A second House member from North Carolina went to bat for Cree in the company’s attempt to fend off Trade Act Section 301 tariffs on U.S. imports of LEDs from China. The company produces LED wafers at its plant in Durham, North Carolina, exports them to China for making them into finished packaged chips and re-imports those chips to the U.S., said Rep. David Price, D-N.C., in a June 8 letter to U.S. Trade Representative Robert Lighthizer posted Wednesday in docket USTR-2018-0005. Cree began exporting the wafers 11 years ago to a plant it owns in Huizhou so it could “serve the rapidly growing and large Chinese and Asian markets,” said Price, who said 2,500 Cree employees work in his congressional district in Durham. Unless the USTR’s office removes from the tariffs list LEDs classified under the Harmonized Tariffs Schedule subheading 85414020, Cree would be forced to pay 25 percent higher duties on the devices, “despite the fact that approximately 70 percent of the value of these LED chips and components are based on U.S. intellectual property,” Price said. Including those LEDs on the final tariffs list “erroneously entangles the company into tariff proposals that are unlikely to result in a reduction of unfair IP practices in China,” he said. Rep. George Holding, R-N.C., earlier urged Lighthizer to remove Chinese LED imports from the final tariffs list (see 1806100001). The White House announced May 29 that the USTR’s office will release its final tariffs list by Friday and the tariffs will take effect “shortly thereafter” (see 1805290046).

An amendment that would stop the deal to lift an export ban on ZTE is to be considered by the Senate Monday as part of the defense authorization bill. Since the House didn't include such an amendment in its version, passed in May, conference committee members would have to agree to include it in the final version. House Speaker Paul Ryan, R-Wis., who won't be a conferee, said he doesn't know what position the House negotiators will take. "I'm going to leave it to our conferees," he said at a news conference Thursday. House Minority Leader Nancy Pelosi, D-Calif., in response to our question, said it's baffling President Donald Trump sought to intervene in the Commerce Department's enforcement case. Initially, Commerce before Trump weighed in said the company deserved a seven-year export ban because of lies about complying with earlier penalties. "The president is saying we can't act against them because we have to save jobs in China," Pelosi said. "Really? ZTE should not be getting this gift." Wednesday, a White House spokesman defended the revised penalty (see 1806130070), saying it gives the government "complete oversight of their future activity without undue harm to American suppliers and their workers." Senate Minority Leader Chuck Schumer, D-N.Y., called that an attempt to derail the bipartisan agreement to restore the export ban. "Both parties in Congress must be resolute in blocking the president's bad, pro-China ZTE deal," he said. "Congress should have the ability to have leverage in that discussion," Pelosi said: "You can't be frivolous about using the national security waiver" on tariffs. Comparing ZTE to steel and aluminum tariffs, she said that "to say you're instituting a tariff because of national security reasons, and at the same time, you're saying to ZTE, 'It's OK if you're a cybersecurity threat, it's OK if you violated the sanctions' -- how can this make sense?"

Imports at major U.S. retail container ports are expected to set record volumes this summer and fall, despite the Trump administration’s threat to impose tariffs on $50 million worth of goods from China, said the National Retail Federation Thursday. “Consumers are buying more and that means retailers are importing more,” said the NRF. “Imports continue to be the primary source of high-quality, mass-produced necessities at affordable prices and will be for the foreseeable future. If tariffs are imposed on consumer goods, that will only drive up prices for American families while doing little or nothing to punish those responsible for unfair trade practices.” The report estimates U.S. ports handled 1.63 million 20-foot-long cargo containers or their equivalents in April, which was down 5.8 percent sequentially from March and up 0.3 percent year-over-year. It estimates ports handled 1.77 million containers in May, up 1.3 percent year-over-year. It forecasts monthly year-over-year increases averaging nearly 4 percent from June through October.

New “trade taxes” will “increase consumer prices, decrease jobs and weaken the US economy,” tweeted CTA President Gary Shapiro Tuesday, hours after the White House announced it will go through with 25 percent tariffs on Chinese imports after the Office of the U.S. Trade Representative releases its final tariffs list by June 15 (see 1805290046). CTA otherwise was silent on the Trump administration's decision to proceed with tariffs, while other tech groups denounced it. CTA "remains opposed" to the use of tariffs to address the "imbalance" in the U.S.-China trade relationship "because of the high likelihood of short- and long-term negative consequences to our own economy and to our member companies," it testified May 16 at a USTR hearing (see 1805160020).

A bipartisan group of senators, led by the No. 2 in Republican leadership, asked the treasury secretary, commerce secretary and U.S. trade representative not to loosen export controls for China as they consider how to narrow the bilateral trade deficit. The letter, sent Tuesday, said loosening export controls on sensitive technology "would bolster China’s aggressive military modernization and significantly undermine long-term U.S. national security interests." In addition to Sen. John Cornyn, R-Texas, Sen. John Thune, R-N.D., and Minority Leader Chuck Schumer, 13 Republicans, 13 Democrats and Independent Sen. Angus King of Maine signed the letter. The missive brings up possible softening of sanctions on ZTE: "We urge you not to compromise lawful U.S. enforcement actions against serial and pre-meditated violators of U.S. law, such as ZTE. Export control and sanctions laws should not be negotiable, because fidelity to the rule of law is a key part of what distinguishes the U.S. from a country like China that is ruled by a Communist dictatorship." On Capitol Hill, anti-ZTE efforts moved forward (see 1805230058).

