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A November meeting of countries participating in a new Western Hemisphere trade and economic cooperation initiative offered few details about what it will include and when it might be implemented. A White House fact sheet said the leaders – representing Barbados, Canada, Chile, Colombia, Costa Rica, the Dominican Republic, Ecuador, Mexico, Panama, Peru, Uruguay, and the U.S. – directed their ministers to develop and implement a focused set of initiatives and actions in three areas: trade, foreign affairs, and finance.

On trade, leaders urged “inclusive and sustainable approaches to trade and investment that will support regional sustainable development and resilient supply chains for goods and services, enhance a predictable and transparent regulatory environment that can boost trade flows, and remove barriers to greater economic integration among our countries.” Efforts will focus first on regional implementation of the World Trade Organization Agreement on Trade Facilitation as well as digitization of customs mechanisms. For more information, click here.

At the ninth meeting of the trade and investment council under the CARICOM-U.S. trade and investment framework agreement held on Oct. 13, negotiators discussed a number of topics to increase trade between the U.S. and Caribbean islands, including ways to increase utilization of Caribbean Basin Initiative programs and thereby expand regional trade. Participants also discussed the possibility of designating additional countries as beneficiaries of CBI trade preferences and establishing a joint work program on trade in services. These discussions could lead to lower tariffs for Virginia companies importing goods from CARICOM countries. For more information, click here.

At the third meeting of the U.S.-Mexico High-Level Economic Dialogue, the two sides noted ongoing efforts to support the reinforcement and expansion of supply chains in the semiconductor, information and communications technology, medical devices, and pharmaceuticals sectors and to boost the efficiency and digitization of trade procedures along their shared border.

Negotiators also pointed to their continuing work to advance projects related to border infrastructure, facilitating lawful cross-border trade and travel, and border security (including piloting a model port for cutting-edge inspection technologies), and reduce or eliminate counterfeit goods and pirated content from supply chains. For more information, click here.

At the second meeting of the bilateral trade and investment framework agreement council on September 26 and 27, Paraguay highlighted its progress in fulfilling its commitments under the WTO’s Trade Facilitate Agreement, including establishing a mechanism for advance publication and consultations on international trade issues. It also noted the renewal of its T-Fast program until 2025 and implementation of an electronic phytosanitary certification system.

Paraguay emphasized its interest in exporting raw beef products to the U.S. (which could happen soon given that the USDA’s regulatory approval process is underway), as well as sugar and non-traditional products, and in receiving GSP benefits. U.S. priorities included addressing corruption risks and intellectual property protection in Paraguay. Although these discussions will not affect tariffs rates, they could make it easier for Virginia companies to do business in Paraguay. For more information, click here.

In early December, the U.S. and the European Union agreed to push back a deadline for concluding negotiations on a steel trade agreement. In the meantime, the EU stated it would continue its suspension of the retaliatory tariffs on U.S. goods until March 31, 2025. In turn, the U.S. published a Presidential Proclamation December 28 extending the tariff rate quotas on imports of EU steel and aluminum until December 31, 2025. The aggregate access to the U.S. market will remain at 3.3 million metric tons, thus the limits per product and country will be the same as they were in 2023.

By way of background, the U.S. lifted its Section 232 tariffs on steel and aluminum products imported from the EU on October 2021 after establishing a tariff-rate quota designed to limit such imports to “a sustainable historic level” (i.e., the volume shipped prior to the 2018 imposition of the tariffs). As a result, the EU suspended its related retaliatory tariffs on U.S. goods and determined not to implement a further tariff increase that had been scheduled to take effect later that year.

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Work on three of the four pillars of the Indo-Pacific Economic Framework is now all but done but participants have yet to reach agreement on trade issues. On Nov. 16 the IPEF participants issued a joint statement announcing that negotiations on clean economy and fair economy have been substantially concluded, and a supply chain agreement was concluded earlier this year and signed in November. Next steps include preparing final texts, concluding domestic processes for signature, and ratifying, accepting, or approving the agreements, which the participants said they hope to do “as soon as practicable.”

There was no word from the Biden administration on the status of the negotiations on trade, though they are expected to continue despite some recent vocal opposition. When the IPEF was first announced the U.S. indicated that goals in this area included establishing enforceable, high-standard commitments with respect to digital economy and e-commerce, supply chain resiliency, trade facilitation, agricultural trade, and corporate accountability. As with the other trade initiatives being pursued by the Biden administration, tariff liberalization is not among the objectives. For more information, click here.

