World Trader | May and June 2018

Midwest Global Trade Association

From the President

Upcoming Events

NAFTA Insights

SMITHS GROUP BRIEF ON RECENT TRADE ENFORCEMENT ACTIONS BY THE UNITED STATES

AIR CARGO SCREENING PILOT GOES LIVE AT JAS USA

Say Goodbye to the Green US-Israel Certificate of Origin Form

Spotlight: - Gold

Thank You, Newsletter Sponsor: Port of Seattle

From the President


By Amanda McDonald — MGTA President

Anna Outtara

Happy Spring to you all! I hope you are enjoying the wonderful weather that has finally arrived. This year is flying by faster than ever. It’s hard to believe that our Annual dinner was 3 months ago!

At the dinner I outlined some of the goals I had for MGTA. One of the goals was professional Development through our seminar series. So far this year we have provided seminars on NAFTA, Classification, import basics and Sanction – just to name a few. Looking ahead, we will be providing a seminar on Country of Origin and TAA/BAA. Although we take a break from seminars in July and August, our Education committee continues to work hard through the summer to start the fall off with more amazing seminars.

Also during the summer, we meet to start sketching out our plan for 2019. If there are topics you want to see offered, please be sure to let us know.

Enjoy the weather!

Amanda McDonald

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Upcoming Events

Country of Origin and TAA/BAA

  • Date: Wednesday June 13, 2018
  • Time: 8:00 am - 11:30 a.m.
  • Location: KPMG, Minneapolis, 4200 Wells Fargo Center, 90 South 7th Street, Minneapolis, MN 55402
  • Register Now

Agenda

Half Day Morning Seminar Program Schedule

8:00 a.m. Registration
8:30 a.m. Program Begins
11:30 a.m. Adjourn

Learning Objectives

  1. Gain familiarity with the Trade Agreements Act (TAA) and when it applies.
  2. Understand TAA requirements and how to determine origin.
  3. Learn how to build a compliance program around TAA.

Program

Do you currently bid on government procurement contracts, or are you considering getting involved in the government procurement business? While government procurement can be a valuable revenue stream, there are many pitfalls that are important to avoid. The first step in doing so is to ensure a robust program is in place for maintaining Trade Agreements Act (TAA) compliance.

This program will help you answer many of the key questions associated with the Trade Agreements Act: when are TAA rules implicated? What are the requirements associated with TAA? How do you determine origin for TAA purposes? How do you strengthen your organization’s ability to effectively deal with the myriad of ways TAA compliance could put you at risk? What level of organizational commitment will be involved, and who are the key partners to work with.

You will walk away from this program with practical advice from Jessica Libby, Managing Director for KPMG’s Trade and Customs practice in Minneapolis; and concrete steps you can take to improve, regardless of the maturity of your TAA compliance program.

We look forward to seeing you there on June 13th!

Presenters

Jessica Libby — Managing Director, KPMG, LLP

Jessica Libby is a Managing Director in KPMG’s Trade and Customs practice and leads the practice in KPMG’s Minneapolis office. Jessica held various senior level global trade compliance and supply chain roles in private industry for a Fortune 500 retailer. She worked as an international trade consultant for a customs and trade law firm, and was an attorney with the International Trade Administration in Washington, D.C.

Jessica’s diverse customs, supply chain and legal background gives her valuable insight into the strategic and operational complexities U.S. importers face, and the opportunities available to them. She possesses extensive experience with import compliance, trade remedies, duty recoveries, and U.S. Customs and Border Protection operations. Jessica worked for one of the largest U.S. importers, leading its Importer Self-Assessment initiative, with more than $18 million First Sale program, and overall trade strategy efforts. Before joining KPMG, she led antidumping and countervailing duty investigations, prepared and conducted import compliance training, and partnered closely with U.S. Customs on key initiatives.

Registration Fees

Member:$50 | Non-Member:$60
Student:$10

Register Now


MGTA 16th Annual Golf Tournament

  • Date: Wednesday, August 8, 2018
  • Time: 12:00-7:00 p.m.
  • Location: Crystal Lake Golf Course, 16725 Innsbrook Dr, Lakeville, MN 55044
  • Register Now

The format for the tournament will be a best ball scramble with awards given to teams and individuals. In addition, there will be contests such as: hole-in-one, longest drive (men’s and women’s), a putting contest, and closest to the pin contest. Golf registration is limited to 144 golfers. Team entries will be filled on a first-come, first-served basis.

Schedule

10:30-11:30 a.m. Golf Registration (Driving Range Open)
Noon/12:00 p.m. Golf — Shotgun Start
5:00 p.m. Social Time
5:30-7:00 p.m. Dinner/Program and Prizes (you must be present to win!)

Fee (Save $15 dollars if you register by July 9!)

