Resources

The U.S. and the EU recently held a virtual meeting of the transatlantic Trade and Labor Dialogue to review progress made on the TALD Social Partner Joint Statement on Transatlantic Forced Labor Trade Strategy as well as collaborative work toward eradicating forced labor from supply chains. These possible actions include measures on forced labor policies, support for businesses and labor unions to implement effective due diligence, support for third countries, and the promotion of decent work. 

Although this meeting will likely not affect tariffs between the U.S. and EU, Virginia companies are encouraged to monitor these developments as they exported more to the European Union than to any other market in 2024. For more information, click here.

At the first-ever in-person U.S.-Montenegro Senior Economic Dialogue, held Oct. 21 in Washington, D.C., the two sides signed a memorandum of understanding seeking to expand two-way trade and investment and support the regional economy. In addition, officials discussed joint approaches to improving foreign investment screening and commercial law training; energy infrastructure; trusted vendor procurement for technology; cybersecurity; investment security; and addressing non-market policies and practices. These discussions could make it easier for companies to export to Montenegro, although it is currently a relatively small market for Virginia companies. For more information, click here.

At the sixth ministerial-level meeting of the U.S.-India Commercial Dialogue, held Oct. 3 in Washington, D.C., commerce ministers signed a new memorandum of understanding on expanding and diversifying critical minerals supply chains, under which the two sides will focus on identifying equipment, services, policies, and best practices to facilitate the mutually beneficial commercial development of U.S. and Indian critical minerals exploration, extraction, processing and refining, recycling, and recovery.

The U.S. is looking to secure a supply chain of critical minerals with trade allies, and India is currently the fourth largest importer of goods from Virginia. Companies should monitor these developments for opportunities in critical minerals. For more information, click here.

Bahrain News Agency reports that the U.S. has signed a customs cooperation agreement with the United Arab Emirates. This agreement “will strengthen the economic partnership between the two nations, increase trade exchange, reduce customs violations and illicit trade, and expand technical customs cooperation through the exchange of information and expertise,” the article said. “It will also raise the level of national competencies through training and exposure to best practices in the customs field.” 

VEDP is planning a trade mission to Saudi Arabia and the UAE in February. For more information on the trade mission, click here. For more information on the customs cooperation agreement, click here.

The U.S.-Egypt Trade and Investment Framework Agreement Council met Oct. 29-30 in Washington, D.C. Officials agreed to advance the U.S.-Egypt Autos Working Group activities to the next stage, identifying regulatory changes needed to facilitate access of U.S. automotive products into the Egyptian market and encourage investment. On agriculture, the two sides agreed to continue technical-level discussions on outstanding market access requests. 

The U.S. welcomed Egypt’s progress in implementing amendments to its 2017 Trade Union Law as well as an increase to the minimum wage. Both sides also discussed ongoing concerns from stakeholders on restrictions on freedom of association, exemptions to the minimum wage law, and labor conditions in qualified industrial zones. These discussions are not expected to affect tariffs for Virginia companies trading with Egypt. For more information, click here.

The Department of Labor and Kenya’s Ministry of Labor and Social Protection signed Oct. 28 a memorandum of understanding to advance labor cooperation. According to a DOL press release, the collaboration will seek to advance workers’ rights in areas such as preventing child labor and forced labor, strengthening consultation on multilateral policy issues, and making workplaces safer and healthier. The two sides will also strive to promote just transitions to a low-carbon economy. Virginia companies exported more than $10 million to Kenya in 2024 so far, and this MOU may make it easier to do business there in the future. For more information, click here.

U.S. Trade Representative Katherine Tai met Oct. 18 with ministers from the Caribbean Community to discuss how the two sides can advance inclusive trade and investment policies, including through the Caribbean Basin Initiative and the U.S.-CARICOM Trade and Investment Framework Agreement. USTR said ministers also explored opportunities for cooperative efforts to “generate long-term, equitable, broad-based economic prosperity, enhanced participation, and supply chain resilience for all of our communities.” Technical teams were directed to immediately intensify cooperation on these matters and other shared priorities.

