The Harmonized System is an international nomenclature that classifies products using six-digit codes. Signatories to the Harmonized System Convention, including the United States, agree to classify imported goods using the same six-digit codes in an effort to facilitate trade between countries. Signatories are permitted to further define products beyond six-digits, as the United States does using eight- and ten-digit codes. However, all signatory countries classify merchandise using the same six-digit codes. As a result, while the USITC employs a separate process that allows interested parties to advocate for more specific 10-digit statistical breakouts for classification of merchandise entering the United States, any changes above the 10-digit level, which would impact all signatory countries, must begin with advocacy through the WCO.

There are several potential benefits for having more specific classifications of products. Specific tariff classifications can allow companies and industries to better track trade flows helping to combat trade fraud and facilitate trade enforcement. For companies and industries that sell products globally, a single clear tariff classification can also have substantial trade facilitation benefits.

The WCO’s modifications to the Harmonized System are the culmination of a multi-year process (that repeats every five years) and accommodates products of new or emerging commercial significance. In particular, the changes that will take effect in January 2022, include new codes for flat panel display modules, smart phones, 3D printers, and unmanned aircraft. Overall, the USITC implementation of the WCO’s modifications will impact the classifications of more than 350 products relevant to a wide-range of industries.

The modifications will not have a tariff impact per se, but importers and customs brokers should nevertheless be aware of the changes to ensure they continue to identify the appropriate classification for all imports.

If you have any questions regarding the appropriate classification for a particular article of commerce, or require assistance in achieving more specific or harmonized classifications for your products, don’t hesitate to contact Kelley Drye’s international trade team for assistance.

The Department’s use of self-initiation authority has been judicious and rare. In an agency-issued press release Secretary Wilbur Ross stated, “{w}e are self-initiating the first trade case in over a quarter century, showing once again that we stand in constant vigilance in support of free, fair, and reciprocal trade.” The Department further noted that it last self-initiated a countervailing duty investigation in 1991 on softwood lumber from Canada, and last self-initiated an antidumping duty investigation in 1985 on semiconductors from Japan.

Use of U.S. AD/CVD laws have increased by 65 percent under the Trump Administration, according to the press release, and appear to be a key instrument of choice to combat unfairly traded exports and protect injured and vulnerable domestic industries. The agency notes, apart from the self-initiated cases, that it has initiated 77 combined AD and CVD cases in response to domestic industry petitions in 2017 – in contrast to 48 combined AD/CVD cases initiated in 2016. In addition to these self-initiated dumping and subsidy cases focusing on aluminum from China, the Commerce Department has also initiated a broader Section 232 investigation to determine whether aluminum imports overall threaten to impair the national security. If the Commerce Department issues an affirmative finding, the President has broad power to impose trade remedies – including tariffs and quotas – to “adjust” the imports so that they will not threaten to impair the national security. The Commerce Department’s Section 232 aluminum determination is due in January 2018.

In terms of next steps for the aluminum sheet AD and CVD cases, International Trade Commission preliminary determinations are due on or before January 16, 2018. If the ITC issues an affirmative preliminarily determination that there is injury or threat of injury, then the Commerce Department investigations will continue with deadlines of February 2018 to issue a preliminary CVD determination, and April 2018 to issues a preliminary AD determination. Affirmative preliminary Commerce determinations would allow Customs and Border Protection to begin collecting cash deposits from all U.S. companies importing the subject aluminum sheet from China. If the investigations proceed without any extensions in the preliminary phase, the Commerce Department’s final determinations would be due in April 2018 and July 2018 for the CVD and AD investigations, respectively.

The public is encouraged to participate in the investigation by submitting comments and appearing at a public hearing in Washington, DC. Comments and requests to appear at the hearing must be submitted by Thursday, September 28, 2017. The public hearing will be held in the main hearing room of the U.S. International Trade Commission (“USITC”) on Tuesday, October 10, 2017.

A notice, which was published in the Federal Register on August 24, 2017, identifies the specific types of conduct that will be investigated. These include:

1. The Government of China’s (“GOC”) reported use of vague administrative procedures, requirements, and unwritten rules which pressure U.S. companies to transfer technologies to Chinese companies.
2. The GOC’s acts, policies, practices reported to limit U.S. companies’ ability to set market-based terms in licensing and other technology-related negotiations with Chinese companies.
3. The GOC’s direction and/or facilitation of Chinese companies’ investment in and acquisition of U.S. companies and their assets to obtain “cutting-edge” technologies and intellectual property.
4. Any unauthorized intrusions into U.S. commercial computer networks or cyber-enabled theft of U.S. companies’ property by the GOC or the GOC’s support for such conduct.

Kelley Drye represents petitioner Nan Ya Plastics Corporation, America in this case.

