Changes To “De Minimis” Shipping Will Likely Have Effects Beyond China And Russia

Changes may be coming to the “de minimis” exception under Section 321 of the Tariff Act of 1930, as amended, which allows goods valued less than $800 to enter the United States free of duty and taxes, and generally free from formal review, when shipped to individual consumers.

Senators Sherrod Brown (D-OH) and Marco Rubio (R-FL) and Representatives Neal Dunn (R-FL) and Earl Blumenauer (D-OR) introduced the Import Security and Fairness Act (“the Act”) on June 15, 2023, the most recent of several legislative efforts proposing changes to the “de minimis” threshold. The Act would make goods sourced from perceived adversarial nations ineligible for de minimis treatment under Section 321 of the Tariff Act of 1930, as amended. Specifically, the Act targets countries that are both (i) a nonmarket economy (as defined by the Tariff Act) and (ii) listed on the United States Trade Representative’s (USTR) Priority Watch List. Notably, as of June 2023, only China and Russia meet both criteria. Accordingly, in practice, the Act would require a formal importation process for all small Chinese and Russian goods, likely exacting a heavy toll on top of the existing Uyghur Forced Labor Prevention Act (UFLPA) and U.S. sanctions regimes.

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Upcoming Webinar: Predicting and Managing the Risks of Doing Business in China

Please join us on Wednesday, July 12 at 12PM EDT for a webinar on Predicting and Managing the Risks of Doing Business in China.

As tensions between the US and China continue to build, what does this mean for US companies operating in China? Partners George Grammas and Ed Newberry will discuss the current political landscape, as well as provide insight on where things are headed and what you can do to mitigate risks and protect your relationships going forward. The discussion will help senior leaders and decision makers evaluate their current activities in China and determine whether they should continue business and expand in China – or if they should close up shop.

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CBP Targets Battery Tech for UFLPA Enforcement

Customs and Border Protection (CBP) recently indicated potential increased scrutiny of battery technology under the Uyghur Forced Labor Prevention Act (“UFLPA,” or the “Act”). Although the Act covers essentially all trade touching China’s Xinjiang region, it specifically lists cotton, polysilicon, and tomatoes as high-priority sectors for enforcement. Recent CBP actions indicate battery technologies are also in CBP’s sights, reflecting UFLPA’s broad scope and increased Congressional scrutiny of these supply chains.

In December 2022 Senate Finance Committee Chair Ron Wyden (D-Oregon) launched an investigation into eight automakers’ potential links to China’s Xinjiang region (allegedly to source parts, including batteries, wiring and wheels). In March 2023, Senator Wyden sent follow-up letters to eight leading automakers, which echoed recent calls from Biden Administration officials that importers ensure their entire supply chains – from raw materials to finished goods – are free from forced labor.

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DHS Adds Two Entities, Eight Subsidiaries to UFLPA Entity List

On June 12, 2023, the Department of Homeland Security (DHS), on behalf of the Forced Labor Enforcement Task Force (FLETF), published a Notice adding two entities and eight subsidiaries to the Uyghur Forced Labor Prevention Act (UFLPA) Entity List, for allegedly working with the government of the People’s Republic of China’s Xinjiang Province to recruit, transport, transfer, harbor or receive forced labor or Uyghurs, Kazakhs, Kyrgyz, or members of other persecuted groups out of Xinjiang.  The updated UFLPA Entity List is published as an appendix to the Notice.  Companies should make sure to regularly review updates to the UFLPA Entity List against their supply chains.

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Improving The International Supply Chain Through IPEF

How IPEF Builds On Prior Trade Relationships Negotiated By The Biden Administration:

In May 2023, the Biden Administration announced the Indo-Pacific Economic Framework for Prosperity (IPEF), a commitment to improving supply chains between the U.S., and the Indo-Pacific nations of Australia, Brunei, Fiji, India, Indonesia, Japan, Malaysia, New Zealand, the Philippines, Singapore, South Korea, Thailand, and Vietnam.

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Supply Chain Webinar: “Drafting Standard Forms for the Purchase of Goods From Suppliers: RFQs, Quotes, Purchase Orders, Long-Term Agreements”

SPB’s Alexis Chandler will be participating in a CLE webinar on June 6, 2023 at 1pm EDT to discuss Drafting Standard Forms for the Purchase of Goods From Suppliers.  The webinar will discuss requests for quotations, seller’s quotes, purchase orders, and long-term agreements, and how parties can minimize disputes between buyers and suppliers with carefully drafted terms and conditions of purchase.

As a bonus, you can receive CLE credit for attending.  If you would like to attend, please register here.

UFLPA Enforcement Remains Work in Progress

U.S. Customs and Border Protection’s (“CBP”) implementation of the Uyghur Forced Labor Prevention Act (“UFLPA”) remains a work in progress, as importers work to mitigate shipment detentions and respond to UFLPA reviews and enforcement actions. Emerging best practices may guide stakeholders as they navigate these uncertainties.

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Postal Code For Chinese Manufacturers To Be Required By U.S. CBP Beginning This Weekend

As part of a continued effort to enforce the Uyghur Forced Labor Prevention Act (UFLPA) and to provide early warning to importers and their representatives that goods may have been produced in the Xinjian Uyghur Autonomous Region (XUAR), U.S. Customs and Border Protection (CBP) will require businesses to provide a valid postal code for Chinese manufacturers from which they are importing goods when reporting via the Automated Commercial Environment (ACE) system beginning on March 8, 2023.   The following Q&A will help your business understand the steps it needs to take to comply with the requirement:

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Aluminum Is Now A Hot Topic In Supply Chain And Trade

Last Friday, February 24, 2023, the Biden Administration issued a Proclamation on Adjusting Imports of Aluminum into the United States.  You can read the full proclamation here.

The Proclamation states that, beginning on March 10, 2023, a 200% ad valorem tariff will be imposed on all aluminum articles and derivative aluminum articles produced in Russia.  Additionally, on April 10, 2023, a 200% ad valorem tariff will be imposed on aluminum articles where any amount of primary aluminum or derivative aluminum articles used in the manufacture of the articles was smelted or cast in Russia.

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The German Supply Chain Act On Corporate Diligence Obligations in Supply Chains Is In Effect

Previously, we have posted on the German Supply Chain Act on Corporate Diligence Obligations in Supply Chains.  That legislation is now in effect, as of January 1, 2023, and requires companies that have their central administration, their principal place of business, or any branch with over 3,000 employees in Germany to implement specific risk management practices to detect and combat child labor, forced labor, poor environmental practices, and other problematic issues.  Our German supply chain team has published an update on what is required.  Please access it here.