Key Notes:

  • Effective June 21, 2022, the Uyghur Forced Labor Prevention Act (UFLPA) establishes a rebuttable presumption that all goods produced, mined or manufactured in the Xinjiang region of China or by certain entities designated to the UFLPA Entity List are produced with forced labor and prohibited from entry into the United States.
  • The prohibition on entry includes finished products that are manufactured in whole or in part using inputs sourced directly or indirectly from Xinjiang, even if imported from outside China.
  • CBP has provided guidance on the enforcement process for the UFLPA to aid the trade community to comply with the UFLPA’s requirements and rebut the presumption.
  • DHS has provided importer guidance on the UFLPA including due diligence and supply chain tracing and management.
  • DHS has also established the UFLPA Entity List with several listed companies. Products sourced from companies on the UFLPA Entity List are subject to the rebuttable presumption regardless of where they are produced.

The Uyghur Forced Labor Prevention Act was passed into law on December 21, 2021, to ensure enforcement of Section 307 of the Tariff Act of 1930, which prohibits the importation of all “ … goods, wares, articles, and merchandise mined, produced, or manufactured wholly or in part in any foreign country by convict labor or/and forced labor or/and indentured labor under penal sanctions.”  It creates a rebuttable presumption that all products produced in whole or in part in the Xinjiang Uyghur Autonomous Region (“XUAR” or “Xinjiang”) or by persons designated to the UFLPA Entity List were produced with forced labor and must be denied entry into the United States pursuant to Section 301 of the Tariff Act. The UFLPA’s provisions are effective as of June 21, 2022.

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On June 14, 2022, the Department of the Treasury’s Office of Foreign Assets Control (OFAC) issued amended Russia-related General License No. 8C extending the authorization to conduct transactions involving the Central Bank of Russia and certain Russian banks that are related to energy until December 5, 2022.  The original General License No. 8, issued on February 24, 2022 had previously been amended to expand the scope of Russian entities, but was schedule to expire on June 24, 2022.

The term “related to energy” means the extraction, production, refinement, liquefaction, gasification, regasification, conversion, enrichment, fabrication, transport, or purchase of petroleum, including crude oil, lease condensates, unfinished oils, natural gas liquids, petroleum products, natural gas, or other products capable of producing energy, such as coal, wood, or agricultural products used to manufacture biofuels, or uranium in any form, as well as the development, production, generation, transmission, or exchange of power, through any means, including nuclear, thermal, and renewable energy sources. This definition remains unchanged from the original issuance of General License No. 8.

General License No. 8C authorizes energy-related transactions through 12:01 a.m. EST, December 5, 2022, unless renewed.  In the event that this general license is not renewed, OFAC has indicated that it intends to issue a general license authorizing the orderly wind down of activities covered by General License No. 8C.

In a June 9, 2022 opinion, the U.S. Court of Appeals for the Federal Circuit (Federal Circuit or CAFC) upheld the decision by the U.S. Court of International Trade (CIT) dismissing Universal Steel Products Holding’s challenge to Section 232 tariffs that the Trump administration placed on steel imports.  The plaintiffs had earlier challenged both the report by the U.S. Department of Commerce (Commerce) supporting the Section 232 steel tariffs (Steel Report) and former President Trump’s executive order, Proclamation 9705, and its subsequent modifications (collectively, “Proclamations”), claiming that they violated various Section 232 procedural requirements and the Administrative Procedure Act (APA).  A CIT three-judge panel had earlier dismissed the challenge (see Update of February 5, 2021).

In its opinion, the CAFC affirmed the CIT’s decision.  While the plaintiffs argued that the Secretary of Commerce’s threat finding constituted a final agency action subject to review under the APA, the CIT ruled that the report “was not a final, reviewable action under the APA because the ‘imposition of tariffs, which is the action that gave rise to the legal consequences that Plaintiffs challenge, was an action taken by the President, and not by the Secretary,’ such that the report did not carry legal consequences itself.”  The CAFC found that the CIT was incorrect on this point and references relevant case law that a predicate affirmative agency finding of injury or threat is reviewable.

