The Department of Treasury’s office that administers reviews of foreign investments in U.S. companies is changing how it identifies critical technology businesses and related technologies that require mandatory review during a foreign investment process. The Committee on Foreign Investment in the United States (CFIUS or the Committee) issued a final rule effective October 15, 2020
On September 14, 2020, the U.S. Department of Treasury, as Chair of the Committee on Foreign Investment in the United States (CFIUS), published final regulations changing the mandatory CFIUS declaration requirements for transactions involving U.S. businesses that produce, design, test, manufacture, or develop critical technologies. Previously, the regulations provided that a CFIUS declaration was mandatory…
Last Thursday, the President issued two executive orders (“E.O.s”) targeting social media applications TikTok (and its parent company, ByteDance) and WeChat (and its parent company, Tencent Holdings). The E.O.s direct the Department of Commerce (“DOC”) to prohibit transactions involving the applications. Companies that deal directly with TikTok or WeChat in the United States and abroad or use their services need to evaluate the scope of those activities and determine if they will be affected by the E.O.s.
The E.O.s were issued pursuant to the national emergency declared in E.O. 13873 regarding information and communication services in the United States that are controlled by persons within the jurisdiction of a “foreign adversary.” In issuing the E.O.s, the President cited concerns that the Chinese government could gain access to Americans’ personal information collected by the applications, among other policy considerations. The President has the power to issue the directives under the International Emergency Economic Powers Act (“IEEPA,” 50 U.S.C. 1701 et seq.), which provides the President with the authority to declare national emergencies and implement sweeping trade controls based on national security concerns.
The intended scope of the E.O.s is not clear due to ambiguous language used in Section 1, which contain the E.O.s’ primary prohibitions. Here is an excerpt of that section from the TikTok order:…
Continue Reading President Issues Executive Orders Targeting TikTok and WeChat
Earlier this week, the COVID-19 Accountability Act was introduced in the Senate and the House by Rep. Senator Lindsey Graham and Rep. Doug Collins respectively. While the text of the draft legislation is not yet available, a summary indicates that it would require within sixty days that the President certify to Congress that China has:
“Provided a full and complete accounting to any COVID-19 investigation led by the United States, its allies, or United Nations affiliates, such as the World Health Organization (WHO);
- Closed all wet markets that have the potential to expose humans to health risks; and
- Released all pro-democracy advocates in Hong Kong that were arrested in the post COVID-19 crackdowns.”
If there is no such certification, the Act would then authorize the President to impose at least two of a variety of sanctions to hold China accountable, including travel bans, visa revocations, asset freezes, restricting U.S. financial institutions from loaning money to Chinese businesses, and barring Chinese firms from being listed on American stock exchanges. Such sanction would be effective until the certification could be made.…
Continue Reading COVID-19 Accountability Act – New Potential Sanctions on China
On May 12, 2020, the U.S. Treasury’s Office of Foreign Assets Control (“OFAC”) announced that U.S. persons no longer need OFAC authorization to engage in dealings with Nynas AB, provided such activities do not involve blocked persons or otherwise prohibited activities. Further, Nynas AB is no longer subject to U.S. blocking sanctions as the entity…
The Department of State’s Office of Defense Trade Controls Policy announced that they are temporarily suspending, modifying, and excepting certain International Traffic in Arms Regulations (ITAR) requirements in an effort to mitigate the impact of the COVID-19 pandemic. The temporary changes are as follows:
- As of February 29, 2020, ITAR registrations and fees with an
Our previous blog post listed the specific types of PPE respirators, masks, and gloves restricted for export from the U.S. on April 10, 2020 by the Federal Emergency Management Agency (FEMA) in response to the COVID-19 pandemic.
On April 21, 2020, FEMA published a list of exemptions to those export restrictions which includes:
- shipments to
On April 22, 2020, President Trump ordered Chevron to “wind down” its business in Venezuela by December 1, 2020. This will have a significant impact on companies that supply Chevron with equipment used for oil and gas projects in Venezuela that were previously licensed.
