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Jay Smith

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Jay Smith is of counsel in the Washington office. He joined the firm after several years as a professor of political science and international affairs, during which he specialized in international trade policy and international dispute settlement. His practice in the International and Litigation groups draws on this academic and policy experience.

He is currently helping clients develop and implement strategies with regard to the Trump Administration’s recent trade actions, including pursuing country exemptions and product exclusions to the recent steel and aluminum tariffs imposed under Section 232, and product exclusions to the proposed Section 301 tariffs.

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On July 26-27, 2022, the Biden Administration hosted a two-day virtual meeting with top trade officials from the 13 other partners of the Indo-Pacific Economic Framework for Prosperity (“IPEF” or “Framework”)—Australia, Brunei Darussalam, Fiji, India, Indonesia, Japan, the Republic of Korea, Malaysia, New Zealand, the Philippines, Singapore, Thailand, and Vietnam. This was the first ministerial meeting since the 13 initial participants[1] agreed on May 23, 2022 to launch “collective discussions towards future negotiations” on the Framework. The IPEF currently focuses on four “pillars”: (1) Trade; (2) Supply Chains; (3) Clean Energy, Decarbonization, and Infrastructure; and (4) Tax and Anti-Corruption. Touted as a “21st century economic arrangement designed to tackle 21st century economic challenges,” the IPEF is said to offer what Commerce Secretary Gina Raimondo calls a “innovative and flexible approach,” and is “internationally designed not to be a ‘same old, same old’ traditional free trade agreement.”

The Framework’s novel approach, however, has raised a flurry of unanswered questions. Key U.S. stakeholders, for instance, have questioned the Biden Administration’s decision not to discuss tariff reductions or market access as part of the IPEF negotiations. Concerns have been raised about the enforceability of any agreements concluded among Framework partners. Potential agreements within each pillar remain largely unknown or undisclosed, even though the Framework partners have spent months engaged in a “scoping exercise” to define the components of each pillar.

This latest ministerial meeting added little clarity. No joint statement was released at the end of the meeting, suggesting that more remains to be done before formal, text-based negotiations begin. But as negotiators approach the one-year anniversary of President Biden’s announcement of the initiative at the October 2021 East Asia Summit meeting, there is growing expectation of more concrete outcomes. The dates for the next ministerial meeting have not been formally announced, though informal reports speculate that the Framework partners may hold the next meeting in September 2022, possibly as the first in-person ministerial.

This alert outlines the scope and objectives of the IPEF’s four pillars, the progress to date and next steps, key remaining questions, and stakeholder reactions thus far.…

Continue Reading Biden Administration Hosts the First Indo-Pacific Economic Framework Ministerial: Updates, Outlook, and Remaining Questions

On July 14, 2022, the U.S. Department of Commerce (“Commerce”) issued a request for a range of additional factual information in connection with the agency’s ongoing circumvention inquiries into solar cells and modules from Cambodia, Malaysia, Thailand, and Vietnam that employ inputs from mainland China.[1]  The deadline to respond is July 21st.

In the July 14 memorandum, Commerce seeks information about the:  (1) amount of investment necessary to construct and start-up certain facilities, (2) non-financial barriers (e.g., access to inputs, qualified technical employees, technologies, research and development, etc.) that companies typically face to establish and begin certain operations, and (3) research and development (“R&D”) expenses associated with conducting certain operations.  These types of facilities/operations involved in:

  • refining silicon into solar-grade polysilicon,
  • producing ingots from solar-grade polysilicon,
  • producing wafers from solar-grade ingots,
  • producing solar cells from wafers,
  • producing solar modules from solar cells, and
  • the same operations and products as foreign producers and exporters responding to Commerce’s solar circumvention inquiries. 

…
Continue Reading Commerce Requests Factual Information in Solar Circumvention Inquiries on Level of Investment, Non-Financial Barriers, and Research and Development Expenses

On July 1, 2022, the U.S. Department of Commerce (“Commerce”) issued proposed rules implementing President Biden’s emergency declaration to provide temporary tariff relief on certain imports of solar cells and modules from Cambodia, Malaysia, Thailand, and Vietnam.[1] Commerce has provided the public with a 30-day period to comment on the proposed rules.

