On Saturday, March 9, 2024, President Biden signed a six-bill appropriations package to fund the U.S. government through September 30, 2024.  In doing so, he codified a notable trade-related policy rider that adds the Secretary of Agriculture “on a case by case basis” to the Committee on Foreign Investment in the United States (“CFIUS” or the “Committee”) to review certain foreign investments “involving agricultural land, agriculture biotechnology, or the agriculture industry (including agricultural transportation, agricultural storage, and agricultural processing)” to ensure such transactions do not compromise national security interests. The inclusion of the Secretary of Agriculture to CFIUS thus maintains the Committee’s composition of nine voting members from various federal departments and offices. Going forward, the Secretary of Agriculture will participate in a manner similar to leaders of a handful of White House offices who observe and, when appropriate, take part in CFIUS activities. 

The addition of the Secretary of Agriculture to CFIUS follows increasing bipartisan calls from Congress to expand the Committee’s composition and jurisdiction over concerns about foreign adversaries investing in U.S. real estate near military or sensitive government facilities, especially vis-à-vis foreign investment in U.S. agricultural lands. The Fufeng Incident of 2022 exemplifies Congress’ concern on this matter; in December 2022, CFIUS concluded it lacked the requisite jurisdiction to block a purchase of approximately 370 acres of land in North Dakota by a U.S. subsidiary of the Chinese company, Fufeng Group, even though the real estate is approximately 12 miles from the Grand Forks Air Force Base—a sophisticated Intelligence, Surveillance, and Reconnaissance base. For greater detail and analysis of the Fufeng Incident of 2022, see Client Bulletin of December 21, 2022 and Update of May 8, 2023.

CFIUS is an interagency committee authorized to review certain transactions involving foreign investment in the United States and certain real estate transactions by foreign persons, in order to determine the effect of such transactions on the national security of the United States. For more details on CFIUS’ functions see Thompson Hine’s CFIUS/National Security Practice.

On March 12, 2024, five national labor unions filed a petition with the Office of the U.S. Trade Representative (USTR) under Section 301 of the Trade Act of 1974 requesting an investigation into the acts, policies, and practices of China in the maritime, logistics, and shipbuilding sector. Section 301 allows the United States to respond to unreasonable or discriminatory foreign government practices that burden or restrict U.S. commerce. Arguing that the “American commercial shipbuilding industry is a shell of its former self,” the petition states that, in the past 50 years, “the number of commercial shipyards in the United States has plunged by more than 70 percent, tens of thousands of jobs have been lost, and the United States now produces only a fraction of one percent of the world’s commercial vessels.” 

The petition alleges that “[t]he biggest obstacle to the industry’s recovery is the unfair trade practices of the world’s largest shipbuilding nation: China.” China’s actions, beginning as far back as 2001, have “seized market share, suppressed prices, and created a worldwide network of ports and logistics infrastructure that threaten to discriminate against U.S. ships and shipping companies, disrupt supply chains, and undermine vital national security interests.” The petition alleges that Chinese state-owned enterprises and other facilities in China are now capable of producing over 1,000 ocean-going vessels a year, while the United States currently produces fewer than ten. The Chinese government’s Five Year Plans and Made in China 2025 policies have identified its shipbuilding industry as a key industry, and the petition alleges that China “has funneled hundreds of billions of dollars and adopted numerous supporting policies to achieve the goals laid out in plans for shipbuilding.” This supposedly includes various Chinese government interventions, including policy loans from state-owned banks, equity infusions and debt-for-equity swaps, the provision of steel plate from state-owned steel producers at below market prices, tax preferences, and other government support.

The petition further alleges that via China’s Maritime Silk Road initiative, China has promoted state-owned shipping and logistics companies, invested in strategically located foreign ports and terminals, dominated the supply of cranes used at such ports, and promoted government-sponsored logistics platform, LOGINK. As a result, the petition argues that related Chinese companies “have become leaders in financing, building, operating, and owning port terminals around the world.” Such market share allegedly gives China leverage in key industry sectors, access to sensitive maritime traffic data, and could allow China to abruptly disrupt critical supply chains, or otherwise “inflict severe and widespread economic coercion or damage against commercial or state actors that do not align with China’s geopolitical goals.”

