Export

Secretary Ross Announces $1.4 Billion ZTE Settlement; ZTE Board, Management Changes and Strictest BIS Compliance Requirements Ever

AICC Business, Export, Home, Trade

Washington – Secretary of Commerce Wilbur Ross today announced that Zhongxing Telecommunications Equipment Corporation, of Shenzhen, China (“ZTE Corporation”) and ZTE Kangxun Telecommunications Ltd. of Hi-New Shenzhen, China (“ZTE Kangxun”) (collectively, “ZTE”) has agreed to severe additional penalties and compliance measures to replace the U.S. Commerce Department’s Bureau of Industry and Security (BIS) denial order imposed as a result of ZTE’s violations of its March 2017 settlement agreement.  Under the new agreement, ZTE must pay $1 billion and place an additional $400 million in suspended penalty money in escrow before BIS will remove ZTE from the Denied Persons List. These penalties are in addition to the $892 million in penalties ZTE has already paid to the U.S government under the March 2017 settlement agreement.

ZTE will also be required by the new agreement to retain a team of special compliance coordinators selected by and answerable to BIS for a period of 10 years. Their function will be to monitor on a real-time basis ZTE’s compliance with U.S. export control laws. This is the first time BIS has achieved such stringent compliance measures in any case.  ZTE is also required under the new agreement to replace the entire board of directors and senior leadership for both entities.  Finally, the new agreement once again imposes a denial order that is suspended, this time for 10 years, which BIS can activate in the event of additional violations during the ten-year probationary period. These collectively are the most severe penalty BIS has ever imposed on a company.

“Today, BIS is imposing the largest penalty it has ever levied and requiring that ZTE adopt unprecedented compliance measures,” said Secretary Ross. “We will closely monitor ZTE’s behavior. If they commit any further violations, we would again be able to deny them access to U.S. technology as well as collect the additional $400 million in escrow. The first settlement with ZTE set a record for civil and criminal penalties in an export control case.  This new settlement agreement sets another record, and brings the total penalties assessed on ZTE to $2.29 billion.”

The purpose of this settlement is to modify ZTE’s behavior while setting a new precedent for monitoring to assure compliance with U.S. law. Embedding compliance officers into the company vastly improves the speed with which the Department of Commerce can detect and deal with any violations.

BACKGROUND:

On April 15, 2018, BIS activated the suspended denial order against ZTE in response to ZTE falsely informing the U.S. Government that it would or had disciplined numerous employees responsible for the violations that led to the March 2017 settlement agreement.  ZTE instead rewarded that illegal activity with bonuses.  This action followed the March 2017 settlement agreement, in which ZTE agreed to a then record-high BIS civil penalty of $661 million, after engaging in a multi-year conspiracy to supply, build, and operate telecommunications networks in Iran using U.S.-origin equipment in violation of the U.S. trade embargo, and committing hundreds of U.S. sanctions violations involving the shipment of telecommunications equipment to North Korea.  They also made false statements and obstructed justice by creating an elaborate scheme to prevent disclosures to and affirmatively mislead the U.S. Government.  In addition to monetary penalties, ZTE had agreed to a seven-year suspended denial of export privileges, which could be activated if any aspect of the agreement was not met and/or if the company committed additional violations of the Export Administration Regulations.

The Commerce Department’s BIS is the principal agency involved in the implementation and enforcement of export controls for commercial technologies and many military items. The BIS Office of Export Enforcement detects, prevents, investigates and assists in the sanctioning of illegal exports of such items. For more information, please visit us at www.bis.doc.gov

Ross Announces Activation of ZTE Denial Order in Response to Repeated False Statements

AICC Business, Export, Home, Technology, Trade

April 16th, Secretary of Commerce Wilbur L. Ross, Jr. announced that the U.S. Department of Commerce’s Bureau of Industry and Security (BIS) has imposed a denial of export privileges against Zhongxing Telecommunications Equipment Corporation, of Shenzhen, China (“ZTE Corporation”) and ZTE Kangxun Telecommunications Ltd. of Hi-New Shenzhen, China (“ZTE Kangxun”) (collectively, “ZTE”).