If enacted…

Presidential Action Triggered by Crisis in the U.S. Solar Industry

In recent months, the U.S. solar industry has been in the midst of an existential crisis, triggered by the threatened imposition of retroactive and future tariffs on a significant portion of U.S. imports. That crisis began on April 1, 2022, when the Department of Commerce (“Commerce”) initiated an inquiry to determine whether solar cells and modules from Cambodia, Malaysia, Thailand, and Vietnam are circumventing antidumping (“AD”) and countervailing duty (“CVD”) orders on solar cells from China. Solar cells from these countries generally accounted for approximately 80% of U.S. solar module imports in 2020.[1] If Commerce finds circumvention, solar cells and modules from the four target countries could not only be subject to combined AD/CVD tariffs approaching 250%, but Commerce’s regulations also allow for the agency to apply these tariffs retroactively to merchandise entering on or after April 1, 2022 (and potentially as far back as November 4, 2021). This threat of AD/CVD tariffs triggered a steep decrease in imports of solar cells and modules from Southeast Asia, and caused parts of the U.S. solar industry to come to a stand-still, furthering domestic reliance on coal.[2] Given this paralysis in the solar industry, lawmakers and others urged the President to provide relief from potential AD/CVD tariffs.[3]

The President’s Response

On June 6, 2022, President Biden issued a declaration of emergency (the “Declaration”)[4] pursuant to section 318(a) of the Tariff Act of 1930, as amended (19 U.S.C. § 1318), and issued a determination pursuant to section 303 of the Defense Production Act of 1950, as amended (50 U.S.C. § 4533) (“the DPA Determination”)[5]. The Declaration finds that an emergency exists “with respect to the threats to the availability of sufficient electricity generation capacity” and authorizes Commerce to issue a moratorium on tariffs on solar cells and modules from Cambodia, Malaysia, Thailand, and Vietnam for up to a 24-month period, while the DPA Determination aims to “expand the domestic production capability” for solar cells during this 24-month period. The Declaration itself does not prevent the imposition of tariffs on imported solar cells and modules from the Southeast Asian countries, rather it authorizes the Secretary of Commerce to “take appropriate action” to permit the duty-free importation of solar cells and modules for 24 months after the Declaration’s issue date.[6]…

Continue Reading President Acts to Prevent Import Tariffs on Solar Cells and Modules from Southeast Asia

On May 3, 2022, the Office of the U.S. Trade Representative (“USTR”) announced that it is initiating a statutory four-year review of necessity for the tariffs imposed on Chinese imports under Section 301 of the Trade Act of 1974 (“Section 301 Tariffs”). USTR’s review will examine whether to extend the tariffs currently in place on over $360 billion in Chinese imports.

Background

The Section 301 Tariffs were imposed based on the U.S. Administration’s determination in March 2018 that China’s technology transfer and intellectual property policies are harming U.S. companies. Between July 2018 and September 2019, the United States imposed four tranches of escalating tariffs on imports from China.

  • USTR imposed additional tariffs of 25 percent ad valorem on $34 billion of Chinese imports, effective July 6, 2018 (“List 1”).
  • USTR imposed duties of 25 percent ad valorem on an additional $16 billion of Chinese imports, effective August 23, 2018 (“List 2”).
  • USTR subsequently “modified” these tariff actions by imposing additional duties on supplemental lists of products in September 2018 (“List 3”) and September 2019 (“List 4A”).

By statute, the Section 301 Tariffs are set to expire four years after the tariffs were imposed, absent a written request for continuation submitted during the final sixty days of the four-year period by a representative of the domestic industry that has benefited from the tariffs.[1] The List 1 tariffs are set to expire July 6, 2022, and the List 2 tariffs are set to expire August 23, 2022. If a request is filed, the statute directs USTR to conduct a “review of necessity” regarding any extension of the tariffs.

First Phase of the Four-Year Review

USTR’s four-year review will proceed in two phases. In this first phase of the review process, USTR is notifying representatives of domestic industries that have benefited from the Section 301 Tariffs of the possible termination of the tariffs and of the opportunity to request a continuation of the tariffs.…

Continue Reading USTR Initiates Four-Year Review of Necessity for Section 301 Tariffs on Chinese Imports

EXECUTIVE SUMMARY

Since entry into force of the U.S.-Mexico-Canada Agreement (“USMCA”) in July 2020, the United States has brought two known complaints against Mexico under the Agreement’s Facility-Specific Rapid Response Labor Mechanism (“RRM”), concerning allegations that workers at two different factories in Mexico were being denied their fundamental right to organize.

The Office of the…

International Trade, Public Policy (U.S.), Technology

On March 23, 2022, the Office of the U.S. Trade Representative (“USTR”) announced its decision to reinstate through December 31, 2022, 352 previously granted exclusions from tariffs imposed on Chinese imports under Section 301 of the Trade Act of 1974 (“Section 301 Tariffs”). The reinstated exclusions are a subset of a limited group of 549 exclusions that were previously extended and thus were eligible for possible reinstatement, and it remains unclear if and when a broader exclusion process might be forthcoming.

Background

The Section 301 Tariffs are based on the U.S. Administration’s determination in March 2018 that China’s technology transfer and intellectual property (“IP”) policies are harming U.S. companies. Between July 2018 and September 2019, the United States imposed four escalating tranches of tariffs on imports from China. U.S. tariffs on over $360 billion in Chinese imports remain in place despite the “Phase One” agreement that the parties reached in January 2020.

