Cross Border Trade Compliance

hypothetiCaL

The following hypothetical illustrates how trade compliance issues can arise for a firm:

Woodlands International Inc. (Woodlands), a U.S.-based publicly traded multinational oilfield services company, manufactures tools and runs operations for National Oil Companies (NOCs) and Independent Oil Companies (IOCs) in eighty countries around the world. Customer XN, an IOC is starting a joint venture in Nigeria with RussiGas, a Russian NOC, and a Nigerian NOC. The name of the joint venture is Nigerian Offshore Development (NOD). NOD issues a tender for oilfield operations support. The work will take place on an offshore rig that operates under an Iranian flag in waters at least 1200 feet deep.

Woodlands prepares its response for the bid. In order to make sure it won the bid, one of the Woodlands salesmen worked with one of the NOC executives. This included flying the official and his family to the U.S., covering a trip to Disney World, giving the official an office job and making a small payment for consulting services. The job requires Woodlands to make and buy tools to bring to Nigeria. One of the contractual requirements in the tender states that Woodlands cannot use any Israeli-produced goods or equipment on the job.

Woodlands has a factory in Israel which makes Woodlands tools needed for the job. Woodlands decides to make and manufacture the tools in Israel, ship the tools to a distribution center in the Netherlands where they will remove or grind off the “Made in Israel” marking, and replace it with a country of origin of the Netherlands. Then, Woodlands will ship the tools to the jobsite in Nigeria.

One of their U.S. competitors has a unique patented tool–designed for the military–that works well but is expensive. Woodlands buys the tool from its competitor and sends it to India to be reverse engineered. The Indian subcontractor gives the designs for the tool to Woodlands and the company in turn send the designs to non-related Factory Z in China that will manufacture the tool. Factory Z employs a skilled workforce in its manufacturing process, and twelve to fourteen year-olds in its packaging department. Factory Z will manufacture the tool and sell it to a Woodlands affiliate in Nigeria. Before shipping, Woodlands asks Factory Z to prepare a commercial invoice with a value of 50% less than the billing invoice, because Nigerian import duties and taxes are high. By reducing the value on its commercial invoice, Woodlands reduces the duties it must pay and protects its profit margin. Factory Z complies. Woodlands successfully completes the job and generates a profit of $200 million dollars. Five weeks later, the Department of Justice (DOJ) knocks on the door of Woodlands’ U.S-based office and Nigerian Customs knocks on the door of Woodlands’ Nigerian office. At the same time, a U.S. competitor serves Woodlands with a lawsuit. The Wall Street Journal publishes an article about child labor in Factory Z, which depicts tools with Woodlands’ logo.

MODERATOR/PANELIST: COURTNEY V. FLORES PANELISTS: TIM BROWN, MEL CHAVEZ, DAVID MORTLOCK, ELLEN C. SMITH

I. Introduction

[The Cross Border Trade Compliance panel began its descussion with the hypothetical on the previous page]. According to the hypothetical, how will Woodlands determine if it is complying with all appropriate trade control and anticorruption laws? In any given transaction, it is crucial to understand what is being sold and what is being shipped. The sale does not have to be of a particular thing, it can be for design plans, drawings, products, or services–all of which are subject to trade control laws.1 After shipping the item or taking it elsewhere, how can the transactional attorney ensure compliance with trade control laws? In the context of a given transaction, there are four broad categories of questions: 1) what is being shipped; 2) where it is being shipped; 3) who will receive the item; and 4) how will the item be used?

Within those broader categories, there are a lot of detailed questions. Some of the more important sub-issues to highlight are as follows. First, what will the item being transferred through the supply chain ultimately become? Second, is the item subject to any applicable export control restrictions? Third, is a license necessary in order to transport the item? Conversely, wherever the item is being imported, is a license required? What needs to be done to comply with other import procedures? Compliance teams should consider that every export corresponds with an import—each is a two sided transaction. Fourth, who is receiving the item? Companies must be sure to utilize screening processes to avoid dealings with those on sanctions lists. Fifth, to what use is the item being put? Discerning the item’s end use is of critical importance before certifying it will not be used in violation of sanctions.

A final question is whether the firm is participating in any sort of non-U.S. sanctioned boycott? This issue is crucial for companies dealing with Middle Eastern countries. Answers to the aforementioned questions lead to the identification of risk areas and, ultimately, to the assembly of a well-structured trade compliance program.

II. Trade Compliance and Red Flags

There is an obligation to know about these laws and to comply with them. If suspicious circumstances surround the transaction, a company cannot hide its head in the sand. That is true with trade compliance and anti-corruption compliance. Any transaction wherein a party appears to be in non-compliance with trade control laws raises a red flag. All red flags are significant, but the most striking is a buyer’s reluctance to offer information about the end use of the product or its ultimate destination.

Companies that have established trusting relations with trading partners are often inclined to certify that the product’s end use is in compliance. In commercial dealings, corporate partners can safely assume each partner will have prepared the relevant documentation. Prudent companies should work closely with main customers and their quality assurance control programs. For example, it is sensible when working with a buyer that has “textiles” in its name, to inquire further as to why they are interested in purchasing oil field tools. Such a purchase should sound odd. It is, in fact, based on a real scenario. The corporate partner was unwilling to sell the customer the tools without both information about where the tools were going and provision of the requisite documentation.

Alarm bells should ring when a product being bought does not appear to fit within the buyer’s line of business. If all is resolved and explanations received, perhaps the firm can become comfortable. However, many times this problem causes transactions to fall apart. Other examples of red flags include fake delivery dates, remote destinations, or circuitous shipping routes. All of these red flags may cause a firm to dive in further to avoid non-compliance.

Many corporate programs have implemented screening processes called Know Your Customer (KYC) programs. The screening process entails running a company or individual’s name through a software tool

that cross-references them against sanctions and politically exposed persons lists. This type of screening serves to address the concerns one may have about a certain company.

Notably, however, a screening process cannot capture everything. Although screening is indeed a requirement, a firm should consider asking common sense questions. Sometimes, a deal simply does not make sense and evades capture by the screening process. Thus, typical screening is not a sensible replacement for undertaking a complete red flag analysis.

III. Administrative Oversight

Three main U.S. governmental agencies have a hand in overseeing cross border trade compliance issues such as export and import controls, sanctions, and antiboycott laws. The Office of Foreign Assets Control (OFAC)2 is the entity within the Treasury Department that deals with economic sanctions, for example, those against Venezuela, North Korea, and Iran.3 There is a great deal of government oversight going on in that space.

The Directorate of the Defense Trade Controls (DDTC) of the U.S. State Department4 works in a focused area of export controls. The DDTC is responsible for implementing trade controls involving militarized goods under the International Traffic in Arms Regulations (ITARs).5 ITARs control military-type grade equipment exported out of the U.S. The government’s concern in restricting those exports is for national security and defense reasons. If companies wish to use and trade militarytype technology converted for commercial use, for example–underwater equipment that allows further exploration of remote, deepwater areas in the energy sector–ITAR compliance is a prerequisite.

