President Obama Signs Trade Facilitation and Enforcement Act

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February 26, 2016

This week, President Obama signed the customs and enforcement bill into law. In his formal statements, however, he objected to a provision in the legislation relating to trade with Israel while seeking to preserve his constitutional power to set objectives in international negotiations not subject to fast-track authority.

Section 909 of the new law requires the president to submit a report to Congress by August 23 describing any barriers to trade that foreign countries or international organizations are imposing upon United States persons “operating or doing business in Israel, with Israeli entities, or in Israeli-controlled territories.” President Obama objected to this section, because references to ‘Israeli-controlled territories’ could be construed as legitimizing Israel settlements within Palestinian territory.

Some items in the legislation will be implemented within a much shorter timeframe than the duty evasion provisions. Notable among these is a change in the "de minimis" threshold for U.S. imports. Within 15 days of the bill's enactment (March 11), the threshold under which shipments can enter the U.S. without paying duties or filing formal paperwork will increase to $800 from the current level of $200.

The Trade Facilitation Act also includes new currency provisions. Once they are implemented, biannual reports by the Treasury Department on international exchange rate policies will include additional standards for determining whether countries have manipulated their currencies. Under the new provisions, these countries must submit to "enhanced analysis" by the Treasury Department, and the administration will be obligated to enter into subsequent bilateral talks.

Obama lauded the bill as a "important milestone”, and praised the process it establishes for investigating evasion of trade remedy duties, as well as other aspects of the legislation.

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