The Month in International Trade—December 2022

In this issue:

Ukraine Crisis Resource Center

• Top Trade Developments
  • Forced Labor Court Case Ends with a Whimper
  • EU Challenges China’s Anti-Suit Injunctions at the WTO
  • USTR Announces 9-Month Extensions for 352 Exclusions
  • FY 2023 National Defense Authorization Act: Key Provisions Government Contractors Should Know
  • Compliance Program Guidelines Issued by DDTC
  • EU Adopts Deforestation-Free Products Regulation
  • Customs Ruling of the Week

Crowell in the Press

Crowell Speaks

This news bulletin is provided by the International Trade Group of Crowell & Moring. If you have questions or need assistance on trade law matters, please contact Jana del-Cerro, Anand Sithian, or Simeon Yerokun or any member of the International Trade Group.

---

Ukraine Crisis Resource Center

Crowell & Moring has a multidisciplinary working group helping clients navigate the rapidly evolving business, legal and operational issues associated with the crisis. Our group brings together lawyers and professionals with relevant senior government, industry, and private sector experience across a wide array of practices that intersect with the most critical issues in this unprecedented crisis. We are helping clients to mitigate risk, to implement practical approaches and sound business solutions, and anticipate and prepare for the opportunities and challenges that are on the horizon.

Insights

Webinars

Press Coverage

External Resources

---

Top Trade Developments

Forced Labor Court Case Ends with a Whimper

The U.S. Court of International Trade (“CIT”) issued a final opinion in Virtus Nutrition LLC’s (“Virtus”) challenge to Customs and Border Protection’s (“CBP”) detention of Malaysian palm oil imports, rejecting Vitrus’ request that the CIT confirm the importer’s right to re-export the shipment.  Please see link to case [here].      

CBP detained the shipment in early 2021 alleging that the palm oil was subject to a withhold release order (“WRO”) issued against Sime Darby Plantation Berhad. See link [here].  To obtain release of the shipment, Virtus provided CBP with extensive documentation concerning the production process. However, CBP found the documentation was not sufficient and instructed Virtus to export or destroy the merchandise within a 60-day time frame.  Virtus filed a protest on CBP’s decision, which CBP denied, claiming insufficient documentation. Virtus brought the case before the CIT to contest the denial of the protest. (Virtus Nutrition, LLC v. United States, CIT #21-00165).  Prior to the appeal, Virtus and CBP entered into a temporary storage agreement stating that Virtus could export the merchandise.  

After filing the appeal Virtus sought to dismiss the case, effectively conceding that it could not prove CBP’s detention was unlawful but requested the CIT order that Virtus be allowed to re-export the goods pursuant to the storage agreement.  CBP agreed that the case should be dismissed with prejudice but argued that the CIT does not issue an order allowing export of the goods because the storage agreement would apply only if Virtus sought a final decision from the court.  

In its December 15, 2022, opinion, the CIT dismissed the case and denied Virtus’s request to export the goods.  The court found that CBP is allowed to seize the goods as they deem appropriate.  If CBP seized the goods, and did not allow Vitrus to export, which is common in WRO proceedings, then the court noted that Virtus may challenge CBP’s decision pursuant to 28 USC § 1356.  Finally, the Court also denied the American Apparel & Footwear Association’s bid to join the suit as an amicus curiae.  It is unlikely Virtus will appeal its loss.   

In the end, the case did not provide insight into the evidence needed to successfully challenge CBP forced labor detentions. The importing community was hoping for such guidance but will have to wait.   

For more information, contact: John Brew, Laurel Saito, Wing Cheung

---

EU Challenges China’s Anti-Suit Injunctions at the WTO

The European Union has filed a legal challenge before the World Trade Organization against China’s use of “anti-suit injunctions” (ASIs) to restrict EU holders from enforcing standard-essential patents against Chinese companies in any non-Chinese court. The EU’s request for the establishment of a WTO panel challenges Chinese court-issued ASIs as they “forbid patent holders to commence, continue or enforce the results of any legal proceedings before any non-Chinese court and which are enforced through daily penalties in case of infringement.”

Read More

For more information, contact: Kathryn Clune, Marcia Pucherio

---

USTR Announces 9-Month Extensions For 352 Exclusions

On December 16^th, the United States Trade Representative (“USTR”) extended 352 exclusions which exclude certain products from the additional duties caused by the Section 301 actions taken against imports from China. These exclusions were scheduled to expire on December 31, 2022 but will now extend until September 30, 2023. USTR reinstated these 352 exclusions in an FR notice published on March 28, 2022 following their expiration during the previous administration.

