UK votes to leave EU

It was announced that, on 23 June 2016, the British public voted in favour of a so-called “Brexit”, or exit from the European Union (“EU“). Whilst the result of the referendum is not legally binding on the UK Government it is politically so and, furthermore, the governing Conservative Party promised that the referendum would be binding in their manifesto.

Mechanics of leaving the EU

The vote in favour of Brexit means that, at some point in the near future, the UK Government will trigger Article 50 of the Treaty on the European Union (“TEU“) by notifying the European Council of the UK’s intention to leave.

This notification will set the timer on a two year countdown within which the UK and the remaining EU Member States (“EU-27“) will have to negotiate a withdrawal agreement. The form of such a withdrawal agreement will depend on negotiations and there is no guarantee that the UK will be able to withdraw entirely on its own terms.

Importantly, during the two year negotiation period, EU laws will still apply to and in the UK, and the UK will be able to continue participating in other EU business during this time. However, in terms of the parties to the negotiation of the UK’s withdrawal, the UK will be one party, and the EU-27 will be the other party, with the UK having no part in the EU-27 discussions.

Any final deal at the end of the two year process would need to be ratified by EU leaders by way of a qualified majority vote, a majority of the European Parliament and by the national parliaments of the EU-27.

Implications of Brexit on your businesses

Many companies are struggling to understand whether or not they will benefit or be at risk now that the UK has voted to withdraw from the EU. Asking the right questions will help companies identify the potential risks and opportunities that the Brexit scenario causes for their organisations.

We see the implications of the Brexit vote falling into three broad categories: (1) the status of EU law; (2) the UK’s trading relationship with the EU-27; and (3) the UK’s trading relationship with the rest of the world.

1) Status of EU law

EU law will continue to apply to the UK throughout the two year negotiation process. This means that there is no immediate change following the results of the Referendum.

Following the UK’s exit of the EU, there is a general assumption that the UK will repeal the European Communities Act 1972, under which the UK is obliged to follow EU law. This means that, from the date of repeal, the UK will no longer be obliged to follow future EU law, although the current corpus of EU law in force is likely to remain in force. In addition, EU law contained in EU Directives, that has been implemented in the UK through UK statutory instruments (or SIs), will remain in force, unless the UK decides to repeal the UK SIs that implemented these Directives. Other forms of EU law, such as EU Regulations, will no longer apply directly to the UK. The UK may decide to create similar legislation, or retain only some aspects of EU Regulations currently in force to suit the needs of the UK.

With regard to European court judgments, English court judges will need to indicate the extent to which English courts should follow European court judgments, past and future. It is possible that in the future, an English court judge might decide that the judgment of a European court is persuasive, and so choose to adopt a similar approach in the UK.

2) UK’s trading relationship with the EU-27

Once the two year withdrawal negotiations are over, the UK will have to form a trading relationship with the EU-27. Whether the negotiations around the UK’s post-EU trading relationship with the EU-27 will happen concurrently with the withdrawal negotiations, or begin afterwards, is currently unknown. As a member of the EU, the UK enjoyed tariff-free trade with the other Member States, as well as free movement of people and services.

It is not certain what form of agreement will be reached with the EU-27, but the current thinking is that the UK will attempt to negotiate a series of free trade agreements (“FTAs“) with the EU-27 once it has exited the EU. Negotiations are likely to be extremely complex and lengthy and there are concerns that the UK lacks the manpower and expertise required for such negotiations.

It is likely that the UK will try and achieve its political objectives behind the Brexit vote (namely, controls on the movement of people, reduction in funding payments to the EU, and regained controls of its own laws) with a FTA with the EU. However, whether the EU-27 will be willing to allow the UK to ‘cherry pick’ the best aspects of EU is far from certain.

Once the UK has exited, until such FTAs are negotiated, the UK will lose a number of the benefits of EU membership, including (but not limited to) tariff-free trade within the EU and ‘passporting rights’. This will mean that imports from the EU-27 will be subject to duties, and financial institutions will no longer be able to freely provide cross-border financial advice, or run branches in other EU Member States.

3) UK’s trading relationship with the rest of the world

As a member of the EU, the UK benefited from the multiple FTAs that the EU held with the rest of the world. Since these FTAs are made with the EU, once the UK has exited the EU, it will also cease to be a party to these agreements. This will mean that the UK will, post exiting, also lose out on any benefits that it previously had as a result of these FTAs, such as tariff free trade.

It is therefore important to consider where your business purchases inputs from, and where your business’ main markets are, in order to assess whether the loss of FTAs will impact your imports and exports to these countries.

In the absence of these FTAs, the default position will be that the UK reverts to World Trade Organisation (“WTO“) rules, which include the rule that equal tariffs must be applied to all WTO members, unless a valid FTA is formed between them. On leaving the EU, the UK will therefore move from duty-free trade with the EU countries and with countries with which the EU has FTAs, to having to re-impose duties when trading with these countries.

Unlike with the EU’s FTAs, the UK will remain a member of the WTO since it joined as a original member in its own right, and not as member of the EU. However, the UK does not currently have a separate Schedule of Concessions (a document listing the specific commitments made by the members of the WTO which reflect specific tariff concessions and other commitments in the context of trade negotiations), since it only currently has one as a member of the EU. Therefore, when the UK formally leaves the EU, it will need to renegotiate a separate Schedule of Concessions so that the other members of the WTO understand what the UK is committed to offering. As with FTAs, such renegotiations are likely to be extremely lengthy and complex and the outcome is far from certain.

The above material was prepared by Ross Denton who may be contacted if additional information is required.

Baker & McKenzie advice

At Baker & McKenzie we are following Brexit developments as they unfurl and considering the implications of what Brexit might mean for our clients.

You can keep ahead of the latest Brexit developments by following the Brexit Blog here.

For a full list of issues to consider in determining how the outcome of the Referendum will affect your business, please see our Baker & McKenzie checklist here.

Please also join us for our Brexit Webinar on 29 June 2016 at 2pm GMT to find out more about the implications of Brexit for companies doing business in the UK.

Please contact Kate Bullard (kate.bullard bakermckenzie.com) for further details.

US – BIS amends Validated End-User authorization for China
On June 23, 2016, the Bureau of Industry and Security (BIS) published in the Federal Register a final rule [Docket No. 160303186–6186–01] that amends the Export Administration Regulations (EAR) to revise the existing Validated End-User (VEU) list for the People’s Republic of China by updating the list of eligible items and destinations (facilities) for VEU Advanced Micro Devices, Inc. (AMD). Specifically, BIS amends Supplement No. 7 to part 748 of the EAR to remove an existing “eligible destination” (facility); add a building to an existing address at one of AMD’s already approved facilities to which eligible items may be exported, reexported or transferred (in-country); and reflect the recent removal of an existing “eligible item” from the Commerce Control List (CCL).
US – FDA seeks participants for import trade account management pilot
On June 23, 2016, the Food and Drug Administration (FDA) published in the Federal Register a notice [Docket No. FDA-2016-N-1548] announcing that it intends to conduct a pilot program to test and evaluate a new Import Trade Auxiliary Communication System (ITACS) Account Management function. Participation will be needed from a small group of Filers, Importers of Record, and Consignees, who will use the new ITACS Account Management function and provide feedback to FDA. FDA is inviting individual firms that wish to participate in this pilot program to submit participation requests via email. To be considered for participation in this ITACS pilot, please send an email with the subject line “ITACS Pilot Participation Request” by July 7, 2016.
US – President continues national emergency with respect to the Western Balkans

On June 23, 2016, the Federal Register published Presidential Notice of June 21, 2016 - Continuation of the National Emergency With Respect to the Western Balkans which extends for an additional year the national emergency first declared in EO 13219 (June 26, 2001) to deal with the unusual and extraordinary threat to the national security and foreign policy of the United States constituted by the actions of persons engaged in, or assisting, sponsoring, or supporting (i) extremist violence in the Republic of Macedonia and elsewhere in the Western Balkans region, or (ii) acts obstructing implementation of the Dayton Accords in Bosnia or United Nations Security Council Resolution 1244 of June 10, 1999, in Kosovo.

EO 13304 (May 28, 2003), took additional steps with respect to acts obstructing implementation of the Ohrid Framework Agreement of 2001 relating to Macedonia. The national emergency is being extended because the actions of persons threatening the peace and international stabilization efforts in the Western Balkans, including acts of extremist violence and obstructionist activity, continue to pose an unusual and extraordinary threat to the national security and foreign policy of the United States.

