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EPA Issues Final Rule to Phase Down HFCs as White House Announces Measures to Prevent Illegal Imports


EPA Issues Final Rule to Phase Down HFCs as White House Announces Measures to Prevent Illegal Imports

The United States Environmental Protection Agency (EPA) has finalized a rule intending to reduce the production and consumption of hydrofluorocarbons (HFCs) in the United States by enforcing a cap and phasedown program under the American Innovation and Manufacturing (AIM) Act. According to the EPA, the final rule will phase down U.S. production and consumption of HFCs by eighty-five percent over the next fifteen years. Beginning January 1, 2022, allowances will be required to produce or import HFCs. The first of such allocations are to be announced by the EPA by October 1, 2021. The AIM Act instructs the EPA to issue a fixed quantity of transferrable production and consumption allowances, which producers and importers must hold in quantities equal to the amount of HFCs they produce or import. Alongside the EPA’s final rule, the EPA and other federal agencies under the Biden Administration announced additional actions intended to reduce consumption of HFCs, with a focus on curtailing and controlling illegal imports.

The final rule establishes HFC production and consumption baselines, a statutory phasedown schedule of allowed production and consumption, and the EPA’s approach to allocating and allowing transfer of allowances. According to the EPA, a global HFC phasedown is expected in order to avoid the most severe consequences of climate change. Producers and importers of HFCs should begin to consider how to adapt their businesses to the phasedown and how to take advantage of potential HFC alternatives. According to the phasedown schedule, steep reductions in allowances are planned for 2024 and 2029 to bring HFC production and consumption down to thirty percent against the baseline.

The EPA will set the initial allocation for each producer and/or importer based upon the individual entity’s production and/or import for the highest three-year period during the 2011-2019 period. The AIM Act had originally established the baseline to be the three-year period of 2011-2013, but the proposed rule published by the EPA in May 2021 had modified that to 2017 to 2019. Now with the final rule, the EPA has determined that using the average of the highest three years in the 2011 to 2019 window would ensure an equitable phasedown consistent with prior phasedowns.

The Administration announced the formation of an interagency task force consisting of the EPA and the Department of Homeland Security (DHS) to prevent and disrupt illegal importation of HFCs into the United States. The announcement of measures to prevent illegal imports follows reports of a surge in illegal trade in HFCs in Europe due to the European Union’s strict regulation of the greenhouse gases. The White House nods to this issue in its fact sheet on the matter, referring to “rates of noncompliance similar to what has been observed in other countries…” With the issuance of the EPA’s final rule, the U.S. has adopted a similar policy on HFCs but aims to avoid the enforcement issues observed in Europe, which have undermined the purpose of HFC regulations.


Nithya Nagarajan is a Washington-based partner with the law firm Husch Blackwell LLP. She practices in the International Trade & Supply Chain group of the firm’s Technology, Manufacturing & Transportation industry team.

Camron Greer is an Assistant Trade Analyst in Husch Blackwell LLP’s Washington D.C. office.


Commerce Issues Final Determination in AD/CVD Investigation on Utility Scale Wind Towers from India

The Department of Commerce published its Final Determination in the antidumping (“AD”) and countervailing duty (“CVD”) investigation of Utility Scale Wind Towers from India on October 13, 2021, which investigation was initiated in November 2020. The AD/CVD petition was filed by Wind Tower Trade Coalition (“Petitioner”). The mandatory respondent selected by Commerce in both the antidumping and countervailing duty investigation was Vestas Wind Technology India Private Limited (“Vestas”).

The additional producers/exporters Commerce included in the antidumping investigation were: Anand Engineering Products Private Limited, Windar Renewable Energy Private Limited, and GRI Towers India Private Limited.

The additional producers/exporters included in the countervailing duty investigation were: Naiks Brass & Iron Works, Nordex India Pvt. Ltd., Prommada Hindustan Pvt. Ltd., Suzlon Energy Ltd., Vinayaka Energy Tek, Wish Energy Solutions Pvt. Ltd., and Zeeco India Pvt. Ltd.

In its final determination, Commerce found that (1) imports of wind towers from India are being, or are likely to be, sold in the United States, at less than fair value and (2) that countervailable subsidies are being provided to producers and exporters of wind towers from India. As a result of these findings, Commerce instituted:

-A 54.03 percent weighted-average dumping margin on exports by Vestas and the five other producer/exporters from India;

-A 2.25 percent countervailable subsidy rate for Vestas and all others that were not specifically investigated; and

-A 397.70 percent countervailable subsidy rate for the seven other producer/exporters.

The factsheet detailing these amounts can be found here.

In the anti-dumping investigation concerning whether Vestas and the other producers/exporters were selling or likely to be selling at less than fair value (“LTFV”), Commerce based its calculation of the dumping margin “entirely on the basis of facts available with the application of adverse inferences (“AFA”).” This decision was mainly due to a lack of documentation and cooperation from Vestas and the five other producers/exporters. Despite many briefs filed by parties opposing the use of AFA, Commerce upheld its Preliminary Determination and adopted it in full.

Notably, Commerce did not receive the necessary information from Vestas or the five other producer/exporters by the agreed-upon deadline. While Vestas did eventually submit the information requested, Commerce stated that it would only accept untimely filed information in extraordinary circumstances. Vestas argued that the COVID-19 pandemic had hindered it from timely filing its responses. However, Commerce noted that Vestas was using a U.S. based law-firm and that the filings were made by the law firm from the law firm’s U.S. office location. Therefore, the extraordinary COVID-19 impact in India was not affecting Vestas’ ability to timely file.