The final government agency is the Commerce Department, and through the Bureau of Industry and Security (BIS),6 which enforces, implements, and promulgates regulations related to the export of commercial items having a dual use.7 BIS looks at items that are not deserving of ITAR restrictions, but do have some potential military components, such as information technology (IT) and encryption. The Department of Commerce implements and enforces regulations called the Export Administration Regulations (EARs).8 EARs are the regulations for classifying products and determining whether they are subject to export limitations.9 Products that fall within an EARs classification require a license to export from the U.S.10

There are anti-boycott rules separate from the Treasury regulations.11 The Department of Commerce also has similar regulations.12 These regulations are designed to ensure that U.S. companies are not participating in nonU.S. sanctioned boycotts.

Evident in the alphabet soup here is that government agency oversight is fairly complicated. The U.S. is not doing this deliberately. All of the regulations are driven by different types of governmental concerns and policies, particularly with respect to sanctions. Sanctions are a tool used to restrict U.S. persons, goods, or services exports from the U.S. to the sanction’s target. The government leverages sanctions in situations implicating foreign policy and national security.

A. The Backdrop of Policy

According to the hypothetical, NOD, the joint venture between RussiGas and the Nigerian NOC, seeks to use Woodlands’ tools for deepwater operations under an Iranian flag. Nothing in the Woodlands hypothetical suggests that the project has anything to do with the reason for the U.S. sanctions—Russia’s attempted annexation of Crimea and its interference in eastern Ukraine.13 In order to fully assess what drives the relevant restrictions, background analysis of the relevant sanctions is required. U.S. sanactions are often the key leverage utilized in national security crises and must be strictly followed.

General embargoes14 are in place to block the export of goods and services from the U.S. or from U.S. persons to Cuba, Iran, North Korea, Syria, and the Crimean region of Ukraine. Essentially, there is a general prohibition on exports by U.S. persons of goods and services directly or indirectly to these places, unless the transaction is subject to an exception or a license. Historically, embargoes have operated with the subtlety of a sledgehammer. Such embargoes mean a company can conduct no business. Over time, U.S. sanctions have become smarter and more nuanced. In fact, in the wake of 9/11, a new policy tool emerged— targeted sanctions. Rather than fixating on jurisdictions or state actors, the U.S. focused on individuals and entities with involvement in bad acts, for example, terrorists and their financial supporters, nuclear proliferators, and organized crime figures.15 Further, there are some sanctions16 that aim restrictions not on the country itself but rather on the individual entities undermining U.S. interests in that country. Examples of such programs are those against South Sudan, Yemen, Burundi, and North Korea, until

2016.17

B. Sanctions

If targeted sanctions are in place where a U.S. company does business, there is the potential for that company’s engagement in a transaction involving a specially designated national (SDN). There are possibly 15,000 individuals on OFAC’s SDN list in locations spread across the globe.18 The U.S. also has a set of restrictions that apply to any entity owned 50% or more by an SDN.19 Entities owned 50% or more by an SDN, or multiple SDNs in the aggregate, are subject to the same restrictions regardless of whether the entity’s name appears on the SDN List. Thus, looking at the SDN list is not enough.

The most recent sanctions involve Russia20 and Venezuela.21 Sanctioning Russia was in some sense a “Catch-22” for the U.S. The concern was that listing major Russian financial institutions and energy companies as SDNs could cause cataclysmic events in the global oil market and financial sector because of the close integration of those institutions with the European and U.S. systems. Thus, the U.S. government crafted limited sanctions measures barring U.S. companies from engaging in certain transactions, such as dealing in the financial sector or providing assistance to listed Russian oil companies for non-conventional oil projects.22 Targeted sanctions are much more nuanced and beneficial because they lend the government more flexibility in the imposition of restrictions. These sanctions aid U.S. business with their less cumbersome

nature.

On the other hand, such sanctions complicate the work of compliance professionals. A company cannot simply say “well this entity is on the list, so we cannot do business with them” or “it is off the list, so no problem.” The situation is dicier than that. Who do these sanctions really affect? The bottom line is that sanctions programs affect everyone. Any person who exports goods or services from the U.S., whether a U.S. company, a U.S. citizen, a green card holder, or someone employed overseas, qualifies as a “U.S. person” and is generally restricted by such sanctions.23

There are special sanction rules for Cuba and Iran. The Cuba rules apply to anyone or any entity owned or controlled by a U.S. person.24 That is also true for Iran, although the scope in those regulations has flipflopped several times over the last few years. In 2012, the Iran sanctions were extended to cover foreign subsidiaries.25 However, through the Joint Comprehensive Plan of Action (JCPOA)–commonly known as the Iran nuclear deal–restrictions on foreign subsidiaries were effectively lifted with a license.26 Now restrictions are back in place because of President Trump’s decision to withdraw from the JPCOA.27

Finally, even a non-U.S. person visiting the U.S working for non-U.S. companies cannot ignore these rules. The largest sanctions enforcement action targets—BNP Paribas and ZTE—all share something in common; they are non-U.S. companies. In addition to having less robust compliance departments than their U.S. counterparts, the way these non-U.S. firms often get in to trouble is by exporting from the U.S. to sanctioned jurisdictions or targets. In the case of ZTE, the illegal conduct was exporting U.S. technology indirectly to North Korea and Iran. Even foreign companies have to comply with sanctions when there is a U.S. nexus.

Even if there is not a U.S. nexus, companies must still worry about U.S. sanctions. Beginning in the 1990s, the U.S. government began threatening sanctions against foreign companies dealing with Iran, leading up to the sanctions on Iran prior to the nuclear deal.28 That is what has been reimposed with the withdrawal of the nuclear deal, the threat of sanctions against foreign companies for doing on-site commercial activity with Iran.

Now, there are sanctions with regard to Russian SDNs and Hezbollah. There have even been reports of the State Department wandering around Europe threatening companies with sanctions if they buy oil from Venezuela. Whether applying sanctions in this context is a legitimate application of law is another question. The bottom line is that everybody needs to worry about OFAC sanctions.

Further, indirect business transactions are subject to sanctions. A company may say “our business is not selling to Iran; we do not have to worry.” However, OFAC administers civil penalties with strict liability, which means it does not matter what the company knows, or should have known, or the intent.29 What matters is where the product ends up and whether it was intended for that destination at the time it was exported from the United States. There could be many occasions where a company might think it is clean because the sales go to its distributor. However, that would not actually shield the

company.

C. Licensing

How sanctions are imposed by the government is getting more complicated. For example, the aggressive use of licensing makes sanctions more complex. In 2014, the

U.S. government could not put Sberbank and Rosneft on the SDN list without causing a global meltdown. The U.S. government also thought there could be similar problems in 2011 when it sanctioned PDVSA (the Venezuelan state-owned oil company) but did not put it on the SDN list.30 In early 2019, however, OFAC placed PDVSA on the SDN list.31 At the same time, OFAC issued nine general licenses, several of which were updated over the last few months.32 These sanctions prevent companies from doing business with PDVSA, absent a license, which allows doing business with PDVSA in certain ways. Essentially, what that means is a firm exercising an abundance of caution may decide to do no business with Venezuela at all. However, is it worth it to tell business teams to shut down a rig and pull out of Venezuelan waters thus suffering losses of hundreds of millions? Or is it worth the extra time and attention to the get the lawyers involved to drill down (pun intended) on what the company may be able to do?