The U.S. and Indonesia announced Nov. 13 that they have elevated bilateral relations to a comprehensive strategic partnership, under which they will further expand cooperation on “all issues of common concern.” This will include increasing trade and deepening cooperation on economic policy, including through the U.S.-Indonesia trade and investment framework agreement, which will feature cooperation on trade in services, intellectual property, labor, investment, and agricultural and industrial goods.

The two sides also committed to (1) developing a critical minerals action plan that includes collaboration on reducing supply chain dependencies and vulnerabilities, promoting supply chain transparency, and expanding access to secure and sustainable critical minerals sources, and (2) supporting the development of Indonesia’s domestic semiconductor ecosystem with a view to enhancing local value creation, diversifying global supply chains, and supporting U.S. industry. Virginia companies importing goods with critical mineral inputs from Indonesia could be impacted by these discussions. For more information, click here.

Labor issues were a dominant theme at the seventh meeting of the bilateral trade and investment cooperation forum agreement council in late September. The U.S. emphasized combatting violence against workers and union organizers and ensuring a simplified and impartial trade union registration process. U.S. negotiators also encouraged Bangladesh to extend freedom of association and collective bargaining to the country’s special economic zones and export processing zones and to dedicate more resources to labor inspections and enforcement.

On a separate issue, the U.S. discussed actions needed to address concerns with Bangladesh’s ranking as one of the top source economies for counterfeit clothing. The U.S. noted progress in several areas, including (1) improvements in the draft version of Bangladesh’s Data Protection Act that remove criminal penalties, restrict the scope of the law to personal data, and limit its application to firms that process personal data within the country, and (2) the removal of Bangladesh’s longstanding fumigation requirement for U.S. cotton exports. For more information, click here.

At the 14th meeting of the bilateral trade and investment framework agreement council in late September, the U.S. encouraged Sri Lanka to improve transparency and efficiency in approving foreign direct investment, implement more robust anti-corruption measures, consult with relevant stakeholders in drafting labor law reforms, provide greater market access for U.S. exports of agricultural products, and advance the use of biotechnology.

Sri Lanka urged better access to the U.S. market for its high-value and value-added agricultural products, such as organic spices and concentrates, and the extension of GSP eligibility to apparel, textiles, and leather products. Other topics of discussion included how the U.S. can assist in the development of Sri Lanka’s digital economy, gem and jewelry industry, floriculture, and boat-building sector. These talks do not include market access for Virginia exports, but they could lead to increased and improved bilateral trade relations. For more information, click here.

USTR reports that the U.S. and Japan held the fourth round of meetings under the U.S.-Japan Partnership on Trade Dec. 14-15. Discussions focused on (1) coordinated efforts to respond to third-party regulations affecting the digital economy and digital trade, (2) meeting commitments under the critical minerals agreement and each side's capacities to extract and process critical minerals, (3) the non-market and trade-distorting practices of third countries, (4) engagements under the Task Force on the Promotion of Human Rights and International Labor Standards in Supply Chains, and (5) bilateral trade issues including regulatory transparency, ensuring a level playing field for certain products and services, and technical barriers to trade.

A congressional hearing earlier this year focused on the benefits of reauthorizing the Generalized System of Preferences, although there appears to be little momentum at present for such a move. Over the past twelve months, dozens of GSP beneficiary countries urged the leaders of the Senate Finance and House Ways and Means committees to renew the program in light of its benefits to both their own economies and U.S. producers.

In May, Senate Majority Leader Chuck Schumer, D-N.Y., announced plans to develop a legislative package aimed at further boosting U.S. competitiveness with China that he said could include a renewal of GSP and a number of other trade-related provisions that lawmakers approved before they were ultimately dropped from the CHIPS and Science bill signed into law in 2022. In July, a bipartisan group of lawmakers urged the majority and minority leaders of the Ways and Means Committee to reauthorize GSP because it could facilitate supply chain shifts out of China and into GSP beneficiary countries. Members of the Ways and Means Committee have stated that they intend to make GSP renewal a top priority for 2024. A reauthorized GSP could reduce tariffs for Virginia companies importing select goods from GSP-eligible countries. For more information, click here.

The future of AGOA remains unclear less than two years before its scheduled expiration as some urge a straight reauthorization of the trade preference program while others push for it to be modernized. An annual AGOA forum was held earlier in November in South Africa, prompting a number of actions and reactions regarding the program’s future. In a statement issued at the outset of the forum, President Biden said AGOA “has formed a bedrock for U.S. trade with sub-Saharan Africa for more than two decades” and called on Congress “to reauthorize AGOA in a timely fashion and to modernize this important Act for the economic opportunities of the coming decade.”