In the countervailable subsidy rate calculation, Commerce reversed its Preliminary Determination to use AFA to calculate the subsidy rate for Vestas. Commerce stated that for the Final Determination, based on the information it received in lieu of its onsite investigation, Commerce was able to investigate and verify all of the information provided by Vestas and “[agreed] with Vestas that use of facts otherwise available is no longer necessary because all necessary information is on the record.” However, Commerce maintained that AFA was the correct calculation for the other producers/exporters to calculate the countervailable subsidy rate due to a lack of cooperation. Specifically, none of the seven other producers/exporters responded to Commerce’s quantity & value questionnaire; therefore, Commerce held that AFA was the correct calculation because the companies “failed to cooperate to the best of their ability….”

The next step in this process will be for the International Trade Commission (“ITC”) to complete its investigation and make a determination “as to whether the domestic industry in the United States is materially injured, or threatened with material injury.” If the ITC decides that the domestic industry is being harmed, then Commerce will issue AD/CVD Orders and instruct Customs and Border Protection (“CBP”) to implement the duties described above. If the AD/CVD orders are issued, they will remain in force for a period of five years after which there will be a mandatory sunset review to determine the continuation of dumping and/or subsidization. Also, for the next five years, Commerce will continue to conduct annual reviews of the AD/CVD rates on an ongoing basis, which might be an avenue to providing relief for certain manufacturers and exporters.


Nithya Nagarajan is a Washington-based partner with the law firm Husch Blackwell LLP. She practices in the International Trade & Supply Chain group of the firm’s Technology, Manufacturing & Transportation industry team.

section 232

U.S. Court of International Trade Stays Department of Commerce’s Motion for Voluntary Remand Setting Course for Court-Annexed Mediation in Section 232 Exclusions Dispute

On September 30, 2021, the Department of Commerce (“Commerce”) filed a motion requesting a voluntary remand to review 502 Section 232 exclusion request denials it issued to Voestalpine High Performance Metals Corporation and Ergo Specialty Steels, Incorporated (collectively “Voestalpine, et al.”) beginning in 2018. Specifically, Commerce in its motion acknowledges that it lacks documentation explaining why it rejected all 502 requests. This motion for voluntary remand comes only a couple months after Commerce requested the same type of voluntary remand in six separate Section 232 appeals.

In its September 15, 2021, order, the court rejected Commerce’s motions for voluntary remand and instead consolidated the six separate cases concerning similar denials of Section 232 exclusion requests and collectively referred the cases to court-annexed mediation. Specifically, the court ordered that (1) all cases are stayed for a maximum of 90 days beginning September 15th in which time mediation should be conducted and concluded, and (2) all cases be returned to the active calendar unless settlement is reached during the mediation process.

The court seems set to follow the same course in Voestalpine et al.’s appeal. On October 1, 2021, the CIT issued an order (1) staying Plaintiffs time to respond to Commerce’s September 30th motion until further notice and (2) requiring both parties to file statements on whether this case should be referred to court-annexed mediation.

Commerce in its statement filed on October 6, 2021, opposes the court-annexed mediation. In its statement, Commerce argues that the differences in the products that are the subject of the exclusion requests do not allow for a speedy resolution through mediation. Commerce also points out that in Voestalpine et al.’s initial complaint, the relief sought was a remand to Commerce.

Voestalpine et al., in its statement filed on October 8, 2021, rebuts both of Commerce’s arguments and supports court-annexed mediation. In its statement, Voestalpine et al. points out that the issue is not that Commerce denied the exclusion requests, but rather that it did not include the reasoning behind any denials at issue. Voestalpine et al. also argues that it did not seek relief through remand to Commerce merely for reconsideration of the exclusion requests. Rather, it sought a remand to Commerce with a requirement “to refund the Section 232 tariffs previously paid by Plaintiffs.”

It appears there may be a trend developing. The court seems reluctant to allow these actions to fully go back to Commerce while, at the same time, it is reluctant to provide plaintiffs the relief sought: a declaration that Commerce’s denials were unlawful.

It may also be that the court is waiting to see whether global politics will impact the status of Section 232 tariffs in the near future. Either way, it seems likely that this case will be referred to the same mediation process as the cases earlier this year and that a trend of court-annexed mediation is developing where Section 232 exclusion request denials are concerned.

As a reminder, the Trump Administration instituted Section 232 national security tariffs on steel and aluminum in 2018 and also set up an exclusion process for importers if they met certain qualifications and were able to demonstrate that the product was not available from any other source and did not harm national security interests. The exclusions were granted on a product-specific and importer-specific basis.


Nithya Nagarajan is a Washington-based partner with the law firm Husch Blackwell LLP. She practices in the International Trade & Supply Chain group of the firm’s Technology, Manufacturing & Transportation industry team.


Should Five Percent Appear Too Small? The Penny Lane of E-commerce.

Benjamin Franklin may not have predicted the internet, but he got it right (inspired by Christopher Bullock’s 1716 insights) when he wrote that, “…in this world nothing can be said to be certain, except death and taxes”. On that note and in related news: buying that inflatable yellow submarine just got more costly! Slowly but surely, shopping from the hopefully convenient home sofa is becoming more expensive: what used to be a ‘tax-free experience’ is now a joyful web-shopping outing until the very end when you see a surprise invoice that includes taxes you’ve never heard of. That surprise now extends to Consumer to Consumer (C2C) sales that historically never used to incur taxes.

Probably not invited and (therefore?) a little late to the internet party, tax authorities found the long and winding road on how to subject e-commerce sales to sales and/or other taxes. With more than 50% of government income depending on taxes in most countries (up to 80% in some, according to and booming internet sales (39% growth in Q1 2021 in the U.S., according to nibbling away at that revenue, it’s a surprise that it took this long for the taxman to issue comprehensive legislation to get back to what once belonged. Over the last few years, as more tax authorities found the right tune for enforcing taxes on e-commerce (Australia, New Zealand, and the U.S. were recently followed by the EU and other countries), more and more taxes have appeared in that cute little checkout cart. It progressed from customs duties on international sales over a certain threshold to sales tax (or its local equivalent like consumption tax or value-added tax (VAT)) on B2C sales and, recently, many countries (including the EU) went all-in and now tax practically all internet transactions.