US – President continues national emergency with respect to N. Korea

On June 23, 2016, the Federal Register published Presidential Notice of June 21, 2016 - Continuation of the National Emergency With Respect to North Korea which extends for an additional year the national emergency first declared in Executive Order (EO) 13466 (June 26, 2008), to deal with the unusual and extraordinary threat to the national security and foreign policy of the United States constituted by the existence and risk of proliferation of weapons-usable fissile material on the Korean Peninsula. The President also found that it was necessary to maintain certain restrictions with respect to North Korea that would otherwise have been lifted pursuant to Proclamation 8271 of June 26, 2008, which terminated the exercise of authorities under the Trading With the Enemy Act (50 U.S.C. App. 1-44) with respect to North Korea.

Additional steps were taken in EOs 13551 (August 30, 2010), 13570 (April 18, 2011), 13687 (January 2, 2015), 13722 (March 15, 2016). The national emergency is being extended because the existence and risk of proliferation of weapons-usable fissile material on the Korean Peninsula and the actions and policies of the Government of North Korea continue to pose an unusual and extraordinary threat to the national security, foreign policy, and economy of the United States.

US – ITC institutes investigation and seeks comments on U.S.-Chile FTA rules of origin modifications
On June 21, 2016, the U.S. International Trade Commission (ITC) published in the Federal Register a document stating that it had instituted an investigation [Investigation No. U.S.-Chile FTA–103–029] and was seeking comments regarding Probable Economic Effect of Certain Modifications to the U.S.-Chile FTA Rules of Origin, following receipt on May 24, 2016, of a request from the U.S. Trade Representative (USTR), under authority delegated by the President and pursuant to section 103(a) of the United States-Chile Free Trade Agreement Implementation Act (19 U.S.C. 3805 note). The deadline for filing written submissions is July 11, 2016. The ITC report will be transmitted to USTR on August 24, 2016.
BIS revises the Unverified List and the Entity List

On June 21, 2016, the Bureau of Industry and Security (BIS) published in the Federal Register a final rule amending the Export Administration Regulations (EAR) by adding thirty-six (36) persons to the Unverified List (the ‘‘Unverified List’’ or UVL), and adding an additional address for one (1) person currently listed on the UVL. The 36 persons are being added to the UVL on the basis that BIS could not verify their bona fides because an end use check could not be completed satisfactorily for reasons outside the U.S. Government’s control. A new address is added for one current UVL person as BIS has determined that this person has changed its registered address.

On June 21, 2016, BIS also published in the Federal Register a final rule amending the EAR by adding twenty-eight persons under thirty-one entries to the Entity List. The twenty-eight persons who are added to the Entity List have been determined by the U.S. Government to be acting contrary to the national security or foreign policy interests of the United States. These twenty-eight persons will be listed on the Entity List under the destinations of Afghanistan, Austria, China, Hong Kong, Iran, Israel, Panama, Taiwan, and the United Arab Emirates (U.A.E.).

This final rule also removes three entities from the Entity List under the destinations of Finland, Pakistan and Turkey as the result of requests for removal received by BIS pursuant to the section of the EAR used for requesting removal or modification of an Entity List entity and the End-User Review Committee’s (ERC) review of the information provided in the removal requests

US – TTB amends regulations to facilitate use of ITDS and streamline procedures
On June 21, 20916, the Alcohol and Tobacco Tax and Trade Bureau (TTB) published in the Federal Register a notice of proposed rulemaking [Docket No. TTB–2016–0004; Notice No. 159] to amend its regulations governing the importation of distilled spirits, wine, beer and malt beverages, tobacco products, processed tobacco, and cigarette papers and tubes. The proposed amendments are intended to clarify and streamline import procedures, and support the implementation of the International Trade Data System and the filing of import information electronically in conjunction with an electronic import filing with U.S. Customs and Border Protection (CBP). The proposed amendments include providing the option for importers to file import-related data electronically when filing entry or entry summary data electronically with CBP, as an alternative to the current TTB requirements that importers submit paper documents to CBP upon importation. Comments must be received on or before August 22, 2016.
US – APHIS amends regulations for electronic information exchange systems

On June 21, 2016, the Animal and Plant Health Inspection Service (APHIS) published in the Federal Register a final rule [Docket No. APHIS-2016-0016] amending our regulations regarding the importation or exportation of animals and animal products and plants and plant products to address instances where the current regulations require the use of a hard-copy form or specify that a particular document must be submitted in writing. The final rule amends the regulations to provide the flexibility needed for persons to take advantage of electronic systems when a regulation has a limiting requirement. The amendments APHIS is making in the final rule are not to mandate the use of electronic systems or preclude the use of paper documents; rather, they address those instances where APHIS regulations specify a submission method to the exclusion of other methods.

APHIS is working to enhance trade facilitation in several ways. In some cases, APHIS programs will work within CBP’s ACE system to take required actions. In other cases, legacy systems will be updated to allow for more efficient processing of the information. For example, a new permitting system, E-file, is currently being developed to replace the legacy E-permits system. E-file will be used across APHIS programs, will include advanced functionality, and will provide permitting data directly to ACE to allow for speedier review and admissibility determinations at the ports of arrival. Other APHIS system enhancements will allow for better communication with APHIS’ CBP Agriculture colleagues concerning pest identification and allow for expansion of e-certification opportunities with APHIS trading partners. APHIS recognizes the advantages provided by the “single-window” concept and will continue to incorporate those strategies into future planning.

Effective on publication.

EU – Council of the European Union lifts restrictive measures against Côte d’Ivoire

Further to our previous Sanctions blog posts (click here and here), on 10 June 2016, the Council of the European Union repealed the following restrictive measures in relation to Côte d’Ivoire:

    1. Decision 2010/656/CFSP renewing the restrictive measures against Côte d’Ivoire;
    2. Regulation (EC) No 174/2005 imposing restrictions on the supply of assistance related to military activities to Côte d’Ivoire; and
    3. Regulation (EC) No 560/2005 imposing certain specific restrictive measures directed against certain persons and entities in view of the situation in Côte d’Ivoire.

The adoption of UNSCR 2283 on 28 April 2016, which terminates with immediate effect all UN sanctions against Côte d’Ivoire, coupled with recent developments in Côte d’Ivoire, has resulted in the Council lifting the entirety of the Union’s own, additional restrictive measures against the country. This is only the beginning for the repealing of restrictive measures in Côte d’Ivoire, and further updates are expected to follow shortly.

Ross Denton and Sunny Mann of our London office authored the above. For updates, please check our Sanctions blog.

EU political agreement on framework to stop financing armed groups through trade in conflict minerals

On 15 June 2016, EU institutions agreed on a framework for an EU Regulation designed to ensure that minerals entering the EU have been sourced responsibly and without funding conflict and human rights abuses. This will build upon the OECD Due Diligence Guidance for responsible mineral sourcing (available here).

The proposed Regulation will apply to the vast majority of metals and minerals imported to the EU will be covered, although small volume importers will be exempted. The agreed framework carries obligations for the upstream part of the conflict minerals supply chain to source raw metals and raw minerals responsibly and to check the origin of materials they buy. The Commission will carry out additional measures (e.g., develop reporting tools) to strengthen due diligence by large and smaller EU downstream companies using such metals and minerals as components in goods.

Negotiations on technical implementation are expected to last several months.

Ross Denton and Sunny Mann of our London office authored the above. For updates, please check our Sanctions blog.



EU extends Crimea and Sevastopol sanctions to 23 June 2017

The EU Council has extended for a further year the measures imposed by Council Regulation 692/2014 and Council Decision 2014/386/CFSP in response to the illegal annexation of Crimea and Sevastopol to Russia (see our earlier Sanctions blog post on the previous one year extension here). The implementing legislation was published in the Official Journal of the European Union on 18 June 2016. The Council took this opportunity to reaffirm its previous statement of 19 March 2015 that the EU continues to condemn the annexation of Crimea and Sevastopol.

The above was authored by Ross Denton and Sunny Mann of our London office. For updates, please check our Sanctions blog.

EU revises list of defence-related products

On 21 June 2016, the Official Journal published Commission Directive (EU) 2016/970 of 27 May 2016 amending Directive 2009/43/EC of the European Parliament and of the Council as regards the list of defence-related products. The Directive contains a revised list of defence-related articles and requires all Member States to adopt and publish, by 21 September 2016 at the latest, the laws, regulations and administrative provisions necessary to comply with the Directive.

Canada – Government introduces Customs Act export amendments

On June 15, 2016, An Act to Amend the Customs Act (Bill C-21) received its first reading in the House of Commons. This enactment, introduced by the Minister of Public Safety and Emergency Preparedness, amends the Customs Act to authorize the Canada Border Services Agency (CBSA) to collect, from prescribed persons and prescribed sources, personal information on all persons who are leaving or have left Canada. It also amends the Act to authorize an officer, as defined in that Act, to require that goods that are to be exported from Canada are to be reported despite any exemption under that Act. In addition, it amends the Act to provide officers with the power to examine any goods that are to be exported. Finally, it amends the Act to authorize the disclosure of information collected under the Customs Act to an official of the Department of Employment and Social Development for the purposes of administering or enforcing the Old Age Security Act.