In March 2017, ZTE agreed to a combined civil and criminal penalty and forfeiture of $1.19 billion after illegally shipping telecommunications equipment to Iran and North Korea, making false statements, and obstructing justice including through preventing disclosure to and affirmatively misleading the U.S. Government.  In addition to these monetary penalties, ZTE also agreed a seven-year suspended denial of export privileges, which could be activated if any aspect of the agreement was not met and/or if the company committed additional violations of the Export Administration Regulations (EAR).

The Department of Commerce has now determined ZTE made false statements to BIS in 2016, during settlement negotiations, and 2017, during the probationary period, related to senior employee disciplinary actions the company said it was taking or had already taken.  ZTE’s false statements only were reported to the U.S. Government after BIS requested information and documentation showing that employee discipline had occurred.

“ZTE made false statements to the U.S. Government when they were originally caught and put on the Entity List, made false statements during the reprieve it was given, and made false statements again during its probation.” said Secretary of Commerce Ross.

These false statements covered up the fact that ZTE paid full bonuses to employees that had engaged in illegal conduct, and failed to issue letters of reprimand.

“ZTE misled the Department of Commerce.  Instead of reprimanding ZTE staff and senior management, ZTE rewarded them.  This egregious behavior cannot be ignored,” Secretary Ross said.

BACKGROUND:

Denial Orders are issued by the Assistant Secretary for Export Enforcement of the Bureau of Industry and Security, denying the export privileges of a company or individual. A denial of export privileges prohibits a person from participating in any way in any transaction subject to the EAR. Furthermore, it is unlawful for other businesses and individuals to participate in any way in an export transaction subject to the EAR with a denied person.

This is a regulatory action and is unrelated to any ongoing trade-related actions.

BIS is the principal agency involved in the implementation and enforcement of export controls for commercial technologies and many military items. The BIS Office of Export Enforcement detects, prevents, investigates and assists in the sanctioning of illegal exports of such items.

For more information, please visit us at www.bis.doc.gov.

U.S. Department of Commerce Issues Affirmative Preliminary Determination on Forged Steel Fittings from China

AICC Export, Home, News and Press, Trade

March 8th, U.S. Secretary of Commerce Wilbur Ross announced the affirmative preliminary determination in the countervailing duty (CVD) investigation of imports of forged steel fittings from China, finding that exporters in China received countervailable subsidies equal to 13.79 percent.

The Commerce Department will instruct U.S. Customs and Border Protection to collect cash deposits from importers of forged steel fittings from China based on these preliminary rates.

“This announcement is separate from today’s the steel and aluminum tariff’s announced by President Trump as a result of the Department’s 232 investigations,” said Secretary Ross. “We will continue to review all information related to this preliminary determination while standing up for American workers and companies.”

In 2016, imports of forged steel fittings from China were valued at an estimated $78.4 million.

The petitioners are Bonney Forge Corporation (Mount Union, PA), and the United Steel, Paper and Forestry, Rubber, Manufacturing, Energy, Allied Industrial and Service Workers International Union (Pittsburgh, PA).

Enforcement of U.S. trade law is a prime focus of the Trump administration.  From January 20, 2017, through March 8, 2018, the Commerce Department has initiated 102 antidumping and countervailing duty investigations – a 96 percent increase from the same period in 2016- 2017.

CVD law provides U.S. businesses and workers with an internationally accepted mechanism to seek relief from the harmful effects of unfair subsidization of imports into the United States.  Commerce currently maintains 418 antidumping and countervailing duty orders which provide relief to American companies and industries impacted by unfair trade.

Commerce is currently scheduled to announce its final CVD determination on July 24, 2018.

If the Commerce Department makes an affirmative final determination in this investigation and the U.S. International Trade Commission (ITC) makes an affirmative final injury determination, Commerce will issue a CVD order.  If the Commerce Department makes a negative final determination or the ITC makes a negative final determination of injury, the investigation will be terminated and no order will be issued.

The U.S. Department of Commerce’s Enforcement and Compliance unit within the International Trade Administration is responsible for vigorously enforcing U.S. trade laws and does so through an impartial, transparent process that abides by international rules and is based solely on factual evidence.

