There are plenty of trade issues that need attention as the new administration hits the ground and we are paying careful attention to what is being indicated by the major players in trade policy.
US International Trade Nominations
Two key positions of our international trade team have been confirmed including Gina Raimondo, as Secretary of Commerce. In a moment of bipartisan support, US Trade Representative (USTR) designate, Katherine Tai, was unanimously confirmed by the Senate. During the confirmation process, both nominees held fast to their intention to keep pressure on China to uphold their obligations from an earlier Phase One agreement, which had led to suspension of a final round of Section 301 tariffs on Chinese goods. They vowed to protect American interests from unfair practices and trade policies worldwide, and to minimize our dependence on technology overseen by authoritarian regimes.
Miscellaneous Tariff Bill
Both the Commerce Department and the USTR plan to work with Congress to achieve approval of the Miscellaneous Tariff Bill (MTB) and a reauthorization of the Generalized System of Preferences (GSP). These bills, addressing duty eliminations or reductions, have enjoyed bipartisan support in past years so actions to bring a vote in Congress should result in passage. Reauthorization of GSP has in previous years been retroactive to the expiration date; a renewal would result in duty refunds on a significant number of entries. The MTB is not technically a renewal, it is a separate bill from the MTB of 2018, so the reauthorization will not be retroactive to the Jan 1 expiration date.
Secretary Raimondo has indicated that the Section 301 tariffs which had been levied on Chinese products are not going to be lifted anytime soon and any changes made would be in response to positive actions taken by China. The USTR’s stance mirrors that of the Commerce Secretary. What is less clear is whether exclusions or alterations to the 301 tariffs may be considered; the USTR has stated that the exclusion process will be reviewed. While many industry groups and some legislators have pressed to have many expired exclusions reinstated, it is far from certain that any such action will be considered. Exclusions for COVID relief related products, which were extended at the end of 2020, have been further extended to September 30, six months after their scheduled, March 31, expiration. This extension was not controversial and garnered no serious opposition.
Withhold Release Orders
Other issues to watch in trade relations with China are the withhold release orders (WRO) for cotton and tomato products from the Xinjiang Uyghur Autonomous Zone and possible new restrictions on US technology exports. It seems that as far as trade policy with China is concerned there is currently little divergence from that of the Trump administration.
The Section 232 tariffs imposed on some steel and aluminum products imported into the US also seem likely to continue in this administration as well. Secretary Raimondo stated in confirmation hearings that the Section 232 tariffs have been effective. However, these tariffs, which cover much of the steel and aluminum imported in primary forms as well as a subsequent list of derivatives, are not universally popular even within the industries they were designed to protect. They also have been a contentious subject with our traditional allies who had sought to be exempted from the action. The EU for instance retaliated with a slate of additional tariffs on US imports in response to losing their exemption from the 232 tariffs. If there are going to be any changes to these tariffs, it will probably start with exemptions, such as those given to our USMCA partners, being extended to “friendly” countries. This ties in with Biden’s comments on the campaign trail that the US needs to establish closer ties with our allies.
Suspension of Additional Tariffs to EU
The USTR recently announced a suspension of the additional tariffs on a list of products traded between the US and certain EU countries (including the UK) resulting from a lengthy dispute on subsidies given to Airbus and Boeing. The four-month-suspension was arranged to give each side time to agree on a permanent settlement of the dispute. With both imports and exports from each side being assessed additional tariffs, it only makes sense that an agreement should be within reach. Negotiations for a settlement have been going on for months, but the suspension of tariffs is the first announced positive step to a hoped-for conclusion.
World Trade Organization
The USTR is preparing for an upcoming World Trade Organization (WTO) meeting though, currently, there is no appointed deputy USTR to serve as our ambassador to the organization. On the agenda is a proposal to waive some obligations to intellectual property rights due to the COVID pandemic. In recent meetings, the US, EU, and pharmaceutical firms have opposed the waiver so prospects for passage are dim.
Since December of 2019, the WTO has been weakened by the inability of their appellate body to act, as a result of US opposition to any new judicial appointments. The appellate body had been the final word on disputes brought to the WTO and gave teeth to their decisions. President Biden has stated that his administration, like President Trump’s, will not agree to appoint new judges without needed WTO reforms, including standards for determining which countries should maintain developing status. Reforming the WTO is a complex issue due to the competing agendas of the member nations. The President did state strong support for Nigerian Finance Minister, Ngozi Okonjo-Iweala, to become the next Director General of the WTO, which should clear a path for her to become the body’s first female chief.
So far indications are that our trade policy with China will not see significant changes while trade with the EU and other allies will be strengthened. The US is more likely to be involved in multinational agreements such as the Paris Agreement on climate change, the World Health Organization, perhaps even the Trans-Pacific Partnership (TPP), and will likely be more supportive of the WTO. Customs will continue to tighten down on importers and brokers to guard against identity theft that can lead to money laundering and strict enforcement of laws and policies to combat exploitive labor and human trafficking. Time will tell if trade policy continues to be used as a tool for other priorities as has happened recently.
The transition to a less manual trade environment has grown tremendously in the last decade, and that trend will continue as will utilization of data driven decisions on behalf of Customs and other aligned governmental agencies. As is to be expected, the trade landscape is ever changing, and new challenges and opportunities will continue to present themselves.
Our CVI team will continue to monitor changes and new trade policy issues as the year progresses.
Director of Compliance & Customs Services
Need a refresher on tariff rounds and exclusions?
CVI has a free, complete guide to EVERYTHING you need to know for tariff rounds and exclusions, including:
- HTS Code
- Publish Dates
- Exclusion provision number per set list and round
- Effective & Extended Expiration Dates
The CVI Exclusion Guide 2020 provides you with a link to original USTR exclusion announcements with a breakdown of each excluded product.
Please let us know if you have any questions. We will be regularly updating this document via our website. Check it out here!
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Meet one of CVI’s Customs Brokerage & Compliance experts, Sam McClure:
Sam serves as Director, Compliance and Customs Services for CVI. He serves as CVI’s corporate compliance officer and is responsible for overseeing all aspects of our Customs related services, including growth.
Sam started his career in 1977 with Waters Shipping Company in Charlotte, NC. He began as a document runner, soon becoming a leader in operations and customer service for the branch. Sam, along with Linda Masten, founded Central Carolina Shipping Inc. in 1983 as an independent Customs Brokerage firm where he served as Vice President for 26 years. Sam and Linda grew Central Carolina into a successful and highly respected member of the Carolinas trade community. When Charlotte opened their local chapter of the IFFCBA Sam was part of the organizing group and he headed the Customs committee for several years. Sam obtained his Customs Brokers License in 1984 and remained with Central Carolina until the company was acquired by CVI in 2009.
At CVI, Sam has held several positions in both the operations and sales departments. As an expert in U.S. Customs regulations, Sam is often called upon on to provide guidance to importers on Customs compliance issues. He makes regular presentations on matters related to importation and broader regulatory compliance.
– Sam McClure, LCB, Director of Compliance & Customs Services, CVI
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