On August 28, 2020, the Office of the U.S. Trade Representative (USTR) issued a Federal Register notice announcing the extension of numerous product exclusions from the Section 301 tariffs for imports from China appearing on List 4A (products from China with an annual trade value of $300 billion). The exemptions include 14 10-digit Harmonized Tariff Schedule (HTS) subheadings and 73 specially prepared product descriptions, which cover various product exclusions issued in eight prior USTR notices for List/Tranche 4A.

These product exclusion extensions will apply until December 31, 2020. These exclusions continue to apply to any product that satisfies the description in the annex of the Federal Register notice, regardless of whether the company using the exclusion filed the request. Each exclusion is governed by the scope of the HTS heading and the product description appearing in the annex of the exclusion notice; it is not governed by the description set out in any particular exclusion request.

The fourteen excluded HTS subheadings are:

  • 0505.10.0050
  • 0505.10.0055
  • 3401.19.0000
  • 3926.90.9910
  • 4015.19.0510
  • 4015.19.0550
  • 4818.90.0000 prior to July 1, 2020; 4818.90.0020 or 4818.90.0080 effective July 1, 2020
  • 5210.11.4040
  • 5210.11.6020
  • 5504.10.0000
  • 6210.10.5000
  • 6307.90.6090
  • 6307.90.6800
  • 6506.10.6030

The 73 specially prepared product descriptions include: cynomolgus macaques; certain feathers used for stuffing; sodium alginate resins; certain shower heads of plastic; certain surgical molded plastic bowls; certain plastic coverings for wound sites; certain sterile pads, covers and plastics for medical purposes; certain wallpaper; certain women’s, women’s and children’s bath robes; various baby fabrics and sleep items; certain blankets, dust covers; certain cold packs and hot packs; disposable shoe covers; face masks and particulate facepiece respirators; certain medical masks; certain single-use medical items; certain sewing machines; certain gas powered augers; certain tracking devices and other wireless communication devices; certain watch cases and dials; certain acoustic upright and grand pianos; parts of child safety seats; arrowheads of metal; certain brushes and hair bristles; certain painting; postage stamps; and collectors’ pieces of mineralogical interest.

U.S. Customs and Border Protection (CBP) will soon issue instructions on entry guidance and implementation. The USTR will continue to issue determinations on pending requests on a periodic basis.  If other List 4A product exclusions issued since October 2019 are not included in this current list of extensions, the exclusions will expire on September 1, 2020.

On August 26, 2020, the Department of Commerce’s Bureau of Industry and Security (BIS) announced that it was adding 24 Chinese companies to the Entity List for their role in helping the Chinese military construct and militarize the internationally condemned artificial islands in the South China Sea. “The United States, China’s neighbors, and the international community have rebuked the [China’s] sovereignty claims to the South China Sea and have condemned the building of artificial islands for the Chinese military,” said Commerce Secretary Wilbur Ross while noting that the newly listed companies “have played a significant role in China’s provocative construction of these artificial islands and must be held accountable.”

The notice also identifies and designates another 36 entities in France, Hong Kong, Indonesia, Malaysia, Oman, Pakistan, Russia, Switzerland and the United Arab Emirates (U.A.E.) for a range of activities, including: (1) attempted diversion of controlled U.S.-origin aircraft parts to Iran; (2) contributions to unsafeguarded nuclear activities; (3) involvement in a scheme to falsify information submitted in support of BIS license applications in order to divert U.S.-origin items to Iran; (4) representing an unacceptable risk that U.S.-origin items exported, reexported, or transferred (in-country) to certain listed entities will be used in military end-use activities in China and/or in support of programs for the People’s Liberation Army; (5) involvement with the Russian military and/or with Russia’s biological weapons program; and (6) engaging in activities contrary to U.S. national security or foreign policy interests.