By July 9, 2018
Golf (includes dinner and green fees): $115 | Dinner Only: $40

After July 9, 2018
Golf (includes dinner and green fees): $130 | Dinner Only: $40

Register Now

Interested in Sponsoring?

If you would like to get involved by sponsoring the golf tournament, visit our sponsorship page for details.

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NAFTA Insights


By KPMG International

So what’s the latest on negotiations?

The sixth round of the NAFTA renegotiation concluded on 29 January in Montreal with some advances but relatively limited progress on the key remaining contentious issues. However, while highlighting the difficulties that remain in the negotiations, the closing ministerial statements signaled that enough progress had been made to continue the negotiations, with a new round of talks now scheduled for 26 February through 6 March in Mexico City.

The negotiating teams were able to close the anti-corruption chapter and some sectoral annexes, the first chapter successfully completed since the fourth round in October. Regarding the anti-corruption chapter, bribery and illicit earnings will be considered as punishable actions, preventive and punitive measures will be outlined to avoid such behaviors and payments will be provided to accelerate procedures. Cooperation between countries and the enforcement of the integrity of government officials also will be supported.

It also looks like the digital trade, telecommunications, the food safety plan and animal health chapters could be closed in the upcoming round in Mexico. The president of the Business Coordinating Council (CCE), Juan Pablo Castañon, suggested that around 6 to 10 chapters could be closed on the next round which would represent up to 40 percent of the deal. Eurasia Group points to the fact that negotiators have agreed to continue the talks as a signal that all sides still want a deal. This also further reaffirms Eurasia Group’s view that Trump will not send the withdrawal letter at this point. But USTR Robert Lighthizer remained critical of various proposals including the binding dispute settlement mechanism and Canada’s counteroffer to the US auto content proposal, while lamenting that the pace of the talks was still very slow.

The slow pace has made Eurasia Group revise their call – they now think it is unlikely that a deal will be reached by the end of the first quarter. Instead, Eurasia Group suggests that it is becoming more likely that the negotiations will be extended past the March deadline, an outcome that President Trump alluded to being open to in an interview with the Wall Street Journal on 11 January. Furthermore, recent comments by Economy Minister Ildefonso Guajardo at Davos signal that Mexico is willing to continue talks throughout the electoral cycle - bringing Eurasia Group to conclude that even with an extended deadline, a deal is still likely this year, now by July.

But the extension also reinforces Eurasia Group’s view that the Mexican election in the summer represents a significant risk for NAFTA, as a deal will be harder to negotiate during presidential campaigns which are expected to ramp up in April. If a deal is not done by July, the Peña Nieto administration would still have until December to negotiate the deal, before the next president takes office (on 1 December). But Eurasia Group thinks that this could be difficult if leftist candidate Andres Manuel Lopez Obrador wins. As a result, investment in the region could take a hit.

What else should you keep an eye on?

Looking beyond NAFTA to the broader geopolitical environment, Eurasia Group suggests that we’re in a period of “geopolitical recession”, where international politics is facing a growing power vacuum due to rising trends that reject globalism. With countries largely looking inward, the rules of engagement are being re-written.

In 2017, we saw this play out in very significant ways. To pick but a few; closely contested elections highlighted the rise of populism and far right public sentiment across the developed world. Strongman stances became – or at least were seen in popular opinion as – government policies in the East and West alike. And most importantly, game theory became media fodder as trade agreements covering some of the world’s biggest markets came up for negotiation.

Looking forward, 2018 seems set to continue the political drama of this year - from nuclear war to trade wars, keystone elections to keyboard crime. Global corporations clearly recognize these risks - nearly 80 percent of respondents to WEF’s recent annual Global Risk Perception.

Survey* said they expect an increase in risks associated with war involving major powers, and an overwhelming 93 percent expect political or economic confrontations between major powers to worsen.

Why is this important? This isn’t intended to fear-monger – it merely highlights that NAFTA negotiations can’t be considered in isolation, and there are broader trends and moves at play that could impact the end state of the agreement.

Thriving in this environment may require going beyond how your business traditionally has dealt with political risk. The impact of politics on a sector or business can manifest in unprecedented and seemingly disconnected ways, and it requires a whole-of-company view to navigate this landscape.

* WEF’s Global Risks Report 2018, available here

What should you do?

Here’s one suggestion for how you plan for the world in 2018: don’t get caught up in the ‘black swans’ – by definition they are unpredictable and unexpected. Prioritize scenario planning over horizon scanning; in this topsy-turvy world, it is much better to focus your time and energy on the known unknowns than trying to complete a full set of possible risks.

We’ve spoken about scenario planning and preparing for changes to NAFTA within a broader context (like US Tax Reform). The revised Trans Pacific Partnership Agreement (TPP) without the U.S. (now called the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP)), signed on 23 January 2018, may also create a new level of opportunity for companies with a presence in Canada and Mexico. Importers in these countries should incorporate the impact of CPTPP in their scenario planning.

