Trade News

January 5, 2021

USTR Imposing Tariffs on French Goods in Tax Dispute

Announced earlier this summer, new 25% U.S. tariffs on $1.3 billion worth of French handbags, cosmetics and soaps will take effect this Wednesday, which could prompt the EU to strike back on an equivalent amount of U.S. goods.

United States Trade Representative, Robert Lighthizer, announced the tariffs in July in retaliation for France’s digital services tax, which the Trump administration believes is unfairly aimed at U.S. internet giants like Google, Amazon, Facebook and Apple. But he suspended the tariffs for 180 days to allow time for a negotiated settlement in talks among 137 nations that are being facilitated by the Organization for Economic Cooperation and Development.

Since then, the OECD talks have failed to reach an agreement and France has begun collecting its digital services tax, which USTR estimates will cost U.S. internet companies at least $450 million for their 2020 activities and $500 million for 2021.

The United States believes France struck the first blow in the dispute by imposing the tax. Still, the EU has vowed to strike back if USTR imposes its retaliation this week.

That raises the possibility the U.S. could retaliate against any EU retaliation. It will be the job of President-elect Joe Biden’s administration to resolve the issue, whatever happens in the final 16 days of President Donald Trump’s administration.

(Source: Politico)

January 4, 2021

Tariff Exclusion Expiry: Which U.S. Duty Relief and Tariff Exclusion Programs Expired at the End of 2020

American companies will have to pay higher taxes on some of the products they import from China, as tariff exclusions expired at midnight on December 31, 2020.

The U.S. Governmet placed tariffs on more than $360 billion of Chinese goods beginning in 2018, prompting thousands of companies to ask the administration for temporary waivers excluding them from the levies. Companies that met certain requirements were given a pass on paying the taxes, which range from 7.5 to 25%.

The bulk of the exclusions, which could amount to billions in revenue for businesses based in the United States, were set to automatically expire at midnight December 31, 2020. After that, many companies will have to again pay a tax to the government to import a variety of goods from China, including textiles, industrial components, and other assorted products.

Some exclusions have been extend until March 31 for a small category of medical care products, including hand sanitizer, masks and medical devices, to help with the battle against the coronavirus pandemic.

Effective January 1, 2021, the following duty relief programs and temporary measures expired:

If you have any questions regarding the above duty relief programs and how their expiry impacts your business, please get in touch.

Get in Touch

(Source: The New York Times)

December 31, 2020

Trans-Pacific Shipping Rates Reach All-Time High

According to the Freightos Baltic Daily Index, Asia-West Coast rates rose to an all-time high of $4,189 per FEU this week, up 8% last week.

Rates are now triple what they were one year ago.

Rates also just jumped on the Asia-East Coast route. Spot rates were $5,397 per FEU this Monday, up 9% from last Friday. Rates in this trade lane are now double what they were one year ago.

According to Judah Levine, research lead at the Freightos Group, “Still-surging demand for ocean freight and the resulting global equipment shortage pushed rates up across most of the major ex-Asia lanes this week, after what seemed like a slowing in upward pressure last week.

“Most surprisingly, rates on both trans-Pacific lanes climbed significantly for the first time since mid-September, perhaps signaling that carriers’ tacit agreement with Chinese regulators not to increase prices on these lanes may be coming to an end,” Levine speculated.

It is anticipated that rates will continue to climb into January. After adding surcharges in mid-December, a number of carriers are scheduled to implement general rate increases starting Friday.

(Source: American Shipper)

December 30, 2020

U.K. Lawmakers Approve Post-Brexit Trade Deal With European Union

The U.K.’s House of Commons voted resoundingly today to approve a trade deal with the European Union, paving the way for an orderly break with the bloc that will finally complete the U.K.’s years-long Brexit journey.

With just a day to spare, lawmakers voted 521-73 in favour of the agreement sealed between the U.K. government and the EU last week.

It will become British law once it passes through the un-elected House of Lords later in the day and gets formal royal assent from Queen Elizabeth.

The U.K. left the EU almost a year ago, but remained within the bloc’s economic embrace during a transition period that ends at midnight Brussels time —- 11 p.m. in London — on Thursday.

The European Parliament also must sign off on the agreement, but is not expected to do so for several weeks.

Just after the EU’s top officials formally signed the hard-won agreement in Brussels, Johnson urged legislators in Britain’s House of Commons to back a deal that he said heralded “a new relationship between Britain and the EU as sovereign equals.”

