Arent Fox International Trade Issues Preview the Top 10 for 2010
We all know that 2009 was an exceptionally turbulent year with unprecedented upheavals in markets and economies, along with anxiety about our collective economic futures. In the world of trade, we witnessed dramatic declines – over 13 percent according to the most recent statistics. The impact on NAFTA trade was even more pronounced, with surface trade off 27 percent-plus for most of the year. Even Chinese trade was affected, although the effects were harder to see with an economy that grew 8.7 percent through the crisis.
We all hope for a better 2010. Current forecasts suggest a rebound of 7 percent-plus for world trade in 2010, but only time will tell.
In the midst of all the crises, the US government trade authorities continue their drive toward further regulation of our borders, seeking to secure import operations, aggressively enforce immigration and export control rules, and pursue the anticorruption agenda. The trend toward aggressive enforcement will continue in 2010, highlighting the need to maintain and even upgrade compliance systems and engage in ever more due diligence.
And there are new dangers on the horizon. The climate change debate rages on, with the distinct probability of some form of carbon tariffs coming out of the process. The temptation to succumb to economic nationalism, with its myriad forms of protection under the guise of “safety” or “saving jobs” or “consumer protection,” is becoming almost impossible for legislators to resist. Can the World Trade Organization provide a shield from these trends, or will it be sidelined by the rush to protect national interests at the expense of global prosperity?
As always, vigilance is the key to anticipating events and staying ahead of the game. Your friends in the international trade group at Arent Fox have taken a bit of time to muse about the events of 2009 and some of the likely issues we will face in 2010. We hope you will find our kick-off Trade Issues Preview helpful. We would be pleased to have a member of our practice group provide further guidance on any of the topics covered.
All the Best for 2010.
The International Trade Team
Arent Fox LLP
The Climate Change Debate: Are Carbon Tariffs In Our Future?
Although climate change legislation held a central position in the Obama administration’s 2010 agenda, recent developments in Copenhagen, Massachusetts, and Washington have moved “cap & trade” legislation well down the administration’s priority list. The fate of the administration’s climate change aspirations for 2010 is now uncertain, but if and when climate change action is revived border equivalence measures (aka “carbon tariffs”) will occupy a prominent position.
For more information, click “The Climate Change Debate” in our “Downloads” section to the right.
Immigration Issues Preview
US Immigration and Customs Enforcement (ICE), an agency of the US Department of Homeland Security, is expected to increase its enforcement actions in the coming year to ensure that employers are complying with immigration laws.
For more information, click “Immigration Issues Preview” in our “Downloads” section to the right.
In response to recurring public health scares and large-scale product recalls, many arising from supposedly contaminated or defective imports, the US Government has made import safety a high priority and launched multiple and broad-based initiatives to identify and investigate imports that could present health, safety, or environmental risks. 2010 will mark the first year of implementation of many of these programs, which will present new obligations and risks to U.S. importers and their foreign suppliers.
For more information, click “Import Safety” in our “Downloads” section to the right..
Fighting the Urge to Protect: Technical Trade Barriers and the WTO
Since taking office last year, US Trade Representative (USTR) Ron Kirk has made clear that challenging foreign technical and health barriers to trade will be a high priority for American trade enforcement efforts. These barriers can range from discriminatory labeling requirements and technical standards and regulations to health inspection requirements that operate as barriers to imports.
For more information, click “Technical Trade Barriers” in our “Downloads” section to the right.
New Defense Trade Controls Broker Rules: I'm a broker, you're a broker...
People and entities that engage in brokering of defense articles are required to register with the US Department of State’s Directorate of Defense Trade Controls (DDTC). However, the current definition of a broker and brokering activities under Part 129 of the International Traffic in Arms Regulations (ITAR) is rather unclear and confusing. Following up on previous statements of its intention to do so, on November 25, 2009, DDTC made public a draft of a proposed rule to amend Part 129. Specifically, the draft rule changes and significantly broadens the very definition of “broker” and “brokering activities.”
For more information, click “New Defense Trade” in our “Downloads” section to the right.
Customs Trends: More Audits, More Security, More Enforcement
Importers can expect US Customs and Border Protection (CBP) to maintain – and in many cases, increase – its focus on audits, security, and enforcement activities in 2010. Arent Fox’s customs team has identified some hot customs issues importers should keep an eye on for the coming year.
For more information, click “Customs Trends” in our “Downloads” section to the right.
ITC Section 337 Trends for 2010
If January’s activity is any indication of this year’s expected caseload for US International Trade Commission’s (“ITC” or “Commission”) intellectual property infringement actions under Section 337 of the Tariff Act of 1930 (19 U.S.C.1337), then 2010 has started on a high note. Five new 337 complaints were filed in the first three weeks of January on products such as notebook computers, cellular phones, PDAs, wireless communication system server software and LCD devices. This is an indicator of the continuing attractiveness of 337 investigations to owners of intellectual property and the likely increase in its use during 2010.
For more information, click “ITC Section 337 Trends” in our “Downloads” section to the right.
Impact of the New $250,000 Per Violation Maximum Penalty on Settlements of Export Enforcement Cases
Since October, 2007, the maximum civil penalty for export control violations increased from $50,000 to $250,000 (or twice the value of the transaction, whichever is higher). This was a huge increase, and compounded a prior elevation of fines from $11,000. The new fines also applied retroactively, although they were not applied to many violations for which voluntary disclosures were filed or enforcement actions were pending or commenced by the date of enactment of the law (October 16, 2007). Many exporters have been left asking “what fine levels apply to me?” when faced with a disclosure or enforcement action.
For more information, click “Settlements of Export Enforcement Cases” in our “Downloads” section to the right.
Trade Litigation Outlook For 2010
In two 2009 trade remedies cases, the US Court of International Trade pushed back against the US Department of Commerce’s methodology in closely-watched antidumping/countervailing duty (AD/CVD) cases, suggesting that the court will carefully examine any attempt by Commerce to “short-circuit” the AD/CVD statutory framework. In one, the court disallowed a methodology that would have resulted in a high risk of double counting of duties against a Chinese manufacturer; in the other, the court rejected Commerce’s attempt to review only two producers of the subject merchandise. The ball is clearly in Commerce’s court as to how to respond to the court’s decisions, and Commerce’s responses will have a significant impact on trade remedies cases in the coming year.
For more information, click “Trade Litigation Outlook” in our “Downloads” section to the right.
Anticorruption Enforcement: More Record Settlements to Come, Individual Prosecutions on the Rise, and the "New Normal" for Due Diligence
Aggressive enforcement of the Foreign Corrupt Practices Act (FCPA) in the United States and foreign anticorruption laws abroad continued unabated in 2009, and 2010 will see more of the same. The US Securities and Exchange Commission (SEC) has established a new unit devoted exclusively to FCPA investigations, and US Department of Justice (DOJ) officials have signaled their intent to expand enforcement of anticorruption laws to more industries (pharmaceutical companies being the latest to hear the warning bell).
For more information, click "Anticorruption Enforcement” in our "Downloads” section to the right.