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The Month in International Trade – August 2020

Client Alert | 16 min read | 09.11.20

In this issue:


This news bulletin is provided by the International Trade Group of Crowell & Moring. If you have questions or need assistance on trade law matters, please contact Jeff Snyder or any member of the International Trade Group.

Top Trade Developments

Coronavirus Resource Center

Crowell & Moring has a multidisciplinary working group helping clients navigate the rapidly evolving business, legal and operational issues associated with the COVID-19 pandemic. Our group brings together lawyers and professionals with relevant senior government, industry, and private sector experience across a wide array of practices that intersect with the most critical issues in this unprecedented crisis. We are helping clients to mitigate risk, to implement practical approaches and sound business solutions, and anticipate and prepare for the opportunities and challenges that are on the horizon.

Insights – Client Alerts and Thought Leadership broken down by Practice/Industry.
Webinars - As part of Crowell & Moring’s ongoing effort to keep clients informed about the most significant developments stemming from the COVID-19 pandemic, we are offering a webinar series focused on issues that are immediate in terms of their impact, as well as issues that are just around the corner. Our focus is helping clients to anticipate issues, take proactive steps, develop appropriate responses, and execute sound legal, business and operational plans.
Re-opening – Practical resources to help navigate re-opening issues and questions.
Client Resources – Checklists, Guidelines, and Toolkits.
Representative Matters – Advised on more than 250 COVID-19 matters in a wide array of areas and industries.
External Resources – External links to government and outside resources.
Media Mentions – Firm commentary on recent developments and significant trends.

For access to the entire resource center, please click here.

Latest U.S. Trade Actions/Tariffs and Other Countries Retaliatory Measures

Please click here anytime for the latest actions, covered products rate increases, and effective dates.

For more information, contact: Dan Cannistra, Robert Holleyman, Bob LaFrankie, Spencer Toubia, Ru Xiao-Graham, Cherie Walterman

Latest on Section 301 Product Exclusions

Please click here anytime for the latest actions regarding Section 301 Product Exclusions.

For more information, contact: Dan Cannistra, Robert Holleyman, Bob LaFrankie, Spencer Toubia, Ru Xiao-Graham, Cherie Walterman

Brexit and its Implications for Global Mobility: Where Are We Now?

Brexit was once the topic of every conversation in the United Kingdom (U.K.), but, overshadowed by the COVID-19 pandemic, it’s not something we hear as much about these days.

The U.K. left the European Union (EU) on January 31, 2020 (bringing to an end 47 years of British membership of the EU and the institutions that preceded it) under the terms of the Withdrawal Agreement, an agreement struck by London and Brussels in October 2019. However, during the standstill post-Brexit transition period, most of the arrangements that were valid during the U.K.’s EU membership have been kept in place. As a result, and until the transition period expires on December 31, 2020, the U.K. must continue to comply with all EU rules and laws which include the rules on freedom of movement, cross border travel and personal rights. This means that up until now virtually nothing has changed for businesses or for the public.

However, the end of the transition period is in sight, and it will bring significant changes regardless of whether or not an agreement is reached on future trading and other relations. The U.K. and EU have both now ruled out any extension to the Brexit transition period so – barring the unlikeliest of U-turns over the next couple of weeks - we now know that a new post-Brexit landscape will take effect on January 1, 2021.

For more on planning for global mobility in a Post-Brexit world, please click here.

For more information, contact: Emmanuel Plasschaert, Nicole Simonian, Stefanie Atchinson, Evelien Jamaels, Jackson Pai

Bureau of Industry and Security (BIS) Launches the "Foundational Technologies" Advance Notice of Proposed Rulemaking (APR)

The long-awaited sequel to the still-pending advanced notice of proposed rulemaking (ANPR) for Emerging Technologies from November 19, 2018, is finally here (see our prior alert). On August 27, 2020, BIS published an ANPR seeking comment on the definition of, and criteria for, identifying “foundational technologies,” as required by Section 1758 of the Export Control Reform Act of 2018 (ECRA). Not only may this rulemaking result in additional controls for items that were either uncontrolled or only subject to limited controls, but it could expand the range of companies where even minimal foreign investment can trigger review by the Committee on Foreign Investment in the United States (CFIUS).

Unlike the Emerging Technologies ANPR where BIS identified a non-exhaustive list of technologies it was considering, the Foundational Technologies ANPR merely states “foundational technologies essential to the national security are those that may warrant stricter controls if a present or potential application or capability of that technology poses a national security threat to the United States.” It suggests such foundational technologies might be found in those items currently only controlled for Anti-Terrorism purposes or for military end use or end user purposes, and specifically highlights “indigenous military innovation efforts in China, Russia and Venezuela.”

After two years since ECRA was enacted, the lack of any clear consensus as to what should qualify as “foundational technologies” is demonstrated by the issues on which the ANPR seeks comment. BIS seeks comment on how to define “foundational technologies” while simultaneously seeking information on the status of development of such unidentified technologies and on the impact further controls would have on their continued development. The issues suggest, however, that BIS is considering both additional end use/end user controls over certain technologies and perhaps expanding scope to “enabling technologies, including tooling, testing and certification equipment.”