According to a readout from Trinidad & Tobago’s Ministry of Trade and Industry, Tai “reiterated that the CBI is here to stay and will be updated to remain relevant to the needs of its beneficiary countries,” including by “expanding the scope of the trade and investment instrument to foster greater inclusiveness.” She also said that in light of the region’s concerns the U.S. “is willing to convene ad-hoc technical sessions to address nearshoring and supply chains and inclusiveness before the end of 2024.” For more information, click here.

The Office of the U.S. Trade Representative reports that the first agreement under the U.S.-Taiwan Initiative on 21st Century Trade entered into force Dec. 10. This agreement, which was signed in June 2023, includes commitments on customs administration and trade facilitation, anti-corruption, good regulatory practices, services domestic regulation, and small and medium-sized enterprises. USTR notes that negotiations on a second agreement addressing other areas like labor, environment, and agriculture are ongoing.

In addition, the fifth U.S.-Taiwan Economic Prosperity Partnership Dialogue, held Oct. 23, featured exchanges on responding to economic coercion, supply chain resilience and investment, and addressing tax-related barriers to increase bilateral investment. According to the State Department, discussions focused on highlighting progress made over the past year and identifying new areas for cooperation, including on transportation and green climate initiatives, partnering on infrastructure development with regional partners, information sharing, and mutual understanding. This agreement may make it easier to trade with Taiwan, which is already the twelfth largest export destination for Virginia companies in 2024. For more information, click here.

President-elect Trump said in Nov. that he plans take action immediately following his inauguration on Jan. 20, 2025, to impose higher tariffs on imports from China, Canada, and Mexico. Trump said he will sign an executive order levying a 25 percent tariff on all products coming into the U.S. from Canada and Mexico until they take action to stop the “invasion” of illegal aliens and drugs across their borders into the U.S. Trump also cited drugs as the reason he intends to issue a separate EO to impose an additional 10 percent tariff on imports from China, most of which are already subject to Section 301 tariffs of 7.5 to 25 percent.

Some members of the Trump transition team have indicated that the International Economic Emergency Power Act (IEEPA) will be invoked to apply these tariffs and that the tariffs on Mexico and Canada will be implemented in five percent increments, increasing five percent each month that the border is not “under control”.  It is also rumored that the tariff will apply to all products that enter the US “from” Mexico and Canda, and not just products that are the “country of origin” Mexico and Canada.  Thus, Virginia companies whose goods may transit these borders may be subject to the tariffs regardless of origin. 

According to press reports, Mexican President Claudia Sheinbaum responded that “for every tariff” the U.S. imposes on imports from her country “there will be a response in kind.” Neither China nor Canada has yet issued any similar retaliatory threats, but they are generally considered a likelihood if the U.S. pursues the kind of measures Trump is threatening. Rising tariffs for China, Mexico, and Canada could be disruptive for Virginia companies, not only those exporting to these countries, but they could also be affected by potential retaliatory tariffs. For more information, click here.

On December 23, the Biden Administration announced the initiation of a section 301 investigation into China’s acts, policies, and practices related to targeting of the semiconductor industry for dominance. They allege evidence that China is unfairly supporting its industry, restricting investment, and undercutting competition in third country markets, all of which are detrimental to the United States and other economies, undermining the competitiveness of American industry and workers, critical U.S. supply chains, and U.S. economic security. 

The incoming Trump Administration will undertake the bulk of this investigation, but it is likely that U.S. investment that received support under the CHIPS Act sought this investigation to help support investment in the U.S. in the face of unfair Chinese competition.  Comments may be submitted and a hearing will be held in March.  Virginia companies sourcing from China products should be aware that additional tariffs could be assessed if there is a positive finding. 

