China’s National Intellectual Property Administration Launches Belt and Road Patent Accelerated Examination Pilot Program
On January 17, 2025, China’s National Intellectual Property Administration (CNIPA) released the “Guidelines for the Belt and Road Accelerated Examination Pilot Program” (“一带一路”专利加快审查试点项目指南), effective January 20, 2025. The Belt and Road initiative is a global infrastructure program launched by China to invest in land and sea corridors to connect China to the world. The Pilot Program, which is somewhat analogous to the Patent Prosecution Highway (PPH), allows for accelerated patent examination in China when a Belt and Road country’s patent office indicates at least one claim in corresponding family member is allowable.
While the Pilot Program envisions including all Belt and Road countries (perhaps including more than 150 countries that signed a Memorandum of Understanding with China per Fudan University), it appears that Türkiye may be the only participating country at this time.
The period of the Pilot Program will commence on January 20, 2025 and end on January 19, 2027. Under the Pilot Program, the total number of applications to be accepted by CNIPA will be limited to 1000 per year, the maximum number of applications from each participating office will be limited to 100 per year. After the expiration of this two-year period, an evaluation will be conducted to determine whether the pilot program should be extended.
Requirements to participate include:
(a) The CNIPA application shall have at least one corresponding application in the participating office, which has determined that one or more claims of the corresponding application is/are patentable/allowable.
(b) All claims in the CNIPA application must sufficiently correspond to one or more of those claims determined to be patentable/allowable in the corresponding application.
(c) The CNIPA application must have been published.
(d) The CNIPA application must have entered into substantive examination stage. Note that as an exception, the applicant may file a request for accelerated examination simultaneously with the Request for Substantive Examination.
(e) The CNIPA has not begun examination of the application at the time of filing the request for accelerated examination.
(f) The CNIPA application must be electronic patent application.
More information can be found here (Chinese and English).
China To Revise Registration Requirements for Foreign Food Facilities
On January 3, 2025, the Chinese General Administration of Customs (GAC) published a draft amendment to the Regulations on Registration and Administration of Overseas Manufacturers of Imported Food (“Registration Regulations,” known as GAC Decree 248)[1] for public comments, due by February 19, 2025. China also notified the World Trade Organization (WTO) of the draft through G/SPS/N/CHN/1324.[2]
In 2021, China issued GAC Decree 248 in 2021, which requires that all overseas food manufacturers exporting food products to China to register with GAC.[3] After three years of implementation, GAC has identified areas for refinement and optimization of the framework, aiming to address practical challenges and enhance the efficiency of the registration process for overseas manufacturers.
Notably, the draft newly introduces a regulatory pathway for overseas facility registration, namely, system recognition, which allows the competent authorities of the manufacturing facility’s home country (region) to obtain recognition from GAC.[4]
Under this new pathway, the competent authorities of recognized countries (regions) may submit a list of recommended manufacturers to GAC. Upon receiving these recommendations, GAC will register the listed enterprises and assign them official registration numbers. It appears that manufacturers may not be required to submit individual applications directly to GAC; however, enterprises from recognized countries may need to coordinate with their competent authorities to ensure their information (e.g., enterprise name, facility address, and contact details) is included in the list submitted to GAC.
This proposed approach represents a significant shift from the current framework under GAC Decree 248, which regulates imported food products based on their risk level and establishes two registration pathways, one for “specified foods” (e.g., milk, meat, aquatic products (typically known as high-risk foods)) and another for “others” (e.g., confectionary and solid beverage). More details concerning GAC Decree 248 can be found in our newsletter: Breaking News: China Imposes New Registration Requirements for All Foreign Food Companies. The draft, however, proposes a classification system at the national level, focusing on whether the competent authorities of the manufacturing facility’s home country (region) can obtain recognition from GAC. Therefore, it is likely that the competent authorities at home countries may have to undertake a higher level of responsibility to supervise the companies exporting foods to China.
On the other hand, the draft also specifies dossier requirements for enterprises whose competent authorities are not recognized by GAC. These enterprises must apply for registration with GAC by themselves or through an agent. We note that the dossier requirements differ based on the category of food involved. Specifically, manufacturers of the specified foods under Catalogue of Foods that Require Official Recommendation Registration Letters (“Catalogue”) will need to provide official inspection reports and recommendation letters issued by their competent authority.
The draft further proposes to update the Catalogue, listing 11 categories of high-risk foods subject to government-recommended registration, along with their corresponding risk assessments. Compared with GAC Decree 248, 8 types of food may no longer be subject to the current recommended registration requirements, covering health foods (including dietary supplements), special dietary foods, unroasted coffee beans and cocoa beans, edible fats and oils, etc. For example, previously, health food manufacturers were required to undergo a government-recommended registration process, [5] which often involved lengthy procedures. Under the proposed revisions, health food manufacturers will be able to process facility registrations by themselves, which will greatly simplify the process, leading to faster market entry and reduced compliance costs. Per GAC’s announcement, the Catalogue will be subject to dynamic adjustments. This flexible approach empowers the authority to adapt quickly to evolving dynamics within the food industry and shifts in the regulatory landscape.
In addition, the draft removes the requirements for overseas manufacturers to reapply for registration in certain scenarios, such as changes to the legal representative or changes to the registration number granted by the country (region). Instead, it specifies that reapplying for registration is necessary when such changes have a significant impact on the enterprise’s sanitation management and control for food safety – for example, in the event of a production site relocation.
Importantly, GAC removes the provision that mandates overseas producers to file their renewal applications three to six months before the registration expires. It also clarifies specific food categories that are exempt from facility registration, including food sent by mail or express delivery, cross-border e-commerce retail items, food carried by travelers, as well as samples, etc. It is worth noting that food additive manufacturers exporting products to China are excluded from the facility registration requirement under Decree No. 248; this remains the same in the draft.