From a compliance perspective, multiple e-commerce platforms have been quick to implement tools for sellers to apply taxes. In many instances, taxes are automatically collected and submitted, with the seller only responsible for filing monthly or quarterly reports/returns on sales and taxes charged. And, as a considerable percentage of transactions are routed through a small number of major platforms (e.g., Amazon, eBay, Shopify, Magento), conducting audits is not reaching for Lucy in the sky. Compared to decentralized in-store retail sales, authorities have a relatively easy job with enforcement for online sales. Obligatory penalties and the threat of shutting down the seller—or even the site—when regulations are ‘forgotten’ make it easier to get taxes accounted for.

But what about those low-value exemptions? Glad you asked. The low-value exemption (Section 321 Type 86 shipments in the U.S.) may still apply on the customs duty portion of a purchase, or even on the local tax part, but e-commerce legislation in many countries requires the seller to charge taxes on every transaction, no matter how small—which is why a 5% tax on a $10 purchase is no longer impossible. Keep those pennies coming! For example, on that eBay purchase of some fine Portuguese stamps, the seller will either charge local Portuguese value added (e-commerce) tax or be required to register in the country of destination and charge that country’s sales/consumption/value-added tax—not good for the buyer’s wallet (especially as VAT can be as high as 25%), yet excellent for the tax authorities.

And the news for the Revenue Service is only getting better: e-commerce is projected to grow to $4.88 trillion in 2021, with McKinsey predicting growth of 8-9% annually in countries like Germany and France and 20% for countries in Asia. That adds up nicely, especially since taxes, as mentioned, are now collected on C2C transactions that were previously never taxed. Furthermore, with the e-commerce model having struck a serious chord with Gen Z, C2C growth is projected at 35% annually for the next four years (C2C e-commerce: Could a new business model sell more old goods?, McKinsey), which in total adds up to quite the lucrative revenue source. Quick note: this is different from the revenue related to the taxation of digital services, for example, digital marketing or reselling of user data.

While many traditional retailers, other than perhaps the barber showing photographs, have had to close due to the pandemic and the never-ending wave of e-commerce, the tax authorities are in a much better position than before to both collect and increase tax revenue on e-commerce and other sales—leaving them to safely count even more pennies from their own hopefully comfortable sofas.

Anne van de Heetkamp, is the VP of Product Management GTC at Descartes


Axis of Innovation: A New School of Geopolitical Economics for the Digital Age

What a difference a few decades make. Trade ministers from the United States and European Union recently felt compelled to sit down for special high-level ministerial forum in hopes of strengthening their relationship after years of transatlantic tensions on all manner of digital-age economic and trade matters—from digital service taxes to cross-border data flows—which together reflect fundamental differences of geopolitical strategy for the digital economy.

This never would have been necessary in the Cold War, when there was a clear, Manichean struggle between the democratic, market-based West and the authoritarian-communist East. It would have been inconceivable in those days to have such differences “across the pond.” There was strong bipartisan support in the United States—and parallel support in Europe—for a cohesive approach to the geopolitical economy that aimed to attract allies and isolate the Soviet Union and China by supporting Western business interests and spreading democracy around the world.


But now, as the Cold War fades into history and as the global economy is increasingly driven by digital and information technologies instead of heavy industry, that consensus view of the geopolitical economy has fractured. The old “free markets and free people” camp has maintained a foothold in the United States, and authoritarian statism is still deeply rooted in the parts of the East, but alongside them there are now other competing visions—including social democratic regulation in Europe and a rising form of digital protectionism in countries such as India, Indonesia, and Vietnam.

If the United States is to effectively advance its interests, which now hinge on spurring faster and deeper digital innovation and transformation, then U.S. policymakers need to recognize this new formation, while embracing a new framework for the geopolitical economy that is better suited to the times: national developmentalism. The overriding priority should be advancing domestic technology competitiveness instead of sacrificing U.S. economic interests on the altar of other foreign policy goals as America often did in the Cold War. Failure to execute this strategic pivot will produce a technologically weaker U.S. economy.

Until recently, America had only one big idea when it came to geopolitical economics, embodied in the neoliberal “Washington consensus.” Policymakers advocated at home and abroad for open markets, deeper trade, limited regulation, budget constraints, the rule of law, and a modest role for government. That approach worked in the Cold War, but there are two problems with it now: First, it ignores the fact that government plays a key role in helping develop and spread digital technologies, as we have seen in the history of the Internet, semiconductors, computing, and technologies like GPS—all of which the federal government spurred. Advancing growth in the era of digital innovation requires more than firms and markets acting on their own. Second, when U.S. policymakers point to the Washington consensus as the only alternative to China’s seemingly successful state-directed model, it gives nations looking to grow their own digital economies a limited choice: Do little and hope markets work things out for the best or be aggressive by copying Beijing’s statist model.

As in the Cold War, some nations today continue to embrace authoritarian statism, but with a digital edge and a more market-friendly veneer. China and Russia are the torchbearers for this formula, with China taking it to the greatest extreme. For China’s central planners, the approach is more than authoritarian; it is deeply mercantilist, seeking not just to build up domestic technology firms by any means necessary, but also to harm foreign competitors—as when Chinese firms coerce their Western counterparts into transferring intellectual property as the price of doing business in China while also enjoying lavish subsidies for “going out” to challenge Western firms for global market share.

This is a model that empowers U.S. adversaries and harms global innovation, because by employing tactics such as massive subsidies, IP theft, and coerced technology transfers, China is empowering its firms to take market share away from more innovative firms in other nations. Moreover, China scoffs at concepts such as freedom and democracy, and in global governance forums, its strategy is to ensure that its formula prevails over the U.S. model of freedom and human rights with private and civil-sector governance.

