Global Trade Brief – June 2021
This month’s Global Trade Brief reviews United States, United Kingdom to suspend trade countermeasures for five years, large civil aircraft dispute, U.S. sanctions regulations related to Myanmar, Non-preferential origin determinations, imports from Canada or Mexico, Free trade agreement between Australia and UK, and more topics.
U.S. sanctions regulations related to Myanmar
OFAC released for publication in the Federal Register a final rule concerning Myanmar (Burma) sanctions regulations. The final rule implements a February 2021 Myanmar-related executive order. In E.O. 14014, the president determined that the situation in and in relation to Myanmar, and in particular the February 2021 coup, constitutes “an unusual and extraordinary threat to the national security and foreign policy of the United States” and declared a national emergency to deal with that threat.
The regulations are published in abbreviated form for the purpose of providing immediate guidance. OFAC intends to supplement these regulations with a more comprehensive set of regulations that may include additional interpretive and definitional guidance, general licenses, and other regulatory provisions.
United States, United Kingdom to suspend trade countermeasures for five years, large civil aircraft dispute
Effective July 4, 2021, USTR released a statement reflecting that representative of the governments of the United States and the United Kingdom (UK) have agreed to suspend, for five years, tariff countermeasures in the large civil aircraft dispute.
- The agreement framework provides that the United States and the UK intend to continue their work and not to impose tariffs related to this dispute for five years.
- A working group will be established to analyze and overcome any disagreements that may arise.
- Each side intends to provide any financing to its large civil aircraft (LCA) producer for the production or development of large civil aircraft on market terms.
- Each side intends to provide any funding for research and development (R&D) for large civil aircraft to its LCA producer through an open and transparent process and intends to make the results of fully government-funded R&D widely available, to the extent permitted by law
- Each side intends to collaborate on jointly analyzing and addressing non-market practices of third parties that may harm their respective large civil aircraft industries
- The two sides will share information regarding cybersecurity concerns, the priorities described below, and other areas relevant to non-market practices in the large civil aircraft sector.
- The two sides will coordinate and explore common approaches and enhanced cooperation regarding the screening of inward investments in the large civil aircraft sector, including those whose financing is supported by a non-market economy.
- The two sides will coordinate and explore common approaches and enhanced cooperation regarding the screening of new outward investments in joint ventures and production facilities in non-market economies to ensure that such activities are not influenced by non-market forces.
- Each side will discuss coordinating their approach to tackling the challenges of non-market competition in the LCA sector. Some economies do not report transparently all domestic subsidies and provide extensive support to their large civil aircraft sector through subsidized equity investment, state lending, and state-directed purchases
*The EU and the United States have similarly agreed to suspend application of tariffs worth $11.5 billion.
Non-preferential origin determinations, imports from Canada or Mexico
OMB’s Office of Information and Regulatory Affairs received for review proposed regulations concerning non-preferential origin determinations for merchandise imported from Canada or Mexico for implementation of the United States-Mexico-Canada Agreement (USMCA).
Certain regulations are subject to review by OMB’s OIRA before being issued; accordingly, knowing the status of OIRA review can help in predicting when the regulations may be issued (in this case, by the U.S. Treasury Department).
According to OIRA, the proposed regulations received for review this week, are identified as:
RIN: 1515-AE63: Non-preferential origin determinations for merchandise imported from Canada or Mexico for implementation of the agreement between the United States of America, the United Mexican States, and Canada
United States suspends tariffs on goods from six countries, digital services tax investigations
United States Trade Representative Katherine Tai announced the conclusion of the one-year Section 301 investigations of Digital Service Taxes (DSTs) adopted by Austria, India, Italy, Spain, Turkey, and the United Kingdom. The final determination in those investigations is to impose additional tariffs on certain goods from these countries, while suspending the tariffs for up to 180 days to provide additional time to complete the ongoing multilateral negotiations on international taxation at the OECD and in the G20 process.
On June 2, 2020, USTR initiated investigations into DSTs adopted or under consideration in ten jurisdictions: Austria, Brazil, the Czech Republic, the European Union, India, Indonesia, Italy, Spain, Turkey, and the United Kingdom.
In January 2021, following comprehensive investigations USTR determined that the DSTs adopted by Austria, India, Italy, Spain, Turkey, and the United Kingdom discriminated against U.S. digital companies, were inconsistent with principles of international taxation, and burdened U.S. companies.
In March 2021, USTR announced proposed trade actions in these six investigations, and undertook a public notice and comment process, during which it collected hundreds of public comments and held seven public hearings. USTR also terminated the remaining four investigations (of Brazil, the Czech Republic, the European Union, and Indonesia) because those jurisdictions had not implemented the DSTs under consideration.
Free trade agreement between Australia and UK
Officials from Australia and the UK this week agreed to main elements of a free trade agreement—the first major trade deal negotiated by the UK government since leaving the European Union (EU).
According to a release from the Australian government, Australian consumers are set to benefit from cheaper products being imported from the UK, with all tariffs to be eliminated within five years, and tariffs on cars, whisky, and the UK’s other main exports eliminated immediately.
Approximately 99% of Australian goods, including wine and short-and-medium-grain milled rice, would enter the UK duty-free once the agreement enters into force.
In addition, beef and sheep meat tariffs in the UK would be eliminated after 10 years, sugar tariffs eliminated over eight years, and dairy tariffs would be eliminated over five years.
According to a release from the UK government, the free trade agreement would:
- Eliminate tariffs on all UK goods
- Eliminate tariffs on Australian goods
- Allow certain UK products to be sold for less into Australia
- Protect UK farmers with a cap on tariff-free imports for 15 years, using tariff rate quotas and other safeguards