Overall, the proposed changes underscore China’s ongoing efforts to strengthen food safety oversight while simplifying administrative procedures for the registration of overseas manufacturers of imported foods. However, there are certain remaining issues that may require further clarification. For instance, it is unclear how the new system recognition mechanism will integrate with the existing framework under GAC Decree 248. One key question is whether companies that have already registered with GAC still need to coordinate with their competent authorities to be included in the list provided to GAC. Such ambiguity could create challenges for businesses navigating the transition between the current and proposed systems.
[1] http://www.customs.gov.cn/customs/302452/302329/zjz/6297231/index.html; Non-official English translation prepared by United States Department of Agriculture (USDA) is available at: https://apps.fas.usda.gov/newgainapi/api/Report/DownloadReportByFileName?fileName=Amended%20Overseas%20Food%20Producer%20Registration%20Regulation%20Notified_Beijing_China%20-%20People%27s%20Republic%20of_CH2025-0005.pdf
[2] https://eping.wto.org/en/Search/Index?countryIds=C156%2CC764%2CC704%2CC458%2CC360%2CC608%2CC410%2CC392%2CC702%2CC158&viewData=G%2FSPS%2FN%2FCHN%2F1324; All comments should be submitted before March 11, 2025.
[3] https://www.gov.cn/gongbao/content/2021/content_5616161.htm
[4] Such recognition is granted under specific conditions, including (1) accepting and passing the inspection of the food safety management system of the country (region) by GAC; (2) signing a food safety cooperation agreement with GAC; (3) signing a mutual recognition agreement of Authorized Economic Operator (AEO) with GAC; and (4) signing other cooperation agreements or joint statements with Chinese government departments that include food safety cooperation content.
[5] Please note that the term “registration” mentioned in this context pertains solely to overseas facility registration under GAC Decree 248 and does not refer to the “blue hat” registration required for health foods in China.
New U.S. Sanctions Targeting Russia’s Energy Sector
On Jan. 10, 2025, the U.S. Department of Treasury announced several new types of sanctions that will affect U.S. and global service providers to the Russian energy sector.
The first of these sanctions will prohibit U.S. persons, including U.S. persons located abroad, from providing petroleum services to any person located in Russia. The Treasury Department’s Office of Foreign Assets Control (OFAC) plans to issue regulations defining “petroleum services,” but they are likely to include services related to exploration, drilling, well completion, production, refining, processing, storage, maintenance, transportation, purchase, acquisition, testing, inspection, transfer, sale, trade, distribution, or marketing of crude oil and petroleum products.
These sanctions will enter into effect on Feb. 27, 2025, so U.S. persons have a limited time to wind down affected transactions.
In addition, the U.S. Secretary of the Treasury issued a determination under Executive Order 14024 that authorizes imposing economic sanctions on any person – whether U.S. or non-U.S. – that is subsequently determined to be operating in the Russian energy sector. OFAC plans to define the “energy sector of the Russian Federation economy” to encompass not just petroleum products, but also natural gas, biofuels, coal, nuclear and other renewable energy.
This determination has broad extraterritorial implications, because it exposes non-U.S. entities to potential sanctions. As a preview, OFAC simultaneously used the determination to impose sanctions on Russia’s major oil companies, Gazprom Neft and Surgutneftegas. However, the determination could be used to impose sanctions on entities from any country that operate in the Russian energy sector.
“The United States is taking sweeping action against Russia’s key source of revenue for funding its brutal and illegal war against Ukraine . . . With today’s actions, we are ratcheting up the sanctions risk associated with Russia’s oil trade, including shipping and financial facilitation in support of Russia’s oil exports.”
home.treasury.gov/…
DORA Becomes Applicable in the EU
On January 17, 2025, Regulation (EU) 2022/2554 of the European Parliament and of the Council of 14 December 2022 on digital operational resilience for the financial sector (“DORA”) becomes applicable in the EU.
DORA intends to strengthen the IT security and operational resiliency of financial entities and to ensure that the financial sector in the EU is able to stay resilient in the event of severe operational disruption. DORA applies to financial entities engaging in activities in the EU. Traditional financial entities, such as banks, investment firms, insurers, and credit institutions, and non-traditional entities, like crypto-asset service providers and crowdfunding platforms, are all within scope.
Financial entities under DORA will be required to comply with new requirements in the areas of (1) risk management, (2) third-party risk management, (3) incident management and reporting, and (4) resilience testing. Key obligations include:
Create and maintain a register of ICT service providers and, on an annual basis, report relevant information from the register to financial authorities.
Comprehensive incident reporting obligations requiring initial notification in 4 hours after the incident is classified as major and a maximum of 24 hours after becoming aware. Follow-up notifications will be required, at least, in 72 hours and one month. Entities under scope will be required, without undue delay, to notify their clients where a major incident occurs and has a financial impact on their interests. For significant cyber threats, entities under scope should, where applicable, inform their clients that are potentially affected of any appropriate protection measures which the latter may consider taking.
Maintain a sound, comprehensive and well-documented ICT risk management framework. The financial entities’ management bodies should define, approve, oversee and take responsibility for the implementation of the ICT risk management framework. In addition, appropriate audits must be conducted with respect to the ICT risk management framework.
Implement post ICT-related incident reviews after a major ICT-related incident disrupts core activities.
Establish and maintain a sound and comprehensive digital operational resilience testing program.
Clearly allocate, in writing, the rights and obligations of the financial entity when engaging with ICT service providers, including mandatory DORA contractual provisions.
Adopt, and regularly review, a strategy on ICT third-party risk.
