Regulatory Compliance updates August 2024

September 10, 2024

Canada impose 100% tariffs on Chinese electric vehicles

Canadian Prime Minister announced 100 percent tariffs on Chinese electric vehicle imports, matching US measures seeking to fend off a flood of Chinese state-subsidized cars into North America. Accusing China -- one of the world's largest exporters of electric vehicles (EVs) -- of "not playing by the same rules as other countries" in areas such as environmental and labor standards.

Canada implementing measures to protect Canadian workers and key economic sectors from unfair Chinese trade practices

Canadian auto workers and the auto sector currently face unfair competition from Chinese producers, who benefit from unfair, non-market policies and practices. China’s intentional, state-directed policy of overcapacity and lack of rigorous labour and environmental standards threaten workers and businesses in the EV industry around the world and undermine Canada’s long term economic prosperity. Recent consultations with stakeholders have confirmed that exceptional measures are required to address this extraordinary threat.
Today in Halifax, the Honourable Chrystia Freeland, Deputy Prime Minister and Minister of Finance, announced a series of measures to level the playing field for Canadian workers and allow Canada’s EV industry and steel and aluminum producers to compete in domestic, North American, and global markets.

First, the Government of Canada intends to implement a 100 per cent surtax on all Chinese-made EVs, effective October 1, 2024. This includes electric and certain hybrid passenger automobiles, trucks, buses, and delivery vans. This surtax will apply in addition to the Most-Favoured Nation import tariff of 6.1 per cent that currently applies to EVs produced in China and imported into Canada.

Second, the federal government intends to apply a 25 per cent surtax on imports of steel and aluminum products from China, effective October 15, 2024. This measure aims to protect Canada’s workers from China’s unfair trade policies and to prevent trade diversion resulting from recent actions taken by Canadian trading partners. An initial list of goods is being released today for public comment. The final list of goods subject to the surtaxes will be announced by October 1, 2024, with the surtaxes taking effect on October 15, 2024. The surtaxes will not apply to Chinese goods that are in transit to Canada on the day on which these surtaxes come into force.

Third, the Government of Canada will launch a second 30-day consultation concerning other sectors critical to Canada’s future prosperity, including batteries and battery parts, semiconductors, solar products, and critical minerals. A consultation notice will be released in the coming days to help inform any further government action.

Fourth, the federal government is announcing its intention to limit eligibility for the Incentives for Zero-Emission Vehicles (iZEV), the Incentives for Medium and Heavy Duty Zero Emission Vehicles (iMHZEV), and the Zero Emission Vehicle Infrastructure Program (ZEVIP) to products made in countries which have negotiated free trade agreements with Canada.
The federal government intends to review these measures announced today within a period of one year from their entry into force. Today’s actions may be extended for a further period of time and supplemented by additional measures, as appropriate.

Canada: Country of melt and pour updates for steel imports

The proposed regulatory changes to require the provision of country of melt and pour (COM) information will be published in the Canada Gazette Part I from August 24 to September 23, 2024. During this period, interested parties may review the proposed regulatory changes to General Import Permits No. 80 and 81 and submit their comments on the Canada Gazette Part I. Global Affairs Canada will review and consider the feedback and the final regulatory changes will be published in the Canada Gazette Part II. The regulatory changes will come into force on November 5, 2024.

China to apply tariff rates agreed in FTA early harvest arrangement on certain imports from Honduras

China will apply tariff rates agreed in an early harvest arrangement for the bilateral free trade agreement signed with Honduras on some imported products from the latter, the Customs Tariff Commission of the State Council announced Friday. The tariff rates effective from Sept. 1, 2024. The implementation of this early harvest arrangement will boost bilateral economic and trade relations, and propel the mutually beneficial cooperation between the two countries to new heights.

China to impose export controls on antimony, superhard materials

China will restrict the exports of antimony (stibium) and superhard materials starting from Sept. 15, according to an announcement. The announcement, issued by the Ministry of Commerce (MOC) and the General Administration of Customs, noted that some antimony-related items and superhard materials can not be exported without permission. The export controls are not targeted at any specific country or region, the statement noted, adding that exports complying with relevant regulations will be approved.

The Chinese government firmly protects world peace and the stability of neighboring areas, safeguards the security of global industrial and supply chains, and facilitates the development of trade conforming to relevant regulations, according to the statement.

