AFS Trade Webinar: Update on Section 232 Steel & Aluminum Tariffs and Retaliation Measures

Transcription

1 AFS Trade Webinar: Update on Section 232 Steel & Aluminum Tariffs and Retaliation Measures Presented by Teresa Polino, Partner, Arent Fox Aman Kakar, Associate, Arent Fox ARENT FOX LLP LA / NY / SF / DC

2 Agenda Section 232 Tariffs on Steel and Aluminum Retaliation from Trading Partners Section 301 Tariffs on China China s Retaliation for Section 301 Tariffs Enforcement Options ARENT FOX LLP LA / NY / SF / DC 2

3 Section 232: National Security Actions Background: What are they? On March 8, President Trump issued Presidential Proclamations imposing a 25 percent ad valorem tariff on certain steel articles and a 10 percent ad valorem tariff on certain aluminum articles. The Proclamations were issued pursuant to Section 232 of the Trade Expansion Act of In Section 232 proceedings, the Department of Commerce issues a report to the President with investigation findings on whether certain imports threaten to impair America s national security. Once the DOC issues the report, the President has wide latitude to take actions to curb imports. ARENT FOX LLP LA / NY / SF / DC 3

4 Section 232: National Security Actions Background: What are they? In Section 232 investigations, the DOC must consider the following factors: domestic production needed for projected national defense requirements capacity of domestic industries to meet such requirements availability of the human resources, products, raw materials, and other supplies and services essential to the national defense the requirements of growth of such industries and such supplies and services the impact of foreign competition on the economic welfare of individual domestic industries; and any substantial unemployment, decrease in revenues of government, loss of skills or investment, or other serious effects resulting from the displacement of any domestic products by excessive imports ARENT FOX LLP LA / NY / SF / DC 4

5 Section 232: Country Exemptions Initially, the U.S. exempted Australia, Argentina, Brazil, Canada, EU, Mexico and South Korea from the 232 tariffs on covered steel and aluminum imports. However, on March 31, 2018, the President issued a proclamation applying the Section 232 tariffs to Canada, Mexico and EU. As of June 1, 2018, Steel Section 232 tariffs are applied to all countries except Argentina, Australia, Brazil and South Korea. Argentina, Brazil and South Korea agreed to absolute quotas for Steel with the administration. Aluminum Section 232 tariffs are applied to all countries except Argentina and Australia. Argentina agreed to absolute quotas for aluminum with the administration. ARENT FOX LLP LA / NY / SF / DC 5

6 Section 232: Who is impacted? Everyone that manufactures, exports and/or imports into the U.S. any of the covered products cited in either of these two investigation reports. Product exclusion process is available. Importer of Record is liable for payment of all duties. ARENT FOX LLP LA / NY / SF / DC 6

7 Section 232: Product Exclusion The Department of Commerce has issued procedures for requesting exclusions for specific products currently subject to the Section 232 tariffs on steel and aluminum. The exclusions will be approved on a product specific basis, limited to the company that requested it and likely limited to volume requested and valid only for a year. No deadline for submitting product exclusion request. Objections to product exclusion must be filed within 30 days of posting of the request for comment. Commerce intends to decide on each request within 90 days of filing. If approved, relief will be retroactive to the date the exclusion is posted for public comment. ARENT FOX LLP LA / NY / SF / DC 7

8 Section 232: Product Exclusion As of June 18, 2018: Steel 20,003 Aluminum 2,503 exclusions requested 42 GRANTED/56 DENIED ARENT FOX LLP LA / NY / SF / DC 8

9 Section 232: Auto/Auto Parts Case On May 23, 2018, the Department of Commerce initiated a Section 232 investigation into imports of automobiles, including SUVs, vans and light trucks, and automotive parts. Within 270 days (Feb. 17, 2019) the DOC must submit a report the President with its findings and recommendation. The President has 90 days after receiving the DOC report to determine whether he concurs with findings and must take action to adjust imports 15 days after taking action. ARENT FOX LLP LA / NY / SF / DC 9

