Cross-Post from the frESH Blog – Latest News and Perspectives on California Prop 65

Under California’s Proposition 65 (Prop 65), any business with 10 or more employees that manufactures, sells, or distributes any consumer product containing a listed substance in California – directly or indirectly – must label the product with a clear and reasonable warning.  As such, understanding and complying with Prop 65, including the new regulations that became effective on August 30, 2018, is critical to companies with supply chains involving California.

Our colleagues Kendra Sherman and Danelle Gagliardi recently posted important updates on Prop 65.  Of particular note, the article contains an update on proposed amendments to clarify how parties in the supply chain can warn or pass along warning information to parties downstream.  You can read the article on our frESH Blog here.

 

Brexit: The Next Three Months

Under Brexit, the UK is likely to leave the EU at the end of March 2019 – a development that will impact many global supply chains.  Whether the UK will leave pursuant to an orderly arrangement, or whether it will leave without a deal is still unclear, and will likely remain unclear for the next several weeks and perhaps months.  Even if the UK leaves the EU in an orderly manner, the nature of its future trading relationship with the EU will need to be determined in a relatively short period, and the product of those negotiations will form the basis of the UK’s future trading relationships with the rest of the world, including the United States.

Our colleagues have prepared a summary briefing analyzing the likely impacts of BREXIT.  The key point is that, although there is likely to be short-term disruption, BREXIT is likely to give rise to a significant number of opportunities, including in supply chain operations, and it is important to anticipate these developments and plan for them now rather than later.  For example, both the US and UK governments are now actively laying the groundwork for a new free trade agreement.

More information can be found in the attached briefing.

 

 

 

Quoted in Bloomberg Law: Human Trafficking Case Could Lead to Expanded Supply Chain Liability

In Ratha v. Phatthana Seafood Co. Ltd., Cambodian plaintiffs sued various companies under the Trafficking Victims Protection and Reauthorization Act (TVPRA), alleging that the companies benefitted from human trafficking in the shrimp and seafood industries in Thailand.

Flickr / linvoyage

A California district court found that the claims against certain defendants failed because those companies did not knowingly participate in or benefit from human trafficking; that decision is now on appeal to the Ninth Circuit.

Bloomberg Law’s Federal Contracting News examines the significance of the case for government contractors and large companies with overseas business.  Sarah Rathke provides comments on the substantial risks that companies with global supply chains could be subject to if there is a finding of passive TVPRA liability.

You can read the article here: Human Trafficking Case Could Increase Supply Chain Stress.

 

Taxation in a Global, Digital Economy: Recent Developments

In the most recent edition of the Tax Strategy & Benefits Newsletter, our colleagues address international efforts to find a consensus on the tax challenges arising from digitalization of the global economy.

The G20/OECD Base Erosion and Profit Shifting (BEPS) Project has so far failed to find an international consensus.  That delay and lack of progress has led others to explore alternative paths. The European Union, in particular, has sought to lead the way in defining the problems and formulating the answers.  The Tax Strategy & Benefits Newsletter considers the status of the EU’s interim and long-term proposals, and discusses the reasons for, and nature of, the opposition to those proposals that are emerging, primarily from the US.  The Newsletter also covers developments in three other jurisdictions – Spain, the UK and Australia – each of which have shown a willingness to act unilaterally to tax digital businesses.  Finally, our colleagues provide a brief overview of the likely road ahead, emphasizing that while interim measures may ameliorate immediate public concern in the short-term, they will not resolve the long-term issue of identifying the optimal location for taxation in an ever-changing global economy.

The newsletter may be accessed on our website or by clicking the link below:

Midterm Election Analysis

On Tuesday, November 6, voters across the US cast ballots in the first major referendum since the election of President Donald J. Trump in 2016. As a result of the most expensive midterm elections in history, Democrats will be in charge of the House of Representatives and Republicans will expand their control of the Senate when the 116th Congress convenes on January 3, 2019. Given this divide, many pundits already are predicting that nothing will be done in Washington for the next two years. 

