September 24, 2022

Washington Wire: USTR Releases Regulations on USMCA Auto Rules of Origin


USTR Releases Regulations on USMCA Auto Rules of Origin  

On June 3rd, the Office of the United States Trade Representative (USTR) released two Uniform Regulations on Rules of Origin (ROO) for customs procedures under the United States-Mexico-Canada Agreement (USMCA) agreement. One Uniform Regulation addresses USMCA Chapter 4, Rules of Origin and related provisions in Chapter 6 (Apparel), the other on Chapter 5 (Origin Procedures), 6 (Textile and Apparel Goods), and 7 (Customs Administration and Trade Facilitation). To reflect the new regulations, U.S. Customs and Border Protection (CBP) released on June 16 an update of their Interim Implementing Instructions for the USMCA.
Unlike the current NAFTA certificate of origin process, CBP is not issuing a form for certification of ROO. Instead, when seeking preferential tariff treatment under the USMCA, the CPB will require businesses to fill out nine “Data Elements”, which they can do an invoice. These elements include: providing background information on the exporter, producer, and importer, including which one is the certifier of origin; providing a description and 6-digit HS Tariff Classification of the good; and specifying the origin criteria under which the good qualifies and whether certification covers multiple shipments of identical goods.
Besides the nine Data Elements, USTR covers several other key areas in the nearly 200-pages of regulations important to One Voice members. According to the document, automotive OEMs may request a longer transition period, five years instead of three, to phase-in these new requirements so long as the vehicle producer submits a draft alternative staging plan by July 1, 2020 and a final alternative staging plan by August 31, 2020. The document also provides Regional Value Content (RVC) auto part HTS codes detailed for Core, Principal, and Complementary. Further, the USTR states the 70 percent steel and aluminum threshold applies to steel and aluminum purchased by an OEM for a parts supplier. Finally, the 70 percent RVC minimum does not apply to steel and aluminum purchased by a producer for other uses, such as the production of other vehicles, tools, dies or molds.
Sources in Washington indicate the Department of Labor should release the Labor Value Content minimum wage requirement implementing regulations towards the end of June. The USMCA is set to take effect on July 1.



Democratic Senators Introduce PPP Bill to Further Stabilize Small Businesses
In an effort to help small businesses struggling with the economic fallout caused by the COVID-19 pandemic, the U.S Senate Committee on Small Business and Entrepreneurship Ranking Member Ben Cardin (D-Md.), along with Senators Chris Coons (D-Del.) and Jeanne Shaheen (D-N.H.) introduced the Prioritized Paycheck Protection Program (P4) Act. The bill authorizes new lending under the Paycheck Protection Plan (PPP) to small businesses with 100 employees or less that have demonstrated a revenue loss of 50 percent or more due to the COVID-19 pandemic compared to a relevant period. To qualify, small businesses must have fully used an initial PPP loan or be on pace to use the funding. According to the bill, P4 loans may be as large as 2.5-times monthly payroll costs, but no larger than $2 million.
The P4 Act will also address issues that Congressional Democrats have pointed out with the current PPP. The bill makes publicly traded companies ineligible for P4 loans. Furthermore, the legislation will allow borrowers to apply for forgiveness as early as eight weeks after the loan is disbursed and they have fulfilled payroll requirements, rather than make borrowers wait until the earlier of twenty-four weeks or December 31, 2020. In addition, the bill requires public disclosure of the identities and information on businesses receiving the loans, as well as increase the Inspector General’s powers in overseeing the program.
While the bill lacks Republican support largely due to the loan disclosure provision, proposals such as this will receive consideration for inclusion in a new COVID-19 relief bill many in Washington expect to pass in late July.



Government Seeks Input on 232 Steel, Aluminum Exclusion Process; Senate Lobbying Update
The Department of Commerce Bureau of Industry and Security has issued a request for public comment on the exclusions criteria and process for the Section 232 Steel and Aluminum tariffs. Individual companies may request an exclusion from paying the 25 percent tariffs on imported steel and 10% on aluminum. The Trump administration is denying 84 percent of exclusion requests if a single steel producer objects, leading to significant abuse in the process.
NTMA and PMA are asking any members who have filed exclusions under either the steel or aluminum 232 procedures and are able to share their experiences to contact One Voice will not name companies but incorporate the information anonymously into broader comments that One Voice will submit through our coalition partners in Washington. We are hoping for responses by Wednesday, June 25 if possible. Commerce is seeking public input on the forms themselves, the objection and rebuttal process, product category exclusions, and “Requiring objectors to submit factual evidence that they can in fact manufacture the product in the quality and amount, and during the time period, to which they attest in the objection,” among other topics.
Not only is One Voice lobbying the administration on the 232 steel, tariffs, the associations are also working with Congress. Recent efforts at reforming Section 232 of the Trade Expansion Act of 1962 have stalled in the Senate Finance Committee due in part to Democrat’s union concerns and the unwillingness of many Senate Republicans to challenge President Trump on tariffs in an election year. One Voice continues to lobby members of Congress in both parties to act and reverse the tax on imported steel and aluminum used by NTMA and PMA members. Especially during times of economic uncertainty, artificially inflating the price of raw materials as the 232 tariffs have done reduces cash flow the business could use now. .



NLRB Will Partially Implement Changes to Obama-Era Labor Union Election Procedure Rules
At the beginning of June, following a District Court order blocking several provisions to its union election procedures final rule, the National Labor Relations Board (NLRB) will only implement some of its planned procedural rules changes to the Obama-era “ambush election” rule of 2014. In December, citing an agency’s ability to change procedural rules under the Administrative Procedures Act (APA) without publishing a Notice of Proposed Rulemaking (NPRM) and necessary notice and comment period, the NLRB released its changes to union representation election procedures as a final rule rather than a proposed rule. Following the announcement of the NLRB’s final rule, the AFL-CIO filed a lawsuit against the rule on procedural grounds. On May 30, the District Court Judge for the District of Columbia Ketanji Brown Jackson issued a decision blocking some of the NLRB’s changes to the Obama-era rule, deciding the agency should have provided a public notice and comment period for several (but not all) of its new provisions.
Days after the ruling, the NLRB announced it would immediately implement in full those provisions within the final rule unaffected by the U.S. District Court order and also signaled the agency would file an appeal to have the invalidated provisions reinstated. Of the provisions unaffected by the judge’s order, the most important ones include: scheduling the pre-election hearing at least 14 days from issuance of the notice of hearing; posting the notice of election within 5 days instead of 2 days; reinstating post-hearing briefs; and election ballot impoundment procedures when a request for review is pending. The five provisions blocked by the U.S. District Court include: reinstitution of pre-election hearing for litigating eligibility issues; timing of the date of an election; voter list timing; election observer eligibility; and timing of Regional Director certification of representatives. More information on these procedural rules, as well as a guidance memorandum, can be found here.