Regulatory Compliance updates 04/21

Canada imposes sanctions on four individuals and one entity linked to Xinjiang

Canada has imposed new sanctions against four Chinese officials and a Chinese entity under the newly enacted Special Economic Measures (People’s Republic of China) Regulations (the “Regulations”), in response to the alleged human rights situation in Xinjiang. Becoming a listed person under the Regulations has two noteworthy consequences.First, listed persons who are individuals are considered inadmissible to Canada under the Immigration and Refugee Protection Act.Second, the Regulations effectively impose an asset freeze on listed persons because, subject to prescribed exceptions, it prohibits any person in Canada and any Canadian outside of Canada from:

• dealing in property, wherever situated (located inside or outside of Canada), that is owned, held or controlled by a listed person or a person acting on behalf of a listed person;
• entering into or facilitating any transaction related to a dealing referred to in paragraph (a) above;
• providing any financial or related services in respect of a dealing referred to in paragraph (a) above.

EU designates eleven individuals and four entities under Global Human Rights Sanctions Regime

The EU imposed restrictive measures on eleven individuals and four entities in relation to alleged human rights violations, including:

• four individuals and one company with links to the large-scale arbitrary detentions of Uyghurs in Xinjiang;
• two individuals and one company in the DPRK, responsible for implementing repressive security policies and other human rights violations;
• two officials in Libya and the armed Libyan militia, responsible for serious human rights abuses including extrajudicial killings;
• two Russian individuals involved in violations of LGBTI rights in Chechnya;
• the Major General of the South Sudan‘s People’s Defence Forces, in response to his role in the abduction and execution of three officers of the Sudan People’s Liberation Army in Opposition, and the clashes in response; and
• the National Security Office of the Government of Eritrea, responsible for serious human rights violations in Eritrea including arbitrary arrests, killings, enforced disappearances and torture.

EU requires export authorization for Covid-19 vaccines and related active substances

The Official Journal published Commission Implementing Regulation (EU) 2021/442 of 11 March 2021 making the exportation of certain products subject to the production of an export authorization, which requires an export authorization to export (or re-export after such goods have been subject to manufacturing operations including filling and packaging within the customs territory of the Union) vaccines against SARS-related coronaviruses (SARS-CoV species) currently falling under CN code 3002 20 10, irrespective of their packaging and active substances, including master and working cell banks used for the manufacture of such vaccines, currently falling under CN codes ex 2933 99 80, ex 2934 99 90, ex 3002 90 90 and ex 3504 00 90. 

EU suspends LCA additional duties on US products for four months

The Official Journal published Commission Implementing Regulation (EU) 2021/425 of 9 March 2021 suspending commercial policy measures concerning certain products from the United States of America imposed by Implementing Regulation (EU) 2020/1646 following the adjudication of a trade dispute under the Dispute Settlement Understanding of the World Trade Organization, which suspends commercial policy measures adopted in Implementing Regulation (EU) 2020/1646 concerning certain products from the United States following the adjudication of the large civil aircraft (LCA) trade dispute under the Dispute Settlement Understanding of the WTO that provides for the application of additional customs duties on imports into the Union of a number of products originating in the United States. On 4 March 2021, an understanding was reached with the United States to mutually suspend all measures for a period of four months, to allow for the negotiations of a balanced settlement of the WTO disputes on large civil aircraft, as soon as internal procedures are completed on both sides. 

Italy blocks shipment of 250,700 doses of COVID-19 vaccine to Australia

The Italian Government has blocked the export of 250,700 doses of COVID-19 vaccine to Australia. This decision represents the first application of the newly enacted EU transparency and authorization mechanism for exports of COVID-19 vaccines provided for by Implementing Regulation (EU) 2021/111 of January 29, 2021.This mechanism establishes that, until March 31, 2021, exports of COVID-19 vaccines are subject to the prior authorization by the Member State where products are manufactured with the purpose of ensuring timely access to COVID-19 vaccines for all EU citizens. The above-mentioned authorization regime only applies to exports of vaccines manufactured by pharmaceutical companies that have entered into Advance Purchase Agreements with the EU. The proposal for refusal was submitted to the European Commission and, following its approval, the decision rejecting the export authorization has been formally notified to the manufacturer on March 2, 2021. 

