Supply Chain

The Export-Import Bank of the U.S.  Board of Directors approved a $90 million guarantee under EXIM’s Supply Chain Finance Guarantee Program to Dutch Financier ING Capital to finance U.S. Natural Gas processor Freeport LNG Marketing. In 2020 Exim approved a deal with Freeport LNG, "with the first-ever use of a funder guarantee structure" for  $50 million.  That deal was a "tripartite agreement"  between EXIM, Private Export Funding Corporation (PEFCO) , and the scandal-plagued, now insolvent Greensill Capital. In June 2022 a blast attributed to safety failures caused approximately $275 million in damages and took the plant offline for 18 months.

 The United States announced the resolution of another USMCA Rapid Response Labor Mechanism (RRM) dispute at a  Caterpillar, Inc. subsidiary in Nuevo Laredo, that produces remanufactured auto parts. The plant's workers remain on strike. After the United States requested Mexico’s review of the matter, Mexico and the company took several actions to address the denials of rights the United States found, including actions to reinstate dismissed workers and correct other employer interference in union activities.

Goods imported into the UK from countries with a lower or no carbon price will have to pay a levy by 2027, ensuring products from overseas face a comparable carbon price to those produced in the UK.  The carbon border adjustment mechanism (CBAM) will ensure highly traded, carbon intensive products from overseas in the iron, steel, aluminium, fertiliser, hydrogen, ceramics, glass and cement sectors face a comparable carbon price to those produced here.

The United States is once again asking the Mexican government to review worker rights violations at a automotive plant under the US-Mexico-Canada Agreement’s rapid response labor mechanism. The latest request is for Mexico to look at whether workers at the Fujikura Automotive Mexico facility in Piedras Negras in the state of Coahuila are being denied the right to freedom of association and collective bargaining, including through the company blacklisting or otherwise retaliating against workers because of union activity at their prior employer, Manufacturas VU. …

On December 12, the United States and the Philippines held the first meeting of a Labor Working Group under the U.S - Philippines Trade and Investment Framework Agreement (TIFA), which was established by President Biden and President Ferdinand "Bongbong" Marcos in May 2023.  U.S. officials encouraged "increased concrete actions and bilateral engagement" to protect union organizers against violence and harassment, promote workers’ rights to freedom of association and collective bargaining, and facilitate dialogue among U.S. and Philippine governments, worker organizations, and employer organizations to inform the objectives of the Labor Working Group.  

The United States announced the successful resolution of the first USMCA facility-specific Rapid Rapid Response Labor Mechanism (RRM) petition in the garment sector. The US action comes in response to a petition alleging that workers at an Industrias del Interior garment facility in the state of Aguascalientes, were being denied the right to freedom of association and collective bargaining. The Factory sews for US fashion brand Levi Strauss & Co.

Five Federal trade enforcement agencies issued a " Know Your Cargo" announcement to industry Monday, describing best practices for shippers to comply with the current enforcement regime. The Department of Justice, Commerce’s Bureau of Industry and Security (BIS), Department of Homeland Security’s Homeland Security Investigations, State’s Directorate of Defense Trade Controls (DDTC), and Treasury’s Office of Foreign Assets Control (OFAC) issued the joint compliance note, advising entities in maritime and transportation industries to implement compliance measures against illicit practices, particularly in high-risk areas and cargo types.

The Department of State issued the Uyghur Human Rights Policy Act (UHRPA) Report to Congress; Treasury is sanctioning two Chinese government officials for their connection to serious human rights abuses in Xinjiang; and the Department of Homeland Security-led interagency Forced Labor Enforcement Task Force added of three PRC entities to the Uyghur Forced Labor Prevention Act Entity List.

The Department of Commerce, International Trade Administration, seeks nominations for immediate consideration to fill positions on the Advisory Committee on Supply Chain Competitiveness (“The Committee”).

President Biden presided over the first meeting of his newly-created Council on Supply Chain Resilience, formed to prevent the shortages in medical and consumer products that took place during the global pandemic.  His Administration’s efforts to strengthen US supply chains also means more domestic manufacturing and less reliance on imports, the President said. “Today, our supply chains are stronger than ever, with backlogs, bottlenecks, and shipping rates at a 25-year low,” he said. “We've created 14 million new jobs, including 800,000 manufacturing jobs.”