China optimizes export control measures for drones, bans export intended for military purposes

China further optimized export control measures for drones, requiring exporters to seek the approval for certain drones and related equipment and banning the export of all civilian drones that are intended for military purposes. In a notice, three Chinese departments, including the Ministry of Commerce (MOFCOM), said that the move to adjust export control measures on certain drones and related items was aimed at safeguarding national security. Drones that have engines with maximum continuous power of over 16 kilowatts, as well as lasers, infrared imaging, radar and radio equipment that meet certain specifications must gain the approval from authorities before they can be exported, the notice read.  For all unmanned aerial vehicles that are not included in the export control list or that are not subject to temporary control, exporters will be prohibited from selling abroad if they become aware that these drones will be used for the proliferation of weapons of mass destruction, terrorist activities, or military purposes, the notice said. The new export control measures effective from September 1, 2024, according to the notice jointly issued by MOFCOM, the General Administration of Customs and the Equipment Development Department of China's Central Military Commission. The adjustments came one year after China announced export control measures on certain drones in July 2023. The ministry further explained that in recent years, drone technology has developed rapidly, and its application scenarios continued to expand, and the risks of some high-standard and high-performance civilian drones being converted to military use continue to rise.

European Union: Customs is working on the implementation of CERTEX

In December 2022, the Regulation establishing the European Union Single Window environment for Customs entered into force (Regulation (EU) 2022/2399). The purpose of this regulation is to simplify the processing of information for non-customs formalities. This makes it easier and faster for companies to trade internationally. In addition, it improves security within the European Union (EU) because the control of non-customs formalities takes place in a uniform manner. In the 1st phase, the EU-CSW-CERTEX (CERTEX) will be implemented.

  • What is CERTEX?

CERTEX is the system that connects the customs systems with the non-customs systems of the EU. Customs has access to data in non-customs systems of the EU via CERTEX. Partly on the basis of this, we decide whether or not to release the goods for the requested scheme. The regulation specifies which non-customs formalities Customs will be required to work with EU non-customs systems in an automated manner from March 2025. An example of a non-customs formality in order to be able to release goods for free circulation is compliance with the phytosanitary requirements (GGB PP). Another example is having sufficient quotas for fluorinated greenhouse gases (F-gas).

  • What does CERTEX mean for your customs declaration?

CERTEX further automates the process of processing a customs declaration. This imposes requirements on the way in which you must refer to non-customs formalities in customs declarations, for example by referring to a permit. We are currently mapping out the impact of working with CERTEX and the realistic timeline for implementation. We expect to be able to provide more information about this in September.

EU Notice to exporters 2024/21: update on Russia sanctions legal services and revocation of legal advisory services general trade licence

This General Licence permitted the direct or indirect provision of legal advisory services in relation to compliance with certain laws or measures, including restrictive measures on or concerning Russia.
The licence was revoked on 6 September 2024 following a change to the Russia Sanctions Regulations, which meant it was no longer required. Link

Ireland Control of Exports Act comes into force

The new Export Authorisation System (EAS) portal is now live. Exporters can create new profiles and apply for authorisations. 

OELAS is no longer active. To ensure a smooth transition to the EAS portal, the following will apply:

  • If you have applied for an authorisation and have not yet received a decision, you will not need to reapply for a new authorisation under the new Act. Conditions for the authorisation will stem from the 2023 Act.
  • If you hold an existing licence and have not fully carried out the licensed activity by the time the new Act comes into effect, you will not need to reapply for a new authorisation under the new Act. Conditions for the authorisation will stem from the 2023 Act. For more details, please refer to link

South Africa Import restriction Updates

Effective from 04 September, ITAC Import permit is not required for Tariff heading 4911. 

Switzerland: Sanctions against Syria- Switzerland extends humanitarian exemption indefinitely

On 4 September, the Federal Council decided to extend indefinitely the humanitarian exemption to the sanctions regime against Syria. The exemption was introduced for a limited period following the earthquake that hit the country in February 2023.

In light of the grave humanitarian crisis in Syria following the earthquake of 6 February 2023, the European Union (EU) introduced a temporary humanitarian exemption to its sanctions regime against Syria on 23 February 2023. The exemption for international organisations and certain categories of humanitarian actors was subsequently extended twice. On 27 May 2024, the EU extended the exemption for a further year.

The Federal Council decided on 10 March 2023 to include the EU's temporary humanitarian exemption in the ordinance on measures against Syria, initially for a period of six months and since extended twice. The exemption means that the targeted financial sanctions do not apply to activities that are necessary for the humanitarian work of international organisations and some categories of humanitarian actors. With today's decision, the Federal Council is extending the duration of the exemption indefinitely, bringing the humanitarian actors involved a degree of predictability.

The Federal Council first adopted sanctions against Syria on 18 May 2011, thus aligning Switzerland with the sanctions regime adopted by the EU against Syria on 9 May 2011. It has subsequently amended the ordinance several times to reflect the EU's decisions.