Sectoral sanctions are limited sanctions, such as restrictions relating to debt equity. The use of such sanctions simply means U.S. companies must be very careful. Take for example, the joint venture, NOD, in the hypothetical. In reality, the first thing a company would do is screen that joint venture. Is it on the Sectoral Sanctions Identifications (SSI) list?33 Is it owned by any entity on that list? Ownership by someone on the SSI list presents a problem, and an even bigger one if that person is on the SDN list. How will the debt and credit of the joint venture be structured? Is it going to be consistent with the restrictions on a U.S. person providing credit to someone on the SSI list? If the joint venture is divided 50/50, then it will also be subject to sanctions. U.S. companies are only able to extend credit to the joint venture over the allowable maturity.34 All of these issues need to be built in on the front end (screening) when a firm puts such investment arrangements together.

D. Issues with Joint Operation

Harking back to the above hypothetical: assume that NOD, the new entity, is a 60/40 joint venture with a Russian company in deepwater greater than 500 feet (the U.S. government definition of deepwater). The Russian company is subject to OFAC Directives 235 and 4.36 The joint venture itself is not subject to sanctions if it has less than 50% SSI ownership. Depending on whether or not the joint venture is subject to OFAC, the transaction may be further complicated by: what the company can own as a “U.S. person”; whether it can extend credit to the Russian parent; and if, as a U.S. person, the company can facilitate the joint venture’s extension of credit to that Russian company. What degree of oversight is a U.S. parent company charged with if engaging in a joint venture entity? Are U.S. persons charged with approving transactions by that entity? Would OFAC consider its role as merely supporting operations with back-end office functions? The key would be to determine at what point OFAC considers a U.S. parent company to be “supporting” specific transactions with a Russian parent.

With respect to the hypothetical, Directive 437 restricts U.S. persons from providing support to deepwater projects at depths greater than 500 feet or those with the potential to produce oil involving a listed Russian entity or one of its 50% or more owned subsidiaries. Again, is the U.S. company providing support to the joint venture partner, or facilitating the joint venture’s support in those areas to the Russian parent? If so, the U.S. company could be engaged in a prohibited facilitation of an activity covered by Directive 4.

Another issue connected to the hypothetical is that the joint venture–NOD–is conducting its work on an offshore rig under an Iranian flag. Everyone should understand the blatant issue–the rig is flying an Iranian flag. U.S. companies will have a problem working on that rig.

There are two problems. First, if the rig was in Iranian commerce or the good originates from Iran, U.S. persons are prohibited from engaging in the transaction. Depending on the arrangement with the rig, there could be an export of services by a U.S. person to Iran. If the joint venture is held fifty-fifty by Woodlands, a U.S. person, these restrictions on Iran extend to the subsidiary as well. With the joint venture, the restrictions on dealing with goods of Iranian origin do not actually extend to foreign subsidiaries–because the regulations were not written correctly.

One might wonder, “the rig is not in Iran anymore, how can the company be exporting services to Iran?” This line of thinking fails to recognize that such transactions are an indirect export of services to Iran. Essentially, if one is engaging in a transaction outside of Iran and the benefit—not necessarily the primary benefit, but any at all—is received in Iran, OFAC considers that an export of services to Iran.38 Even more removed, the “facilitation” by a U.S. person of the export of services to Iran is also prohibited by the regulations.39

To give some examples from a practical standpoint, it is not uncommon to have

global virtual teams working together on projects. When acting as in-house counsel, part of the education process is telling the project and commercial people to be mindful that the bulk of the team may be outside the U.S., but they are pulling in people to the U.S. to provide support. That proposition must serve as a constant reminder to these teams: be clear that there must be no U.S. nexus. The employee cannot go back to the U.S. now. The company cannot pull them in on certain aspects of the transaction. The lawyer must make clear to the team the sensitivity of the issue and severity of potential consequences.

Even worse, there have been numerous enforcement actions involving approval from the U.S. for a foreign entity, whether or not it is a subsidiary of another company for a transaction that would be prohibited for U.S. persons. OFAC also takes the position that a referral is prohibited facilitation.40 If a request comes into your company on the business side, involving a sanctioned Russian entity or incorrect export to Iran or Cuba, you cannot say “I’m sitting here in my Houston office, I cannot approve it, but I can help Fred in the Paris office, who can deal with these issues, because he’s not a U.S. person.” In that situation, the U.S. lawyer has engaged in a prohibited facilitation as a U.S. person. This highlights the importance of the U.S. nexus in such questions.

Take PDVSA as an example of just how narrowly tapered targeted sanctions can be. The same day that OFAC placed PDVSA on the SDN list, internal licenses were issued. Confusingly, the licenses authorized certain activities and certain entities, but with different deadlines. There were questions about at what date and time the company’s work was considered to no longer be covered by licenses. The company had to take a close look to assure certain licenses only covered certain activities for a certain amount of time and that other licenses covered something else for different periods of time. The targeted nature of these sanctions necessitates careful attention to exactly what each authorization allows.

No transaction is simple—a company is not just going to enter haphazardly into a transaction with a company like PDVSA. While some larger corporations may be fortunate enough to be named on the general licenses, they will have to exercise caution or altogether avoid assisting partners, who may not be named, to prevent violating the law.

Lawyers viewing these issues from the inside fly blind. OFAC writes the licenses. There is no notice-and-comment period on these regulations, because they are intended to, and many times do, surprise the target and are meant to be deployed swiftly. So, OFAC writes these general licenses on the assumption that they will mesh with the real world. OFAC is hoping it has identified all the unintended consequences. OFAC takes that goal seriously, particularly with regard to the Russia sectoral sanctions. Those were only put in place following complex economic modeling on the possible impacts. At the end of the day, however, a lot of guesswork went into how a set of sanctions may affect the real world. Licenses for Venezuela,41 for example, have been frequently updated after being issued. There is constant adjustment and tinkering by the U.S. government to try and get it right. In real time, companies deal with the consequences–such as when financial transactions are halted while employees sit stagnant on remote rigs. That is when in-house counsel gets a call in the middle of night asking, “Hey lawyers, what is the answer?”

IV. Export Controls

Referring back to the above hypothetical–Woodlands bought its tool from a competitor. The tool was highly technical, patented, and designed for military use. The company sent it to India to be reverse engineered, and then had the tool manufactured in China. What

issues arise?

Essentially, sanctions are restrictive on individuals and entities, usually, U.S. persons. Export controls are restrictions on the item, regardless of who is exporting. Where is the item going? Where is it being transported? What borders will it cross? The answers to these questions are controlled by ITARs (International Traffic and Arms Regulations)—administered by the State Department—which covers munitions list and military use items. Additionally, the EARs (Export Administration Regulations) cover everything else and generally restrict U.S. origin items exported or re-exported42 from the United States. The untrained eye may think an item in Europe that happens to be of U.S. origin being sent to a third country does not involve any U.S. person. But a U.S. company must still exercise caution as these regulations control items termed to originate in the U.S. If the item started in the U.S., export controls are going to be an issue regardless.