However, our Public Policy team disagrees with that analysis. Rather than focus on headlines about House Democrats drawing up subpoenas to demand documents from the Trump Administration, we discuss potential areas of compromise that could lead to substantial legislation in the run up to the 2020 elections.

In our 2018 Midterm Elections Analysis, our colleagues discuss the prospects for Congress to adopt a comprehensive privacy and cybersecurity bill, and envision possible scenarios where Congress could find common ground with President Trump in the areas of infrastructure and immigration reform. Further, we share our perspectives on a host of other issues, such as US tax and trade policy.

Read the full analysis here.

Webinar: Bid Protest Process – Don’t Be Late!

The US federal government contracts bid protest process and timing is different based on the type of procurement and contract vehicle involved. You could be left without much of a remedy if you miss a critical deadline.

To help lessen the anxiety, some of our legal experts from our government contracts team – Karen Harbaugh, Jeremy Dutra and John Sharp – are offering a webinar that covers the ins and outs of the bid protest process. We will explain the complexity and potential pitfalls. A protest gone wrong could cause valuable business opportunities or disrupted relationships. We would like to help you get ahead of the situation and avoid those panic-inducing moments. 

The webinar will be held from 11 a.m. to Noon EST on December 5, 2018.  Please click here to register.  Webinar login instructions will be provided following registration. 

2018 US Midterm Elections Overview

As the past few years have made very clear, political issues have the potential to impact supply chains.  Squire Patton Boggs’ Public Policy Practice has created a 30-day outlook for the upcoming US Midterm Elections. The overview—which includes updated polling, party funding comparisons, and a discussion of races that are considered “toss ups”—is now live on our web site, accessible through the following link: https://www.squirepattonboggs.com/en/insights/publications/misc/2018-us-midterm-elections-overview.  This overview will be updated periodically leading up to the November 6 election to provide real-time information.

 View our 30-day outlook.

2018 US Midterm Elections Overview

October 2018

Our best-in-class Public Policy Practice provides exceptional expertise and unparalleled levels of political analysis to make sure you stay informed and are heard at the right time by the right people. In the US and globally, we help clients understand the political environment and key stakeholders in each, and what government policies and regulations may impact their goals and objectives. Our presence in nearly all major world capitals spans six continents.

Since May 2018, our preeminent Public Policy team has carefully tracked and compiled data to display current trajectories for the US midterm elections in November 2018. Our 2018 Midterm Elections Overview highlights competitive Senate and House races which will define the 116th Congress, but does not attempt to predict the outcome.

The Senate overview provides recent polling and political rankings from Real Clear Politics, Cook Political Report and Sabato’s Crystal Ball, while the House overview imparts a general look into more competitive races. Information regarding both chambers is supplemented by previous voter trends in congressional and presidential elections. Our congressional midterm analysis further leverages unique political insight from former Senate Majority Leader Trent Lott (R) and Senator John Breaux (D), co-chairs of our Public Policy Practice.

Additionally, Republicans currently hold a majority in both gubernatorial and attorney general positions throughout the country. We profile several key races for each position and illustrated President Trump’s respective endorsements to target where and if the Republican advantage will remain intact.

This overview will be updated periodically leading up to the November 6 election to provide real-time polling information.

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Potential Impact of Recent US Tariffs and Trade Actions on the Automotive Industry

The US Department of Commerce investigation into the threat of automotive imports to US national security under Section 232 of the Trade Expansion Act of 1962, as amended, started in May 2018.  Currently, the Trump Administration is considering a 25% tariff on vehicles and auto parts from all foreign countries of origin.  Additional Section 301 tariffs against China have been announced, and the outcomes of US and Mexican bilateral trade negotiations remain unclear.  For insight into these recent trade actions, including the potential impact on the automotive industry and practical advice for manufacturers, please read this Summary of Recent US Trade Actions and the Potential Impact on the Automotive Industry.

