Weekly Trade Briefing: June 19-July 2, 2021

Trade Update • JULY 05, 2021

Aweekly roundup of news reports, government announcements, and other information about current and emerging developments in international trade and customs compliance.

Mexico Agrees to Review USMCA Labor Complaint Against Auto Parts Maker

The Mexican Economy Ministry, in a June 19 statement, said it informed USTR that it has agreed to review a U.S. complaint under the U.S.-Mexico-Canada Agreement against an auto parts manufacturer for alleged labor rights violations. Last month, the USTR and organized labor groups lodged a complaint against U.S.-owned parts maker Tridonex for allegedly denying workers freedom of association and collective bargaining rights. In a press conference, Mexican President Andrés Manuel López Obrador touted his government’s labor reform efforts and vowed to uphold commitments to workers made in the USMCA.

Canada and Indonesia Launch Free Trade Talks

The Trudeau government announced on June 20 that it has entered into negotiations with Indonesia aimed at achieving a Comprehensive Economic Partnership Agreement between the two countries. Indonesia is currently Canada’s 24th largest trading partner with two-way merchandise trade totaling $3.4 billion in 2020, roughly split between imports and exports. Indonesia is Canada’s largest export market in Southeast Asia, and a key destination for Canadian agricultural products, manufactured goods, and natural resources. According to the government, a CEPA with Indonesia “would help unlock the potential of this dynamic, rapidly growing market for Canadians while upholding labour rights and promoting environmental sustainability.”

NY Fed Cites Duty Avoidance as Factor in Narrowing Trade Deficit with China

New research from the Federal Reserve Bank of New York into a narrowing of the U.S. trade deficit with China amid the trade war launched in 2018 was “driven by successful efforts to evade U.S. tariffs, with an estimated $10 billion loss in tariff revenues in 2020.” The report said it considered the misreporting of trade to avoid duties to be “highly relevant” given the significant tariff hikes imposed by the Trump administration. It suggests that U.S. importers incentivized to find ways of underreporting import values were “perhaps utilizing low-ball invoices provided by their Chinese suppliers.”

USMCA Labor Petitions Lack ‘Due Process Protections,’ Warns U.S. Chamber

Ahead of the first USMCA Labor Council meeting, the U.S. Chamber of Commerce registered its concerns in a letter to USTR Katherine Tai  regarding a “lack of due process protections found in the labor and dispute settlement chapters of [USMCA] as they relate to the so-called rapid-response mechanism.” The Chamber contends that because the final procedure guidelines have yet to be published “any action on a petition is inappropriate and unfair to the owner of the covered facility and the respondent party.” The letter poses a number of questions to the Labor Council including when it plans to publish finalized procedural guidelines and whether provisions will be included to protect facility owners’ due process rights.

Canadian Lumber Producers Look for Billions in Duty Repayment

“Canadian lumber producers have their eyes on a big cash prize if the Biden administration gives into pressure from home builders and members of Congress to begin talks with Canada on a new softwood lumber agreement,” says a June 22 article in Politico. It reports that producers want to be refunded the billions paid to CBP following the imposition of AD/CVD by the Trump administration in 2017. Meanwhile, a former head of the FTC draws attention to the fact that Canadian-owned mills in the U.S. have been one of the biggest beneficiaries of the additional duties. “Canadian owners of U.S. lumber producers smile all the way to the bank,” he concludes.

ITC Determines U.S. Tire Industry ‘Materially Injured’ by Korea, Taiwan, Thailand Tire Imports

The U.S. International Trade Commission announced on June 23 its affirmative determination that domestic manufacturers are “materially injured” by imports of passenger vehicle and light truck tires from Korea, Taiwan, and Thailand. The ITC also found subsidized passenger tires from Vietnam injure U.S. producers. As a result, Commerce will issue AD orders on imports of these products from Korea, Taiwan, and Thailand, and a CV duty order on imports of subject tires from Vietnam (after finding dumped imports from that country were “negligible” the ITC voted to terminate the AD investigation concerning Vietnam).

CBP Blocks Polysilicon Imports from Xinjiang Linked to Forced Labor

On June 24, 2021, CBP issued a Withhold Release Order on silica-based products produced by Hoshine Silicon Industry Co. Ltd. and its subsidiaries. Hoshine makes metallurgical silicon, which is processed into polysilicon and used in the production of solar panels. On the same date, Commerce also updated its entity list to include Hoshine and four other Chinese companies “for participating in the practice of, accepting, or utilizing forced labor in Xinjiang and contributing to human rights abuses against Uyghurs and other minority groups in Xinjiang.” In a statement, the White House said: “These actions demonstrate our commitment to imposing additional costs on the People’s Republic of China (PRC) for engaging in cruel and inhumane forced labor practices and ensuring that Beijing plays by the rules of fair trade as part of the rules-based international order.”

Aluminum Import Licenses Now Required

The U.S. Department of Commerce began requiring and collecting aluminum import licenses for all covered entries into the United States, effective June 28, 2021. Aluminum importers will now be required to register and obtain a license through the International Trade Administration’s Aluminum Import Monitoring portal. The licenses are free and automatic and require importers to provide information on volume, value, expected date of importation, HTS code, and country of origin of the covered aluminum as well as to identify the country where the aluminum used in the manufacture of the imported product was most recently cast.

CFIA Seeking Experts for Importer Risk Assessment Model Study

The Canadian Food Inspection Agency, in collaboration with experts from industry, academia, and other government departments, has begun development of its Importer Risk Assessment model, a quantitative, science-based risk assessment tool designed to evaluate the food safety risk associated with Safe Food for Canadians licensed food importers. As part of this process, the CFIA is seeking Canadian experts to participate in a study to estimate the relative risk (importance) of various assessment criteria considered in the IRA model.
Additional information is available here.

Ex-Im Reports ‘Significant Progress’ in Financing Since Reauthorization

The Export-Import Bank on Wednesday released its annual Competitiveness Report to Congress, finding that the bank has made “significant progress” in providing exporters credit since Congress reauthorized it in 2019. According to the report, the top five countries providing official medium- and long-term export credit in 2020 were China ($18 billion), France ($12.1 billion), Germany ($8.6 billion), Italy ($8.4 billion), and Korea ($5 billion). In support of U.S. exports, EXIM authorized $1.8 billion in official MLT export credit financing.

EU Extends Steel Safeguard for Three Years

The EU is prolonging for three additional years the safeguard measure currently in place on imports of certain steel products. The prolongation will apply from 1 July 2021. The initial safeguard measure was introduced in July 2018 to protect the Union steel market against trade diversion, following the decision the U.S. to impose, under its Section 232 legislation, duties on imports of steel into the U.S. market. The Section 232 measures are still in force. The decision to extend the safeguard measure follows an investigation requested by 12 EU Member States on whether the conditions to prolong are fulfilled.

U.S. Hits Myanmar with Additional Sanctions

On July 2, the Commerce Department’s Bureau of Industry and Security added four companies to the Entity List in the Biden administration’s latest action in response to the military coup in Burma: Wanbao Mining Ltd. and its two subsidiaries, Myanmar Wanbao Mining Copper, Ltd. and Myanmar Yang Tse Copper, Ltd., as well as King Royal Technologies Co., Ltd. Three of the companies have financial ties to the Myanmar military while one provides it with telecommunications services, according to a Commerce announcement.