Effective Nov. 25, goods produced by 29 companies based in China are prohibited from entering the U.S. after those entities were added to the Uyghur Forced Labor Prevention Act Entity List. The Department of Homeland Security states that 25 of the newly-added companies were listed for sourcing materials from China’s Xinjiang Uyghur Autonomous Region while the rest were added for working with the XUAR government to recruit, transport, transfer, harbor, or receive Uyghurs, Kazakhs, Kyrgyz, or members of other persecuted groups out of the XUAR.

The UFLPA Entity List is a consolidated register of the four lists required to be developed and maintained under that law: (1) entities in the XUAR that mine, produce, or manufacture wholly or in part any goods, wares, articles, or merchandise with forced labor, (2) entities working with the XUAR government to recruit, transport, transfer, harbor, or receive forced labor or Uyghurs, Kazakhs, Kyrgyz, or members of other persecuted groups out of the XUAR, (3) entities that export products made by any of the above entities from China into the U.S., and (4) facilities and entities, including the Xinjiang Production and Construction Corps, that source material from the XUAR or from persons working with the XUAR government or the XPCC for purposes of the “poverty alleviation” program or the “pairing-assistance” program or any other government-labor scheme that uses forced labor. Virginia companies that import or work with companies from China should monitor the updated Uyghur Forced Labor Prevention Act Entity List to ensure they are in compliance with all applicable laws. For more information, click here.

The Department of Homeland Security has added two companies based in China to the Uyghur Forced Labor Prevention Act Entity List. Effective Oct. 3, goods produced by these entities are prohibited from entering the U.S. 

According to DHS, one of the entities is based in the Urumqi Prefecture of the Xinjiang Uyghur Autonomous Region and is engaged in iron ore mining and steel manufacturing. Its main products include rebar, hot-rolled coils, and medium and thick steel plates. The U.S. has reasonable cause to believe that this company works with the government of the XUAR to recruit, transport, transfer, harbor, or receive Uyghurs, Kazakhs, Kyrgyz, or members of other persecuted groups out of the XUAR. The other company is headquartered in Jiangsu and produces and sells aspartame, an artificial sweetener and food additive. The U.S. has reasonable cause to believe that this company sources material from the XUAR. Viriginia companies are encouraged to review their partners to ensure they remain in compliance with all applicable laws. For more information, click here.

The Office of the U.S. Trade Representative has announced Section 301 tariff increases for imports from China of certain tungsten products, solar wafers, and polysilicon. Effective with respect to products entered or withdrawn from warehouse for consumption on or after Jan. 1, 2025, the tariff rates for solar wafers and polysilicon will increase to 50 percent and the rates for certain tungsten products will increase to 25 percent.

USTR notes that it did receive comments opposing its these tariff increases. Some argued that they would increase production costs, exacerbate inflation, harm U.S. competitiveness, and decrease U.S. market share, while others said the existing tariffs have not been effective and have only negatively impacted the U.S. economy. Virginia companies imported more goods from China than from any other country in 2024 and may see higher tariffs on Chinese goods in 2025. For more information, click here.

The International Trade Administration has issued a final rule that, effective Jan. 15, 2025, will make dozens of changes to the regulations on antidumping and countervailing duty proceedings, including with respect to the collection of cash deposits, the application of AD duty rates in non-market economy proceedings, the calculation of “all others” rates, the selection of examined respondents, and the attribution of subsidies.

This rule could result in higher AD/CV duties on goods imported from China and other NMEs. Virginia companies importing from China or other NMEs should review this Rule to ensure they remain in compliance. For more information, click here.

U.S. Customs and Border Protection is planning to further advance in 2025 work on a new system that will ultimately replace the Automated Commercial Environment.

In a recent update, a working group under CBP’s Customs Commercial Operations Advisory Committee said ACE 2.0 is CBP’s plan to modernize ACE by adding needed new functionality and capabilities to implement the next generation of business processes envisioned by the 21st Century Customs Framework. It is intended to close capability gaps associated with trade facilitation, systems integration and data sharing, supply chain transparency, trade enforcement management, and anomalous trade detection. Virginia companies involved in international trade should monitor these developments closely and are encouraged to reach out to their VEDP trade manager should any questions arise. For more information, click here.