But in light of the geopolitical environment, why not think even more holistically? Consider stress-testing your 3-year business plan to the following scenarios (individually or collectively):

  • 2x increase in operating expenditure of transacting across borders (financial hedges, professional fees, regulatory compliance, travel cost and the like).
  • 72-hr outage of information backbone (website, online gateways, encrypted messaging services and similar). Here’s a tidbit for you: if a major cloud provider went down in an attack, the damages would be somewhere in the range of a Sandy event to a Katrina event (an estimated US$50-US$120 billion).
  • Zero cross-border travel for one week (no plane, train or road journeys across international borders).
  • Double transport time (and/or cost) of transporting goods (sea, air, road, rail).

Click HERE to read more online.

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SMITHS GROUP BRIEF ON RECENT TRADE ENFORCEMENT ACTIONS BY THE UNITED STATES

  1. SECTION 232 STEEL AND ALUMINUM NATIONAL SECURITY INVESTIGATIONS
    1. Background
    2. In April 2017, the Trump Administration self-initiated investigations to determine the impact of steel and aluminum imports on national security under Section 232 of the Trade Expansion Act of 1962. On March 8, 2018 President Trump signed Presidential Proclamations on steel and aluminum imports in connection with the Administration’s Section 232 national security investigation. The Proclamations are consistent with the President’s statement on March 1 that 25% tariffs on steel and 10% tariffs on aluminum will be imposed.

    3. Presidential Section 232 Determinations
    4. According to the steel and aluminum Presidential Proclamations, as outlined, the tariffs will cover certain defined steel and aluminum articles.

      As provided by statute, the President is required to implement the new import tariffs no later than 15 days after the date on which the determination is made, or by March 23. As a result, the tariffs were applied on March 23 to all imports of steel and aluminum articles specified in Proclamations with respect to goods entered, or withdrawn from warehouse for consumption from all countries except Argentina, Australia, Brazil, Canada, Mexico, the European Union and South Korea. As the country exemption and product exclusion processes play out, the President will determine if any adjustments to the tariffs will be required.

      1. Country Exemption Overview and Process – Changes in Directions
        1. Country Exemption Process
        2. The details of the country exemption process have not been officially released. Ambassador Lighthizer, has been put in charge of negotiating country exemptions. Lighthizer has reportedly outlined five conditions that must be addressed by countries seeking exemptions:

          1. Limiting steel and aluminum exports to the U.S. to 2017 levels.
          2. Actively addressing China's various trade-distorting policies.
          3. Being more assertive and cooperative with the U.S. at the G-20 Global Steel Forum.
          4. Cooperating with the U.S. in launching cases against Chinese practices at the World Trade Organization.
          5. Enhancing security cooperation with the U.S.

          On March 22, President Trump issued Proclamations exempting Argentina, Australia, Brazil, Canada, Mexico, the European Union, and South Korea from the steel and aluminum tariffs until May 1, 2018. Continuation of the exemptions is dependent upon discussions with these countries on “measures to reduce global excess capacity in steel and aluminum production by addressing its root causes.” On March 26, South Korean Trade Minister Kim Hyun-chong announced that they had reached an agreement, in principle, with the United States that addressed issues in KORUS and the steel tariffs including an agreement to voluntarily restrict its steel exports to the U.S. (the agreement is known as Voluntary Restraint Agreement (VRA), which is now illegal under the WTO). The U.S. has agreed to permanently exempt South Korea from the steel tariffs in return for a quota of 2.68 million tons of steel exports from Korea annually, or about 70 percent of the average annual Korean steel exports to the United States between 2015 and 2017. An official announcement on the Agreement’s framework was released by USTR on March 28, 2018.

          It now appears that VRAs have returned as an option since disappearing from Section 232 as a remedy in the 1980’s. Another “creative remedy” that might return is to restrict government procurement to domestic steel and/or aluminum sources.

          According to the updated Proclamations, other countries, such as the EU, will be granted more permanent exemptions if “the United States has reached a satisfactory alternative means to remove the threatened impairment to the national security…” such as VRAs or more creative means of “adjusting imports.”

      2. Threat of Retaliation from Section 232 Tariffs
        1. European Union’s Response
        2. The European Union has been the most vocal critic of the U.S. steel and aluminum tariffs and has warned it will proceed with retaliation if it does not receive an exemption from the tariffs. There are ample historical precedents for this response from the EU in the face of U.S. protectionism.

          On March 1, 2018, the European Commission issued a statement on the potential tariffs. Jean-Claude Juncker, President of the European Commission, said:

          “We will not sit idly while our industry is hit with unfair measures that put thousands of European jobs at risk. I had the occasion to say that the EU would react adequately and that's what we will do. The EU will react firmly and commensurately to defend our interests. The Commission will bring forward in the next few days a proposal for WTO-compatible countermeasures against the U.S. to rebalance the situation."