There are certain percentages43 of U.S. origin equipment that, if sent to another country to be incorporated into a new product and then on to another country, may fall within the regulations. The question

becomes: does the item remain of U.S. origin? Generally, it comes down to whether or the item is made of 25% or more U.S. origin equipment. That is true for most countries, except when the item is going to Iran or another sanctioned jurisdiction. In that case, the U.S. origin percentage decreases to 10%, but the government often plays that number up or down. A similar discussion about categorization took place with respect to sanctions on Russia.

Encryption is a pertinent issue when examining export controls. Encryption, it is worth noting, falls under the umbrella of “items” as that is defined, encompassing both goods and technology. The technology could be almost any proprietary technology developed here in the U.S. Software is becoming an export control issue. Of course, the reason software may fall within that export control category—in which exports may be conditioned on procurement of a license—is the encryption component.44 The Commerce Department tends to follow behind the real-world in these areas, but has been catching up with guidance.

When dealing with software, one question to ask is whether or not it operates on a cloud or is downloadable? For a long time, the Commerce Department operated on the assumption that all software would move from Country A to Country B in the form of a hard floppy disk. The reality is technology was developing far beyond that model. Now software may be shared either by remote download or operation of the cloud. In the latter case, no export occurs if the user has no access the underlying technology. Regulators need to understand how that distribution of the technology works and moves around the world.

The Commerce Department and the State Department are not alone. Other departments within the government are getting involved, such as the Department of Defense. A vast number of regulations are driven by turf wars and personalities within the U.S. government. In the context of export controls, there is an ongoing tug of war between agencies as to who controls on a particular issue. The Department of Defense is involved in the Committee on Foreign Investment in the United States (CFIUS) process, which reviews incoming investments in the United States. The Foreign Investment Risk Review Modernization Act of 2018 (FIRRMA)45 expands the jurisdiction of the Department of Defense to export controls, inasmuch as it concerns foreign investment in U.S. companies manufacturing and designing controlled technology.

A company planning to export needs to know the nature of its technology, not just to determine whether it can export it but also to determine who can invest in the company, whose money it can take, and whether that requires approval from the U.S. government. The type of product and its export classification affects these issues as well. On classification of the product for export, a company could determine there is no need to worry since the item is just going down the road to Houston.

Companies planning to share information must also consider the concept of “deemed exports.”46 If a company discloses or otherwise exposes an export controlled item to a foreign national, essentially a nonU.S. entity, the U.S. government treats that sharing of information as an export, even if it occurs in the United States. This shows the different layers in this regulatory space that go to national security concerns and satisfy other policy objectives.

As a practical example of the debate within the agencies over control, consider the sanctions on Sudan. These sanctions were recently lifted and from a sanctions perspective are no longer comprehensive. However, there is still state-sponsored terrorism. Particularly with equipment and services suppliers, there are many export controls to manage. When Sudan opened up, so too did the opportunities. However, the Department of Commerce requires submission of a written request to obtain a license, a process that can take some time. Most often, requests bounce around several different agencies. A Department of Commerce license may be approved. However, additional circumstances may necessitate another agency’s approval. Delays may happen because everyone in the government wants to have a look at the license before it gets issued. A typical situation may involve several agencies inquiring about a written request—a document which may begin as two or three pages that evolves into fourteen—before a license is actually issued.

V. U.S. Antiboycott Rules

What is a boycott? A boycott, in essence, is a law or policy enacted by Country A prohibiting the import to or export of goods or services to Country B or the entry or employment of their nationals. The U.S. antiboycott regulations47 are administered by two departments, the U.S. Department of Commerce and the U.S. Department of Treasury.48 The rules are designed to prevent the participation and the cooperation with international

boycotts that the U.S. government does not enforce. The antiboycott regulations apply to U.S. companies, their foreign subsidiaries, branches, U.S. citizens, taxpayers, and residents.49 This set of regulations is of great import to the trade compliances programs in multinational corporations and firms with global reach.

There are different reporting requirements for each department. Companies are required to report boycott-related requests on a quarterly basis to the U.S. Department of Commerce and on an annual basis to the U.S. Department of Treasury.

Boycott requests can be oral or written and appear in a variety of commercial documents such as an invitation to bid or tender, contract, purchase order, request for quote, letter of credit, shipping instructions, and so on. What is reportable is the request itself, not simply whether “we agree” to the request or not. The U.S. anti-boycott rules and regulations are principally concerned with the Department of Treasury’s list of boycotting countries in the Arab League, which are as follows: Iraq, Kuwait, Lebanon, Libya, Saudi Arabia, Syria, Qatar, United Arab Emirates, and Yemen.50 These countries maintain boycott laws on their books, requiring careful attention when reviewing any commercial documents received from customers in these countries or authorizes services to be performed in these countries. Note that boycott requests can come from a variety of sources and are not limited to those in Treasury List countries, such as Pakistan, India, Bangladesh, Malaysia, China, and Taiwan.

With respect to oversight, what are some red flags to look for? When a company receives an opportunity for the business, its commercial team reviews the documents for any potential boycott-related language. If there is potential boycott-related language, such as “Contractor shall comply with all applicable laws of [insert Treasury List country],” then that language must be revised because it is too broad and arguably would include the Treasury List country’s boycott of Israel laws. Such language would be submitted to the compliance team for review and advice on how to negotiate with the customer. Compliance teams pay special attention to key words and red flags including, but not limited to: mentions of Israel or Israeli companies; language targeting other boycotted countries; port eligibility; and requests for employee data, such as national origin, race, religion, ethnicity, gender, or place of birth or the equivalent. Then, the compliance department can either advise on how to revise such language or strike a clause entirely because it is prohibited and penalized under U.S. antiboycott rules and regulations.

A boycott-related current event in trade compliance involves the Senate’s recent passage of a bill on February 5, 2019, the Strengthening America’s Security in the Middle East Act, which includes the Combating B.D.S. Act of 2019 (BDS).51 The law—combatting boycott, divestment, and sanctions activities—allows U.S. states to implement anti-BDS laws and further allows them to divest from government contractors participating in the boycott of Israel.52 Supporters say that the act is meant to oppose the global BDS movement and show U.S. support for Israel. However, opponents of the legislation say this is more of a restriction on the First Amendment right to free speech, specifically the right to boycott. The American Civil Liberties Union (ACLU) has filed suit on behalf of government contractors that have been affected by this legislation. In two cases, in Kansas and Arizona, the federal courts have ruled in favor of the ACLU and their clients.53 However, there are twenty-six states that currently have anti-BDS laws, including Texas. It will be interesting to see how this pans out and what cases will arise. In the hypothetical, one of the contractual requirements in the tender stated that the contractor–Woodlands–could not use any Israeli goods or equipment on the Nigerian joint venture job. While drafters may always provide origin information, in terms of the actual country of origin, they should never certify that any particular country or supplier was not involved. Certain boycotting countries, however, do have laws that prohibit the importation of goods originating from boycotted countries. The Department of Commerce excepts primary boycotts from its prohibitions. Thus, compliance with the import requirements of a boycotting country is not prohibited. However, such requests must be reported to the Department of Commerce. Where the business would otherwise have done so based on business merits, the business should continue to use Israeli goods and components for items sent to countries that do not boycott Israeli goods. Merely removing the marks from the tool is a potential compliance issue.

