Potential changes to the Foreign Direct Product Rule may hinder Huawei supply chain.

board-printed-circuit-board-computer-electronics-163125

Photo by Pixabay on Pexels.com

The Trump administration has agreed to changes to the Foreign Direct Product Rule, which subjects some foreign-made goods based on U.S. technology or software to comply with U.S. regulations.  The proposed rule change requires foreign companies that use U.S. chip making equipment to obtain a license before they can supply certain semiconductor chips to Huawei.

The proposed rule change is to limit the number of foreign suppliers who continue to supply chips to Huawei. The new rule will greatly impact Huawei as most chip manufacturers use equipment produc Multiple articles on this subject cite the Taiwan-based “Taiwan Semiconductor Manufacturing Company” (TSMC). TSMC is Taiwan’s largest semiconductor manufacturer with over 15 fabs located throughout Taiwan.

If you have any questions whether you are subject to export controls or if you want to know how you are impacted, contact experienced export controls attorney David Hsu by phone/text at 832-896-6288 or by email at attorney.dave@yahoo.com, dh@gjatradelaw.com.

What’s the current status of France’s proposed digital tax?

pexels-photo-705764

Photo by TravelingTart on Pexels.com

Last year, France threatened a “digital tax” of 3% on digital revenue of big tech companies such as Facebook and Google. In response, the US threatened tariffs on $2.4 billion of French goods such as wine, cheese, and makeup.

On Monday, January 20th, France said they would delay the the tariffs for the remainder of 2020 in response to US pressure.

And earlier today, at the Davos World Economic Forum, US Treasury Secretary Steven Mnuchin reiterated the Trump administration’s claim a digital tax is discriminatory and in response, he threatened tariffs on auto manufacturers if a deal does not work out and the digtal tax is put into effect.

What’s next? Treasury Secretary Mnuchin and his counterpart, France’s foreign minister Bruno Le Maire met earlier today (Wednesday January 22nd), but no news has been released about an agreement between the US and France. Will post more news as it is released.

US China Trade Deal as of 12/13/2019.

Donald_Trump_official_portrait

Official portrait of President Donald J. Trump, Friday, October 6, 2017. (Official White House photo by Shealah Craighead)

As you are aware, the Trump administration has confirmed a trade deal with China has been reached.

Phase one of the trade deal was just announced:

-List 1 remains at 25%

-List 2 remains at 25%

-List 3 remains at 25%

-List 4b is gone (4b was initially scheduled to take effect December 15th, and included consumer electronics such as cell phones, laptops, computers, etc.).

-“Most” (not all) of List 4a is going to drop to 7.5%.

We will monitor the Federal Register for what specifically is being reduced. If you have any further questions, contact experienced trade attorney David Hsu for immediate help by phone/text at 832-896-6288 or by email at attorney.dave@yahoo.com, dh@gjatradelaw.com.

U.S. House passes USMCA, next stop the Senate.

flag of canada

Photo by Social Soup Social Media on Pexels.com

As you are aware, the U.S. House of Representatives passed an updated version of the USMCA earlier this week. The passage by the House includes revisions to an agreement initially agreed to by the US, Mexico and Canada in September 2018.

The next step for the USMCA is the Senate, where it is not expected to be put to a vote until 2020.

What are some of the changes in the USMCA versus NAFTA?

  • If autos are to qualify for no tariffs, then 75% of the components must be manufactured in Canada, Mexico or the United States (currently at 62.5%).
  • 30% of the work on the vehicle must be performed by individuals making $16 or more per hour, with a 40% requirement in 2023.
  • The new agreement allows works in Mexico to unionize.
  • The definition of steel and aluminum for Mexico in regards to the automotive rules of origin includes “melted and poured” in North America.
  • USMCA will be subject to mandatory review every 6 years, if all parties agree, then there is a 16 year period for review, with subsequent reviews every 16 years.

If you have any further questions how your business may be impacted by the USMCA if and when it is passed next year, contact experienced trade attorney David Hsu by phone/text at 832-896-6288 or by email at attorney.dave@yahoo.com or dh@gjatradelaw.com.

US may impose 100% tariff on French champagne, cheese and handbags over digital services taxes.

photo of hugging couple taking selfie with a crowd of people and the eiffel tower in the background

Photo by Dominique ROELLINGER on Pexels.com

This past Monday, the Trump administration announced the United States may impose duties of 100% on $2.4 billion in imports from France of items including champagne, handbags, and cheese in response to France’s 3% tax on digital services earned by companies with more than $27 million in French revenue and 750 million euros worldwide.

The US opposition to the tax has bipartisan support, with top Republican and top Democrat Senators Charles Grassley and Ron Wyden claiming “the French digital services tax is unreasonable, protectionist and discriminatory.”

French officials counter by saying the digital tax is not aimed specifically at US technology companies, but rather any digital firm.

The public is able to submit public comments through January 14th on the proposed tariffs and a public hearing is scheduled for January 7th.