The Netherlands and Chile Sign a Tax Treaty

The Netherlands has a broad tax treaty network. However, a tax treaty between the Netherlands and the Republic of Chile was never signed – until now. On Jan. 25, 2021, the Netherlands and Chile signed a convention for the elimination of double taxation with respect to taxes on income, capital, and the prevention of tax evasion and avoidance (the Treaty). The Treaty contains clauses to prevent tax avoidance and the payment of double taxation. 
Currently, there is no official date as to when the Treaty will enter into force, but it will be after parliamentary ratification and the exchange of ratification instruments between the contracting states. 

UK imposes sanctions on four individuals and one entity linked to Xinjiang

The UK Government added four individuals and one entity to the Global Human Rights financial sanctions regime, in relation to alleged human rights violations taking place in Xinjiang, China. Four Chinese government officials and a Xinjiang security body have been added to the UK sanctions list and to the Office of Financial Sanctions Implementation’s consolidated list of financial sanctions targets. These measures were announced in coordination with Canada and the United States, and in parallel to EU measures. This follows our previous post here on measures announced earlier this year by the UK, US and Canadian governments in response to the alleged human rights violations in Xinjiang. 

UK: New OFSI Monetary Penalty Guidance applicable from 1 April 2021.

The Government published new guidance on the government processes on the issue of monetary penalties for breaches of financial sanctions (see here). This guidance applies from 1 April 2021 and from this date will replace the April 2018 guidance (see our previous blog post on this guidance here). In the interim, the current guidance will remain applicable. The updated guidance incorporates some of the lessons learned through OFSI’s monetary penalty cases since April 2018 and where necessary, it clarifies OFSI’s position. While the overall penalties regime has not changed, there are a number of smaller changes to the guidance that indicate that OFSI is taking a stronger enforcement stance. 

USTR terminates Sec. 301 DST investigations for Brazil, the Czech Republic, the EU and Indonesia

The Office of the United States Trade Representative (USTR) posted an advance copy of a Federal Register notice terminating, as of March 26, 2021, the Section 301 investigations of Digital Services Taxes (DSTs) under consideration by Brazil, the Czech Republic, the European Union, and Indonesia because these jurisdictions either have not adopted or not implemented a DST during the period of investigation. As of March 25, 2021, Brazil, the Czech Republic, and the European Union have not adopted DSTs, and Indonesia has not implemented a DST. Under the Section 301 statute, determinations must be made within one year of initiation, or in this case by June 2, 2021. Even if one or more of these jurisdictions were to adopt or implement a DST prior to June 2, USTR would not have sufficient time to determine whether the DST was actionable under Section 301 and, if so, what action, if any, to take to obtain the elimination of the measure. Accordingly, the USTR has determined that it is appropriate to terminate these investigations at this time. USTR will continue to monitor the status of any proposed or adopted DST in these four jurisdictions, and may, if appropriate, initiate one or more new Section 301 investigations. 

United States: US Government sanctions Burmese military conglomerates, issues wind-down and humanitarian General Licenses and tightens export controls for Burma (Myanmar)

The US Government has imposed a series of sanctions against Myanmar Economic Corporation Limited (MEC) and Myanma Economic Holdings Public Company Limited (a.k.a. Myanmar Economic Holding Limited) (MEHL), two military-affiliated conglomerates, in response to the February military coup in Burma (Myanmar). The combined restrictions are likely to have a significant impact on business activities in Burma as these conglomerates have substantial interests and joint ventures in several sectors of the Burmese economy, including trading, natural resources, tourism, alcohol, cigarettes, and consumer goods. In addition, the US Government has significantly tightened export controls for Burma. 

United States: DHS/CBP extend land and ferry travel restrictions to/from Mexico and Canada

Office of the Secretary of the Department of Homeland Security (DHS) and US Customs and Border Protection (CBP) published in the Federal Register a notification of continuation of temporary travel restrictions at land ports of entry and ferries between the United States and Mexico from March 22, 2021 to April 21, 2021. For purposes of the temporary alteration in certain designated ports of entry operations authorized under 19 U.S.C. 1318(b)(1)(C) and (b)(2), travel through the land ports of entry and ferry terminals along the United States-Mexico border shall be limited to “essential travel.” At this time, this Notification does not apply to air, freight rail, or sea travel between the United States and Mexico, but does apply to passenger rail, passenger ferry travel, and pleasure boat travel between the United States and Mexico. 