Meanwhile, where the United States and Europe once were closely aligned on economic and foreign policy, their goals and interests have now diverged. In the EU’s social democratic approach to the digital economy, the government’s main role is to regulate, rather than promote, technology and technology companies (especially U.S. companies) to achieve social policy goals. The EU is doing everything it can, including using carrots and sticks, to bring other nations into its orbit, offering its model as a third-way alternative to Chinese authoritarianism and what it considers to be America’s “cowboy capitalism.” The result is a spread of a digital regulatory system marked by higher taxes, onerous rules, and strict antitrust enforcement, which constrains global innovation and weakens U.S. competitiveness. And unfortunately, many U.S. policymakers, particularly on the left, see this as an appealing alternative to the Washington consensus they believe has been discredited.

But ultimately social-democratic regulation of the digital economy will prove to be a dead end. Even though EU social democrats and their U.S. allies profess to be pro-innovation, the reality is that onerous regulations on privacy, competition, “fairness,” and other areas result in less innovation, slower economic growth, and worse experiences for consumers.

On a separate track are unaligned nations that often charted their own path in the Cold War era. Today, many of them are defaulting toward digital protectionism as a preferred approach. For example, India, Indonesia, and Vietnam, among others, see limiting foreign IT and digital market access as the key to growing their domestic digital economies. To that end, they take measures such as limiting cross-border data flows, favoring domestic digital firms, and otherwise discriminating against foreign technology firms. This, too, will likely prove to be a dead end. Digital protectionism usually doesn’t work, in part because it doesn’t just harm the interests of U.S. firms and others, but often drives up the costs of digital technologies domestically, thereby limiting their use and forgoing the productivity benefits they offer.

Against this backdrop, the United States faces a host of new challenges, but it also has an opportunity to secure a new era of prosperity for itself and others by embracing a national developmentalist model in which government helps coach firms within its borders to compete globally, innovate, and boost productivity. This entails supporting innovation, markets, and business—including big business. But it also recognizes that the state should play a key role in supporting digital innovation in areas like broadband, health care, education, and governance while defending U.S. firms from unfair foreign competition. Among the nations moving toward the national developmentalism model are the Scandinavian bloc, the United Kingdom (as conservatives increasingly move beyond their Thatcherite traditions), Israel, Singapore, and Taiwan. Some U.S. policymakers on both sides of the aisle have begun moving in this direction, too, as evidenced by the Senate’s United States Innovation and Competition Act.

While the doctrine of national developmentalism presents a more realistic picture of the world, recognizing that nations seek competitive advantage in IT and digital industries, it also counsels a “race-to-the-top,” wherein nations support digital innovation with policies related to research and development, worker skills, and digital infrastructure, plus conducive regulatory and tax policies, and government leadership in using the technologies themselves.

The United States should fully embrace this burgeoning national developmentalism at home and work methodically to bring as many other countries as possible into the U.S. national developmentalist orbit—selling it as a compelling and effective alternative to social democratic regulation, protectionism, and authoritarian statism. We are no longer locked in a Manichean struggle; there are now several models on offer. But one is clearly the best.


Robert D. Atkinson (@RobAtkinsonITIF) is president of the Information Technology and Innovation Foundation, the leading think tank for science and technology policy.


President Biden’s Targeted Exclusion Process

The United States Trade Representative (USTR) is considering reinstating previously granted and extended exclusions on a case-by-case basis. Similar to the previous exclusion process, USTR has three considerations:

1. Whether the particular product remains available only from China

2. Whether reinstating the exclusion, or not reinstating the exclusion, will impact or result in severe economic harm to the commenter or other U.S. interests, including the impact on small businesses, employment, manufacturing output, and critical supply chains in the United States

3. The overall impact of the exclusions on the goal of obtaining the elimination of China’s acts, policies and practices covered in the Section 301 investigation.

In accordance with a USTR statement made on October 5, 2021, companies may submit comments either in support or opposition of the restatement of a particular exclusion. A list of the over 500 exclusions covered by the notice is posted separately on the USTR website here. The reinstated exclusions will be retroactive to October 12, 2021. The commenting period opens on October 12, 2021 and closes December 1, 2021.

Biden Administration’s New Approach to the U.S.-China Trade Relationship

The reopening of the Section 301 tariff exclusion process is the first action in the Biden Administration’s New Approach to the U.S.-China Trade Relationship. Ambassador Katherine Tai, the USTR, outlined the Biden Administration’s New Approach in remarks at the Center for Strategic and International Studies (CSIS) on October 4, 2021. Ambassador Tai identified four items as the starting point of this new approach:

-Enforcement of the Phase One Agreement;

-A new targeted Section 301 tariff exclusion process;

-Addressing concerns with China’s state-centered and non-market trade practices; and

-Working with allies to shape the rules for fair trade in the 21st century.

Following up on the second item, USTR issued its request for comments on the reinstatement of certain Section 3011 exclusions on October 5, 2021. Baker Donelson’s trade professionals expect additional actions as a result of the Biden Administration’s new approach to China and will continue to keep clients informed.

Background on the Section 301 Tariffs

In August 2017, the Trump Administration initiated a Section 301 investigation into China’s unfair policies and practices related to technology transfer, intellectual property, and innovation.2 In March 2018, USTR issued its Section 301 Report3 and determined that China’s actions related to intellectual property were unreasonable or discriminatory and burdened or restricted U.S. commerce. After unproductive engagement with China, USTR imposed tariffs on China’s imports as a response to China’s unfair trade practices related to the forced transfer of American technology and intellectual property. USTR, however, established a process where companies could seek an exclusion from these tariffs and granted numerous exclusions for one year. USTR allowed companies to extend certain exclusions by written request. On December 31, 2020, all exclusions expired, except COVID pandemic-related exclusions.


