The U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) recently sanctioned six individuals, twenty-four entities, and seven vessels for their role in the exportation, refining, brokering, and sale of oil from Libya.

As set forth in OFAC’s press release regarding the implementation of sanctions, the six individuals who were Maltese, Libyan, and Egyptian nationals, engaged in a scheme to export petroleum products from Libya to Europe.  The group moved the Libyan petroleum products to ports in Malta and Italy, and then sold the products through the use of falsified fuel certificates which concealed the origin of the oil.  The group also used a shell Maltese company to transport the illicit fuel through Europe.  OFAC acknowledged reports that the scheme had earned the group over 30 million euros.

OFAC’s statutory basis for issuing the sanctions is Executive Order 13726, an EO made by President Obama in April 2016. EO 13726 was designed to block property and individuals who are “contributing to the situation in Libya.” EO 13726 was itself and expansion of EO 13566 which declared a state of emergency in Libya in 2011 based on the ongoing violence, human rights violations, and violations of existing arms embargoes by Libya.  EO 13726 contains broad language prohibiting, among other specific provisions, any “actions or policies that threaten the peace, security, or stability of Libya.  Accordingly, OFAC needed only to determine that the groups activities threatened peace in Libya to issue sanctions under the authority of EO 13726.  In issuing sanction, OFAC also noted that the group’s alleged conduct was condemned by United Nations Security Counsel Resolution 2146 (2014) as modified by 2362 (2017).


As a result of the sanctions, the individuals, entities, and vessels have been added to OFAC’s list Specially Designated Nationals.  Accordingly, U.S. citizens and U.S. companies are prohibited from transacting business with the individuals, entities, and vessels.

The Trade Facilitation Agreement (TFA) marked its first anniversary last week. The TFA entered into force on February 22, 2017 when the World Trade Organization (WTO) obtained the required two-thirds acceptance from its members.

The WTO members are continuing to work towards fully implementing the TFA. Implementation of the TFA is expected to have positive effects on international trade, with a particular emphasis on the benefit for developing and least developed countries (LDCs).

One unique component of the TFA is the ability of developing countries and LDCs to set their own timetable for implementation based on that county’s capabilities. Developed countries committed to immediate implementation of Category A commitments from the date the TFA entered into force. Developing countries and LDCs have committed to implementation of commitments that have been designated as Category A, and these countries have more time for Category B and Category C commitments.

According to the TFA Database, as of the one-year anniversary, 107 members have notified their Category A commitments, 49 their Category B commitments and 39 their Category C commitments.

The TFA aims to accelerate the movement of goods between countries by increasing the cooperation between customs and other appropriate authorities on trade facilitation and customs compliance. Read more about the TFA here.

In a recent opinion, the U.S. Court of International Trade (“CIT”) found, at least in part, in favor of the producer of pet carriers, by excluding the items from a catch-all baggage classification.

Since 2013, Quaker Pet Group, LLC (“QPG”)  has been challenging the government’s classification of various styles of cloth carriers for dogs, cats, and other animals.  The government has classified the carriers under subheading 4202.39 for “travel, sport and similar bags” and assessed a 17.6% duty rate.  QPG argues that the carriers are not “bags” and should be classified as textiles under Chapter 63.

According to the CIT, the classification turns on the fact that the items at issue are designed to carry living things, not inanimate objects.  Citing Additional U.S. Note 1 to HTSUS Chapter 42, the CIT noted that “travel, sport and similar bags” are defined as being “of a kind designed for carrying clothing and other personal effects during travel.”  Because pets are not clothing, the CIT turned to a determination of whether pets are properly considered “personal effects.”

The CIT noted that HTSUS does not define “personal effects” and, therefore, it relied on definitions gathered from various dictionaries. Among the definitions cited was commonality in the fact that “personal effects” are inanimate items, such as keys or a wallet, which are regularly worn or carried by a person.  The government, relying on numerous cases finding pets to be personal property in the context Fourth and Fourteenth Amendment analyses, argued that pets can fall within the definition of personal property or effects.  The CIT found the government’s argument unpersuasive, holding that even if pets are considered personal property, they do not meet the definition of “personal effects” which is the express language used in the explanatory Note for Chapter 42.