10 Section 232: Auto/Auto Parts Timeline June 29: written comments, data, analyses due June 29: request to appear at public hearing due July 13: rebuttal comments due July 19 & 20: public hearing in Washington, D.C. Tariffs on Auto/Auto Parts likely to be announced by September, ahead of mid-terms ARENT FOX LLP LA / NY / SF / DC 10

11 Section 232: Retaliatory Actions Canada Mexico EU PRC July 1 June 5 June 22 April 2 $12.8 Billion $3 Billion $3.2 Billion $3 Billion India Aug. 4 $240 Million Turkey No Date $266 Million Russia and Japan No Date/ Products ARENT FOX LLP LA / NY / SF / DC 11

12 Effective Date of Tariffs: July 1 st Annual U.S. Export Value: Approximately $12.8 billion Retaliation from Canada Type of Retaliation: 25% tariffs on steel products and 10% tariffs on other products Products Covered (Example): List not finalized; final comments submitted June 15 (25% Tariff) Stainless steel and stainless steel products, including bar, rods, wire, and casing or tubing used in drilling for oil or gas Iron and non-alloy steel products, including bars, rods, wire, tubes, and pipes Alloy steel and alloy steel products, including bars, rods, and wire Angles, shapes, and section of other alloy steel Other casing or tubing, of a kind used in drilling for oil or gas (10% Tariff) Aluminum products, including bars, rods, profiles, wire, pipes, tubes, pipe fittings, sheets and strips, aluminum structures, and other articles of aluminum Parts of iron or steel for stoves, ranges, grates, cookers, barbeques, braziers, plate warmers, and other similar non-electric domestic appliances Refrigerator-freezers, water heaters, dishwashing machines, laundry washing machines Boats, including sailboats and motor boats ARENT FOX LLP LA / NY / SF / DC 12

13 Other Products Covered: Retaliation from Canada (10% Tariff) Processed foods, including yogurt, prepared foods, orange juice, ketchup, mayonnaise, mustard, soups, waters and whiskies Consumer goods, shaving cream, dishwasher detergents, soaps, perfumes, candles, toilet paper, tableware and kitchenware, tablecloths, mowers, sleeping bags, mattresses, pens Chemicals and other similar products, including insecticides and herbicides ARENT FOX LLP LA / NY / SF / DC 13

14 Effective Date of Tariffs: June 5th Retaliation from Mexico Annual U.S. Export Value: Approximately $3 billion Type of Retaliation: Tariffs of 7% to 25% Products Covered: Steel products, including plates, rods, bars, tubes and pipes (25% Tariff) Products coated in aluminum (15% Tariff) Other Products: Fans (10%) Motor boats, except for outboard motor (15%) Lamps and lighting fixtures (15%) Food preparations (15%) Pork and ham products (15-20%) Apples (20%) Cranberries (20%) Potatoes (20%) Cheese products, including fresh, grated or powder (20-25%) Tennessee or bourbon whiskey (25%) ARENT FOX LLP LA / NY / SF / DC 14

15 Effective Date of Tariffs: June 22 Annual U.S. Export Value: $3.2 billion Retaliation from the European Union Type of Retaliation: Tariffs of 25%-50% for initial list, tariffs of 10%-25% for second list Products Covered: (25% Tariff) Steel and steel products Iron and non-alloy steel and products, including tubes, pipes and hollow profiles Stainless steel and stainless steel products, including bars and rods, pallets, flat-rolled steel, nuts, wire, tubes and pipes Products of alloy steel other than stainless Aluminum, including plates, sheets and strip Products of iron and steel including cooking ware Doors, windows, and their frames of iron or steel Motor boats, sailboats, yachts, row boats and canoes Motorcycles ARENT FOX LLP LA / NY / SF / DC 15