The Bill (revised Section 159 (2) of the Customs Act) also makes it an offence to smuggle or attempt to smuggle out of Canada, whether clandestinely or not, any goods that are subject to duties, or any goods the exportation of which is prohibited, controlled or regulated under the Customs Act or any other Act of Parliament, and applies the punishment set out in Section 160 (1).

US – BIS publishes revised penalty charging and settlement guidance

On June 22, 2016, the Bureau of Industry and Security (BIS) published in the Federal Register a final rule [Docket No. 151204999–6179–02] revising the BIS guidance regarding administrative enforcement cases based on violations of the Export Administration Regulations (EAR). The rule rewrites its Guidance on Charging and Penalty Determinations in Settlement of Administrative Enforcement Cases found in Supplement No. 1 to part 766 of the EAR, setting forth the factors that the Office of Export Enforcement (OEE) considers when setting penalties in settlements of administrative enforcement cases and when deciding whether to pursue administrative charges or settle allegations of EAR violations.

BIS is amending the EAR to update its Guidance in order to make civil penalty determinations more predictable and transparent to the public and aligned with those promulgated by the Treasury Department’s Office of Foreign Assets Control (OFAC). OFAC administers most of its sanctions programs under the International Emergency Economic Powers Act (IEEPA), the same statutory authority by which BIS implements the EAR. OFAC uses the transaction value as the starting point for determining civil penalties pursuant to its Economic Sanctions Enforcement Guidelines. Under IEEPA, criminal penalties can reach 20 years imprisonment and $1 million per violation, and administrative monetary penalties can reach $250,000 (subject to adjustment in accordance with U.S. law, e.g., the Federal Civil Penalties Inflation Adjustment Act Improvements Act of 2015 (Pub. L. 114–74, sec. 701)) or twice the value of the transaction, whichever is greater. Both agencies coordinate and cooperate on investigations involving violations of export controls that each agency enforces, including programs relating to weapons of mass destruction, terrorism, Iran, Sudan, Specially Designated Nationals and Specially Designated Global Terrorists.

This final rule does not apply to alleged violations of regulations concerning restrictive trade practices and boycotts, which would continue to be subject to the guidance. The guidance also will not apply to pending matters where, as of July 22, 2016, there are ongoing settlement negotiations and a charging letter has not been filed. The new rule is effective July 22, 2016.

US – Commerce corrects applicability date for ADD price adjustments

On June 20, 2016, Enforcement and Compliance, International Trade Administration, Department of Commerce (Commerce) published in the Federal Register a proposed rule [Docket No. 140929814–4814–01] to modify the applicability date contained in the final rule published in the Federal Register on March 24, 2016, Modification of Regulations Regarding Price Adjustments in Antidumping Duty Proceedings, 81 FR 15641, and is seeking comments from parties. The original applicability date language did not convey Commerce’s intention, i.e., to apply the newly amended regulation to all segments of proceedings initiated on or after the effective date contained in the Federal Register notice. This action is necessary to ensure that there is no ambiguity in the application of the modified regulations.

To be assured of consideration, written comments must be received no later than July 5, 2016.

APHIS clarifies revised Lacey Act requirements

On June 16, 2016, the Animal and Plant Health Inspection Service (APHIS) published in the Federal Register a notice [Docket No. APHIS–2008–0119] clarifying the Lacey Act (16 U.S.C. 3371 et seq.) declaration requirements. The Food, Conservation, and Energy Act of 2008 amended the Lacey Act to provide, among other things, that importers submit a declaration at the time of importation for certain plants and plant products. Enforcement of the declaration requirement began on April 1, 2009, and products requiring a declaration are being phased-in. The purpose of the notice is to clarify that the declaration is required for all formal consumption entries of plant and plant products into the United States, including those entries from foreign trade zones and bonded warehouses.

In a February 2009 notice, APHIS stated that it would be enforcing the declaration requirement only as to formal consumption entries (i.e., most commercial shipments). APHIS also stated that it did not intend to enforce the declaration requirement for informal entries (i.e., most personal shipments), personal importations, mail (unless subject to formal entry), transportation and exportation entries, in-transit movements, carnet importations (i.e., merchandise or equipment that will be re-exported within a year), and U.S. Foreign Trade Zones (FTZ) and bonded warehouse entries.

APHIS has become aware of certain instances where a Plant and Plant Product Declaration has not been filed for plant or plant products entered into the United States from FTZ and bonded warehouses. This practice is not in conformity with the purpose and intent of the Lacey Act, as amended. APHIS is publishing the notice to make clear that such a declaration is required for all formal consumption entries of plant and plant products imported into the United States, including those entries from FTZ and bonded warehouses. However, such declarations are not required for admission into such FTZ or bonded warehouses, which is what APHIS was referring to in the February 2009 notice when it stated that it did not intend to enforce the declaration requirement for FTZ and warehouse entries.

US –BIS removes Special Iraq Reconstruction License from EAR
On June 7, 2016, the Bureau of Industry and Security (BIS) published in the Federal Register a proposed rule [Docket No. 160303182–6182–01] amend the Export Administration Regulations (EAR) to remove the Special Iraq Reconstruction License (SIRL) from the EAR. The action, if published in final form, would further the objectives of the Retrospective Regulatory Review Initiative that directs BIS and other federal agencies to streamline regulations and reduce unnecessary regulatory burdens on the public. Specifically, the SIRL is outdated and seldom used by exporters, who now have more efficient options for exports and reexports to Iraq and transfers (in country) in Iraq. This rule also makes conforming changes. Comments must be received by July 7, 2016.
US – BIS amends EAR to implement 2015 Australia Group decisions and understandings
On June 7, 2016, the Bureau of Industry and Security (BIS) published in the Federal Register a final rule [Docket No. 160302176–6176–01] to amend the Export Administration Regulations (EAR) to implement the recommendations presented at the February 2015 Australia Group (AG) intersessional implementation meeting, and later adopted pursuant to the AG silent approval procedure, and the understandings reached at the June 2015 AG Plenary meeting. The rule amends three Commerce Control List (CCL) entries to reflect the February 2015 intersessional recommendations that were adopted by the AG. Specifically, the rule amends the CCL entry that controls chemical precursors by adding the chemical diethylamine (C.A.S. 109– 89–7), which was not previously identified on the AG’s “Chemical Weapons Precursors” common control list. The rule also amends the CCL entry that controls certain human and zoonotic pathogens and toxins by adding two viruses that were not previously identified on the AG “List of Human and Animal Pathogens and Toxins for Export Control” and by updating the nomenclature of certain viruses that were already identified on this AG common control list. In addition, this rule amends the CCL entry that controls equipment capable of handling biological materials to reflect the AG intersessional updates to the controls on biocontainment chambers, isolators, and biological safety cabinets and the controls on aerosol inhalation equipment described on the AG “Control List of Dual-Use Biological Equipment and Related Technology and Software.” Consistent with the understandings adopted at the June 2015 AG Plenary meeting, this rule also amends the CCL entry that controls equipment capable of handling biological materials by updating the controls on freeze-drying (lyophilization) equipment. Finally, this rule amends the EAR to reflect the addition of Angola and Burma as States Parties to the Chemical Weapons Convention (CWC) and also amends the Chemical Weapons Convention Regulations (CWCR) to reflect the addition of these two countries as States Parties. This rule is effective June 7, 2016.
CBP announces new date for October license exam
On June 16, 2016, U.S. Customs and Border Protection (CBP) published in the Federal Register a general notice that announces that CBP has changed the date on which the semi-annual written examination for an individual broker’s license will be held in October 2016. The customs broker’s license examination scheduled for October 2016 will be held on Wednesday, October 5.
US – NMFS/NOAA announces export test of ITDS; seeks comments

On June 3, 2016, National Marine Fisheries Service (NMFS), National Oceanic and Atmospheric Administration (NOAA), Commerce, published in the Federal Register a notice announcing, in consultation with U.S. Customs and Border Protection (CBP), a test of the International Trade Data System (ITDS) involving the electronic submission of forms and/or data, related to exportation of fish products regulated by NMFS, using the export Partner Government Agency (PGA) data set of the Automated Export System (AES) Trade Interface Requirements, AES Direct via the Automated Commercial Environment (ACE) Secure Web Portal (Portal) and the Document Image System (DIS). CBP and NMFS have developed a plan to test and assess the electronic transmission of export and re-export data for tunas, swordfish and toothfish.

The test will involve using the above referenced methods to transmit the data required for processing exports or reexports of tunas, swordfish and toothfish. Under this test, data may be submitted for the covered fish products exported from any operational port.