VI. Customs Issues

On the import side, there are three important questions an attorney must ask himself or herself. First, what is the item and how is it classified? Second, what is the value of the item? This is critical from an import

perspective, much more than it is on the export side. Third, where is the item coming from–what is the country of origin?

The term classification carries an entirely different meaning depending on whether imports or exports are at issue. With respect to exports, classification refers to the Export Control Classification Number (ECCN), which is determinative as to which controls apply to a particular item. The number changes depending on what the item is. However, import “classification” involves the harmonized tariff number, commodity code, or import number.54 The U.S. tariff number is a ten-digit number and anything imported into the U.S. is classified according to the tendigit code in the tariff. Locating the relevant number is critical to understanding which import duties apply.

Secondly, what is the items valuation according to its classification? The vast majority of duties for items subject to the tariff are imposed on an ad valorem basis–in proportion to the item’s value. As illustrated by the hypothetical, a company can try to play around with the value, tweaking it to get a lower duty payment.

One exception is found in Chapter 27 of the U.S. Harmonized Tariff Schedule,55 which primarily affects petroleum and petroleum products. Typically, duties are paid on a specific rate of duty based on the value or the weight of the cargo. However, application of this exception involves basing the rate of duty on the specific quantity of barrels imported. The tariff may not make sense for the widget world—one that involves pieces of equipment and parts. For companies that are importing hydrocarbons in bulk tankers, a barrel-based valuation is more sensible.

Finally, the third question deals with the country of origin. In the hypothetical, Israel is the tool’s true country of origin. Woodlands later transshipped the tool to a different country, by getting another firm to hide the true country of origin. Woodlands’ course of action had more to do with concealing Israel as the country of origin because of a boycott. However, this practice is not uncommon for those merely trying to give off the appearance that an item moved from a different country in order to take advantage of that country’s lower duty rate. Different countries pay different duty rates.

Customs issues are impacted by special programs, including bilateral and trilateral free trade agreements, such as NAFTA or now, the USMCA. Free trade agreements may involve two or more countries negotiating and looking for reciprocal export benefits. Under these agreements all of the participating countries benefit mutually from each others’ exports.

Unilateral preferential programs are another sort of specialty program, designed to encourage development between certain countries and the U.S.56 The Generalized System of Preferences (GSP) and the African Growth and Opportunity Act (AGOA) are the most commonly known. The U.S. exports to GSP and AGOA member countries that satisfy specified conditions, receiving no benefit in return.5758 Benefits are not necessarily provided duty-free, but often do receive a lower duty rate than had the products come from countries not within these programs.

A. 232 Tariffs

Trade compliance programs are on the front lines of the “trade war”. The Trump administration has initiated several trade wars, viewing tariffs as the great equalizer. Only time will tell if that is in fact the case. In the meantime, the administration has added additional tariffs on goods on top of preexisting tariffs. Importers feel the brunt of the impact, especially with respect to the Section 232 tariffs on aluminum and steel.59 The Trump administration found when initiating those tariffs that, as a matter of national security, domestic steel imports are very sensitive. Sensitivity of both the steel and aluminum industries prompted the Trump administration’s determination that both needed protection. Tariffs on raw steel and aluminum, as well as products derived from those materials, are subject to increases of 25% or 10% additional duties, as the case may be.60 Additional duties as a general rule are applied across the board, with limited exclusions.61 Those products excluded from additional duties however are subject to quotas that cap the quantity of total imports each year.62

As a practical example, take Brazil–where the steel pipe quotas operate to “open” up each quarter, closing within mere hours. As a result, importers and their brokers must be prepared to submit their import documentation at the moment it opens–as complicated by the fact that the government does not advertise exactly when it will open–and cross their fingers. Evidently, such quotas complicate trade compliance.

B. 301 Tariffs

Section 301 tariffs63 target China and are retaliatory in nature. The U.S. currently has four different retaliation lists.64 The U.S. has lists of Chinese practices they are seeking to see some improvement on. For example, companies seeking to do business in China must form a joint venture with a Chinese partner. Upon formation, Chinese

law requires the non-China partner to turn over its technology to its Chinese counterpart, which as a general matter are at least nominally affiliated with the Chinese government itself. The U.S. fundamentally opposes forced technology transfers.

List three includes 5,733 items, valued at a whopping 200 billion dollars’ worth of merchandise and went into effect May 10, 2019.65 Then, a fourth list went into effect on September 1, 2019, covering 3,796 items valued at 300 billion dollars.66 Later that month, President Trump tweeted that the first three lists, scheduled to increase from 25% to 30% effective early October, were subject to a hold based on the outcome of the “Phase 1” interim U.S.-China Agreement reached in their recent negotiations.67

Another issue in the “trade war” is the trade imbalance–unsurprisingly, the U.S. imports far more than it exports to China. These are just two of the many issues the U.S. government is concerned with resolving in the ongoing U.S.-China negotiations. The eyes of the global business community are upon them as this takes place, and the outcome still remains to be seen.

In the meantime–is it workable for multinational companies to simply just take Chinese goods, ship them to say–Singapore, and then import them from Singapore to get around the tariff increases? No, because the country of origin, not the country of export, is determinative. The import–however routed—goes back to the country of import. This may be confusing to those unfamiliar with this nuanced system, thus companies and their respective compliance programs must ensure that the supply chain is made aware. Classification, valuation, and country of origin are integral, not only for those in the import sector of trade compliance, but in order to understand the way free trade agreements operate more generally.

VII. Anti-Dumping and Countervailing Duties

When a foreign manufacturer sells goods in the U.S. for less than fair value, causing injury to U.S. industry, antidumping occurs.68 Both anti-dumping and countervailing duties69 are considered unfair trade practices.70 Foreign companies “dumping” are selling into the U.S. market, hoping to drive out U.S. competition, at which point the dumpers can drive prices back up. Affected U.S. industries can initiate an investigation, either through the International Trade Commission (ITC)71 and the International Trade Administration (ITA)72 within the Commerce Department. Both agencies investigate and ultimately determine whether: 1. dumping is taking place; and 2. if material injury has occurred as a result. Satisfaction of both elements will result in the U.S. government issuing “the delta”—the difference between the price the item is actually sold for in the U.S. and fair market value—as a duty.73 This is a trap for the unwary, capable of blindsiding importers ignorant of these processes with anti-dumping duties commonly in the 200%-300% range, on top of the actual price the importer paid for the good. Countervailing duty law works similarly. The usual case involves a foreign government assisting a foreign manufacturer by providing subsidies or tax incentives, giving the manufacturer a leg up on U.S. industry. Therefore, companies would be wise to exercise caution if a deal seems too good to be true and ensure the import is not captured by either a countervailing duty or an anti-dumping duty order.