Switzerland: Federal Council decides on further measures of the 14th package of sanctions

On 21 August, the Federal Council decided to adopt further measures of the EU's 14th package of sanctions against Russia. These measures will take effect on 27 August. On 9 July, 69 individuals and 47 entities were already added to Switzerland's sanctions list.

In response to Russia's ongoing military aggression against Ukraine, as well as Russia's continued destabilising actions that undermine Ukraine's territorial integrity, sovereignty and security, the EU adopted new measures against Russia on 24 June as part of its 14th package of sanctions. Already on 9 July, the Federal Department of Economic Affairs, Education and Research (EAER), in its capacity as the competent body, implemented sanctions on an additional 69 individuals and 47 entities.

On 21 August, the Federal Council decided to adopt further measures of the EU's 14th package of sanctions against Russia. These include a clarification of the bans on Russian diamonds, making them internationally harmonised. The effective implementation of sanctions against Russia and international coordination are of great importance to the Federal Council. The Federal Council has also extended the deadlines for granting exemption permits with regard to the withdrawal of investments from Russia. The aim is to ensure that Swiss companies can legally terminate their business activities in Russia. The amendments will enter into force on 27 August.

The 14th package of sanctions adopted by the EU on 24 June provides for a number of additional measures, which are currently being examined in detail. The head of the EAER informed the Federal Council about the measures at their meeting on 21 August. The Federal Council will discuss these measures in due course.

UK updates general trade licence for Russian diamonds 

The UK has updated GBSAN0002, its General Trade Licence for sanctioned Russian diamonds processed in third countries. The licence permits the import of certain otherwise prohibited diamonds. Diamonds that meet the following criteria may also be imported:

  • Were outside Russia on 1 September 2024;
  • Were smaller than 1 carat but larger or equal to 0.5 carats; and
  • Have remained outside of Russia since 1 September 2024.

United Kingdom: update on AUKUS and publication of new open general licence

This notice is to update exporters on progress with export control reforms between the AUKUS partner nations, providing for new export authorisations between and amongst AUKUS nations.

  • AUKUS is a trilateral defence partnership between Australia, the UK and the US which was announced in September 2021. It consists of 2 pillars and has been designed to allow the 3 nations to cooperate closely on defence capabilities. These capabilities include submarine technology and cutting-edge advanced features such as artificial intelligence and quantum technologies.
  • To help deliver the AUKUS Partnership, the AUKUS nations have reformed their export controls to support, to the maximum extent possible licence free trade between and amongst the nations.
  • On 16 August the US certified that the UK’s export controls were compatible with the US controls. This means the UK can benefit from an exemption from the ITAR regulations, for an agreed scope of goods and technology.
  • To reciprocate the US exemption, the UK is publishing an AUKUS specific open general licence (OGL) that will cover the equivalent range of goods and technology on the US exemption.
  • Certain goods and technology are not included in the exemption and are set out in an excluded technology list which forms part of the OGL. The excluded technology list includes certain items on which there are international obligations and items which the US, Australia or UK have asked to be excluded.

Open general licence

The OGL will be published on 16 August, but came into force on 1 September. This is to align with the date the US measures will come into force. 
To be able to use the OGL, UK exporters must be on the AUKUS nations’ Authorised Users list. In addition, the export or transfer, or supply and delivery of controlled goods under the OGL must be to recipients who are also Authorised Users.
A guidance note has been prepared that provides links on how to become an Authorised User and on how to register on SPIRE and to use the OGL.

UK suspends “around 30” of 350 export licences to Israel

The government has taken the decision that the UK will suspend arms export licences to Israel for use in military operations in Gaza, following a review of Israel’s compliance with international humanitarian law.

  • government announces immediate suspension of around 30 licences for items used in the current conflict in Gaza which go to the IDF, from a total of approximately 350 licences to Israel
  • UK assessment concludes there is a clear risk certain military exports to Israel might be used in violations of International Humanitarian Law 
  • Foreign Secretary underlines our support for Israeli security
  • sanctions announced against 3 individuals within the Islamic Revolutionary Guard Corps-Quds Force and an IRGC unit for threatening the stability of the Middle East

The government has taken the decision that the UK will suspend arms export licences to Israel for use in military operations in Gaza, following a review of Israel’s compliance with international humanitarian law.

The UK’s robust export licensing criteria states that the government will not issue export licences if the items might be used to commit or facilitate serious violations of International Humanitarian Law. The suspension will not change the UK’s steadfast support for Israel’s security, and the decision will be kept under review.Link

United Kingdom: Update to CITES and Ivory Act import and export controls coverage for commodity codes in Heading 9705

This update is due to the Department for Environment, Food & Rural Affairs amending the import and export controls. The following commodity codes may need an Ivory Act registration and CITES licence to be controlled appropriately throughout the goods’ import or export journey: 9705100030 and 9705220010
The following commodity codes require a CITES licence for imports and exports.
9705100010, 9705100090 and 9705220090
Date of implementation is 13 September 2024.

