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.

 

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On June 16, 2016, Teva Pharmaceutical’s Russian subsidiary (Teva LLC) pled guilty to one count of conspiring to violate the Foreign Corrupt Practices Act (FCPA).  Judge Kathleen M. Williams of the United States District Court for the Southern District of Florida hesitated, however, in entering a final judgment under which Teva LLC would pay no fine.  While there is no doubt that Teva LLC’s parent entity will pay over a half-billion dollars for violations of the FCPA, the proposed sentence for Teva LLC did not include any obligation to pay fines or civil claims.

The claims against Teva LLC stem from payments made to a Russian official who also ran a pharmaceutical distribution company.  Between 2010 and 2013, Teva LLC offered the official’s company favorable pricing terms in exchange for his push to have Russian government entities purchase more Teva drugs for the national health care system.  Notably, Teva LLC’s transactions passed internal FCPA checks because Teva LLC omitted key facts such as the official’s ownership of the distribution company and a Russian investigation of possible corruption within the distribution company.  The facts of Teva LLC’s violations are not what raise questions at this phase.

Rather, potential cause for concern in the contemporaneous settlement of numerous FCPA against Teva Pharmaceuticals and its subsidiaries in Europe and Mexico.  Collectively, Teva Pharmaceuticals and federal prosecutors have agreed to settle all of the outstanding claims in exchange for (i) a $238 million criminal penalty, (ii) a deferred prosecution agreement and (iii) $236 million to settle civil claims.  Significantly, while Teva LLC agreed to plead guilty as part of the settlement, Teva Pharmaceuticals has been given a deferred prosecution agreement and is not admitting guilt. Teva Pharmaceuticals, however, will pay the criminal penalty and civil claims.  As a result, Judge Williams was presented with the prospect of a guilty plea accompanied by no punishment.  In particular, the Court expressed concern regarding what would happen if Teva Pharmaceuticals did not pay its fine and final judgment had already been entered against Teva LLC.

While there is no concern that the Court and counsel will work out the nuts and bolts of the the overall settlement and component pleas in the near future, the potential complexities of FCPA litigation should give practitioners and their clients pause.  Further, with directives in place focused on individual liability and strict parameters on cooperation credit, counsel must keep an eye on the broader liability landscape because, ultimately, the Court will demand that violators are held responsible.

 

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.

The Trans-Pacific Partnership

The Trans-Pacific Partnership (TPP) is a trade agreement between 12 Pacific Rim countries (Australia, Brunei Darussalam, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, United States, and Vietnam), which among other things, contains measures to lower trade barriers such as tariffs.

For more information about the TPP see our previous post, Fox Guide to the Trans-Pacific Partnership.

The Report

U.S. Secretary of Commerce Penny Pritzker released the Opportunities for the U.S. Service Sector Report, which highlights the positive impact of the TPP.

Secretary Pritzker’s report emphasized that the TPP will expand investment opportunities for U.S. services, including those in the telecommunications, software, retail, entertainment and delivery.

“The Trans-Pacific Partnership strengthens our nation’s standing as the world’s leading services exporter,” Secretary Pritzker said.  She further emphasized the positive impact on the service sector, by stating: “With TPP, we can grow our $233.1 billion trade surplus in services and support even more high-paying American jobs.”

Benefit for U.S. Service Suppliers

According to the Office of the United States Trade Representative, services industries account for four out of five U.S. jobs and also represent a significant and growing share of jobs in other TPP countries (Australia, Brunei Darussalam, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, United States, and Vietnam).  The TPP will benefit U.S. service suppliers, both small and large, seeking to do business in TPP markets.

The report lists TPP commitments that will directly benefit U.S. services suppliers, including removing unnecessary barriers that reduce efficiency of trade in the global supply chain and increased transparency in licensing and qualification regulations and procedures for service suppliers.

To learn more about the opportunities for the U.S. service sector related to the TPP, visit http://trade.gov/fta/tpp/industries/pdfs/service.pdf.

The Story

Asia-Pacific Region
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After many years of negotiations, the 12 countries making up the Trans-Pacific Partnership (TPP) (Australia, Brunei Darussalam, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, United States, and Vietnam) finally reached a trade agreement on October 4, 2015.  Note that the deal still needs to be approved by Congress (after the President gives Congress a 90 day advance notice that he intends to sign it).

Why Does it Matter?

The deal opens up trade and promotes regional integration among 12 countries that collectively produce almost half of the world’s products and services. This can have a huge impact on the global economy.

The goals of the deal are to promote economic growth; support the creation and retention of jobs; enhance innovation, productivity and competitiveness; raise living standards; reduce poverty; and promote transparency, good governance, and enhanced labor and environmental protections.  Geopolitical reasons of establishing a strong partnership in Asia to challenge China’s stronghold in the region is also certainly a motivating factor.

Key Features Of The Deal

  1. Comprehensive market access. The TPP eliminates or reduces tariff and non-tariff barriers across substantially all trade in goods and services, to create new opportunities and benefits for businesses, workers, and consumers.
  2. Regional approach to commitments. The TPP facilitates the development of production and supply chains, and seamless trade, enhancing efficiency and supporting the goal of creating and supporting jobs, raising living standards, enhancing conservation efforts, and facilitating cross-border integration, as well as opening domestic markets.
  3. Addressing new trade challenges. The TPP promotes innovation, productivity, and competitiveness by addressing new issues, including the development of the digital economy, and the role of state-owned enterprises in the global economy.
  4. Inclusive trade. The TPP includes commitments to help small- and medium-sized businesses understand the Agreement and take advantage of its opportunities.  It also includes commitments on trade capacity building, to ensure that all Parties are able to meet the commitments in the Agreement and take full advantage of its benefits.
  5. Platform for regional integration. The TPP is intended as a platform for regional economic integration and designed to include additional economies across the Asia-Pacific region.

What Does the Deal Mean for US Businesses?

  1. The deal reduces tariffs for American products traded in the TPP region and, therefore, opens up the TPP region for American products. It also makes it cheaper for American companies to purchase products from the TPP region.
  2. Expedited customs procedures for TPP members will ensure faster and easier shipment.
  3. More transparent, non-discriminatory rules for technical regulations will mean easier compliance with trade regulations for US companies.
  4. Investment in TPP countries will become easier and more transparent.
  5. E-commerce companies doing business in the TPP region will encounter fewer restrictions.