Trade Law

Antidumping and countervailing duty orders address unfairly priced and subsidized imports that enter the United States. Each order contains a “scope” that identifies in part the “class or kind” or merchandise covered by order.

CFIUS: Account for CFIUS risks in transactions involving non-U.S. investments in businesses with a U.S. presence

Over the past year, the Committee on Foreign Investment in the United States (CFIUS), an interagency committee chaired by the Department of the Treasury, has been particularly active in reviewing and, at times, intervening, in non-U.S. investments in U.S. businesses to address national security concerns. CFIUS has the authority to impose mitigation measures on a transaction before it can proceed. It may also recommend that the President block a pending transaction or order divestiture of a U.S. business in a completed transaction. Consequently, companies that have not sufficiently accounted for CFIUS risks may face significant hurdles in successfully closing a deal. With the incoming Trump administration, there is also the potential for an expanded role for CFIUS, particularly in light of campaign statements opposing certain foreign investments.

The results of the U.S. presidential election are historic and unanticipated, and they will have significant economic, political, legal and social implications. As we prepare for the Trump presidency, many uncertainties remain regarding how the incoming administration will govern. President-elect Trump has stated that he will pursue vast changes in diverse regulatory sectors, including international trade, health care, and energy and the environment. These changes are likely to reshape the legal landscape in which companies must conduct their business, both in the United States and abroad.

On December 15, 2015, U.S. congressional leaders announced a year-end budget compromise that removes the ban on the export of crude oil from the United States. In exchange for this concession, the Democratic-led opposition to the repeal secured multiyear extensions of certain currently expired renewable energy tax credits (discussed here). Assuming the legislation is passed by both the House of Representatives and the Senate (likely by Friday of this week), and the president signs the bill into law, as is currently anticipated, U.S. oil producers will soon be able to export crude oil with minimal restrictions for the first time in nearly 40 years.

On October 18, 2015, the day on which the Joint Comprehensive Plan of Action (JCPOA) became effective (“Adoption Day”), the U.S. Department of State (“State Department”) issued contingent waivers of certain extraterritorial sanctions targeting non-U.S. persons that engage in certain transactions with Iran, pursuant to the terms of the JCPOA. Importantly, these waivers are not currently in effect and will take effect only when Iran has fulfilled its nuclear commitments under the JCPOA (i.e., “Implementation Day”). Furthermore, these waivers do not apply to non-U.S. persons that are owned or controlled by U.S. persons (e.g., foreign subsidiaries of U.S. companies). Although the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) is expected to issue a General License that will permit non-U.S. persons that are owned or controlled by U.S. persons to engage in activities “consistent with the JCPOA,” the terms of this General License are not yet available.

On December 30, 2014, the Department of Commerce, Bureau of Industry and Security (BIS) issued long-awaited frequently asked questions (FAQs) and related answers in an attempt to provide guidance on restrictions on crude oil exports. Most significantly, the FAQs attempt to clarify the “processed through a distillation tower” test for determining whether crude oil has been transformed into a petroleum product and to identify the factors BIS considers in applying this test. The guidance likely will encourage more companies to submit classification requests (CCATS) to BIS and/or to self-classify their products, which is also legally permissible, because it provides a demonstrable basis for making these determinations. The FAQs also address commingling foreign and domestic crude oil in the context of license applications for the export of foreign crude.

Below is (i) background regarding crude oil export restrictions and prior developments, (ii) more detailed analysis of the FAQs and (iii) a discussion of their impact on the debate over lifting the export restrictions on crude oil.

On December 17, 2014, the U.S. Department of Commerce (DOC) announced its final determinations in the antidumping duty (AD) and countervailing duty (CVD) investigations of crystalline silicon photovoltaic products (“solar products”) from China and Taiwan (AD only). DOC’s final determinations are the latest in a series of trade remedy actions taken by the United States, the European Union and Canada since 2012 against Chinese exports of solar products. The current “Solar II” investigations follow AD and CVD orders imposed by DOC in 2012 following the “Solar I” investigations.

In its final determinations, DOC found AD margins ranging from 26.71 to 165.04 percent and CVD rates ranging from 27.64 to 49.79 percent for Chinese companies, and AD margins ranging from 11.45 to 27.55 percent for Taiwanese companies. The final determinations will be enforced by U.S. Customs and Border Protection (CBP) through the collection of cash deposits in the applicable amounts from U.S. importers of record. The AD cash deposit requirements will become effective on the date of publication of DOC’s final determinations in the Federal Register, expected on December 23, 2014. CVD cash deposits will become effective on the date of publication in the Federal Register of any final affirmative determination by the U.S. International Trade Commission (ITC), expected in early February 2015.

On December 11, 2014, the U.S. Department of Treasury’s Office of Foreign Assets Control (OFAC) released new guidance related to existing U.S. sanctions against Russian entities designated on the Sectoral Sanctions Identification List (“SSI List”). Specifically, OFAC released the following three Frequently Asked Questions (FAQs) on its website:

• FAQ 419 providing guidance regarding the treatment of deferred payment terms under Directives 1, 2 and 3
• FAQ 420 clarifying the meaning of “production” in Directive 4
• FAQ 421 explaining the meaning of “Arctic offshore” projects in Directive 4.