Flag of Rwanda via Wikipedia
A few days ago I posed about a pending US-Rwanda trade war over Rwanda’s import duty on second hand clothes imported into Rwanda.
My post mentioned a May 28th deadline in which the US asked Rwanda to reverse or reduce tariffs on imports of secondhand clothing – as of today, there has been no news. Yesterday (Monday, May 28th) was Memorial Day in the US, so a decision will likely be made some time this week.
Flag of Rwanda via Wikipedia
Unexpected title I know, usually we associate “trade war” with “China”, however, the Trump administration has given Rwanda until May 28th to reduce the tax on imported clothes (the US is a major exporter of second hand clothes to Rwanda – ever wonder what happens to those “clothes and shoes” that are donated to the parking lot donation boxes?)
Background:
In 2016, the East African Community (EAC) composed of Kenya, Tanzania, Rwanda and Uganda increased tariffs on used clothing. Specifically, Rwanda increased the duties by 20 cents to $2.50 per kilogram. This 20 cent increase is at risk of hurting Rwanda’s export benefits under the US African Growth and Opportunity Act (AGOA). The AGOA allows certain African countries (like Rwanda) duty-free access to the US market for 6,500 exported products. Since AGOA was passed, duty-free exports to the US from AGOA qualified countries have increased 400% to over 1.0 billion since the law was passed.
AGOA Products:
A full list of those products can be found here.
The Trump administration is threatening Rwanda with losing certain benefits under the AGOA after a compliant was filed last year from the Secondary Materials and Recycled Textiles Association (SMART), a US-based organization which represents companies that collect and resell Americans’ used clothing. SMART claims the Rwanda tariffs have a big impact on the $1 billion dollar used clothing export industry.
Arguments from both sides:
SMART claims the Rwandan tariffs hurt their business while poor Rwandans also claim the increased prices of second hand clothes in Rwanda impact their ability to buy clothes at affordable prices. However, Rwanda’s government claims an increase in second-hand clothing prices will make locally made Rwanda clothes more price competitive. If the tariffs increase second-hand clothing prices and move people towards purchasing new Rwandan made clothes, the Rwandan government claims more factories will be built, more jobs will be created and the economy will improve.
What will happen?
Check back on May 28th, I will update as soon as I find anything. If anything, I’m expecting China to fill the void. A cursory search on Alibaba for “used clothes in bales” shows lots of offerings targeted for export to East Africa and the general African market.
President Trump via whitehouse.gov
I’ve read almost every ZTE-related article and no article has mentioned what I believe to be the real reason behind President Trump’s efforts to reverse or implement other alternatives to remove ZTE’s 7-year ban on purchasing U.S. hardware and software.
The real reason President Trump is trying to remove the ban is an effort to help US companies. US based companies such as Qualcomm, Intel, Broadcom and Oclaro supply hardware to ZTE. Software companies such as Alphabet supply and provide the Android mobile operating system and updates found on ZTE phones. A 7-year ban means the Google Play Appstore will lose sales on both apps and in-app purchases.
While Trump has faced backlash from Congress, I believe Trump’s efforts are in the interest of helping US companies and improving their stock prices.
Image of denier polyester staple fiber courtesy of the Tianjin Glory Tang Technology Co., Ltd.
According to a U.S. Department of Commerce (Commerce) news release – the Commerce Department announced the affirmative final determinations in the antidumping duty (AD) investigations of imports of fine denier polyester staple fiber from China, India, Korea, and Taiwan.
Commerce determined that exporters from China, India, Korea, and Taiwan sold fine denier polyester staple fiber in the United States at less than fair value. The dumping margins determined by Commerce are as follows:
China – 65.17 – 103.06 percent
India – 21.43 percent
Korea – 0 – 45.23 percent
Taiwan – 0 – 48.86 percent
With today’s decision, Commerce will instruct U.S. Customs and Border Protection to collect cash deposits from importers of fine denier polyester staple fiber from China, India, Korea, and Taiwan based on the final rates, as appropriate.
I find it ironic, one of the petitioners is Nan Ya Plastics Corporation, America – a company that previously imported fine denier polyester staple fiber.
One interested statistic in the Commerce release – the Trump administration has 114 new antidumping and countervailing duty investigations since the beginning of the administration compared to the the 64 initiations in the last 489 days of the previous administration.
If you are an importer of fine denier polyster staple fiber from China, India, Korea or Taiwan and have questions how this decision may impact your business, contact David Hsu at 832-896-6288 or by email at attorney.dave@yahoo.com.
Photo by Pixabay on Pexels.com
Current Commerce Secretary Wilbur Ross told CNBC today that the US may consider other measures, such as placing compliance officers at ZTE. The compliance officers would report back to the Department of Commerce.
Background:
The Department of Commerce banned ZTE from purchasing hardware and software from U.S. manufacturers because ZTE was found to sell American parts to Iran and North Korea. The Commerce department prohibits the sale of US goods to North Korea, Sudan, Syria, Iran and Cuba. ZTE is most commonly known in the US for their smart phones but ZTE also manufactures telecomunications equipment.
