Senate passes amendment to undo Trump’s ZTE deal.

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ZTE logo, credit: Wikipedia

As has been widely reported, the Senate passed “H.R. 5515: National Defense Authorization Act for Fiscal Year 2019” with an amendment that would undo Trump’s ZTE deal. The full text of the bill can be found here.

The actual amendment is included in Section 6702 of the bill. A copy and paste of only Section 6702 can be found at the bottom of the post. The amendment would reinstate the ZTE ban. As you are aware, the US Department of Commerce issued a denial order in April of this year banning ZTE from buying software and hardware from any US supplies for 7-years. Without access to Qualcomm chips, google Android software and other US components, ZTE would be effectively out of business. Evidence of this has also been reflected in ZTE’s stock price – which has already declined by 23% following yesterday’s passage of the Senate bill with the ZTE amendment.

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Tom Cotton official Senate photo and author of ZTE amendment

It has been reported that Trump will meet with legislators on Wednesday, June 20th to work out a deal removing this language. As the Senate bill moves to reconciliation in the House, it will be an important meeting as Trump will be able to make a deal with Republican lawmakers prior to reconciliation taking place. As the committee members involved in reconciliation are chose from Republican leadership in the House and Senate, Trump is hoping a deal can be made to remove the amendment.

In the meantime, we will have to just wait and see. A denial order against ZTE only hurts US companies that supply chips, components and software to one of the largest phone manufacturers in the world. Additionally, the ZTE deal allows US oversight of a Chinese-based telecommunications company – this would never happen if ZTE closes and opens up as a new company.

If you have any questions how this may impact your business or any questions regarding export compliance, contact David Hsu at 832-896-6288 or by email at dhsu@givensjohnston.com.

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For your reference, below is the amendment reinstating ZTE’s ban (if approved):

SEC. 6702. PROHIBITION ON MODIFICATION OF CIVIL PENALTIES UNDER EXPORT CONTROL AND SANCTIONS LAWS AND PROHIBITION ON CERTAIN TELECOMMUNICATIONS EQUIPMENT.

(a) Prohibition On Modification Of Penalties.—

(1) IN GENERAL.—Notwithstanding any other provision of law, no Federal official may modify any penalty, including a penalty imposed pursuant to a denial order, implemented by the Government of the United States with respect to a Chinese telecommunications company pursuant to a determination that the company has violated an export control or sanctions law of the United States until the date that is 30 days after the President certifies to the appropriate congressional committees that the company—

(A) has not, for a period of one year, conducted activities in violation of the laws of the United States; and

(B) is fully cooperating with investigations into the activities of the company conducted by the Government of the United States, if any.

(2) REINSTATEMENT OF PENALTIES OR SUSPENDED ORDER.—

(A) IN GENERAL.—If, before the date of the enactment of this Act, any penalty imposed pursuant to the order of the Acting Assistant Secretary of Commerce for Export Enforcement entitled “Order Activating Suspended Denial Order Relating to Zhongxing Telecommunications Equipment Corporation and ZTE Kangxun Telecommunications Ltd.” (83 Fed. Reg. 17644), and dated April 15, 2018, is reduced or eliminated, or that order is suspended, on such date of enactment, that penalty shall be reinstated to the penalty in place before such reduction or elimination, or that order shall be reinstated, as the case may be.

(B) ADDITIONAL MODIFICATIONS.—Any modification to a penalty imposed pursuant to the order described in subparagraph (A) on or after the date of the enactment of this Act shall be subject to the requirements of paragraph (1).

FDA issues new warning on Kratom – May 22, 2018.

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U.S. Food & Drug Administration Logo, credit: FDA.gov

On May 22, 2018, the U.S. Food and Drug Administration (FDA) issued a new warning (full text here) for companies three marketers and distributors of kratom products:

1. Front Range Kratom of Aurora, Colorado;
2. Kratom Spot of Irvine, California and
3. Revibe, Inc., of Kansas City, Missouri.

The FDA claims the above distributors and others like them are illegally selling unapproved kratom-containing drug products with unproven claims about their ability to help in the treatment of opioid addiction and withdrawal.

The FDA cited the companies claims that kratom also treats pain, lowers blood pressure, treats cancer and reduces the damage caused by strokes.

As you are aware, all medical claims from a food or drug product must be approved by the FDA. The FDA position is that kratom as an “opioid analogue” that may contribute to the opioid epidemic instead of treating the addiction.