The Entity List is used by BIS to restrict the export, re-export and transfer (in-country) of items subject to the Export Administration Regulations (EAR) to persons (individuals, organizations, companies) reasonably believed to be involved, or to pose a significant risk of becoming involved, in activities contrary to the national security or foreign policy interests of the United States. When placed on the list, additional license requirements apply to any business transactions involving such entities, and the licensing policy of BIS is often a policy of denial. The list of all companies is available in a Federal Register notice published on, and effective as of, August 27. 2020.

Shipments of items to any of these listed entities that were en route aboard a carrier to a port of export or reexport as of August 27, 2020 pursuant to actual orders for export or reexport to a foreign destination, may proceed to that destination under the previous eligibility for a License Exception or export or reexport without a license (NLR).

On August 27, 2020, the Department of Commerce’s Bureau of Industry and Security (“BIS”) published in the Federal Register an advance notice of proposed rulemaking (ANPRM) for foundational technologies and asked for public comment on the categories of technologies for which BIS should issue controls. Specifically, BIS is soliciting public comments through October 26, 2020, on the definition of foundational technology and the criteria for identifying foundational technology. BIS is focused on items subject to the EAR and controlled for anti-terrorism reasons (AT) or currently considered EAR99.

In August 2018, Congress enacted the Export Control Reform Act of 2018 (ECRA), directing the Commerce Department to conduct an interagency review process to identify “emerging and foundational technologies” and to impose controls on the export, reexport or in-country transfer of such technologies. On November 19, 2018, BIS released an ANPRM soliciting comments on the definition and criteria to be used to identify “emerging technologies,” and on January 6, 2020 issued a related interim final rule. For more information on the emerging technologies ANPRM, please see Update of November 19, 2018.

Items controlled as emerging and foundational technologies under ECRA also qualify as “critical technologies” under the Foreign Investment Risk Review Modernization Act (FIRRMA). Under FIRRMA, the Committee on Foreign Investment in the United States (CFIUS) has expanded jurisdiction to review a wider range of foreign investment transactions involving critical technologies, and requires mandatory filings under some circumstances. For more information on CFIUS’s expanded jurisdiction to review critical technologies, please see Update of January 22, 2020.

Interested parties may submit public comments on the foundational technologies ANPRM until October 26, 2020, as follows:

  • Through the Federal eRulemaking Portal: http://www.regulations.gov, referencing the rulemaking identification number BIS-2020-0029; or
  • By mail or delivery to: Regulatory Policy Division, Bureau of Industry and Security, U.S. Department of Commerce, Room 2099B, 14th Street and Pennsylvania Avenue NW, Washington, D.C. 20230, referencing RIN 0694-AH80.

On August 24, 2020, TikTok Inc. and its Chinese parent, ByteDance, Ltd., filed suit in the Central District of California against President Donald J. Trump, Secretary of Commerce Wilbur Ross and the U.S. Department of Commerce, in an effort to prevent the government from banning its video-sharing mobile application pursuant to the Executive Order issued on August 6, 2020, which broadly prohibits transactions by any person related to TikTok, ByteDance and any of its subsidiaries. The president’s order had determined that the “spread in the United States of mobile applications developed and owned by companies in the People’s Republic of China (China) continues to threaten the national security, foreign policy, and economy of the United States.” In the filed complaint, TikTok and ByteDance seek injunctive and declaratory relief and argue that the Executive Order violates their constitutional rights, and is not authorized by the International Emergency Economic Powers Act (IEEPA), upon which it is based.

More specifically, TikTok and ByteDance maintain that the app does not present “an unusual and extraordinary threat,” as required by law, and that the “executive order is not rooted in bona fide national security concerns,” making it ultra vires or an act beyond the authority granted to the president by IEEPA. Instead, the complaint states that the ban was issued by the president “for political reasons rather than because of an ‘unusual and extraordinary threat’ to the United States.” The complaint contains seven counts against the defendants, two for violations of the Fifth Amendment’s due process and takings clauses, one for violation the First Amendment’s freedom of speech clause, and four for violations of IEEPA. TikTok has issued a statement in support of its lawsuit explaining its previous efforts to cooperate with the Committee on Foreign Investment in the United States (CFIUS).