Imports from companies that receive unfair subsidies from their governments in the form of grants, loans, equity infusions, tax breaks and production inputs are subject to “countervailing duties” aimed at directly countering those subsidies.

Section 232 investigations help to determine the effects of imports on America’s national security and give the President the ability to address any threats to national security by restricting imports through tariffs.

Section 232 of the Trade Expansion Act of 1962, as amended, gives the executive branch the ability to conduct investigations to “determine the effects on the national security of imports.” Within 270 days of initiating any investigation, the Commerce Department issues a report to the President with the investigation’s findings, including whether certain imports threaten to impair America’s national security. The President has 90 days to determine whether he concurs with the findings and, if so, to use his statutory authority under Section 232 “to adjust the imports” as necessary, including through tariffs or quotas.

President Donald J. Trump has accepted the Commerce Department’s recent conclusion that imported steel and aluminum “threaten to impair the national security,” and is taking action to protect America.

In January 2018, the Department of Commerce delivered the Section 232 reports on steel and aluminum to the President. In February 2018, the Commerce Department publicly released Section 232 reports on imported steel and aluminum. The reports concluded that the quantities and circumstances of steel and aluminum imports “threaten to impair the national security,” as defined by Section 232. The reports found that United States steel imports were nearly four times our exports, and that aluminum imports had risen to 90% of total demand for primary aluminum. The Commerce Department recommended that President Trump take action to protect the long-term viability of our nation’s steel and aluminum industries.

Following President Trump’s signing of a Presidential Proclamation imposing tariffs on steel and aluminum products from certain countries, U.S. Secretary of Commerce Wilbur Ross released the following statement:

“President Trump is taking action today to protect both our national security and industries critical to our economy. The President’s decision regarding the steel and aluminum Section 232 reports are the result of a long and well-thought-out process led by the Commerce Department. Once again, President Trump is keeping his promises and standing up for American families, American businesses, and American workers.”

Schedule B and Harmonized Tariff Schedule (HTS) Updated in the Automated Export System (AES)

AICC Business, Export, Home, Information

The Schedule B, Harmonized Tariff Schedule (HTS), and HTS Codes That Are Not Valid for AES tables have been updated to reflect the changes to the 2018 codes effective January 1st, 2018.

AES will accept shipments with outdated 2017 codes during a grace period for 30 days beyond the expiration date of December 31st, 2017. Reporting an outdated 2017 code after the 30-day grace period will result in a fatal error.

The ACE AESDirect program has been updated with the 2018 codes and will accept shipments with outdated 2017 codes during the grace period as well.

The 2018 Schedule B and HTS tables are available for downloading at:

http://www.census.gov/foreign-trade/aes/documentlibrary/#concordance

The current list of HTS codes that are not valid for AES are available at:

http://www.census.gov/foreign-trade/aes/documentlibrary/concordance/hts-not-for-aes.html

For further information or questions, contact the U.S. Census Bureau’s International Trade Indicator Micro Analysis Branch.

Telephone: (800) 549-0595, select option 2 for International Trade Indicator Micro Analysis Branch

Website: www.census.gov/trade

Upcoming Event: Discover Global Markets

AICC Event, Export, Home, Trade

Design + Construct
Kansas City, MO
April 30 – May 2, 2018

Discover Global Markets is the U.S. Department of Commerce’s flagship event series for U.S. exporters.

In just a few days, attendees will uncover new exporting opportunities, learn from seasoned exporters, and connect with hundreds of networking contacts.

At Each Discover Global Markets Conference, you will:

  • Meet one-on-one with U.S. Commercial Diplomats visiting from abroad
  • Participate in panel discussions on the latest industry trends
  • Identify new and emerging markets of opportunity ahead of your competition
  • Learn about U.S. export programs designed to cut your time to market
  • Network with U.S. trade officials, leading private sector experts and like-minded U.S. businesses active in overseas markets

You can see from the last Discover Global Markets event in Cleveland, Ohio, and visit Export’s testimonials page to see what previous Discover Global Markets attendees had to say about their experience.