The list of exclusions covers a wide-array of products from List 1 to List 4 and multiple industries. Products of interest include certain DC electric motors, heat exchanger plates, rubber tracks for use in construction equipment, rotary switches, air purification equipment, artificial graphite, duffel bags, and portable electric heaters. With the exception of the COVID exclusions currently valid until February 28, 2023, these 352 exclusions represent the only active exclusions at this time. Although members of Congress expressed interest in restarting the Section 301 exclusion process, the effort has been opposed by USTR and does not look likely for at least the near future.

Since requesting new exclusions has not been an available option since early 2020, importers looking for Section 301 relief currently have their eyes on the Section 301 4-year review comment process  as perhaps the only means to have products removed from Section 301 tariffs in the future.  USTR is soliciting comments on the effectiveness of the China tariffs at individual HTS levels, which leaves that possibility that USTR may raise, lower, or eliminate the tariff levels of certain goods as a result of their 4-year review. Interested parties that wish to remove or increase duty levels for their products should consider filing comments on the USTR website. The docket for submitting comments opened on November 15, 2022, and will close on January 17, 2023.

For more information, contact: John Brew, Sam Boone

---

FY 2023 National Defense Authorization Act: Key Provisions Government Contractors Should Know

The National Defense Authorization Act (NDAA) for Fiscal Year (FY) 2023, signed into law on December 23, 2022, makes numerous changes to acquisition policy. Crowell & Moring’s Government Contracts Group discusses the most consequential changes for government contractors here. These include changes that provide new opportunities for contractors to recover inflation-related costs, authorize new programs for small businesses, impose new clauses or reporting requirements on government contractors, require government reporting to Congress on acquisition authorities and programs, and alter other processes and procedures to which government contractors are subject. The FY 2023 NDAA also includes the Advancing American AI Act, the Intelligence Authorization Act for FY 2023, and the Water Resources Development Act of 2022, all of which include provisions relevant for government contractors.

Read More

For more information, contact: Alexandra Barbee-Garrett, Addie Cliffe, Stephanie Crawford, Jana del-Cerro, Christopher Garcia, Rina Gashaw, Lyndsay Gorton, Michael Gruden, Jacob Harrison, Olivia Lynch, John McCarthy, Per David Midboe, Rachel Schumacher, Zachary Schroeder, Robert Sneckenberg, Anuj Vohra, Alexis Ward

---

Compliance Program Guidelines Issued By DDTC

On December 5^th, the Department of State’s Directorate of Defense Trade Controls (DDTC) issued new Compliance Program Guidelines (CPG) intended to provide an overview of an effective compliance program.

The CPG is broken down into elements covering the spectrum of ITAR compliance from company management commitment, registration, jurisdiction and classifications, authorizations, recordkeeping, violations, training, risk assessment, and audits and compliance monitoring.

In the introduction, DDTC states, “The purpose of an ITAR Compliance Program (ICP) is to establish robust policies and procedures to ensure that organizations and their staff who engage in ITAR-controlled activities do so in compliance with the ITAR, Title 22 of the Code of Federal Regulations in parts 120- 130, issued pursuant to the Arms Export Control Act (AECA) (22 U.S.C. § 2751 et seq.), as amended. Operating an effective ICP helps organizations integrate ITAR requirements into their business and research processes and helps mitigate the risk of violating the regulations.”

You can find the new guidelines here.

For more information, contact: Jana del-Cerro, Edward Goetz

---

EU Adopts Deforestation-Free Products Regulation

Days before the recent UN Biodiversity Conference (COP15), the European Parliament and the Council reached an agreement on the terms of a new Regulation on deforestation-free products. First initiated in 2021 within the Green Deal framework, this Regulation is part of a wider effort from the European legislator to regulate international supply chains (see our previous alert on the Corporate Sustainability Reporting Directive).

Read More

For more information, contact:  Lorenzo Di Masi, Jean-Baptiste Blancardi

---

Customs Rulings of the Week

• Classification of an Outdoor Gift Set and Axe-Saw
• Classification of Products for the 2023 Winter World University Games
• Classification and Nairobi Protocol Eligibility of Steel Safety Grab Bars

For more information, contact: Simeon Yerokun, Martín Yerovi, Emily Devereaux

---

Crowell in the Press

Recent CIT Case Starves Trade Bar Of Guidance In Forced Labor Exclusion Matters, Law Firm Says

December 30, 2022—Trade Law Daily
Related Professionals: John B. Brew, Laurel Saito, Wing Cheung

---

Crowell Speaks

"Imposing Price Controls on a Skeptical Global Market: The Russian Oil Price Cap Experience After its First 10 Days," BIMCO Webinar, 2022. (December 14, 2022). Speakers: Michelle J. Linderman and Dj Wolff.