Lee Smith is an attorney and leader of Baker Donelson’s International Trade and National Security practice. He advises clients on matters involving export controls, customs compliance, trade remedy investigations, trade policy, market access, and free trade agreement interpretation. Smith can be reached at

Robert J. Gardner is a public policy advisor in Baker Donelson’s Washington, D.C. office. He provides legislative and government relations guidance to clients on a variety of subjects, including tax, trade, appropriations, budget, infrastructure, and sanctions issues. Gardner may be reach at

1 19 U.S.C. §§ 2411-2417; “Section 301” refers generally to Chapter 1 of Title III of the Trade Act of 1974.

2 Initiation of Section 301 Investigation; Hearing; and Request for Public Comments: China’s Acts, Policies, and Practices Related to Technology Transfer, Intellectual Property, and Innovation, 82 Fed. Reg. 40, 213 (Aug. 24, 2017).

3 USTR, Findings Of The Investigation Into China’s Acts, Policies, And Practices Related To Technology Transfer, Intellectual Property, And Innovation Under Section 301 Of The Trade Act Of 1974 (Mar. 22, 2018) (Section 301 IP Report).

section 301

Section 301 Case Offers Importers a Chance at Refunds as Administration Contemplates Further Tariff Action

After a summer of wrangling, Plaintiffs in the ongoing Court of International Trade (‘CIT’) case challenging List 3 and 4A Section 301 duties on imports from China got a big win: in September the Government conceded that it is not able to administer a repository system that would require each importer to continually submit entry-specific information to preserve its rights to actual 301 duty refunds. The arguably unnecessary and burdensome repository system was the Court’s solution to the fact that the Government refused to stipulate that Plaintiffs would have the right to duty refunds on liquidated entries in the event their claims are ultimately successful. Usually, imports are “liquidated”think “finalized”on a rolling basis about a year after entry, so the Government’s position meant that Plaintiffs could potentially lose their rights to duty refunds on more and more entries each day as the CIT litigation continues to play out.

In the end though, after months of intransigence, the Government changed its position and agreed to stipulate that refunds on liquidated entries would be available post-judgment for all Plaintiffs’ entries that were unliquidated as of July 6, 2021. This about-face brings an end to this particular squabble, guarantees Plaintiffs will have access to duty refunds on this set of entries if they win, and allows the case to proceed to the merits. It also suggests that going forward, the Government intends to put forth any possible argument, however tenuous or impractical, to deny refunds to as many importers as possible even if the Plaintiffs prevail on the merits.

While the fact that the Government is vigorously defending its position may not be surprising, it does underscore the benefits of joining the litigation: if List 3 and 4A duties are ultimately declared unlawful, the next debate will center around the extent and form of relief that will be granted to importers who paid these unlawful duties, including which companies will actually get refunds. Actual Plaintiffs in the case will be in the best position to obtain these duty refunds, while the Government will likely make every effort to prevent the ruling from applying more broadly to all importers.

Door Still Open to Join Section 301 Litigation

The CIT case challenging List 3 and 4A duties, which began over a year ago, could very well reach the oral argument stage by early 2022 (barring any further tangential matters brought on by the Government’s efforts to limit potential duty refunds). This would set the stage for a CIT ruling in 2022. Yet the door is still open for other US importers that continue to pay List 3 or 4A duties on China-origin products to join the ongoing litigation and benefit from a potential Plaintiff win once the case and any related appeals are decided.

This opportunity is still available due to multiple arguments that extend the statute of limitations each time duties are assessed on an entry subject to List 3 or 4A. To boot, the burden associated with participating as a new Plaintiff will likely remain quite low in light of the fact that the day-to-day proceedings are led by a Plaintiffs’ Steering Committee that has already been established. So while the extent to which Section 301 duty refunds will be available to Plaintiffs and other importers is still up in the air, importers can still file a complaint to join the CIT litigation and improve their chances of benefiting from a favorable outcome.

More Tariffs May Be Coming

Meanwhile, hopes and predictions that the various unconventional tariff increases implemented under the Trump administration would cease and even be rolled back under President Biden have failed to materialize. So far, the Biden administration has left the additional Section 301 tariffs on many products from China untouched. And now, as a result of its ongoing months-long review of the United States’ policy regarding trade with China, the Biden administration is reportedly contemplating further action under Section 301 aimed at leveling the playing field with China.

Specifically, the Biden administration may launch a fresh Section 301 investigation into government subsidies the Chinese central government provides to the county’s manufacturers, thereby giving its manufacturers an advantage over their American counterparts. Understanding the extent of these subsidies and holding China to account for practices that violate US or World Trade Organization laws has been a longstanding US goal. However, the fact that the Biden administration is contemplating initiating its own investigation under Section 301 to address the concern suggests the use of tariffs as a tool to sway America’s trading partners is no longer considered out of bounds by either Republican or Democratic leaders.

For US companies that import goods from Chinaand are therefore legally liable for paying all duties owed to US Customs and Border Protection (‘CBP’) on those products this new normal suggests that existing Section 301 duties will not be revoked by the Biden administration anytime soon. Quite the opposite in fact: it looks like more Section 301 tariffs on more China-origin goods could be on the horizon.

Navigating this new normal in a way that keeps companies’ tariff costs down while ensuring compliance with these ever-changing CBP requirements has prompted business leaders to take a more active approach to Customs law issues including classification and country of origin determinationsboth of which have the potential to affect how much duty an importer pays to US Customs.