Check back here for the latest news as they develop.
And if you have any export controls or export compliance issues – contact David Hsu at 832-896-6288 or by email at attorney.dave@yahoo.com.
Photo by Manuel Joseph on Pexels.com
Bloomberg news reported that China’s ZTE Corp is estimated to lose at least 20 billion yuan ($3.1 billion) due to Washington’s ban on U.S. firms hardware and software. The Bloomberg article cited unnamed sources.
Bloomberg also reports that ZTE is hopeful that the United States and China will be able to reach a deal that would remove the ban and has a plan in place allowing the telecoms firm to “swing idled factories into action within hours” of the ban being officially lifted.
Photo by lalesh aldarwish on Pexels.com
Reuters reports the Trump administration may consider imposing new tariffs on imported vehicles based under Section 232 of the Trade Expansion Act of 1962.
A little bit of background – a section 232 investigation is conducted under the authority of the Trade Expansion Act of 1962, as amended and the purpose of a 232 investigation is to determine the effect of imports on the national security. Investigations may be initiated based on an application from an interested party, a request from the head of any department or agency, or may be self-initiated by the Secretary of Commerce.
Reuters reports the administration is currently considering tariffs of up to 25 percent for imported vehicles. As this was just announced, the plan is still not yet implemented and will receive much feedback from interest groups, foreign trading partners, domestic dealers of importer cars and anyone else involved in the import car business.
Check back for the latest news. If you have any questions about the current steel and aluminum tariffs initiated under section 232, contact experienced trade attorney – David Hsu at 832-896-6288 or by email at attorney.dave@yahoo.com.
Photo by Louis PHDC on Pexels.com
According to a May 21, 2018 news release on the U.S. Department of Commerce (Commerce) website – the Commerce department announced an affirmative ruling on corrosion-resistant steel (CORE) and certain cold-rolled steel flat products (cold-rolled steel) imported from the Socialist Republic of Vietnam (Vietnam) produced from substrate originating in the People’s Republic of China (China) are circumventing the antidumping and countervailing duty (AD/CVD) orders on CORE and cold-rolled steel imported from China.
In order to avoid payment of duties, some manufacturers ship goods to another country not subject to duties, and from there send the goods to the United States. This practice is known as “transshipment” and we will likely hear more reports of transshipment as manufacturers look for ways to avoid the steel and aluminum duties.
While the steel here is produced in Vietnam, Commerce found circumvention of AD/CVD orders did occur because the subject merchandise is the same class or kind of merchandise subject to existing orders and completed or assembled in a third party country prior to importation to the US.
Commerce will notify Customs and Border Protection (CBP) to continue collecting cash deposits on imports of CORE and cold-rolled steel produced in Vietnam using Chinese-origin materials at an AD rate of 199.43 percent and CVD rate of 39.05 percent.
CBP will also collect AD and CVD cash deposits on imports of cold-rolled steel produced in Vietnam using Chinese-origin substrate at rates of 199.76 percent and 256.44 percent, respectively.
If you have any questions about this or any other AD/CVD order, call experienced antidumping attorney David Hsu at 832-896-6288 or email at attorney.dave@yahoo.com.
Photo by Juhasz Imre on Pexels.com
According to a May 22nd Bloomberg article, China will cut import duty on passenger cars from the US. Here are the highlights from the article:
1. China will reduce the import duty on passenger cars from 25% to 10% or 15%
2. Duty on car parts will be reduced to 6%
3. China sold 28.9 million automobiles last year, 4.2% of those sales were imported cars
4. China imported $51 billion in vehicles in 2017, $13.5 billion from North America.
5. Tesla in talks with Shanghai government to open a factory. Tesla owner wants factory to be fully owned instead of a joint venture with a Chinese company.
6. China is working on changing regulations to permit foreign automobile makers to own more than 50% of joint ventures.
I believe these changes are more symbolic and reflect each country taking steps to improve the trade relationship between each other – the majority of GM and Ford vehicles are already made in China through joint venture partnerships.
ZTE Campus in Shenzhen, Guangdong Province, People’s Republic of China; By Brücke-Osteuropa – Own work, Public Domain
According to a Wall Street Journal article dated May 22nd, the US and China have reached a tentative deal on what steps ZTE could take in order for the Trump administration to remove the ban preventing U.S. companies from selling hardware and software to ZTE.
As previously mentioned on this blog, U.S. companies were barred for selling components and software to ZTE for a period of 7 years due to ZTE not complying with the terms of a 2017 plea deal for violations related to shipping US equipment to Iran and North Korea.
Citing sources close to the negotiation, the WSJ reported ZTE would need to make management changes, changes in the board and payment of additional fines.
Check back for more updates to the ongoing ZTE issue as they become available.
For any questions about denial orders, ZTE, customs or trade law, contact David Hsu at 832-896-6288 or by email at attorney.dave@yahoo.com.