US China Trade War Update– 301 Case $50 Billion Tarifffs Imports from China — China Retaliates

TRADE IS A TWO WAY STREET

“PROTECTIONISM BECOMES DESTRUCTIONISM; IT COSTS JOBS”

PRESIDENT RONALD REAGAN, JUNE 28, 1986

US CHINA TRADE WAR UPDATE JUNE 16, 2018

PRESIDENT TRUMP ANNOUNCES $50 BILLION IN TARIFFS AGAINST CHINESE IMPORTS IN THE SECTION 301 CASE — CHINA RETALIATES

On June 15th, in the Section 301 case against China’s misappropriation to US intellectual property rights, through the United States Trade Representative (“USTR”), President Trump announced tariffs on $34 billion of Chinese imports.  The $34 billion will be followed with tariffs on another $16 billion in tariffs for a total of $50 billion.

As stated in the attached USTR announcement:

The Office of the United States Trade Representative (USTR) today released a list of products imported from China that will be subject to additional tariffs as part of the U.S. response to China’s unfair trade practices related to the forced transfer of American technology and intellectual property.

On May 29, 2018, President Trump stated . . .USTR shall announce by June 15 the imposition of an additional duty of 25 percent on approximately $50 billion worth of Chinese imports containing industrially significant technologies, including those related to China’s “Made in China 2025” industrial policy. Today’s action comes after an exhaustive Section 301 investigation . . . in which USTR found … that China’s acts, policies and practices related to technology transfer, intellectual property, and innovation are unreasonable and discriminatory, and burden U.S. commerce.

“We must take strong defensive actions to protect America’s leadership in technology and innovation against the unprecedented threat posed by China’s theft of our intellectual property, the forced transfer of American technology, and its cyber attacks on our computer networks,” said Ambassador Robert Lighthizer. “China’s government is aggressively working to undermine America’s high-tech industries and our economic leadership through unfair trade practices and industrial policies like ‘Made in China 2025.’ Technology and innovation are America’s greatest economic assets and President Trump rightfully recognizes that if we want our country to have a prosperous future, we must take a stand now to uphold fair trade and protect American competitiveness.”

USTR Issues Tariffs on Chinese Products in Response to Unfair Trade Practices _ United States Trade Representative

The target products on the first $34 billion list are set forth in set 1.  For those products in set 1, an additional duty of 25% will be levied on July 6, 2018.  The Set 1 target list is attached.FIRST SET OF $50 BILLION

A second set of products covering another $16 billion in imports is being examined.  The second set will go through a public hearing process to take products off the list.  The second set is attached.  SECOND SET OF $50 BILLION

There will then be an exclusion process to get products off the list, but it has not been published yet.

There is a lot of machinery and other products on the lists, “containing industrially significant technologies, including those related to China’s “Made in China 2025” industrial policy”.  Please look at the lists closely and see if you or your clients will be affected by these actions.

As expected, the Chinese government immediately announced its own retaliation against US exports into China.  See attached.  CHINA RETALIATION LIST

Section 301 cases are usually settled through a negotiated settlement between the two countries.  But it is difficult right now to predict the end game in this Section 301 case.  By announcing this $50 billion in tariffs is President Trump trying to increase the US leverage in any negotiations with China?  Or is President Trump simply trying to curtail imports from China?

To understand Trump’s trade policy, however, one has to start with a simple fact   The US Trade Deficit in goods with the World in 2017 was $810 billion, almost a trillion dollars.  The US trade deficit in goods with China in 2017 was $375 billion while the trade deficit in goods with the EC was $151 billion, with Mexico was $70 billion and with Canada was $17 billion.

Trump apparently believes that the US cannot follow the same trade path because the US simply cannot afford it.

One of his key promises in the election is that a President Trump would fix the trade problem. President Trump keeps his campaign promises.

President Trump may simply believe that tough trade politics will lead to better trade agreements.  We will just have to wait and see whether President Trump wants to negotiate or simply raise tariff walls against imports inviting retaliation and a trade war.

