1. Get Ready: U.S. Ban on the Import of Xinjiang Goods Goes Into Effect on June 21
In late December 2021, President Joe Biden signed the Uyghur Forced Labor Prevention Act (UFLPA). The new law creates a rebuttable presumption that any goods created in whole or in part in the Xinjiang Uyghur Autonomous Region of China (Xinjiang) have been made using forced labor and are therefore banned from entering the United States. The ban, which goes into effect on June 21, will apply to all goods with Xinjiang-origin inputs, regardless of sector, country of export, or country of origin. Customs and Border Protection (CBP) has announced that it will issue known importer letters to importers the agency has identified as having previously imported merchandise that may be subject to the UFLPA. CBP aims to issue these letters in advance of June 21. However, all importers should be reviewing their supply chains to identify and replace Xinjiang inputs/suppliers and to compile documentation demonstrating that none of their products are linked to Xinjiang or to forced labor.
2. China Section 301 Tariffs To Be Reviewed
The United States Trade Representative (USTR) has announced the start of a mandatory review of the China Section 301 tariffs. The USTR will notify representatives of domestic industries that benefit from the tariff actions through letters to interested parties that previously submitted comments in support of the tariff actions and through the issuance of a Federal Register notice. Requests for continuation must be submitted prior to the four-year anniversary of the action, which is July 6.
3. Suspension of Normal Trade Relations With Russia and Belarus
Biden has suspended normal trade relations with Russia and Belarus. Beginning on April 9, imports originating from Russia and Belarus will be ineligible for the most-favored nation (MFN) tariff rates the United States currently applies to imports from all World Trade Organization member countries. Instead, imports originating from Russia and Belarus will be subject to the duty rates set forth in "Column 2" of the Harmonized Tariff Schedule of the United States, which average approximately 32.3 percent (versus an average MFN rate of 3.3 percent). The suspension remains in effect until Jan. 1, 2024. Note that a companion law now also prohibits the importation of oil, gas, and coal from Russia.
4. Russian Crypto Mining Biz Target of Sanctions
On April 20, the Treasury Department's Office of Foreign Assets Control (OFAC) targeted Russia's virtual currency mining industry in an effort to ensure no asset becomes a mechanism for the Putin regime to offset the impact of economic sanctions. Russian virtual currency company Bitriver AG and 10 Russia-based subsidiaries were designated by OFAC. Those doing business in crypto mining and trading should review and update their compliance procedures accordingly.
5. U.S. Offers $5 Million for Help Curbing North Korea Cyber Ops
The Department of State's Rewards for Justice Program announced that it will pay up to $5 million for information that helps authorities disrupt North Korea's illicit actions in cyberspace. This announcement came after the FBI linked a March cyberattack against Axie Infinity, which resulted in the theft of more than $620 million, to North Korean hacking group Lazarus. OFAC announced new sanctions against an ethereum wallet belonging to Lazarus that allegedly holds the stolen funds.
6. FTC Charges Battery Maker in First Case Under New Made in USA Labeling Rule
The Federal Trade Commission is alleging that Lithionics Battery LLC has falsely claimed its battery and battery module products were made in the USA since 2018. The products were marketed using phrases and American flag images to convey a Made in USA marketing message, but the FTC alleges the products were actually made in China. The proposed settlement includes a civil penalty of $105,000. This is the first enforcement action under a revised rule implemented by the agency last year that prohibits marketers from including unqualified Made in USA claims on labels unless 1) final assembly or processing of the product occurs in the United States; 2) all significant processing that goes into the product occurs in the United States; and 3) all or virtually all ingredients or components of the product are made and sourced in the United States.
TRADE TIP OF THE MONTH: Take Note: AML
compliance does not necessarily cover U.S. economic sanctions
requirements.
OFAC's strict liability sanctions requirements apply to all U.S. parties, not just financial institutions and financial services companies. These requirements are not the same as AML requirements. Effective OFAC compliance requires every U.S. party 1) to screen each and every entity that it does business with around the world and 2) to have geolocation blocks for embargoed countries and the three embargoed regions in Ukraine. Companies also should keep screening paperwork for five years.
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