           

          Following the issuance of the Presidential Proclamation, the EU published a list of U.S. products that it may be hit with retaliation if the EU is not exempted from the steel and aluminum tariffs. The EU solicited comments until March 26. The EU’s proposed list targets Republican-run states, which is standard fare by countries facing retaliation.

          On March 3, President Trump tweeted that “If the E.U. wants to further increase their already massive tariffs and barriers on U.S. companies doing business there, we will simply apply a Tax on their Cars which freely pour into the U.S. They make it impossible for our cars (and more) to sell there. Big trade imbalance!” The President told reporters on March 5 that he would not back down on the Section 232 tariffs in response to retaliation threats, stating that the U.S. “has been ripped off by virtually every country in the world, whether it’s friend or enemy.”

          On March 10, Ambassador Lighthizer met with EU Trade Commissioner Cecilia Malmström and Japanese Trade Minister Hiroshige Seko in Brussels to address non market-oriented policies and practices that lead to overcapacity in certain industries, a follow-up to their joint statement at the WTO Ministerial in Buenos Aires in December 2017. The ministers agreed to take joint action on issues of market distortions and overcapacity and agreed to meet again on the margins of the OECD ministerial meeting in Paris. The meeting in Brussels also focused on the Section 232 tariffs on steel and aluminum, with the EU seeking exemptions from the tariffs. On March 21, a joint statement was released by Ross and Malmström which stated that the two countries have agreed “to launch immediately a process of discussion with President Trump and the Trump Administration on trade issues of common concern, including steel and aluminum, with a view to identifying mutually acceptable outcomes as rapidly as possible.” As noted above, the EU received a temporary exemption from the Section 232 tariffs on March 22.

          According to senior USDA officials, there is more than a 50 percent chance that the EU will retaliate rather than follow Korea’s lead in negotiating VRAs. Recent reports coming out of Europe indicate that the members are divided on how to respond to the Section 232 tariffs. In the meantime, the EU continues to claim that the Section 232 investigations are, in fact, “escape clause” cases rather than based on national security. The rationale for this rather novel claim is that under WTO rules, tariffs imposed under escape clause (also known as “safeguard”) procedures would permit the EU to retaliate by imposing its own tariffs on U.S. products.

          On April 18, EU Trade Commissioner Cecilia Malmström announced that they are making a permanent and unconditional exemption from U.S. steel and aluminum tariffs a condition of any future trade talks with the U.S. Speaking at a press conference in Brussels, Malmström said the EU has not yet received a guarantee from the U.S. that it will be permanently exempted from the tariffs despite ongoing conversations with the Commerce Department and the Office of the U.S. Trade Representative. She also fought back against claims that the EU would offer the U.S. any type of concession in return for a permanent exemption.

          “We have not offered the U.S. anything,” she said. “We are not going to offer them anything to get exceptions from tariffs we consider not in compliance with the [World Trade Organization]. So we are asking them, we are demanding a permanent and unconditional exception from that. When that is confirmed by the president, we are, as always, willing to discuss anything when it comes to trade, trade facilitation, trade irritants, with the U.S. and others. But we are not negotiating anything under threat. We are not offering them anything.”

        3. China’s Response
        4. On March 23, China issued a notice threatening the imposition of tariffs in response to the U.S. Section 232 tariffs on steel and aluminum, proposing a list of 128 U.S. products as potential retaliation targets (see Appendix A). The proposed list of additional tariffs is principally on U.S. agricultural products, as well as steel pipes and scrap aluminum (estimated in excess of $1 billion in imports). A 25% tariff could be imposed on aluminum waste and scrap products. The plan intends to “balance losses to Chinese interests caused by the U.S. tariffs on steel and aluminum products,” an unnamed ministry spokesperson said in a separate statement. If China and the US can't reach trade compensation agreements, China will impose tariffs on the first part of the list of products, the spokesperson noted, adding that tariffs will be imposed on the second part after evaluating the US' influence on China.

      3. Product Exclusion Overview and Process
      4. There is a separate product exclusion process, as recommended in the DOC’s Section 232 steel and aluminum reports to the President. DOC issued a Federal Register notice on March 19 outlining the requirements for companies to seek product exclusions which includes an extensive list of questions for each product request (see Appendix B). Approved exclusions will be made on a product basis and will be limited to the individual or organization that submitted the specific exclusion request, unless DOC approves a broader application of the product-based exclusion request to apply to additional importers. Therefore, trade associations will not be able to file on behalf of multiple members, even if it is for the same product. Instead, each company will need to file for each product which they would like to be excluded. If granted, the relief will be retroactive to the date the request was posted for public comment.

        It will be the company’s responsibility to prove that they cannot source a product domestically. The length of time of the exclusion will vary by product, but could be up to one year, and, if circumstances change (such as a U.S. plant opening), the company will need to provide additional information to prove that they still cannot source the product domestically. If a company is not granted a product exclusion, they could reapply in the future if circumstances change so that they cannot source domestically. Ross testified at a Ways and Means Committee hearing on March 22 that an appeals process would be put in place for companies whose exclusion requests were denied, but no details have been provided.

