The Month in International Trade – November 2022

In this issue:

Ukraine Crisis Resource Center

• Top Trade Developments
  • USTR Extends Covid-Related Section 301 Tariff Exclusions for 81 Medical Care Products
  • Magnus Resigns from CBP Following Mayorkas Request, Troy Miller New Acting Commissioner
  • Commerce Downgrades Russia to Nonmarket Economy Status
  • 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.

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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

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Top Trade Developments

USTR Extends COVID-Related Section 301 Tariff Exclusions For 81 Medical Care Products

On Wednesday, November 23, the Office of the U.S. Trade Representative (USTR) extended exclusions from Section 301 tariffs for 81 medical care products from China for a sixth time. The tariff exclusions for these products were initially granted in December 2020 and had been extended multiple times throughout the COVID-19 pandemic. The tariff exclusions for these specific products are now set to expire at the end of February 2023.

Section 301 (Title III of the Trade Act of 1974, 19 U.S.C. §§2411-2420) authorizes USTR to take action to encourage foreign countries to abandon or mitigate unfair trade practices that affect U.S. commerce. In 2018, USTR determined that China’s acts, policies, and practices related to technology transfer, intellectual property (IP), and innovation were “unreasonable or discriminatory and burdened or restricted U.S. commerce”. In order to counter them and obtain their elimination, the Trump Administration used Section 301 authorities to impose four rounds of increased tariffs on approximately two-thirds of all U.S. imports from China, sparking a heavily publicized and controversial trade war with Beijing.

In a draft Federal Register notice, USTR stated that “in light of the continuing efforts to combat COVID, the U.S. Trade Representative has determined that a 3-month extension of the 81 COVID related product exclusions is warranted”. Earlier this month, USTR opened a comment period on Section 301 tariffs imposed on China by the Trump Administration, which covered approximately $370 billion worth of Chinese goods at the peak of the US-China trade war. USTR’s comment period will be open until January 17, 2023 – interested parties can submit their comments via USTR’s web portal at https://comments.USTR.gov.

For more information, contact: Dan Cannistra, Dmitry Bergoltsev

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Magnus Resigns from CBP Following Mayorkas Request, Troy Miller New Acting Commissioner

On Saturday, November 12, 2022, Commissioner of U.S. Customs and Border Protection, Chris Magnus, resigned following tensions between Magnus and Department of Homeland Security Secretary Alejandro Mayorkas over how to handle increasing numbers of migrant people at the southern border. DHS officials have reported that Secretary Mayorkas informed Magnus on Wednesday that he should either resign or be dismissed. Following initial reports that Magnus had no intention of resigning, he stated Saturday evening, “I resigned because I believe this decision provides me with the best path for advancing my commitment to professional, innovative and community-engaged policing.” Troy Miller, who previously served as acting commissioner before Mr. Magnus, has returned to the role of acting commissioner following Magnus’ resignation. In his previous tenure as Commissioner, he led the agency through major challenges, such as the COVID-19 pandemic, hurricane relief efforts, and Operation Allies Welcome, which is the substantive efforts to assist refugees fleeing Afghanistan. Between December 2021 and November 2022, Acting Commissioner Miller fulfilled the role of v’s Deputy Commissioner, where he acted as the agency’s senior career official, and oversaw the daily operations of U.S. Customs and Border Protection’s mission, such as matters related to trade, travel, and national security. Prior to his tenure as director, Acting Commissioner Miller began his career in 1993 as a Customs Inspector. Other titles Miller has held include Acting Assistant Commissioner at the Office of Intelligence and Investigative Liaison, the Executive Director of the National Targeting Center (NTC), and Director of Field Operations for U.S. Customs and Border Protection’s New York Field Office. Additionally, Muller was awarded the Meritorious Executive Presidential Rank Award in 2021 and the Distinguished Executive Presidential Rank Award in 2016.