Upcoming Trade Events

AICC Business, Event, Export, Home, Trade

Trade EventsExpo MRO
Ciudad Juárez, Mexico
October 11-13, 2017

This trade show is a popular option for companies who want to supply MRO materials to Mexican manufacturers. Several American companies exhibit at the event held in Ciudad Juarez, Mexico. MRO materials are quick sales and don’t need to comply with the lengthy, burdensome procurement process required for direct materials. Expo MRO is a great venue for companies to explore opportunities and to network with fellow manufacturers.

Trade Winds Business Forum
Southeast Europe
October 16-23, 2017

commercial specialists have identified the advanced manufacturing sector as one with top prospects for sales in Southeast Europe. With tens of billions of dollars in available EU funds for economic development, there are a number of opportunities for U.S. exporters in this dynamic and growing region.

Certified Trade Mission to Azerbaijan & Georgia
Oct 16-18, 2017

Azerbaijan, with a GDP of $37.5 billion, is a country on the move with countless opportunities for business. Georgia, with a GDP of 14.5 billion, has many trade agreements in place that provide opportunities for companies to access not only the country’s 4.4million residents, but the wider region without or with limited customs tariffs. U.S. companies may participate in one or both stops in order to: explore these markets for new business opportunities; meet with pre-screened distributors, customers and business partners; meet with government officials; and, network with key business people.

Webinar: International Additive Manufacturing Standardization
October 17, 10:00a.m. EDT, 2017

The global additive manufacturing market is booming. Due to recent statistics, Germany is at the forefront. The share of local firms already utilizing 3D-printing promises rapid growth in the future.
Topic 1 – Regulations relating to Additive Manufacturing in the US and EU: Get an insight into the appropriate regulations to export successfully.
Topic 2 – Snapshot of the Additive Manufacturing market in Germany/Europe Germany as the EU’s largest market offers U.S. additive manufacturers good potential.
Free webinar.

FABTECH 2017
McCormick Place, Chicago
November 6-9, 2017

FABTECH provides a convenient venue where you can meet with world-class suppliers, see the latest industry products and developments, and find the tools to improve productivity, increase profits and discover new solutions to all of your metal forming, fabricating, welding, and finishing needs. The annual event will see more than 1,700 exhibitors and 50,000 attendees. Join the U.S. Commercial Service at this event. Contact Allison Mello for details.

Plastimagen 2017
Centro Banamex, Mexico City
November 7-10, 2017

Plastimagen 2017 is the most complete and important U.S. Department of Commerce certified trade fair for the plastic industry in Latin America. With over 850 exhibiting companies from 20 different countries including Guatemala, Colombia, Brazil, Argentina and others. The show brings together more than 28,000 visitors with a large percentage of decision makers and industry leaders. The U. S. pavilion is booked up but spaces are still available in the machinery section.

Composites Meetings B to B event
Nantes, France
November 8-9, 2017

An international custom-tailored matchmaking program which in 2015 attracted 420 participants from 21 countries and generated 5200 b2b meetings. Unlike traditional exhibits, the event provides pre-arranged one-on-one meetings strictly reserved for professionals that pre-register. It is a great opportunity to be connected with decision-makers from major target industries, including aerospace, automotive, nautical construction, rail and energy.

Integr8 2017, Automation Alley’s Industry 4.0 Conference
Detroit, Michigan
November 9, 2017

Join Ian Steff, Deputy Assistant Secretary for Manufacturing, U.S. Department of Commerce at Integr8 2017! Get inspired by the world’s foremost Industry 4.0 thought leaders as they discuss the smart technologies shaping our future. Meet us at Integr8™, Automation Alley’s one-of-a-kind, global conference focused on the eight technologies currently disrupting the manufacturing industry. Integr8™ aims to educate attendees on the advantages and benefits of implementing advanced manufacturing technologies on our factory floors.