UK amends Russia Regulations 

The UK has enacted the Russia Regulations 2024, amending The Russia Regulations 2019, to make it clear that the provision of legal advisory services, which may otherwise be restricted by regulation 54D of the Russia Regulations, are permitted on or in connection with compliance with global sanctions, Russian counter-sanctions and global criminal law. The amendment also clarifies that legal advisory services are permitted in relation to the application of punitive measures, as well as in relation to compliance with UK statutory or regulatory obligations.

UK amends Russia Regulations on legal advisory services and revokes related Russia GL

The UK has enacted  The Russia (Sanctions) (EU Exit) (Amendment) (No. 4) Regulations 2024, amending The Russia (Sanctions) (EU Exit) Regulations 2019 (notice), to make it clear that the provision of legal advisory services, which may otherwise be restricted by regulation 54D of the Russia Regulations, are permitted on or in connection with compliance with global sanctions, Russian counter-sanctions and global criminal law. The amendment also clarifies that legal advisory services are permitted in relation to the application of punitive measures, as well as in relation to compliance with UK statutory or regulatory obligations. As a result of this amendment the Legal Advisory Services General Trade Licence, which was put in place to facilitate licensing of certain legal services, is no longer required and has been revoked. The UK guidance on Russia sanctions and providing professional and business services to a person connected with Russia has been updated to reflect the changes.

US designates Russian shipping entities and vessels and issues Russia-related shipping GL

OFAC has designated 2 Russian shipping entities and 2 vessels connected to attempts to export liquefied natural gas (LNG) from the Arctic LNG 2 project, which is sanctioned by the US – press release. The entities designated, Gotik Energy Shipping Co (Gotik Energy) and Plio Energy Cargo Shipping OPC PVT LTD (Plio Energy), are respectively the owner and commercial manager of LNG carrier, New Energy. New Energy allegedly breached US sanctions by transferring cargo from the Arctic LNG 2 project and is 1 of the vessels designated. The other vessel is the Mulan, which is linked to Plio Energy. The designations are made pursuant to EO-14024. OFAC also issued Russia-related General Licence 108, which authorises limited safety and environmental transactions involving Gotik Shipping or Plio Energy or any entity which either owns 50% or more of. It is in force from 5 September 2024

United States Department of State Concludes $200 Million Settlement Resolving Export Violations by RTX Corporation

The U.S. Department of State has concluded an administrative settlement with RTX Corporation (RTX) to resolve 750 violations of the Arms Export Control Act (AECA), 22 U.S.C. § 2751 et seq., and the International Traffic in Arms Regulations (ITAR), 22 C.F.R. parts 120-130. The Department of State and RTX reached this settlement following an extensive compliance review by the Office of Defense Trade Controls Compliance in the Department’s Bureau of Political-Military Affairs.

The administrative settlement between the Department of State and RTX, concluded pursuant to ITAR § 128.11, addresses RTX’s unauthorized exports of defense articles resulting from the failure to establish proper jurisdiction and classification; unauthorized exports of defense articles, including classified defense articles; unauthorized exports of defense articles by employees via hand-carry to proscribed destinations listed in 22 C.F.R. 126.1; and violations of terms, conditions, and provisos of DDTC authorizations. RTX disclosed all of the alleged violations voluntarily. RTX also cooperated with the Department’s review of this matter and has implemented numerous improvements to its compliance program since the conduct at issue.

Under the terms of the 36-month Consent Agreement, RTX will pay a civil penalty of $200 million. The Department has agreed to suspend $100 million of this amount on the condition that the funds will be used for the Department-approved Consent Agreement remedial compliance measures to strengthen RTX’s compliance program. In addition, for an initial period of at least 24 months, RTX will engage an external Special Compliance Officer to oversee the Consent Agreement, which will also require at least one external audit of its ITAR compliance program and implementation of additional compliance measures.

This settlement demonstrates the Department’s role in furthering the national security and foreign policy of the United States by controlling the export of defense articles. The settlement also highlights the importance of exporting defense articles only pursuant to appropriate authorization from the Department.

United States BIS Publishes New Export Control Compliance Resources for the Academic Community

the Department of Commerce’s Bureau of Industry and Security (BIS) Export Enforcement published new resources for the academic community: a compliance note on voluntary self-disclosure trends and a compendium of export compliance resources. These resources align with BIS’s ongoing commitment to support academic institutions in their efforts to comply with export controls.

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