Other Ways to Mitigate Tariff Liability

Beyond joining the CIT litigation challenging List 3 and 4A Section 301 duties companies can identify opportunities to save on both general tariffs and additional Section 301 duties by reviewing and confirming the accuracy of the information they submit to CBP. One example of this is conducting a product-specific classification analysis to determine the correct Harmonized Tariff Schedule of the United States Code (or HTSUS code) applicable to a given product based on the product’s characteristics and the (often gray) body of rules and guidance governing classification. Each 10-digit HTSUS code has a corresponding general duty rate, so if a review of a product’s classification results in an HTSUS code correction, it could also result in a lower general duty rate for that product.

Similarly, conducting a supply chain-specific country of origin analysis to determine the correct country of origin of a given product based on where each manufacturing step is conducted and the applicable (and often gray) rules and guidance governing country of origin can result in duty savings. If a company can establish and document that its product’s country of origin is a country other than China, then Section 301 duties will no longer apply to that product.

While both classification and country of origin reviews present an opportunity to mitigate tariff costs, they also help ensure companies are not inadvertently providing incorrect information to US Customs and exposing themselves to potential penalties for such violationsanother must for US importers in light of the fact that tariff issues remain front and center in the minds of regulators and requirements continue to evolve in response to the ever-changing geopolitical landscape.


Andrew Bisbas is Counsel at Lowenstein Sandler. His practice centers on US Customs and Border Protection import requirements and tariffs. He helps clients navigate CBP requirements including classification and country of origin determinations as well as USMCA and other trade agreement implications. Andrew also assists clients in setting up and maintaining corporate import compliance programs, conducting import audits and supply chain due diligence, preparing and submitting prior disclosures to US Customs, and advising on tariff engineering and supply chain structuring efforts geared towards mitigating tariff costs.


How to Strengthen Trade and Labor Compliance with Technology Amid Increasing Customs Enforcement

Supply chain constraints, both expected and unexpected, continue to disrupt global trade and appear to be the new normal for the foreseeable future. As the world is slowly recovering from the pandemic and constraints in both materials and labor are creating unprecedented supply chain challenges, recent government actions are also generating often unexpected hurdles in the “last mile” such as unexpected delays and merchandise detentions.

The U.S., [1] Australia[2] and Germany[3] have recently proposed or enacted regulations or legislation aimed at ensuring companies take affirmative steps to prevent and eliminate forced labor in both their direct and indirect supply chains. As supply chains have grown more complex with additional tiers, the risk of exposure to potential human rights issues has grown as well. Importers subject to withhold release orders (WROs) often lack complete visibility into their full supply chain and regulators might not specify where their forced labor suspicions lie. This heightened risk is also driven, in part, by geopolitical tensions and global focus on environmental, social and governance (ESG) initiatives. A forced labor investigation may originate internally within the organization wanting to ensure a compliant supply chain, through non-governmental organization (NGO) reporting, or from a regulatory inquiry.

In the U.S., if Customs and Border Protection (CBP) receives information that “reasonably indicates” merchandise intended for importation contains any components that are the result of forced labor, the agency may detain the suspected merchandise at the port of entry under the authority of a WRO. While the specter of forced labor is a legitimate threat, the lack of a transparent process and ongoing trade disputes have led to concerns that WROs could be also used as political tools.

To combat allegations of the use of forced labor with regards to U.S. imported merchandise, the burden of proof is on the importer. If the importer can affirmatively demonstrate that the goods were not produced with forced labor, CBP may deem the merchandise admissible and release it. Importers must provide proof of admissibility, including a certificate of origin conforming to the template set out in 19 CFR §12.43(a), within three months of the importation.[4] While CBP provides scant guidance or information as to why merchandise is detained or how evidence of admissibility is evaluated, practical experience suggests that merely complying with the basic requirements for a certificate of origin and attestation as described in Part 12.43 will likely be an inadequate defense against the agency’s assertions.

To determine if a supply chain is plagued by forced labor activity, CBP uses the International Labor Organization’s 11 indicators of forced labor.[5]  After determining that there is sufficient evidence to suggest the presence of these factors, CBP allows evidence to refute the allegations and demonstrate admissibility. CBP suggests four general kinds of evidence that support admissibility to allow release of detained merchandise:[6]

1. Evidence refuting each identified indicator of forced labor;

2. Evidence that policies, procedures, and controls are in place to ensure that forced labor conditions are remediated;

3. Evidence of implementation and subsequent verification by an unannounced and independent third party auditor; and

4. Supply chain maps that specify locations of manufacturers, factories, farms, and processing centers.

However, CBP does not offer specific examples of the types of documents, records, reports or other due diligence that meet or exceed the subjective standard for release from detention. In the absence of sufficient examples of successful release in the public record, importers may struggle to develop appropriate or adequate compliance measures.

Further, despite the regulatory requirement for a “reasonable indication” that the subject merchandise contains forced labor, CBP has a history of issuing WROs covering broadly defined products, including finished goods and raw materials, originating from entire countries and regions, such as the palm oil industry in Malaysia, which has been the subject of labor compliance allegations for several years.[7],[8]

The number of CBP cargo detentions related to WROs increased by a factor of 27 in FY 2020 over FY 2019, from 12 to 324. Those detentions amounted to a total cargo value in excess of $55.5 million. The steep, upward trend in WRO enforcement has continued thus far in FY 2021 with year-to-date figures indicating 967 cargo detentions representing a total value of over $367 million, a three-fold increase in detentions and six times the import value over last fiscal year (with two months remaining in FY 2021).[9]

Importers caught unprepared have been unable to rebut the presumption of forced labor absent the appropriate evidence and compliance controls attentive to forced labor factors. Given the significant burden to prove the negative, coupled with increasing concerns over supply chain endurance, global companies should be highly motivated to engage with supply chain business partners that can support the required due diligence to defend against forced labor allegations.

Developing or improving trade and labor compliance procedures often requires a multifaceted and customized approach, especially when faced with an ever-changing enforcement landscape. In addition to traditional trade compliance measures such as documentation, due diligence and reasonable care, a robust labor compliance process will also benefit from a more modern, technology-based approach.

