A few notable developments and announcements on the international trade front took center stage late last week of which U.S. companies with multinational operations should be aware of:
- A new executive order that will give U.S. government agencies greater enforcement tools to combat trade violations;
- A new executive order requiring a report on foreign trading partners with which the U.S. had a significant trade deficit in goods and the major causes of the deficits; and,
- The announcement of nominees for the positions of Commissioner of Customs and Under Secretary of Commerce for Export Administration.
Executive Order Establishing Enhanced Collection and Enforcement of Antidumping and Countervailing Duties and Violations of Trade and Customs Laws
First, the President signed an Executive Order on March 31st that will establish enhanced measures for the collection of antidumping and countervailing duties, and for the enforcement of trade violations that threaten the safety and economic security of the United States. The Executive Order requires U.S. Customs and Border Protection (“CBP”) to develop implementation plans within 90 days to require importers who pose a risk to the revenue of the United States to provide security for antidumping and countervailing duty liability through the posting of new bonds. CBP is also tasked with developing and rolling out a plan for enabling interdiction and disposal of inadmissible goods through seizures as well as additional new methods. The Executive Order also authorizes CBP to share information with intellectual property rights holders to assist in infringement determinations, and information relating to violative imported merchandise that has been abandoned—previously, this level of information was not shared with owners of IPR as it was considered confidential and proprietary to the importers of record. Under the Executive Order, the Attorney General is also required to develop prosecution practices and allocate resources to treat significant trade law violations as a top priority.
Each year, CBP screens more than 74,000 truck, rail and sea cargo containers (valued over $6.3 billion) at the 328 U.S. ports of entry every day. In Fiscal Year 2016, CBP reports that it seized over 31,000 shipments of counterfeit merchandise and collected more than $40 billion in duties, taxes, and fees. However, in 2015 alone, it has been reported that more than $2.3 billion in antidumping and countervailing duties owed to the U.S. Government were unable to be collected because the importers were foreign entities that either lacked capital or assets located in the United States sufficient to allow for the collection of the revenue owed to CBP. To combat this problem, the Executive Order authorizes CBP to impose new bonding requirements for so-called “covered importers”—that is, importers of goods subject to antidumping or countervailing duty (“AD/CVD”) orders that pose risks to U.S. revenue collection efforts. A “covered importer” is defined as a new importer or an importer that has a prior record of making late payments or failing to pay required AD/CVDs as required by law. It is too early to tell whether importers who have discovered AD/CVD errors and have taken steps post-entry to correct them (i.e., through filing prior disclosures and tendering the duties owing), will also be caught in the net of new bonding requirements. See https://www.whitehouse.gov/briefing-room/presidential-actions/executive-orders.
Executive Order Regarding the Omnibus Report on Significant Trade Deficits
Another Executive Order was also issued on March 31st which directs the Commerce, Treasury, Defense, Agriculture and Homeland Security Departments, as well as the USTR, to submit an Omnibus Report on Significant Trade Deficits to the President within 90 days that will identify foreign trading partners with which the U.S. had a significant trade deficit in goods in 2016 and the major causes of the trade deficit (e.g., differential tariffs, non-tariff barriers, dumping, subsidies, intellectual property rights infringement, forced technology transfer, denial of worker rights and labor standards, etc.). The Report must also: (a) assess whether the identified trading partners are imposing unequal burdens on, or are unfairly discriminating against, U.S. commerce; (b) assess the effects of the trade relationship between the production capacity and strength of the manufacturing and defense industrial bases of the United States; (c) assess the effects of the trade relationship on employment and wage growth in the United States; and, (d) identify import and trade practices that may be impairing the national security of the United States. The Executive Order notes that for many years, the U.S. has not obtained the full scope of benefits anticipated under international trade agreements or from its participation in the World Trade Organization and that the U.S. annual trade deficit in goods currently exceeds $700 billion. The Report is intended to provide policymakers and the USTR with current and comprehensive information regarding unfair trade practices and the causes of U.S. trade deficits that will be useful in future trade negotiations. See https://www.whitehouse.gov/briefing-room/presidential-actions/executive-orders.
New Import and Export Leadership Nominees Announced
In terms of other new international trade developments, the Administration announced two new nominations for U.S. import and export leadership on March 30th. With respect to imports and border security, in particular, Kevin McAleenan, who had been serving as Deputy Commissioner and CBP’s Chief Operating Officer, will be nominated to assume the position of Commissioner of U.S. Customs and Border Protection. McAleenan previously served as the area Port Director for the Los Angeles International Airport as well as Acting Assistant Commissioner of the Office of Field Operations. With respect to exports, the Administration also announced that Mira Radielovic Ricardel, will serve as Under Secretary of Commerce for Export Administration. Ricardel previously held the positions of Acting Assistant Secretary of Defense, Principal Deputy Assistant Secretary of Defense for International Security Policy, Deputy Assistant Secretary of Defense for Eurasia, and served in senior leadership positions within Boeing Defense Space and Security.
If you have any questions pertaining to the new Executive Orders or other international trade issues, please feel free to contact a member of Polsinelli’s International Attorneys, including Melissa Proctor at email@example.com.