        There is no deadline for submitting exclusion requests and DOC states that the review period normally will not exceed 90 days, including adjudication of objections submitted on exclusion requests. According to the DOC, the exclusion request process includes a 30-day period for comments, a 15-day period for interagency review, followed by a 45-day period in which Commerce will make a public determination.

        Based upon IBC discussions with U.S. government officials, industry representatives, and on statements by senior level officials, it is doubtful that many product exclusions will be approved unless a clear case can be shown.

  2. SECTION 301 INVESTIGATION ON CHINA
    1. Section 301 Investigation on China
      1. 1. Background and Summary
      2. On August 14, 2017, President Trump signed a memorandum directing USTR to determine whether there was merit to launch an investigation on China’s policies and practices related to intellectual property, innovation and technology. Pursuant to Section 301(b)(1) of the Trade Act of 1974, as amended, USTR initiated an investigation four days later, on August 18, to determine whether acts, policies, and practices of the Government of China related to technology transfer, intellectual property, and innovation are unreasonable or discriminatory and burden or restrict U.S. commerce.

        The Administration’s claim is that China has not followed through on its commitments under the WTO and that endless bilateral dialogues have been tried but without sufficient results. While the WTO Dispute Settlement Body (DSB) might be an option to address discrete policies and issues, it is not adequate to take meaningful action against China’s industrial policies, many of which are not explicitly forbidden under WTO rules. The Section 301 action is a broader enforcement mechanism that has a defensive element to counter what is seen as the growing threat of Chinese policies to the U.S. economy, including cyber theft and forced technology transfers. Given China’s track record of retaliating against U.S. trade actions, the Administration expects China to retaliate against the Section 301 measures as well, but this is not expected to deter U.S. action. President Trump has said that he wants to reduce the $375 billion bilateral goods trade deficit with China by $100 billion.

        While the Section 301 investigation must be completed within one year (by August 2018), it was expected that a determination by USTR would be made before then, which took place on March 22 when USTR published its findings. There are a wide range of retaliatory options available to the President under Section 301, but the statute provides that increased tariffs must be given preference over other options. A factor restraining Presidential action would be concern from U.S. interests that could be harmed by potential counter-retaliation by China.

      3. Selected Retaliatory Actions – Tariffs, WTO DSB Case and Investment Restrictions
      4. The President has directed the U.S. Trade Representative and the Secretary of the Treasury to take the following actions as a response to the Section 301 determination:

        • 25% additional tariffs on certain imported products that are supported by China’s unfair industrial policies. The sectors subject to the proposed tariffs are likely to include aerospace, information communication technology and machinery – there are no agricultural products on this list; a Federal Register notice must be published within 15 days from the President’s March 22 memorandum;
        • USTR will launch a WTO DSB case on China’s discriminatory technology licensing practices, and a progress report is required in 60 days from the memorandum; and
        • The Department of Treasury, in consultation with other agencies, will propose restrictions on investment by China in sensitive U.S. technologies, and a progress report is also required within 60 days.

        We are advised that visa restrictions are still under consideration.

      5. Imposition of U.S. Tariffs on Chinese Imports
      6. It is anticipated that a USTR Federal Register notice would be published late in the week of March 26. The notice will provide only a 30-day comment period reportedly on a list of roughly 13,000 tariff line imported products, and a public hearing will be held in April. The notice is expected to be similar to earlier Section 301 notices by including issues of interest to the Section 301 interagency committee.

      7. China’s Retaliation Threat
      8. In a brief statement, China’s Ministry of Commerce (MOFCOM) condemned the U.S. announcement as representing “unilateralism and protectionism” and as contrary to U.S. and global interests. MOFCOM emphasized that China “does not wish to fight a trade war, but is certainly not afraid of a trade war.” The Chinese Government is expected to respond to the Section 301 determination by imposing retaliation of its own which is likely to go beyond increased tariffs and beyond those already proposed in response to the Section 232 tariffs. "China will absolutely not sit back watching its rights and interests be damaged," said an unnamed official in charge of the ministry's treaty and law department. Public opinions have indicated that China will begin by targeting soybeans and other agricultural products imported from the US as retaliation. Since the U.S. tariff action under Section 301 is not authorized by the WTO, China is arguably not obliged to pursue WTO dispute settlement before imposing retaliatory measures.

      9. President Trump Weighing Additional Tariffs Against China
      10. On April 5th, President Donald Trump said he was considering imposing tariffs on an additional $100 billion in imports from China. The move would triple the amount of Chinese goods facing levies when entering the U.S., up from the tariffs on $50 billion in imports from China that the Trump administration announced earlier that week. The Federal Register public hearing and comments process will run in tandem with the initial $50 billion tariff announcement.