In addition, the Office of the U.S. Trade Representative recently stated that Mauritania will be reinstated to the program effective Jan. 1, 2024, based on progress it has made in the area of worker rights concerns. Also, effective Jan. 1, 2024, the U.S. will terminate AGOA benefits for Gabon, Niger, the Central African Republic, and Uganda, citing various reasons. For now, AGOA remains authorized, allowing Virginia companies to import select goods from AGOA beneficiaries duty free. For more information on the debate of AGOA’s future, click here. For more information on country eligibility in regards to AGOA, click here.

An in-person negotiating round under the U.S.-Kenya Strategic Trade and Investment Partnership was held Oct. 4-7 in Washington, D.C. According to USTR, the two sides exchanged views on proposed texts covering agriculture, anticorruption, and services domestic regulation and continued their conceptual discussions on the subject of inclusivity in trade.

The STIP was announced in July 2022 and aims to negotiate high-standard commitments on issues such as trade facilitation, customs procedures, digital trade, good regulatory practices, agriculture, environment, labor, and standards. The STIP replaced negotiations on a bilateral free trade agreement launched under the Trump administration, and USTR Katherine Tai has said she hopes it “can serve as a model for trade policy engagement in Africa.” Although a small market for Virginia companies, the developments of these discussions could make it easier to do business in Kenya. For more information, click here.

The ITC has instituted another investigation into the automotive rules of origin under the U.S.-Mexico-Canada Agreement. In this investigation, the ITC will examine many areas of the trade agreement, including the economic impact of the USMCA automotive ROOs on U.S. gross domestic product; U.S. exports and imports; U.S. aggregate employment and employment opportunities; production, investment, use of productive facilities, and profit levels in the U.S. automotive industries and other pertinent industries; wages and employment of workers in the U.S. automotive sector; and the interests of U.S. consumers.

The ITC will hold a public hearing in connection with this investigation and accept written submissions for the record, but no dates have yet been provided. Virginia companies exporting or importing autos or auto parts to/from Canada and/or Mexico may want to provide comments to the ITC as they continue their investigation. For more information, click here.

BIS announced in October a package of rules designed to broaden and strengthen controls on exports of advanced computing semiconductors and semiconductor manufacturing equipment and items that support supercomputing applications and end-uses. BIS said these rules reinforce regulations issued a year ago that limited exports to China by closing loopholes and restricting Beijing’s ability to both purchase and manufacture certain high-end chips critical for military advantage. According to press sources, additional updates are expected at least annually.

In addition, effective Oct. 17, a BIS final rule adds to the Entity List two Chinese entities and their subsidiaries (a total of 13 entities) involved in the development of advanced computing chips. These entities are also subject to restrictions on foreign-produced items made with U.S. technology. BIS states that foundries producing chips for these listed parties will need a BIS license before they may send such chips to these entities or parties acting on their behalf as a result of applying the “footnote 4” Entity List foreign direct product rule designation. It is very important for Virginia companies exporting these products to ensure they are compliant with the ever-changing U.S. export restriction, sanctions and prohibited entities. For more information, click here.

Foreign and domestic medical device facilities that do not properly renew their registrations with the Food and Drug Administration can be locked out of the U.S. market. Renewals for such facilities are due each year. Owners or operators of establishments involved in the production and distribution of medical devices intended for commercial distribution in the U.S., including those that are imported for export only, must register annually with the FDA.

These facilities include foreign and domestic contract manufacturers, specification developers, relabelers/repackers, and initial importers and foreign exporters. Most such establishments must also list the devices they make and the activities performed on those devices at that establishment. Virginia medical device facilities may be subject to these requirements and may need to register with the FDA. For more information, click here.

The EPA has issued a final rule that finalizes reporting and recordkeeping requirements for PFAS under the Toxic Substances Control Act. The EPA states that this rule only applies to manufacturers of PFAS but that importers of PFAS in articles are considered PFAS manufacturers.

PFAS are a group of synthetic chemicals that have been in use since the 1940s and can be found in a wide array of industrial and consumer products. They are synthesized for many different uses, from firefighting foams, to coatings for clothes and furniture, to food contact substances, to the manufacture of other chemicals and products. They are used in a wide variety of products, including textiles, electronics, wires and cables, pipes, cooking and bakeware, sport articles, automotive products, toys, transportation equipment, and musical instruments, that may be imported into the U.S. as finished articles. Virginia companies importing PFAS in articles may be subject to this final rule, and those companies should consult with experts to ensure continued import compliance. For more information, click here.