In addition to financial entities, ICT service providers providing services to financial entities will also have a level of exposure to DORA. This level of exposure will vary in accordance with how critical the ICT service provider is in the sector. All ICT service providers will be subject to indirect obligations resulting from the requirements that their customers (i.e., in-scope financial entities) will be subject to under DORA (e.g., mandatory contractual provisions). In addition, ICT service providers designated as “critical” will be subject to direct obligations and specific oversight mechanisms under DORA.
Read the full text of DORA.
Breaking News: U.S. Supreme Court Upholds TikTok Ban Law
On January 17, 2024, the Supreme Court of the United States (“SCOTUS”) unanimously upheld the Protecting Americans from Foreign Adversary Controlled Applications Act (the “Act”), which restricts companies from making foreign adversary controlled applications available (i.e., on an app store) and from providing hosting services with respect to such apps. The Act does not apply to covered applications for which a qualified divestiture is executed.
The result of this ruling is that TikTok, an app which is owned by Chinese company ByteDance and qualifies as a foreign adversary controlled application under the Act, will face a ban when the law enters into effect on January 19, 2025. To continue operations in the United States in compliance with the Act, the law requires that ByteDance sell the U.S. arm of the company such that it is no longer controlled by a company in a foreign adversary country. In the absence of a divestiture, U.S. companies that make the app available or provide hosting services for the app will face enforcement under the Act.
It remains to be seen how the Act will be enforced in light of the upcoming changes to the U.S. administration. TikTok has 170 million users in the United States.
Make Protecting Your UK and EU Product Packaging and Labels Your New Year’s IP Resolution. Part 1: Protect Unique Packaging in the EU
New developments in Europe make a filing strategy for registered designs and trade marks even more essential for the modern consumer business. Read on to find out more.
On 19 December 2024, the EU’s new Packaging Regulation was signed and will come into force 18 months after the date of publication, still to be announced. This repeals the old packaging directive and makes significant changes to the regime. These changes include introducing stringent requirements on sustainability, recyclability and limiting single-use plastics for products sold in the EU. However, the regulation will also provide certainty for brands as the regulation will harmonise the rules across all EU member states, which will stop brands having to contend with varying, sometimes conflicting, packaging rules in different markets.
Packaging Minimisation in the EU
This new regulation will have a large effect on many industries including fast moving consumer goods, cosmetics and fashion, but we want to draw your attention to one new requirement in particular, the requirement for packaging minimisation (Article 10). This requires packaging to be designed so as to minimise its volume and weight, and to enable recyclability.
There will therefore be a ban on “superfluous” packaging such as double walls and false bottoms, but also packaging that is not necessary for “packaging function”. Together these could limit a brand’s ability to use inventive and creative packaging to stand out in the market. For instance, a product packaging in an unusual shape that is not strictly necessary to its function could be banned.
There is a (somewhat limited) exception to this rule for packaging that is protected under EU or national design or trademark laws or applicable international agreements. This exception applies provided that packaging changes would affect “the shape of the packaging in such a way that the trademark can no longer distinguish the trademarked good from goods of another undertaking, and the design can no longer keep its new and individual characteristics”. Importantly, UK designs and trademarks will not count, and companies will need EU-based registrations to qualify for this exception.
However, the exception only applies to trademark and design rights protected before the date of entry into force of the new regulation. This means that the clock will start to tick very shortly with an 18-month window to ensure designs and trademarks are properly filed.
Key Takeaways for Brands
The key takeaways are:
Review trade mark and design portfolios to check protection status today;
File trade marks for any hero products and packaging to protect their shape, look and feel (multiple marks may be necessary depending on the complexity of the packaging); and
File registered designs for new products as soon as possible.
Look out for Part 2 of this series on combating product imitations (known as ‘dupes’) in the UK, coming soon.
OFAC Sanctions Russia’s Energy Sector
In an effort to reduce Russian energy revenues being used to fund the war against Ukraine, on January 10, 2025, the United States Department of the Treasury’s Office of Foreign Assets Control (OFAC), issued a “determination” that subjects the energy sector of the Russian Federation to significant sanctions.
In parallel, OFAC issued a determination that prohibits exportation of petroleum services to Russia from the United States or by U.S. persons wherever located.
Designation of Russia’s Energy Sector. The determination pursuant to Section 1(a)(i) of Executive Order 14024, which took effect on January 10, 2025, designates the energy sector of the Russian Federation economy as a sanctioned sector. As explained by OFAC in FAQ 1214 (issued in conjunction with the determination), not all persons that operate or that have operated in the energy sector are now sanctioned. Rather, the designation enables the Secretary of the Treasury in consultation with the Secretary of State (or vice versa), to impose sanctions on any person, entity, or vessel determined to be operating, or to have been operating, in the Russian energy sector. Any such person, entity, or vessel is now at sanctions risk, and contractual counterparties are on notice that transactions with or involving anyone in the Russian energy sector may be prohibited or blocked without warning.
Pursuant to the authority thus granted, the Secretary of the Treasury immediately listed as Specially Designated Nationals (SDN) Russia’s two leading energy companies (Gazprom Neft and Surgutneftegas), as well as numerous vessels, vessel owners, oil traders, oilfield service providers, insurance companies, and Russian energy officials. Any property or interest in property of anyone listed as an SDN in the possession or control of a U.S. person, must be blocked (i.e., frozen). Any property or interest in property of any entity owned 50% or more by one or more SDN-listed persons or entities must likewise be blocked. The designations prohibit any U.S. person (including any person in the United States) from providing funds, goods, or services to, and from receiving funds, goods, or services from, any blocked person or entity.
