After passage with overwhelming bipartisan support, on August 13, 2018 President Trump signed the Foreign Investment Risk Review Modernization Act (FIRRMA) into law. The new law reforms and expands the foreign investment review process of the Department of the Treasury’s Committee on Foreign Investment in the United States (CFIUS or the Committee), an inter-agency committee tasked with reviewing the national security implications of foreign investment in the United States. Among its key components, FIRRMA for the first time establishes mandatory CFIUS filing requirements for certain categories of transactions, introduces filing fees, and expands the universe of transactions subject to CFIUS jurisdiction (known as covered transactions). FIRRMA also reinforces the Committee’s already broad authority to delay, block, and even unwind transactions deemed contrary to U.S. national security interests. According to sponsors of the legislation, the reforms promulgated under FIRRMA were motivated by increased concerns over foreign investment, particularly with respect to investment by certain sensitive countries, and foreign parties’ access to sensitive and emerging U.S. technologies.
On May 8, 2018, President Trump announced his decision to withdraw the United States from the Iran Joint Comprehensive Plan of Action (JCPOA), the multilateral nuclear agreement signed on July 14, 2015, between Iran, the P5+1 (China, France, Russia, the United Kingdom, the United States, and Germany), and the European Union. Implementation of the president’s decision to withdraw requires the Department of Treasury’s Office of Foreign Assets Control (OFAC) to amend its regulations to officially reimpose certain sanctions. While the sanctions have been reimposed, OFAC has simultaneously provided short-term general licenses to permit industry to wind down activities that are once again prohibited.
Following the White House’s decision to impose tariffs on imports of certain steel and aluminum products from Mexico starting on June 1, 2018, Mexico has responded in kind by imposing compensatory tariffs. On June 5, 2018, the government of Mexico published in the Diario Oficial de la Federación (Mexico’s federal gazette) a presidential decree levying duties on $3 billion worth of a wide array of U.S. exports. The new tariffs on U.S. products became effective on June 5, 2018, for most of the affected products. The tariffs will become effective for the remaining affected products on July 5, 2018.
On May 8, 2018, President Trump announced his decision to withdraw the United States from the Iran Joint Comprehensive Plan of Action (JCPOA), the multilateral nuclear agreement signed on July 14, 2015, between Iran, the P5+1 (China, France, Russia, the United Kingdom, the United States, and Germany), and the European Union. The move sets the stage for the re-imposition of all U.S. sanctions against Iran that were waived under the JCPOA when it became effective on Jan. 16, 2016.
In recent months, the United States has implemented a number of high profile trade-related sanctions measures. While the new U.S. tariffs imposed on a variety of Chinese goods have received much attention in the media, the United States has also subjected Chinese companies to fines and other penalties for alleged violations of separate U.S. sanctions and export laws. These actions highlight the extent to which even wholly Chinese companies must consider complex and extraterritorial U.S. sanctions and export controls laws and regulations in their own operations.
On April 3, 2018, the U.S. Trade Representative (USTR) published a list of products imported from China on which it recommended imposing 25 percent tariffs, in addition to any other existing tariffs on those goods. USTR issued this list in the context of an investigation conducted under section 301 of the Trade Act of 1974, which authorizes the president to unilaterally take any appropriate action to remove any practices of countries that violate an international trade agreement or that engage in acts, policies, or practices that are “unreasonable or discriminatory and burden or restrict” U.S. commerce.
On April 6, 2018, the U.S. government announced new sanctions against Russia. Specifically, the Department of Treasury’s Office of Foreign Assets Control (OFAC) designated 36 Russian individuals and entities under authority granted by Executive Orders 13661 and 13662, and codified last year in the Countering America’s Adversaries Through Sanctions Act (CAATSA). The newest sanctions are a continuation of sanctions against Russian business elite, and specifically, President Putin’s inner circle.
On March 6, 2018, representatives from the United States, Canada, and Mexico wrapped up the seventh round of the ongoing renegotiations of the North American Free Trade Agreement (NAFTA) in Mexico City. As discussed in our prior GT Alert, the negotiations have been ongoing since August 2017, but many important proposals remain largely unaddressed. As in the past six rounds, some additional progress was made during this latest round, but several key issues must still be resolved before an agreement can be reached. Negotiations during the Seventh Round were further complicated by President Trump’s announcement last week imposing tariffs on imports of steel and aluminum into the United States. Although Canada and Mexico have been excluded from the tariffs for now, the possibility of imposing these tariffs at some future time will likely play a continuing role in the NAFTA negotiations.
On March 8, 2018, President Trump signed two proclamations imposing tariff rates of 25 percent and 10 percent on imports of certain steel and aluminum products, respectively, pursuant to Section 232 of the U.S. Trade Expansion Act of 1962. These tariff rates will come into effect March 23, 2018, and will be applied in addition to any other duties, fees, and charges applicable to covered products.
On Jan. 29, 2018, in Montreal, representatives from the United States, Canada, and Mexico – including U.S. Trade Representative Robert Lighthizer, Canadian Foreign Minister Chrystia Freeland, and Mexican Economy Secretary Ildefonso Guajardo – wrapped up the Sixth Round of the ongoing renegotiation of the North American Free Trade Agreement (NAFTA). In this Round of negotiations, the parties were expected to discuss some of the most contentious proposals of the NAFTA renegotiations.
Some of the key issues addressed were:
- Rules of Origin;
- Sunset Provision;
- Perishable and Seasonal Goods;
- Canada’s Dairy Supply Management System;
- Government Procurement; and
- Dispute Resolution.
However, the Sixth Round ended with little closure on these key issues. Some of these issues continue to be sticking points in the negotiation and create uncertainty as to what a modernized NAFTA might look like. Below, we provide brief summaries of the key issues addressed during the Sixth Round.