The FCC set terms for access to sensitive information in its rulemaking to safeguard national security in communications (see 1804170038). An NPRM "seeks comment on a rule to prohibit, going forward, the use of universal service support to purchase equipment or services from any communications equipment or service providers identified as posing a national security risk to communications networks or the communications supply chain," said the Wireline Bureau protective order Wednesday in docket 18-89. On Capitol Hill, anti-ZTE efforts moved forward (see 1805230058).

Scrutiny of social media platforms like Facebook should be seen as a cautionary model for the regulators watching the rapid growth of e-commerce, said Customs and Border Protection Commissioner Kevin McAleenan during a speech at the U.S. Chamber of Commerce Tuesday: "Recent developments in social media and the oversight of social media provide some context I think we should reflect on." For e-commerce, as with Facebook, "the relevant regulators have to be cognizant of the potential risks that such expansion brings," he said. As the e-commerce "business model has evolved, so have the potential threats," McAleenan said. "There are digital venues that enable the direct shipment of small packages to retailers and consumers eager to find that great deal who instead may receive counterfeit items." Growth in online commerce is overwhelming, the CBP chief said. The agency will need to make internal changes, he said. "CBP will use data analytics and an array of powerful resources at our National Targeting Center and forward deploy to our ports of entry." It will work with the Department of Homeland Security. CBP recently visited Amazon headquarters with customs officials from the U.K., Australia, Canada and New Zealand, he said. "It's a dialogue we need to continue, with eBay, with Alibaba, with major retailers." CBP's e-commerce strategy also includes opportunities for collaboration with other agencies, including state and local governments (see 1805070034).

Proposed new 25 percent tariffs on products from China will be put "on hold" while the Trump administration tries to "execute the framework" of a trade deal with China, Treasury Secretary Steven Mnuchin said in an interview on Fox News Sunday. "I'm pleased to report that we've made very meaningful progress and we've agreed on a framework, which is important to understand, and the framework includes their agreement to substantially reduce the trade deficit by increasing their purchasing of goods," he said of the talks with the Chinese. China and the U.S. released a joint statement Saturday saying both sides are aligned on the "importance of intellectual property protections, and agreed to strengthen cooperation," among other terms. Comments are due Tuesday in docket USTR-2018-0005 to rebut statements made in three days of hearings the U.S. Trade Representative's office held last week on the proposed tariffs (see 1805160067 or 1805160020). USTR Robert Lighthizer wants "real work" for "changes in a Chinese system that facilitates forced technology transfers in order to do business in China and the theft of our companies’ intellectual property and business know how," he said in a statement his office emailed us Monday. "Getting China to open its market to more U.S. exports is significant, but the far more important issues revolve around forced technology transfers, cyber theft and the protection of our innovation. As this process continues the U.S. may use all of its legal tools to protect our technology through tariffs, investment restrictions and export regulations. Real structural change is necessary." Despite the Trump administration's pause in adding tariffs on goods from China, it's too early to end efforts on product exemptions, Baker McKenzie lawyer Ted Murphy blogged. "While this is a positive development, it is also subject to change," he said. "For now, we are recommending that companies continue to pursue exclusions just in case."

There are “more effective mechanisms” than 25 percent tariffs on finished TVs sourced from China that the U.S. Trade Representative’s office “should consider” to curb allegedly unfair Chinese trade practices, said Best Buy in May 11 comments posted Thursday in docket USTR-2018-0005. What those suggested mechanisms are were heavily redacted. There are “few and insufficient alternatives” to the finished flat-panel TVs imported from China “to serve existing U.S. market demand,” and so the tariffs would hurt U.S. consumers the most, said Best Buy. There's no display panel production in the U.S. so there's no American market to protect with tariffs, it said. Construction of Foxconn’s LCD fab in Wisconsin (see 1711130014) “has not yet begun and the start-up of this plant is some years away,” it said. “Even when it is fully operational in a few years, the plant will be unable to supply even a small fraction of the total U.S. market for flat panel TVs.” The retailer also testified at the USTR office’s hearing Tuesday that tariffs would have “no effect” on changing allegedly bad Chinese trade policy (see 1805170067).

The House Appropriations Committee unanimously approved an amendment Thursday to its FY 2019 Commerce, Justice and Science appropriations bill that would bar the Department of Commerce from renegotiating its recent set of sanctions against Chinese telecom giant ZTE. The amendment, offered by Rep. Dutch Ruppersberger, D-Md., follows days of Capitol Hill criticism of President Donald Trump for a Sunday tweet saying the administration is working with the Chinese government to keep ZTE in business. Secretary Wilbur Ross said the Commerce Department is looking at alternative punishments but officials are resisting attempts to connect the ZTE ban with ongoing trade negotiations with China (see 1805140062, 1805150068 and 1805160061). “Supporting this amendment will show that the U.S. government stands behind the sanctions that it enacts, and will enforce them,” Ruppersberger said . “It also further prevents foreign companies beholden to their governments from further infiltrating our U.S. networks.” The underlying Commerce appropriations bill includes the Trump administration's request for more than $33 million to NTIA, down from the $36 million requested in FY 2018 and largely on par with its continuing appropriations for the year (see 1802120037).