In a recent opinion, the United States Court of International Trade (CIT) upheld its categorical ban of the importation of fish and fish products caught with gillnets in the habitat of the critically endangered vaquita, off the coast of Mexico.

In a July 26, 2018 Order, the CIT granted a preliminary injunction sought by several conservation groups prohibiting the importation of certain fish and fish products from Mexico which had been caught using gillnet — fishing nets hung from boats that entangle fish and shrimp — within the limited range of the vaquita, the smallest porpoise in the world.  Experts believe that just 15 vaquitas remain and all inhabit a small area in the Northern Gulf of California, between Baja California and Mexico.  The CIT entered an order, pending final adjudication, banning the importation of shrimp, curvina, sierra, and chano fish from Mexican commercial fisheries that use gillnets within the vaquita’s range under the authority of the Marine Mammal Protection Act (“MMPA”).

The government subsequently filed a “motion to clarify” in which it questioned the scope of the ban and whether it was immediately effective.  Specifically, the government challenged the scope of the MMPA with respect to illegal commercial fisheries, whether other federal environmental protection statutes rendered the express duties of the MMPA inoperative, and asserted that the regulatory challenges with respect to implementation made immediate implementation impossible. The CIT rejected each of these challenges and held, unequivocally, that the ban was effective immediately.

The CIT determined that nothing in the language of the MMPA limited its authority to “legal” fisheries and, in fact, the MMPA was not limited to “commercial” fish, let alone, “legally caught” commercial fish. The CIT also found that the MMPA and other federal environmental protection statutes were “complimentary” and “non-duplicative” and, as such, did not excuse the government from its obligations under any of the statutes. Finally, the CIT “discern[ed] no merit” in the government’s argument lengthy certification processes meant that the ban was not effective immediately.

The CIT Opinion did not mince words in upholding its prior determination and chastising the governments request for “clarification.”  The decision serves as cautionary reminder that the words of the CIT, or any Court, are meant to be followed by governments, importers, and brokers alike.

 

In a recently issued Final Determination, U.S. Customs and Border Protection (CBP) confirmed that the roasting of coffee beans substantially transforms the beans into a product of the country in which the beans were roasted.

Coffee producer Keurig Green Mountain (“Keurig”) requested the determination as to the country of origin assignment to green coffee beans that it imported into the United States and Canada and then roasted in those countries.  Specifically, Keurig sought the determination as it relates to the procurement of its products by the U.S. government and certain regulatory waivers for  “U.S.-made end products.”

CBP answered unequivocally that it has consistently held that the act of roasting coffee beans substantially transforms green coffee beans into a different article of commerce pursuant to 19 U.S.C. section 2518(4)(B).  Noting numerous letter rulings dating back to the mid-1980s, CBP concluded that “roasting” or “roasting and blending” substantially transformed green coffee beans for country of origin purposes.

Interestingly, CBP found that it did not have occasion to address whether other processes in coffee manufacturing would be considered substantially transformative.  For example, a portion of the green coffee beans at issue had been undergone a decaffination process in their country of origin, prior to importation into the U.S.  Accordingly, CBP did not address whether the decaffeination process alone would substantial transform a caffeinated bean to a new article of commerce.  Similarly, the beans at issue were roasted, flavored, ground, degassed, and packaged in the same country (either the U.S. or Canada).  Therefore, CBP did not have occasion to determine whether any of these other processes, alone or in combination, may create different articles of commerce throughout the coffee production process.

As is often the case, a seemingly conclusive determination by CBP can still leave open significant questions related to the issues not squarely placed before the agency. Experienced counsel can help business determine what avenues of trade remain open and which are truly settled issues.

On the firm’s Energy Law Today blog, Fox Partner Mark V. Santo discusses the renegotiation of the North American Free Trade Agreement (NAFTA) and its potential impact on the natural gas trade between the U.S. and Mexico.

North America from space
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“Mexico imports nearly all of its natural gas from the U.S. and exports to Mexico are expected to double by 2019, with Texas fields being the primary source. At least 17 pipelines currently carry four billion cubic feet of natural gas a day from Texas to Mexico, with four additional cross-border pipelines in the works. Mexico’s demand for U.S.-sourced natural gas has been a boon to domestic producers as it has greatly offset the oversupply of natural gas production. Without this outlet to Mexico, natural gas producers in the U.S. will face a severe downturn with wells shut, job losses and investment curtailed.

The U.S.-Mexico natural gas symbiotic relationship is just one example of the tri-nation supply chain intricacies and complexities forged under NAFTA. There are countless others, such as deep supply chains in agriculture, construction materials and autos to name a few….”

Mark notes the key provisions of the agreement that the Trump Administration will seek to alter. These provisions relate to the remedies available should a NAFTA nation’s exports injure the domestic market of another NAFTA member.

To read Mark’s full post, please visit the Energy Law Today blog.