        A Chinese Commerce Ministry official reiterated that China will use “any measure” to fight back and has more “very detailed countermeasures” ready if needed. “We will not exclude any option,” said Gao Feng, the ministry’s spokesman, adding that Beijing is not currently considering talks with U.S. trade envoys. “The Chinese way of doing things is like this: We do not pick a fight, but if someone does pick a fight, we will fight resolutely,” Gao told reporters. “The Chinese have always been very serious in handling these matters. We mean what we say.”

  3. OUTLOOK ON HOW EVENTS WILL UNFOLD
  4. The Trump Administration, led by a team of highly nationalistic and international trade-law savvy USTR negotiators and Commerce Department leadership, has made it clear both in public fora and now in Sections 301 and 232 enforcement decisions that it will, if necessary, disregard international trade obligations memorialized and spearheaded by the U.S. itself in GATT 1994 and the WTO. For example, both the Section 301 increase in U.S. tariffs on Chinese-origin imports and the negotiation of VRAs flatly contravene U.S. international trade obligations. Similarly, the steel and aluminum tariffs are applied under an obscure trade law used only twice by the U.S. in the 16 years since the U.S. joined the WTO in 1994. There is widespread concern that other countries will use the GATT Article XXI and a never WTO “litigated” national security exception to follow the U.S. in protecting their own domestic sectors based on national security (e.g. Japan – rice; India – many sectors).

    For the past 30 or more years, the U.S. has focused on improving U.S. access to foreign markets in favor of import protection. Looking forward, the Trump Administration will likely continue to pursue a strategy with the goal of “rebalancing”, making trade more “fair”, and using the threat of import relief to reduce U.S. bilateral trade deficits. Entering into a global or bilateral trade war, however, will only hurt the U.S. manufactures, farmers, and consumers that the President depends on to retain a Republican Congress and his position in office. The recent KORUS Agreement is a major victory for the Trump Administration and empowers it to continue using trade remedies as a hammer to increase U.S. exports and reduce imports. Going forward, it is likely the Administration will continue to embrace a risky balance aimed at achieving its trade deficit reduction goals without triggering a massive global trade war. On April 17th, the United States announced that it has agreed to hold consultations with China at the World Trade Organization over its Section 232 tariffs on steel and aluminum as well as its proposed tariffs stemming from the Section 301 investigation into China’s intellectual property practices, but maintains that there is no basis in WTO rules for China to request consultations in the first place.

  5. News Clips
  6. March 8, 2018, Trump imposes tariffs on steel and aluminum, but offers relief to allies, By David Lynch, Philip Rucker and Erica Werner, Washington Post

    March 22, 2018, President Trump Signs Memorandum Targeting China's "Economic Aggression", By Time Hains, Real Clear Politics

    March 23, 2018, China stocks plunge after US tariff announcement; By Xinhua, China Daily

    March 23, 2018, China plans to impose tariffs on US imports to offset its loss: MOFCOM; Global Times

    March 23, 2018, China 'Prepared' for Trade War, Unveils Response to Trump Tariffs, By Fran Wang and Pan Che, Caixin

    March 27, 2018, U.S. and China tussle at WTO over legality of Trump tariffs, Tom Miles, Reuters

    March 28, 2018, U.S. Threatened Tariffs to Spur China to Honor Promises: Ambassador; By Qing Ying and Pan Che, Caixin

    March 28, 2018, Trade War to Hurt US More than China; Editorial, Global Times

    April 18, 2018, Trump Weighs Tariffs on $100 Billion More of Chinese Goods, Wall Street Journal