The term “energy sector” will be formally defined in forthcoming OFAC regulations. FAQ 1213 sets out the anticipated definition, which will include “activities such as the procurement, exploration, extraction, drilling, mining, harvesting, production, refinement, liquefaction, gasification, regasification, conversion, enrichment, fabrication, manufacturing, testing, financing, distribution, purchase or transport to, from, or involving the Russian Federation, of petroleum, including crude oil, lease condensates, unfinished oils, natural gas, liquefied natural gas, natural gas liquids, or petroleum products, or other products capable of producing energy, such as coal, wood, or agricultural products used to manufacture biofuels; the development, production, testing, generation, transmission, financing, or exchange of power, through any means, including nuclear, electrical, thermal, and renewable, to, from, or involving the Russian Federation; and any related activities, including the provision or receipt of goods, services, or technology to, from, or involving the energy sector of the Russian Federation economy.”
Prohibition on Petroleum Services. The determination pursuant to Section 1(a)(ii) of Executive Order 14071, titled “Prohibition on Petroleum Services,” will take effect at 12:01 am EST on February 27, 2025. It generally prohibits “[t]he exportation, reexportation, sale, or supply, directly or indirectly, from the United States, or by a United States person, wherever located, of petroleum services to any person located in the Russian Federation.”
The term “petroleum services” will be formally defined in forthcoming OFAC regulations. FAQ 1216 sets out the anticipated definition, which will include “services related to the exploration, drilling, well completion, production, refining, processing, storage, maintenance, transportation, purchase, acquisition, testing, inspection, transfer, sale, trade, distribution, or marketing of petroleum, including crude oil and petroleum products, as well as any activities that contribute to Russia’s ability to develop its domestic petroleum resources, or the maintenance or expansion of Russia’s domestic production and refining. This would include services related to natural gas as a byproduct of oil production in Russia.”
General Licenses. OFAC has also issued several general licenses (GL) that mitigate the immediate impact of the determinations. Existing transactions that fall within the prohibitions may be wound down until either February 27 or March 12, 2025, depending on the Russian entity involved (GL 8L, 117, 118, 119). Activities necessary for the health or safety of crews on sanctioned vessels are authorized until February 27, 2025, as are vessel repairs necessary to protect the environment (GL 120). Petroleum services related to three major energy projects (the Caspian Pipeline Consortium, Tengizchevroil, and Sakhalin-2) are authorized until June 28, 2025 (GL 121).
OFAC’s latest salvo against the Russian Federation mandates heightened caution in dealing with the Russian energy sector. Anyone planning or currently involved in such activity would be well-advised to consult with experienced sanctions counsel. Katten stands ready to assist.
The BR International Trade Report: January 2025
Recent Developments
President Biden blocks Nippon Steel’s acquisition of US Steel. On January 3, President Biden announced that he would block the $15 billion sale of U.S. Steel to Japan’s Nippon Steel, citing national security concerns. President Biden’s decision came after the Committee on Foreign Investment in the United States (“CFIUS”) reportedly deadlocked in its review of the transaction and referred the matter to the President. U.S. Steel and Nippon Steel condemned the President’s action in a joint statement, arguing it marked “a clear violation of due process and the law governing CFIUS,” and on January 6 filed suit challenging the measure.
Canadian Prime Minister Justin Trudeau announces his resignation as party leader and prime minister. On January 6, Prime Minister Trudeau, who has served as the Liberal Party leader since 2013 and prime minister since 2015, declared his intention to “resign as party leader, as prime minister, after the party selects its next leader through a robust, nationwide, competitive process.” Governor General Mary Simon suspended, or prorogued, the Canadian Parliament until March 24 to allow the Liberal Party time to select its new leader—who will replace Trudeau as prime minister leading up to the general elections, which must be held by October 20. Separately, details have begun to leak of the potential Canadian retaliation against President-elect Trump’s threatened tariffs on Canadian goods. This retaliation could include tariffs on certain steel, ceramics, plastics, and orange juice.
U.S. Department of Commerce announces new export controls for AI chips. On January 13, the U.S. Department of Commerce’s Bureau of Industry and Security (“BIS”) issued a new interim final rule in an effort to keep advanced artificial intelligence (“AI”) chips from foreign adversaries. The interim final rule seeks to implement a three-tiered system of export restrictions. Under the new rule, (i) certain allied countries would face no new restrictions, (ii) non-allied countries would face certain restrictions, and (iii) U.S. adversaries would face almost absolute restrictions. BIS followed up with another rule on January 15 imposing heightened export controls for foundries and packaging companies exporting advanced chips, with exceptions for exports to an approved list of chip designers and for chips packaged by certain approved outsourced semiconductor assembly and test services (“OSAT”) companies.
Biden Administration imposes sanctions against Russia’s energy sector in parting blow. On January 10, the U.S. Department of the Treasury (“Treasury”) issued determinations authorizing the imposition of sanctions against any person operating in Russia’s energy sector and prohibiting U.S. persons from supplying petroleum services to Russia, and designated two oil majors—Gazprom Neft and Surgutneftegas—among others.
BIS issues final ICTS rule on connected vehicle imports and begins review of drone supply chain. On January 14, BIS issued a final rule under the Information and Communications Technology and Services (“ICTS”) supply chain regulations prohibiting the import of certain connected vehicles and connected vehicle hardware, capping a rulemaking process that started in March 2024. The rules, which will have a significant impact on the auto industry supply chain, will apply in certain cases to model year 2027 and in certain other cases to model year 2029. (See our alert on BIS’s proposed rule from September 2024.) Meanwhile, BIS launched an ICTS review on January 2 into the potential risk associated with Chinese and Russian involvement in the supply chains of unmanned aircraft systems, issuing an Advance Notice of Proposed Rulemaking.
China implicated in cyberattack on the U.S. Treasury. In December, a China state-sponsored Advanced Persistent Threat (“APT”) actor hacked Treasury, using a stolen key. Reports suggest that attack targeted Treasury’s Office of Foreign Assets Control (“OFAC”), which administers U.S. sanctions programs, among other elements of Treasury. Initial reporting indicated that only unclassified documents were accessed by hackers, although the extent of the attack is still largely unknown. The Chinese government has denied involvement.
