Elsa Manzanares and Michelle Schulz 2016-12-20 18:02:59
From the historic changes in U.S. relations with Cuba to reform of the U.S. export control system, the past few years have seen significant and newsworthy changes in international trade law—2016 was no exception. What follows are some of last year’s important developments in U.S. customs, export controls, and sanctions regulations. In February, President Barack Obama signed into law the Trade Facilitation and Trade Enforcement Act of 2015, what many consider the most significant customs legislation since the Customs Modernization Act of 1993. Noteworthy provisions include new enforcement procedures for U.S. Customs and Border Protection to counteract evasion of antidumping duties by importers, including a requirement that customs and border officials formally investigate allegations of duty evasion within a specified time period. The legislation also enhanced import-related protection of intellectual property rights and authorized a number of trade facilitation programs administered by the federal government. Ministers from 12 nations signed the Trans-Pacific Partnership, or TPP, free trade agreement. Though negotiations have concluded, the U.S. has yet to ratify TPP. Signatories include Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, the United States, and Vietnam. Proponents of the deal argue a key benefit of its enactment would be tariff elimination over agreed timeframes. Duty reduction could be dramatic, as TPP countries import nearly $3 trillion in manufactured goods, farm products, and natural resource products per year. In the auto industry, for example, TPP would eliminate a 30 percent tariff on imports of U.S. automobiles into Malaysia and a 27 percent tariff on imports of U.S. auto parts into Vietnam. Opponents of TPP cite concerns about specific provisions of the agreement, such as protections for pharmaceutical companies’ prices for medicine. The U.S. Department of Treasury’s Office of Foreign Assets Control and the Department of Commerce’s Bureau of Industry and Security published several amendments to their respective Cuban sanctions regulations following Obama’s announcement in 2014 of a new direction in U.S.-Cuba relations. The amendments increased opportunities for travel to Cuba by U.S. persons, authorized exports from the U.S. to increase support for the Cuban people, and expanded the authorization for physical and business presence in Cuba for certain entities and exporters. In January, the U.S. announced the historic lifting of sanctions related to Iran’s nuclear program. Although this measure was significant for non-U.S. persons, sanctions relief remains limited for U.S. residents. The trade embargo on Iran remains in place, leaving U.S. companies broadly prohibited from engaging in transactions involving Iran. The most significant opening for U.S. companies was the Office of Foreign Asset Control’s issuance of a favorable licensing policy to permit U.S. persons to request authorization to export, re-export, sell, lease, or transfer to Iran commercial passenger aircraft and related parts and services for exclusively civil, commercial passenger aviation end-use. As part of Obama’s Export Control Reform Initiative, the Bureau of Industry and Security and the Department of State took steps to harmonize their respective regulations by revising terms used in the Export Administration Regulations for dual-use goods and the International Traffic in Arms Regulations for defense articles. The revisions clarify certain terms and add new definitions for others. The bureau also introduced new security thresholds for electronically transmitting encrypted technology and software without causing an “export” under the regulations. In September, in an effort to further streamline the export regulations, Bureau of Industry and Security officials announced revisions to the Export Administration Regulations that eliminated the encryption registration requirement for exporters and amended the annual reporting requirements for exports of certain encryption products. With trade policy in flux, international companies updated their compliance procedures substantially in 2016. As trade policy further evolves in 2017, we anticipate trade compliance will continue to be an important area of focus for risk mitigation. ELSA MANZANARES is co-chair of Gardere’s international trade practice, where she advises clients on various U.S. and international regulations and trade compliance. MICHELLE SCHULZ is a corporate partner in Gardere in Dallas, where she is a founder and co-chair of the firm’s international trade practice.
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