IMTEX Forming 2018
Bengaluru, India
January 25-30, 2018

Organized by the Indian Machine Tool Manufacturers’ Association (IMTMA), IMTEX and the concurrent Tooltech 2018 is one of the largest international machine tools expos in Asia. The show will feature all aspects of forming technologies, predominantly sheet metal forming. It attracts visitors from a wide spectrum of manufacturing and ancillary industries, including key decision and policy makers as well as industry captains who are keen to source latest technologies and manufacturing solutions for their product lines. The Commercial Service will be happy to provide counselling on market opportunities in India and matchmaking services for exhibiting/participating U.S. companies in and around the show dates.

ACMEE 2018
Chennai, India
June 21-25, 2018

This show is held once every two years and is one of the premier expos of machine tools. It is organized by the local manufacturing association of Ambattur Industrial Estate Manufacturers Association (AIEMA). The last show in 2016 had 465 exhibitors including 125 from overseas and 45,000 visitors.

Private Exporters Report Sales Activity for China

AICC Agriculture, Export, Home

USDA, Sept. 27, 2017—Private exporters reported to the U.S. Department of Agriculture export sales of 132,000 metric tons of soybeans for delivery to China during the 2017/2018 marketing year.

The marketing year for soybeans began Sept. 1.

USDA issues both daily and weekly export sales reports to the public. Exporters are required to report to USDA any export sales activity of 100,000 tons or more of one commodity, made in one day or quantities totaling 200,000 tons or more in any reporting period, except 20,000 tons for soybean oil, made in one day to one destination or quantities totaling 40,000 tons or more in any reporting period, by 3:00 p.m. Eastern time on the next business day following the sale. Export sales of less than these quantities must be reported to USDA on a weekly basis.

Automotive & Ground Transportation Upcoming Events

AICC Event, Export, Home, Transportation

APTA EXPO, Georgia World Congress Center Atlanta – October 9-11, 2017:
Held every three years in conjunction with the American Public Transportation Association’s (APTA) Annual Meeting, EXPO is public transit’s premier showcase of technology, products and services. Be at the center of the growing public transportation industry where innovation and technology converge to accelerate every mode of public transportation.
Event details here.

Automotive Warehouse Distributors Association (AWDA) Conference Las Vegas, Nevada – October 29 – 31, 2017:
The AWDA Conference brings the leading manufacturers and wholesalers of the industry together to engage in productive and profitable business and networking opportunities.
Details here.

ITS World Congress Montreal, Canada – October 29 – November 2, 2017:
Join the U.S. Commercial Service and the Intelligent Transportation Society of America for exhibits, demonstrations and industry-leading education on transformational transportation and integrated mobility. Last year’s Congress drew 11,000 participants from 70 countries. 
Event details here.

Automotive Aftermarket Products Expo (AAPEX) Las Vegas, Nevada – October 31 – November 2, 2017:
As the annual, trade-only showcase for the $356 billion automotive auto care market, the AAPEX engages more than 132,000 professionals from around the globe.
Event details here.

Specialty Equipment Market Association (SEMA) Show ,Las Vegas, Nevada – October 31 – November 3, 2017:
The annual, trade-only SEMA Show features 2,400 exhibiting companies that offer the latest automotive specialty products related to enhancing a vehicle’s performance, appearance, safety, or comfort. Approximately 25 percent of the buyers that attend SEMA are from outside of the United States. On October 30, U.S. companies can participate in three roundtable discussions regarding SEMA’s overseas trips to China, Australia, and the Middle East, and hear tips from buyers and experienced exporters about selling to these regions.
Event details here.

Automotive Meetings Bursa, Turkey – November 14 – 16, 2017:
Join the U.S. Commercial Service and Advanced Business Events for the only auto supply chain event in Turkey for the automotive and aftermarket industry. AM Bursa is a unique venue for suppliers and service providers interested or doing business in Turkey to secure direct meetings with large Tier I and Tier II automotive companies. Engineering, procurement, supply chain, fabrication, commodity teams, suppliers and service providers will meet through pre-arranged one-to-one business meetings, without the distractions found at traditional exhibitions. Don’t miss out on the opportunity to participate!
Event details here.