The test will commence after June 1, 2016, and will continue until concluded by publication of a notice in the Federal Register ending the test. Participants should consult the CBP Web site here to determine which ports are operational for the test and the date that they become operational: (see the PGA Integration tab). Comments on the submission and processing of export data will be accepted throughout the duration of the test.

US – State to pilot DS 2031 for shrimp imports in ITDS/ACE

On June 15, 2016, the Department of State Bureau of Oceans and International Environmental and Scientific Affairs, Office of Marine Conservation (OES/OMC) published in the Federal Register a notice [Public Notice: 9603] that announces a pilot test of the International Trade Data System (ITDS) involving the electronic submission of forms and/or data related to importations of shrimp and shrimp products using the Partner Government Agency (PGA) Message Set and Document Image System (DIS) components of the Automated Commercial Environment (ACE). The U.S. Customs and Border Protection (CBP) and OES/OMC have developed a pilot plan to test and assess the electronic transmission of import data for shrimp and shrimp products. The pilot test will involve using ACE, the OMC PGA Message Set, the DIS and the Automated Broker Interface (ABI) to transmit the data required for admissibility determinations for entries of shrimp and product of shrimp. ABI is the electronic data interchange that enables participants to file electronically required import data with CBP and transfers that data into ACE. Initially, under this test, OMC PGA Message Set data may be submitted only for formal and informal consumption entries (entry types 01 and 11), filed at certain ports.

The test will commence after July 25, 2016, and will continue until concluded by publication of a notice in the Federal Register ending the test. Participants should consult the PGA Integration on the CBP Web site for additional information regarding pilot status. Comments will be accepted through the duration of the test.

US – President continues national emergency with respect to Belarus
On June 14, 2016, the Federal Register published Presidential Notice of June 10, 2016 – Continuation of the National Emergency With Respect to the Actions and Policies of Certain Members of the Government of Belarus and Other Persons to Undermine Belarus's Democratic Processes or Institutions which extends for an additional year the national emergency first declared by Executive Order 13405 dated June 16, 2016 to deal with the unusual and extraordinary threat to the national security and foreign policy of the United States constituted by the actions and policies of certain members of the Government of Belarus and other persons to undermine Belarus’s democratic processes or institutions, manifested in the fundamentally undemocratic March 2006 elections, to commit human rights abuses related to political repression, including detentions and disappearances, and to engage in public corruption, including by diverting or misusing Belarusian public assets or by misusing public authority. The national emergency is being continued because the actions and policies of certain members of the Government of Belarus and other persons continue to pose an unusual and extraordinary threat to the national security and foreign policy of the United States.
US – FinCEN imposes special measures against N. Korea
On June 3, 2016, the Financial Crimes Enforcement Network (FinCEN), Treasury, published in the Federal Register a notice of proposed rulemaking to propose to prohibit covered financial institutions from opening or maintaining a correspondent account in the United States for or on behalf of a North Korean banking institution and to prohibit the use of foreign banking institutions’ correspondent accounts at covered U.S. financial institutions to process transactions involving North Korean financial institutions. This follows a finding, notice of which was published in the Federal Register (“Notice of Finding”), the Director of FinCEN found that the Democratic People’s Republic of Korea (“North Korea”) is a jurisdiction of primary money laundering concern. Written comments on the notice of proposed rulemaking must be submitted on or before August 2, 2016.
BIS and State amend EAR and ITAR to harmonize definitions and scope

On June 3, 2016, the Bureau of Industry and Security (BIS) published in the Federal Register a final rule [Docket No. 141016858–6004–02] revising certain definitions in the Export Administration Regulations (EAR). This final rule is part of the Administration’s Export Control Reform (ECR) Initiative. The Initiative will enhance U.S. national and economic security, facilitate compliance with export controls, update the controls, and further the goal of reducing unnecessary regulatory burdens on U.S. exporters. As part of this effort, BIS, in publishing this rule, makes revisions to the EAR to include certain definitions to enhance clarity and consistency with terms also found in the International Traffic in Arms Regulations (ITAR), which is administered by the Department of State, Directorate of Defense Trade Controls (DDTC), or that DDTC expects to publish in proposed rules. The final rule also revises the Scope part of the EAR to update and clarify application of controls to electronically transmitted and stored technology and software, including by way of cloud computing. DDTC is concurrently publishing comparable amendments to certain ITAR definitions for the same reasons. Finally, this rule makes conforming changes to related provisions.

The rule is effective September 1, 2016.

Also on June 3, 2016, the Department of State (State) published in the Federal Register an interim final rule [Public Notice: 9487] that amends the ITAR to update the definitions of “export,” and “reexport or retransfer” in order to continue the process of harmonizing the definitions with the corresponding terms in the EAR, to the extent appropriate. Additionally, State creates definitions of “release” and ”retransfer” in order to clarify and support the interpretation of the revised definitions that are in the rulemaking. State creates new sections of the ITAR detailing the scope of licenses, unauthorized releases of controlled information and revises the section on “exports” of technical data to U.S. persons abroad. Finally, State consolidates regulatory provisions on the treatment of foreign dual and third country national employees within one exemption.

The rule is effective on September 1, 2016. State will accept comments on this interim final rule until July 5, 2016.

US – NMFS/NOAA announces export test of ITDS; seeks comments

On June 3, 2016, National Marine Fisheries Service (NMFS), National Oceanic and Atmospheric Administration (NOAA), Commerce, published in the Federal Register a notice announcing, in consultation with U.S. Customs and Border Protection (CBP), a test of the International Trade Data System (ITDS) involving the electronic submission of forms and/or data, related to exportation of fish products regulated by NMFS, using the export Partner Government Agency (PGA) data set of the Automated Export System (AES) Trade Interface Requirements, AES Direct via the Automated Commercial Environment (ACE) Secure Web Portal (Portal) and the Document Image System (DIS). CBP and NMFS have developed a plan to test and assess the electronic transmission of export and re-export data for tunas, swordfish and toothfish.

The test will involve using the above referenced methods to transmit the data required for processing exports or reexports of tunas, swordfish and toothfish. Under this test, data may be submitted for the covered fish products exported from any operational port.

The test will commence after June 1, 2016, and will continue until concluded by publication of a notice in the Federal Register ending the test. Participants should consult the CBP Web site here to determine which ports are operational for the test and the date that they become operational: (see the PGA Integration tab). Comments on the submission and processing of export data will be accepted throughout the duration of the test.

US – Treasury finds N. Korea to be primary money laundering jurisdiction

On June 2, 2016, the Financial Crimes Enforcement Network (FinCEN), Treasury, published in the Federal Register a notice that, pursuant to the authority contained in the USA PATRIOT Act, the Director of FinCEN found on May 27, 2016 that reasonable grounds exist for concluding that the Democratic People’s Republic of Korea (“DPRK” or “North Korea”) is a jurisdiction of primary money laundering concern.

The designation provides Treasury with a range of options that can be adapted to target specific money laundering and terrorist financing concerns most effectively. Through the imposition of various special measures, the Secretary can gain more information about the jurisdictions, institutions, transactions, or accounts of concern; can more effectively monitor the respective jurisdictions, institutions, transactions, or accounts; or can prohibit U.S. financial institutions from involvement with jurisdictions, institutions, transactions, or accounts that pose a money laundering concern.

Client Alert: Changes in Customs Declaration Requirements Herald Greater Scrutiny in China

From 30 March 2016, importers and exporters are required to provide additional information when making customs declarations in China which could result in further scrutiny from Customs on the valuation of imported goods.

Pursuant to the Amendments to the Standards of PRC Customs for the Completion of Import and Export Customs Declaration Forms issued by the General Administration of Customs (" GAC ") and effective from 30 March 2016 (" Announcement No. 20 "), GAC amended the types of information that importers and exporters are required to provide when making customs declarations.

We are pleased to attach our client alert. Please feel free to share with your colleagues who might also be interested in this topic.

If you have any questions on the topics covered or need further clarification on any particular issue, please do not hesitate to get in touch with your usual contact at Baker & McKenzie, or any of the lawyers listed below.

