The U.S. is reducing by 50% tariffs on certain prepared meals, certain crystal glassware, cigarette lighters and lighter parts, surface preparations and propellant powders, in exchange for the European Union ending tariffs on live and frozen lobster imports. Canada had been taking market share from Maine lobster exports since Canada and the EU signed a trade deal, and Canadian lobsters could enter duty free. The products from the EU have an “average annual trade value of $160 million,” while lobster exports to the EU topped $111 million in 2017, the Office of the U.S. Trade Representative said in a news release Aug. 21. All the tariff reductions are effective as of Aug. 1, 2020.
The semiconductor industry was surprised by the U.S.’s increased restrictions on Huawei (see 2008170029) and expects significant short-term supply chain disruptions, industry officials and experts said in interviews. Officials also thought the initial version of the rule, issued in May (see 2005150058), was sufficient, and were frustrated that the Bureau of Industry and Security did not ask for feedback on the new requirements.
China again criticized U.S. restrictions on Huawei, TikTok and WeChat but said the measures will not affect an expected call between officials from the two countries to discuss the phase one trade deal. The call, originally scheduled for Aug. 15 (see 2008170022), will be held “in the near future,” a Chinese Ministry of Commerce spokesperson said Aug. 20, according to an unofficial translation. The call is expected to serve as a six-month compliance check on both countries’ commitment to the phase one agreement. The Office of the U.S. Trade Representative did not comment.
A top U.S. intelligence official urged companies to avoid supply chains involving Huawei, and said there is a strong push within the administration to bolster domestic production of 5G technologies. Constance Taube, National Counterintelligence and Security Center deputy director, said U.S. companies should approach Huawei and other Chinese state-controlled companies with a high degree of skepticism, saying their supply chains will ultimately benefit from more trusted actors.
Companies across the world are increasingly struggling to expand their exports due to a rise in trade retaliation, trade experts said. Although exporters can find some stability by diversifying their markets, they should continue to expect unpredictability, particularly as countries react to changing U.S. tariffs. “You have to love riding roller coasters right now as a trade professional,” said Kim Campbell, president of MKMarin Trade Services, a Canadian trade consulting firm. “If you don't have that temperament, I think you're just going to be nothing but frustrated and heartbroken most of the time.”
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The Department of Justice’s recent changes to its voluntary disclosure policies (see 1912130047) could lead to complications for companies and were met with backlash from other enforcement agencies, said Robert Clifton Burns, an export control lawyer with Crowell & Moring. The guidance, which outlined benefits for companies that disclose export control and sanctions penalties, can be interpreted as saying industry should first submit their voluntary disclosures to the Justice Department instead of to other agencies, Burns said.
The Bureau of Industry and Security on Aug. 17 added 38 Huawei affiliates to the Entity List and refined a May amendment to its foreign direct product rule, further restricting Huawei’s access to U.S. technology, the agency said in an Aug. 17 final rule. BIS also modified four existing Huawei entries on the Entity List, amended language in the Export Administration Regulations and said it will continue one cybersecurity-related authorization under its temporary general license for Huawei. The remainder of the license expired Aug. 13.
European countries need to increase sanctions against Venezuela to force a regime change and limit Nicolas Maduro’s ability to evade U.S. restrictions, said Carrie Filipetti, the State Department’s assistant secretary for the Bureau of Western Hemisphere Affairs. Filipetti also said more U.S.-European cooperation can help limit the Maduro regime’s access to gold supply chains, which it uses for funding.
Export control experts advocated for more effective U.S. controls, saying the U.S. should pursue more multilateral support and may need to rethink its strategy toward China. In a series of short essays published Aug. 13 by the Center for a New American Security, experts and former policymakers dive into how the controls can be more effective, what they should target, and how the controls are viewed by U.S. allies and adversaries.