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As part of a comprehensive streamlining effort, the U.S. State Department’s Directorate of Defense Trade Controls (DDTC) issued an interim final rule that reorganizes and restructures Part 120 of the International Traffic in Arms Regulations (ITAR).  This action marks the initial stage of the DDTC’s effort to restructure and consolidate the ITAR through a series…

On September 15, President Biden signed an Executive Order (EO) with the first ever formal Presidential direction to the Committee on Foreign Investment in the United States (CFIUS or the Committee). The EO emphasizes the risks that the Committee should consider when reviewing covered foreign company purchases of U.S. businesses. The EO is intended reemphasize…

The historic infrastructure bill, now approved by the U.S. Congress and pending President Biden’s signature, includes broad policy provisions designed to improve governmental sourcing from U.S. manufacturing sectors.  These new statutory authorities aim to:

  • Expand domestic preference procurement policies applicable to federal financial assistance programs for public works infrastructure;
  • Increase the domestic component content requirements

…

After months of deliberation, the U.S. Congress has passed the $1.2T Infrastructure Investment and Jobs Act, which will deliver $550 billion of new federal investments in America’s infrastructure over five years.  The bipartisan bill contains $260 billion for transportation and transit investment; $90 billion for investment in clean technologies; $84 billion for water infrastructure and…

On September 20, 2021, the U.S. Department of Commerce (“Commerce”) published a final rule codifying numerous changes – both substantive and procedural in nature – to certain portions of the body of regulations governing antidumping and countervailing duty proceedings.  Regulations To Improve Administration and Enforcement of Antidumping and Countervailing Duty Laws, 86 Fed. Reg. 52,300 (Dep’t Commerce Sept. 20, 2021) (“Final Rule”).  The rule revisions constitute the first major overhaul of the AD/CVD regulations in over 20 years and were several years in the making.  That Commerce’s work on and ultimate implementation of these revisions spanned multiple presidential administrations is a testament to the apolitical nature of the effort and its importance to the good governance of U.S. trade laws.

Commerce first published a proposed rule in August 2020, inviting public comment and allowing 30 days for initial comments and 14 days for rebuttal submissions.  Regulations To Improve Administration and Enforcement of Antidumping and Countervailing Duty Laws, 85 Fed. Reg. 49,472 (Dep’t Commerce Aug. 13, 2020) (“Proposed Rule”).  In response to the Proposed Rule, Commerce received 37 sets of comments and 17 rebuttal submissions from interested parties, including domestic producers, exporters, importers, surety companies, and foreign governments.  Given the scope and significance of the Proposed Rule most submissions were submitted on behalf of formal trade associations or informal groups of companies, or law firms, including Kelley Drye, representing the general interests of their client base and providing input based on extensive practitioner experience.

The modifications proposed and ultimately adopted by Commerce were largely expected and codified agency practice as it has developed over many years, in a number of increasingly important areas.  As Commerce explains:…
Continue Reading Commerce Publishes Long-Awaited Changes to AD/CVD Regulations

Yesterday, the Office of Foreign Assets Control (“OFAC”) announced sanctions against three prominent Bulgarian individuals and 64 related companies for corruption.  The designations are the largest action in the history of Executive Order 13818, which implements the Global Magnitsky Human Rights Accountability Act and authorizes sanctions on parties that engage in significant corruption or human…

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 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[1], 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

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