The FDA warning reiterated FDA”s position that Mitragyna speciosa (kratom) use expose users to a risk of addiction, abuse and dependence by affecting the same opioid brain receptors as morphine. At the moment there are no FDA-approved uses for kratom.

Benefits of kratom?
Commonly argued benefits of kratom include: helping end drug addiction, ability to lower blood pressure, relieve pain, boost metabolism, increase sexual energy, improve the immune system, prevent diabetes, ease anxiety, eliminate stress, and induce healthy sleep. It is believed that kratom also reduces the opiate withdraw effects allowing those addicted to other opioids an opportunity to quit. The list of kratom benefits also include relieving headaches, vascular pain, arthritic pain and muscle pain?

FDA-Approval soon?
A check on the FDA site shows no indicating kratom/mitragyna speciosa will be approved anytime soon or even in the near future. Some argue FDA-approval doesn’t legitimize a drug as evidenced by the multitude of mass tort pharmaceutical lawsuits over dangerous drugs (trasylol, accutane, actos, depakote, hydroxycut, etc).

How does this FDA release impact imports of kratom?
U.S. Customs and Border Protection (CBP) enforces the laws of all the US government agencies (FDA, Consumer Product Safety Commission, Department of Commerce, Department of Defense, etc). This new FDA warning and others before it mean that imports of kratom may be subject to detainment and seizure if the imports of kratom contain non FDA-approved statements concerning the benefits of kratom. Officially, kratom is still being imported into the US with sporadic reports of seized kratom shipments.

More questions?
If you have any questions about the importation of kratom or a seizure related to kratom, contact experienced trade and customs attorney David Hsu by text/phone at 832-896-6288 or by email at: dhsu@givensjohnston.com.

Italy will not ratify EU/Canada trade deal.

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The Italian government has threatened not to ratify the EU/Canada trade deal titled: the Comprehensive Economic and Trade Agreement (CETA). CETA would be the largest trade deal since the EU/South Korea trade agreement in 2011.

The main reason for Italy’s opposition to the EU/Canada trade deal is the lack of protection for Italy’s specialty foods. The EU/Canada trade deal featured Protected Designation of Origin (PDO) and Protected Geographical Indication (PGI). Under CETA, Canada has recognized more than 40 Italian PDO and PGI labels out of a total of 292 foods.

Check back as more news becomes available.

EU approves counter tariffs against US steel and aluminum.

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In response to US tariffs on steel and aluminum, all members of the EU unanimously approved a plan to impose import duties on $3.3 billion worth of US products of steel and aluminum.

Further details will be released in 3 days as they are available and duties are expected to be in place later this month or early July (the next scheduled meeting is June 20th).

Questions, call David Hsu at 832-896-6288 or by email at dhsu@givensjohnston.com.

 

White House imposes tariffs on $50 billion of Chinese goods.

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As expected, the administration announced Section 301 tariffs on about $50 billion worth of Chinese goods with two purposes: (1) balance the trade relationship between the US and China and (2) prevent the transfer of American technology and intellectual property to China when US businesses operate in China.

After the announcement this morning, China responded by issuing their own tariffs on 659 types of goods from the US starting on July 6th. When announcing the initial $50 billion in tariffs, Trump also indicated any Chinese retalation will also be met with additional US tariffs.

Cliff Notes version of today’s developments:

  1. 2/3rds of the US duties on 1,102 types of goods begins July 6th.
  2. The goods announced on Friday will apply later after a review period ends.
  3. The US imposed these tariffs to limit the transfer of technology to China.
  4. Some lawmakers say these tariffs will only impact the average American due to higher prices.
  5. The first list of goods subject to tariffs can be found here.
  6. The second list of goods subject to tariffs can be found here:

Whether or not these announcements are posturing on both sides, check back for more details.

If you have any questions on how these new tariffs will impact your import or export business, contact experienced trade attorney, David Hsu at 832-896-6288 or by email at: dhsu@givensjohnston.com.

 

Got bugs? CBP vigorously checking ports and looking at wood packaging materials – did you receive an EAN?

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If you are importing anything into the Port of Houston (or any sea port) please be advised CBP is increasing scrutiny of cargo and solid wood packing materials for pests.

