Global Trade Brief – December 2020
This month’s Global Trade Brief reviews Transshipments of grain-oriented electrical steel, Countermeasures against the United States in large civilian aircraft dispute, U.S. final rule amending EAR, export enforcement provisions, and more topics.
GSP PROGRAM: THAILAND TRADE PREFERENCES
USTR announced the suspension of $817 million in trade preferences for Thailand under the Generalized System of Preferences (GSP) program “based on its lack of sufficient progress providing the United States with equitable and reasonable market access for pork products.” The decision is effective on December 30, 2020, and will close the review of Thailand.
The USTR release also announces the closure of GSP eligibility reviews with no loss of benefits for three countries:
- Georgia—based on improvements in the protection of worker rights
- Uzbekistan—based on improvements in the protection of worker rights
- Indonesia—based on improvements aimed at providing the United States with equitable and reasonable market access
Additionally, the USTR announced the closure of the GSP designation review of Laos (with no change in status) and the opening of two new GSP eligibility reviews of Eritrea and Zimbabwe (based on worker rights concerns).
Lastly, the USTR announced the results of the GSP annual product review that added fresh-cut roses to and removed parboiled rice from, the list of goods eligible for GSP trade benefits.
TRANSSHIPMENTS OF GRAIN-ORIENTED ELECTRICAL STEEL
USTR announced that representatives of the governments of Mexico and the United States concluded consultations to address the transshipment of grain-oriented electrical steel (GOES) from outside the North American region into the United States through “GOES-containing downstream products.”
The USTR release announces that Mexico will:
- Establish a strict monitoring regime for exports of electrical transformer laminations and cores made of non-North American GOES
- Closely monitor shipments of these products to the United States (from the fourth quarter of 2020 onward)
Pursuant to these negotiations, imports from Mexico will not be subject to any action to adjust imports of electrical transformers and related parts that may be adopted by the United States under Section 232 of the Trade Expansion Act of 1962.
The USTR release states that Mexico and the United States will consult at regular intervals on the implementation of these agreed measures and on the state of bilateral trade and market conditions relating to GOES.
COUNTERMEASURES AGAINST UNITED STATES IN LARGE CIVILIAN AIRCRAFT DISPUTE
The European Commission (EC) issued a release with regard to a regulation that imposes increased tariffs on U.S. exports into the European Union (EU) having a value of $4 billion. The regulation will be effective when published in the official journal of the EU on November 10, 2020.
The Dispute Settlement Body of the World Trade Organization (WTO) in October 2020 formally authorized the EU to take countermeasures against the United States in the large civilian aircraft dispute.
Today’s EC release announces the following countermeasures:
- Additional tariffs of 15% on aircraft
- Additional tariffs of 25% on a range of agricultural and industrial products imported from the United States
These tariffs mirror the countermeasures imposed by the United States in the context of the WTO case on subsidies in the large civilian aircraft dispute. EC release states that the countermeasures bring the EU on an “equal footing” with the United States.
U.S. FINAL RULE AMENDING EAR, EXPORT ENFORCEMENT PROVISIONS
The Bureau of Industry and Security (BIS) of the U.S. Commerce Department released for publication in the Federal Register a final rule amending and clarifying certain provisions of the Export Administration Regulations (EAR).
Final rule promotes compliance with existing EAR requirements and implements the export enforcement portions of the Export Control Reform Act of 2018 (ECRA), that affirmed existing authorities under the EAR and provided expanded export control authorities to the Secretary of Commerce.
According to the preamble, the final rule also amends certain provisions of the EAR not strictly related to the implementation of ECRA concerning the issuance of licenses and denial orders and the payment of civil penalties.
The ECRA repealed most of the Export Administration Act of 1979 (EAA), which had lapsed. The ECRA continues existing authorities under the EAR that had been issued pursuant to, and been maintained in force under, the EAA until its lapse, and thereafter under the International Emergency Economic Powers Act (IEEPA). The ECRA provides the Secretary of Commerce with additional authorities to implement effective export controls in furtherance of U.S. national security and foreign policy interests.
Accordingly, the BIS final rule amends the EAR to reflect enforcement authorities and to update certain EAR provisions to make them consistent with ECRA. These amendments include:
- Replacing existing references to the EAA currently in the EAR with references to ECRA and other export laws and regulations
- Amendments to the EAR that reflect the expanded scope of authority provided to the Secretary of Commerce in ECRA
- Amendments to the EAR to implement the following enforcement provisions:
- Pre-license checks and post-shipment verifications
- Overseas investigative authority
- Searches, inspections, detentions, and seizures, and related authorities concerning exports, reexports, and transfers (in-country)
- Inspection of books, records, and other information
- Violations and penalties under ECRA