For more information, please contact: Jana del-Cerro, Alan W.H. Gourley, Jeff Snyder, Chandler Leonard

BIS Publishes Final "Direct Product" Rule for Huawei and Entity List Compliance Obligation Clarifications

On Monday, August 17, 2020, BIS released two rules arising out of the ongoing effort to restrict Huawei’s access to items subject to the EAR. The first rule has three parts: (1) the addition of 38 new Huawei affiliates to the Entity List; (2) the removal of the Temporary General License (TGL) and replacement with a more limited permanent general license; and, (3) amendments to the direct product rule (DPR). The second rule announced clarifications to the Entity List, indicating that the presence of an Entity List party in any way in a transaction involving items subject to the EAR means the export is covered.

For more on these important developments, please click here.

For more information, please contact: Jana del-Cerro, Alan W.H. Gourley, Jeff Snyder, Brian McGrath

Recent BIS $31 Million Civil Penalty Against a Singapore Company Reminds Companies about Global Reach of U.S. Export Controls, Including in the Maritime Sector

In a press release issued August 20, 2020, the Bureau of Industry and Security (BIS) announced a final order imposing a fine of over $31 million against Singapore based Nordic Maritime Pte. Ltd. (“Nordic”) and its Chairman, Morten Innhaug (“Innhaug”).

Nordic was found to have violated the Export Administration Regulations (EAR) by using U.S. origin subsea survey equipment, installed on a vessel chartered by Nordic, in Iranian territorial waters. A previous vessel operator had installed the equipment on the vessel pursuant to a BIS reexport license. After Nordic chartered the vessel, the previous operator sent Nordic a cease and desist letter informing them of the terms of the BIS reexport license and warned against use of the equipment in Iranian waters.

BIS determined that Nordic and Innhaug ignored the letter and instead used the controlled equipment to perform a 3D offshore seismic survey for an Iranian power plant management company in Iranian territorial waters without previous authorization from either BIS or Treasury’s Office of Foreign Assets Control (OFAC). Nordic was found to have committed three violations when it illegally reexported the equipment to Iran, including acting with knowledge of the violations, and making false and misleading statements to BIS during the investigation. Innhaug was found to have aided and abetted Nordic in violating the regulations. BIS previously issued a 15-year denial order against both Nordic and Innhaug.

For more information, please contact: Chandler Leonard

FinCEN Issues New Guidance for Complying with the CDD Rule

On August 3, 2020, the Financial Crimes Enforcement Network (FinCEN) released additional frequently-asked-questions (FAQs) regarding customer due diligence (CDD) requirements for covered financial institutions detailed in FinCEN’s “CDD Rule”. The 2020 FAQs follow earlier FAQs from FinCEN in July 2016 and April 2018, and provide additional detail on conducting due diligence, developing customer risk ratings, and updating customer information.

For more on the new FAQs, please click here.

For more information, please contact: Erik Woodhouse, Caroline Brown, Carlton Greene, Nicole Succar

CFIUS Review Culminates in Order Directing ByteDance, Ltd. to Divest TikTok

Citing the existence of credible evidence that ByteDance, Ltd.’s (ByteDance) 2017 acquisition of Musical.ly “threatens to impair the national security of the United States”, the President issued an Executive Order on August 14, 2020, ordering ByteDance to divest all of its interests in the mobile application TikTok within 90 days. Specifically, the order prohibits the 2017 acquisition along with any ownership interests in Musical.ly by ByteDance. 

Further, it directs ByteDance to divest all interests in “any tangible or intangible assets or property, wherever located, used to enable or support ByteDance’s operation of the TikTok application in the United States” and “any data obtained or derived from TikTok application or Musical.ly application users in the United States.” Following divestiture, ByteDance must certify in writing to the Committee on Foreign Investment in the United States (CFIUS) that it has destroyed that data as well as any copies of that data wherever located. CFIUS may require an audit to ensure destruction of the data.

For more on this CFIUS review, please click here.

For more information, contact: Caroline Brown, Robert Holleyman

Customs Rulings of the Week

For more information, contact: Frances Hadfield, Rebecca Toro Condori

Upcoming Crowell & Moring Webinars

Valuing Your Imports for U.S. Customs Entry

Date: Wednesday, September 16, 2020
Time: 1:00 PM Eastern Daylight Time
Duration: 1.5 hours

As a result of the trade wars there has been a significant increase in tariffs on imports. Because tariffs are applied based on the value of imports it is critical that companies understand how to properly value their imports under U.S. customs laws. Using improper values may lead to draconian audits, enforcement actions, and penalties imposed by U.S. Customs and Border Protection. However, smart importers structure their transactions to reduce U.S. customs values, creating significant cost savings from reduced tariffs. This topic will explore the basic rules of proper U.S. customs valuation, common errors, how to avoid risks, and how to minimize U.S. customs value to maximize your company’s profits.

