Will new US export controls block Huawei’s 5G ambitions?

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As previously posted on my blog, the May 19th Commerce Department export rules are part of the US effort to limit Huawei’s access to semiconductor chips needed to build components in their 5G infrastructure. The new rules prohibit chipmakers located mostly in Taiwan and South Korea from using U.S. origin machines and software to produce semiconductors for Huawei.

Huawei relies on Taiwan and South Korean chipmakers to make the actual chips – however the chipmakers are now subject to the US export rules since the machines and software used are based off American machines from US companies and technology.

These new rules were meant to close a loophole that allowed semiconductor foundries to manufacture chips for Huawei as long as the manufacturing occurred outside of the U.S.

The U.S. government views Huawei as a national security threat because their hardware could potentially allow them to access sensitive information and hand it over to the Chinese government – a claim denied by Huawei.

If you have any questions how the new US export control regulations will impact your ability to do business with Huawei or one of its entities, contact export control attorney David Hsu by phone/text at 832-896-6288 or by email at attorney.dave@yahoo.com, dh@gjatradelaw.com.

Trump will decide tariffs on auto imports “soon”.

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Today’s November 14th deadline on whether to impose tariffs (duties) on cars and auto parts imported into the US will likely result in President Trump extending the time to make a decision.

These additional tariffs on vehicles and parts are part of the “Section 232” national security tariffs enacted during the Cold-War that could see tariffs as high as 25% on vehicles and parts from the European Union, South Korea, and Japan.

A delay would likely result in a 6-month extension and allow for negotiators from all sides attempt to reach an agreement.

If you are an importer of car parts or vehicles and want to know what you can do, contact experienced trade attorney David Hsu 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.

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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.

Canada’s Global Affairs consults whether South Korea, Taiwan, Thailand and the UK should join CPTPP.

The Global Affairs Canada organization includes individuals, businesses (including SMBs), industry associations, experts, consultants, academics, civil society organization, labour unions, governments, indigenous groups, students and youth and other interested Canadian stakeholders.

In late July, Global Affairs Canada started discussions whether South Korea, Taiwan, Thailand and the United Kingdom should join the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (“CPTPP”).

An announcement was published in the Canada Gazette, Part 1. Global Affairs Canada has has begun soliciting comments for whether these countries (and China) should join the CPTPP. The deadline for submissions is midnight, August 25, 2019.

The announcement asks for the following information:

1. Contributor’s name and address and, if applicable, the name of the contributor’s organization, institution or business;
2. The specific issues being addressed; and
3. Where possible, precise information on the rationale for the positions taken, including any significant impact it may have on Canada’s domestic or international interests.

Additionally, they would like feedback on specific markets that Canadians and businesses would support entry to the CPTPP.

The full text of the announcement and additional topics Global Affairs Canada would like feedback on can be found here:

http://www.gazette.gc.ca/rp-pr/p1/2019/2019-07-27/html/notice-avis-eng.html#nL5

 

Japan and South Korea trade war tensions rise.

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Japan and South Korea trade war tensions rise.

As previously mentioned on this blog, Japan and South Korea are in a trade dispute arising out of a court case granting South Koreans compensation for forced-labor during Japan’s colonial occupation of South Korea.

In response, Japan placed export regulations on chemicals exported to South Korea that are vital for South Korea’s tech industry. The restrictions on exports to South Korea are to take place in August unless an agreement is reached between the two sides. It appears no deal will be reached as both politicians have seen their approval ratings rise since the disputes.

South Korea and Japan – next trade war?

No Japan

“Boycott Japan” logo, source: Twitter user: sydbris

Back in May of this year, a South Korean court sided with Korean wartime laborers to be compensated for their forced labor during Japan’s occupation of the Korean Peninsula. The court ordered seizure of assets belonging to Nippon Steel and Nachi-Fujikoshi to pay compensation to wartime laborers during 1910 to 1945.

In early July, Japanese Prime Minister Shinzo Abe’s government announced the restrictions on sales to South Korea of materials necessary to produce vital components in high-tech manufacturing. The restrictions include three products: (1) fluorinated polyimides, used in smartphone displays; (2) photoresists, used to transfer circuit patterns on to semiconductor wafers; and (3) hydrogen fluoride, used as an etching gas when making chips.

Prime Minister Abe has denied the export controls are retailiation for the seizing of assets, but the netizens on both sides are battling it out online.

For example, the #BoycottJapan is trending in South Korea with South Korean netizens proposing South Korean alternatives to popular Japanese brands. Some South Koreans are posting their cancellation confirmations of previously arranged trips to Japan. In addition to individuals, the Korean Supermarkets Alliance, an organization representing more than 23,000 stores, said it would temporarily halt sales of Japanese products, including beers by Asahi and Kirin Holdings Co., and Japan Tobacco Inc.’s Mild Seven cigarettes.

Will be interesting to see what happens next.

Maybe the US courts can also do something – I’m still waiting for Japan to atone for their slaughter of civilian men, women, children in China and throughout Asia, the forced human trafficking of women to be used as “comfort women” and the killing of prisoners of war from the US, Australia, New Zealand and the rest of the world. Not holding my breath my breath though – one can only hope Japan gets payback for the pain and agony they caused the world.

Renegotiated KORUS FTA results in changes more favorable to US companies.

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According to the Office of the United States Trade Representative website, the Trump administration has negotiated additional favorable terms of the United States – Korea Free Trade Agreement (KORUS) that went into effect in 2012.

Fulfilling part of his campaign promises, President Trump has re-negotiated the KORUS with these (and many more) favorable changes to US companies:

1. Korea will double the number of US automobile exports to 50,000 cars per manufacturer per year.

2. US automobile exports to Korea that meet US safety standards can enter the Korean market without further modification. This lowers the cost of US cars being sold in Korea as additional testing and modifications are not needed before the US cars are sold in the marketplace.

3. Korea will recognize US standards for auto parts to service US vehicles in Korea, this reduces the labeling burden for US parts manufacturers.

4. Korea will amend their Premium Pricing Policy for Global Innovative Drugs to ensure non-discriminatory and fair treatment for US pharamceutical exports.

5. Korea imports of steel products into the US will be subject to a product-specific quota equal to 70% for the average annual import volume of such products during the years 2015-2017, resulting in reduction of Korean steel shipments to the US.

If you have any questions regarding the KORUS or other trade and customs law issues, feel free to contact David Hsu at 832.896.6288 or by email at attorney.dave@yahoo.com.

South Korea allows for increases on US auto imports in exchange for U.S. Steel tariff exemption.

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According to Reuters, the US and South Korea agreed on Monday (March 27th, 2018) to revise the KORUS bilateral free trade deal. As part of the deal, South Korea would improve access to U.S. automakers and in exchange the US would exempt Korean steel from the new Section 232 duty rates.

President Trump has always claimed the current KORUS agreement was “horrible” and lead to a doubling of the U.S. goods trade deficit with South Korea since 2012. While the terms have not yet been announced, the agreement likely makes South Korea is the first US ally to receive an indefinite exemption but still subject to quotas.

In addition to South Korea, Trump has temporarily excluded other major US trading partners Canada, Mexico, Australia and the European Union from higher U.S. import duties on steel and aluminium.

Check back for the latest news and as always, please contact David Hsu at 832.896.6288 or attorney.dave@yahoo.com for all your trade and international law questions.