Global Trade Monitor

News & Commentary About Global Trade Issues Affecting Your Business

U.S. ITC Public Hearing on Digital Trade in Moffett Field, California on September 25th – Requests to Attend Due September 12, 2013

Posted in Uncategorized

On September 25 the US International Trade Commission (USITC) will hold a public hearing on digital trade at the NASA Ames Conference Center Moffett Field, California. The hearing is being held in conjunction with the USITC investigations on Digital Trade in the U.S. and Global Economies.

Digital trade is described as “products and services delivered via the Internet and to commerce in products and services that is facilitated by the use of the Internet and related technologies,” as it relates to both U.S. domestic (economic) activity and international trade.

The USITC was asked by the Senate Finance Committee to prepare two reports on the impact of digital trade in the U.S. and global economies. The first public hearing on digital trade was held on March 7, 2013; the corresponding first report, Digital Trade in the U.S. and Global Economies, Part 1, was released August 15, 2013.

The USITC will base the second report on information including, “survey of U.S. firms in selected industries, valued estimates and potential growth of U.S. digital trade; linkages and contributions of digital trade to the U.S. economy; case studies examining the importance of digital trade to selected U.S. industries that use or produce such goods and services, on various-sized industries.” The report, which the USITC expects to submit to the Senate Finance committee by July 14, 2014, will also evaluate the barriers that affect relevant industries and the US economy overall.

Requests to attend the public hearing should be filed with the ITC via mail to the address included below, or emailed to by 5:15 p.m. (EST) on September 12. For more information about the hearing, click here.

Secretary to the Commission, 500 E Street SW, Washington, DC 20436

* Special thanks to Cynthia Arnfeldˇ for her assistance in creating this post.

ˇ Not admitted to the practice of law.

The EU seeks Strengthening of Safe Harbor Rules

Posted in Uncategorized

The European Union (EU) has launched a commission to review the U.S. Department of Commerce’s (DOC) Safe Harbor agreement. The review comes in the wake of PRISM, the National Security Agency’s data collection program. Safe Harbor is a voluntary program for U.S.-based companies with operations in the EU to transfer personal data across EU borders.

The EU argues that the Safe Harbor program may be using “loopholes” to skirt EU data privacy rules. The International Trade Association (ITA), acknowledges the “criticisms,” but disagrees, saying that the program operates within its framework. Safe Harbor is based on the EU Data Protection Directive, and, as noted by the ITA, is limited when national security or defense matters are in question.

EU officials would like to review Safe Harbor for compatibility with new EU laws on data protection. While the U.S. is open to discussions on Safe Harbor, it is not likely that they will tighten any restrictions on it.

* Special thanks to Cynthia Arnfeldˇ for her assistance in creating this post.

ˇ Not admitted to the practice of law.  

New Antidumping Case Against Korean OCTG May Be More Than a Rumor This Time

Posted in Antidumping, Countervailing Duties

With Rosa S. Jeong

For the past few years, rumors of a new antidumping duty case against Korean oil country tubular goods (OCTG) have circulated within the industry. But each time, no new petition was filed. In January of this year, the rumor mill heated up again, with industry publications reporting that a case against Korean OCTG as being “imminent.”

While the rumors may once again end up as empty threats, all the signs may indeed be pointing to a new case being filed as early as the end of this month. In our experience, a new antidumping case is often presaged by a number of “clues” that relate to import trends and industry performance.

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EU Imposes More and More Sanctions and Restrictive Measures: Compliance is an Absolute Necessity

Posted in United Nations Actions

Following the social unrest in the Middle East and parts of Africa, the United Nations Security Council (UNSC) adopted a number of UN Resolutions over the last few years. These UN Resolutions introduced restrictive measures against certain countries, persons, entities and bodies involved in, among other things, serious human rights abuses. Amongst others, restrictive measures have been imposed by the UNSC in view of the situation in Iran, Cote d’Ivoire and Libya.