55th Annual National RV Show Louisville, Kentucky – November 28 – November 30, 2017:
As the sole “trade only” recreational vehicle (RV) industry show currently held, there is no public attendance. The show provides an important marketplace for recreational vehicle dealers, owners of accessory stores and campground operators to view the products of numerous RV manufacturers and suppliers of OEM parts, services and accessories in one location. The show provides exhibitors an excellent opportunity to expand product lines into new regions, domestically and internationally; see competing products; and strengthen distribution networks.
Event details here.

Automechanika Shanghai, China – November 29 – December 2, 2017:
Automechanika is one of the leading international meeting places for the automotive sector. It spotlights innovations and solutions in the fields of parts, systems, tuning, workshop equipment, bodywork & paintwork, car wash, IT & management and the latest automobile services. U.S. companies can exhibit anywhere on the show floor or in the U.S. Pavilion.
Event details here.

Secretary Ross’s Meetings with Chinese Officials During East Asia Travel

AICC Business, Export, Home, News and Press, Trade

On September 25, Secretary Wilbur Ross and Ambassador Terry Branstad met separately with Premier Li Keqiang, Vice Premier Wang Yang, NDRC Chairman He Lifeng, Director of the Party Central Economic and Financial Affairs Leading Small Group Liu He, and MIIT Minister Miao Wei. The Secretary also met with his counterpart, Minister of Commerce Zhong Shan, on the evening of September 24.

The meetings provided opportunities to prepare the ground for President Trump’s planned visit to Asia later this fall and to engage in a friendly and honest exchange of views on a range of issues including the need to rebalance bilateral trade and investment relations, protect intellectual property, lower tariffs and non-tariff barriers, and guarantee fair and reciprocal treatment for U.S. firms.

The Secretary highlighted his intention to lead a senior level trade mission to China in November and to reduce the trade deficit through increased exports of high-value U.S. goods and services to China and improved market access for U.S. firms.

Chinese officials committed to further market opening and welcomed participation by U.S. firms. Both sides expressed the view that bilateral trade frictions should be resolved through negotiation, commitment to high standards, and good economic governance. Secretary Ross reiterated the need for concrete deliverables and meaningful action on key issues.

Chinese officials also expressed concern about U.S. export controls and about the Section 301 investigation that is being conducted by the United States Trade Representative.

In response, the Secretary relayed the ongoing concerns of the U.S. business community at forced technology transfers, data localization, and other intellectual property rights issues. Chinese officials asked Secretary Ross to inform them of any such issues to them as they arise, saying they would seek to resolve these challenges on behalf of American companies.

Chinese officials continually stressed that dialogue is preferable to unilateral action, saying that they would have to respond in kind to any potential action by the United States. Secretary Ross once again continued to stress the need for concrete action to address the concerns of U.S. businesses, and that the U.S. would take action to defend American workers and businesses if cooperative efforts bear no fruit.

Secretary Ross now travels on to Hong Kong, Thailand, and Laos.

BIS Update 2017: Conference on Export Controls and Policy

AICC Business, Event, Export, Home, Security

October 3 – October 5, 2017
Washington, D.C.
BIS 2017 Update Conference on Export Controls and Policy

The Bureau of Industry and Security
Presents
BIS 2017 Export Control Policy Conference
Protecting American Technology, Growing American Industry

The Bureau of Industry and Security’s annual Update Export Control Policy Conference gives the exporting community the opportunity to learn first-hand from senior U.S. Government officials about current issues and trends in export control policies, regulations and practices. This major outreach activity draws business and government representatives from around the world to learn and exchange ideas about export control issues. It provides attendees with the opportunity to network with colleagues in the export control industry, interact with U.S. Government officials, and learn about programs and services offered by U.S. Government and industry exhibitors. It is one of the Department of Commerce’s most notable international trade events.

Exhibit opportunities are available. The exhibit hall will be open during the entire conference: on Tuesday, October 3 and Wednesday, October 4 from 7:30 a.m. – 5:00 p.m., and on Thursday, October 5 from 7:30 a.m. – 2:30 p.m.

Update will be held at the Washington Hilton Hotel in Washington, D.C. Confirmation receipts will be sent after the registration process has been completed.

For additional information on Update 2017, please contact BIS’s Outreach and Educational Services Division at updateconference@bis.doc.gov; or (202) 482-6031.