 

DEVELOPMENTS–TRADE, CUSTOMS/TARIFFS, 337/IP/PATENT, DRYWALL PRODUCT LIABILITY, ARBITRATION

Zhengyang Gate from Walking Street Tiananmen Square Beijing Chin There have been major developments in the Trade, Customs, 337/IP, Patent, Products Liability and Arbitration areas.

TRADE DEVELOPMENTS

SHRIMP FROM CHINA, VIETNAM, INDIA AND OTHER COUNTRIES

A new countervailing duty case has been filed against Shrimp from China and a number of other countries.  See the announcement below.  If anyone wants a copy of the complaint, please feel free to contact me.

Docket No: 2928 

Document Type: 701 Petition

Filed By: Elizabeth J. Drake

Firm/Org: Stewart and Stewart

Behalf Of: Coalition of Gulf Shrimp Industries (COGSI)

Date Received: December 28, 2012

Commodity: Frozen Warmwater Shrimp

Country: People’s Republic of China, Ecuador, India, Indonesia, Malaysia, Thailand, and the Socialist Republic of Vietnam

Description: Letter to Lisa R. Barton, Secretary, USITC; requesting the Commission to conduct an investigation under section 701 of the Tariff Act of 1930 regarding the imposition of countervailing duties on U.S. imports of Certain Warmwater Shrimp from the People’s Republic of China, Ecuador, India, Indonesia, Malaysia, Thailand, and the Socialist Republic of Vietnam.

Status: 701-TA-491-497

XANTHAN GUM FROM CHINA–COMMERCE DEPARTMENT PRELIMINARY ANTIDUMPING DETERMINATION

Today, the Commerce Department announced its preliminary antidumping duty determination in the Xanthan Gum from China.  Fufeng Biotechnologies Co., Co., Ltd.  received 21.69% and Deosen Biochemical Ltd. 127.65%.  The separate rate companies received 74.67%, and the rate for the rest of China is 154.07%.

Attached are the preliminary Federal Register notice and fact statement. Xanthan Gum Prelim FR (signed)  Xanthan Gum FS Prelim

CURTAIN WALL DECISION APPEALED TO THE COURT OF INTERNATIONAL TRADE

The Commerce Department’s decision to extend the Aluminum Extrusions antidumping and countervailing duty orders to cover imports of Chinese curtain wall/sides of buildings has been appealed to the Court of International Trade.  See the attached complaint.  Complaint and Aluminum Extrusion and Curtain Wall (2)

WOODFLOORING REVIEW INVESTIGATION STARTS UP

The US wood flooring industry has requested an antidumping and countervailing duty review investigation of numerous Chinese exporters.  If anyone wants a list of the Chinese companies named in the letter, please feel free to contact me.

CHINESE ANTIDUMPING AND COUNTERVAILING DUTY ON PULP FROM THE US, CANADA AND BRAZIL

Possibly in response to the numerous US cases against Chinese wood products, we have learned that the Chinese government is on the verge of initiating a major antidumping case against imports of wood pulp, cotton pulp, and bamboo pulp from the US, Canada and Brazil.  If anyone wants a copy of the target companies in the US, Canada or Brazil, please feel free to contact me.

CUSTOMS—NEW TARIFF BILL

On January 1, 2013, The House of Representatives introduced this week a major tariff reduction bill, The U.S. Job Creation and Manufacturing Competitiveness Act of 2013.  Attached is a copy of the bill, which must still go to the Senate.  TARIFF BILL  The bill represents a bipartisan effort to lower costs for US manufacturers by lowering tariff rates to zero on hundreds of products, including numerous chemical products.  Since both Republicans and Democrats sponsor the bill, it will pass the House.  According to the attached announcement by the House Ways and Means Committee, the Senate Finance Committee has reviewed the same proposals in the House Bill so this bill should eventually pass the Senate and go to the President for his signature.  HOUSE ANNOUNCEMENT

 NEW 337 PATENT CASE AGAINST HUAWEI AND ZTE

On January 2, 2013, a new 337 patent case was filed at the International Trade Commission against Huawei and ZTE.  See notice below.

Docket No: 2929 

Document Type: 337 Complaint

Filed By: Bert C. Reiser

Firm/Org: Latham and Watkins

Behalf Of: Inter Digital Communications, Inc., Inter Digital Technology Corporation, IPR
Licensing, Inc. and Inter Digital Holdings, Inc.