Last November, Customs changed the penalty provisions for violations of shipments that do not comply with wood packaging material regulations. Wood packaging materials (WPM) are required to meet the “Guidelines for Regulating Wood Packaging Material in International Trade”. The PDF of the regulations can be found here (last accessed July 13, 2018).

What is Wood Packaging Materials (WPM)?

-Hardwood or softwood packaging
-Created using glue, heat, pressure, or a combination of all three
-Used to support, protect or carry an item
-Examples include pallets, skids, containers and crates.

In other words, the definition is very broad – call our office if you want to verify your materials are considered “wood” packaging materials.

WPM violations include:

(1) markings not approved by the International Plant Protection Convention (IPPC);
(2) WPM not stamped in accordance with the ISPM 15 standard;
(3) WPM that is infested.

If there are any WPM violations, Customs will send you an Emergency Action Notification (EAN) and in most cases Customs will ask you to export the violating items.

If you receive an EAN for any WPM violations, contact customs attorney David Hsu at 832-896-6288 or by email at dhsu@givensjohnston.com.

Any Customs case involve pests or WPM are time sensitive and you have to act fast – do not hesitate to contact our office.

Japan passes law to ratify Trans-Pacific Partnership trade deal.

As reported by the Kyodo News – the Japanese government enacted a law to ratify the TPP free trade deal. As you are aware, Japan and 10 other nations (Australia, Brunei, Canada, Chile, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam) continued negotiations with the free trade deal after the United States withdrew. The TPP deal requires at least 6 member countries to ratify the pact before it takes effect.

More TPP updates as they become available. If you have any trade or customs questions, please feel free to contact David Hsu at 832-896-6288 or by email at dhsu@givensjohnston.com.

Air Cargo Advance Screening (ACAS) program in effect starting June 12, 2018.

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U.S. Customs and Border Protection and the Transportation Security Administration  (TSA) announced that the Air Cargo Advance Screening (ACAS) program went into effect on June 12, 2018. The ACAS program requires submitting in advance air cargo information on shipments arriving in the US from a foreign location.

Starting today, the program is now mandatory for all airlines flying to the United States and requires submitting pre-arrival air cargo data to CBP prior to landing or transiting through the United States. The new ACAS program is a joint effort between the CBP and TSA to screen high volumes of cargo and to identify high-risk cargo and minimize risks.

The interim final rule can be found here on the Federal Register.

If you have any questions about ACAS program compliance, please contact David Hsu anytime at 832-896-6288 or by email at dhsu@givensjohnston.com.

 

Deal reached between the US and ZTE.

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Credit: Courtesy of ZTE Corporation

The US will end the ban on ZTE buying American software and hardware.

The terms of the deal require:
1. $1 billion penalty;
2. $400 million in escrow to be forfeited in the event of future export violations during the 10-year probationary period;
3. Compliance team in ZTE that will report to the company’s new chairman;
4. ZTE must change board and management team in 30 days.

Various online articles covering the US/ZTE deal ask what the US gets out of the ZTE deal.

None of the news sources mention that this deal saves ZTE and will lead to business for US suppliers of components and software to ZTE:

-Acacia Communications Inc
-Oclaro,
-Lumentum Holdings,
-FiberHome
-NeoPhotonics Corp
-Inphi Corp
-Finisar Corp
-Analog Devices Inc
-Xilinx Inc
-Qualcomm
-Qorvo Inc.
-Alphabet Inc

If you or anyone you know has questions about the ZTE deal or export compliance questions, feel free to contact experienced trade attorney, David Hsu at 832-896-6288 or by email at dhsu@givensjohnston.com.

EU imposes tariffs on US goods starting July 1, 2018. Full list here.

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No surprise here – the Associated Press on June 6th published an article stating the European Union (EU) will start imposing duties on US goods starting this July in response to the current administration’s decisions to implement tariffs on steel and aluminum imports from Europe.

The increase in tariffs covers US goods such as steel, cigarettes, t-shirts, women’s cotton denim trousers, rice, broken rice (not a typo), tobacco, bourbon, peanut butter, cranberries and orange juice. The official list of goods subject to a 10%-50% duty can be viewed here.

Based on the items subject to new tariffs, seems like the majority of the people who will be effected are the consumers.

If you have any questions, please contact experienced trade attorney, David Hsu at 832-896-6288 or by email at dhsu@givensjohnston.com.