The complaint comes 10 days after another Executive Order issued on August 14, 2020 directing the 2017 transactions that resulted in the acquisition of Musical.ly, now TikTok, by ByteDance be unwound for similar national security reasons. For more information on the August 14, 2020 Executive Order or the August 6, 2020 Executive Order, please see our updates dated August 17, 2020 and August 7, 2020, respectively.

The Department of Commerce’s Bureau of Industry and Security (BIS) and the Treasury Department’s Office of Foreign Assets Control (OFAC) announced sanctions against several persons and entities determined to be supporting Iran’s Mahan Air in violation of U.S. sanctions toward Iran. According to both agencies, the involved companies have provided key parts and logistics services for Mahan Air, which was first sanctioned in March 2008 for providing support to Iran’s Islamic Revolutionary Guard Corps-Qods Force (IRGC-QF) and has subsequently been found to provide transportation for other illicit purposes.

OFAC Designations

On August 19, 2020, OFAC designated UAE-based Parthia Cargo and Delta Parts Supply FZC for their “material support” of Mahan Air, while also designating Iranian national Amin Mahdavi for owning or controlling Parthia Cargo. According to an OFAC press release, “[t]he services provided by Parthia Cargo and Delta Parts Supply FZC help Mahan Air sustain its fleet of western-manufactured aircraft and allow it to support the Iranian regime’s destabilizing agenda through activities that include the transportation of terrorists and lethal cargo to Syria to prop up the murderous Assad regime, as well as the more recent transportation of Iranian technicians and technical equipment to Venezuela to support the illegitimate Maduro regime’s efforts to revive energy production ruined by corruption and mismanagement.”

As a result of this action, these entities and have been placed on OFAC’s Specially Designated Nationals (SDN) List and all property and interests in property of these entities/person that are in the United States or in the possession or control of U.S. persons must be blocked and reported to OFAC. Further, any foreign financial institution that knowingly facilitates a significant financial transaction or provides significant financial services for these persons could be subject to U.S. correspondent account sanctions or payable-through account sanctions.

BIS Temporary Denial Order

On August 21, 2020, BIS issued a Temporary Denial Order (TDO) against six parties in Indonesia for operating an international procurement network of aircraft parts suppliers and repair facilities to acquire and repair U.S.-origin goods for Mahan Air. Named in the TDO are: (1) Sunarko Kuntjoro, (2) Satrio Wihargo Sasmito, (3) Triadi Senna Kuntjoro, (4) PT MS Aero Support, (5) PT Antasena Kreasi, and (6) PT Kandiyasa Energi Utama. BIS has determined that each has been involved “in operating an international procurement scheme to illegally obtain and repair U.S.-origin aircraft parts on behalf of Mahan Air and Mustafa Oveici (Oveici), an Iranian executive for Mahan Air.”

Under the TDO, each person and entity has been denied export privileges to prevent an imminent or ongoing export control violation. The TDOs are issued for a renewable 180-day period and prohibit persons from exporting or reexporting any item subject to the Export Administration Regulations (EAR) to or on behalf of the denied person. It also prohibits the denied person from themselves dealing in items subject to the EAR, and prohibits the denied persons from negotiating, storing, forwarding, or engaging in other dealings related to items subject to the EAR.