House China hawks called for an immediate investigation of all Chinese Light Detection and Ranging (LiDAR) companies to determine whether their activities justify inclusion on US government restricted entities lists.  LiDAR technologies have broad applications in navigation and control, including autonomous systems. "Given the importance of LiDAR, it is crucial to ensure U.S. technology used in foreign LiDAR systems are not being leveraged by our adversaries to create autonomous military vehicles and weapons. Urgent action is also needed to stop LiDAR produced by state-backed entities from foreign adversary countries to proliferate in the U.S. market or gain access to U.S. capital markets or U.S. critical infrastructure systems," the lawmakers wrote.

Treasury and Internal Revenue Service (IRS) released proposed guidance on the clean vehicle provisions of the Inflation Reduction Act (IRA). Today’s Notice of Proposed Rulemaking (NRPM) provides clarity and certainty around the IRA’s foreign entity of concern (FEOC) requirements.  Beginning in 2024, an eligible clean vehicle may not contain any battery components that are manufactured or assembled by a FEOC, and, beginning in 2025, an eligible clean vehicle may not contain any critical minerals that were extracted, processed, or recycled by a FEOC.

As the Department of Energy sets to distributing $6 billion from the Infrastructure Investment and Jobs Act,  to support domestic battery material processing, manufacturing, and recycling,  the Department is required prioritize material processing and manufacturing applicants that will not use battery material supplied by or originating from a “foreign entity of concern” (FEOC). Recognizing that it may be difficult to definitively evaluate the contractual relationships of upstream suppliers, DOE is also considering whether to provide entities with the opportunity to voluntarily request a review of contracts and licensing arrangements by DOE in order to provide additional certainty regarding whether effective control by a FEOC is present.

US Trade Representative Katherine Tai announced  that the United States has asked Mexico to review whether workers at the Autoliv Steering Wheels Mexico facility in El Marqués in the state of Quéretaro are being denied the right to freedom of association and collective bargaining. Allegations against the Swedish airbag giant include firing workers in retaliation for union activity, making coercive statements that interfere with workers’ rights and denying access to the facility for union-related activity.

The Justice Department’s Environment and Natural Resources Division (ENRD) is prioritizing the investigation and prosecution of timber trafficking offenses, including through the recent creation of the TIMBER Enforcement Working Group. This has led to the largest-ever fine for timber trafficking, restitution to foreign countries for illegally sourced timber and insight into how trafficking works.

Representative Chris Smtih (R-NJ) and Senator Jeff Merkley (D-OR) of the bicameral Congressional-Executive Commission on China (CECC) sent letters Oct. 31 inquiring about Costco and ADI's selling of banned products with ties to China.

The bipartisan Congressional-Executive Commission on China (CECC) held a hearing last week on forced labor in China’s seafood industry and how seafood caught and processed with forced labor ends up in the U.S. supply chains. The CECC’s Chairs, Representative Chris Smith (R-NJ) and Senator Jeff Merkley (D-OR) were joined at the hearing by Commissioner Thea Lee, the Deputy Undersecretary for International Affairs at the Department of Labor.  In his opening statement Mr. Smith cited the work of The Outlaw Ocean Project whose reporting exposed a “disconcerting pattern of People’s Republic of China (PRC) based companies exploiting the forced labor of Uyghurs and North Koreans to process substantial quantities of seafood destined for the U.S. market.

United States Trade Representative Katherine Tai announced Monday that the United States has asked Mexico to review whether workers at the Asiaway Automotive Components Mexico facility in San Luis Potosiare being denied the right to freedom of association and collective bargaining. Asiaway Automotive Components Mexico performs die casting and machining of aluminum parts for "Tier One" suppliers such as Magna, Cummins, and Robert Bosch, as well as General Motors and BMW. The plant opened in June of 2023 and employs 300 workers.   Parent company Ningbo Asiaway Automotive Components Co.,Ltd is a privately held company based in Ningbo, an industrial hub near Shanghai. 

The Administration is being slow in carrying out enforcement activities to prevent goods made with forced labor from entering the US market, Congressional lawmakers and witnesses at a House Homeland Security subcommittee hearing. Customs and Border Protection needs to take a more proactive approach to enforcing the Uyghur Forced Labor Prevention Act, Homeland Security oversight, accountability and enforcement subcommittee Chairman Dan Bishop (R-NC) commented.

After being cited twice for unfair labor practices under the USMCA, Troy Michigan-based VU Manufacturing has reportedly closed their automotive components facility in Piedras Negras, Coahuila, Mexico.  "[R]ather than comply with the terms of the remediation plan and ensure it is operating consistent with Mexican labor laws, the United States understands that Manufacturas VU has closed the facility and ended operations in Mexico,” read a USTR statement.

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