The remainder of the opinion focuses on the plaintiffs’ argument that the threat determination by both former President Trump and the Secretary of Commerce was contrary to the clear language of the relevant Section 232 statute.  The plaintiffs had argued at the CIT that the “threat” must be “imminent” or “near at hand” and “likely to happen soon.”  The CAFC held that the statute “imposes no imminence requirement.”  The CAFC found that the plaintiffs did not challenge former President Trump’s determination “for any reason other than [this] alleged statutory violation.”  As for the Secretary of Commerce’s threat determination, the judges held that such a determination “is not reviewable under the APA arbitrary and capricious standard. This is so because the standard governing the Secretary’s action is the same as for the President’s action (i.e., the existence of a “threat”), and the President’s action is only reviewable for compliance with the statute.”

The CAFC considered plaintiffs’ argument that “the President failed to satisfy the ‘nature and duration’ requirement of the statute with Proclamation 9705”  by failing to indicate a time period for the tariffs.  In their analysis, the judges found that this action “is committed to the President, and the Secretary plays no part.”  They held that this matter is left to “the President’s discretion, and the President’s exercise of his judgment to ‘determine the nature and duration’ of the action he believes necessary is beyond the scope of our review.”

The opinion concludes, “We have authority to review the determinations by both the President and the Secretary that steel imports threaten national security and the determination by the President to set a steel tariff for an indefinite duration. We find no violations of the statute.”

While concurring with the decision, Judge Raymond Chen offered brief additional views, expressing concern that the key precedent supporting the decision, Corus Grp. PLC v. Int’l Trade Comm’n, is inconsistent with U.S. Supreme Court precedents on “the non-finality of a Secretary’s or Commission’s tentative report and recommendation to the President.”  His comments reference, in particular, two other Supreme Court decisions that found “the Secretary’s or Commission’s report and recommendations to the President did not constitute final agency action, reviewable under the APA, because those recommendations were not themselves binding actions that directly affected the parties.”  However, Judge Chen concluded that the CAFC is bound by the Corus Group decision despite his concern that it was incorrectly decided in the wake of these Supreme Court precedents.

On June 6, 2022, President Joseph Biden announced that he was declaring an emergency “with respect to the threats to the availability of sufficient electricity generation capacity to meet expected customer demand” in the United States.  Announcing that a “robust and reliable electric power system” is critical to national security and national defense, the president took several actions to address ongoing requirements, including addressing growing needs in the solar energy industry.  In a Declaration of Emergency, President Biden announced that for 24 months he was authorizing the Secretary of Commerce to allow for the importation, free from any duties, of certain solar cells and modules exported from the Kingdom of Cambodia, Malaysia, the Kingdom of Thailand and the Socialist Republic of Vietnam.  This decision is related to and impacts the Department of Commerce’s ongoing investigation into whether imports of solar cells and/or modules from these countries are circumventing the antidumping duty (AD) and countervailing duty (CVD) orders on crystalline silicon photovoltaic cells, whether or not assembled into modules (solar cells and modules), from the People’s Republic of China (China).

As a result of the president’s declaration, imports of solar cells and modules from these countries will not be subject to additional antidumping or countervailing duties during this two-year period.  In a brief press statement, Assistant Secretary of Commerce for Enforcement and Compliance Lisa Wang noted President Biden’s emergency declaration, stating that the Department of Commerce will soon issue regulations to temporarily permit duty-free access to solar cells and modules from these four countries.  She added that the Department’s “anti-circumvention proceeding continues uninterrupted, and whatever conclusion Commerce reaches when the investigation concludes will apply once this short-term emergency period is over.  [However,] with the President’s declaration, no solar cells or modules imported from Cambodia, Malaysia, Thailand, and Vietnam will be subject to new antidumping or countervailing duties during the period of the emergency. Existing duties on Chinese and Taiwanese imports of solar cells and modules remain in effect.”

Invoking the Defense Production Act

In addition to this action, President Biden announced that he was authorizing the use of the Defense Production Act (DPA) to accelerate domestic production of clean energy technology.  On June 6, 2022, the president authorized the Department of Energy to use the DPA to expand U.S. manufacturing of five critical clean energy technologies:

The White House announced that the Department of Energy will “soon convene relevant industry, labor, environmental justice, and other key stakeholders” to maximize the impact of the DPA tools made available for this initiative.  A Department of Energy statement on the presidential determinations authorizing the DPA to accelerate domestic production of these five key energy technologies is available here.