The U.S. International Trade Commission (ITC) announced on August 21, 2020 that it has initiated a Section 332 general factfinding investigation on COVID-19 related industry sectors and particular products. The investigation, COVID-19 Related Goods: The U.S. Industry, Market, Trade, and Supply Chain Challenges, was requested by the U.S. House of Representatives’ Committee on Ways and Means and the U.S. Senate Committee on Finance in an August 13, 2020 letter. In a final report due by December 15, 2020, the ITC will provide to Congress:

  • a brief overview of key U.S. industry sectors producing COVID-19 related goods, including, but not limited to, medical devices; personal protective equipment; and medicines (pharmaceuticals). The overview will include, to the extent practicable, information on U.S. production, employment and trade.
  • case studies on key products within each relevant industry sector, including N95 respirators, ventilators, vaccines and COVID-19 test kits. The case studies will focus on products for which there were reported shortages in the first half of 2020, including those affected by supply chain fragility, blockages or barriers, and will include information on:
  • the U.S. industry, market and trade, including, to the extent available:
    • the product, including key components and the production process;
    • the size and characteristics of the U.S. market;
    • the U.S. manufacturing industry, including key producers of finished goods and intermediate inputs, the extent of U.S. production and employment; and
    • U.S. imports of finished goods and inputs, including leading source countries and supplying firms; and
  • supply chain challenges and constraints, including, but not limited to:
    • factors affecting domestic production, including, to the extent practicable, regulatory requirements that may impact entry into the market; and
    • foreign trade barriers and restrictions and other factors that may affect U.S. imports of finished goods or inputs needed for domestic production.

In preparing the report, the ITC is seeking public comment from all interested parties and will hold a public hearing in connection with the investigation.  The hearing will be held on September 23, 2020 by videoconference. Key dates involving the hearing are:

  • September 11, 2020: Deadline for filing requests to appear at the public hearing.
  • September 14, 2020: Deadline for filing pre-hearing briefs and statements.
  • September 23, 2020: Public hearing.
  • September 30, 2020: Deadline for filing post-hearing briefs and statements only on issues raised at the hearing.

All filings, including requests to appear at the hearing, must be made through the ITC’s Electronic Document Information System (EDIS, https://edis.usitc.gov) on ITC Docket no. 332-580. No in-person paper-based filings or paper copies of any electronic filings are currently being accepted by the ITC. In lieu of or in addition to participating in the hearing, interested parties may file written submissions concerning this investigation until October 2, 2020. All submissions made in this investigation, except for confidential business information, will be available for public inspection.

Our firm’s International Trade group participates regularly in ITC proceedings; please contact us if your company is interested in providing comments in this investigation.

On August 20, 2020, the Department of the Treasury’s Office of Foreign Assets Control (OFAC) and the Department of State sanctioned six Syrian individuals in President Basher al-Assad’s office and the Syrian Ba’ath Party who have contributed to the oppression of the Assad regime. The sanctioned individuals are: (1) President al-Assad’s media adviser, Luna al Shibl; (2) senior Ba’ath party official Mohamad Amar Saati; (3) Yasser Ibrahim, National Defense Forces commander; (4) Fadi Saqr, 42nd Brigade commander; (5) Brigadier General Ghaith Dalah; and (6) Samer Ismail, Tiger Forces Haider Regiment commander. In a lengthy press release providing background details on each individual, Secretary of State Mike Pompeo stated, “While these Assad regime supporters prolong the brutal Syrian conflict, the United States and its international partners are standing by the Syrian people calling for peace. We support efforts to convene the UN-facilitated, Syrian-led Constitutional Committee and hope all participating recommit themselves to building a peaceful future for Syria.”

As a result of this action, these persons and entities have been placed on the Specially Designated Nationals (SDN) List and all property and interests in property of these persons that are in the United States or in the possession or control of U.S. persons must be blocked and reported to OFAC. OFAC has indicated in its press release that any non-U.S. persons that engage in certain transactions with these designated persons may also be exposed to sanctions including designation on the SDN List.

For additional recent sanctions activity, see Updates of July 30, 2020, June 26, 2020, and June 5, 2020.

