According to the Associated Press, President Donald Trump had a rally in Wisconsin to promote his trade deal with Mexico and Canada, known as the United States-Mexico-Canada Agreement (USMCA). Trump was the first Republican to win Wisconsin since Ronald Reagan in 1984 and recent polling indicates Wisconsin is another battleground state in 2020.
Wisonsin exports $31 million worth of goods to Canada and $15.2 million worth of goods to Mexico; importing $15.5 million in goods from Canada and $9.3 million in goods from Mexico.
The USMCA will likely be ratified in Mexico and Canada, but Congress has not yet supported ratification. Democrat Congress members want strong labor and environmental protections. The AP article said a vote was likely to be held in September at the earliest.
If you have any questions how the new USMCA will impact your business, contact experienced trade attorney David Hsu at 832-896-6288 or by email at email@example.com, firstname.lastname@example.org.
According to the New York Times, China’s Number 2 official, Premier Li Keqiang speaking at the World Economic Forum in the Chinese port city of Dalian, promised to cut tariffs, loosen restrictions on foreign investments, protect intellectual property rights and allow foreign companies to apply for China’s generous subsidies for research and development.
Speaking during a question and answer session, Li also said that China would allow foreign financial services companies into its market a year earlier than previously promised, and that it would rewrite many rules on foreign investment.
The NYT mentioned the lack of details, and indicated previous vague promises by Chinese officials in the past.
In addition to extending an olive branch to foreign companies, Premier Li’s remarks also sought to calm worries about the relocation of manufacturing overseas as a result of the Section 232 and 301 duties levied against China.
This past Wednesday, Mexico became the first country to pass the new U.S.-Mexico-Canada Agreement (USCMA) to replace NAFTA. NAFTA was a free trade agreement also entered between the three countries over 25 years ago. As Mexico sends 80% of exports to the US, the passage of the trade agreement is a necessity for Mexico.
Canada’s Prime Minister Justin Trudeau is trying to get the deal through the Canadian Parliament while in the United States, House Speaker has not yet put the passage of the USMCA up for vote. The House Speaker and her Democrat allies hold a majority in the House and are requiring stronger enforcement mechanisms for the provisions related to labor and environmental rules.
As you are aware, a suspension agreement between tomato growers and the Department of Congress was passed in 1996 – this agreement reached between US and Mexican tomato growers to maintain a balance in market share between the two sides. This agreement also postponed any Commerce investigation into whether Mexican tomatoes are “dumped” into the US. Last year, tomato growers in Florida petitioned Commerce to suspend the agreement due to an increase in market share by Mexican tomato growers. After the required notice period, the agreement was withdrawn on May 7th.
On May 22nd, Mexico’s tomato growers submitted a proposal that addresses among other things:
1. reference prices for organic and non-organic tomatoes.
2. Mexican growers contend there is no instance of a sale below reference price.
3. Mexican growers without a US repack operation will have a disproportional and negative impact.
4. Revisions to Appendix D removing 100 percent of defective product from the US market.
5. Protection from legal challenges and exposure to treble damages for Mexican growers.
6. Export management such as quarterly certifications to include volumes assigned and or received for export.
7. Adding all tomatoes to the USDA marketing order on Florida tomatoes
8. Increase PACA enforcement including quarterly certifications, preseason letters
9. Commerce Department changes – establishing a taskforce between Commerce, USDA and CBP, quarterly meetings with Commerce to discuss monitoring and enforcement efforts, third-party verification compliance.
The full document can be viewed here.
Check back for any updates on a new suspension agreement. If you have any questions, contact David Hsu at 832-896-6288 or by email at email@example.com.
Tell me more about the CHS FCPA violation:
In an August 31, 2018 Form 10-K filing with the United States Securities and Exchange Commission (SEC), CHS Inc. disclosed FCPA violations related to:
“a small number of reimbursements the Company made to Mexican customs agents in the 2014-2015 time period for payments the customs agents made to Mexican customs officials in connection with inspections of grain crossing the U.S.-Mexican border by railcar. We are fully cooperating with the government, including with the assistance of legal counsel, which assistance includes investigating other areas of potential interest to the government. We are unable at this time to predict when our or the government agencies’ review of these matters will be completed or what regulatory or other outcomes may result.”
The full 10-K filing can be found here (link opens in a new window).
Who is CHS?
CHS is a Fortune 100 business based in Minnesota and operates food processing and wholesale, farm supply, Cenex brand fuel, financial services, and retail businesses. CHS employs 12,000 people and are also large operators in grain, soybean and sunflower production and transport.
What is the FCPA?
In short – the Foreign Corrupt Practices Act of 1977 was enacted for the purpose of making it unlawful for certain classes of persons and entities to make payments to foreign government officials to assist in obtaining or retaining business. Payments, promises to pay or even authorization for payment is a violation and the definition of a foreign official is also very broad.
What does the FCPA have to do with importers and exporters?
Everything! The FCPA applies to all U.S. persons and many of our clients have FCPA risks without even knowing they do. FCPA violations and penalties are severe and individuals have also been found to be personally liable for violations that were committed by the company. The CHS FCPA violations highlight just some of the risks US based exporters face when doing business (exporting) overseas.
FCPA consultation and audit at no obligation or cost to you.
If you don’t have a FCPA compliance program in place or have not updated your compliance program – call experienced trade and compliance attorney David Hsu at 832-896-6288 or by email at firstname.lastname@example.org.
The FCPA penalties and compliance risk to you and your company is high, call David Hsu today.
According to the Financial Tribune, the trading arm of China’s Sinopec and largest buyer of US crude oil – Unipec, will resume purchase of US crude oil very soon at a significant volume.
Unipec has not imported US crude oil in August or September of this year. However, since the “truce” in the US and China trade war in early December where both sides agreed to suspend raising tariffs for an additional 90 days, Chinese refiners have started to look to the US for crude oil.
As reported by the Guardian, over the weekend, Robert Lighthizer appeared on TV and spoke regarding several trade issues:
- 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.
- 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”.
- 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.
- 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).
- Lighthizer indicated that part of the negotiations require China to increase purchases of US goods along.
- 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 email@example.com.
According to anonymous sources, U.S. Trade Representative Robert Lighthizer will meet with CEO’s from Google, Microsoft, Qualcomm and Oracle today in Silicon Valley.
The topics likely center around intellectual property protections, the ongoing trade war, reports of bias in news searches, emerging technologies such as 5G, AI and robotics.
Other topics could include the Trump Administration’s plan to increase restrictions on exports of new technologies to China due to national security concerns. The new technologies include AI, quantum computing, and speech recognition.
Check back for more news as they become available.
Earlier this week, current US Treasury Secretary Steven Mnuchin told reporters he may travel to Beijing for trade negotiations to ease U.S.-China tensions.
In recent weeks both countries have announced tariffs on goods imported from the other country and the tensions between the US and China (the world’s two largest trading partners) has raised concerns of an impending trade war. The US first proposed tariffs totaling $150 billion on Chinese imports and Beijing has proposed tariffs on American goods such as soybeans.
In response, the Ministry of Commerce, People’s Republic of China would “welcome” the move by Treasury Secretary Mnuchin.
More updates as they become available.