Appendix A: Section 232 Exclusion Request Questions

1.a What is the class of steel product for which the exclusion is sought, and what is the HTSUS for the product?
1.b Provide basic information on your company’s authorized representative/agent.
1.c Do you hold ownership in, or are otherwise engaged as a steel manufacturer, steel distributor, steel exporter or steel importer?
1.d What is the primary type of steel activity you have? What is the total requested annual exclusion quantity?
2.a What is your annual consumption for years 2015-2017 of the steel product subject to your request?
2.b Why do you require an exclusion?
2.c What is the percentage of total steel product covered under this exclusion request not available from steel manufacturers in U.S.?
2.d How many days are required to take delivery of the steel product covered by this exclusion request, from the time the purchase order is issued?
2.e How many days are required to manufacture this product?
2.f How many days are required to ship this product from the foreign port of departure to your company’s loading dock?
2.g How many distinct shipments are needed to transport the product to the U.S.?
2.h What are the U.S. destination port(s) of entry through which the product will be transported?
2.i Is your organization making this exclusion request on behalf of a non-U.S. steel producer that does not manufacture steel products in the U.S.?
2.j Provide a full, complete description of the physical properties of the product.
2.k What are the standards organizations that have set specifications for the product type, and what are their reference designations?
2.l What are the classification and properties of the product?
3.a What is the chemical composition of the product?
3.b What is the dimensional information for the product? What is its performance data for tensile strength, hardness, impact, shear and test temperature?
3.c What is the product’s performance data for ductility, magnetic permeability and surface finish? What are the metal coating process, material type, weight and thickness?
4.a What are the commercial name(s) of the product?
4.b What is the application for the product and why are similar steel products manufactured in the U.S. not suitable?
4.c If the exclusion is needed to support U.S. national security requirements, what is the specific use of the product?
4.d What are the source countries for the product? What is the annual quantity to be supplied? What is the name of the current manufacturer(s) of the product?
4.e Do you know any domestic U.S. parties that currently manufacture this product?
4.f Do you know any parties that currently manufacture the product in a country exempted from this tariff?
4.g Are you aware of any manufacturers capable of producing a substitute for the product in the U.S.?
4.h Have you attempted to qualify any steel manufacturer in U.S. as a supplier of the product in the past two years?
5.a Have you attempted to purchase the product or a substitute from a U.S. manufacturer in the past two years?
5.b Have you had supply contracts, or do you have current contracts with steel producers that manufacture this product in U.S.?
5.c Have you determined that there is no U.S. manufacturer that produces a near-equivalent steel product that would meet qualification requirements?
5.d In the last two years, have you purchased a substitute steel product manufactured in the U.S. in place of the steel product described in the exclusion request?
5.e How will U.S. Customs and Border Protection be able to reasonably distinguish this product at time of entry without adding undue burden to their current entry system and procedures?

Appendix B: Section 301 Exclusion Request Questions

Companies wishing to avoid the 25% tariff on imports from China should be prepared submit arguments to USTR explaining why specific products should not be hit by the tariffs. As outlined in the Federal Register notice, written public comments are due on May 11, 2018. Those wishing to appear at a May 15, 2018 public hearing on the tariff proposal should file a request by April 23, 2018. USTR encourages written comments to be submitted through a standard form, which is attached and can be found at: https://ustr.gov/sites/default/files/301/USTR-2018-0005-DRAFT-0002.pdf

Questions for Consideration: In preparing written comments, the following questions should be considered.

  1. Which tariff lines are particularly important? If imports from China are being made under multiple tariff lines threatened by the tariff, which ones are the most significant in terms of value? While USTR may consider the removal of some tariff lines from the list, it will likely be very targeted. Companies should focus arguments on the tariff lines that are most consequential.
  2. Why should the tariff line(s) be removed? USTR has spelled out that its determination will be based partly on whether the tariff will “cause disproportionate economic harm to U.S. interests, including small- or medium-sized enterprises.” To the extent that a case can be made that the 25% tariff will threaten a U.S. business or manufacturing, that should be spelled out. What is the U.S. MFN tariff on the product?
  3. Who is the Chinese supplier? Would removal of this tariff line be practicable in affecting China’s policies? The Section 301 action is targeting China’s policies which coerce U.S. companies into transferring technology or intellectual property to China or shifting investments there. If the product is being sourced from a manufacturer that was compelled to invest in China in order to gain market access, that might be a strike against the request.
  4. What should the USG know about the imported product(s) and supply chain? Are there onerous U.S. regulatory burdens in getting substitute imports approved? Is there any U.S. production of the imported product? Are non-Chinese-origin imports available? Would Chinese competitors supplying value-added downstream products be aided by the tariff? Would vulnerable consumers be harmed by higher prices for the imported good?

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AIR CARGO SCREENING PILOT GOES LIVE AT JAS USA

By Sommer Sampson

As of Monday March 20, 2018, JAS Forwarding (USA) is now assisting CBP and TSA on its initiative to provide enhanced security for air cargo coming into the United States.

The Air Cargo Advanced Screening (ACAS) initiative was created by U.S. Customs and Border Protection (CBP) to gather data concerning the parties and commodities involved in air cargo prior to its loading on an aircraft at a foreign port. The initiative is currently in the pilot phase allowing CBP to collaborate with the air cargo industry to determine the most effective means of achieving the desired regulatory results without affecting the speed of air cargo operations. CBP extended the ACAS pilot program last year in hopes of getting more participation. Government officials have stated that mandatory compliance with ACAS may be expedited due to a recent scare concerning an IED found on a plane headed for the United States. This prompted an emergency order requiring stricter scrutiny of air cargo by TSA Administrator David Pekoske. Growing terrorist concern has already prompted 6 airlines to comply with this requirement on all cargo originating from certain countries.

"Technology innovation remains a cornerstone of our mission to ensure worldwide transparency and an efficient supply chain for our customers by delivering their cargo on time and securely," said Laurie Arnold, Regulatory Compliance Officer at JAS Forwarding (USA). "As an early adopter and one of the few Forwarders participating in the ACAS pilot program, we are sharing information with CBP further back in the supply chain to help identify high-risk air shipments into the U.S. while accelerating the movement of low-risk shipments."