Effective April 21, 2020, the Department of Treasury’s Office of Foreign…
On April 10, 2020, the Federal Emergency Management Agency (FEMA) issued a temporary final rule (TFR), pursuant to the Defense Protection Act (DPA) and related authorities, to require explicit approval for exports of certain personal protective equipment (PPE). This TFR is aimed at allocating certain scarce or threatened materials for domestic use as needed for national defense during the COVID-19 pandemic. The TFR took effect April 7, 2020, and remains effective until August 10, 2020. This date could be extended.
Five Types of PPE Currently Covered:
Pursuant to this TFR, shipments of the following five types of PPE, determined by the Secretary of Health and Human Services (HHS) to be “scarce or threatened materials”, may NOT leave the United States without explicit FEMA approval:
- N95 Filtering Facepiece Respirators, including devices that are disposable half-face-piece non-powered air-purifying particulate respirators intended for use to cover the nose and mouth to reduce exposure to pathogenic biological airborne particulates;
- Other Filtering Facepiece Respirators (e.g., those designated as N99, N100, R95, R99, R100, or P95, P99, P100), including single-use, disposable half-mask respiratory protective devices that cover the user’s airway and offer protection from particulate materials at an N95 filtration efficiency level;
- Elastomeric, air-purifying respirators and appropriate particulate filters/cartridges;
- PPE surgical masks, including masks that cover the user’s nose and mouth and provide a physical barrier to fluids and particulate materials; and
- PPE gloves or surgical gloves, including exam and surgical gloves, as well as gloves intended for the same purposes.
Note that this list is not exhaustive, and that the FEMA Administrator may add other materials if they are determined to be scarce and critical materials essential for national defense. Other such materials would be added to this allocation order, and there would be a Federal Register notice.
FEMA Approval Process
Pursuant to this TFR, before any shipments of these materials may leave the United States, the U.S. Customs and Border Patrol (CBP) will detain the shipment temporarily, so that FEMA may determine in a reasonable time period, which is not defined, and acting based on promoting national defense how to proceed. They could either issue a rated order for all or part of the shipment and return the merchandise for domestic use (i.e., not allowing the export at all), or they could allow the export in whole or in part.…
Continue Reading FEMA Issues New Rule Requiring Approval for Exports of Certain Personal Protective Equipment
Even as companies make rapid changes to respond to business challenges posed by the COVID-19 pandemic, executives and compliance team leaders must protect their company and employees by continuing to comply with critical U.S. international trade laws and regulations (including those addressing customs, anti-corruption, export controls, and economic sanctions). Trade regulations are not suspended, and it is important to not make assumptions or conclude that the law does not apply during this difficult time with all of the issues competing for attention, not least family and employee health and company survival. With the need to move so quickly, we have seen clients inadvertently come close to trade compliance violations that would not pose a problem for them in normal times. The following suggestions are intended to help companies reduce the risk of certain significant federal international trade law violations and avoid inbound and outbound shipment delays – while continuing to operate.
Trade rules and surrounding circumstances are changing quickly. For example, the Administration very recently appeared to be seriously considering suspending or lowering certain import tariffs, but backed away from that approach given the complexity of administering a revised system on short notice, among other problems. You are likely also seeing reports about various countries’ restrictions on exports of medicine, medical equipment (including protective equipment and ventilators), and food, among other products. How do you keep up with what is actually happening that may affect your company and what is just rumor that you do not need to react to?
One step companies are taking is to include key personnel from their trade compliance and legal teams in the decision processes related to changing international transactions. You need to move quickly, but including a team member who knows trade rules can help keep things on track and help avoid clear compliance errors.
Here are four substantive areas of U.S. trade regulation that should continue to be part of international transaction diligence: U.S. anti-corruption, export controls, and sanctions laws (that permit most exports of medicines, medical devices, and food to sanctioned locations), and U.S. Customs rules on personal protective equipment and medical devices (among other imported items). …
Continue Reading COVID-19 – Four Key International Trade Compliance Considerations