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US Trade Policy Taking Slow Road With Clear China Focus

In the first six months of the Biden administration, trade has generally taken a back seat to other domestic and foreign policies and issues, with the forced labor issues in cotton cultivation surrounding China’s Xingjiang Autonomous Region (XUAR) getting the most attention.

That was the summation of United States Fashion Industry Association’s (USFIA) Symposium session on “Key Issues in Trade Policy, Politics & Customs,” where David Spooner, USFIA Washington counsel and partner at Barnes & Thornburg LLP, and John Pellegrini, USFIA Customs Counsel, laid out the status of President Biden’s action so far.

Spooner, discussing the Uyghur Forced Labor Prevention Act first introduced in January, noted that it cleared the Senate Committee on Foreign Affairs on June 24. On Thursday, the full Senate passed the measure. A companion bill in the House is pending.

The legislation goes beyond the existing power of Customs & Border Protection’s Withhold Release Orders and creates a “rebuttable presumption that goods from Xingjiang are made with forced labor.”

Companies can overcome the presumption only by “fully and completely complying” with government regulations and guidance by fully responding to Customs requests for information and if Customs agrees that the items were not made with forced labor.

“Both the Senate and House bills have very strong support from both sides of the aisle, so I think we’re looking at timing where it happens at any time, although some folks are thinking just because of the big issues and the disfunction in Congress that if it doesn’t happen in the next few weeks…that it may be this fall when the legislation finally passes,” USFIA president Julia Hughes said. “But everyone you talk to believes the legislation will be approved.”

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Spooner also noted Tuesday’s multiagency Xinjiang advisory that called for urgent attention to U.S. businesses’ supply chain risks and identifies serious investing and sourcing considerations for businesses and individuals with exposure to entities engaged in forced labor and other human rights abuses linked to Xinjiang. The advisory also described U.S. government actions taken to date to counter the use of forced labor in Xinjiang and to prohibit the importation of goods produced in whole or in part with forced labor or convict labor.

“In the short, the situation is that companies can’t import from this region,” Pellegrini said. ‘I think many companies have already made that decision.”

Spooner noted that the Senate passed legislation in June that would require U.S. Trade Representative (USTR) Katherine Tai, who has been actively engaged in her short time on office, he said, to consider China Section 301 exclusion requests. The bill stipulates exclusions would be valid for 18 months and would require USTR to dispose of exclusion requests “not later than 90 days before the duty is due to be paid.”

“The amendment is not perfect,” Spooner said. “It would permit USTR to refrain from product exclusions if it declares that they would undermine U.S. leverage in trade negotiations and establish vague criteria for evaluation.”

However, USFIA, as part of the Americans for Free Trade Coalition, wrote House Speaker Nancy Pelosi and Minority Leader Kevin McCarthy on June 30 stating its support for House passage of elements of the Trade Act of 2021 that were included in the U.S. Innovation and Competition Act related to products subject to additional tariffs under Section 301 of the Trade Act of 1974.

With that said, Spooner felt that at least in the short term, the China 301 tariffs will remain in place, as President Biden and USTR Tai have both said they give the U.S. “leverage” in negotiations with Beijing.

Spooner also touched on the Digital Services Taxes issue, noting that on June 7, USTR announced it would retaliate against a range of countries, notably France and the U.K., for imposing tariffs on goods such as bras from India. The tariffs would not go into effect until Nov. 29 this year in the hope that a resolution would be negotiated.

As for whether the U.S. will enter any free trade agreements, Spooner noted that Trade Promotion Authority, seen as vital for negotiating such pacts, expired at the beginning of July.