Summary of information we have about the Huawei CFO Arrest.

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Below is a summary in bullet point of news we know about the arrest of Huawei’s CFO as reported by multiple sources:

  1. Who is Meng Wangzhou?
    1. 46 year-old global CFO of Huawei
    2. Daughter of Huawei founder.
    3. She faces extradition to the US.
    4. She also goes by Cathy or Sabrina
  2. When was the arrest?
    1. December 1, 2018
    2. The arrest warrant was issued on August 22nd.
  3. Where did they arrest the CFO?
    1. The arrest took place in Vancouver’s airport as she traveled from Hong Kong to Mexico.
  4. Why did they arrest the CFO?
    1. The arrest stems from 2013 statements made by Meng Wanzhou. In 2013, she told financial institutions Huawei had no connection to a Hong-Kong based company called Skycom.
  5. Why is Skycom Tech Co. Ltd. under investigation by the US?
    1. Skycom is suspected of selling Hewlett-Packard computer equipment to Iran’s largest mobile-phone operator.
    2. There is an embargo in place and selling HP equipment to Iran is in violation of US sanctions.
    3. Meng’s lawyer claims Huawei already divested itself from Skycom and left the Skycom board.
    4. US authorities also believe Huawei operated Skycom as an “unofficial subsidiary” to conduct business in Iran.
    5. Meng previously served on the board of Skycom from February 2008- April 2009 according to Skycom filings with Hong Kong’s Companies Registry.
    6. Several past Skycom directors may also have connections to Huawei.
  6. Tell me more about the court case?
    1. Eastern District of New York.
    2. US authorities will like allege Meng played a role in fraud by telling banks there was no link between Huawei and Skycom.
  7.  Why arrest the CFO in Canada?
    1. The US does not have an extradition treaty with China
    2. Canadian authorities consider her a flight risk because of her wealth.
  8.  What is China’s response?
    1. The Chinese government has demanded Meng’s immediate release.
    2. China has asked Ottawa and Washington to clarify their reasons for the detention.
    3. The arrest has sparked anger on Chinese social media with users calling for boycott of US goods.
  9.  Who is Huawei?
    1. Huawei was founded in 1987 by Zhengfei Ren, a prominent business figure in China.
    2. Huawei is the world’s second-largest maker of smartphones (behind Samsung) and one of the world’s largest makers of telecommunication equipment.
    3. Huawei and ZTE are considered by some US officials as a threat to national security due to the potential for spying on US companies or agencies that use their equipment.

Check back for more news as they develop.

US-China Trade Deadline – March 1, 2019.

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As reported by the Guardian, over the weekend, Robert Lighthizer appeared on TV and spoke regarding several trade issues:

  1. The Trump administration is set to impose further duties on Chinese goods on March 1, 2019 if a trade deal is not reached. The March 1st deadline marks the end of 90 days starting December 1 of this month.
  2. The US Trade Representative, Robert Lighthizer was chosen by Trump to negotiate the trade deal and Lighthizer told CBS’s Face the Nation that March 1, 2019 is “a hard deadline”.
  3. In other news, at Trump’s last meeting with Chinese President Xi Jinping, both sides announced a truce and delay in the scheduled January 1, 2019 increase in tariffs to 25% from 10% on approximately $200 billion of Chinese goods.
  4. In response to last Monday’s arrest of Huawei’s CFO, Lighthizer indicated the two issues are separate (trade on one side and law enforcement on the other side).
  5. Lighthizer indicated that part of the negotiations require China to increase purchases of US goods along.
  6. Other requirements for China would be changes to the rules requiring American firms to provide technology to Chinese partners as a condition of doing business.

Check back for more information as it becomes available. Also, if you have any goods scheduled under “List 3” and have questions about what the delay may mean to your imports under List 3, feel free to give me a call, 832-896-6288 or email at dhsu@givensjohnston.com.

 

Huawei CFO arrested in Canada for violating U.S. sanctions on Iran.

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According to Bloomberg – Huawei’s CFO, Wanzhou “Sabrina” Weng was arrested in Canada on December 1st over Huawei’s potential violations of U.S. sanctions on Iran. Sabrina Weng is the deputy chairwoman and daughter of Huawei founder Zhengfei Ren.