USTR Katherine Tai confirmed USTR’s receipt of the 4,000 page petition and noted that, “We have seen [China] create dependencies and vulnerabilities in multiple sectors, like steel, aluminum, solar, batteries, and critical minerals, harming American workers and businesses and creating real risks for our supply chains.” USTR has 45 days to review the allegations set forth in the petition and determine whether to initiate an investigation to determine whether China’s acts, policies, and practices are unreasonable, unfair, inequitable, and discriminatory, and whether they have burdened and restricted U.S. commerce.

On March 7, 2024, the Office of the U.S. Trade Representative (USTR) published a Federal Register notice seeking public comments to help develop trade and investment policy initiatives aimed at making supply chains more resilient.

The USTR is interested in responses to one or more of the twelve questions outlined in the Federal Register notice.  These questions cover a broad range of topics, including ways to support domestic manufacturing, prevent offshoring, enhance coordination on labor and environmental standards, and develop sector-specific resilience strategies.  Comments are also sought on policy tools that could enhance resilience in sectors like aerospace, agriculture, automobiles, call centers, critical minerals, metals, pharmaceuticals, semiconductors, renewable energy, and textiles.  The process aims to gather diverse viewpoints to build a more resilient and inclusive trade environment that benefits all interested parties. 

To gather insights and proposals, the USTR has opened the window for written comments until April 22, 2024, with plans to host a public hearing on May 2, 2024 (requests to testify at the hearing are due by April 12, 2024). 

This is an opportunity for interested individuals and organizations to share their views and suggestions on enhancing supply chain resilience across various sectors.

The USTR’s press release on this process is available here.

On March 1, 2024, the Office of the United States Trade Representative (USTR) published President Biden’s 2024 Trade Policy Agenda and 2023 Annual Report. This year’s agenda aims to further the cause of worker-centered trade policy, enhance the resilience of supply chains, and promote fair and sustainable trade practices. Below is a summary of the agenda and the report.

According to the publication, the USTR is executing the economic vision of the Biden-Harris administration through the negotiation of trade agreements with allies and partners. In June 2023, the United States and Taiwan initiated the U.S.-Taiwan 21st Century Trade Initiative, marking a significant step with the signing of the first agreement under the initiative, aimed at fostering trade in various crucial sectors. Concurrently, the United States is deepening its economic ties with Kenya through the U.S.-Kenya Strategic Trade and Investment Partnership, focusing on sustainable growth and regional economic integration in Africa. In the broader Indo-Pacific region, the United States is making strides with the Indo-Pacific Economic Framework for Prosperity (IPEF). Additionally, the Americas Partnership for Economic Prosperity is strengthening economic cooperation across the Western Hemisphere, with efforts to establish a Council on Trade and Competitiveness to guide trade matters.

The Biden-Harris administration is seeking to reform the World Trade Organization (WTO) to ensure it remains a force for good, advocating for a system that supports fair, market-oriented competition and addresses the modern challenges of global trade. The United States sees an urgent need for the WTO to evolve in response to the rapidly changing global economy, especially in areas like workers’ rights, supply chain resilience, and climate change. The administration is actively working with other WTO members to implement reforms that enhance transparency, improve labor standards, advance gender equity, and ensure the dispute settlement system effectively resolves conflicts between members. Following significant progress at the Thirteenth Ministerial Conference, the United States is committed to continuing these efforts, aiming to make the WTO more responsive to the needs of society and capable of addressing unfair trade practices and non-market policies that undermine market-based competition.