The petition prepared by Kelley Drye, filed on June 27^th, alleged that subject imports – at estimated dumping margins of 39.24 to 52.3 percent (Korea) and 28.47 to 73.21 percent (Taiwan) – were able to penetrate the U.S. market and capture an increasing share of the U.S. market by significantly undercutting U.S. prices. The petition also alleged that as a result of increasing and low-priced imports, the domestic industry has suffered significant declines in production, shipments, prices, and profits. The ITC held a public preliminary conference on July 18^th to hear testimony from domestic industry, foreign producer, and U.S. importer parties in the investigation. Based on witness testimony, post-conference briefs, and the data obtained in the case, the Commissioners reached a unanimous affirmative preliminary injury determination. The report will be available on the ITC’s website after September 8, 2017.

As a result of the ITC’s affirmative determination, the U.S. Department of Commerce’s (“Commerce”) antidumping investigations, initiated on July 17^th, will proceed. Commerce’s preliminary antidumping determinations are due on or about December 4, 2017, unless fully extended to January 23, 2018. The entire investigation will take approximately one year, and will culminate with final dumping margin determinations at Commerce and with a final injury investigation and hearing at the ITC. If the domestic industry prevails, Commerce will issue orders imposing antidumping duties at the determined rates on imports of low melt PSF from Korea and Taiwan.

• Peter B. Davidson, Senior Vice President for Congressional Relations at Verizon Communications, was selected by President Trump to be general counsel of Commerce. Prior to Verizon, Mr. Davidson served as General Counsel to the United States Trade Representative (“USTR”). He has also served as Vice President for Congressional Relations at USWEST and Qwest, and General Counsel and Policy Director to the Majority Leader of the House of Representatives. Mr. Davidson earned his bachelor’s degree at Carleton College, and his law degree from the University of Virginia School of Law.

• Jason Kearns was selected to be a Commissioner of the USITC for the remainder of a 9 year term expiring December 16, 2024. Mr. Kearns currently serves as Chief International Trade Counsel (Democratic Staff) to the Committee on Ways and Means in the House of Representatives. In this position, Mr. Kearns advises Members of Congress on legislation concerning trade and oversight issues involving the USTR and other agencies involved in international trade policy and regulation. Before that, he served for three years in the Office of the General Counsel to the USTR. From 2000 through 2003, Mr. Kearns worked in the international trade group of the law firm, WilmerHale. Kearns has a master’s in public policy from Harvard University’s Kennedy School of Government, a law degree from the University of Pennsylvania and a bachelor’s degree from the University of Denver.

In addition, the Director-General of the World Trade Organization (“WTO”) announced a recent appointment of a senior Dentons senior counsel. More specifically, WTO Director-General Robert Azevedo announced on June 27^th that Alan Wolff had been named as deputy director-general at the WTO. Mr. Wolff will serve a four year term, replacing fellow American David Shark, a former U.S. trade official who has served in the secretariat since 2013. Director-General Roberto Azevedo lauded Wolff's qualifications, calling him "a strong supporter of trade as a key driver of growth and development and a strong supporter of the multilateral trading system." Mr. Wolff served in senior trade positions as deputy USTR and as USTR general counsel during the Carter and Ford administrations. He currently works as senior counsel at the law firm Dentons. Wolff earned his law degree from Colombia Law School and his bachelor’s degree at Harvard University.

Prior to assuming his role as an ITC Commissioner, Kieff held positions as a professor at the George Washington University School of Law and the Ray & Louise Knowles Senior Fellow at the Stanford University Hoover Institution. According to his bio, Commissioner Kieff’s research, teaching, practice, and consulting work focused on the law, economics, and politics of innovation, including entrepreneurship, corporate governance, finance, economic development, trade, intellectual property, antitrust, bankruptcy, medical ethics, technology policy, and health policy.

Cold-drawn mechanical tubing is a tubular product that is used by a number of industries, including for automotive, agricultural, industrial, and oil and gas applications. Kelley Drye & Warren LLP represents the domestic petitioning industry in this case, which includes ArcelorMittal Tubular Products, Michigan Seamless Tube, LLC, Plymouth Tube Co. USA, PTC Alliance Corp., Webco Industries, Inc., and Zekelman Industries.

In the first series, over 3,100 petitions were submitted to the ITC through its online Miscellaneous Tariff Bill Petition System (“MTBPS”). Due to petition withdrawals, 2,500 petitions still are under consideration. On June 6, 2017, the Commission issued its preliminary report to the Committees, entitled: American Manufacturing Competitiveness Act of 2016: Preliminary Report, USITC Pub. 4699 (USITC June 2017). In preparing the Preliminary Report, the Commission took into account comments from the public, as well as the information contained in a report submitted by the U.S. Department of Commerce, with input from U.S. Customs and Border Protection (“CBP”). In the Preliminary Report, the Commission broke the petitions down in the following categories: “Category I-IV” (petitions that meet the requirements of the Act with or without modification); Category V (petitions that do not contain the information required by the Act or that were not filed by a likely beneficiary); and “Category VI” (petitions that the Commission does not recommend for inclusion in a MTB). The public may submit additional comments on the “Category VI” petitions cited in its Preliminary Report; see 82 Fed. Reg. 24,142 (USITC May 25, 2017). The closing date for comments is June 21, 2017.

The Commission’s final report is due by mid-August 2017.