The government also argued that even the carriers did not fall withing Section 4202.39, they were still properly classified under Chapter 42 as another type of bag.  The CIT relied on the Federal Circuit’s decision in Avenues in Leather, Inc. v. United States, 423 F.3d 1326, 1332 (Fed. Cir. 2005), which held that “the common characteristic or unifying purpose of the goods in heading 4202 consist[s] of organizing, storing, protecting, and carrying various items.”  The CIT again relied on dictionary definitions to determine that pets are not “items” or “things,” and, therefore do not meet the general criteria announced in Avenues in Leather for classification under Chapter 42.

Although the CIT determined that the carriers are not properly classified under Chapter 42, the CIT found that the record was not sufficient for it to determine whether the carriers should be classified under hearing 6307 for “other made up articles, including dress patterns” of textile, as QPG proposed. Specifically, the CIT stated that it did not have sufficient information regarding the “predominant material” from which each of the styles of carrier was constructed or the procedures for assembling the carriers.  Accordingly, the CIT directed further proceeding to determine the proper classification of the carriers.




On January 30, 2018, the Alliance Rubber Co. filed antidumping (“AD”) and countervailing duty (“CVD”) petitions on rubber bands from China, Sri Lanka, and Thailand. The petitioner alleges that the subject merchandise from these countries is being sold in the U.S. at less than fair value. The petitioner also alleges the governments of China, Sri Lanka, and Thailand are subsidizing the foreign producers, giving them an advantage in the U.S. market. Importers of subject merchandise are liable for any potential antidumping or countervailing duties imposed.

The U.S. International Trade Commission (“ITC”) will investigate to determine whether the U.S. industry is being materially injured or threatened with material injury due to imports of subject merchandise from China, Sri Lanka, or Thailand. The U.S. Department of Commerce will determine whether the foreign companies are selling at less than fair value, or whether the foreign exporters are being subsidized by the foreign governments. Affirmative findings from both agencies are required for either AD or CVD duties to be imposed. The ITC will issue its preliminary determinations in the AD/CVD investigations by March 16, 2018. Unless extended, the Department of Commerce must issue its preliminary CVD determinations by April 26, 2018, and its preliminary AD determinations by July 10, 2018. The deadlines for the Department of Commerce’s preliminary determinations are subject to postponement.

The petitioner alleges the following dumping margins:

  • Thailand: 60.82 percent
  • China: 27.16 percent
  • Sri Lanka: 48.63 percent


Merchandise covered by these proceedings is currently classified in the Harmonized Tariff System of the United States (“HTSUS”) under sub-heading 4016.99.35.10 (Rubber Bands Made of Vulcanized Rubber, Except Hard Rubber, of Natural Rubber). Notably, this sub-heading pertains only to vulcanized rubber bands. The written description of the scope, provided below, is dispositive.

The products subject to the AD/CVD investigations are bands made of bands made of vulcanized rubber, with a flat length, as measured end-to-end by the band lying flat, no less than 1/2 inch and no greater• than 10 inches; with a width, which measures the dimension perpendicular to the length, of at least 3/64 inch and no greater than 2 inches; and a wall thickness from .020 inch to .125 inch. Vulcanized rubber has been chemically processed into a more durable material by the addition of sulfur or other equivalent curatives or accelerators. Subject products are included regardless of color or inclusion of printed material. The scope includes vulcanized rubber bands which are contained or otherwise exist in various forms and packages, such as, without limitation, vulcanized rubber bands included within a desk accessory set or other type of set or package, and vulcanized rubber band balls, but excludes Bedford Elastitags®, and bands that are being used at the time of import to fasten an imported product.

Projected Schedule

Petition is Filed – January 30, 2018
DOC Initiates Investigations – February 20, 2018
ITC Staff Conference – February 20, 2018
ITC Post-Conference Briefs – February 23, 2018
ITC Preliminary Determinations Issued – March 16, 2018
DOC Preliminary CVD (un-extended) – April 26, 2018
DOC Preliminary AD (un-extended) – July 10, 2018
DOC Preliminary CVD (extended) – July 2, 2018
DOC Preliminary AD (extended) – August 29, 2018

For more information, please contact Lizbeth Levinson  or Brittney Powell.