For example, blockchain and digital token technology can provide immutable certification throughout the supply chain, which can be independently verified by regulators or a credible third party to trace and validate the origin of materials and labor in addition to real-time logistics tracing. Blockchain solutions have been successfully implemented in similar contexts for supply chain and origin audits and inspections, cradle-to-grave supply chain tracing and global, product tracking to improve regulatory compliance as well as achieve time and cost efficiencies. A combined technology and regulatory approach to compliance can be tailored to improve the traceability of all aspects of the supply chain and designed to create an irrefutable, digital record of compliance. In addition to the regulatory compliance benefits of a traceable supply chain, blockchain demonstrates a company’s efforts to maintain transparency and accountability to its business partners, customers and other stakeholders.

Blockchain technology is often misunderstood. By engaging blockchain experts, organizations can overcome technical challenges and ensure the technology is developed as a unique solution fit for purpose, scale and cost benefits. Companies in an array of industries are implementing blockchain within their supply chains to increase efficiency and transparency.

For example, a global food and beverage company adopted blockchain technology to track its coffee products from bean to cup.[10] Another company implemented a blockchain solution built to trace a product’s travels across the supply chain—achieving insights within seconds, as compared its previous seven-day tracking cycle.[11] Similar applications of blockchain technology can be used to verify and document compliance throughout the supply chain, including validation of workforce compliance, and presented as evidence rebutting underlying allegations of a WRO or in support of the admissibility of merchandise.

Given increasing scrutiny of supply chains and in particular the focus on complete transparency with regards to eliminating forced labor, in addition to importers operating in industries already impacted by existing WROs, all companies should be evaluating their risk and exposure to commodities, regions and countries with a heightened risk of future action. Those who are proactive will maintain a competitive commercial advantage over those who chose to wait until their merchandise is detained and are forced to react to either agency action or public scrutiny over non-compliance.

Without implementing a combination of traceability technology throughout the supply chain and other tools such as third-party audits to ensure compliance, merchandise detained by CBP will not have sufficient documentation to rebut the presumption of a “reasonable indication” of forced labor, which could lead to devastating losses of merchandise, exorbitant storage fees while admissibility is assessed, forced export to non-U.S. markets or costly and protracted litigation. An innovative approach to proactive compliance, including modern technology-based solutions, could be the key to creating an objective record of due diligence in an otherwise subjective space.


Nick Baker is a Senior Director within FTI Consulting. He assists clients with international trade matters including customs, import compliance, export controls and sanctions.

Steve McNew is a Senior Managing Director within FTI Consulting’s Technology segment, where he leads the Blockchain and Cryptocurrency practice. He provides strategic advice and expert services for companies looking to innovate with crypto assets and blockchain technology. 

[1] For example, Chapter 23 of the United States-Mexico-Canada Agreement addresses forced labor rights and compliance in the context of the trade agreement. 

[4] 19 C.F.R. §12.43(a)

[5] ILO Indicators of Forced Labour, International Labour Organization, October 1, 2012.  Available at,—ed_norm/—declaration/documents/publication/wcms_203832.pdf

[6] CBP Publication #1394-0321 “WRO Modification/Revocation Process Overview,” U.S. Customs and Border Protection.  Available at

[7] CBP Issues Detention Order on Palm Oil Produced with Forced Labor in Malaysia, U.S. Customs and Border Protection, September 30, 2020.  Available at

[8] CBP Issues Detention Order on Palm Oil Produced with Forced Labor in Malaysia, U.S. Customs and Border Protection, December 30, 2020.  Available at

[9] CBP Trade Statistics, published at (last visited August 18, 2021). FY 2021 statistics current as of August 6, 2021.


U.S. Domestic Industry Files Anti-Circumvention Cases Against Three Countries Regarding Crystalline Silicon Photovoltaic Cells

The Petitioners representing the U.S. domestic industry filed new petitions with the U.S. Department of Commerce (“Commerce”) against imports from three countries, Thailand, Vietnam, and Malaysia, alleging that certain Chinese producers are diverting Chinese-origin components through Thailand to undergo minor processing to complete Crystalline Silicon Photovoltaic (“CSPV”) cells and modules subject to the Orders and subsequently to export the merchandise to the United States to avoid AD/CVD duties. The companies that were named in the circumvention submissions were:


1. Canadian Solar Manufacturing (Thailand) Co., Ltd. (“Canadian Solar Thailand”), a subsidiary of Canadian Solar Inc. (“Canadian Solar”);

2. Trina Solar Science & Technology (Thailand) Co., Ltd. (“Trina Solar Thailand”), a subsidiary of Trina Solar Co., Ltd;

3. Talesun Solar Technologies Thailand or Talesun Technologies (Thailand) Co., Ltd.; and

4. Astroenergy Solar Thailand Co., Ltd (“Astroenergy Thailand”).


1. Trina Solar (Vietnam) Science & Technology Co., Ltd. (“Trina Solar Vietnam”);

2. Canadian Solar Manufacturing (Vietnam) Co., Ltd. (“Canadian Solar Vietnam”);

3. China Sunergy Co., Ltd. in Vietnam (“CSUN Vietnam”);

4. Boviet Solar Technology (Vietnam) Co., Ltd. or Boviet Solar Technology Co., Ltd. (“Boviet Solar”);

5. GCL System Integration Technology (Vietnam) Co. Ltd. (“GCL-Si Vietnam”);

6. Vina Cell Technology Company Limited and Vina Solar Technology Company Limited; and

7. Jinko Solar (Vietnam) Co., Ltd.


1. Jinko Solar Technology Sdn. Bhd. (“Jinko Solar Malaysia”);

2. LONGi (Kuching) Sdn. Bhd.; and

3. JA Solar (Malaysia) Co., Ltd. or JA Solar Malaysia Sdn. Bhd.

While the requests are hundreds of pages in length, the gist of the allegations against each country is that the operations being performed in each of these countries are minor or insignificant, and the products being exported from each of the three countries are subject to the antidumping and countervailing duty order on CSPV cells and modules from China.

