Here are synopses of some of the many new trade regulation initiatives issued in the past month or so.
Launch Vehicle and Spacecraft Controls Revisited
As part of their ongoing Export Control Reform initiative, the State and Commerce Departments have invited comments on the scope of export controls imposed on launch vehicles and spacecraft. The former are found in Category IV of the United States Munitions List and Export Control Classification Number 9A515 of the Commodity Control List, and the latter in USML Category XV and ECCN 9A515.
ITAR aficionados will recall that the pre-reform regulations placed most satellites and related equipment on the USML. That status changed substantially following the initial revisions in 2014-2016. Now the agencies seek comments on whether further product transfers from the USML to the CCL would be appropriate, focusing particularly on the transition from military to commercial uses. They also are interested in whether currently non-controlled space-related technologies should be given controlled status.
Export control reform is a dynamic process, offering affected parties the opportunity to ease their regulatory burden to reflect current market realities. In particular, the agencies recognize that items placed under controls half a decade ago may no longer warrant that status. Public comments, due by April 22, 2019, will help in that analysis.
National Security Investigation of Titanium Sponge Imports
The Section 232 investigations of steel and aluminum products, and subsequent imposition of duties proved to be such crowd-pleasers that the Trump Administration used the same statute to evaluate the national security impact of imported automobiles and auto parts. We await the report in that case any day now.
Meanwhile, the Commerce Department has commenced another Section 232 proceeding, this time on titanium sponge. I can see the national security tie-in, since the product is crucial for aerospace applications. Given that the International Trade Commission reached a negative preliminary material injury determination in the 2017 antidumping investigation of titanium sponge from Japan and Kazakhstan, however, the purportedly harmful effects of imports may be less certain. Anyway, Commerce “is particularly interested in comments and information” on the following points:
(i) Quantity of or other circumstances related to the importation of titanium sponge;
(ii) Domestic production and productive capacity needed for titanium sponge to meet projected national defense requirements;
(iii) Existing and anticipated availability of human resources, products, raw materials, production equipment, and facilities to produce titanium sponge;
(iv) Growth requirements of the titanium sponge industry to meet national defense requirements and/or requirements for supplies and services necessary to assure such growth including investment, exploration, and development;
(v) The impact of foreign competition on the economic welfare of the titanium sponge industry;
(vi) The displacement of any domestic titanium sponge production causing substantial unemployment, decrease in the revenues of government, loss of investment or specialized skills and productive capacity, or other serious effects;
(vii) Relevant factors that are causing or will cause a weakening of our national economy; and
(viii) Any other relevant factors, including the use and importance of titanium sponge in critical infrastructure sectors identified in Presidential Policy Directive 21 (Feb. 12, 2013) (for a listing of those sectors see https://www.dhs.gov/cisa/criticalinfrastructure- sectors).
Comments are due by April 22, 2019, and rebuttals thirty days thereafter.
Buy American Changes? What and When?
I’m still not sure what to make of the Trump Administration’s “Buy American” initiative. A response to the initial directive to evaluate the impact of trade agreements on Federal procurement remains somewhere in the bureaucratic process. More recently, Executive Order 13858 “Strengthening Buy-American Preferences for Infrastructure”, seeks application of “domestic preference” to acquisition of iron and steel products, and manufactured products, used in infrastructure projects.
Part of my puzzlement relates to what the term “domestic preference” means in the Executive Order. Will it mean an absolute bar on procuring foreign-origin supplies, or instead provide a bidding preference for domestically produced items over their foreign competitors? Is it intended to resurrect the American Recovery and Reinvestment Act of 2009‘s domestic origin requirements for “construction materials”? To what extent will it be duplicative of the longstanding Buy American Act?
Agency responses to EO 13858 are due in early June, so we may have answers to these questions then. I’ll keep you informed of developments.
India and Turkey Lose GSP Status
The Trade Representative’s office announced that both India and Turkey will lose Beneficiary Developing Country status under the Generalized System of Preferences:
“India’s termination from GSP follows its failure to provide the United States with assurances that it will provide equitable and reasonable access to its markets in numerous sectors. Turkey’s termination from GSP follows a finding that it is sufficiently economically developed and should no longer benefit from preferential market access to the United States market.”
As the press release points out, the termination will not be effective until after both Congress and the two nations involved are given 60 days’ notice and an implementing Presidential Proclamation is issued. Thus, while the status change is not imminent, it should occur in the reasonably foreseeable future. U.S. importers of GSP-eligible products from those countries should take note and plan accordingly.