The EPA has issued a final rule that, effective Dec. 26, prohibits certain import and export as part of a new restriction on the use of hydrofluorocarbons in specific sectors and subsectors. The new final rule implements additional measures by restricting the use of HFCs, whether neat or used in a blend, with high global warming potentials within the refrigeration, air conditioning, and heat pump; foam; and aerosol sectors.

Among other things this rule prohibits the importation, manufacture, or installation of certain equipment across approximately 40 subsectors, based on either overall GWP limits or restrictions on use of specific HFCs. The compliance dates for these restrictions vary from Jan. 1, 2025, to Jan. 1, 2028, depending on the subsector. Virginia companies exporting or importing HFCs may be subject to this new EPA rule and should consult with experts to ensure continued compliance. For more information, click here.

BIS has announced that, effective Oct. 27, it has suspended exports of guns and ammunition and related export assistance activities for approximately 90 days. Additional steps could be taken after BIS completes a review of current firearms export control review policies to “more effectively assess and mitigate the risk of firearms being diverted to entities or activities that promote regional instability, violate human rights, or fuel criminal activities.”

BIS states that this pause applies to its issuance of new licenses involving exports of firearms, related components, and ammunition controlled under export control classification numbers 0A501, 0A502, 0A504, and 0A505 that are destined for non-governmental end-users worldwide. Shipments to Ukraine, Israel, or countries in Country Group A:1 (Wassenaar Arrangement participants) are exempt from this suspension. Virginia companies involved in these exports need to watch closely for changes to export rules. For more information, click here.

A U.S. government commission known for its generally hardline stance on U.S.-China relations appears to have softened its calls for action in its annual report but is still recommending a number of measures that could have an effect on two-way trade. In its 2023 report, the U.S.-China Economic and Security Review Commission does continue to assert that China’s ruling regime “gives no sign of altering its policies” despite U.S. engagement and that “the new normal” in the U.S.-China relationship “is one of continuing, long-term strategic and systemic competition.”

However, the report also highlights that China “may now be on the verge of its most serious economic crisis in 40 years” at the same time that it is facing “an increasingly inhospitable international environment as the United States and other advanced industrial countries attempt to shift supply chains out of China and ‘de-risk’ their economic relations with it.” The commission asserts that Beijing has done little of substance to respond to these and other challenges, possibly suggesting (despite its traditional bellicosity) that this inaction will be sufficient to constrain China’s ambitions and that the U.S. thus does not need to be overly aggressive in its own efforts. For more information, click here.

Litigation seeking to overturn Section 301 tariffs on hundreds of billions of dollars’ worth of imports from China is expected to continue into 2024, meaning importers of subject goods can still join this effort, which could ultimately yield refunds of duties imposed. A case first filed in 2020 and since joined by thousands of importers argues that the Section 301 tariffs on List 3 and List 4A goods from China were wrongly imposed.

If this case is ultimately successful, refunds of all Section 301 tariffs paid on List 3 and List 4A goods will potentially become available. Importers can still preserve their rights to possible refunds of these tariffs by joining the litigation. For more information, click here.

The federal government is reiterating the urgency for businesses to undertake due diligence measures to make sure their supply chains do not involve the use of forced labor in China’s Xinjiang Uyghur Autonomous Region. In July 2021, a multi-agency advisory warned businesses, individuals, and others that do not exit supply chains, ventures, and/or investments connected to the XUAR that they could run a high risk of violating U.S. law and triggering criminal or civil enforcement actions.

The agencies involved have now issued an addendum to that advisory asserting that since it was issued Chinese authorities have not taken any steps to change policies in response to mounting public concern over the contamination of international supply chains with goods produced by state-sponsored forced labor there. To the contrary, the addendum states, the Chinese government and affiliated commercial entities have continued to engage in a concerted campaign to dispel these accusations through vehement denial in public messaging; state-ordered, politically-motivated academic research; falsified cotton production and harvest mechanization data; localized propaganda campaigns targeting consumers in trade partner countries; the establishment of false supply chain policy initiatives as alternatives to preexisting international monitoring and compliance programs; new sanctions on foreign government officials critical of Chinese abuses; and pressure on international companies. Virginia companies importing goods from China need to closely monitor their supply chains and ensure they have taken due diligence and reasonable care in getting visibility into their sources. For more information, click here.