The arrest prompted China’s embassy in Canada to demand Sabrina be released and for the US and Canada to “rectify wrongdoings” and to “to clarify the grounds for the detention, to release the detainee and earnestly safeguard the legitimate rights and interests of the person involved”.

It is not known when or if Sabrina will be expedited to the US.

Check back for more updates as they are available. If you have any questions about your company’s compliance with US export controls and or want to ensure your company is in compliance with all the sanctions and laws regarding exporting, contact David Hsu at 832-896-6288 or by email at dhsu@givensjohnston.com.

ITC preliminary determination on aluminum wire and cable from China.

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According to Bloomberg Bureau of National Affairs, Inc., the International Trade Commission (ITC) preliminarily ruled that aluminum wire and cable from China receive government subsidies such as tax breaks, loans and grants. The lower cost of production to these goods from China are “dumped” to the US thereby hurting US manufacturers.

A preliminary determination is one step towards the implementation of anti-dumping and countervailing duties. Countervailing duties are to counteract any subsidies that may be given to foreign manufacturers.

Two US companies – Encore Wire and Southwire Co. petitioned the ITC to assess duties on goods for China because (1) the margins of wire and cable from China are up to 63.47 percent and (2) Chinese producers receive government subsidies, tax breaks, loans and grants. These two factors allow Chinese companies to have a competitive advantage against U.S. manufacturers.

According to the article, the US imported about 157.2 million worth of wire and cable from China in 2017 alone.

Besides the just passed preliminary stage, the next state is a “final determination” phase that determines whether the imported steel and

The U.S. will only impose anti-dumping or countervailing duties if Commerce makes a final determination that the imports were sold in the U.S. at less than fair value or unfairly subsidized, and the ITC makes a final determination that the imports seriously hurt or threaten U.S. industry.

Check back for more news as it becomes available. If you have any anti dumping or countervailing duty questions, please do not hesitate to call me at 832-896-6288 or by email at dhsu@givensjohnston.

Highlights from Chinese President Xi Jinping’s speech at the International Import Expo.

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As reported by CNN, Chinese President Xi Jinping opened the China International Import Expo in Shanghai with a speech on Monday.

Here’s a summary of the opening remarks and some observations made by CNN:

-The International Import Expo is to highlight China as a destination for foreign goods
-No senior US government officials attended the event
-President Xi Jinping said protectionism should not be a part of international trade
-Over 3,600 companies from over 150 countries participated
-President Xi and President Trump will meet later this month at the G20 summit in Argentina
-President Xi Jinping promised to open the Chinese economy further to international investment and protect foreign businesses already operating in China

If you have any questions regarding export compliance of goods sent to China, contact experienced compliance attorney David Hsu at 832-896-6288 or by email at dhsu@givensjohnston.com.

 

Customs seizes counterfeit Mercedez parts valued over $1.8 million.

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U.S. Customs and Border Protection (CBP) seized suspected counterfeit Mercedes Benz auto parts in Philadelphia shipped from China New Jersey. If the parts were authentic, the value of the counterfeit goods retailed at approximately $1,764,126 in value.

The shipment from Yangshan, China was labeled as “other parts and accessories of motor vehicles”. The trademarked Mercedes logo and origin of the shipment raised CBP’s suspicion of the authenticity of the goods.

Without going into detail, the CBP media release says CBP has their own inspection methods and use computer databases to find counterfeit goods that may be imported to the US.

If you had your shipment seized for suspected counterfeit of goods – contact experienced trade attorney David Hsu at 832-896-6288 or by email at dhsu@givensjohnston.com.

 

The NAFTA (USMCA) loyalty oath?

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As has been widely reported, the new NAFTA agreement (USMCA) contains what has been branded a “loyalty oath” among the US, Canada and Mexico.

What is this “loyalty oath”?
In short, the oath says that in the event any USMCA member enters into a free trade agreement (FTA) with a non-market country, the other two remaining countries can leave the agreement and form their own bilateral trade pact.

