ZTE may need to change management and board in order to access US suppliers.

white house

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According to a May 19th South China Morning Post article – Larry Kudlow, White House economic advisor suggested any change in ZTE’s Denial Order may require a change of management, board and “everything”.

Part of the US decision to re-evaulate the Denial Order against ZTE (effectively cutting ZTE off from their US suppliers) was a result of President Trump asking the Commerce Department to get ZTE back into business.

ZTE report to the HKEX on the impact of the US denial order: “major operating activities of the Company have ceased”


According to a May 10, 2018 filing with the Stock Exchange of Hong Kong (HKEX) online here, ZTE announced the April 2018 BIS Denial Order has resulted in “major operating activities of the Company have ceased”.

Earlier in April 2018, the Bureau of Industry and Security (BIS) of the U.S. Department of Commerce (Commerce) issued a Denial Order against ZTE for failing to comply with the terms of a plea deal reached in 2017 after ZTE plead guilty for illegally shipping US equipment to Iran and North Korea. One often cited plea deal was for ZTE to reprimand responsible employees and deny bonuses to those employees. However, BIS determined ZTE did pay full bonuses and kept 35 employees who violated the law.

A “Denial Order” bans American companies from exporting parts to ZTE. In the instant case, ZTE is faced with a 7-year Denial Order and can no longer receive Qualcomm Snapdragon chips (84% of all ZTE phones use Snapdragon chips) and Google Android updates.

The HKEX release further states that, “the Company maintains sufficient cash”, and ends with ZTE indicating they would seek a modification or reversal of the Denial Order and update investors as soon as possible.

It will be interesting to see the second quarter ZTE results if the Denial Order is not reversed – ZTE’s shipped 75% of their smartphone shipments to the US in the first quarter of 2018.

US Department of Commerce initiates antidumping and countervailing investigations on certain quartz surface products from China.

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On May 7, 2018, the Department of Commerce (Commerce) initiated its less-than-fair-value and countervailing duty investigations on “Certain Quartz Surface Products from the People’s Republic of China (China)” (Initiation Notices). These investigations have been assigned the following case numbers: A-570-084 and C-570-085.

Scope Description:

According to the Commerce Department, the scope of the certain quartz surface products from China are covers:


The merchandise covered by the investigation is certain quartz surface products. 1
Quartz surface products consist of slabs and other surfaces created from a mixture of materials that includes predominately silica (e.g., quartz, quartz powder, cristobalite) as well as a resin binder (e.g., an unsaturated polyester). The incorporation of other materials, including, but not limited to, pigments, cement, or other additives does not remove the merchandise from the scope of the investigation. However, the scope of the investigation only includes products where the silica content is greater than any other single material, by actual weight. Quartz surface products are typically sold as rectangular slabs with a total surface area of approximately 45 to 60 square feet and a nominal thickness of one, two, or three centimeters. However, the scope of this investigation includes surface products of all other sizes, thicknesses, and shapes. In addition to slabs, the scope of this investigation includes, but is not limited to, other surfaces such as countertops, backsplashes, vanity tops, bar tops, work tops, tabletops, flooring, wall facing, shower surrounds, fire place surrounds, mantels, and tiles. Certain quartz surface products are covered by the investigation whether polished or unpolished, cut or uncut, fabricated or not fabricated, cured or uncured, edged or not edged, finished or unfinished, thermoformed or not thermoformed, packaged or unpackaged, and regardless of the type of surface finish.

In addition, quartz surface products are covered by the investigation whether or not they are imported attached to, or in conjunction with, non-subject merchandise such as sinks, sink bowls, vanities, cabinets, and furniture. If quartz surface products are imported attached to, or in conjunction with, such non-subject merchandise, only the quartz surface product is covered by the scope.

Subject merchandise includes material matching the above description that has been finished, packaged, or otherwise fabricated in a third country, including by cutting, polishing, curing, edging, thermoforming, attaching to, or packaging with another product, or any other finishing, packaging, or fabrication that would not otherwise remove the merchandise from the scope of the investigation if performed in the country of manufacture of the quartz surface products.

