Recent Trade & Tariff Perspectives

December 1, 2021 | Anahi Czeszewski Product Development Manager

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Newest Developments in Customs and Trade

We have seen numerous customs and trade developments emerge in the past few weeks. From the agreements made to go to conference on the U.S. Innovation and Competition Act to the takeaways following United States Trade Representative (USTR) Katherine Tai’s travels to Asia to meet with key allies—read on as we examine the effects these changes could have on your supply chain and the steps you should take to maximize potential cost-savings opportunities.

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Considerable strides for the U.S. Innovation and Competition Act (USICA)

The U.S. Innovation and Competition Act was passed through the Senate on June 8, 2021, and currently resides with the House of Representatives. The USICA addresses Section 301 China duty exclusions and includes the Trade Act of 2021, which would renew the previously expired Generalized System of Preferences (GSP) and allow for a new Miscellaneous Tariff Bill (MTB). (Explore a more in-depth look into the current legislation on GSP and MTB.)

Following Senate Majority Leader Chuck Schumer’s motion to invoke cloture and attach the USICA to the National Defense Authorization Act (NDAA), it was later announced in a joint statement that Schumer and House Speaker Nancy Pelosi have agreed for the House and Senate to go to conference on the USICA.

As stated in the joint statement, "The House and Senate will immediately begin a bipartisan process of reconciling the two chambers’ legislative proposals so that we can deliver a final piece of legislation to the President’s desk as soon as possible."

If the USICA is passed by the House, and subsequently signed by the President, it could largely impact the import trade community. In relevant part, all previous duty exclusions would be reinstated from the date of passage of the legislation through December 2022. According to the bill, the specific duty exclusions that expired on December 31, 2020, would be retroactively reinstated between January 1, 2021, and the date of passage.

Takeaways following Katherine Tai’s travels to Asia

In an endeavor to meet with government officials and key stakeholders to discuss the U.S. commitment to the Indo-Pacific region and further cultivate strong trade relationships with key allies, Katherine Tai recently traveled to Japan, South Korea, and India. Highlights from the meetings with leaders from each country are outlined below.

Announcement launches the U.S.-Japan partnership on trade

To facilitate the trade-related commitment both countries share, the United States announced the formation of the U.S.-Japan Partnership on Trade, according to the USTR. This announcement was made following USTR Tai and Commerce Secretary Gina Raimondo’s Tokyo meeting with country leaders.

The immediate areas of focus include the following issues:

  • Third country concerns
  • Cooperation in regional and multilateral trade-related forums
  • Addressing labor and environment-related priorities
  • A supportive digital ecosystem for all
  • Trade facilitation

The regularly cadenced meetings are set to begin in early 2022, and will be chaired by USTR Tai.

Future of trade relations, digital services taxes, and GSP for India

Following USTR Tai’s meeting with Indian Minister of Commerce and Industry, Shri Piyush Goyal, the United States and India agreed to continue working through several trade issues.

In relevant part, a USTR announcement states the United States is open to considering restoring India’s beneficiary status under the GSP, which has been terminated since June 2019. Both countries also demonstrated a commitment to develop plans for future trade-related priorities, including the relaunch of workshops focused on accelerating the implementation of the World Trade Organization’s Trade Facilitation Agreement.

Most importantly, the USTR recently stated an agreement was reached between the United States and India on the treatment of Digital Services Taxes (DST), allowing India to continue to collect digital services taxes without the threat of retaliatory tariffs. This agreement is consistent with the same terms of earlier agreements with Austria, France, Italy, Spain, the United Kingdom, and Turkey.

U.S.-Korea Free Trade Agreement: A "longstanding and solid economic trade partnership"

The United States and South Korea stated both countries will continue to reaffirm the importance and commitment to the almost 10-year Korea-U.S. Free Trade Agreement (KORUS). They also look forward to developing this relationship and working together to address many emerging trade-related issues. Some of these issues include supply chain challenges, the digital ecosystem, and trade facilitation "with the intention of deepening cooperation to enable common approaches and responses to challenges facing global trade."

It was further communicated that both countries regard labor and environmental issues in relation to people’s welfare with the utmost importance. Because of this, both countries will hold meetings of the KORUS Labor Affairs Council and KORUS Environmental Affairs Council "in the near future to advance cooperation in these areas."

Specific to the United States and Korea trade relations, as reported by the Korea Herald in mid-November, South Korea’s Ministry of Trade, Industry, and Energy communicated his concerns regarding the Section 232 steel and aluminum tariff quotas. However, nothing concrete has been communicated regarding any negotiations currently being held.

Next steps

Remaining proactively informed in a rapidly-changing customs and trade environment can be overwhelming. Fortunately, your supply chain does not need to navigate these changes alone. Connect with one of our trade policy experts to learn more.


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