16 Retaliation from the European Union Other Products Covered (25% Tariff): Ovens, air heaters, and sinks Textiles, apparel and footwear (t-shirts, jeans, cotton pants and trousers, shoes, bedlinen) Make-up, manicure and pedicure preparations Bourbon and whiskey Corn, sweetcorn, kidney beans and rice Cranberries and cranberry juice, peanut butter, orange juice Tobacco (tobacco from leaves, water-pipe tobacco, chewing tobacco, cigarettes, and cigars) ARENT FOX LLP LA / NY / SF / DC 16

17 Retaliation from China Effective Date of Tariffs: April 2nd Annual U.S. Export Value: Approximately $3 billion Type of Retaliation: 25% tariffs on pork and aluminum scrap and 15% tariffs on other products Products Covered: (25% Tariff) Aluminum scrap (15% Tariff) Stainless steel products, including pipes Other steel products Seamless tubes, pipes and hollow profiles of iron and steel ARENT FOX LLP LA / NY / SF / DC 17

18 Other Products Covered: Retaliation from China (25% Tariff) Modified ethanol and other alcohols of any concentration Pork products (15% Tariff) Sparkling wine and other wine Nuts Ginseng Coconuts, plantains, nuts, strawberries, watermelon, apples, and other fruits ARENT FOX LLP LA / NY / SF / DC 18

19 Effective Date of Tariffs: August 4 Annual U.S. Export Value: $240 million Type of Retaliation: Tariffs of 10%-50% Products Covered: Motorcycles (50%) Cast articles of iron or steel(15%) Threaded Nuts (15%) Stainless Steel Fittings (15%) Apples (25%) Walnuts (20%) Almonds (20%) Lentils (10%) Chickpeas (10%) Retaliation from India ARENT FOX LLP LA / NY / SF / DC 19

20 Effective Date of Tariffs: Not announced Annual U.S. Export Value: $266 million Type of Retaliation: Tariffs of 5%-50% Products Covered: list not final Retaliation from Turkey Motor cars and vehicles for the transport of people (35%) Structures and parts of structures of iron and steel (30%) Machines and mechanical appliances (10%) Apparatus based on use of x-rays (5%) ARENT FOX LLP LA / NY / SF / DC 20

21 Other Products Covered: Retaliation from Turkey Undenatured ethyl alcohol, including spirits, liqueurs, and other spirituous beverages (40%) Poly vinyl chloride (32%) Beauty or make-up preparations, including sunscreen (30%) Certain articles of plastics (30%) Unmanufactured tobacco (25%) Rice (20%) Fuel wood (15%) Food preparations (10%) Polyamides (10%) Paper, uncoated paper, kraft liner board and paperboard (10%) Coal, coke, and petroleum coke (5-10%) Nuts (5%) ARENT FOX LLP LA / NY / SF / DC 21

22 Effective Date of Tariffs: Not specified Annual U.S. Export Value: Not specified Type of Retaliation: Not specified Products Covered: Not specified Retaliation from Japan and Russia Response from Japan and Russia ARENT FOX LLP LA / NY / SF / DC 22

23 Background: What are they? Section 301- Retaliatory Duties Section 301 of the Trade Act of 1974 provides the United States with the authority to enforce trade agreements and respond to restrictive foreign trade barriers or unreasonable or discriminatory practices that burden or restrict U.S. commerce. Section 301 cases can be self-initiated by the USTR or by an industry petition. If USTR determines that the foreign trade policies in question do have the above effects, the USTR may take action to obtain the elimination of that act, policy, or practice. Authorized retaliatory actions under Section 301 include the imposition of duties or import restrictions. ARENT FOX LLP LA / NY / SF / DC 23

24 China Investigation Section 301- Retaliatory Duties USTR initiated an investigation under Section 301 into the acts, policies, and practices of China related to technology transfer, intellectual property, and innovation in August In March 2018, USTR released a report detailing harmful and restrictive Chinese policies resulting in harm to the U.S. economy of at least $50 billion per year. In response, President Trump directed the USTR to publish a proposed list of Chinese products to be subject to additional 25 percent ad valorem tariffs, among other actions. On April 3, 2018, the USTR published a proposed list of products that could be subject to the Section 301 tariff. ARENT FOX LLP LA / NY / SF / DC 24