On June 2, 2022, the Department of Commerce’s Bureau of Industry and Security (BIS) issued a Final Rule adding 71 entities located in Russia and Belarus to the Entity List in further response to Russia’s invasion of Ukraine. These entities have been determined by the U.S. government to be acting contrary to the national security interests or foreign policy of the United States. According to BIS, these additions bring the total number of parties added to the Entity List for support of Russia’s military to 322 entities.

Sixty-six entities are being added to the Entity List on the basis of §§ 744.11(b) and 744.21 and will receive a footnote 3 designation because BIS determined they are Russian or Belarusian “military end users” that have acquired or attempted to acquire U.S.-origin items in support of Russia’s military. A footnote 3 designation subjects these entities to the Russia/Belarus foreign “direct product” (FDP) rule (see Updates of February 25, 2022 and March 4, 2022) requiring a license for the export, reexport, export from abroad or transfers (in-country) of all items subject to the Export Administration Regulations (EAR). The other five entities are being added for acquiring and attempting to acquire U.S.-origin items in support of activities contrary to U.S. national security and foreign policy interest.

Their addition to the Entity List means these entities are subject to a license requirement – currently under a “policy of denial,” with no license exceptions available – for the export, reexport, export from abroad (as described under Russia/Belarus FDP rule), or transfers (in-country) of all items subject to the EAR destined to these entities.

The rule is effective as of June 2, 2022. BIS has stated that shipments of items subject to the Final Rule that, pursuant to actual orders were en route aboard a carrier to a port of export, reexport, or transfer (in-country) on June 2, 2022, may proceed to that destination under the previous export eligibility without a license (NLR).

On June 2, 2022, the Department of the Treasury’s Office of Foreign Assets Control (OFAC) designated and blocked numerous additional Russian and related entities that are “key networks” relied upon by President Vladimir Putin and other Russian elites “to attempt to hide and move money and anonymously make use of luxury assets around the globe.” Notable among the designated entities are: (i) Severgroup (an investment company with holdings in metallurgy, engineering, mining, banking, technology, media and finance); (ii) PJSC Severstal (a company operating in the steel and mining industry); (iii) Nord Gold PLC (a gold producing subsidiary of Severstal with operations in Russia, Africa, South America, and North America); and (iv) Limited Liability Company Algoritm (a Russian technology, media, and advertising company).

Also added to the SDN List were additional Russian government ministers as well as the presidents of United Aircraft Corporation and Severgroup. The OFAC designation also include several yachts, aircraft and a helicopter – and related operating entities – with ownership ties or interests to President Putin or the government of Russia.

Detailed identifying information on these entities can be found here. All property and interests in property of these newly designated SDN List entities that are in the United States or in the possession or control of U.S. persons are blocked and must be reported to OFAC. In addition, any entities that are owned, directly or indirectly, 50% or more by one or more blocked persons are also blocked. All transactions by U.S. persons or within (or transiting) the United States that involve any property or interests in property of designated or otherwise blocked persons are prohibited unless authorized by a general or specific license issued by OFAC, or exempt.

Russia-Related General Licenses

OFAC has revised General License (GL) 25B authorizing certain transactions related to telecommunications and Internet-based communications to specifically exclude LLC Algoritm. The following new Russia-related GLs have been issued:

  • GL 36 – authorizes, until August 31, 2022, all transactions ordinarily incident and necessary to the wind-down of transactions involving JSC Severstal.
  • GL 37 – authorizes, until July 1, 2022, all transactions ordinarily incident and necessary to the wind-down of transactions involving Nord Gold PLC.
  • GL 38 – authorizes all transactions ordinarily incident and necessary for the processing of pension payments to U.S. persons via certain OFAC-blocked financial institutions.