JAS Forwarding (USA) has partnered with Descartes Global Logistics Network to collect house bill information directly from its Cargo Wise enterprise system to file directly to CBP without any manual intervention, thereby; increasing data quality and velocity.

“The majority of ACAS pilot participants consists of airlines and express carriers, but has lacked forwarder participation. Representing the forwarding community, we have the chance to help write the rules before we are subjected to their requirements," says Sommer Sampson, Corporate IAC Security Coordinator at JAS Forwarding (USA). "We're excited to be an active part in the ACAS pilot and committed to enhancing readiness for the regulation when it is issued." Ms. Sampson is the lead 24hr contact with CBP NTS (National TargetingCenter), along with team member Fabienne Jolly Corporate Compliance Coordinator, CCS. Sampson states, “Getting on board with this Initiative was no easy task and we could not have done it without the assistance of our IT Special Projects division...... It was truly a team effort.”

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Say Goodbye to the Green US-Israel Certificate of Origin Form

By David Noah, President, Shipping Solutions

More than 30 years ago, the United States entered into a free trade agreement (FTA) with Israel that eliminated many of the duties on import of U.S. goods into Israel that met the agreement’s rules of origin. It was the first free trade agreement entered into by the United States.

While Israel is just one of 20 countries with whom the U.S. currently has free trade agreements, it’s one that sometimes gets more attention than others because of its unique green certificate of origin form. Companies often paid $10 or more to purchase a single sheet of this special green paper, since exporters had to submit an original copy of this form to qualify for the FTA benefits.

On April 1, 2018, that all changed. A new agreement between the U.S. and Israel eliminated the green certificate of origin and replaced it with a new U.S. Origin Invoice Declaration that must appear on a commercial document, such as the commercial invoice that should be accompanying the export shipment.

This new declaration reads:

I, the undersigned, hereby declare that unless otherwise indicated, the goods covered by this document fully comply with the rules of origin and the other provisions of the Agreement on the Establishment of a Free Trade Area between the Government of Israel and the Government of the United States of America.

This statement must be signed by the exporter or producer of the goods, depending on who can prove that the goods qualify as duty free under the terms of the agreement. For more information about this change and the full text of the U.S. - Israel FTA, visit the U.S. Trade Agreement Compliance website.

Shipping Solutions export documentation and compliance software has complied with this change by adding a new commercial invoice for exports to Israel that includes this new declaration and its related requirements.

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At Bremer Bank, our experienced international team works closely with customers who are already selling or considering selling in international markets. Our team will help manage risks related to collecting payment from international customers or paying foreign vendors through a deep understanding of the methods of payment. As your partner, Bremer Bank, strives to help you achieve your goals. We will listen to your objectives and apply our expertise to your specific situation, providing solutions that transform a world of possibilities in Global Trade.

Through our partnership with our customers, the Bremer Bank team provides an understanding of:

  • Irrevocable Trade Letters of Credit
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  • Standby Letters of Credit
  • Open Account Trade Transactions
  • ash in Advance Transactions

Other International Services we provide are:

  • International Wire Transfers
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  • Foreign Exchange Contracts
  • Currency Exchange
  • Foreign Drafts
  • Trade Credit Insurance
  • Assistance with International Rules and Guidelines governing International Trade Transactions

We have established working relationships with organizations such as the Minnesota Trade Office, Minnesota Department of Employment and Economic Development, US Commercial Service, Small Business Administration, Export Import Bank, Trade Acceptance Group and Minnesota District Export Council who assist in facilitating foreign transactions in an efficient and effective manner for our customers.

About Bremer

It all started with Otto Bremer, a German immigrant, who began his career as a bookkeeper at the National German American Bank in St. Paul, eventually rising to the role of chairman. Over the years, Otto invested in independent and rural banks, fulfilling a passion for helping smaller banks succeed and flourish. Otto’s concern extended to the communities surrounding his banks.

The Otto Bremer Trust (OBT) is a private charitable trust, established in 1944 by founder Otto Bremer, a successful banker and community and business leader. OBT is the 92 percent owner of Bremer Bank and also manages a diversified investment portfolio. The returns on these holdings provide the funding for OBT’s grant-making, which supports regional and local resources that benefit the communities that are home to Bremer Bank locations.

In 2017, the Otto Bremer Trust awarded a total of $48.7 million in grants and program-related investments to more than 650 organizations in Minnesota, North Dakota and western Wisconsin.

Giving back

Our private ownership structure allows us to make long-term strategic business decisions, rather than respond to short-term market pressures, for the lasting vitality and stability of the bank and communities we serve.

Year after year, Bremer employees volunteer thousands of hours of their time. From helping out local food shelves to lending a hand at local charities and nonprofits, Bremer employees help strengthen communities.

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