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President Trump Issues Executive Order to Reduce Federal Regulations

President Trump issued on 30 January an executive order on reducing federal regulation that could impact the trade community. This order appears to be part of Mr. Trump’s avowed goal of eliminating “a little more than 75 percent” of existing regulations. Specifically, the order states that “unless prohibited by law, whenever an executive department or agency publicly proposes for notice and comment or otherwise promulgates a new regulation, it shall identify at least two existing regulations to be repealed.” In addition, “any new incremental costs associated with new regulations shall, to the extent permitted by law, be offset by the elimination of existing costs associated with at least two prior regulations.” The elimination of existing regulations must also be done via notice and comment, which can take months if not longer.

The order directs the head of the Office of Management and Budget to provide federal agencies with guidance addressing issues such as processes for standardising the measurement and estimation of regulatory costs; standards for determining what qualifies as new and offsetting regulations; standards for determining the costs of existing regulations that are considered for elimination; processes for accounting for costs in different fiscal years; methods to oversee the issuance of rules with costs offset by savings at different times or different agencies; and emergencies and other circumstances that might justify individual waivers of the order’s requirements. The order also requires OMB to consider phasing in and updating these requirements.

Further, the order requires OMB to notify each federal agency each year of the total amount of incremental costs it will be allowed in issuing and repealing regulations for the next fiscal year. No regulations exceeding the agency's allowance will be permitted in that fiscal year unless required by law or approved in writing by OMB. For fiscal year 2017, which runs through 30 September, the total incremental cost of all new regulations is zero. This order does not apply to regulations associated with national security or foreign affairs functions; regulations related to agency organisation, management or personnel; or any other category of regulations exempted by OMB.

This is perhaps the most visible of several recent executive actions taken by President Trump to lessen the overall regulatory burden on the U.S. private sector and streamline what he views as an oversized Washington bureaucracy. The president issued a separate executive order on 24 January directing executive departments and agencies to support the expansion of manufacturing in the United States through expedited reviews of and approvals for proposals to construct or expand manufacturing facilities as well as through reductions in regulatory burdens affecting domestic manufacturing. Among other things, this order requires the U.S. Department of Commerce to seek input from stakeholders concerning federal actions to streamline permitting and reduce regulatory burdens for domestic manufacturers and develop a plan identifying priority actions and recommended deadlines for completing actions, including any proposed changes to existing regulations or statutes as well as actions to change policies, practices or procedures that can be taken immediately under existing authority.

Also of potential interest is a 23 January executive order implementing a freeze on the hiring of federal civilian employees across the executive branch. As part of this freeze, no vacant positions existing as of noon on 22 January may be filled and no new positions may be created, except in limited circumstances and except for military personnel. The order indicates that the head of any executive department or agency may exempt from the hiring freeze any positions that he/she deems necessary to meet national security or public safety responsibilities, and the director of the Office of Personnel Management may also grant exemptions whenever necessary.

The federal hiring freeze has attracted criticism from a number of lawmakers, including nine senators who have urged the president to rescind it with respect to employees responsible for trade enforcement. The lawmakers argue that the freeze runs contrary to Mr. Trump’s campaign vow to make enforcement the centre of his trade reform plan, particularly given the additional enforcement responsibilities conferred on federal agencies by the Trade Facilitation and Trade Enforcement Act of 2015.

Specific initiatives that could be negatively affect by the freeze, according to the lawmakers, include efforts by the DOC to combat dumping of steel, softwood lumber and other commodities; U.S. Customs and Border Protection’s identification and investigation of companies that are failing to pay import duties, importing counterfeit merchandise or otherwise violating U.S. trade laws; the Office of the U.S. Trade Representative’s investigation and prosecution of trade barriers in mainland China and other economies that fail to comply with their international obligations; the U.S. Department of Labor’s Bureau of International Labor Affairs’ identification of cases in which foreign governments are violating labour commitments or foreign companies are producing goods using child or forced labour; the U.S. Fish and Wildlife Service’s investigation of illegal trafficking in endangered species and stolen timber; and the U.S. Department of Justice’s defence of U.S. trade remedy actions and prosecution of companies that violate U.S. trade laws.

Finally, President Trump issued a memorandum on 20 January postponing for 60 days the effective date of all regulations that had been published in the Federal Register but had not yet taken effect. A summary of the more significant regulatory delays is provided below.

Importation of Vehicles/Engines and TSCA Certifications

CBP has postponed from 26 January to 21 March the effective date of a final rule amending CBP’s regulations relating to the importation of certain vehicles and engines under the Clean Air Act in order to harmonise the documentation requirements applicable to different classes of vehicles and engines that are subject to the CAA’s emission standards. The rule further amends the regulations to permit importers to file the required Environmental Protection Agency declaration forms with CBP electronically.

CBP has also postponed from 26 January to 21 March the effective date of a final rule amending the agency’s regulations regarding the requirement to file a Toxic Substances Control Act certification when importing chemicals in bulk form or as part of mixtures and articles containing a chemical or mixture. This rule allows importers to file the required EPA TSCA certifications electronically, clarifies and adds certain definitions, and eliminates the paper-based blanket certification process.

Export Control Change on Software

The Bureau of Industry and Security has postponed a change in export controls on certain software. In a 25 November 2016 final rule BIS amended the Export Administration Regulations to remove nuclear non-proliferation Column 2 licence requirements from certain pressure tubes, pipes, fittings, pipe valves, pumps, numerically controlled machine tools, oscilloscopes and transient recorders on the Commerce Control List. This rule also created four new Export Control Classification Numbers to maintain anti-terrorism controls on certain affected commodities and related software and technology.

BIS states that a consequence of the amendment of ECCN 3A992 to add certain oscilloscopes and transient recorders under new paragraphs 3A992.d through .g was that ECCN 3D991, which includes certain software for general purpose electronic equipment described in ECCN 3A992, then also controlled software for the development, production or use of those devices. Such software had been classified and licenced under the designation EAR99 and its classification under ECCN 3D991 imposed a foreign policy control for anti-terrorism reasons.

Because such controls must first be notified to Congress, BIS delayed implementation of this control until 31 January. However, in light of the presidential memorandum, BIS now states that software specially designed for the development, production or use of items previously controlled under ECCN 3A292 will continue to be classified and licenced under the designation EAR99 through 21 March. As of 22 March such software will be classified and licenced under ECCN 3D991.

Electronic Data Submission for Imports of Tableting and Encapsulating Machines

The Drug Enforcement Administration has announced that the effective date of its final rule requiring the electronic submission through the Automated Commercial Environment of required data for the import and export of tableting and encapsulating machines, controlled substances and listed chemicals has been delayed from 30 January to 21 March. In addition, compliance with this rule is now not required until 180 days after 30 January (approximately 30 July).

Energy Standards or Test Procedures for Various Products

The Department of Energy has postponed the effective dates of the following rules.

  • a final rule amending the energy conservation standards for ceiling fans – effective date delayed from 20 March to 21 March
  • a final rule establishing energy test procedures for certain varieties of compressors – effective date delayed from 3 February to 21 March
  • a final rule establishing energy test procedures for certain walk-in cooler and freezer components – effective date delayed from 27 January to 21 March
  • a final rule amending the energy test procedures for central air conditioners and heat pumps – effective date delayed from 6 February to 21 March
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