The above holds particularly true in the current political climate. Each year, U.S. Customs Border Protection (CBP) announces its priority areas. In both 2018 and 2019, CBP’s announced priorities included anti-dumping, countervailing duties, and the “trade war.” Since his candidacy as well as throughout his presidency, President Trump made NAFTA a big target. Aside from the Iran Deal, he proclaimed NAFTA the “worst trade deal ever made.”74 He similarly targeted the Trans-Pacific Partnership (TPP), a multilateral free trade agreement. One of his first actions coming in the office was to withdraw from the TPP.75

United States-Mexico-Canada Agreement (USMCA)76 has gotten lot of attention, and many argue it to be a brandnew free trade agreement, while others insist it is merely NAFTA 2.0.77 There are tweaks on the edges, but for all practical purposes, not a lot has changed from under NAFTA. The Trump administration is stepping back in many ways from the U.S.’s traditional role as the global leader.

Looking ahead, there are several other bilateral trade agreements potentially on the horizon, such as the U.S.-E.U. agreement. The Trump administration has indicated a preference for dealing bilaterally. For example negotiations are underway for a U.S.-U.K. free trade agreement in anticipation of Brexit.78 Further, similar one-to-one style negotiations took place between the U.S. and Japan–signing a new agreement this September,79 as well as the 2018 revisions to the U.S.-Korea (KORUS)80 deal.81 Similar to NAFTA, as opposed to USMCA, the revisions to KORUS resembled a tweaking

of the issues rather than a major overhaul of the agreement as a whole.

Understanding classification, valuation, and country of origin is important, not only for those in the import sector of trade compliance but also for understanding the way free trade agreements work.

VIII. Conclusion

Firms must address issues on several fronts when conducting business or seeking out transactions at the multinational level. Compliance implications can arise in structuring the deal itself, seeking out business partners, establishing operations abroad, and transshipping goods. Federal administrative oversight is driven by both foreign policy and national security concerns, rather than industry regulation or worker safety, often yielding puzzling outcomes.

Export controls restrict an item from shipment without regard to the identity of the exporter, generally targeting certain sanctioned jurisdictions such as bad actors like Iran or Russia. Sanctions are often specific to certain types of items and sectors or limited in quantity, rather than operating as a blanket bar. Exporters, particularly those in the technology sector, will often encounter issues posed by cross-cultural differences— such as SOEs in China. Thus, professionals may be required to request and obtain licenses to fully comply with U.S. law. An inquiry as to a particular item’s classification, valuation, and country of origin is essential to properly complying with taxes levied on imports by customs, generally assessed on an ad valorem basis.

Compliance professionals must be prudent in ensuring that countries of origin are accurately represented, and not hidden or purportedly coming from a different country to take advantage of lower duty rates or avoid boycott rules. Tariffs majorly impact importers, and those dealing in Chinese markets must stay apprised of the latest developments with ongoing negotiations. Trade wars between the U.S. and other countries can lead to dumping in the American market in an attempt to drive American businesses out by undercutting the prices of goods. This leads to anti-dumping and countervailing duties being applied to both individual companies and specific countries. In efforts to control trade issues, the Trump administration is attempting to deal with other nations less on a multilateral bases and more on bilateral basis. In sum, lawyers should look at the big picture and, a point that cannot be overstated, exercise an abundance of caution when advising clients.