Eugene Lim (Singapore)
+65 6434 2633
eugene.lim@bakermckenzie.com

Anne Peng (Hong Kong)
+852 2846 1943
anne.peng@bakermckenzie.com

Si Ying Kong (Hong Kong)
+852 2846 1907
siying.kong@bakermckenzie.com

Frank Pan (Shanghai)
+86 21 6105 8523
frank.pan@bakermckenzie.com

Di Wu (Beijing)
+86 10 6535 3812
di.wu@bakermckenzie.com

US – CBP publishes notice of intent to distribute continued dumping and subsidy offsets to affected domestic producers

On May 31, 2016, U.S. Customs and Border Protection (CBP) published in the Federal Register a notice, pursuant to the Continued Dumping and Subsidy Offset Act of 2000, of its intent to distribute assessed antidumping or countervailing duties (known as the continued dumping and subsidy offset) for Fiscal Year 2016 in connection with countervailing duty orders, antidumping duty orders, or findings under the Antidumping Act of 1921. The document provides the instructions for affected domestic producers, or anyone alleging eligibility to receive a distribution, to file certifications to claim a distribution in relation to the listed orders or findings. Certifications to obtain a continued dumping and subsidy offset under a particular order or finding must be received by August 1, 2016. Any certification received after August 1, 2016 will be denied, making claimants ineligible for the distribution.

Although section 7601(a) of the Deficit Reduction Act of 2005 repealed the CDSOA, as of October 1, 2005, section 7601(b) provides that all duties collected on an entry filed before October 1, 2007, must be distributed as if the CDSOA had not been repealed by section 7601(a). The funds available for distribution were also affected by section 822 of the Claims Resolution Act of 2010 and section 504 of the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010.

Historically, the antidumping and countervailing duties assessed and received by CBP on CDSOA-subject entries, along with the interest assessed and received on those duties pursuant to 19 U.S.C. 1677g, were transferred to the CDSOA Special Account for distribution (66 FR 48546, Sept. 21, 2001) see also 19 C.F.R. 159.64(e). Other types of interest, including delinquency interest that accrued pursuant to 19 U.S.C. 1505(d), equitable interest under common law, and interest under 19 U.S.C. 580, were not subject to distribution.

Section 605 of the Trade Facilitation and Trade Enforcement Act of 2015 (TFTEA) (Pub. L. 114–125, February 24, 2016), provides new authority for CBP to deposit into the CDSOA Special Account for distribution delinquency interest that accrued pursuant to 19 U.S.C. 1505(d), equitable interest under common law, and interest under 19 U.S.C. 580 for payments received on or after October 1, 2014, on CDSOA subject entries if the payment was made by a surety in connection with a customs bond pursuant to a court order or judgment, or a litigation settlement with the surety, including any payments made during the litigation by the surety with respect to the bond.

Surety payments received from October 1, 2014, through September 30, 2016, for which delinquency, equitable, and 19 U.S.C. 580 interest are subject to distribution under Section 605 of the TFTEA will be deposited into the Special Account during Fiscal Year 2016 for inclusion in the Fiscal Year 2016 distribution. Any domestic producer seeking distribution of interest as provided under Section 605 of the TFTEA for payments received from October 1, 2014, through September 30, 2016, must file a timely Fiscal Year 2016 certification. CBP will utilize the Fiscal Year 2016 certifications to determine each domestic producer’s pro-rata share of the assessed duties received during Fiscal Year 2016, the assessed 19 U.S.C. 1677g interest received during Fiscal Year 2016, as well as the interest provided for under Section 605 of the TFTEA for payments received from October 1, 2014, through September 30, 2016.

US – USTR makes additional FY 2016 TRQ allocations for raw sugar; FY 2017 TRQ allocations for raw, refined, specialty sugars

On May 27, 2016, the Office of the U.S. Trade Representative (USTR) published in the Federal Register a notice providing country-by-country allocations of additional Fiscal Year (FY) 2016 in-quota quantity of the tariff rate quota (TRQ) for imported raw cane sugar as announced by Secretary of Agriculture on May 18, 2016. On May 18, 2016, the Secretary of Agriculture announced an additional in quota quantity of the TRQ for raw cane sugar for the remainder of FY 2016 (ending September 30, 2016) in the amount of 127,006 metric* tons, raw value (MTRV). This quantity is in addition to the minimum amount to which the United States has already committed to pursuant to the WTO Uruguay Round Agreements (1,117,195 MTRV, as announced by Federal Register notice on June 15, 2015, 80 Fed. Reg. 34129). USTR is allocating this total quantity of 127,006 MTRV to the following countries in the amounts specified below:

Country

FY 2016 raw cane sugar increase (MTRV)

Country

FY 2016 raw cane sugar increase (MTRV)

Argentina

6,159

India

1,146

Australia

11,888

Jamaica

1,576

Belize

1,576

Malawi

1,432

Brazil

20,768

Mauritius

1,719

Colombia

3,437

Mozambique

1,862

Costa Rica

2,148

Nicaragua

3,008

Dominican Republic

15,000

Panama

4,154

Ecuador

1,576

Peru

5,872

El Salvador

3,724

Philippines

19,336

Fiji

1,289

South Africa

3,294

Guatemala

6,875

Swaziland

2,292

Guyana

1,719

Thailand

2,005

Honduras

1,432

Zimbabwe

1,719

On May 27, 2016, the Office of the U.S. Trade Representative (USTR) also published in the Federal Register a notice providing country-by-country allocations of the Fiscal Year (FY) 2017 (Oct. 1, 2016 through Sept. 30, 2017) in-quota quantity of the tariff-rate quotas (TRQs) for imported raw cane sugar, certain sugars, syrups and molasses (also known as refined sugar), specialty sugar, and sugar-containing products. USTR is allocating the quantity that the Secretary of Agriculture announced (1,117,195 metric tons* raw value or MTRV) to the following countries in the amounts specified below:

Country

FY 2017 raw cane sugar allocations (MTRV)

Country

FY 2017 raw cane sugar allocations (MTRV)

Argentina

45,281

Jamaica

11,584

Australia

87,402

Madagascar

7,258

Barbados

7,371

Malawi

10,530

Belize

11,584

Mauritius

12,636

Bolivia

8,424

Mexico

7,258

Brazil

152,691

Mozambique

13,690

Colombia

25,273

Nicaragua

22,114

Congo

7,258

Panama

30,538

Costa Rica

15,796

Papua New Guinea

7,258

Cote d’Ivoire

7,258

Paraguay

7,258

Dominican Republic

185,335

Peru

43,175

Ecuador

11,584

Philippines

142,160

El Salvador

27,379

South Africa

24,220

Fiji

9,477

St. Kitts & Nevis

7,258

Gabon

7,258

Swaziland

16,849

Guatemala

50,546

Taiwan

12,636

Guyana

12,636

Thailand

14,743

Haiti

7,258

Trinidad & Tobago

7,371

Honduras

10,530

Uruguay

7,258

India

8,424

Zimbabwe

12,636

* Conversion factor: 1 metric ton = 1.10231125 short tons.

US – FDA issues new food labeling requirements

On May 27, 2016, the Food and Drug Administration (FDA) published in the Federal Register a final rule [Docket No. FDA–2012–N–1210] amending its labeling regulations for conventional foods and dietary supplements to provide updated nutrition information on the label to assist consumers in maintaining healthy dietary practices. The updated information is consistent with current data on the associations between nutrients and chronic diseases, health related conditions, physiological endpoints, and/or maintaining a healthy dietary pattern that reflects current public health conditions in the United States, and corresponds to new information on consumer understanding and consumption patterns. The final rule updates the list of nutrients that are required or permitted to be declared; provides updated Daily Reference Values and Reference Daily Intake values that are based on current dietary recommendations from consensus reports; amends requirements for foods represented or purported to be specifically for children under the age of 4 years and pregnant and lactating women and establishes nutrient reference values specifically for these population subgroups; and revises the format and appearance of the Nutrition Facts label.

The incorporation by reference of certain publications listed in the rule is approved by the Director of the Federal Register as of July 26, 2016.

On May 27, 2016, the FDA also published in the Federal Register a final rule [Docket No. FDA–2004–N–0258 (Formerly Docket No. 2004N–0456)] to define a single-serving container; require dual-column labeling for certain containers; update, modify, and establish several reference amounts customarily consumed (RACCs); amend the label serving size for breath mints; and make technical amendments to various aspects of the serving size regulations. The FDA is taking this action to provide consumers with more accurate and up-to-date information on serving sizes.

Both final rules become effective on July 26, 2016. Compliance date: The compliance date of both final rules is July 26, 2018, for manufacturers with $10 million or more in annual food sales, and July 26, 2019, for manufacturers with less than $10 million in annual food sales. See Federal Register notices for details.

