Trade & Manufacturing - News of Note - August 2014

King & Spalding

United States Holds First Round Of Negotiations With 13 Trading Partners Toward An Environmental Goods Agreement
Cole Pfeiffer and Jordan Shepherd

On July 8, 2014, the United States and 13 other Members of the World Trade Organization (WTO), including China, launched the first round of negotiations on the Environmental Goods Agreement (EGA) in Geneva, Switzerland. Together these countries have a serious stake in the future of the green energy market, as they account for 86 percent of the global trade in environmental goods. Although outside the auspices of the WTO, these negotiations aim for an agreement to be applied to all WTO Members on a Most-Favored-Nation (MFN) basis. American companies face multiple barriers to fair economic competition in the environmental goods sector, including high tariffs and unfair dumping and subsidization of imported goods, though the negotiations will focus solely on eliminating tariffs. The trade barriers faced by American exporters, however, are not unique as environmental goods have been at the center of trade wars among the United States, China, the European Union, and others.

The focus of the negotiations is to eliminate tariffs, which can be as high as 35 percent, on environmental technologies. While significant progress has been made already in the Asia-Pacific Economic Cooperation context, with promises to cut tariffs on 54 environmental goods to 5 percent or less by 2015, the United States negotiators hope to expand the products list to additional products. The Obama Administration hopes that the negotiations will not only level the playing field for U.S. manufacturers seeking to sell environmental technologies abroad but also help support general U.S. trade and environmental goals.

China Announces Strong Measures To Boost The Integrated Circuit Industry
Lingna Yan

The Chinese Integrated Circuit (IC) industry welcomed the long-anticipated National Guidelines for the Development and Promotion of the Integrated Circuit Industry (Guidelines), which were issued by China's State Council on June 24. The Guidelines set ambitious targets of exceeding 350 billion renminbi (RMB) in sales revenue by 2015 (compared with 250.8 billion RMB in 2013), reaching an annual sales revenue growth rate of over 20 percent by 2020, and reaching "advanced world level" by 2030. To achieve the targets, the Guidelines call on both the central and local governments to establish IC industry investment funds, support policy and commercial financial institutions to increase the financing they provide to this industry, and encourage domestic companies to expand abroad. Government officials stated that over 100 billion RMB in government support will be provided to the industry over the next few years.

Export Control Reform Continues To Move Forward
Shannon Doyle Barna

On July 1, the State Department and the Commerce Department published final rules in the Federal Register announcing their intent to revise Category XI (Military Electronics) of the State Department's U.S. Munitions List (USML) by shifting specific items to the Commerce Control List (CCL) that no longer warrant a place on the USML. The military electronics transitioned to the CCL include: certain microwave monolithic integrated circuits power amplifiers; certain discrete microwave transistors; certain high frequency surface wave radars; certain application specific integrated circuits and programmable logic devices; certain printed circuit boards and populated circuit card assemblies; certain multichip modules; and certain parts, components, accessories, and attachments specially designed for articles controlled by USML Category XI or the articles described above. The final rules will go into effect on December 30, 2014.

Also on July 1, previous revisions to USML Categories IV (Launch Vehicles, Guided Missiles, Ballistic Missiles, Rockets, Torpedoes, Bombs, and Mines), V (Explosives and Energetic Materials, Propellants, Incendiary Agents, and Their Constituents), IX (Military Training Equipment), X (Personal Protective Equipment), and XVI (Personal Protective Equipment) became effective. There are only six remaining USML categories to be revised as part of the Export Control Reform initiative.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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