1. See generally 15 C.F.R. § 30 (2019). 2. U.S. Dep’t of the Treasury, Office of Foreign Assets Control (Apr. 5, 2019, 5:53 PM), https:// www.treasury.gov/about/organizational-structure/offices/pages/ office-of-foreign-assets-control. aspx [hereinafter OFAC] [https:// perma.cc/638V-RFV4]. 3. U.S. Dep’t of the Treasury, Venezuela-Related Sanctions, https://www.treasury.gov/ resource-center/sanctions/ programs/pages/venezuela.aspx [https://perma.cc/3E2Q-SXGZ] [hereinafter Venezuela-Related Sanctions]; U.S. Department of the Treasury, Iran Sanctions, https://www.treasury. gov/resource-center/sanctions/ Programs/Pages/iran.aspx [https:// perma.cc/4TKJ-DNEF]; U.S. Dep’t of the Treasury, North Korea Sanctions, https://www. treasury.gov/resource-center/ sanctions/Programs/pages/nkorea. aspx [https://perma.cc/NY2WQ3U8] [hereinafter North Korea Sanctions]. 4. U.S. Dep’t of State, Directorate of Defense Trade Controls, https://www.pmddtc.state.gov/ ddtc_public?id=ddtc_public_ portal_about_us_landing [https:// perma.cc/UVK6-H6TV]. 5. See 22 C.F.R. §§ 120–130 (2019) (implementing the Arms Export Control Act, 22 U.S.C. § 2778 (2019)). 6. U.S. Dep’t of Commerce, Bureau of Industry and Security, https://www.bis.doc.gov/ (last visited Jan. 22, 2020). 7. 15 C.F.R. § 730.3 (2019). 8. 15 C.F.R. §§ 730–774 (2019) (implementing the Export Administration Act of 1979, 50 U.S.C. App. 2401–2420 (2012)). 9. Id. 10. Id. 11. Id. § 760. 12. Id. 13. See Statement by the President on Ukraine, The White House President Barack Obama (Mar. 17, 2014), https:// obamawhitehouse.archives.gov/ the-press-office/2014/03/17/ statement-president-ukraine [https://perma.cc/2QE4-8ME3]. 14. See U.S. Dep’t of the Treasury, Sanctions Programs and Country Information, https:// www.treasury.gov/resourcecenter/sanctions/Programs/Pages/ Programs.aspx [https://perma.cc/ X875-QDLV]. 15. U.S. Dep’t of the Treasury, Specially Designated Nationals and Blocked Persons List, https://www.treasury.gov/ resource-center/sanctions/SDNList/Pages/default.aspx [https:// perma.cc/QZW6-CQ4B]. 16. U.S. Dep’t of the Treasury, Balkans-related Sanctions, https://www.treasury.gov/ resource-center/sanctions/ Programs/pages/balkans.aspx [https://perma.cc/C99T-MJT4]; U.S. Dep’t of the Treasury, Iraq-Related Sanctions, https:// www.treasury.gov/resource-center/ sanctions/Programs/pages/iraq. aspx [https://perma.cc/A4KC66AR]; U.S. Dep’t of the Treasury, Lebanon-Related Sanctions, https://www.treasury. gov/resource-center/sanctions/ Programs/pages/leb.aspx [https:// perma.cc/5QMR-PB2F]; U.S. Dep’t of the Treasury, Malirelated Sanctions, https:// www.treasury.gov/resource-center/ sanctions/Programs/pages/mali. aspx [https://perma.cc/76PA58H7]; U.S. Dep’t of the Treasury, Nicaragua-related Sanctions, https://www.treasury. gov/resource-center/sanctions/ Programs/pages/nicaragua.aspx [https://perma.cc/3SVD-EG9J]; U.S. Dep’t of the Treasury, South Sudan-related Sanctions, https://www.treasury. gov/resource-center/sanctions/ Programs/pages/south_sudan. aspx [https://perma.cc/562S5V59] [hereinafter South Sudanrelated Sanctions]; U.S. Dep’t of the Treasury, Syria-Related Sanctions, https://www.treasury. gov/resource-center/sanctions/ Programs/Pages/northeast_syria. aspx [https://perma.cc/PJ4ZSBNG]; U.S. Dep’t of the Treasury, Ukraine-/Russiarelated Sanctions, https:// www.treasury.gov/resourcecenter/sanctions/Programs/Pages/ ukraine.aspx [https://perma. cc/FD7J-MDW7] [hereinafter Ukraine-/Russia-related Sanctions]; Venezuela-Related Sanctions, supra note 3. 17. South Sudan-related Sanctions, supra note 16; U.S. Dep’t of the Treasury, YemenRelated Sanctions, https:// www.treasury.gov/resourcecenter/sanctions/Programs/pages/ yemen.aspx [https://perma.cc/ X9AP-8YX7]; U.S. Dep’t of the Treasury, Burundi Sanctions, https://www.treasury. gov/resource-center/sanctions/ Programs/pages/burundi.aspx [https://perma.cc/4PZC-66FC]; North Korea Sanctions, supra note 3. 18. U.S. Dep’t of the Treasury, OFAC Specially Designated Nationals and Blocked Persons List (Oct. 23, 2019), https://www.treasury.gov/ofac/ downloads/sdnlist.pdf [https:// perma.cc/PJV2-42L6]. 19. Dep’t of the Treasury, Revised Guidance on Entities Owned by Persons Whose Property and Interests in Property are Blocked (Aug. 13, 2014), https:// www.treasury.gov/resource-center/ sanctions/Documents/licensing_ guidance.pdf [https://perma. cc/RC2T-QQHM] [hereinafter Revised Guidance]. 20. Ukraine-/Russia-related Sanctions, supra note 16. 21. Venezuela-Related Sanctions, supra note 3. 22. See U.S. Dep’t of the Treasury, Sectoral Sanctions Identifications (SSI) List, https://www.treasury.gov/ resource-center/sanctions/ SDN-List/Pages/ssi_list.aspx [https://perma.cc/VCQ8EPWW] [hereinafter Sectoral Sanctions Identifications (SSI) List]; see also Exec. Order No. 13,662, 79 Fed. Reg. 56 (Mar. 24, 1994), https://www.treasury. gov/resource-center/sanctions/ Programs/Documents/ukraine_ eo3.pdf [https://perma.cc/4CQJ7ZA9]. 23. See, e.g., 31 C.F.R. § 560.314 (2018). 24. See 31 C.F.R. § 515.329 (2018). 25. 31 C.F.R. § 560.215 (2018). 26. 31 C.F.R. §560 (2018); See e.g., Dep’t of the Treasury, Iranian Transactions and Sanctions Regulations 31 C.F.R. Part 560 (2018), https://www.treasury. gov/resource-center/sanctions/ Programs/Documents/iran_glh. pdf [https://perma.cc/BPA4AC7Q]. 27. See U.S. Dep’t of the Treasury, Revocation of JCPOA-Related General Licenses; Amendment of the Iranian Transactions and Sanctions Regulations; Publication of Updated FAQs, https://www.treasury.gov/ resource-center/sanctions/OFACEnforcement/Pages/20180627. aspx [https://perma.cc/WGF9XZDB]. 28. See Ashish Kumar Sen, A

Brief History of Sanctions on

Iran, Atlantic Council (May 8, 2018) , https://www. atlanticcouncil.org/blogs/newatlanticist/a-brief-history-ofsanctions-on-iran/ [https://perma. cc/J4K2-SQVW]. 29. See Dep’t of the Treasury, A Framework for OFAC Compliance Commitments 11, https://www.treasury.gov/ resource-center/sanctions/ Documents/framework_ofac_ cc.pdf [https://perma.cc/5QCNP3UR]. 30. Seven Companies Sanctioned Under the Amended Iran Sanctions Act, U.S. Dep’t of the Treasury, https://2009-2017.state.gov/r/ pa/prs/ps/2011/05/164132. htm [https://perma.cc/C7UGUWRZ]. 31. See U.S. Dep’t of the Treasury, Treasury Sanctions Venezuela’s State-Owned Oil Company Petroleos de Venezuela, S.A., https://home.treasury.gov/news/ press-releases/sm594 [https:// perma.cc/342U-7E4A]. 32. Venezuela-Related Sanctions, supra note 3. 33. See generally Sectoral Sanctions Identifications (SSI) List, supra note 22 (listing for determining sanctions); see generally U.S. Dep’t of the Treasury, Office of Foreign Assets Control Sectoral Sanctions Identification List (2018), https://www.treasury.gov/ofac/ downloads/ssi/ssilist.pdf [https:// perma.cc/UK8V-UDM9]. 34. See Revised Guidance, supra note 19. 35. See U.S. Dep’t of the Treasury, Directive 2 (As Amended on Sept. 29, 2017) under Exec. Order 13662 (2017), https:// www.treasury.gov/resource-center/ sanctions/Programs/Documents/ eo13662_directive2_20170929. pdf [https://perma.cc/QY88D5YE]. 36. See U.S. Dep’t of the Treasury, Directive 4 (As Amended on Oct. 31, 2017) under Executive Order 13662 (2017), https:// www.treasury.gov/resource-center/ sanctions/Programs/Documents/ eo13662_directive4_20171031. pdf [https://perma.cc/3WXWCY4C]. 37. Id.

end notes

38. 31 C.F.R. § 560.204 (2018). 39. 31 C.F.R. § 560.208 (2018). 40. 31 C.F.R. § 560.417 (2018). 41. Venezuela-Related Sanctions, supra note 3. 42. U.S. Dep’t of Commerce, Bureau of Industry and Security, https://www.bis. doc.gov/index.php/documents/ regulation-docs/410-part-730general-information/file [https:// perma.cc/KA32-G42H]. 43. See Bureau of Industry and Security, De Minimis Rules and Guidelines, https://www.bis. doc.gov/index.php/documents/ pdfs/1382-de-minimis-guidance/ file [https://perma.cc/43F4NA82]. 44. Bureau of Industry and Security, Encryption and Export Administration Reglations (EARs), https://www.bis.doc.gov/ index.php/policy-guidance/encryption [https://perma.cc/9T7E3MGF]. 45. Title XVII—Review of Foreign