US – Commerce seeks input on U.S. Port Competitiveness Initiative
On May 27, 2016, the Department of Commerce (Commerce) published in the Federal Register a notice and request for comments on U.S. seaport efficiency and competitiveness issues for its 21st Century U.S. Port Competitiveness Initiative. In this effort, Commerce is working with seaports, stakeholders, and port users to identify and share best practices in port-stakeholder-user coordination, collaboration, and information-sharing that are being used to resolve operational and infrastructure issues that affect freight flows and increase port and supply chain congestion. Commerce’s goal is to ensure that U.S. seaports and their supply chains have the tools they need to strengthen U.S. port and supply chain competitiveness, facilitate international trade, and catalyze local, regional, national economic growth and job creation. We welcome input from all interested parties. Written comments must be submitted on or before 5 p.m. EDT on July 11, 2016.
US - State certifies shrimp harvesting nations

On May 26, 2016, the Department of State published in the Federal Register a document [Public Notice: 9584] announcing that on May 3, 2016, it certified that 14 shrimp-harvesting nations (Colombia, Costa Rica, Ecuador, El Salvador, Gabon, Guatemala, Guyana, Honduras, Mexico, Nicaragua, Nigeria, Pakistan, Panama, and Suriname) have a regulatory program comparable to that of the United States governing the incidental taking of the relevant species of sea turtles in the course of commercial shrimp harvesting and that the particular fishing environments of 26 shrimp-harvesting nations and one economy do not pose a threat of the incidental taking of covered sea turtles in the course of such harvesting. Sixteen nations have shrimping grounds only in cold waters where the risk of taking sea turtles is negligible: Argentina, Belgium, Canada, Chile, Denmark, Finland, Germany, Iceland, Ireland, the Netherlands, New Zealand, Norway, Russia, Sweden, the United Kingdom, and Uruguay. Ten nations and one economy only harvest shrimp using small boats with crews of less than five that use manual rather than mechanical means to retrieve nets or catch shrimp using other methods that do not threaten sea turtles. Use of such small scale technology does not adversely affect sea turtles. The 10 nations and one economy are: The Bahamas, Belize, China, the Dominican Republic, Fiji, Hong Kong, Jamaica, Oman, Peru, Sri Lanka, and Venezuela.

A completed DS–2031 Shrimp Exporter’s/Importer’s Declaration must accompany all shipments of shrimp or shrimp product into the United States. Only shrimp or products from shrimp harvested in the 40 certified nations and one economy listed above may be accompanied by a DS–2031 with Box 7(B) checked. All DS–2031 forms accompanying shrimp imports from uncertified nations must be originals with Box 7(A)(1), 7(A)(2), or 7(A)(4) checked, consistent with the form’s instructions with regard to the method of production of the product and based on any relevant prior determinations by the Department of State, and signed by a responsible government official of the harvesting nation’s competent domestic fisheries authority.

US – President announces lifting of Vietnam arms embargo

On 23 May 2016, at a joint press conference with President Quang in Hanoi, President Obama announced the lifting of the U.S. arms embargo against Vietnam, which had been in place since 1984. The U.S. Department of State’s Directorate of Defense Trade Controls (DDTC) subsequently announced the end of its policy prohibiting the sale and transfer of lethal weapons to Vietnam. This announcement follows DDTC’s recent lifting of arms embargoes on Sri Lanka and Côte d’Ivoire.

Prior to these rule changes, DDTC had imposed a policy of denial on all license applications for exports or imports of defense articles and defense services destined for or originating in Vietnam, Côte d’Ivoire, Sri Lanka, respectively, except for certain limited categories of items eligible for case-by-case review. These categories included: (for Vietnam) non-lethal items, non-lethal, safety-of-use defense articles for lethal end-items, and, pursuant to a November 2014 rule change, limited categories of lethal items intended to enhance maritime security and domain awareness; (for Sri Lanka) items for humanitarian demining or aerial/maritime surveillance; and (for Cote d’Ivoire) items to support certain UN operations, humanitarian uses, and the Ivorian security forces.

For additional information, contact Bart M. McMillan or Maria H. van Wagenberg. Check our Sanctions blog for updates.

UK – Policing and Crime Bill: New explanatory notes published

Further to our blog post on 26 April 2016 summarising the proposed Part 8 financial sanctions elements of the Policing and Crime Bill 2015-16 to 2016-17 (the “Bill“), the Bill reached its 1st and 2nd reading stages in the House of Commons on 19 May 2016 without any questions put. As previously set out, the Bill proposes the introduction of an extended maximum penalty, Serious Crime Prevention Orders and Deferred Prosecution Agreements, and a new monetary penalties regime in respect of breaches of financial sanctions, as well as temporary UK legislation to bridge the time gap between the adoption of UN sanctions and their implementation by the EU.

The Bill has now been printed with new explanatory notes. The Bill as introduced at its reading stages can be accessed here. The explanatory notes can be accessed here. The notes provide an overview of the Bill, stating the following in relation to its financial sanctions elements:

“Part 8 strengthens the enforcement regime for financial sanctions by increasing the maximum custodial sentence on conviction for breaching sanctions, expanding the range of enforcement options, including a new system of monetary penalties, and by providing for the immediate implementation of UN-mandated sanctions.”

The explanatory notes go on to set out the following:

    • provide a background on the UN and EU sanctions framework;
    • note that currently under UK law the maximum penalties relating to financial sanctions breaches are two years’ imprisonment upon conviction on indictment and three months imprisonment upon summary conviction, and that these are inconsistent with penalties for similar offences in other sanctions regimes;
    • refer to an ‘enforcement gap’ between situations deemed serious enough to warrant prosecution and cases where a cautionary letter may be sufficient;
    • refer to the creation of the new Office of Financial Sanctions Implementation (for more information see our previous blog post); and
    • summarise the main provisions of Part 8. (Paragraphs 166 to 178.)

The notes then provide a detailed analysis of the Part 8 draft provisions (from paragraphs 883 to 931).

A date for the report stage of the Bill has yet to be announced. If approved, the Bill will proceed to the House of Lords for consideration and potential amendment.

For additional information, please contact Mara Ghiorghies of our London office.

UN Security Council terminates Liberian sanctions

On 25 May 2016, the UN Security Council (UNSC) adopted Resolution 2288 (2016), which terminated, with immediate effect, the measures on arms, previously imposed by paragraph 2 of Resolution 1521 (2003) and modified by paragraphs 1 and 2 of Resolution 1683 (2006), by paragraph 1 (b) of Resolution 1731 (2006), by paragraphs 3, 4, 5 and 6 of Resolution 1903 (2009), by paragraph 3 of Resolution 1961 (2010), and by paragraph 2 (b) of Resolution 2128 (2013) and dissolved, with immediate effect, the Committee established by paragraph 21 of Resolution 1521 (2003) and the Panel of Experts established pursuant to paragraph 22 of Resolution 1521 (2003), and subsequently modified and extended, including in paragraphs 3 and 4 of Resolution 2237 (2015).

The actions were taken because the Council determined that the ceasefire in Liberia is being fully respected and maintained, disarmament, demobilization, reintegration, repatriation and restructuring of the security sector have been completed, the provisions of the Comprehensive Peace Agreement are being fully implemented, and significant progress has been made in establishing and maintaining stability in Liberia and the subregion.

Switzerland - Sanctions against Côte d’Ivoire lifted

On 25 May 2016, the Swiss Government announced that on the basis of UN Security Council Resolution 2283 (2016) of 28 April 2016, the Federal Council has repealed the Ordinance on Measures against Côte d’Ivoire. The measures involved a partial embargo on armaments, as well as financial and travel sanctions. The Ordinance is repealed as of 6pm on 25 May 2016.

Following the failed putsch against Laurent Gbagbo's government on 19 September 2002 and the subsequent outbreak of civil war in the country, the Federal Council issued the Ordinance on Measures against Côte d’Ivoire, thereby implementing the UN Security Council sanctions. The Ordinance and its annex have been amended several times to take account of political developments. For example, in late 2014 the measures regarding trade in raw diamonds originating in Côte d’Ivoire were repealed. Since then, the Ordinance has covered only a partial embargo on armaments, travel sanctions and the freezing of assets.

As the political situation in the country has become less tense, and with presidential elections correctly conducted on 25 October 2015, the UN Security Council has decided to lift the remaining sanctions against Côte d’Ivoire. On the basis of the corresponding Resolution 2283 (2016), the Federal Council will repeal the Ordinance as of 25 May 2016.

US – FAS publishes WTO agricultural quantity-based safeguard trigger levels

On May 25, 2016, the Foreign Agricultural Service (FAS), U.S. Department of Agriculture, published in the Federal Register a notice that lists the updated quantity-based trigger levels for products which may be subject to additional import duties under the safeguard provisions of the WTO Agreement on Agriculture. The notice also includes the relevant period applicable for the trigger levels on each of the listed products.