The economic relationship between the United States and the European Union holds critical importance, underscored by shared goals such as economic growth, inequality reduction, and environmental stewardship. The geostrategic landscape, significantly affected by Russia’s full-scale invasion of Ukraine and the assertive behavior of autocratic regimes, has emphasized the necessity of a strong U.S.-EU partnership based on democratic values, human rights, and a commitment to maintaining a liberal, rules-based international order. This partnership is viewed by the Biden-Harris administration as essential for achieving a shared vision of prosperity and security. In response to the crisis in Ukraine, the United States has closely collaborated with the EU to implement targeted sanctions against Russia, aiming to hold it accountable for its actions. Additionally, this partnership has been pivotal in providing Ukraine with security assistance, humanitarian aid, and direct economic support, demonstrating a joint effort to support Ukraine during the ongoing conflict and to uphold the principles of democracy and international law.

The report addresses the complex and competitive U.S.-China trade relationship, emphasizing the need for fair competition against China’s pervasive non-market policies and practices. These practices not only distort the global marketplace through unfair, anticompetitive behavior but also undermine supply chain resilience, limit market access, and exploit labor and environmental standards. To counteract these challenges, the administration is leveraging domestic investments, such as the Bipartisan Infrastructure Law, the CHIPS and Science Act, and the Inflation Reduction Act, to strengthen the U.S. economy and supply chain resilience. Additionally, there’s a focused effort on international collaboration to develop effective responses to China’s non-market policies, including the endorsement of a Joint Declaration by Australia, Canada, Japan, New Zealand, the United Kingdom, and the United States to address economic coercion. The United States is also enforcing laws against imports produced with forced labor, notably through the Uyghur Forced Labor Prevention Act. These actions, along with a comprehensive review of Section 301 tariffs in place against certain imports from China, illustrate a holistic approach to re-aligning the U.S.-China trade relationship, grounded in the principles of fair market competition and the defense of democratic values and economic security.

Overall, the Biden-Harris administration’s 2024 Trade Policy Agenda presents a forward-looking and multifaceted approach to trade policy. By balancing enforcement with engagement, competition with cooperation, and economic growth with social justice, the administration is navigating the complexities of global trade with an eye towards a more equitable and prosperous future.

A press release outlining other key highlights of the annual report is available here.

Key Notes:

  • More than 500 entities and individuals added to the Specially Designated Nationals and Blocked Persons List and nearly 100 added to the Entity List.
  • Four new or updated general licenses issued by the Office of Foreign Assets Control to address wind-down and safety considerations.
  • An expansion of the multilateral Common High Priority Items List by the Bureau of Industry and Security to include certain computer numerically controlled (CNC) machine tools and parts.
  • The U.S. sanctions and export restrictions package were imposed in concert with key allies and partners, including Australia, Canada, the European Union, Japan and the United Kingdom.

On February 23, 2024, the United States imposed a new set of Russia-related sanctions and export controls to commemorate the second anniversary of Russia’s full-scale invasion of Ukraine and to respond to the death of prominent opposition leader Aleksei Navalny, who died in a Russian prison on February 16, 2024. The measures, which take particular aim at Russia’s financial sector, energy production revenue streams and the military-industrial complex, represent the largest single tranche of designations since Russia began its invasion of Ukraine three years ago.

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On February 20, 2024, Hoshine Silicon (Jia Xing) Industry Co., Ltd. (“Jiaxing Hoshine”), a wholly owned subsidiary of Hoshine Silicon Industry Co., Ltd., filed a complaint at the United States Court of International Trade (USCIT) challenging the U.S. Customs and Border Protection’s (CBP) June 2021 decision to issue a withhold release order (WRO) against Hoshine Silicon Industry Co., Ltd. and its subsidiaries (collectively, “Hoshine Silicon”). The WRO instructs CBP personnel to detain all shipments containing silica-based products made by Hoshine Silicon entities. The complaint also challenges CBP’s subsequent refusal to grant Jiaxing Hoshine’s petition to modify the WRO. The WRO applies to materials and final goods derived from or produced using those silica-based products, regardless of where the materials and final goods are produced.