25 Section 301- Product List On June 15, USTR released a list of 818 tariff lines from PRC on which 25% ad valorem duties will be assessed starting July 6. In addition USTR, will establish a process to request exclusion of particular product covered under Sec. 301 action that are available only from China or cause sever economic harm to U.S. interest. In addition, USTR released a list of 284 additional tariff lines that it proposes to add to the Sec. 301 list. Additional 284 tariff lines will undergo a public notice and comment process: June 29: Request to appear and summary of expected testimony July 23: Submission of written comments July 24: Public Hearing at 9:30 AM in Washington, D.C. July 31: Post-hearing Rebuttal Comments ARENT FOX LLP LA / NY / SF / DC 25

26 Covered Products Section 301- Product List Source: The Peterson Institute for International Economics at (Trump, China, and Tariffs: From Soybeans to Semiconductors). ARENT FOX LLP LA / NY / SF / DC 26

27 Products Removed Section 301- Product List Source: The Peterson Institute for International Economics at (Trump, China, and Tariffs: From Soybeans to Semiconductors). ARENT FOX LLP LA / NY / SF / DC 27

28 Section 301- Product List Products Removed $1.3 billion worth of aluminum removed from the original list Final Sec. 301 List only covers aluminum electrolytic fixed capacitors (HTS ) and brazed aluminum plate-fin heat exchangers (HTS ). All other aluminum products were removed Other products excluded: more than 150 products containing steel, medicines and medical equipment, clothing and textiles, garbage disposal and weapons. Steel products were removed after domestic companies supported tariffs during hearings. ARENT FOX LLP LA / NY / SF / DC 28

29 Products Added Section 301- Product List Source: The Peterson Institute for International Economics at (Trump, China, and Tariffs: From Soybeans to Semiconductors). ARENT FOX LLP LA / NY / SF / DC 29

30 Section 301- Response from China China has initiated a WTO case against the Section 301 actions (DS543). On June 16, China announced that it would impose 25% tariffs on $34 billion worth of U.S. goods which will also take effect on July 6, In addition, China also released a second list on which it will impose 25% tariffs at a later date. Products are heavily concentrated in transportation-related goods and meat, seafood, agricultural products. ARENT FOX LLP LA / NY / SF / DC 30

31 Section 301- U.S. Response to China On June 18, 2018, President Trump directed USTR to formulate a list of goods on which the United States will impose a 10% tariff on an additional $200 billion worth of goods from China in response to China s retaliation. USTR will announce a list of additional tariffs and provide a public comment process for the new list. China has already announced that it will take swift action to counteract the newest announcement ARENT FOX LLP LA / NY / SF / DC 31

32 Status of Case Against China Section 301- Retaliatory Duties The White House previously announced the implementation of specific investment restrictions and enhanced export controls for Chinese persons and entities, which will be announced by June 30, ARENT FOX LLP LA / NY / SF / DC 32

33 Enforcement Options Antidumping and Countervailing Duty Investigations Section 201 Investigations Accurate Origin Markings ARENT FOX LLP LA / NY / SF / DC 33

34 Enforcement Options: AD/CVD Definitions Dumping When a foreign producer sells a product in the U.S. at a price below that producer's sales price in the country of origin ("home market"), or at a price lower than the cost of production. The difference between the price (or cost) in the foreign market and the price in the U.S. market is called the dumping margin. Subsidy - Foreign governments subsidize industries when they provide financial assistance to benefit the production, manufacture or exportation of goods. Subsidies can take many forms, such as direct cash payments, credits against taxes, and loans at terms that do not reflect market conditions. ARENT FOX LLP LA / NY / SF / DC 34

35 Enforcement Options: AD/CVD World Trade Organization ( WTO ) Agreement allows governments to act against dumping and government subsidies where there is genuine ( material ) injury to the competing domestic industry. Local laws to address unfair pricing (antidumping) and foreign government subsidies (countervailing). AD/CVD Order imposes duties equal to the amount of the dumping (companyspecific) or subsidies (country-specific), in addition to usual Customs duties, taxes, fees, VAT, etc. Offset amount = AD or CVD duty margin expressed as a % applied to entered value of imported goods ARENT FOX LLP LA / NY / SF / DC 35