In an Opinion made public last week, the U.S. Court of International Trade (CIT) sustained the U.S. Commerce Department’s (“Commerce”) change of opinion with regard to antidumping duties assessed on frozen fish fillets from Vietnam.  Ultimately, the CIT found that Commerce had “reasonably explained” its shift in position based on Commerce’s new understanding of the evidence presented to it and the company in question’s failure to present evidence to rebut the assumption Commerce had applied.

In January 2017, the CIT granted in part and remanded in part Commerce’s final determination of the tenth administrative review of its antidumping duty order for frozen fish fillets from the Socialist Republic of Vietnam.  As part of its tenth administrative review, Commerce assigned a $2.39 per kilogram duty on pangasius fish fillets.  The antidumping duty was based on the presumption that all respondent companies in a non-market economy, such as Vietnam, are subject to government control and assigned the same duty rate.  Nevertheless, the CIT questioned Commerce’s basis for its determination of a “broad-market advantage” in the production of the fillets based on the affidavit of an Indonesian fisheries official.

In addition, one company, Can Tho Import-Export Joint Stock Co. (“Casemax”) disputed the assignment of antidumping duty rate to its products. Casemax asserted that, based on the structure of its articles of formation, it was not subject to control of the communist government.  In its January 2017 decision, the CIT found that Commerce had not sufficiently explained why it denied Casemax’s assertions and assigned it the same duty rate as other pangasius exporters.

As set forth in the CIT’s most recent opinion, Commerce has now sufficiently explained the two questions that required remand.

First, Commerce subsequently came to learn that the assertions contained in the Indonesian official’s affidavit applied to the three provinces in Indonesia which accounted for 99.8% of Indonesia’s pangasius production during the relevant period.  Learning that the affidavit provided essentially nation-wide data, Commerce gave the affidavit greater credence than an Indonesian magazine article on which it had relied on as part of its prior administrative reviews.

Second, the application of anti-dumping duties to Casemax was largely a result of Casemax’s failure to present evidence to rebut the presumption that it was subject to government control.  Despite Casemax’s assertions, Commerce properly presumed government control in the absence of evidence demonstrating that the communist government had neither de jure or de facto control over the company.  Accordingly, the CIT found that Commerce was not unreasonable in applying the presumption and denying Casemax’s request for a separate duty rate.

Any U.S. company which believes it is facing unfair completion from foreign producers should explore whether a petition for protective duties may be appropriate. As here, the antidumping duties were originally instigated by a complaint from U.S. producers in 2002 and Commerce has continued to ensure appropriate protections over the past fifteen years.

Last week, the U.S Department of Commerce announced that it was revising the definition of solar panels from China which are subject to countervailing and antidumping duties to exclude educational solar energy kits which had been lumped in with panels designed for industrial and other applications in a recent Order.

Earlier this month, the Commerce Department announced the preliminary results of an administrative review of countervailing and antidumping duties originally ordered in December 2012.  The Commerce Department began its initial investigation in November 2011 after it received a petition from U.S. solar cell manufacturers which suggested that solar cells imported from China were being sold at unfair value.  The investigation broadly examined crystalline silicon photovoltaic cells, regardless of whether the cells had been assembled into modules, such as solar panels.  The initial investigation found evidence of improper subsidies and the December 2012 Orders imposed countervailing and antidumping duties against Chinese manufacturers.

In February 2017, members of the solar energy industry and other interested parties requested that the Commerce Department undertake an administrative review of the 2012 countervailing and antidumping Orders.  As a result of the administrative review, the Commerce Department announced countervailing duties of between approximately 11% and 14% against mandatory and non-selected Chinese companies.  In addition, the Commerce department announced preliminary antidumping margins of 61.61% against Trina Solar Energy based on an adverse inference resulting from Trina’s failure to provide necessary information.

Caught up among these industrial and mass market solar cell producers was Pitsco Inc., based in Pittsburg, Kansas. Pitsco produces small, low voltage solar cells in China for use in educational classroom science sets.  Accordingly, Pitsco filed a request for a changed circumstances review revocation pursuant to section 751(b)(1) of the Tariff Act of 1930 and 19 CFR 351.216(b).  Notably, neither the lead petitioner nor any other entity opposed Pitsco’s request that its products be carved out of the countervailing and antidumping duty Orders.   Accordingly, the Commerce Department announced the Final Results of its Changed Circumstances Reviews, and Revocations of the Orders, in Part to reflect a particularized exclusion for solar cells of between approximately 5 and 50 square inches, with one black and one red wire of specified gauge and length, which do not exceed minimal voltage, amp, and wattage outputs, and not containing a battery or computer peripheral port.

