Ian Cohen

The Commerce Department withdrew a proposed rule that would have further restricted foreign sales to Huawei that contain U.S.-origin goods, according to a Jan. 24 report in The Wall Street Journal. Commerce officials withdrew the rule from the Office of Management and Budget after objections from both the Defense and Treasury departments over concerns that the rule could hurt U.S. companies and U.S. national security interests, the report said. The Pentagon specifically voiced concerns that the rule could deprive U.S. companies of an important source of revenue they need for research and development to maintain a technological edge over China, the report said. The rule would have lowered the U.S.-origin threshold on exports to Huawei to 10 percent, but required the State, Commerce, Defense and Energy departments to approve with input from the Treasury, the report said.

There will be more trade uncertainty in 2020 than in 2019 despite a phase one deal with China, trade experts said during a Jan. 22 panel hosted by the Center for Strategic and International Studies. As trade tensions with Europe come to the foreground and as the U.S. potentially negotiates a more comprehensive deal with Japan, one expert said, the administration will not have enough time and resources to start on phase two of the deal with China as it tries to implement the first phase. Another panelist said the U.S. and China will likely come to a “narrow” phase two deal as the election approaches, but that deal will not provide relief for the international trade environment.

A group of 17 World Trade Organization members announced plans for an interim appeals process to settle disputes between members, according to a Jan. 24 joint statement. The members, including the European Union and China but not the U.S., said they will put in place “contingency measures” to allow for appeals of WTO panel reports “in disputes among ourselves.” The system would only be in place until a reformed WTO appellate body “becomes fully operational,” the statement said.

Twenty states and Washington, D.C., sued the State and Commerce departments and asked a court to vacate the Trump administration's recently released final rules to transfer gun export controls to Commerce. The rules, scheduled to take effect March 9 (see 2001170030), will transfer export control authority from the State Department to Commerce for a range of firearms, ammunition and other defense items. The lawsuit said the rules will create a dangerous lack of oversight over technology and software used for the 3D printing of guns, and violates federal “notice-and-comment procedures” and the Arms Export Control Act.

The Directorate of Defense Trade Controls issued a Jan. 23 guidance on the final rules for the transfer of gun export controls from the State Department to the Commerce Department, including a clarification on license submissions during the transition period. The guidance also clarifies how the rules and transition period affect technical assistance agreements, manufacturing license agreements, reporting requirements, commodity jurisdiction determinations and regulatory oversight responsibilities. The rules -- which were published Jan. 23 and transfer export control authority from the State Department to Commerce for a range of firearms, ammunition and other defense items -- will take effect March 9 (see 2001170030).

Most aspects of the United Kingdom’s trading environment will remain the same for U.K. companies during the Brexit transition period, according to Kevin Shakespeare, director of stakeholder engagement at the Institute of Export and International Trade. But there are some important developments companies should monitor, including a changing trade relationship with Ireland, preparing for new customs procedures and an unclear environment surrounding origin of goods. Perhaps most importantly, Shakespeare said, U.K. traders need to maintain communication with customers, suppliers and stakeholders to retain their confidence during the transition period.

The upcoming year will produce “record” results for U.S. agricultural exports as agreements with Japan and China take effect and as the U.S. Department of Agriculture aims to increase U.S. exports to countries “around the world,” Secretary Sonny Perdue said. Speaking during a Jan. 20 event hosted by the American Farm Bureau, Perdue said agriculture exports will significantly increase in 2020, particularly due to the phase one agreement with China (see 2001150073). “If you made 200 bushels this year, think about making 400 next year,” Perdue said. “We’re talking about doubling the number of [agricultural imports] that China has ever done throughout the whole agricultural sector.”

The Treasury's Office of Foreign Assets Control does not adequately report on the money it and partner agencies spend related to sanctions against drug traffickers, leading to potentially inaccurate estimates and a lack of transparency when reporting expenditures, the Government Accountability Office said. Although OFAC reports to Congress on the resources and personnel it uses when imposing Foreign Narcotics Kingpin Designation Act sanctions, it provides “limited guidance” to partner agencies on how to fulfill those same reporting requirements, the GAO said. Administration officials also said it is sometimes “impossible” to determine whether the sanctions are working.

The Treasury’s Office of Foreign Assets Control has done little to define the broad scope of the Iranian executive order issued earlier this month that expanded sanctions authority for the Treasury and State departments, according to trade lawyers. The order (see 2001100050) -- which authorized both primary and secondary sanctions against Iran’s construction, mining, manufacturing and textiles sectors -- did not define the scope of the Iranian sectors that may be subject to sanctions, and OFAC has yet to release guidance. OFAC did, however, issue a frequently asked question that provided a 90-day wind-down period (see 2001160011).

The Commerce Department released its final rule for transferring export controls of firearms, ammunition and other defense items from the State Department to Commerce. The rule revises the Export Administration Regulations to transfer items that no longer “warrant control” on the U.S. Munitions List to the Commerce Control List. The rule will be published alongside a final rule from the State Department, which details the changes made to Categories I, II and II of the USML and describes “more precisely” the items that warrant “export or temporary import control” on the USML. The rules, which have been highly anticipated by the firearms industry (see 1908130066), will be published Jan. 23 and take effect March 9.