United States: US Government imposes new sanctions and export controls on Russia in response to poisoning and imprisonment of Navalny

The US Government imposed a series of new measures against Russian Government officials and entities in response to the alleged poisoning and subsequent imprisonment of Russian opposition politician Aleksey Navalny.Specifically, the US State Department (State) imposed a number of financial sanctions and export restrictions on Russia; the Office of Foreign Assets Control (OFAC) within the US Treasury Department designated seven Russian officials to the List of Specially Designated Nationals and Blocked Persons (the “SDN List”); the Bureau of Industry and Security (BIS) within the US Commerce Department added 14 entities to the Entity List. 

US and EU suspend large civilian aircraft tariffs for four months

The EU and the US are committed to reach a comprehensive and durable negotiated solution to the Aircraft disputes. Key elements of a negotiated solution will include disciplines on future support in this sector, outstanding support measures, monitoring and enforcement, and addressing the trade distortive practices of and challenges posed by new entrants to the sector from non-market economies, such as China. “These steps signal the determination of both sides to embark on a fresh start in the relationship. The US tariffs were imposed pursuant to section 301 of the Trade Act of 1974 to enforce US rights in the WTO dispute against the European Union (EU) and certain EU member States addressed to EU subsidies on LCA. The annual trade value of the list of tariff subheadings subject to additional duties was approximately $7.5 billion, which was consistent with the WTO Arbitrator’s finding on the appropriate level of countermeasures. 

United States: Restrictions extended on import of certain archaeological and ethnological materials from Colombia

US Customs and Border Protection (CBP) published in the Federal Register a final rule [CBP Dec. 21-05] that amends the CBP regulations to reflect an extension of import restrictions on certain archaeological and ecclesiastical ethnological material [Pre-Columbian archaeological material ranging approximately from 1500 B.C. to 1530 A.D. and ecclesiastical ethnological material of the Colonial period ranging approximately from A.D. 1530 to 1830] from Colombia. The restrictions, which were originally imposed by CBP Dec. 06-09 and last extended by CBP Dec. 16-05, are due to expire on March 15, 2021. 

United States: USTR extends sec. 301 Covid-19 related product exclusions

The Office of the United States Trade Representative (USTR) published in the Federal Register a notice (that was previously posted on the USTR website) that announces the USTR’s determination to further extend exclusions from the sec. 301 tariffs for 99 medical-care and similar products needed to address the COVID-19 pandemic. Those extensions were published in the Federal Register on December 29, 2020 (See 85 FR 85831) The new extensions will extend the product exclusions through September 30, 2021. US Customs and Border Protection (CBP) will issue instructions on entry guidance and implementation. As provided in the December 29 notice, the exclusions are available for any product that meets the description in the product exclusion. The U.S. Trade Representative may continue to consider further extensions and/or additional modifications as appropriate. 

United States: Commerce to delay aluminum licensing requirement again

The Commerce Department announced that it is submitting a notice announcing a delay in the March 29, 2021 effective date of the Aluminum Import Monitoring and Analysis (AIM) system to the Office of the Federal Register. Commerce had published a final rule in the Federal Register on December 23, 2020, adopting the AIM system regulations and establishing an AIM website.The AIM website consists of an online aluminum import license application platform and public AIM monitor.On January 27, 2021, Commerce published notice of a delay in the original January 25, 2021 effective date until March 29, 2021. Under the AIM regulations, all aluminum imports into the United States will require an import license for Customs entry summary. The aluminum import license is an automatic license used for data collection purposes only. The delay means that licenses will not be required for covered aluminum product imports beginning on March 29, 2021.Further information and a revised effective date will be provided in the Federal Register notice. 

United States: USTR seeks comments on the WTO Dispute Settlement Proceeding regarding US origin marking requirement for Hong Kong, China

The Office of the United States Trade Representative (USTR) published in the Federal Register a notice [Docket Number USTR–2021–0001; Dispute Number DS597] requesting comments on Hong Kong, China’s request for the establishment of a dispute settlement panel under the Marrakesh Agreement Establishing the World Trade Organization (WTO Agreement). USTR invites written comments concerning the issues raised in this dispute. All submissions must be in English and sent electronically via Regs.gov. Although USTR will accept any comments during the course of the dispute settlement proceedings, you should submit your comment on or before April 12, 2021 to be assured of timely consideration by USTR. 

United States: completes WTO quota negotiations with EU

The Acting US Trade Representative announced the conclusion of negotiations with the European Union on adjustments to the EU’s WTO tariff rate quotas (TRQ) as a consequence of the United Kingdom’s withdrawal from the EU.The agreement, after two years of negotiations under WTO procedures, will determine how to split TRQ quantities between the EU-27 and the United Kingdom (UK). The agreement will be signed and implemented after formal approval procedures are completed by the EU.