On August 21, 2020, the United States and the European Union (EU) agreed to tariff reductions on several products unrelated to ongoing trade disputes involving Section 232 national security tariffs on aluminum and steel products and retaliatory tariffs under the WTO dispute involving large commercial aircraft. In a Joint Statement issued by the Office of the U.S. Trade Representative (USTR), the EU will eliminate tariffs on imports of U.S. live and frozen lobster products, valued at over $111 million in 2017. The EU tariffs will be eliminated for five years, and the European Commission will initiate procedures to make the reduced tariff rate permanent. The United States will reduce by 50% its tariff rates on a range of products exported by the EU, worth an average annual trade value of $160 million, including certain prepared meals, certain crystal glassware, surface preparations, propellant powders, cigarette lighters and lighter parts. Both the United States and the EU have agreed to make the tariff reductions retroactive to August 1, 2020.

“As part of improving EU-US relations, this mutually beneficial agreement will bring positive results to the economies of both the United States and the European Union. We intend for this package of tariff reductions to mark just the beginning of a process that will lead to additional agreements that create more free, fair, and reciprocal transatlantic trade,” said Ambassador Lighthizer and Commissioner Hogan. Details on the specific products and tariff reductions are expected soon.

On August 21, the Office of the U.S. Trade Representative (USTR) issued a Federal Register notice exempting Section 301 import tariffs for two additional List/Tranche 3 products from China (import from China with an annual trade value of $200 billion):

  • Wallets, whether or not with wrist straps, of reinforced plastics, each measuring at least 17.5 cm long by 2 cm wide by 11 cm high and not more than 19 cm long by 2 cm wide by 11 cm high (described in statistical reporting number 4202.32.1000); and
  • Mixtures containing N,N-dimethyldodecan-1-amine (CAS No. 112-18-5) and N,N-dimethyltetradecan-1-amine (CAS No. 112-75-4) (described in statistical reporting number 3824.99.9297).

The USTR also made eight technical amendments to prior product exclusion descriptions previously published in the annexes of Federal Register notices published on October 28, 2019February 5, 2020, and May 8, 2020.

The exclusions will apply from September 24, 2018, through August 7, 2020. The exclusions are governed by the scope of the HTS headings and the product descriptions appearing in the annex of the Federal Register notice; they are not governed by the product descriptions set out in any particular exclusion request. U.S. Customs and Border Protection will soon issue instructions on entry guidance and implementation. The USTR will continue to issue determinations on pending requests on a periodic basis. Please contact us to discuss whether we can assist in determining if your product might fit within one of these exclusions.

Since April 2020, we have collaborated with our foreign law firm partners to provide a chart of economic, labor and employment, health and safety, and export and import measures taken by governments around the world in response to the COVID-19 pandemic.

We will not provide regular updates to this chart (until further notice) but please feel free to contact us or the firms listed on the chart directly with any questions.

View/Download the Country Guide: Government Measures Taken in Response to COVID-19

This update includes new information through the first week of August 2020 for Australia, Belgium, Brazil, Canada, Chile, Costa Rica, El Salvador, Guatemala, Honduras, India, Indonesia, Israel, Italy, Japan, Mexico, Netherlands, Philippines, Poland, Russia, South Korea, Turkey, United Kingdom and United States. The updates are in bold on the chart for ease of reference.

In the Americas and Europe, July’s changes involve the easing of stricter health and safety measures including curfews, stay-at-home orders and domestic travel restrictions. In Europe, it appears that restrictions on public gatherings are being lifted. However, mandates to wear face masks in public indoor spaces and on public transportation have continued. In the United States, states and counties continue to differ on business closures and reopenings as well as face mask requirements. In Asia, governments continue to lift lockdown measures and to implement technology-based health measures such as temperature checks and contact tracing applications.

Most governments have used a phased approach to reopening businesses previously closed due to the pandemic and continue to maintain new export controls and import facilitation measures involving COVID-19-related health and medical goods. In recent months, the EU and United States have narrowed their export control measures to more accurately reflect domestic need.

Please see our Trump and Trade Update of April 7 for a discussion of this initiative.