If you have any questions how the proposed duties may impact your business, contact experienced trade attorney David Hsu by phone/text at 832-896-6288 or by email at attorney.dave@yahoo.com, dh@gjatradelaw.com.

Phase 1 of the China trade deal explained.

cargo containers trailer lot

Photo by Frans Van Heerden on Pexels.com

Earlier this week, US and Chinese representatives met for the 13th time in ongoing negotiations to reach a trade deal. On Friday, President Trump outlined what has been referred to as “Phase 1”:
1. Suspension of tariff hike set for October 15th that would have increased tariffs from 25% to 30% on $250 billion in Chinese goods.
2. Some intellectual property protections on copyrights, trademarks and piracy (no movement on technology transfers, data flows, cyber security, product standard reviews or the new social credit system.
3. China’s commitment to purchase $50 billion in US agricultural products
The announcement is short on details and more information should be available in 5 weeks and details will be posted as soon as they are available.
If you have any questions how these duties will impact your business, or for any questions on trade with China, contact experienced trade attorney David Hsu at 832-896-6288 or by email at attorney.dave@yahoo.com, dh@gjatradelaw.com.

US DOJ warns of increase in Chinese theft of trade secrets.

white electric train

Photo by David Dibert on Pexels.com

According to CNBC, the Justice Department launched the “China Initiative” in November 2018 in response to Chinese national security threats while the Chinese have accused the United States protecting US companies from competition and attempting to hinder China’s technological development.

The Justice Department issued a warning to companies to bolster their defenses against economic espionage, which has seen an 80% increase in cases since 2012. US Deputy Assistant Attorney General Adam Hickey is quoted as saying more “more cases are being opened that implicate trade secret theft”.

Further more, Adam’s states:

“We expect other nations will want to become self-sufficient in critical technologies. That’s what we’d expect of a responsible government,” he said. “The issue isn’t that China has set out to do that. It’s that part of their industrial policy, part of the way they try to accomplish that, is state-sponsored theft or creating an environment that rewards or turns a blind eye to it.”

The DOJ believes part of the continued espionage efforts are part of the “Made in China 2025” strategic plan to reduce China’s dependence on importations of technology in 10 industries including information technology, robots, aviation, bio-pharmaceuticals and railway transportation.

If you have questions on imports or exports from China, contact experienced trade attorney David Hsu at 832-896-6288 or by email at attorney.dave@yahoo.com, dh@gjatradelaw.com.

US and China trade talks to resume in October.

pile of intermodal containers

Photo by Frans Van Heerden on Pexels.com

The office of the US Trade Representative (USTR) confirmed on Thursday that a deputy-level meeting would be held in mid-September to discuss plans for trade talks in October.
This past Sunday, new tariffs on US$125 billion of Chinese imports, including shoes and smartwatches, came into effect after President Trump said he was disappointed in China’s lack of effort to buy US farm goods. In return, China responded with duties on $75 billion of American goods, affecting crude oil exported from the US.
The agreed to talks in October will hopefully resolve the 13-month trade war between the two countries.
If you have any questions how your company may be impacted by the US/China trade war – contact experienced trade attorney David Hsu at by phone/text at 832-896-6288 or by email at attorney.dave@yahoo.com, dh@gjatradelaw.com.

Japan downgrades South Korea’s trade status.

black and white mountain over yellow white and blue sky

Photo by Pixabay on Pexels.com

This past Wednesday, Japan downgraded South Korea’s preferential trade status – requiring Japanese manufacturers to now apply for approval for technology-related goods to be exported to South Korea. Japan claims the trade status of South Korea was needed over concerns the technology could be used for military purposes. Prior to Wednesday, exports to South Korea required less compliance as a preferential trade partner. South Korea also announced their action to downgrade Japan’s trade status to take effect later this month (September).

As previously posted on this blog, South Korea accuses Japan using trade as retaliation in responses to court decision granting compensation to individuals who were victims of forced labor during Japan’s occupation of Korea. The AP reports leadership from both countries are working on an agreement.

Citizens from both countries have also joined in street protests and boycotting goods from either country.

USTR to open comment period on List 4.

birds eye view photo of freight containers

Photo by Tom Fisk on Pexels.com

This past Thursday, the US Trade Representative (USTR) gave formal notice of the plan to raise tariffs on $300 billion of Chinese imports from 10% to 15% starting December 15th. The formal notice starts the opportunity for importers or anyone impacted by the potential tariffs to submit comments. The comments are an opportunity for businesses to tell the White House why the tariffs are good or bad. As in the past, comments have been both supportive and critical of the potential tariffs.
This round of tariffs encompasses goods on “List 4” and includes mostly consumer goods – such as smartphones, computers, and other consumer electronics.
If you want to submit comments regarding any goods on “List 4”, contact experienced trade and customs attorney David Hsu at 832-896-6288 or by email at attorney.dave@yahoo.com, dh@gjatradelaw.com.