According to the complaint, following the issuance of the June 2021 WRO, Jiaxing Hoshine and its counsel repeatedly engaged with CBP officers and on September 12, 2023, submitted a modification petition to CBP asking that, inter alia, a narrowly defined supply chain for products made by Jiaxing Hoshine be excluded from the WRO as “the identified supply chain is located entirely outside of Xinjiang and involves no use of forced labor.” On November 3, 2023, CBP denied the petition after finding that modifying the WRO to exclude a specific supply chain would undermine the CBP’s enforcement efforts and that companies subject to a WRO must “demonstrate full remediation of all forced labor indicators present at all of company locations.”

In its complaint, Jiaxing Hoshine asserts that CBP acted unlawfully in at least two ways: (1) CBP failed to provide any evidentiary basis for its decision to include Jiaxing Hoshine within the scope of the WRO, and (2) CBP has no legal basis for its decision to reject the modification petition and its refusal to exclude Jiaxing Hoshine from the WRO. Jiaxing Hoshine is asking the USCIT to vacate the CBP’s determinations to add Jiaxing Hoshine to the WRO and to deny the modification petition.

President Biden signed the National Defense Authorization Act for Fiscal Year 2024 into law (P.L. 118-31) (NDAA 2024 or Act) in December 2023. Lawmakers frequently target this type of “must pass” legislation as a vehicle to codify their own, often unrelated policy priorities or “rider” provisions. The NDAA 2024 is no exception, containing a patchwork of trade-related riders that have important ramifications regarding U.S. export controls, sanctions, supply chain issues and other areas of international trade law.

Key Notes:

  • Processes and procedures for sending defense articles, defense services and technical data within the trilateral AUKUS security partnership have been streamlined.
  • Many sanctions-related provisions overlap with government contract provisions prohibiting the federal government from contracting with certain proscribed or denied persons, especially those owned or controlled by foreign competitors like China and Russia.
  • The NDAA 2024 implements the American Security Drone Act of 2023 and the Combating Global Corruption Act.
  • The NDAA 2024 requires an analysis of foreign ownership and control of major U.S. container ports that may implicate national and economic security interests.
  • Numerous supply chain provisions aim to identify ways for ensuring greater transparency and/or independence of supply chains for critical metals and minerals and address forced labor in China.
  • The NDAA 2024 declares the United States should not accept and instead advocate for the end of China’s “developing nation” status in various treaties and international organizations.

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On February 23, 2024, the eve before Russia’s full-scale invasion of Ukraine officially enters its third year, the United States issued another sanctions package against Russia, taking particular aim at Russia’s financial sector, energy production revenue streams, and military-industrial complex. Specifically, the package sanctions more than 500 entities and individuals by having them added to the Specially Designated Nationals and Blocked Persons List by the Department of the Treasury and the Department of State, respectively, while the Department of Commerce imposes new export restrictions against nearly 100 entities by adding them to the Entity List maintained by the Bureau of Industry and Security. The targeted entities and individuals span across Europe, East Asia, Central Asia, and the Middle East, and are known for supplying critical technology and equipment to Russia’s military and for evading sanctions. Additionally, some of the targeted individuals were sanctioned because they were connected to the death of prominent opposition leader Aleksey Navalny, who died under mysterious circumstances in a Russian prison last week.

Perhaps the most notable inclusion in the sanctions package is the state-owned National Payment Card System Joint Stock Company, which operates Russia’s national payment system, known as Mir. Nonetheless, the package also targets two of Russia’s largest companies by revenue: SUEK, a transportation and logistics operation company that serves the Russian military, and Mechel, a major producer of specialty steels. The sanctions also target SPB Bank, which is owned by SPB Exchange—Russia’s second-largest stock exchange specializing in trading foreign shares—as well as companies involved in the Arctic LNG 2 energy project, and various manufacturers of weapons, metals, lubricants, industrial chemicals, electronics, robotics, ball bearings, and batteries used by the Russian military.