QUANTITY-BASED SAFEGUARD TRIGGER

Product

Trigger level

Period

Beef

317,530 mt

January 1, 2016 to December 31, 2016

Mutton

3,316 mt

January 1, 2016 to December 31, 2016

Cream

2,789 liters

January 1, 2016 to December 31, 2016

Evaporated or Condensed Milk

1,173,090 kg

January 1, 2016 to December 31, 2016

Nonfat Dry Milk

525,441 kg

January 1, 2016 to December 31, 2016

Dried Whole Milk

3,406,679 kg

January 1, 2016 to December 31, 2016

Dried Cream

586 kg

January 1, 2016 to December 31, 2016

Dried Whey/Buttermilk

18,198 kg

January 1, 2016 to December 31, 2016

Butter

13,656,765 kg

January 1, 2016 to December 31, 2016

Butter Oil and Butter Substitutes

6,076,713 kg

January 1, 2016 to December 31, 2016

Dairy Mixtures

15,718,595 kg

January 1, 2016 to December 31, 2016

Blue Cheese

4,865,957 kg

January 1, 2016 to December 31, 2016

Cheddar Cheese

11,292,096 kg

January 1, 2016 to December 31, 2016

American-Type Cheese

663,153 kg

January 1, 2016 to December 31, 2016

Edam/Gouda Cheese

8,161,533 kg

January 1, 2016 to December 31, 2016

Italian-Type Cheese

19,591,643 kg

January 1, 2016 to December 31, 2016

Swiss Cheese with Eye Formation

28,790,738 kg

January 1, 2016 to December 31, 2016

Gruyere Process Cheese

3,745,854 kg

January 1, 2016 to December 31, 2016

NSPF Cheese

52,603,975 kg

January 1, 2016 to December 31, 2016

Lowfat Cheese

153,319 kg

January 1, 2016 to December 31, 2016

Peanuts

19,037 mt

April 1, 2015 to March 31, 2016

13,106 mt

April 1, 2016 to March 31, 2017

Peanut Butter/Paste

3,592 mt

January 1, 2016 to December 31, 2016

Raw Cane Sugar

676,944 mt

October 1, 2015 to September 30, 2016

617,282 mt

October 1, 2016 to September 30, 2017

Refined Sugar and Syrups

177,579 mt

October 1, 2015 to September 30, 2016

355,264 mt

October 1, 2016 to September 30, 2017

Blended Syrups

87 mt

October 1, 2015 to September 30, 2016

106 mt

October 1, 2016 to September 30, 2017

Articles Over 65% Sugar

385 mt

October 1, 2015 to September 30, 2016

415 mt

October 1, 2016 to September 30, 2017

Articles Over 10% Sugar

20,158 mt

October 1, 2015 to September 30, 2016

18,930 mt

October 1, 2016 to September 30, 2017

Sweetened Cocoa Powder

86 mt

October 1, 2015 to September 30, 2016

72 mt

October 1, 2016 to September 30, 2017

Chocolate Crumb

12,167,560 kg

January 1, 2016 to December 31, 2016

Lowfat Chocolate Crumb

500,069 kg

January 1, 2016 to December 31, 2016

Infant Formula Containing

Oligosaccharides

309,726 kg

January 1, 2016 to December 31, 2016

Mixes and Doughs

230 mt

October 1, 2014 to September 30, 2015

234 mt

October 1, 2015 to September 30, 2016

Mixed Condiments and Seasonings

961 mt

October 1, 2015 to September 30, 2016

894 mt

October 1, 2016 to September 30, 2017

Ice Cream

2,964,185 liters

January 1, 2016 to December 31, 2016

Animal Feed Containing Milk

27,792 kg

January 1, 2016 to December 31, 2016

Short Staple Cotton

2,330,949 kg

September 20, 2015 to September 19, 2016

1,363,307 kg

September 20, 2016 to September 19, 2017

Harsh or Rough Cotton

0 kilograms

August 1, 2015 to July 31, 2016

13 kg

August 1, 2016 to July 31, 2017

Medium Staple Cotton

48,783 kg

August 1, 2015 to July 31, 2016

0 kg

August 1, 2016 to July 31, 2017

Extra Long Staple Cotton

1,505,611 kg

August 1, 2015 to July 31, 2016

1,270,096 kg

August 1, 2016 to July 31, 2017

Cotton Waste

793,048 kg

September 20, 2015 to September 19, 2016

925,273 kg

September 20, 2016 to September 19, 2017

Cotton, Processed, Not Spun

2,058 kg

September 20, 2015 to September 19, 2016

51 kg

September 20, 2016 to September 19, 2017

US – DDTC posts notices on exports to Vietnam, Côte d’Ivoire, Sri Lanka

On May 23, 2016, the State Department’s Directorate of Defense Trade Controls (DDTC) posted an Industry Notice on exports to Vietnam which states:

Change in Policy on Exports of Munitions to Vietnam

Pursuant to a decision made by the Secretary of State and effective immediately, the Department of State's policy prohibiting the sale or transfer of lethal weapons to Vietnam, including restrictions on exports to and imports from Vietnam for arms and related materiel, has been terminated. Consequently, in accordance with the Arms Export Control Act, the Directorate of Defense Trade Controls (DDTC) will review on case-by-case basis applications for licenses to export or temporarily import defense articles and defense services to or from Vietnam under the International Traffic in Arms Regulations (ITAR). DDTC will soon publish a rule in the Federal Register to implement a conforming change to ITAR §126.1.

On May 5, 2016, the State Department’s Directorate of Defense Trade Controls (DDTC) posted an Industry Notice on exports to Côte d’Ivoire which states:

Policy on Exports to Cote d'Ivoire

Pursuant to UNSCR 2283, adopted April 28, 2016 and effective immediately, the UN Security Council sanctions regime against Cote d'Ivoire, including restrictions on exports to Cote d'Ivoire of arms and related materiel, has been terminated. Consequently, in accordance with International Traffic in Arms Regulations (ITAR) §126.1(c), the Directorate of Defense Trade Controls (DDTC) will review applications for licenses to export or temporarily import defense articles and defense services to or from Cote d'Ivoire under the ITAR on a case-by-case basis. DDTC will publish a Federal Register notice to implement a conforming update to ITAR §126.1.

On May 4, 2016, the State Department’s Directorate of Defense Trade Controls (DDTC) posted an Industry Notice on exports to Sri Lanka which states:

Policy on Exports to Sri Lanka

Licensing restrictions relating to Sri Lanka articulated in §7044(e) of the Consolidated Appropriations Act, 2015, Pub. L. No. 113-235, and in previous appropriations acts, were not carried forward in §7044(e) of the Consolidated Appropriations Act, 2016, Pub. L. No. 114-113. Effective immediately the Directorate of Defense Trade Controls (DDTC) will review applications for licenses to export or temporarily import defense articles and defense services to or from Sri Lanka under the International Traffic in Arms Regulations (ITAR) on a case-by-case basis. DDTC will publish a Federal Register notice to implement a conforming update to ITAR §126.1(n).

US – Commerce proposes word limits for certain AD/CVD filings

On May 20, 2016, Enforcement and Compliance, International Trade Administration, Department of Commerce (Commerce) published in the Federal Register a proposed rule [Docket No. 160506400-6400-01] to modify the regulation pertaining to written argument in antidumping and countervailing duty proceedings and is seeking comments from parties. This modification, if adopted, is intended to establish word limits for submission of case and rebuttal briefs. This action is necessary to streamline the process contained in the current regulation, to better align with current Department practices and to reduce the strain on resources.

To be assured of consideration, written comments must be received no later than June 20, 2016.

CBP issues final determinations in procurement cases

CBP has published in the Federal Register the following determinations concerning the country of origin of merchandise for purposes of US Government procurement under the Trade Agreements Act. A copy of the final determination may be reviewed by clicking on the ruling number. Any party-at-interest may seek judicial review of the final determination within 30 days of the date of publication in the Federal Register.

F.R. Date

Ruling Reference (Date Issued) and Product

Country of Origin

05-16-16

HQ H270580 (May 10, 2016) Exercise Equipment: Matrix® G3–S60 Selectorized Dip/Chin Assist and the Matrix® G3–FW52 Back Extension Bench

Scenario 1 – USA

Scenario 2 – China

05-20-16

HQ H273529 (May 13, 2016) Twenty foot long intermodal container

Korea

US – CBP announces ACE as sole EDI system for entry and entry summary processing

On May 23, 2016, U.S. Customs and Border Protection (CBP) published in the Federal Register a general notice announcing that effective July 23, 2016, ACE will be the sole CBP authorized EDI system for the electronic entry and entry summary filings listed below, for all filers. These electronic filings must be formatted for submission in ACE, and will no longer be accepted in ACS.