Co-Author, Santos Ramos

On June 16, 2017, President Trump announced changes to United States’ Cuban sanctions regime which will stem the tide of liberalization that Obama Administration set in motion 2014. While the regulatory changes have not yet taken effect, the Department of Treasury’s Office of Foreign Assets Control (OFAC) released updated its online resources to reflect the Trump Administration’s forthcoming changes.  Most notably, under the announced changes, individual “people-to-people” travel will no longer be permitted and any trade or business ventures involving Cuba’s military, intelligence and security services is strictly prohibited.

Travel

Trump Administration’s new Cuban travel policies crack down on the potential for individual ‘vacation’ travel to Cuba. Under the Obama Administration’s reforms to the Cuban sanctions, individuals could travel to Cuba as long as they affirmed that they were engaged in permitted activities, such as educational and artistic study, news reporting, or other endeavors designed to promote and aid the Cuban people.  Under the newly announced changes, individuals will no longer be able to travel to Cuba on their own for “people-to-people travel” (i.e., educational travel that does not involve any academic study towards the pursuit of a degree and is not under the auspices of an organization). Group people-to-people travel will still be permitted as long as the group is led by a U.S.-based organization and maintains a full-time schedule of educational or other permitted activities. Unfortunately for those who may have already booked their tickets to Havana, the new regulation will not be prospective, meaning that any travel that does not conform with the new regulations (even if previously planned) will be prohibited.

Trade and Business

Companies seeking to do business in Cuba will also have to navigate stricter regulations. While trade and business ventures with the Cuban government remained restricted under the Obama Administration’s revised sanctions, the new rules will more clearly delineate entities which are associated with Cuban military conglomerate Grupo de Administración Empresarial SA (GAESA). GAESA, which is comprised of Cuban military, intelligence, and security services, has an extensive web of subsidiaries and ownership interests which some estimate touch as much as 60 percent of the Cuban economy. OFAC and Department of Commerce, Bureau of Industry and Security (BIS) will publish an extensive list of prohibited entities when the new regulations are completed. The new trade policy will be prospective, however, meaning that any contracts and licenses executed and issued prior to effective date of the new regulations will not be terminated.

What Should U.S. Companies Do?

U.S. companies which have already entered into contracts with a GAESA-related companies will be able to continue operating without any change. Any U.S. company seeking to begin or expand business in Cuba after the new policy takes effect, however, must heed the warning that any transaction with GAESA-related entities is prohibited. Moreover, while OFAC and BIS will strive to produce a comprehensive list of GAESA-related entities, it may prove to be a difficult and ever-evolving challenge.  Accordingly, despite any published list of entities, it will almost certainly remain the responsibility – and potential liability – of U.S. companies to know with whom they are conducting business. In addition, U.S. companies must be vigilant about any renewals of contracts or licenses with GAESA-related entities, as there has been little guidance as to whether renewing an existing contract will be considered continued operation or a new, prohibited engagement.

North America from space
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Public comment on NAFTA renegotiations has been extended until midnight tonight ET, according to an Alert by Nevena Simidjiyska published on June 13:

The process of renegotiating the North American Free Trade Agreement (NAFTA) with Mexico and Canada officially began on May 18 when the Office of the U.S. Trade Representative (USTR) notified Congress, triggering a 90-day period during which the administration will consult with Congress before NAFTA negotiations can begin. The USTR requested public comments on its negotiation of NAFTA, which were initially due by June 12. The USTR has extended its deadline to June 14 at 11:59 p.m. ET.

After originally calling for a complete withdrawal from NAFTA, the administration displayed a more lenient position in its announcement and notice to Congress. The administration continued to criticize NAFTA’s provisions on labor and environmental protection, digital trade, intellectual property protection, and state-owned enterprises, however, it called for modifying certain aspects of the agreement, rather than comprehensive revisions.

Canada and Mexico have shown a willingness to renegotiate portions of NAFTA, provided that the majority of the Agreement stays intact.  The two countries are likely to push back on certain topics, including the administration’s plan to increase local content for country-of-origin calculations, including that of automobiles, reduction in Canada’s protective measures of its dairy industry, and easing of Mexico’s restrictive policy on foreign investment in its energy sector.

The USTR requested public comment on its negotiation of NAFTA on a broad number of topics listed at the end of this article.  Parties may also testify at an open hearing scheduled for 9 a.m. on June 27, 2017 held in the Main Hearing Room of the U.S. International Trade Commission in Washington, D.C. Written comments and requests to testify must be submitted to USTR.  Although the deadline for submission was originally June 12, the deadline has been extended to June 14 at 11:59 pm ET.

To read Nevena’s full update on the USTR’s call for public comment on NAFTA, including topics open for public comment, please visit the Fox Rothschild website.

On June 20, 2016, U.S. President Barack Obama will deliver the keynote address at the meeting of the international trade and investment delegation. This event is being organized by the United States – India Imports Council (USIIC).