Learning Objectives

  • You will be able to review basic U.S. custom value rules and methods.
  • You will be able to identify possible deductions from U.S. customs value.
  • You will be able to recognize common valuation errors and penalties.
  • You will be able to describe strategies to reduce U.S. customs requests, audits, and enforcement actions.

Speaker: John Brew

To register for this webinar, please click here.

Export Controls Classroom

Welcome to Crowell & Moring’s Export Controls Classroom! This Classroom is intended to provide insight into the significant challenges and potential compliance risks that export controls pose for global companies. The site contains various training resources and a schedule of upcoming presentations by Crowell & Moring practitioners. The Classroom will be updated regularly with new content.

We would love to hear your questions, comments, and suggestions regarding future training sessions. Click here to connect with our team.

Upcoming Events/Webinars

September 15, 12:00 PM EDT (Webinar): Export Controls for Government Contractors

Government contractors, particularly those providing services and commodities to US or foreign defense and intelligence customers, navigate compliance with a myriad of national security related regimes, each with its own set of definitions and requirements, from obligations related to the handling of U.S. government data, to the provision of supply chain certifications, to the restrictions on exports of technical data, services, and commodities under the International Traffic in Arms Regulations (ITAR) and the Export Administration Regulations (EAR). In this cross-over session of our Export Control Classroom series, our Government Contractors colleagues will join us as we focus on how to identify the key national security related considerations for contractors at the outset of an opportunity, and steps for establishing a compliance program to support successful contract performance.

Speakers: Addie Cliffe, Jana del-Cerro, Stephanie Crawford, Chandler Leonard

Click here to register.

October TBD, 12:00 PM EDT (Webinar): Classification 101/201 
November 17, 12:00 PM EST (Webinar): M&A Considerations
December 15, 12:00 PM EST (Webinar): Licensing 101

On-Demand Resources

Crowell & Moring Speaks

Caroline Brown and Robert Holleyman authored an article featured in Law360 on August 6th titled, “New Executive Orders Start Clock Ticking for TikTok and WeChat.”

Clif Burns was featured in an August 7th Financial Times article titled, “Banning Tencent’s WeChat Would Hit Both Chinese and US Businesses.”

Clif Burns was featured in an August 9th Financial Review article titled, “How WeChat Crackdown Threatens US Companies.”

Caroline Brown was featured in an August 10th Law360 article titled “Confusion Prevails Over Extent of Trump’s TikTok ‘Ban’.”

Clif Burns and Chandler Leonard were featured in an August 19th article in Export Compliance Daily titled, “New DOJ Voluntary Disclosure Policies May Create Complications for Industry, Lawyer Says.”

Maria Vanikiotis was a speaker at the Petroleum Equipment and Services Association’s free webinar on USMCA: Advantages and Challenges for OFS. The event was held on August 19.

Jeff Snyder was a moderator for the Inter-Pacific Bar Association’s “International Trade in a Time of Crisis” webinar on September 7.

It’s not too late to register for the 2020 ICPA Fall Conference being held September 13th through 15th in Grapevine, Texas. Unable to travel? No worries we have you covered! Participate from the comfort of your couch in your favorite pjs or arrange a Watch Party at your office. For $200 you will have access to the entire Import Track. Don’t forget the Valuation Seminar on September 16th. You may view that session online for $50.

  • For additional information on the conference or to register please click here. 
  • Save the dates for our 2021 conferences. Click here for a complete list. We just added an event in San Antonio next Spring!
  • We hope you and your family are surviving this new world we all live in. For those who have to teach their children as well as work……. may the force be with you!

The ICPA Team

On September 22-23, join over 600 IP professionals for an unrivaled gathering of national speakers and a sophisticated discussion of emerging issues and best practices in copyright, patent, trademark, trade secret and related fields. See Judges O'Malley (Fed. Cir.), Stoll (Fed. Cir.), Albright (W.D. Tex.), Bataillon (D. Neb.), Conley (W.D. Wis.), Fitzgerald (C.D. Cal.), Koh (N.D. Cal.), Selna (C.D. Cal.) and Wu (C.D. Cal.) plus MPA CEO Charles Rivkin, prominent government officials, leading academicians, in house counsel, and top practitioners for two days of learning and networking in a virtual landscape.

Contacts

Insights

Client Alert | 7 min read | 07.18.24

Council of Europe's First Legally Binding International Treaty on AI to Be Signed in September

Amid the continued exponential rise and adoption of artificial intelligence (AI) systems, the Council of Europe set a unique precedent earlier this year by adopting the first-of-its-kind legally binding international AI framework. Aimed at ensuring the respect of human rights, the rule of law, and democracy in the use of AI systems, the framework strikes an important balance in addressing the risks throughout the lifecycle of an AI system without hampering innovation....

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