Further to the UNSC Resolutions, the EU Authorities have implemented various sanctions and restrictive measures against the aforementioned countries by means of Decisions and Regulations. In many cases, the EU sanctions and restrictions are even stricter than the measures imposed by the UN. In addition to the EU measures, national EU Member States’ authorities can implement specific national restrictions. The EU is very active in this field. Recent EU sanctions (updates) include, for example, restrictive measures on countries and regimes such as Iran, Syria and Tunisia, as well as on individuals deemed to be terrorists or in some way related to terrorism.

Current EU sanctions and restrictive measures include, but are not limited to:

  • embargo on arms and related material;
  • embargo on equipment that may be used for internal repression;
  • ban on the provision of certain services;
  • prior information requirements on cargo;
  • restrictions on admission of listed persons;
  • freezing of funds and economic resources of listed persons, entities and bodies; and
  • prohibition to grant certain claims to listed persons and entities.

EU sanctions and restrictive measures generally apply not only within the territory of the EU, including its airspace, but also:

  • onboard any aircraft or any vessel under the jurisdiction of a Member State;
  • to any person inside or outside the territory of the EU who is a national of a Member State;
  • to any legal person, entity or body which is incorporated or constituted under the law of a Member State; and
  • to any legal person entity or body in respect of any business done in whole or in part within the EU.

As such, the EU measures have a direct consequence for many companies and people doing business in or with, for example, Iran, Syria or Tunisia. Not only for EU companies, but potentially also for U.S. companies with international (EU) operations or an international workforce including nationals of an EU Member State. Failure to comply with the EU and, if applicable, national sanctions can have serious consequences. Recently, multiple (international) companies have been subject to legal measures in various EU Member States. These measures vary from a “simple” warning to, for example, penalties and/or even imprisonment of responsible personnel. In addition, the reputation of a company can be at risk. Given the fact that there is a growing interest among EU legislators and enforcement agencies for sanctions and export controls compliance, ensuring such compliance by implementing compliance proceedings, providing compliance training to personnel and, where and to the extent possible, obtaining prior written approval on specific transactions from the competent authorities is strongly recommended.

With a view to the current situation in various countries in the Middle East and Africa, it is a virtual guarantee that the UN and the EU will continue to monitor the developments on an ongoing basis. New developments may lead to additional sanctions and restrictive measures being imposed, thereby increasing the need for a comprehensive compliance program.

Digital Trade Under Investigation

Posted in Investment, ITC

The U.S. International Trade Commission (ITC) is investigating the role of digital trade in the U.S. and global economies.   According to the ITC, the reports will contain the following items:

The first report, Digital Trade in the U.S. and Global Economies, Part I, will:

  • describe U.S. digital trade in the context of the broader economy;
  • examine cross-border digital trade and its relationship to other cross-border transactions (e.g., foreign direct investment);
  • describe notable barriers and impediments to digital trade; and
  • outline potential approaches for assessing the linkages and contributions of digital trade to the U.S. economy, noting any challenges associated with data gaps and limitations.

The second report will build on the first report to:

  • estimate the value of U.S. digital trade and the potential growth of this trade;
  • examine the broader linkages and contributions of digital trade to the U.S. economy;
  • present case studies that examine the importance of digital trade to selected U.S. industries that use or produce such goods and services; and
  • examine the effect of notable barriers to digital trade on selected industries and the broader U.S. economy.

A public hearing in connection with these investigations will be held on March 7, 2013.  Requests to appear at the hearing must be filed by February 21, 2013.   The public is also invited to provide written submissions which are due March 14, 2013.

Second Circuit Adheres Strictly to the Rules of Contract in Sovereign Debt Restructurings

Posted in Business Reorganization & Restructuring

In a measured opinion hewing closely to standard principles of contract interpretation, the United States Court of Appeals for the Second Circuit in NML Capital, Ltd. v. Republic of Argentina rejected the notion that a sovereign may issue bonds governed by New York state law and subject to the jurisdiction of the state’s courts, and then restructure those bonds in a manner that violates New York state law.  Our recent GT Alert, Second Circuit Adheres Strictly to the Rules of Contract in Sovereign Debt Restructurings, reviews the Second Circuit’s decision.