The United States did not act alone to escalate economic pressure on Russia this week.  Adopting its 13th sanctions package against Russia on February 23, 2024 as well, the European Union designated about 200 entities and individuals connected to Russia’s weapons procurement network. Similarly, Canada also imposed sanctions against 153 entities and 10 individuals known to support the Russian military through finance, logistics, and sanctions evasion on February 23, 2024. And earlier in the week, the United Kingdom levied 50 new sanctions against parties linked to Russia’s ammunition supply chain, and targeted 6 individuals known to oversee the Arctic prison colony where Navalny died. Notwithstanding the multilateral sanctions package imposed by the United States and Europe this week, though, there are still ongoing debates by the western allies about enacting even more aggressive measures to stymie Russia’s economic abilities to continue its full-scale invasion of Ukraine.

Still, the U.S. sanctions package to mark the second anniversary of Russia’s full-scale invasion of Ukraine is significant because it aligns with the ongoing trend of the United States and its allies to levy sanctions and export restrictions against Russia on each anniversary of the invasion. See Update of February 24, 2023 and Update of February 24, 2023, respectively.

On February 20, 2024, the Department of the Treasury’s Office of Foreign Assets Control (OFAC) extended Russia-related General License (GL) 83 by issuing a revised version: GL 83A, “Authorizing Certain Transactions Related to Imports of Certain Categories of Fish, Seafood, and Preparations Thereof Prohibited by Executive Order 14068.” The modified GL 83A maintains the authorization to engage in transactions “that are ordinarily incident and necessary to the importation into the United States of seafood derivative products” of Russian Federation origin pursuant to written contracts or written agreements entered into prior to December 22, 2023, but extends the deadline to load such seafood derivative products onto a vessel at the port of loading until 12:01 a.m. Eastern Daylight Time, May 31, 2024. The original deadline set by the preceding GL 83 had been 12:01 a.m. Eastern Standard Time, February 21, 2024.

GL 83A and its antecedent were issued pursuant to Executive Order 14114—published on December 22, 2023—which, among other things, amended Executive Order 14068 so as to also prohibit the importation and entry into the United States, including into a foreign trade zone located in the United States, “fish, seafood, and preparations thereof” whether produced or manufactured wholly or in part in the Russian Federation, or harvested in waters under the jurisdiction of the Russian Federation or by Russia-flagged vessels, notwithstanding whether such products have been incorporated or substantially transformed into other products outside of the Russian Federation. See Update of January 2, 2024.

In addition to its role in enforcing U.S. export control laws, the Department of Commerce’s Bureau of Industry and Security (BIS) is charged with administering and enforcing the antiboycott laws under the Export Administration Act. These antiboycott laws were adopted to encourage and, in some circumstances, require U.S. companies to refuse to participate in foreign boycotts that the United States government does not sanction. According to BIS, the laws “have the effect of preventing U.S. persons from advancing foreign policies of other nations that run counter to U.S. policy.” Together, the Department of the Treasury (via the 1976 Tax Reform Act) and BIS’s Office of Antiboycott Compliance have oversight as to efforts to counteract the participation of U.S. persons and companies in other countries’ economic boycotts or embargoes.

Semi-annually, Treasury releases a notice to the public of countries that require or may require participation in, or cooperation with, an international boycott. In a Federal Register notice of February 16, 2024, the following countries were identified:

  • Iraq
  • Kuwait
  • Lebanon
  • Libya
  • Qatar
  • Saudi Arabia
  • Syria
  • Yemen

For these listed countries, U.S. companies must report to BIS’ Office of Antiboycott Compliance any receipt of certain boycott-related requests such as a provision in a proposed agreement to refuse to do business with a boycotted country, requests to furnish information about any person’s business relationships with a boycotted country or with blacklisted persons, and requests for implementation (by U.S. banking entities) of letters of credit that include prohibited boycott-related terms or conditions. Examples of boycott requests are available here.