A live webinar on the same topic, presented by our colleagues Cipriano Baredo III, Frank Samolis and Stacy Swanson, is scheduled for 10:00 am EST, September 28, 2018.  For more information, and to register, please click here.  We hope you can join us.

Section 301 Tariffs – Recent Developments

The following is an update from Frank Samolis, a partner in our Washington DC office, and Rory Murphy, an associate in our Washington DC office.  Frank is co-chair of our International Trade Practice and he advises clients on a wide range of international trade matters.  Rory is a member of our Public Policy International Practice who focuses on providing US public policy guidance. 

In the past few months, the United States has rolled out three lists of Section 301 tariffs that it has imposed, or will soon impose, on products being imported from China.  For each list there has been, or will soon be, both a public comment period – during which companies could ask for specific tariff lines to be removed from the proposed list of tariffs – followed by a product exclusion process – during which companies can ask that specific products imported under an effected tariff line to be excluded from the higher duty rates.

In the past 24 hours, there have been three significant developments:

  • The Trump Administration finalized List 3 of the Section 301 tariffs.  Approximately 300 of the proposed 6,300 List 3 tariff lines were removed as a result of public comments.  From September 24-December 31, 2018, products on List 3 will face an additional 10 percent duty.  Starting on January 1, the additional tariffs on these products will increase to 25 percent.
  • This morning, China announced it would retaliate against the United States’ most recent action by imposing 5 or 10 percent tariffs on approximately 5,200 U.S. products worth $60 billion.
  • The Office of the U.S. Trade Representative (“USTR”) announced a product exclusion process for List 2 of the Trump Administration’s Section 301 tariffs via the Federal Register.  Similar to the product exclusion process for List 1, requesters are encouraged to file using a yet-to-be-released form from USTR and asked to address whether (1) the product is available only from China, (2) the increased duties would cause severe economic harm to the requester or other US interests, and (3) the product is strategically important or related to “Made in China 2025” or other Chinese industrial programs.  If an exclusion is granted under this process, it would apply retroactively to August 23.  The product exclusion requests will be due December 18.

Finally, there are reports that China may cancel high-level bilateral meetings tentatively planned for later this month.

For your convenience, all of the upcoming deadlines are listed below.

List

Exclusion Process

Public Comment Period

  • List 1 (818 Tariff lines/$34 billion worth of Chinese products)
  • Product exclusion process open through October 9, 2018
  • Public comment period is closed.  Tariffs imposed as of July 6.
  • List 2 (284 tariff lines/$16 billion worth of Chinese products)
  • Product exclusion process open through December 18, 2018
  • Public comment period is closed. Tariffs imposed August 23.
  • List 3 (approximately 6,000 tariff lines/$200 billion worth of Chinese products)
  • Product exclusion expected, but not announced.
  • Public comment period closed.  Tariffs to be imposed September 24.

 

Force Majeure in a Tight Labor Market

2018 has produced a tight labor market for many manufacturers.  Particularly in the electronics, aerospace, and trucking/automotive sectors, skilled laborers are becoming increasingly difficult to find.  As a consequence, many manufacturers are finding themselves in a position where they are unable to perform contracts that have any degree of complexity without a level of scrap and/or corrective action that renders the contract uneconomical – because they don’t have skilled workers capable of shepherding these difficult contracts to performance.  And products that have manufacturing difficulties may not be apparent to the eye:  Truck panels or circuit boards that appear no different from standard-issue products may involve tight tolerances and specifications that only become apparent when the resulting products fail to perform as intended or fail to meet applicable specifications.

Solving the problem of insufficient skilled manufacturing workers on a policy level will involve time, coordination, and careful strategy.  American education institutions need to stay in close communication with industry, to know what skills the modern manufacturing worker needs to have.  Economic incentives have to be right to retain the most skilled workers.  And technology has to adequately support the manufacturing workforce to produce robust products.  But, in the short and medium term, is there anything that manufacturers can do to cope with these difficulties caused by labor shortages? Continue Reading

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