Why is this clause in the USMCA?
This clause is likely an effort by the US Administration to isolate China economically since neither Canada or Mexico would want to leave the USMCA. This clause is also aimed at limiting the imports from China to Mexico/Canada for shipment into the US duty free.

Is a “loyalty oath” found in other trade agreements?
Currently, no, however this inclusion in the USMCA may be an indication of what will occur in future trade agreements to further isolate China from their trading partners.

Is the “loyalty oath” set in stone?
Right now, no, the disclaimer on the current USMCA text states: “Subject to Legal Review for Accuracy, Clarity, and Consistency Subject to Language Authentication“. Only upon ratification by all countries can we know for sure whether this is in the agreement.

What is a market or non-market economy?
This loyalty oath against non-market economies is likely aimed at China while not specifically named in the agreement. Beijing has asked for recognition as a “market economy” within the World Trade Organization (WTO) since their accession agreement expired in December 2016. If China is branded a “market economy”, this would limit trade remedies such as anti-dumping/countervailing duties to be used against Chinese imports.

What are the non-market economies around the world?
According to the European Union, besides China, the other non-market economies include Vietnam, Kazakhstan, Albania, Armenia, Azerbaijan, Belarus, Georgia, the Democratic People’s Republic of Korea, Kyrgyzstan, Moldova, Mongolia, Tajikistan, Turkmenistan, and Uzbekistan.

Where can I read the full text of the “loyalty oath”
I could not find any news sources that cited the USMCA section.

The exact text of the oath is copied below:

4. Entry by any Party into a free trade agreement with a non-market country, shall allow the other Parties to terminate this Agreement on six-month notice and replace this Agreement with an agreement as between them (bilateral agreement).

The official PDF on the US Trade Representative website can be accessed here: (last accessed October 9, 2018).

https://ustr.gov/sites/default/files/files/agreements/FTA/USMCA/32%20Exceptions%20and%20General%20Provisions.pdf

See Article 32.10 (4)

If you have any questions about NAFTA or the USMCA and how this may impact your business, call experienced trade attorney, David Hsu at 832-896-6288 or by email at dhsu@givensjohnston.com.

China to cut import tariffs on wide range of products.

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According to Reuters, China’s finance ministry will reduce import tariffs on textiles and metals from 11.5% to 8.4% on November 1st. Tariffs on wood and paper products, minerals and gemstones will be cut from 6.6% to 5.4%.

The reduction in tariffs on imports is part of Beijing’s efforts to increase imports this year and likely due to the current trade situation between China and the United States.

November 1st marks the second time in which China reduced import tariffs – the first reduction occured in early July and covered import tariffs on mostly consumer items – such as clothing, home appliances, fitness products among others.

US and China exchange tariff duties in trade war.

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Sorry for the lack of updates, Trump’s 232 and 301 duties have been occupying most of my time.

As you likely already know, yesterday, the Trump administration announced they will impose 10% duties on $200 billion worth of Chinese goods, earlier today, China announced retaliatory duties on $60 billion in US goods.

If you import from China and have questions about commenting, exclusion requests or other alternatives to minimize the tariff penalty – feel free to give me a call, 832.896.6288 or email me at dhsu@givensjohnston.com.

Trump threatens tariffs on $267 billion in Chinese goods (not a typo).

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President Trump said on Friday (September 8th) he is ready to impose tariffs on $267 billion in goods from China, on top of the current $200+ billion plus in tariffs on goods. This past July, Trump imposed tariffs on $50 billion in Chinese imports in July and then an additional $200 billion in tariffs.

With the threatened $267 billion, Trump will have imposed or threatened to impose a total of over $500 billion in imports from China. To put this amount into perspective, the US imported only $505 billion in Chinese goods in 2017. In short, Trump is threatening tariffs on everything imported from China.

On September 6th, the U.S. Trade Representative finished accepting comments on the List 3 of tariffs that could impact up to $200 billion in Chinese goods.

More updates will be posted as they become available.

If you have any questions about how List 1, 2, 3 and upcoming proposed tariffs will impact your business – or how you can file comments or exclusions, contact experienced trade and customs attorney – David Hsu at 832.896.6288 or by email at dhsu@givensjohnston.com.