Not covered by the scope of the investigation:


The scope of the investigation does not cover quarried stone surface products, such as granite, marble, soapstone, or quartzite. Specifically excluded from the scope of the investigation are crushed glass surface products. Crushed glass surface products are surface products in which the crushed glass content is greater than any other single material, by actual weight.

Applicable HTSUS numbers subject to the scope of the investigation:


The products subject to the scope are currently classified in the Harmonized Tariff Schedule of the United States (HTSUS) under the following subheading: 6810.99.0010. Subject merchandise may also enter under subheadings 6810.11.0010, 6810.11.0070, 6810.19.1200, 6810.19.1400, 6810.19.5000, 6810.91.0000, 6810.99.0080, 6815.99.4070, 2506.10.0010, 2506.10.0050, 2506.20.0010, 2506.20.0080. The HTSUS subheadings set forth above are provided for convenience and U.S. Customs purposes only. The written description of the scope is dispositive.

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1
Quartz surface products may also generally be referred to as engineered stone or quartz, artificial stone or quartz, agglomerated stone or quartz, synthetic stone or quartz, processed stone or quartz, manufactured stone or quartz, and Bretonstone®.

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If you have any questions about how the AD/CVD investigation will impact your quartz import business, or if you would like to discuss other options, contact the experienced antdiumping and countervailing duty attorney David Hsu at 832.896.6288 or email at dhsu@givensjohnston.com.

CBP seizes $3 million in counterfeit jewelry and watches.

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In the second major seizure for the month of May, U.S. Customs and Border Protection (CBP) Officers in Philadelphia seized 64 pieces on April 3rd from a shipment coming from Hong Kong. If authentic, this seizure and a prior March seizure result in a combined manufacturer suggested retail price (MSRP) of over $3 million.

The packaging indicated the shipment contained bangles and arrived from Hong Kong. With the large amounts of shipments from overseas, CBP is unable to inspect every package – instead will focus on inspecting shipments sent from places known to counterfeit items. Upon inspection of these bangles, CBP also found the counterfeit jewelry would be in packaging of poor quality.

This time, CBP officers found the package containing bracelets, earrings and rings bearing the Cartier and Tiffany brands.

If you or anyone you know has had their shipment seized by Customs, contact experienced Customs seizure attorney David Hsu at 832.896.6288 or by email at dhsu@givensjohnston.com. Customs will seek civil and sometimes criminal penalties for importers that violate intellectual property rights – call today.

ZTE and Huawei banned for sale to US military personnel.

black huawei android smartphone

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In addition to my blog post from April 19, 2018, ZTE has once again made news according to a Washington Post May 2nd article. In the Washington Post article, the Pentagon instructed the military from selling ZTE and Huawei branded phones from U.S. military bases.

The Defense Department cited security risks posed by the devices made by Huawei and ZTE writing:

“Huawei and ZTE devices may pose an unacceptable risk to Department’s personnel, information and mission” and that “it was not prudent for the Department’s exchanges to continue selling them to DoD personnel.”

Besides phones, modems and other wireless products manufactured by ZTE and Huawei are also included in the ban.

Under the direction of the President, the move by the Pentagon was an attempt to limit the use of wireless equipment manufactured in China that may contain technology used to spy or hack US citizens and military personnel.

CBP seizes more than $1.5 million in counterfeit hangbags and belts.

LV

Credit: CBP.gov. CBP officers at the Port of Tacoma
seized merchandise that violated the
trademark rights of Chanel, Luis Vuitton,
Calvin Klein, Gucci and Fendi.

According to a U.S. Customs and Border Protection (CBP) release, the Port of Tacoma seized counterfeit handbags and belts, among other high-end items totaling more than $1.5 million.

Without going into details, the press release indicated the counterfeit items were “of poor quality and violated the trademark rights of Chanel, Luis Vuitton, Calvin Klein, Gucci and Fendi”.

CBP enforces over 500 U.S. trade laws and regulations (such as trademark violations of the handbags) for the over 47 federal agencies with a goal of “protecting the U.S. economy and its consumers from harmful imports and unfair trade practices”.

If you or someone you know had their imports seized due to CBP’s belief the items are counterfeit, contact experienced trade and customs attorney David Hsu, 832.896.6288 or by email at dhsu@givensjohnston.com .