Wow. Trade issues had barely been addressed during the Obama Administration. Now in the last 6 months there has been a flurry of government activity. We have seen:
1. Continual increase in restricted parties added under the Iran, Russian, Sudanese and N. Korean sanctions programs
2. Released NAFTA negotiating objectives with negotiations begin this Fall
3. Tightening of enforcement of anti-dumping and countervailing duties (CVD)
4. Potential CFIUS legislative changes
5. Increased concern limiting Chinese investment and trade
6. Changes to Cuba regulations and new restricted parties coming this Fall
There is the potential that your business activities could be affected by any of the above. Some of the actions are more significant than others. We are seeing an increase in questions regarding enforcement and pre-payment of anti-dumping and CVD duties. The North Korea secondary sanctions could become a serious concern for companies doing business in China. The NAFTA objectives have been released by USTR and can be considered moderate and reasonable objectives. The details will be determined during the negotiations. So far, it is my opinion that the Administration could improve the almost 25 year old agreement by adding labor, environment, digital trade and intellectual property concerns while not altering the framework itself or the mechanism of the rules of origin for determining North American content. If you have a specific concern regarding a change affecting your company, you can communicate your concerns to your Congressional representatives and trade associations. Of course getting Congress on board could be another issue with the far left and ultra-right teaming up to object to the changes. Read the objectives here.
What can you do to determine your company’s risk?
1. Learn about your business partners and have diligence reviews as part of your risk procedures.
For example, are you Chinese suppliers and/or customers doing business in North Korea or Iran?
2. Check government websites for trade-related sanctions and see if they apply. Monitor the websites for changes.
3. Ensure your company is screening for restricted parties and end use as part of your internal process.
4. Determine if you have a system to keep records of these risk mitigation steps.
Your actions and your “intent” to comply may protect you from potential violations.
5. Do you have alternative sources, partners and/or supply chains in case you need them?
Consider having internal discussions on these issues and consider the possible NAFTA changes.
If you need more information on any of the above, check our related articles. One on North Korea is here.