The agreement, hammered out after more than nine months of tense negotiations and sealed on Christmas Eve, will ensure Britain and the 27-nation EU can continue to trade in goods without tariffs or quotas. That should help protect the 660 billion pounds ($1.15 trillion Cdn) in annual trade between the two sides, and the hundreds of thousands of jobs that rely on it.

(Source: CBC News)

December 29, 2020

Implementation of the United Kingdom Trade Continuity Remission Order, 2021

Effective January 1, 2021, importers of qualifying goods may cite the United Kingdom Trade Continuity Remission Order, 2021 #20-1135, in order to benefit from the remission of duties.

The Government of Canada has issued the Canada-United Kingdom Trade Continuity Remission Order, 2021, to minimize disruptions for Canadian importers. The order ensures that tariff benefits currently afforded to eligible imports from the United Kingdom under CETA, and replicated in the future Canada-UK TCA, are temporarily available to Canadian importers. In exchange, the United Kingdom has agreed to provide reciprocal tariff benefits for eligible Canadian exports to the United Kingdom. The remission order is intended to remain in effect until the Canada-UK TCA can enter into force through respective legislative procedures.

Importers are responsible for obtaining documentation in support of a claim for remission under the Order. The Canada Border Services Agency will accept documentation from exporters in the U.K. in support of an importer’s claim for remission.

Click here to read the full notice.

December 29, 2020

Britain and Turkey Reach Post-Brexit Free Trade Agreement

Turkey and Britain signed a free-trade agreement Tuesday as the U.K. prepares to leave the European Union’s economic orbit at the start of the new year.

The deal, which will come into effect on January 1st, aims to support trade between the two countries which was worth more than $25 billion in 2019. It is one of many post-Brexit trade deals the British government is pursuing with nations around the world and came days after it finalized a trade agreement with the EU.

The U.K. left the EU on January 31st of this year but remained subject to the bloc’s business regulations and within its customs union during a transition period that ends on December 31st.

Turkish Trade Minister Ruhsar Pekcan and Dominick Chilcott, the British ambassador to Turkey, signed the the British-Turkish agreement.

Pekcan hailed the deal as the most significant trade pact for Turkey since the signing of a customs union agreement with the EU in 1995.

“The free trade agreement is a new and special milestone in the relationship between Turkey and United Kingdom,” Pekcan said during the ceremony. Britain is Turkey’s second-largest export market.

A British government statement said the deal will secure existing preferential tariffs for some 7,600 British businesses that exported goods to Turkey in 2019, ensuring the continued tariff-free flow of goods.

Both countries have said the deal will lead to a more comprehensive agreement in the future.

(Source: The Associated Press)

December 29, 2020

“Slidings” Replacing Blank Voyages as Ocean Carriers Stretch Transit Times

Ocean carriers are looking to extend transit times in a bid to improve schedule reliability and cut costs.

They are starting to add more buffer time into schedules to mitigate the impact of chronic global port congestion, with some alliance carrier members calling for an urgent review of their networks in order to alleviate the costly last-minute disruptions from having to skip ports.

One Asia-North Europe carrier source told The Loadstar this week that its live schedules were, in some cases, “almost unrecognisable” from the official network.

“If you have to wait off a UK port for a week and then eventually decide to skip and dump the boxes in Zeebrugge, Rotterdam or Bremerhaven, then the schedule is totally shot to pieces,” he said.

“Some of us have been arguing that we have to build more buffer time into the schedules and, by doing so, we would actually save costs by not having to make last-minute port changes,” he said.

“Now that it looks like the demand spike will continue until at least the Chinese New Year – and our visibility suggests maybe as far out as Easter – I think we will have to look more closely at what we can do to improve reliability and add more certainty to the network,” he added.

Container schedule reliability slumped to a record low of 50.1% in November, according to a SeaIntelligence analysis. CEO Alan Murphy warned shippers that “with widespread port congestion, and with carriers not letting off capacity-wise until at least the CNY”, that schedule reliability was unlikely to improve until the second quarter of next year.

(Source: The Loadstar)

December 17, 2020

Ocean Carriers Quoting Upwards of $10,000

Record high spot rates from Asia to North Europe and predictions of huge hikes for annual contract rates could lead to a rush of cancelled orders for next year.

Retailers in Europe are feeling the impact — with partial lockdown measures and high ocean freight rates impacting bottom lines.

