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On May 21, the U.S. Treasury Department, as chair of the Committee on Foreign Investment in the United States (“CFIUS”), issued a proposed rule that more directly links mandatory filing obligations with export control restrictions administered by other federal agencies, including the Bureau of Industry and Security (“BIS”) and the Directorate of Defense Trade Controls

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:

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

On April 28, 2020, the Department of Commerce’s Bureau of Industry Security (“BIS”) published three separate rules which, in response to the Administration’s conclusion that “civil-military integration” in China is increasing, impose significant additional restrictions on the export of dual-use items to strategic rivals including China, Russia, and Venezuela.  These rules, when implemented, will have an especially acute effect on transactions with China.  Specifically, consistent with the Administration’s conclusion that these countries present national security and other foreign policy concerns, BIS restricted exports, re-exports, and in-country transfers to these destinations by: 1) issuing a final rule expanding end-use and end-user restrictions related to China by expanding the scope of prohibitions to include “military end-users” in China and expanding the definition of “military end use”,  among other changes; 2) issuing a final rule removing a license exception that allows the export of some items to certain countries that present national security concerns, including China and Russia, provided that the end-use was civilian (license exception CIV); and 3) issuing a proposed rule narrowing the scope of a license exception that allows the re-export of some items that present national security concerns (license exception APR).

These changes, which are largely effective on June 29, 2020, will create additional hurdles in transactions with China, Russia, and Venezuela. 
Continue Reading Bureau of Industry and Security Imposes Significant Additional Restrictions on Exports to China, Russia, and Venezuela

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

On January 17, 2020, the U.S. Treasury Department published final rules in the Federal Register implementing the Foreign Risk Review Modernization Act (“FIRRMA”), one of which implements FIRRMA’s provisions regarding foreign investments in U.S. real estate.  In accordance with FIRRMA’s expansion of Committee on Foreign Investment in the United States (“CFIUS”) jurisdiction, these final rules

On January 17, the U.S. Treasury Department issued final rules implementing the Foreign Investment Risk Review Modernization Act (“FIRRMA”), which expanded and clarified the jurisdiction of the Committee on Foreign Investment in the United States (“CFIUS”) (an additional final rule regarding real estate transactions was published the same day and will be the subject of

Late last month, the Directorate of Defense Trade Controls issued a long-awaited interim final rule regarding what qualifies as the export, re-export, or transfer of technical data (a “controlled event”) under the International Traffic in Arms Regulations (“ITAR”). Specifically, in 2016, the Bureau of Industry and Security (“BIS”) issued a final rule clarifying that the

Companies outside the U.S. contemplating purchases of U.S. business (and potential U.S. acquisition targets) are continuing to parse the Department of the Treasury’s two proposed regulations continuing implementation of the Foreign Investment Risk Review Modernization Act (“FIRRMA”).  The proposed rules change the Committee’s jurisdiction and certain procedures related to the national security reviews undertaken by the Committee on Foreign Investment in the United States (“CFIUS”).  These proposed regulations provide additional clarity regarding how CFIUS intends to implement the FIRRMA amendments.  When implemented, these regulations will formally expand CFIUS jurisdiction – but will also formalize current CFIUS practice in most respects.  Implementation is scheduled to occur on or before February 13, 2020.[1]

Jurisdiction over non-controlling investments

Traditionally, CFIUS exercised jurisdiction over investments that result in the “control” of a non-U.S. person over a U.S. business.  After FIRRMA implementation, CFIUS will have jurisdiction over certain investments that do not result in control by a non-U.S. person.  Specifically, CFIUS will have jurisdiction over non-controlling investments if the investment is in a specific company type, and if it affords the investor specific, enumerated rights.

The draft regulations identify several company types that satisfy the first part of the test.  The first type is a business that produces or otherwise deals in certain “critical technologies.”  A separate statute[2] authorizes the Department of Commerce to identify these critical technologies.  Although the Department of Commerce did identify examples of these technologies in a 2018 rulemaking, that process is not yet complete.
Continue Reading CFIUS to Cover More Foreign Investments in U.S. Companies