United Kingdom joins the Comprehensive and Progressive Agreement for Trans-Pacific Partnership. On December 15, the United Kingdom officially joined the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (“CPTPP”)—a trade agreement between Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, and Vietnam—nearly four years after submitting its 2021 application. The United Kingdon is the first non-founding country to join the CPTPP.
Fallout of failed presidential martial law declaration continues in South Korea. South Korea continues to face unrest after last month’s short-lived declaration of martial law by President Yoon Suk Yeol, which led to his December 14 impeachment and January 15 arrest by anti-corruption investigators. On December 27, the National Assembly also impeached Prime Minister Han Duk-soo, who had been serving as acting president for the two weeks following Yoon’s impeachment. Finance Minister Choi Sang-mok now serves as acting president, and faces calls from South Korean investigators to order the presidential security service to comply with a warrant for President Yoon’s arrest.
Office of the U.S. Trade Representative initiates investigation into legacy chips from China. In late December, U.S. Trade Representative (“USTR”) Katherine Tai announced a new Section 301 investigation “regarding China’s acts, policies, and practices related to the targeting of the semiconductor industry for dominance.” The USTR will focus its initial investigation on “legacy chips,” which are integral to the U.S. manufacturing economy. The USTR began accepting written comments and requests to appear at the hearing on January 6. The public hearing is scheduled for March 11-12.
President-elect Donald Trump eyes the Panama Canal and Greenland. At the December 2024 annual conference for Turning Point USA, President-elect Donald Trumpcriticized Panama’s management of the Panama Canal, indicating that the United States should reclaim control due to “exorbitant prices” to American shipping and naval vessels and Chinese influence in the Canal Zone. Panamanian President José Raúl Mulino rejected Trump’s claims, stating “[t]he canal is Panamanian and belongs to Panamanians. There’s no possibility of opening any kind of conversation around this reality.” President-elect Trump also has sought to revive his 2019 proposal to purchase Greenland from Denmark, emphasizing its strategic position in the Arctic and untapped natural resources. In response, Greenland’s Prime Minister Mute Egede stated that Greenland is not for sale, but would “work with the U.S.—yesterday, today, and tomorrow.”
Nicolás Maduro sworn in for third presidential term, despite disputed election results. On January 10, Nicolás Maduro Moros was inaugurated for another six-year term as president of Venezuela, despite evidence he lost the election to opposition candidate Edmundo González Urrutia. Gonzalez, recognized by the Biden Administration as the president-elect of Venezuela, met with President Biden in the White House on January 6. In response to Maduro’s inauguration, the United States announced new sanctions programs against Maduro associates and extended the 2023 designation of Venezuela for Temporary Protected Status by 18 months.
U.S. Department of Defense designates more entities on Chinese Military Companies list. In its annual update of the Chinese Military Companies list (“CMC list”), the Department of Defense (“DoD”) added dozens of Chinese companies to the list, including well-known technology, AI, and battery companies, bringing the total number of CMC List entities to 134. Beginning in June 2026, DoD is prohibited from dealing with the newly designated companies.
European Union and China consider summit to mend ties. On January 14, European Council President António Costa and Chinese President Xi Jinping spoke via phone call, reportedly agreeing to host a summit on May 6, 2025—the 50th anniversary of EU-China diplomatic relations. The conversation comes just days before the inauguration of President-elect Donald Trump, who has threatened additional tariffs on Chinese goods and pushed the European Union to further decouple from China. Despite Beijing’s and Brussels’s willingness to meet, China-EU trade tensions remain high, highlighted by the European Commission’s October decision to impose duties of up to 35% on Chinese-made electric vehicles.
Mexico Increases Textile Sector Tariffs and Amends IMMEX Decree
On Dec. 19, 2024, the “Decree modifying the tariff on the General Import and Export Tax Law and the Decree for the Promotion of the Manufacturing, Maquila and Export Services Industry” (Decree) published in the Official Gazette of the Federation, through which the Mexican government seeks to establish two measures protecting domestic textile production.
Tariff Increases
Through the Decree, the Mexican government made temporary changes in the tariffs on several items included in the General Import and Export Tax Law, which will be effective until April 23, 2026. Such adjustments, which cover 155 items, correspond to the following chapters:
15% Tariff
–
Chapter 52 (cotton)
–
Chapter 55 (synthetic or artificial staple fibers)
–
Chapter 58 (special woven fabrics, textile fabrics, lace, tapestries, trimmings, and embroidery)
–
Chapter 60 (knitted fabrics)
35% Tariff
–
Chapter 61 (articles of apparel and clothing accessories, knitted or crocheted)
–
Chapter 62 (articles of apparel and clothing accessories, not knitted or crocheted)
–
Chapter 63 (other made-up textile articles, sets, worn clothing, worn textile articles, and rags)
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Tariff item number 9404.40.01 (footmuffs, quilts, comforters, and blankets)
These tariffs apply only to products originating in countries with which Mexico does not have free trade agreements.
Modifications to the IMMEX Program
The Dec. 19 Decree also changes the IMMEX Decree, adding new restrictions to Annex I, which lists “Goods that cannot be temporarily imported under the IMMEX program.” The IMMEX (Manufacturing, Maquiladora, and Export Services Industry Program) program is designed to promote the development of companies engaged in manufacturing and assembly activities for export purposes in Mexico. The changes to the Annex I affect several items under chapters 61, 62, and 63 of the General Import and Export Tax Law, with some exceptions. The government has also added other subheadings from this law to the restricted list.