Quite rightfully, this educational David was able to avoid the fight between international solar energy Goliaths.  Nevertheless, the labors undertaken to petition and develop appropriate and well-drafted exclusion language were necessary to bring about the result.

On January 12, 2018, President Trump issued a statement announcing that he will approve certain sanctions waivers necessary in order to preserve the Iran nuclear deal. At the same time, he called on the U.S.’s European allies to work with the U.S. to fix the flaws of the Iran nuclear deal (the Joint Comprehensive Plan of Action or the JCPOA), or he would terminate the deal.

President Trump began his statement by condemning the Iranian regime as the world’s leading state sponsor of terror. He also added 14 more Iranian individuals and entities to the Specially Designated Nationals and Blocked Persons List.

In his statement, President Trump explained that he is open to working with Congress on bipartisan legislation dealing with Iran. However, any bill must include four critical components. First, the bill must allow immediate inspection by international inspectors at all nuclear sites. Second, it must demand that Iran not come close to possessing nuclear weapons. Third, there must be no expiration date on these requirements. Finally, the bill must subject Iran’s long-range missile program to the same sanctions imposed on its nuclear weapons program.

Although President Trump waived the application of certain nuclear sanctions, he stated that “this is a last chance.” He called on the U.S.’s European allies to fix the Iran deal and made it clear that if the allies cannot agree on a new supplemental JCPOA, President Trump will not waive sanctions again to stay in the deal. The President also reserved the right to withdraw from the deal immediately if he determines that an agreement is not within reach.

The President’s full statement can be found here.

In an attempt to become a modern hub in Southern China for domestic and international arbitration, the Government of Shenzhen announced at the end of December 2017 that it was combining two arbitration centers. The previous Shenzhen Court of International Arbitration (“SCIA”) and the Shenzhen Arbitration Commission will be combined into one center called the Shenzhen Court of International Arbitration.

The merger of the two institutions will help integrate the resources of both institutions and further build the Shenzhen arbitration platform.

This is part of China’s One Belt, One Road Initiative, which calls for investment in and development of trade routes in that region. The One Belt, One Road Initiative is part of the growth of Chinese exports and a push by China to expand its trading network.

Both the SCIA and the Shenzhen Arbitration Commission had jurisdiction to handle contract disputes and various types of commercial disputes. In December 2016, the SCIA promulgated new arbitration rules relying heavily on the UNCITRAL Arbitration Rules, which made the SCIA the first Chinese institution to make this move.

The UNCITRAL Arbitration Rules provide comprehensive procedural rules regarding arbitral proceedings arising out of commercial relationships. The UNCITRAL Arbitration Rules provide a model arbitration clause, set out rules regarding appointing arbitrators, and establish rules related to the effect and interpretation of the awards.

Once the combination is effective, cases submitted to either of the institutions will be handled by the SCIA. It is still unclear what rules will apply to cases that the parties had agreed to submit to the Shenzhen Arbitration Commission and which panel of arbitrators will be used to arbitrate those cases. The combination into one arbitration body does mean that arbitration rules consistent with international standards, like the UNCITRAL Arbitration Rules, will likely be applied to more cases in China.

In recent remarks, Deputy Attorney General Rod Rosenstein announced significant revisions to the Department of Justice’s (DOJ) policies for enforcing the Foreign Corrupt Practices Act.  The policy revisions make permanent many of the aspects of the FCPA Pilot Program which began in 2016 and sought encourage voluntary self-disclosures of FCPA violations by formalizing the benefits to corporations for doing so.  The recent policy revisions even went a step farther than the Pilot Program, announcing that if company voluntarily discloses FCPA violations, fully cooperates in the government’s investigation, and makes timely and appropriate remediation, there will be a presumption that the DOJ will resolve the company’s case through a declination to prosecute.

This policy revisions reinforce that the DOJ is focused on prosecution culpable individuals.  Indeed, Deputy Attorney General Rosenstein noted that “[i]t makes sense to treat corporations differently than individuals, because corporate liability is vicarious; it is only derivative of individual liability.”