Within 45 days of the filing (which was August 16, 2021) the rules of Commerce require it to either make a final determination or initiate a full investigation. The 45-day deadline is September 30, 2021. It is very likely that Commerce will conduct a full review of these circumvention allegations, in light of their complexity and seriousness.

Of great importance to importers here is that if there is a final determination that there has been circumvention, the entries on or after the date of the initiation of the scope inquiry will be subject to Chinese rates. Thus, for imports made no later than September 30, 2021, importers could find themselves subject to the high Chinese rates. At the moment, it is very difficult for importers to know the likelihood of whether those Chinese rates will be applied, because the preliminary and final determinations of Commerce are still several months away.

The final determination in an anticircumvention ruling is to be issued normally within 300 days from the date of initiation, according to the Commerce rules. Before that time Commerce will issue a preliminary determination and at that time importers will have a better idea of the likelihood that duties will be applied to those products allegedly circumventing the order.


Jeffrey Neeley is a Washington-based partner with the law firm Husch Blackwell. He leads the firm’s International Trade Remedies team.

Cortney O’Toole Morgan is a Washington D.C.-based partner with the law firm Husch Blackwell. She leads the firm’s International Trade & Supply Chain group.


New Executive Order Authorizes Imposition of Additional Sanctions on the Government of Belarus and Certain Sectors of the Belarusian Economy

On August 9, 2021, President Biden issued Executive Order 14038 (the “EO”) which expanded the scope of the national emergency previously declared in EO 13405 of June 16, 2006. The EO imposes additional sanctions in response to conduct by the Government of Belarus (“GoB”) and the President Alyaksandr Lukashenka regime which the Biden Administration described as “long-standing abuses aimed at suppressing democracy and the exercise of human rights and fundamental freedoms.” As specific examples, the EO cites the “fraudulent” August 9, 2020 election administered by the GoB, in which Lukashenka was reelected, and the GoB’s forced grounding of an international flight to arrest Belarusian journalist Raman Pratasevich and his partner Sofia Sapega.

Among other things, the EO gives the U.S. Treasury Department’s Office of Foreign Assets Control (“OFAC”) the discretionary authority, in consultation with the U.S. Secretary of State, to impose blocking sanctions on GoB agencies, GoB leaders and officials, and individuals and companies operating in the defense and related materiel, security, energy, potassium chloride (potash), tobacco products, construction or transportation sectors of the Belarusian economy. The EO also authorizes OFAC to sanction individuals and entities “responsible for or complicit in” activities such as “actions or policies that threaten the peace, security, stability, or territorial integrity of Belarus,” suppression of human rights and freedom of the press, electoral fraud, deceptive transactions, and public corruption.

OFAC immediately used its authority under the EO in order to add multiple persons and entities to its Specially Designated Nationals & Blocked Persons List (“SDN List”). Those added to the SDN List under the EO include:

-BelKazTrans and Closed Joint-Stock Company New Oil Company, who were sanctioned for operating in the energy sector of the Belarusian economy;

-Inter Tobacco, Energo-Oil and Grodno Tobacco Factory Neman, who were sanctioned for operating in the tobacco product sector of the Belarusian economy;

-Cyprus-based Dana Holdings Limited, who was sanctioned for operating in the construction sector of the Belarusian economy; and

-Belaruskali OAO, who was sanctioned for being owned by the GoB and for operating in the potassium chloride (potash) sector of the Belarusian economy.

The U.S. Treasury Department published a separate press release which identifies all of the SDNs designated by OFAC under the EO. As a result of these designations, all property and interests in property of these SDNs that are or come within the U.S. or the possession or control of U.S. persons are blocked, and U.S. persons are generally prohibited from engaging in transactions involving such SDNs unless authorized by OFAC. OFAC’s “50% Ownership Rule” will also extend these blocking sanctions to any entities owned 50 percent or more, individually or in the aggregate, directly or indirectly, by one or more of these newly designated SDNs. Additionally, the EO gives OFAC the authority to impose blocking sanctions on any non-U.S. persons who provide material assistance to any SDN designated pursuant to the EO.

For Belaruskali OAO, OFAC issued General License 4, which authorizes the wind down of transactions involving Belaruskali OAO, or any entity owned 50% or more by Belaruskali OAO, through 12:01 a.m. eastern standard time on December 8, 2021. OFAC issued FAQ 918 to provide additional information regarding General License 4.

OFAC also issued FAQ 917 which clarifies the scope of the EO’s sector-based sanctions as follows:

The identification of a sector pursuant to E.O. of August 9, 2021 provides notice that persons operating in the identified sector risk exposure to sanctions; however, the identification of a sector does not automatically block all persons operating in that sector of the Belarus economy. Only persons designated on OFAC’s Specially Designated Nationals and Blocked Persons List (SDN List), and entities owned 50 percent or more, individually or in the aggregate, directly or indirectly, by one or more such persons, are subject to blocking sanctions.

As a result, the EO does not automatically sanction persons operating in the identified sectors of the Belarusian economy, but it does provide OFAC with the authority to impose blocking sanctions on such persons at any time.


Cortney O’Toole Morgan is a Washington D.C.-based partner with the law firm Husch Blackwell. She leads the firm’s International Trade & Supply Chain group.

Grant Leach is an Omaha-based partner with the law firm Husch Blackwell focusing on international trade, export controls, trade sanctions and anti-corruption compliance.

Tony Busch is an attorney in Husch Blackwell’s Washington, D.C. office.