Date Received: January 2, 2013

Commodity: Wireless Devices with 3G and/or 4G Capabilities and Components

Description: Letter to Lisa R. Barton, Acting Secretary, USITC; requesting that the Commission conduct an investigation under section 337 of the Tariff Act of 1930, as amended regarding Certain Wireless Devices with 3G and/or 4G Capabilities and Components Thereof . The proposed respondents are Samsung Electronics Co., Ltd., Korea; Samsung Electronics America, Inc., Ridgefield Park, NJ; Samsung Telecommunications America, LLC, Richardson, TX; Nokia Corporation, Finland; Nokia Inc., White Plains, NY; ZTE Corporation, China; ZTE (USA) Inc., Richardson, TX; Huawei Technologies Co., Ltd., China; Huawei Device USA, Inc., Plano, TX; and Future Wei Technologies, Inc., d/b/a Huawei Technologies (USA), Plano, TX.

Status: Pending Institution

If anyone wants a copy of the complaint, please feel free to contact me.

MORE PATENT CASES AGAINST HUAWEI AND ZTE

Attached are the companion complaints filed in Federal District Court by Interdigital against Huawei and ZTE.  INTERDIGITAL HUAWEI INTERDIGITAL ZTE

In addition, Steelhead Licensing has filed a new patent case against ZTE.  See attached complaint.  STEELHEAD ZTE 

 DRYWALL PRODUCTS LIABILITY LEGISLATION

On Tuesday, January 1, 2013, the House of Representatives passed legislation banning the sale of contaminated drywall imported from China.  In the bill, Congress insisted that the Chinese government force Chinese manufacturers to compensate American homeowners who have faced property damage and health problems caused by the tainted product.

The U.S. House of Representatives voted 378-37 in favor of the Drywall Safety Act.  On December 21, 2012, the same bill went through the US Senate on a unanimous, 100 to 0, vote so the bill is on President Obama’s desk for signature.

The bill stipulates that contaminated drywall be treated as a banned hazardous substance under the Federal Hazardous Substances Act and as an imminent hazard under the Consumer Product Safety Act. 

Attached is a copy of the bill going to the President for signature.  US LEGISLATION

Section 2 of the Bill reads as follows:

SEC. 2. SENSE OF CONGRESS.

“It is the sense of Congress that—

(1)  the Secretary of Commerce should insist that the Government of the People’s Republic of China, which has ownership interests in the companies that manufactured and exported problematic drywall to the United States, facilitate a meeting between the companies and representatives of the United States Government on remedying home owners that have problematic drywall in their homes;

and

(2)  the Secretary of Commerce should insist that the Government of the People’s Republic of China direct the companies that manufactured and exported problematic drywall to submit to jurisdiction in United States Federal Courts and comply with any decisions issued by the Courts for home owners with problematic drywall.”

As mentioned in a previous post on this blog, there is a major multidistrict litigation, which includes 10,000 or more cases ongoing in the Eastern District of Louisiana.  Recently, in September, the Court rejected an effort by a Chinese company to lift a default judgment in the case and the Court found jurisdiction over the Chinese company.

One Chinese drywall manufacturer Knauf Plasterboard Tianjin Co., a subsidiary of a German company, in December 2011 settled the personal injury and other claims in a settlement worth between $800 million and $1 billion. This settlement covers about 4,500 homes.

ENFORCEMENT OF ARBITRATION AWARD BY CHINESE COMPANY AGAINST US COMPANY

Attached is a complaint filed January 2, 2013 by Chongqing Hengsheng Xintai Trade Co., Ltd. against Baja, Inc. a/k/a Baja Motorsports, LLC, a Delaware Corp., in the US District Court of South Carolina seeking to enforce an arbitration award from the China International Economic and Trade Arbitration Commission (“CIETAC”) against a US company.  CHONGQING CIETAC AWARD COMPLAINT

If anyone wants any information about these complaints, developments or general information on US Trade, Customs, antitrust, securities, products liability or arbitration law, please feel free to contact me. 

Best regards,

Bill Perry

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