Half the companies surveyed by the U.S.-China Business Council say that it's too soon to tell if the tariffs in the China trade war were worth it for the gains won at the negotiating table, even as 78 percent of respondents welcome the phase one deal. Companies see the phase one deal -- which takes effect Feb. 14 -- as something that will prevent more tariff hikes. Of those who are directly affected by the commitments in phase one -- 60 percent of the companies -- the purchase promises matter most, with 30 percent saying that's the most relevant plank. Protection of intellectual property was a close second, with 27 percent of companies saying that's most important.
Exports to China
The Commerce Department Bureau of Industry and Security asked for an 8% boost in funding for the 2021 fiscal year to increase export control compliance and enforcement, bolster initiatives to counter China, and to better identify emerging and foundational technologies. BIS’s request for a $10 million budget increase, submitted to Congress last week, comes as the agency plans to roll out a series of export controls on sensitive technologies (see 1912160032), which will increase its involvement in the Trump administration's effort to sustain the U.S.'s technological advantage over China. BIS specifically asked for just over $1 million and five new positions to help it control emerging and foundational technologies and enforce those controls.
KPMG issued a Feb. 11 alert detailing recent announcements made by China to simplify customs and trading procedures as the country battles the coronavirus outbreak (see 2002030034). China will exempt certain import duties on ambulances and cars used for emergency purposes -- as well as medical supplies such as reagents, disinfection equipment and protective supplies -- through March 31, KPMG said. Importers are also eligible for tax refunds on qualifying supplies if they already paid duties. KPMG said to expect “more tax relief measures” if the virus continues.
As the coronavirus outbreak continues, companies should review their contracts to determine whether they contain force majeure provisions and what those contracts define as force majeure qualifying conditions, according to a Feb. 13 post from Crowell & Moring. A force majeure provision can be triggered by specific language in a contract clause -- such as natural disasters, human threats or acts of God -- or by official announcements from government agencies and nongovernmental organizations, including the World Health Organization, the post said. But the coronavirus outbreak “presents an unusual situation” because it includes both components -- a naturally occurring element and a government action. China confirmed Feb. 10 that the virus outbreak should be considered a force majeure under Chinese law, the law firm said
Japan will allow traders to renew import and export documents and authorizations if they expire due to delays caused by the coronavirus outbreak, the country’s Ministry of Economy, Trade and Industry said in a Feb. 14 notice, according to an unofficial translation. Traders can apply to extend import and export approval certificates, import and export licenses, and customs quota certificates, Japan said. Japan said it is also automatically extending the deadline for traders to meet “conditions attached to the export license” for shipments to China. The country asked traders to fulfill their shipments and orders “as soon as possible.”
The State Department announced penalties on foreign entities for illegal transfers under the Iran, North Korea and Syria Nonproliferation Act, the agency said in a notice. The entities transferred items subject to multilateral control lists -- such as the Wassenaar Arrangement -- that contribute to weapons proliferation or missile production. The entities mentioned in the notice include companies based in China, Iraq, Russia and Turkey and are barred from purchasing items controlled on the U.S. Munitions List and by the Arms Export Control Act. In addition, the State Department will suspend any current export licenses used by the companies; State will bar them from receiving new export licenses for any goods subject to the Export Administration Regulations; and government agencies are barred from entering into procurement contracts with them. The measures took effect Feb. 3.
California-based Alpha and Omega Semiconductor is being investigated by the Justice Department for export control violations relating to shipments to Huawei, the company said in a Feb. 5 press release. The company said it has been ordered by the Commerce Department to stop all shipments to Huawei and is working with the agency to “resolve this issue.” The semiconductor company has an export control compliance program in place and is committed “to comply fully” with U.S. export laws, but said it expects revenue hits due to penalties “incurred in connection with the investigation” and by the “Huawei shipment interruption.”
The Commerce Department withdrew a rule that was expected to impose controls on exports of field effect transistor technology (see 1912170031), according to the Office of Information and Regulatory Affairs within the Office of Management and Budget. The “Gate-All-Around Field Effect Transistor (GAAFET) Technology” rule, which was sent to OIRA in November and withdrawn Feb. 11, was expected to be one of six rules issued by Commerce early this year (see 1912160032) as part of the agency’s effort to control emerging technologies. Commerce has faced delays while trying to release the rules, which officials expected to be issued by now (see 2002040057). So far, Commerce has issued one rule in the vein of emerging technologies: a January interim final rule to control geospatial imagery software (see 2001030024).
The European Commission revoked some tariff preferences granted to Cambodia due to objections over human rights violations “enshrined” in Cambodia’s laws, the commission said in a Feb. 12 press release. The preferential tariffs will be replaced by EU standard tariffs and will affect certain garments, footwear, travel goods and sugar. The change will impact about one-fifth of Cambodia’s yearly exports to the EU, the press release said. The change will take effect Aug. 20 unless the European Parliament or Council objects. In a statement, Commission Vice President Josep Borrell said the preferential tariffs will be reinstated if Cambodian authorities “take the necessary measures.”
The State Department recently held a ship registry management and compliance standards symposium in Washington, D.C., to share recommendations to counter North Korean evasion of sanctions in the maritime arena, the agency said Feb. 11. The symposium gathered representatives from international ship registries, classification societies, foreign governments and industry to improve due diligence and inter-industry communications to stop Illegal North Korean shipping practices. The United Nations is expected to release a report next month alleging that North Korea continued to violate international sanctions last year -- specifically through illegal ship-to-ship transfers -- with China’s help (see 2002110016).