For each of the four tranches or “Lists,” USTR established a process for requesting product-specific exclusions from the Section 301 Tariffs. In total, USTR granted over 2,200 exclusions. USTR also opened a process for submitting comments on whether to extend the duration of particular exclusions. Based on that process, USTR extended 549 exclusions spanning products covered by Lists 1 – 4, but most of these exclusions expired by December 31, 2020, with the remainder expiring on March 25 and April 18, 2021.

On October 8, 2021, days after USTR Katherine Tai announced that her office would open a “targeted” tariff exclusion process, USTR published a Federal Register notice inviting public comment on whether and how long USTR should reinstate 549 product exclusions that were granted and subsequently extended. USTR published on its website a list of all 549 exclusions. The notice indicated that USTR would focus on evaluating whether, despite imposition of the Section 301 Tariffs, “the particular product remains available only from China.” Additionally, USTR would consider whether reinstating an exclusion would “impact or result in severe economic harm to the commenter or other U.S. interests,” or affect the goal of obtaining the elimination of China’s problematic IP policies.

Reinstated Section 301 Tariff Exclusions

On March 23, 2022, USTR announced its decision to reinstate 352 product exclusions among those identified in its October 8, 2021 notice. USTR stated that its determination was based on public comments received as well as input from advisory committees and other U.S. agencies.

All reinstated exclusions are retroactive to import entries made on or after October 12, 2021, that are unliquidated or that are liquidated but remain protestable. The reinstated exclusions expire on December 31, 2022, though the notice provides that USTR “may consider further extensions as appropriate.”…
Continue Reading USTR Reinstates Limited Exclusions from Tariffs on Chinese Imports

On March 11, 2022, President Biden announced that the United States, acting in coordination with the European Union (“EU”) and leaders of major economies belonging to the Group of Seven (“G7”), would begin taking steps to revoke most-favored-nation (or “MFN”) trade status for Russia. MFN trade status—known as Permanent Normal Trade Relations (“PNTR”) status in the United States—is a term used to describe the nondiscriminatory treatment granted among most of the world’s trading partners. Days after the President’s address, on March 16, the House passed to formally revoke PNTR for Russia, and also stripping Belarus of MFN treatment. The bill now moves to the Senate, where timing for its consideration is uncertain.

MFN status is a fundamental principle in the international trading system established under the World Trade Organization (“WTO”), and as a general rule, WTO Members are required to accord MFN status to all other WTO Members. Having acceded to the WTO in 2012, Russia is generally entitled to MFN treatment by other WTO Members. In response to Russia’s invasion of Ukraine, however, several other WTO Members have joined the United States, the EU, and the G7 in stating an intent to revoke MFN treatment for Russia, invoking an “essential security” exception that permits WTO-inconsistent measures where a Member considers such measures to be “necessary for the protection of its essential security interests.” Statements issued by the White House and G7 Leaders emphasized the coordinated nature of the initiative across economies, and the intent to continue to pursue additional collective action to deny Russia the benefits of WTO membership.

While certain G7 countries, such as Canada, have already withdrawn Russia’s trade benefits by means of executive action, revocation of Russia’s PNTR status in the United States will require congressional action. While the House has passed a bill to do so, specific timing for consideration of that legislation in the Senate is still unknown. A revocation of Russia’s MFN status will increase tariff rates applicable to certain U.S. imports from Russia, and may also provoke Russia to take responsive, retaliatory actions against international firms. This alert provides background on Russia’s current trade status, analyzes congressional action to date on the issue, and describes the potential international trade implications for U.S. firms of a change in Russia’s trade status.

Background on Russia’s Trade Status

Under the principle of MFN treatment, WTO Members are required to treat imports of goods and services from any WTO Member as favorably as they treat the imports of like goods and services from any other WTO Member. In practice, this means that MFN treatment is the basic “non-discriminatory” treatment to which all WTO Members are generally entitled. Russia has been accorded MFN treatment by most major economies since it became a WTO Member in August 2012.
Continue Reading Revocation of Russia’s Most-Favored-Nation Trade Status: What Companies Need to Know

On March 19, 2018, the U.S. Department of Commerce published procedures for seeking product-specific exclusions from the tariffs on steel and aluminum announced on March 8, 2018. According to these procedures, an exclusion may be granted only if (1) a particular product is not produced in the United States “in a sufficient and reasonably available…

On April 26, 2017, the U.S.-based solar manufacturer Suniva, Inc. filed a petition for global safeguards with the U.S. International Trade Commission (“ITC”). In particular, Suniva requests the imposition of tariffs on solar cells and the establishment of a minimum price for solar modules imported into the United States. The petition was filed under Section…