The USIIC will be taking a trade and investment delegation composed of 18 members from Gujarat, India, to the U.S.  The delegation will attend SelectUSA, a project of the U.S. Department of Commerce, where the U.S. will present its trade benefits to over 50 other countries. The goal is to promote foreign direct investment and trade in the U.S.  The delegates from Gujarat represent several business sectors, including infrastructure, mining, logistics, pharmaceuticals, automotive, and financial services.

For more information about the USIIC and the trade relationship between the U.S. and India, visit the USIIC website.

Copyright: paulprescott72 / 123RF Stock Photo
Copyright: paulprescott72 / 123RF Stock Photo

On Thursday, April 28, 2016, the United States and Sri Lanka adopted a joint plan to boost trade between the countries. U.S. Trade Representative Michael Froman and Sri Lanka Minister of Development Strategies and International Trade Malik Samarawickrama announced the deal after a meeting in Washington, D.C, under the nations’ bilateral Trade and Investment Framework Agreement.

The goal of the plan is to expand trade and encourage foreign investment. The plan also focuses on promoting business in Sri Lanka. The plan aims to make Sri Lanka’s business and trade sectors more accessible to women and to promote workers’ rights and ethical practices in the work force.

The two countries aim to achieve the goals of the plan over a five year period, and they will release their proposals for implementing the plan later this year.

The U.N. Security Council has delayed its vote on the proposed sanctions against North Korea until Wednesday, at the request of Russia.

Last week, the United States and China proposed expanded sanctions against North Korea, which include mandatory inspection of cargo leaving or entering North Korea, by sea or air. The United States and China had spent seven weeks negotiating the new sanctions in response to North Korea’s nuclear tests.

The U.N. Security Council, composed of 15 member nations, will vote on the resolutions on Wednesday. The vote was delayed after Russia invoked a procedural 24-hour review of the resolutions.  Russia has requested more time to review the lengthy text of the resolutions and consider the changes to the current sanctions.

Copyright: hypermania2 / 123RF Stock Photo
Copyright: hypermania2 / 123RF Stock Photo

The United States and China agreed on draft resolutions, which, if accepted by the United Nations Security Council, would result in increased sanctions against North Korea. The United Nations has enforced sanctions against North Korea since 2006 because of its multiple nuclear tests and rocket launches. Currently there is a U.N. embargo on arms exports to and imports from North Korea, and Pyongyang (North Korea’s capital) is banned from importing and exporting nuclear and missile technology and is not allowed to import luxury goods.

The United Nations Security Council has adopted four major resolutions since 2006 that impose and strengthen sanctions on North Korea. These resolutions are aimed at preventing North Korea from continuing to develop its nuclear weapons program, and they also call on Pyongyang to dismantle its nuclear program and refrain from ballistic missile tests.

In response to the claim in January of this year that North Korea tested a nuclear weapon, the United States and China began intense negotiations to once again strengthen sanctions against North Korea. The United States and China have reached an agreement, but to-date the text of the resolution proposed by the two countries has not been supplied to the public.  Diplomats believe that the resolutions should come before the United Nations Security Council within the coming days.

Skepticism exists as to whether the proposed new sanctions would actually curb North Korea’s nuclear program, and whether other countries would enforce the sanctions. However, if adopted, the resolutions would be legally binding.

The proposed sanctions would require countries to inspect all North Korean cargo entering or leaving a country. Additionally, 31 ships that have been identified as trafficking in illegal nuclear goods will be banned from docking in any port.  The resolutions are expected to call for the blacklisting of certain individuals and entities.  The resolutions would also prohibit countries from sending any item to North Korea that could be used by the North Korean army, like trucks that could be repurposed for military use.

Despite the new sanctions, North Korea would still be able to buy oil and sell coal and iron ore, provided that such materials are not being used to fund its nuclear weapons program, something which would be difficult to prove.

 

President Obama announced on Thursday that he would travel to Cuba in March and meet with Cuban President Raúl Castro. The two men first met face-to-face during a summit in Panama last year, but President Obama has never visited Cuba. In fact, President Obama will be the first sitting American president to visit Cuba in 88 years. The last president to visit Cuba was President Coolidge who attended the Pan American Conference in Havana in January 1928.

Recently, there has been significant communication between the two countries, including American officials traveling to Havana on Tuesday to sign a pact that will for the first time in decades allow scheduled commercial flights between the two countries. Cuban officials are also in Washington this week to discuss ways of expanding business ties between the two countries.

Despite the President’s announcement in December 2014 regarding significant changes in the U.S. policy toward Cuba to normalize relations between the two countries, the Cuba embargo remains in place. Most transactions between the United States, or persons subject to U.S. jurisdiction, and Cuba continue to be prohibited, and OFAC continues to enforce the prohibitions of the Cuban Assets Control Regulations (CACR).

Effective on January 27, 2016, there have been several changes to the trade relationship between the two countries. These changes are targeted at further engaging and empowering the Cuban people by facilitating authorized travel to Cuba; certain authorized commerce; and the flow of information to, from, and within Cuba.  For more information about the loosening of Cuban sanctions, see our earlier post here.