Conclusion
The increase in tariffs on specific fractions of the textile industry, along with the addition of more restricted tariff items under the IMMEX program, could impact both importers and companies operating under IMMEX. Importers may face higher costs due to increased duties, which could affect their profit margins and competitiveness in the market. Similarly, IMMEX program participants might experience disruptions in their supply chains and increased operational costs, limiting their ability to efficiently import and export goods. These changes highlight the need for careful consideration of the potential consequences on trade and business operations.
As the (Customs and Trade) World Turns: January 2025
Welcome to the January 2025 issue of “As the (Customs and Trade) World Turns,” our monthly newsletter where we compile essential updates from the customs and trade world over the past month. We bring you the most recent and significant insights in an accessible format, concluding with our main takeaways — aka “And the Fox Says…” — on what you need to know.
This edition provides essential insights for sectors including International Trade, Aluminum and Steel Industries, Fashion and Retail, E-commerce, Automotive, and Compliance, as well as for in-house counsel, importers, and compliance professionals.
In this January 2025 edition, we cover:
Federal Circuit deliberates on Section 301 tariffs: a landmark case for importers.
Aluminum extrusions import dispute: CIT to review ITC’s negative determination.
CBP’s proposed rule for low-value shipments: CBP’s attempts to enhance efficiency and security.
Forced labor enforcement intensifies: new challenges and strategic shifts.
Mexico’s textile and apparel tariff hikes: navigating new import challenges.
CFIUS controversy: presidential block on Nippon-US Steel deal sparks legal battle.
Temporary sanctions relief: OFAC authorizes limited transactions, maintaining key restrictions.
1. Section 301 Tariffs Appeal: Federal Circuit Hears Oral Argument
On January 8, the US Court of Appeals for the Federal Circuit (CAFC) heard the oral argument in HMTX Industries LLC v. United States, a pivotal case challenging the legality of tariffs imposed on Chinese-origin goods under Lists 3 and 4A of the Section 301 tariff regime. These tariffs, which cover approximately $320 billion in goods, have been challenged by over 4,000 importers.
Central to the case is whether the US Trade Representative’s (USTR) actions expanding tariffs to the Lists 3 and 4A qualify as a permissible “modification” of the original Section 301 action (covering Lists 1 and 2) under Section 307 of the Trade Act of 1974. The plaintiffs argued that the term “modify” allows only moderate or minor adjustments to the original tariffs, which targeted $50 billion in goods. The judges explored whether the statutory language supports such limits and considered distinctions between this case and prior rulings interpreting a different section of the Trade Act that limited “modification” to smaller adjustments.
The panel also examined whether China’s retaliatory tariffs, which formed the basis for USTR’s tariff increases under Lists 3 and 4A, were sufficiently linked to the intellectual property violations initially investigated under Section 301. The plaintiffs argued these actions were distinct, while the government claimed they were part of the broader context of unfair practices. A final issue was whether USTR’s authority to modify tariffs when an action is “no longer appropriate” could justify broader increases, with the judges probing the potential limits of this provision.
And the Fox Says…: The CAFC is expected to issue a decision before the end of this year, though further appeals could extend the litigation into 2026. A final ruling for the plaintiffs could lead to refunds of tariffs paid under Lists 3 and 4A for those participating in the litigation, and to the end of any Lists 3 and 4A tariffs. More broadly, the decision could constrain future tariff actions, particularly those being contemplated by President-elect Donald Trump in his second term or validate such escalation of tariffs.
2. Challenging the US International Trade Commission’s Decision: Implications of the Appeal on Aluminum Extrusions Imports
On November 26, 2024, the petitioners, US Aluminum Extruders Coalition (USAEC) and the United Steel, Paper and Forestry, Rubber, Manufacturing, Energy, Allied Industrial and Service Workers International Union (USW), filed a summons with the US Court of International Trade (CIT), contesting the US International Trade Commission’s (ITC) final negative determination in the aluminum extrusions’ antidumping and countervailing duty (AD/CVD) proceedings against multiple countries. As we discussed previously, on October 30, 2024, the ITC had reached a negative determination in its final phase of the antidumping and countervailing duty investigations concerning aluminum extrusions from China, Colombia, Ecuador, India, Indonesia, Italy, Malaysia, Mexico, South Korea, Taiwan, Thailand, Turkey, United Arab Emirates, and Vietnam.
The CIT will either affirm the underlying decision by the ITC, which can then be appealed to the US Court of Appeals for the Federal Circuit, or it can remand the decision back to the ITC for further consideration of certain matters. Remand could lead to a new vote from the Commissioners sitting on the Commission at that time. If the decision by the Commission becomes affirmative, and the CIT affirms, AD/CVD orders will be issued. The appeal may be taken to the US Court of Appeals for the Federal Circuit.
And the Fox Says…: Importers should closely monitor the CIT appeal. If the case is remanded and the ITC makes an affirmative determination which is affirmed by the CIT, AD/CVD orders will be imposed and estimated AD/CVD duties will have to be deposited and ultimately collected at liquidation. Please contact the AFS team if you are uncertain whether the product you import containing aluminum extrusions is within the scope of the investigations and therefore potentially subject to AD/CVD duties if the CIT remands the case and the ITC makes an affirmative determination.
3. CBP Proposes Enhanced Entry Process and Other New Rules for De Minimis Shipments
US Customs and Border Protection (CBP) has announced a notice of proposed rulemaking (NPRM) aimed at modernizing the entry process for low-value shipments, specifically those valued under $800. The proposed Entry of Low-Value Shipments (ELVS) rule is intended to increase the efficiency and security of processing these shipments in response to the rise of e-commerce. Through this process, CBP aims to expedite clearance and improve its ability to target high-risk shipments, such as those containing illicit drugs.