Carriers are now regularly quoting upwards of $10,000 per 40ft HC for January shipments from China to the UK, in addition to steep cancellation fees.

There are also concerns in the forwarding community that customers will either refuse, or be unable, to pay all the extra charges being racked up by the supply chain disruptions.

In one instance, some 6,000 teu carried to the Belgian port of Zeebrugge several weeks ago, due to Ocean Alliance carriers skipping the heavily congested port of Felixstowe, are finally arriving at the London Thamesport Isle of Grain general cargo and container facility this week on two feeder vessels.

Communication by the carrier on the relay operation was described by one UK forwarder dealing with customs clearances as “disgraceful”, and another told The Loadstar he feared his boxes could be stuck at Thamesport until after Christmas.

The European Shippers’ Council and forwarding association CLECAT have urged the European Commission to follow the lead of the US Federal Maritime Commission and step up its scrutiny of carrier practices.

(Source: The Loadstar)

December 16, 2020

USTR Announces First USMCA Enforcement Action to Address Canada’s Tariff-Rate Quotas for Dairy Products

The United States Trade Representative announced the very first enforcement action under the United States-Mexico-Canada Agreement o address Canada’s tariff-rate quotas on imported dairy products, which the USTR alleges are in violation of various USMCA Articles to the detriment of U.S. dairy producers.

USTR’s announcement follows complaints from U.S. dairy farmers and Members of Congress received earlier this year over Canada’s use of TRQs. USTR stated in its announcement that it was “disappointed that Canada’s policies have made this first ever enforcement action under the USMCA necessary to ensure compliance with the agreement.”

TRQs are defined in the USMCA as mechanisms that apply “a preferential rate of customs duty to imports of a particular originating good up to a specified quantity (in-quota quantity), and at a different rate to imports of that good that exceed that quantity.” According to the USTR, the U.S. is concerned with Canada’s use of dairy TRQs, particularly with how Canada has reserved a percentage of each dairy TRQ “exclusively for processors” (and in some instances for what Canada describes as “further processors”). For example, Canada’s “Cheeses of All Types” TRQ limits access to 15% for distributors and allocates 85% to processors. In doing so, U.S. dairy producers cannot fully utilize the TRQs and therefore are unable to sell as wide a variety of dairy products to Canada as they otherwise could.

At this time, the enforcement action consists of a request for consultations between the U.S. and Canada to resolve the United States’ concerns. Canada and the U.S. have 15 days to enter into consultations under the USMCA Dispute Settlement rules. If they are unable to resolve the United States’ concerns through consultations, the U.S. may request the establishment of a USMCA dispute settlement panel to further examine the matter.

Canada’s published notices to importers on the TRQs which the USTR has identified and taken issue with can be found here.

(Source: International Trade Insights)

December 15, 2020

Canada to Challenge U.S. Softwood Lumber Export Duties Through World Trade Organization

Canada said it will be considering “all of its legal options” to challenge Canadian softwood lumber export duties unveiled by the United States last month, the international minister of trade said Friday.

“These duties have caused unjustified harm for Canadian workers and businesses, and are hampering economic recovery on both sides of the border — especially when our people are being affected by the health and economic impacts of COVID-19,” Minister Mary Ng said in a statement.

Ng’s comments come in response to a new 7.42% countervailing duty rate for most Canadian producers of softwood lumber that was established by the U.S. Department of Commerce on November 24. This is in addition to an 1.57% anti-dumping rate, which combined 8.99%.

Previously, Canadians exporting certain softwood lumber products to the U.S. were subject to a combined rate of 20.23%. Last month, the federal government said it welcomed the reduction as a “step in the right direction,” but reaffirmed its position that “unfair” fees on Canada’s lumber industry must come to an end.

In August, the World Trade Organization ruled against the U.S. over duties imposed in 2017 on the grounds that the American government had failed to prove 16 claims related to Canada’s lumber industry, resulting in unfair subsidy for Canadian producers.

Ng said “any duties” imposed on Canadian exports of softwood lumber to the U.S. were “unwarranted and unfair.”

Canadian officials have argued that U.S. duties drove up construction costs in both countries, inflicting further damage on a lumber industry already ravaged by the effects of climate change and the COVID-19 pandemic.

The U.S. Lumber Coalition has countered that even reducing the duty rate “understates true levels of subsidies and dumping,” by the Canadian lumber industry.

(Source: Global News)