36 Background: What are they? Section 201: Safeguard Actions Under Section 201 of the Trade Act of 1974, domestic industries seriously injured or threatened with serious injury by a surge in imports may petition the USITC for import relief. The USITC determines whether an article is being imported in such increased quantities that it is a substantial cause of serious injury, or threat thereof, to the U.S. industry producing an article like or directly competitive with the imported article. A substantial cause is defined as a cause which is important and not less than any other cause It is important to note that both the injury standard (i.e. serious injury or thereat thereof ) and the causation standard are higher in a Section 201 investigations as compared to AD/CVD material injury determinations. Unlike AD/CVD cases, there is no requirement that the USITC find that the imports are unfairly traded i.e. dumped or subsidized) in order for Section 201 relief to be granted. ARENT FOX LLP LA / NY / SF / DC 36

37 Background: What are they? Section 201: Safeguard Actions If the USITC makes an affirmative determination of serious injury under Section 201, the investigation proceeds to a remedy phase. During the remedy phase the USITC recommends to the President specific actions to address the serious injury to the domestic industry. Traditionally, the remedies have taken the form of tariffs, quotas, tariff rate quotas, trade adjustment assistance or a combination of remedies. Remedies can be ordered for a max. of 4 years, possible to extend once (max. 8 years total). Certain countries and or products may be excluded from the remedy. ARENT FOX LLP LA / NY / SF / DC 37

38 Background: What are they? Section 201: Safeguard Actions Global safeguard investigations are not country specific. However, the USITC Commissioners who make affirmative injury determinations are required to make additional separate findings for countries with which the U.S. has free trade agreements. The President has the ultimate authority to decide whether to impose a remedy and the type and duration of the remedy. President can order a remedy different than what the ITC recommends but he must explain his decision in a report to Congress. President must act within 60 days of USITC recommendation and remedies go in effect no later then 15 days from the Presidential Proclamation. ARENT FOX LLP LA / NY / SF / DC 38

39 Enforcement Options: Foreign Origin Marking Common Issues on Foreign Origin Marking No country of origin marking Marking with incorrect country of origin Insufficient or inadequate marking Not permanent or conspicuous enough Not in English Not legible Not in close proximity or equal size to U.S. place name. ARENT FOX LLP LA / NY / SF / DC 39

40 Enforcement Options: Foreign Origin Marking CBP may initiate enforcement action based on: Tips from competitors Routine inspections at the Port. If CBP discovers goods were improperly marked, it will issue a Notice to Mark and/or Notice to Redeliver. Penalties apply to unintentional mislabeling and criminal penalties apply for fraud/intentional removal, alteration or destruction of markings ARENT FOX LLP LA / NY / SF / DC 40

41 Enforcement Options: Foreign Origin Marking Private Party Enforcement of Customs Marking Requirements A private party may alert CBP of country of origin marking violations by: Submitting an e-allegation at Informing of the violation via a moiety claim Initiating whistleblower action under the FCA Treble damages plus minimum civil penalty $10,957 maximum $21,916 per false claim or statement. U.S. v. Victaulic reverse false claims action against importer who failed to mark or properly mark imported pipe fittings with the country of origin ARENT FOX LLP LA / NY / SF / DC 41

42 Enforcement Options: Made in the USA Claims FTC Enforcement: Private Party Initiation Private individuals, including competitors, can pursue various actions against known or suspected violations of the Made in U.S.A. mark or other false origin designation. Write warning letters to the alleged violator File a detailed complaint with the FTC outlining the allegations and providing any evidence in support Complaints may be filed online at Bring lawsuit for false designation of origin (federal law) and / or for false advertising (state law). See, e.g., 15 USC 1125 (a). ARENT FOX LLP LA / NY / SF / DC 42