Welcome to Weise Wednesday! Twice a month we share a brief Q&A with the former U.S. Commissioner of Customs, Mr. George Weise. If you have questions, we encourage you to send them to This email address is being protected from spambots. You need JavaScript enabled to view it..

 

Q. A lot has happened in the last few weeks. Could you please update us on recent developments on the trade front?

A. There have been a number of recent developments on topics I have addressed in past Weise Wednesdays. Today I would like to bring you up-to-date on those developments.

 

Section 232 tariffs on steel and aluminum took effect with some modifications

The additional 25% and 10% tariffs on certain steel and aluminum products resulting from Presidential Proclamations 9704 and 9705 went into effect at 12:01 a.m. on Friday, March 23. Shortly before that, President Trump announced that the additional tariffs would be temporarily suspended until May 1, 2018, for the following countries:

  • Argentina
  • Australia
  • Brazil
  • Canada
  • Mexico
  • Member countries of the European Union
  • South Korea

Discussions are taking place between each of these countries and the U.S. to explore alternative means of addressing the threatened impairment to U.S. national security. A determination will be made by May 1, 2018, on whether the exemption from the tariffs for these countries will continue based on the status of the discussions to reach an agreement on an acceptable alternative means of addressing the problem.

This week it was announced that the U.S. and Korea have reached an agreement in principle on modifications to their bilateral free trade agreement (KORUS), which will allow Korea to be permanently exempt from the additional tariff on steel. There does not appear to be a similar agreement exempting Korea from the additional aluminum tariffs.

 It has been reported that the modifications to the KORUS relate to new concessions Korea made to the U.S. on automobiles. The exemption from the additional steel tariffs is also contingent on Korea limiting its steel shipments to the U.S. to 70% of their average between 2015 and 2017, or roughly 2.7 million tons.

The process for directly affected parties to apply for exclusions from the additional tariffs for specific steel or aluminum products was announced in a recent Federal Register Notice. The U.S. Bureau of Industry and Security has also provided instructions and forms regarding the exclusion and objection process for aluminum and steel. But at this time, I am not aware of any specific product exclusions that have been granted.

 

GSP program was renewed

The recently enacted Omnibus Funding Bill (H.R. 1625) includes a provision that renews the Generalized System of Preferences (GSP) program until December 31, 2020. The program had expired on December 31, 2017. The President signed the bill on Friday, March 23, and the GSP provisions will become effective 30 days after that date. The bill also includes a retroactive provision providing duty-free treatment for entries made after December 31, 2017, and before enactment of this legislation for goods that would have been entitled to GSP treatment if entered before the program’s expiration.

 

U.S. considers section 301 trade action against China for IPR violations

On March 22,  President Trump directed the Office of the U.S. Trade Representative (USTR) to draw up a list of Chinese products that potentially could be subject to increased U.S. tariffs as a result of the 301 action launched last year related to forced technology transfers and the theft of U.S. intellectual property rights (IPR).

The new tariffs could apply to $50 to $60 billion worth of Chinese exports to the U.S. The list of products subject to the additional tariffs is to be issued within 15 days of the March 22 announcement. Among the products expected to be targeted for the increased tariffs are robotics, aerospace, maritime, rail equipment, electric vehicles, and telecommunication and biopharmaceutical products. USTR has suggested that an additional 25% tariff could be imposed on the products identified.

The proposed list of products is expected to be issued in a Federal Register Notice for public comment. All comments will be reviewed by USTR and the interagency section 301 committee. The additional tariffs are expected to become effective 60 days after the public comment process is complete and final product list is published.

China has already begun to compile a list of U.S. products to retaliate against if the U.S. goes through with its intention to increase tariffs on Chinese products. It is hoped that the two countries can negotiate a resolution of the underlying U.S. IPR complaints during this period to avoid the implementation of the additional tariffs.

 

Senate approved Kevin McAleenan’s nomination as CBP Commissioner

On March 20, the Senate finally completed the approval process for Kevin McAleenan’s nomination to the position of Commissioner of U.S. Customs and Border Protection. The Senate voted 77-19 in favor of confirmation. He has been serving as Acting Commissioner for the past 14 months and was nominated by President Trump on March 30, 2017.