For more information, contact: John Brew

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Commerce Downgrades Russia To Nonmarket Economy Status

On November 10, 2022, the U.S. Department of Commerce (“Commerce”) announced that it has reclassified Russia as a nonmarket economy, meaning that it will no longer treat Russia as a market economy in antidumping (AD) proceedings. This is an unprecedented move because it is the first time that Commerce upgraded a country to market economy and then downgraded it to nonmarket status.  Commerce had been treating Russia as a market economy since 2002.  Commerce’s decision to downgrade Russia’s market economy status means that it will have the ability to apply the “full force of the U.S. AD law to address the market distortions caused by increasing interference from the Russian government in their economy.”[1] Specifically, the application of Commerce’s “non-market methodology” in antidumping proceedings is essentially a summary finding that the Department cannot rely on the costs reported by Russian manufacturers in the dumping calculation.  This generally results in significantly higher duty rates through the use of surrogate costs from comparable market economy producers. Russia joins 11 other countries classified as nonmarket economies by the Department of Commerce, including China, Vietnam, and nine former Soviet republics.

 In October 2021, Commerce had reviewed Russia’s market economy status and decided to maintain Russia’s market economy status, although it had expressed disappointment with Russia’s lack of progress toward a more market-oriented economy since attaining the designation in 2002. Russia’s new nonmarket economy status was triggered in large part by petitions submitted on June 30, 2022, from CF Industries Nitrogen LLC, an Illinois-based fertilizer producer and its subsidiaries. The company claimed that both Russia and Trinidad and Tobago “are exporting illegally subsidized fertilizer to the U.S. at unfairly low prices and underpricing their goods by as much as 433.37%”.[2] In its petition, CF Industries highlighted Russian President Vladimir Putin’s two-decade hold on power and stated that Russia’s “move from a centrally planned economy toward a market-based system has stalled and, in many areas, reversed in recent years.” In response, Commerce launched an investigation to assess whether the Russian Federation operates as a nonmarket economy, which concluded with its announcement on Thursday.

Russia’s new nonmarket economy status is likely to significantly raise tariffs for Russian imports such as aluminum, steel, and chemicals into the United States, which have already fallen drastically following U.S. sanctions and trade restrictions in response to Russia’s invasion of Ukraine. According to official data from Commerce, the United States imported $12.5 billion worth of Russian goods in between January and September of this year, which is roughly half the level achieved during the same time period in 2021.  

[1] https://www.trade.gov/press-release/us-department-commerce-revokes-russias-market-economy-status-antidumping-proceedings

[2] https://www.law360.com/articles/1405407/feds-fertilizer-probe-to-decide-if-russia-is-market-economy

For more information, contact: John Brew, Dan Cannistra

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Customs Rulings of the Week

• Classification of a Steel Racking Structure
• Classification of a Unisex Children’s Jacket
• Classifying Wheelchair Accessories and a Multi-Use Bath Belt
• Classification of Equipment and Goods Related to the Copa America Centenario

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

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Crowell in the Press

Can You Buy Bitcoin Without An Exchange Like FTX? We Tried.

November 25, 2022 — Barron's

Access Article (Web)

Related Professionals: Anand Sithian

US Prosecutors Opened Probe of FTX Months Before Its Collapse

November 21, 2022 — Bloomberg

Access Article (Web)

Related Professionals: Anand Sithian

Hard-Line China Push Is Vowed By Republicans Taking Control of the US House

November 16, 2022 — Bloomberg News

Access Article (Web)

Related Professionals: Robert Holleyman

OFAC-OFSI Announcement Latest Sign Of United States’ Growing Multilateral Sanctions Approach

November 7, 2022 — Global Investigations Review

Access Article (Web)

Related Professionals: David (Dj) Wolff

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Crowell Speaks

“International Traffic in Arms Regulations (ITAR) Tutorial” at the Interservice/Industry Training, Simulation, and Education Conference in Orlando, Florida. (November 28, 2022). Speaker: Jana del-Cerro.

"Uyghur Forced Labor Prevention Act: Implementation and Enforcement Update" ACC Southern California Webinar, 2022. (November 10, 2022). Speakers: Evan Y. Chuck and David R. Stepp.