The ELVS rule would create a new “Enhanced Entry Process,” based on lessons learned from the Section 321 Data Pilot and Entry Type 86 test, requiring the advance electronic submission of various data elements, including the shipment contents, origin, destination, and a 10-digit Harmonized Tariff Schedule of the United States (HTSUS) classification, amongst others. An HTSUS Waiver Privilege is also included in the proposal, allowing certain filers to bypass the requirement to submit an HTSUS classification, subject to certain requirements, including documented internal controls ensuring certain compliance measures. Goods that are regulated by other federal agencies and mail importations must go through the Enhanced Entry Process.
Additionally, the “Release from Manifest Process” will be renamed the “Basic Entry Process” and revised to include additional data elements for verifying eligibility for duty- and tax-free entry. Another key change is the specification that the “one person” eligible for the de minimis exception is only the owner or buyer of the goods and no longer a consignee receiving the goods. Where a person receives multiple shipments that exceed the $800 threshold in the aggregate on a single day, none of the shipments would be eligible for the de minimis program.
And the Fox Says…: The deadline to file comments to the NPRM is March 15. The ELVS rule is the first of two NPRMs announced by the Biden Administration in September 2024. A second NPRM is expected at a later date and will likely continue to build on CBP’s aggressive multi-pronged strategy. Stay tuned for a more in-depth analysis on the NPRM and its impacts.
4. Forced Labor Enforcement Updates: CIT Case to Challenge Forced Labor Finding, Auto Industry Targeted for Detentions, More Entities Added to UFLPA Entity List, Reports Scrutinize Global Supply Chains, USTR Issues Trade Strategy to Combat Forced Labor
Kingtom Challenges Forced Labor Finding
On December 23, 2024, aluminum extrusions exporter Kingtom Aluminio, a Chinese-owned company based in the Dominican Republic, filed a complaint with CIT to challenge CBP’s forced labor finding, which authorizes CBP to seize the company’s imports of aluminum extrusion and profile products at the port. In filing the suit, the company claims in part that CBP’s issuance of the finding was arbitrary or capricious and that CBP bypassed administrative steps in failing to first issue a Withhold Release Order. See Kingtom Aluminio v. US, CIT # 24-00264.
Auto Industry Targeted for UFLPA Detentions in FY 2025
Significantly, the Uyghur Forced Labor Prevention Act (UFLPA) dashboard statistics for FY 2025 published thus far show that CBP primarily targeted the automotive and aerospace sector, with 1,239 shipments stopped for suspected violation of the UFLPA in December alone, with a total of 2,042 shipments in the first three months of FY 2025. By way of comparison, in the entirety of FY 2024, only 197 shipments in this sector were stopped. This follows scrutiny from US Congress resulting from Sheffield University and Human Rights Watch non-governmental organization (NGO) reports alleging connections to Xinjiang in every part of the auto supply chain. These statistics may reflect a shift in the industries targeted for enforcement, which have historically focused on electronics, apparel and footwear, and industrial and manufacturing materials.
DHS Adds 37 Companies to UFLPA Entity List
On January 14, the US Department of Homeland Security (DHS) announced the addition of 37 companies to the UFLPA Entity List. These entities include companies that grow Xinjiang cotton, manufacture textiles, manufacture inputs for solar modules and the energy industry, and supply critical minerals and metals. The UFLPA Entity List is nearly 150 companies.
Reports Scrutinize Supply Chains for Forced Labor Concerns
Several reports were issued last month discussing supply chains and forced labor risks:
UMASS Amherst Labor Center issued a report covering REI’s published supplier list and alleged connections to forced labor.
Transparentem issued a report covering its investigation into conditions on cotton farms in Madhya Pradesh, India. The report warned that the NGOs could not definitively link the problematic farms to the specific supply chains of brands and retailers.
The Financial Times published a report discussing billions of dollars invested by environmental, social, and governance funds linked to forced labor in Xinjiang.
In its first ever Quadrennial Supply Chain Review, the White House recommended upgrades to trade legislation to strengthen supply chains.
USTR Issues Trade Strategy to Combat Forced Labor
On January 13, USTR issued a trade strategy to combat forced labor that outlines the actions the United States is taking and considering to address forced labor in global supply chains. We will outline the USTR’s strategy in our forthcoming 2025 forced labor guide for global businesses.
And the Fox Says…: Forced labor enforcement has shown no signs of slowing down, and we anticipate that enforcement will remain steady or even increase as the Trump Administration assumes office later this month, particularly due to US Sen. Marco Rubio’s (R-FL) nomination as Secretary of State. Companies in the solar, textile, and apparel industries specifically should review the recent additions to the UFLPA Entity List to confirm whether any entities listed are in their supply chains.
Recent reports have focused on the global supply chains of fashion and apparel brands and critical industries, underscoring the importance for companies in the United States and globally to monitor these reports to ensure their supply chains are not associated with forced labor risks. While companies have been encouraged to release their supplier lists, this comes with some risk, as NGOs have scrutinized the labor practices of publicly disclosed suppliers.
Finally, as we previously discussed, the Kingtom Aluminio CIT litigation joins other cases where importers and affected companies have filed suit against CBP for issues related to forced labor enforcement. As forced labor enforcement efforts intensify, we should continue to expect legal disputes over forced labor allegations in global supply chains. To date, we have not seen a final decision on any of the cases.
5. Mexico Takes Aim at Textile and Apparel Sector With IMMEX Restrictions Focused on E-commerce and Increased Tariffs
Effective December 20, 2024, Mexican President Claudia Sheinbaum Pardo announced a decree imposing significant changes to the import regime for certain apparel and textile products, including tariff increases and restrictions on temporary imports under Mexico’s Manufacturing, Industry, Maquila and Export Services (IMMEX) program.