Investment and Export Controls, H.R. 5515—538, 115th Cong. § 1701 (2018), https:// home.treasury.gov/sites/default/ files/2018-08/The-ForeignInvestment-Risk-ReviewModernization-Act-of-2018FIRRMA_0.pdf [https://perma. cc/3PXA-M4G4]. 46. 15 C.F.R. § 734.13 (2016). 47. 15 C.F.R. § 760 (2019); see also 50 U.S.C. §1701 (2012). 48. Bureau of Industry & Security, Office of Antiboycott Compliance (OAC), https:// www.bis.doc.gov/index.php/ enforcement/oac [https://perma. cc/XQN9-CPN2]. 49. Id. 50. Daniel B. Pickard, Lori Scheetz & Tessa Capeloto, Treasury Publishes

List of Boycotting Countries, Wiley Rein LLP (Jan. 28, 2016), https:// www.wileyrein.com/newsroomarticles-Treasury-Publishes-Listof-Boycotting-Countries.html [https://perma.cc/YNC2-LCAN]. 51. S. 1, 116th Cong. § 402 (2019). 52. Id. 53. Brian Haus & Kate Ruane, In

Congress, a Threat to Americans’

First Amendment Right to Boycott, ACLU Blog (Jan. 28, 2019, 3:00 PM), https://www.aclu.org/ blog/free-speech/congress-threatamericans-first-amendment-rightboycott. 54. About Harmonized Tariff Schedule, USITC, https://www. usitc.gov/harmonized_tariff_ information [https://perma. cc/FBE9-6P2W]; see also U.S. Customs & Border Protection, Tips for New Importers and Exporters (Feb. 27, 2019), https://www.cbp.gov/trade/basicimport-export/importer-exportertips [https://perma.cc/K2RS6C5B]. 55. Mineral Fuels, Mineral Oils, and Products of Their Distillation; Bituminous Substances; Mineral Waxes, 2019 Harmonized Tariff Schedule of the United States 27-5 (2019). 56. Office of the U.S. Trade Representative, Generalized System Preferences (GSP), https://ustr.gov/issue-areas/ trade-development/preferenceprograms/generalized-systempreference-gsp [https://perma. cc/5ZB3-G5JL]. 57. Office of the U.S. Trade Representative, Preference Programs, https://ustr.gov/ issue-areas/preference-programs [https://perma.cc/EA8N-KQLC]. 58. See, e.g. , U .S. Trade Representative, U.S. Generalized System of Preferences: GUIDEBOOK 6 (2017), https://ustr.gov/ sites/default/files/gsp/GSP%20 Guidebook%20March%202017. pdf. 59. Rachel F. Fefer Et Al., Cong. Research Serv., R45249, Section 232 Investigations: Overview and Issues for Congress 7 (2019) [https:// perma.cc/8WMQ-HFB2]. 60. Id. 61. Id. at 9-10. 62. Id. at 8. 63. Office of the U.S. Trade Representative, China Section 301–Tariff Actions and Exclusion Process, https:// ustr.gov/issue-areas/enforcement/ section-301-investigations/tariffactions [https://perma.cc/B2GHW4XD]. 64. Office of the U.S. Trade Representative, $34 Billion Trade Action (List 1), https:// ustr.gov/issue-areas/enforcement/ section-301-investigations/ section-301-china/34-billiontrade-action (last visited Oct. 18, 2019); Office of the U.S. Trade Representative, $16 Billion Trade Action (List 2), https:// ustr.gov/issue-areas/enforcement/ section-301-investigations/ section-301-china/16-billiontrade-action (last visited Oct. 18, 2019); Office of the U.S. Trade Representative, $200 Billion Trade Action (List 3), https:// ustr.gov/issue-areas/enforcement/ section-301-investigations/ section-301-china/200-billiontrade-action (last visited Oct. 18, 2019); Office of the U.S. Trade Representative, $300 Billion Trade Action (List 4), https://ustr.gov/issue-areas/ enforcement/section-301investigations/section-301china/300-billion-trade-action (last visited Oct. 18, 2019); see also Int’l Trade Admin., Current Foreign Retaliatory Actions, https://www.trade.gov/mas/ ian/tradedisputes-enforcement/ retaliations/tg_ian_002094.asp (last visited Oct. 18, 2019). 65. Brock R. Williams & Keigh E. Hammond, Cong. Research Serv., IF1110943, Escalating U.S. Tariffs: Timeline (2019). 66. Id. 67. Ana Swanson, Trump Reaches

‘Phase 1’ Deal With China and

Delays Planned Tariffs, N.Y. Times (Oct. 11, 2019), https://www.nytimes.com/2019/10/11/business/ economy/us-china-trade-deal. html. 68. 19 U.S.C. § 1673 (2012). 69. Id. § 1671. 70. 15 U.S.C. § 45 (2012). 71. 19 C.F.R. § 207.10 (2019). 72. Id. § 354.6. 73. Id. § 351.211. 74. President Donald Trump, Remarks by President Trump on the United States – Mexico – Canada Agreement (Oct. 1, 2018) [https:// perma.cc/3KUP-F268]. 75. See Office of the U.S. Trade Rep., The United States Officially Withdraws from the Trans-Pacific Partnership (2017), https://ustr.gov/aboutus/policy-offices/press-office/ press-releases/2017/january/USWithdraws-From-TPP [https:// perma.cc/C2XU-X5YU]. 76. Office of the U.S. Trade Rep., Agreement between the United States of America, the United Mexican States, and Canada 05/30/10 Text (2019), https://ustr.gov/trade-agreements/ free-trade-agreements/unitedstates-mexico-canada-agreement/ agreement-between [https:// perma.cc/J7VF-F3BR]. 77. John S. Baker & Lindsey Keiser,

NAFTA/USMCA Dispute

Settlement Mechanisms and the

Constitution, 50 U. Miami InterAm L. Rev. 1, 7 (2019) (“The language of NAFTA’s Chapter 19 was carried over almost verbatim to the USMCA Chapter 10 with a few new additions for digitizing filing and decisions.”); see also Cherie O. Taylor, Twenty-First Century Trade

Policy: What the U.S. has Done &

What It Might Do, 23 Currents: J. Int’l Econ. L. 49, 56 (2019) (“The proposed USMCA contains chapters covering all of the original NAFTA topics as well as most of the newer topics.”). 78. Office of the U.S. Trade Rep., U. S.-UK Trade Agreement Negotiations, https://ustr. gov/countries-regions/ europe-middle-east/europe/ united-kingdom/us-uk-tradeagreement-negotiations [https://perma.cc/8LTK-LR8Y]. 79. Cathleen D. Cimino-Isaacs & Brock R. Williams, Cong. Research Serv., IF11120, U.S.-Japan Trade Agreement Negotiations (2019) [https:// perma.cc/8JH3-AQR2]. 80. Office of the U.S. Trade Rep., Fact Sheet on U.S.-Korea Free Trade Agreement Outcomes (2018), https://ustr.gov/about-us/ policy-offices/press-office/factsheets/2018/september/fact-sheetus-korea-free-trade [https://perma. cc/N7ET-7R9Y]. 81. Office of the U.S. Trade Representative, U.S.-Japan Trade Agreement Text (2019), https:// ustr.gov/countries-regions/japankorea-apec/japan/us-japan-tradeagreement-negotiations/us-japantrade-agreement-text.