While the DOJ appears to have made it even easier for companies to insulate themselves from liability if they turn over the individual bad actors, there are still many difficult decisions to be made by companies contemplating self-disclosure. Each of the requirements for unlocking the benefits of corporate disclosure – voluntary disclosure, full cooperation, and appropriate remediation – have specific criteria and pose nuanced questions for executives and directors to consider.

First, under the revised FCPA enforcement policy, the self-disclosures must be genuinely voluntary (i.e., prior to the “imminent threat” of disclosure or government investigation) and must be made within a “reasonably prompt time” after discovery of the violation.  This creates some potential issues for directors and officers who may learn of potential violations and seek to conduct an internal investigation to gather more information.  The policy revisions do not further define an “imminent threat” or “reasonably prompt” period, but company must be aware that protected investigations may jeopardize their ability to make an effective voluntary disclosure.

Second, full cooperation may be onerous.  Although the policy revisions do not contain an exhaustive list of the types of cooperation that the DOJ will expect, it does instruct that companies should “proactively” disclose all relevant facts and evidence.  Accordingly, companies must determine the appropriate scope of their disclosures (and may need to do so even if an internal investigation is not complete because concerns regarding the timeliness of the disclosure have arisen).  Moreover, the instruction that the companies take a proactive approach to disclosures appears to add additional pressure on companies to make broad disclosure (but not data dumps which could frustrate DOJ investigations) or risk failing to meet the full cooperation criterion.

Third, remediation efforts must be genuinely aimed at and capable of correcting the source of the violation.  The DOJ acknowledges that there will be variances based on the size of the company and the nature of the underlying violation; however, companies should be prepared to commit necessary resources to develop and implement ethics and compliance programs that will demonstrably improve the company’s ability to stop future violations.

Finally, another condition that has been made permanent is the requirement that the company pay all disgorgement, forfeiture, and/or restitution in full.  Depending on the amount in question, the ability to pay in full may be a difficult practical issue for a company.  Nevertheless, as part of the gateway to non-prosecution, a company must address the issue and develop a strategy for obtaining the necessary funds as it approaches voluntary self-disclosure.

Robust compliance programs remain the critical first step for companies seeking eradicate FCPA violations from their corporate culture.  As Deputy Attorney General Rosenstein noted, criminals try to evade law enforcement, but must first evade internal controls and compliance programs, therefore, “[h]onest companies pose a meaningful deterrent to corruption.”  Fostering a culture of compliance, dedicating sufficient resources, and ensuring that compliance personnel have access to management and the board were all cited by Deputy Attorney General Rosenstein as hallmarks of effective compliance and should be at the core of any compliance program.

In a customs classification case, Chemtall, Inc. v. United States, the U.S. Court of Appeals for the Federal Circuit affirmed a U.S. Court of International Trade (“CIT”) ruling that the vinyl polymer acrylamide tertiary butyl sulfonic acid was properly classified under the Harmonized Tariff Schedule of the United States (“HTSUS”).

The Federal Circuit was called on to distinguish between “Amides” and “Other” in a heading of the HTSUS that covers amides, their derivatives and salts thereof. The case considered the appropriate duty rate for the product that Chemtall, Inc. (“Chemtall”) is importing.

The HTSUS is a hierarchical structure for describing all goods in trade for duty, quota, and statistical purposes. Goods are classified in accordance with the General and Additional U.S. Rules of Interpretation, starting at the 4-digit heading level to find the most specific provision and then moving to the subordinate categories. The United States International Trade Commission maintains and publishes the HTSUS. However, the Bureau of Customs and Border Protection of the Department of Homeland Security (“CBP”) is responsible for interpreting and enforcing the HTSUS.

The Federal Circuit affirmed the CIT determination that the chemical product of the plaintiff-appellant Chemtall, acrylamide tertiary butyl sulfonic acid, is not an amide, but rather is a derivative of an amide.

The significance of this categorization is that derivatives of amides are subject to a higher duty rate, which is almost double that of amide imports. The categorization that Chemtall argued applied carries a 3.7% duty rate. However, the federal judge affirmed the decision of the CBP to apply the higher 6.5% duty rate for the product.

The full opinion of Chemtall, Inc. v. United States, case number 2016-2380, in the U.S. Court of Appeals for the Federal Circuit can be found here.