Mexico applied temporary tariff increases on goods imported into Mexico through April 23, 2026, as follows:
Increase to 35% for 138 Harmonized Tariff Schedule (HTS) codes covering finished textile and apparel products, including items under Chapters 61, 62, 63, and 94.
Increase to 15% for 17 HTS codes covering textile inputs, including items under Chapters 52, 55, 58, and 60.
The decree also imposes restrictions on the temporary importation of certain textile and apparel products under the IMMEX program, which allows companies to defer duties on imported products, raw materials and components, enabling duty-free importation for manufacturing, assembly, export services such as e-commerce sales, or other programs, before re-exporting. The decree imposes restrictions on finished clothing and textile articles classified under HTS Chapters 61, 62, and 63 are excluded from the IMMEX program.
Shortly after the decree was published, Mexico’s Ministry of Economy revised the decree and exempted the IMMEX restriction for six months for goods classified in HTS chapters 61, 62, 63, and subheadings 9404.40 and 9404.90, as long as certain requirements are met.
And the Fox Says…: These changes are part of Mexico’s broader strategy to bolster its domestic textile and apparel industries, tackle compliance challenges under the IMMEX program, shield its textile and clothing sectors from alleged unfair trade practices, and possibly retaliate against the incoming administration’s proposed tariffs. Mexico’s decree could significantly affect textile and apparel importers utilizing the IMMEX program to bring goods into the United States.
Companies should reassess their import strategies, explore alternative sourcing to mitigate tariff impacts, and collaborate with trade compliance experts to navigate new regulations and optimize supply chain efficiency. The AFS team is well-equipped to assist businesses in adapting to these changes, offering expert guidance on global supply chains and duty mitigation.
6. Nippon No-Go: President Uses CFIUS Authority to Block Nippon-US Steel Acquisition, Parties Sue
On January 4, President Biden issued an executive order prohibiting the acquisition of US Steel by Japanese firm Nippon Steel, pursuant to his Committee on Foreign Investment in the United States (CFIUS) authorities. CFIUS is an interagency committee charged with reviewing certain foreign investments in the United States for national security risks. If CFIUS finds that such a risk arises from a given transaction, it can recommend that the president prohibit the transaction. President Biden’s order follows a contentious CFIUS review process of the approximately $14 billion deal, which resulted in a “split recommendation.” Split recommendations to the president result when CFIUS cannot come to agreement whether a transaction creates national security risks. In response to the order, US Steel and Nippon Steel filed multiple lawsuits alleging, among other things, political interference in the process.
And the Fox Says…: CFIUS has entered into uncharted territory. Presidential prohibitions on their own are extremely rare; “split recommendations” by CFIUS are rarer still; and CFIUS litigation is almost unheard of. Regardless of the outcome, this case is likely to significantly shape CFIUS’ evolving role in the national security and investment space for many years to come. The results are unpredictable: buyer (and seller) beware.
7. General License Gives Temporary Sanctions Relief to Post-Assad Syria
The US Department of Treasury’s Office of Foreign Assets Control (OFAC) issued General License 24 on January 6, authorizing for the next six months:
Transactions with governing institutions in Syria following December 8, 2024.
Transactions in support of the sale, supply, storage, or donation of energy, including petroleum, petroleum products, natural gas, and electricity to or within Syria.
Transactions that are ordinarily incident and necessary to processing the transfer of noncommercial personal remittances to Syria, including through the Central Bank of Syria.
The license — which aims to ensure that US sanctions “do not impede essential governance-related services in Syria following the fall of Bashar al-Assad on December 8, 2024” — covers transactions that are otherwise prohibited under Syria Sanctions Regulations, the Global Terrorism Sanctions Regulations, and the Foreign Terrorist Organizations Sanctions Regulations.
There are several important exceptions to the authorization, including most — but, crucially, not all — financial transfers to blocked persons (like Hay’at Tahrir al-Sham, the organization in control of the post-Assad government) and new investments in Syria. Note that comprehensive export controls against Syria are still very much in place. Check out our full client alert here.
And the Fox Says…: Companies and individuals relying on General License 24 must make sure that their activities are in one of the three approved categories and do not fall into one of the exceptions. In the meantime, OFAC’s wait-and-see approach offers temporary but much-needed sanctions relief to the Syrian people.
William G. Stroupe II, Natalie Tantisirirat, Sylvia G. Costelloe, and Matthew Tuchband contributed to this article.
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ETA Travel Requirement for Visitors to The United Kingdom
Most individuals who are visiting the UK or transiting through the UK, and who are exempt from obtaining a visitor visa, will now need to obtain an Electronic Travel Authorization (ETA) prior to travel. The ETA requirement takes effect for US citizens (as well as citizens for nearly 50 other countries) for travel to the UK on January 8, 2025 or later. The ETA is also required for those who are transiting through the UK.
The cost to apply for an ETA is UK £10. The UK Home Office states that processing will be completed within three business days, and possibly sooner. An approved ETA is valid for a period of two years, or until the applicant’s passport expires, and can be renewed.
The link to electronic registration is here. Travelers can also utilize the UK ETA app on their smartphones.
Additional information about the ETA scheme can be found here:
UK Home Office ETA scheme factsheet: ETA Factsheet
Guidance from our friends at Kingsley Napley: Kingsley Napley ETA guidance
Private Market Talks: Bringing Private Credit to the Wealth Channel with Nomura Capital Management’s Robert Stark [Podcast]
In our first episode of 2025, we’re excited to speak with Robert Stark, CEO of Nomura Capital Management. During our discussion, we discuss the competitive DCA ranges and challenges of building a private credit platform within a large, global financial institution. Robert also talks about how Nomura has been able to tap into its vast network of registered investment advisors to unlock distribution through the private wealth channel. Finally, we look forward and get Robert’s outlook for 2025. It’s a great start to the New Year!