Senate Passes House Bill 4014, Clearing Way for Privilege Protection Documents Turned Over to CFPB During Examination

Posted in Financial Institutions

Our colleagues Laureen Galeoto, Robert Bostrom and Scott Sheehan recently published a GT Alert titled  Senate Passes House Bill 4014, Clearing Way for Privilege Protection Documents Turned Over to CFPB During Examination.

To summerize: On December 11, 2012, the U.S. Senate passed House Bill 4014 without amendment and sent it to the president for signature. HR 4014 is the long-awaited and much sought after legislation that amends the Federal Deposit Insurance Act (FDIA) in order to protect banks and non-banks that are subject to the Consumer Financial Protection Bureau’s supervision and examination authority from unintended waiver or destruction of a privilege that they could have otherwise claimed as to third parties. And while there is cause to be somewhat comforted or alleviated even, there are still some real risks and considerations that lie ahead as examined entities are asked to turn over their privileged documents and communications.

Are Your Imports Covered by Antidumping or Countervailing Duty Orders?

Posted in Antidumping, China, Countervailing Duties

An antidumping or countervailing duties are imposed on imports.   As an importer, the first practical question is whether your imported products are covered by the antidumping or countervailing duty order.   Often, this is not a simple question.  The scope of the order generally provides a narrative description of the products subject to the duties.  The problem is that it is not always straightforward and does not necessarily encompass expressly every type of product or any future type of products in the same family.  Importing products without being certain that there are not subject to the higher tariffs is fraught with risks because the Customs and Border Protection Office (“CBP”) could request the payment of duties and suspend the liquidation of the entry concerned.  In recent years, CBP has heightened scrutiny of Chinese imports at U.S. ports to ascertain whether they are within the scope of an order and ensure that they are not evading antidumping or countervailing duties.

Here are some questions that we hear most frequently from importers:

1.  Are the products excluded if they do not fall under the tariff subheading?

Along with a written description, the scope of the order lists the tariff subheading codes for the goods covered.  However, the mere fact that a product falls outside the tariff subheading listed in the scope does not mean that the product is excluded from antidumping or countervailing duties.   It is the narrative description of the scope that controls whether a product is covered by the scope on an order.   Thus, there are instances where a product that is not covered by a tariff subheading associated with an order is still subject to the special duties.

2.  Does the scope cover unassembled goods?

A question frequently asked is whether a product that is unassembled, or partially assembled or in an intermediary stage of production, is included in a scope.  The answer depends upon the language used in the scope.  Generally, they are excluded unless the scope clearly includes them or the intermediary product has already all the essential characteristics of the product covered by the scope.

3.  Does the scope cover kits?

What about a product that is imported as part of another product or kit?  The answer once again depends upon the facts in each case.  This is a determination that has to be made in light of the scope description and precedents by the U.S. Department of Commerce (“DOC”).  Generally, products included as a part of a kit with other products are covered unless the scope clearly excludes them or there has been a specific DOC decision excluding such kits.


The recommended course of action in all instances in which it is not clear whether a product falls within the scope of  an order is to file a formal scope ruling request with the DOC.   The DOC is required to rule on such issues as quickly as possible.  For simple issues, the process may take 4 to 6 months.  This formal ruling will put to rest any questions relating to the imported merchandise and ensure that your future business will go smoothly without unpleasant surprises.

Will Scope of Current Countervailing and Antidumping Duty Investigations for Chinese Solar Panels be Expanded in Department of Commerce’s Final Determination?