    • 01—Consumption—Free and Dutiable
    • 02—Consumption—Quota/Visa
    • 03—Consumption—Antidumping/Countervailing Duty
    • 06—Consumption—Foreign Trade Zone (FTZ)
    • 07—Consumption—Antidumping/Countervailing Duty and Quota/Visa Combination
    • 11—Informal—Free and Dutiable
    • 12—Informal—Quota/Visa (other than textiles)
    • 21—Warehouse
    • 22—Re-Warehouse
    • 23—Temporary Importation Bond (TIB)
    • 31—Warehouse Withdrawal—Consumption
    • 32—Warehouse Withdrawal—Quota
    • 34—Warehouse Withdrawal—Antidumping/Countervailing Duty
    • 38—Warehouse Withdrawal—Antidumping/Countervailing Duty & Quota/Visa Combination
    • 51—Defense Contract Administration Service Region (DCASR)
    • 52—Government—Dutiable
    • 61—Immediate Transportation
    • 62—Transportation and Exportation
    • 63—Immediate Exportation
    • 69—Transit (Rail only)
    • 70—Multi-Transit (Rail only)

Electronic entry and entry summary filings for the following entry types must continue to be filed only in ACS. CBP will publish a subsequent Federal Register Notice in the future when these entry and entry summary filings will be transitioned in ACE.

    • 08—NAFTA Duty Deferral
    • 09—Reconciliation Summary
    • 41—Direct Identification Manufacturing Drawback
    • 42—Direct Identification Unused Merchandise Drawback
    • 43—Rejected Merchandise Drawback
    • 44—Substitution Manufacturer Drawback
    • 45—Substitution Unused Merchandise Drawback
    • 46—Other Drawback

Due to low shipment volume, filings for the following entry types will not be automated in either ACS or ACE

    • 04—Appraisement
    • 05—Vessel—Repair
    • 24—Trade Fair
    • 25—Permanent Exhibition
    • 26—Warehouse—Foreign Trade Zone (FTZ) (Admission)
    • 33—Aircraft and Vessel Supply (For Immediate Exportation)
    • 64—Barge Movement
    • 65—Permit to Proceed
    • 66—Baggage
US – President continues national emergency with respect to stabilization of Iraq
US – President continues national emergency with respect to stabilization of Iraq
On May 20, 2016, the Federal Register published Presidential Notice of May 18, 2016 - Continuation of the National Emergency With Respect to the Stabilization of Iraq which continues the national emergency first declared in Executive Order (E.O.) 13303 of May 20, 2016. Because the obstacles to the orderly reconstruction of Iraq, the restoration and maintenance of peace and security in the country, and the development of political, administrative, and economic institutions in Iraq continue to pose an unusual and extraordinary threat to the national security and foreign policy of the United States, the national emergency declared in E.O. 13303, as modified in scope and relied upon for additional steps taken in E.O. 13315 of August 28, 2003, E.O. 13350 of July 29, 2004, E.O. 13364 of November 29, 2004, E.O. 13438 of July 17, 2007, and E.O. 13668 of May 27, 2014, are being continued for 1 year.
US – USTR waives discriminatory purchasing requirements for Ukraine

On May 18, 2016, the Office of the U.S. Trade Representative (USTR) published in the Federal Register a notice announcing a determination regarding waiver of discriminatory purchasing requirements under the Trade Agreements Act of 1979. On November 11, 2015, the WTO Committee on Government Procurement approved the accession of Ukraine to the World Trade Organization (“WTO”) Agreement on Government Procurement (GPA). Ukraine submitted its instrument of accession to the Secretary-General of the WTO on April 18, 2016. The GPA will enter into force for Ukraine on May 18, 2016. The United States, which is also a party to the GPA, has agreed to waive discriminatory purchasing requirements for eligible products and suppliers of Ukraine beginning on May 18, 2016. Section 1-201 of Executive Order 12260 of December 31, 1980 delegated the functions of the President under sections 301 and 302 of the Trade Agreements Act of 1979 to the USTR.

Beginning on May 18, 2016, with respect to eligible products (namely, those goods and services covered under the GPA for procurement by the United States) of Ukraine and suppliers of such products, the application of any law, regulation, procedure, or practice regarding government procurement that would, if applied to such products and suppliers, result in treatment less favorable than that accorded – (A) to United States products and suppliers of such products, or (B) to eligible products of another foreign country or instrumentality which is a party to the GPA and suppliers of such products, shall be waived. This waiver shall be applied by all entities listed in United States Annexes 1 and 3 of GPA Appendix 1.

US – USDA increases FY 2016 raw sugar TRQ
On May 18, 2016, the Office of the Secretary, U.S. Department of Agriculture (USDA) published in the Federal Register a notice increasing the fiscal year (FY) 2016 raw cane sugar tariff-rate quota (TRQ) of 127,006 metric tons raw value (MTRV).
US – State updates list of independently produced Cuban goods and services
On May 18, 2016, the Department of State published in the Federal Register a notice [Public Notice: 9568] with an updated list of goods and services produced by independent Cuban entrepreneurs authorized for importation into the United States (Section 515.582 List). On April 22, 2016, the Department of State published on its website an updated list of goods and services produced by independent Cuban entrepreneurs whose importation into the United States is authorized by the Department of the Treasury’s Cuban Assets Control Regulations (CACR). This list updates the version of the list published on February 13, 2015. These changes allow for more engagement with Cuba’s private sector through new business opportunities.
US – USITC releases report on Trans-Pacific Partnership Agreement

On May 18, 2016, the U.S. International Trade Commission (USITC) released its report assessing the likely impact of the Trans-Pacific Partnership (TPP) Agreement that the President has entered into with Australia, Brunei Darussalam, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, and Vietnam.

The USITC's report, Trans-Pacific Partnership Agreement: Likely Impact on the U.S. Economy and on Specific Industry Sectors (Inv. No. TA-105-001, USITC Pub. 4607), provides an assessment of the likely impact of the Agreement on the U.S. economy as a whole and on specific industry sectors and the interests of U.S. consumers, as requested by the U.S. Trade Representative and required by the Bipartisan Congressional Trade Priorities and Accountability Act of 2015.

In making its assessment, the USITC investigated the impact the agreement will have on the U.S. gross domestic product; exports and imports; aggregate employment and employment opportunities; and the production, employment, and competitive position of industries likely to be significantly affected by the agreement. In preparing its assessment, the USITC also reviewed available economic assessments regarding the Agreement, including literature concerning any substantially equivalent proposed agreement. The USITC provides a description of the analytical methods used and conclusions drawn in such literature, and a discussion of areas of consensus and divergence between the USITC’s analyses and conclusions of other economic assessments reviewed.

US – Burmese Sanctions Regulations amended to add general licenses

On May 18, 2016, the Office of Foreign Assets Control (OFAC) published in the Federal Register a final rule amending the Burmese Sanctions Regulations (31 C.F.R. Part 537) to add a general license authorizing certain transactions related to U.S. persons residing in Burma. OFAC is also incorporating a general license authorizing certain transactions incident to exports to and from Burma that has, until now, appeared only on OFAC’s website on the Burma sanctions page, and expanding this authorization to allow certain transactions incident to the movement of goods within Burma that otherwise would be prohibited. Finally, OFAC is expanding and updating another existing authorization allowing most transactions involving certain blocked financial institutions.

Please check our Sanctions blog for additional information and future updates.

US – President continues national emergency with respect to Burma
On May 18, 2016, the Federal Register published Presidential Notice of May __ 2016 – Continuation of the National Emergency With Respect to Burma which continues the national emergency first declared in Executive Order (E.O.) 13047 of May 20, 1997. Because the actions and policies of the Government of Burma continue to pose an unusual and extraordinary threat to the national security and foreign policy of the United States, the national emergency declared on May 20, 1997, and the measures adopted to deal with that emergency in E.O.s 13047 of May 20, 1997; 13310 of July 28, 2003; 13448 of October 18, 2007; 13464 of April 30, 2008; 13619 of July 11, 2012; and 13651 of August 6, 2013 are being continued for an additional year.
US – CITA makes determination on CAFTA-DR commercial availability
On May 17, 2016, the Committee for the Implementation of Textile Agreements (CITA) published in the Federal Register a determination that certain warp stretch woven rayon blend fabrics, as specified in the Federal Register document, are not available in commercial quantities in a timely manner in the CAFTA-DR countries. The products will be added to the list in Annex 3.25 of the CAFTA-DR Agreement in unrestricted quantities.
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Chair, NA International
Commercial Practice Group

Miguel Noyola
Partner, Chicago
Email: Miguel Noyola
T + 1 312 861 7589


Members, US International
Trade Compliance Steering Committee


Janet K. Kim
Partner, Washington DC
Email: Janet Kim
T + 1 202 835 1653

John F. McKenzie
Partner, San Francisco
Email: John McKenzie
T + 1 415 576 3033

Ted Murphy
Partner, Washington DC
Email: Ted Murphy
T + 1 202 452 7069


Editor, International Trade
Compliance Update


Stuart P. Seidel
Partner, Washington DC
Email: Stuart Seidel
T + 1 202 452 7088