On June 1, 2022, the Office of the U.S. Trade Representative (USTR) announced the U.S.-Taiwan Initiative on 21st-Century Trade, which is “intended to develop concrete ways to deepen the economic and trade relationship, advance mutual trade priorities based on shared values, and promote innovation and inclusive economic growth for our workers and businesses.”  Under the initiative, the two parties will seek to reach agreements “with high-standard commitments and economically meaningful outcomes” in the following trade areas:

  • Trade facilitation – including accelerated implementation of the World Trade Organization’s Trade Facilitation Agreement, adopting provisions on digitalization of trade facilitation measures, and ensuring inclusivity in accessing customs procedures.
  • Regulatory practices – including timely online accessibility to information about regulations and processes, providing adequate time for public consultations and consideration of comments, and ensuring that regulatory decisions are based on high quality information, science and evidence.
  • Agriculture – including provisions to facilitate agricultural trade through science and risk-based decision-making and through the adoption of sound, transparent regulatory practices.
  • Anti-corruption – including provisions that preclude the tax deductibility of bribes and establish measures regarding the recovery of proceeds of corruption and the denial of a safe haven for foreign public officials who engage in corruption.
  • Supporting SMEs in trade –  including efforts to identify and overcome barriers to trade for small and medium-sized enterprises (SMEs), focusing on trade facilitation for SMEs, sharing and promoting best practices, and working together on activities to promote and support SMEs, including those owned by under-represented groups and women entrepreneurs and those in disadvantaged communities.
  • Harnessing the benefits of digital trade – including efforts to build consumer trust in the digital economy, promoting access to information, facilitating use of digital technologies, promoting resilient and secure digital infrastructure, and addressing discriminatory and trade-distortive practices in the digital economy.
  • Promoting worker-centric trade – including efforts to develop more durable and inclusive trade policies, protecting labor rights, and eliminating forced labor in global supply chains.
  • Supporting the environment and climate action – including promoting decarbonizing economies, exchanging information, and supporting businesses, green jobs and the growth of low-carbon economies.
  • Standards – including the adoption and application of standards, technical regulations, and conformity assessment procedures that are non-discriminatory, do not create unnecessary barriers to trade, and serve legitimate policy objectives.
  • State-owned enterprises – including developing provisions to create a level playing field for workers and businesses when competing against these entities in the international marketplace by ensuring that these entities act in a commercial manner, are regulated impartially, and do not provide or receive trade-distorting non-commercial assistance.
  • Non-market policies and practices – including collaboration on ways to address these harmful non-market policies and practices.

The first meeting of the U.S.-Taiwan Initiative on 21st-Century Trade is expected to occur later this month.

On June 1, 2022, the Department of Commerce’s Bureau of Industry and Security (BIS) issued a Final Rule amending the Export Administration Regulations (EAR) to adopt a congressional notification requirement for license applications of semiautomatic firearms meeting certain requirements.  This final rule is effective on July 18, 2022.

This Final Rule adds a new section 15 C.F.R. § 743.6 adopting a congressional notification requirement for export license applications involving semiautomatic firearms that are (i) classified under Export Control Classification Number (ECCN) 0A501.a and (ii) valued at $4 million or more.  The congressional notification requirement will not apply to license applications if the 0A501.a semiautomatic firearms are destined for countries in Country Group A:5 or A:6 (i.e., close U.S. allies – see supplement no.1 to part 740 of the EAR), with the exception of Mexico, South Africa, and Turkey.  Nor will this requirement apply to exports to personnel and agencies of the U.S. Government under License Exception GOV or when for the official use by an agency of the North Atlantic Treaty Organization (NATO).  The Final Rule cautions that license applicants should not break-up any sales contract values in order to come under the $4 million dollar threshold.

BIS stated that it determined that congressional notification of such exports is warranted due to the fact that such semiautomatic firearms were previously subject to control under the International Traffic in Arms Regulations (ITAR) and are often used by military and law enforcement personnel.  BIS has stated that this notification requirement does not change the interagency license process for impacted firearms or how license applicants need to structure or generally apply for a BIS export license.

The Office of the U.S. Trade Representative (USTR) has announced that it will again extend Section 301 product exclusions for imports from China of medical care products needed to address the COVID-19 pandemic. The USTR will extend product exclusions on 81 medical care products, as set forth in Annex B of USTR’s announcement, for an additional six months.  These product exclusions were set to expire on May 31, 2022, but will now be extended through November 30, 2022.  The exclusion extensions are available for any product that meets the description in the product exclusion.  Further, the scope of each exclusion and modification is governed by the scope of the 10-digit Harmonized Tariff Schedule of the United States (HTSUS) statistical reporting numbers and product descriptions in the relevant section of Chapter 99 of the HTSUS.

See past Update of November 12, 2021, for additional details on past extensions.