Posted in Antidumping, Countervailing Duties

In its preliminary countervailing and antidumping duty determinations, the Department of Commerce ruled that the origin of the solar panels under investigation was that of the country in which the cell is manufactured. Accordingly, if the cell is made in a third country and incorporated into the panel in China, the final product is of third-country origin, not Chinese. Conversely, if the cell is made in China and the panel assembled in a third country, the final product is of Chinese origin.

This ruling created consternation among the U.S. solar panel industry, which has argued that a solar panel assembled in China should keep its Chinese origin even if the cell was made in a third country. In particular, the U.S. industry alleges that only a small percentage - estimated at around 20% – of the value of the panel occurs during the cell manufacturing stage. Therefore, the U.S. industry argues that the Department of Commerce’s ruling opens the door to the circumvention of the countervailing and antidumping duties because solar panels that have 80 percent of their value added in China would fall outside the scope of the higher tariffs.

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New Tougher Rules for Chinese Antidumping Cases

Posted in Antidumping, China, Countervailing Duties, US-China trade relations

A  series of new rules proposed and implemented by the U.S. Department of Commerce (DOC) makes it tougher for Chinese companies to navigate antidumping (AD) and countervailing duty (CVD) cases in the United States.  In particular, two of the most recent rules are likely to result in substantially higher AD rates in Chinese cases.

1.         Market Economy Input Price Less Likely To Be Used.

A new proposed rule makes it more likely that the dumping margin in Chinese and other non-market economy cases is calculated based on a surrogate value rather than on the actual price paid by the producer.

Under its longstanding practice, the DOC calculates dumping margins in Chinese and other non-market economy (NME) cases by comparing the exporter’s U.S. selling price with the cost of production based on surrogate values.  As an exception to this general rule, the actual price of a given input may be used in place of a surrogate value if the producer sourced at least 33% of the given input from a market economy country during the period examined.  The proposed rule would increase this percentage to 85% and would also require exporters to show that the inputs were produced in — not just sourced from market economy countries.

The proposed rule is expected to make it less likely for exporters to meet the market economy input exception.  And given that the use of surrogate values generally results in higher input prices, the proposed rule is expected to lead to higher dumping margins.

This rule is not yet in effect.  The DOC has collected public comments regarding the proposed rule and is expected to announce the final rule in the near future.

2.         Unrefunded VAT May Be Deducted from U.S. Price

Under a final rule announced in June 2012, the DOC may reduce an exporter’s U.S. price by the amount of unrefunded value-added tax (VAT) in calculating the exporter’s dumping margin in cases involving China and Vietnam.  The new rule is likely to result in higher dumping margins

As noted above, dumping margins in cases involving China and other NMEs are based on a surrogate value methodology.  Due to certain limitations with the use of surrogate values, the DOC, in the past, has not adjusted the dumping calculations to account for internal taxes such as VAT imposed on inputs.

In China and many other countries, VAT (of 17% in China) is imposed on almost all transactions of goods and services.  Generally, a company pays VAT on its purchase of inputs and collects VAT from its customer when the finished good is sold.  Where the amount of VAT collected from the finished good sales exceeds VAT paid by the company for the purchase of inputs, the difference is remitted to the government.  Because no VAT is imposed on export sales, a company with more export sales than domestic sales would end up paying VAT on inputs that are not offset through its sales.  To prevent this disparity, China, like many other countries, provide a refund of VAT paid for inputs upon exportation of the finished good.  For many goods, China provides for a refund of 13% out of the 17% VAT paid (the refund rate varies for certain goods).

While it is still unclear how the new final rule will be applied, the DOC implies that “VAT that is not fully refunded upon exportation” will be treated as an export tax that will deducted from export price when determining the dumping margin.  If the DOC indeed treats the unrefunded VAT on inputs as an export tax, this will result in increased dumping margins in virtually all Chinese cases.

In such case, we believe that the DOC’s new rule may be at odds with the U.S. and international law because VAT is not an export tax.  It remains to be seen how the rule will be applied in actual calculations.