Insights

Beginning on February 8, the members of the Indo-Pacific Economic Framework (IPEF), the Biden-Harris Administration’s signature economic initiative in the Asia-Pacific, held the next framework negotiating round. This round advanced the arrangement’s supply chains, clean economy, and fair economy pillars and continued to build on the negotiating text that was tabled at the last negotiating round. Notably, it did not include negotiations on the trade pillar, of which India is not a member. The Asia-Pacific Economic Cooperation (APEC) Leaders’ Summit, which will be held in San Francisco in late 2023 has been cited as a tentative target date by which the parties hope to conclude the negotiations.

Employers continue to face the impact of the current Ukraine/Russia conflict on employees and the employment relationship in Russia, Ukraine and the broader region. This article will touch upon briefly some key issues of concern for multinationals during this time.

Yesterday, President Biden issued a Fact Sheet entitled Biden Administration Efforts to Address Bottlenecks at Ports of Los Angeles and Long Beach, Moving Goods from Ship to Shelf to help address the “delays and congestion” across the transportation supply chain. As has been widely reported in recent weeks and months, the global supply chain has been hard hit by large increases in e-commerce and delays and shutdowns implemented to curb the spread of COVID-19. Yesterday’s release confirms public and private commitments to move goods more quickly and to secure the resiliency of American and global supply chains. To do so, the Biden Administration is focusing on the Ports of Los Angeles and Long Beach, which act as the ports of entry to the United States for 40% of containers received. The President, together with leadership from these ports, are undertaking a series of public and private commitments as noted below.

On August 20, 2021, China’s national legislature passed the Personal Information Protection Law (“PIPL”), which will become effective on November 1, 2021. As China’s first comprehensive system for protecting personal information, the PIPL is an extension of the personal information and privacy rights enshrined in China’s Civil Code, and also a crucial element of a set of recent laws in China that seek to strengthen data security and privacy. Among other things, the PIPL sets out general rules for processing and cross-border transfer of personal information. A number of provisions, notably various obligations imposed on data processors, restrictions on cross-border transfer, and hefty fines, will have significant impact on multinational corporations’ HR activities, including recruitment, performance monitoring, cross-border transfers, compliance investigations, termination of employment relationships, and background checks.

As COVID-19 vaccination rates increase globally, governments across the world are developing and discussing COVID-19 vaccine passports or health certificates as a way to enable people to travel safely, for work or tourism, in the coming months. As multinational companies are navigating how to resume some sense of normalcy for employees to travel across borders, governments are beginning to provide a framework in which to facilitate travel. Several legal considerations arise, including around data sharing and privacy (especially cross-border), and employment and anti-discrimination protections. Because both public and private stakeholders have to date adopted largely individualized approaches, an increasingly fragmented global ecosystem for such programs is likely to further complicate data sharing and privacy concerns in particular. How these efforts evolve alongside the arc of the COVID-19 pandemic, which has recently been complicated by the emergence of COVID-19 variants, creates the need for stakeholders to proactively address such challenges in the near-term.

Audits on multinational companies by Chinese tax authorities slowed down during the COVID-19 pandemic and in response to the U.S.-China trade war since 2018 as part of the Chinese government’s tax reduction policy.  As the Chinese economy and international travel continue to recover, it is expected that Chinese tax authorities will begin increasing their enforcement actions in 2021 to recover lost tax revenue. 

The United States-Mexico-Canada Agreement (USMCA) came into force on July 1, 2020. Included in the USMCA are stronger labor provisions Congressional Democrats demanded, with the support of the Trump Administration, that were approved on a bipartisan basis during consideration of the USMCA implementing legislation in late 2019. The stronger labor provisions helped secure the support of key labor groups for the USMCA. Together with overall support from business groups, the USMCA set a framework for more extensive labor commitments in U.S. trade agreements. This is expected to lead to more aggressive enforcement.

Almost one year after the appearance of the novel coronavirus, the COVID-19 pandemic continues to set agendas for countries and multinational companies. More and more countries and jurisdictions have re-introduced lockdowns and restrictions on activities outside the home. Non-essential shops, bars and restaurants are closed again or have limited opening hours. Employees who may have begun the process of returning to the office are obliged to work from home again to the maximum extent.

Eight years after negotiations began, fifteen countries from the Asia-Pacific signed an agreement on Sunday that will create the world’s largest free trade bloc. The Regional Comprehensive Economic Partnership, or RCEP, will advance economic integration between the ten member states in the Association of Southeast Asian Nations, or ASEAN1, and Asia’s other trade powerhouses, Japan, South Korea, Australia, New Zealand and most notably, China.

On November 2, 2020, the Chinese State Taxation Administration (STA) revealed that, for the first three quarters of 2020, government receipt of taxes and fees were reduced by RMB 1.366 trillion as a result of government policies to support prevention and control efforts of the COVID-19 pandemic and to promote economic and social development. This is not an insignificant number as the national tax receipt for the same period was less than RMB 12 trillion.

New interim final rules published by the Department of Homeland Security (DHS) and the Department of Labor (DOL) on October 8, 2020 will make it significantly more difficult for highly skilled foreign workers to meet the eligibility criteria for the H-1B visa application.

On May 28, 2020, the National People's Congress of the People's Republic of China issued the new Civil Code of the People’s Republic of China (“PRC Civil Code”) which will become effective on January 1, 2021. This new PRC Civil Code, which is the first comprehensive code legislating civil matters in China, will replace nine existing laws and regulations.

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 new United States Mexico Canada Agreement (USMCA), which replaced the 1994 North American Free Trade Agreement (NAFTA), became effective on July 1, 2020. Historically, free trade agreements like the NAFTA have been criticized for their lack of strong labor provisions to address low wages and inadequate labor standards that advocates argue support worker rights and improve economic growth in developing countries. The USMCA seeks to address those concerns. In fact, as a precondition to the passage of the USMCA, the U.S. Congress reopened the negotiations at the end of 2019 and amended the agreement to bolster Mexican workers’ rights and to include stronger enforcement provisions like the Rapid Response Mechanism to hold companies in Mexico accountable for violating the rights of free association and collective bargaining.

The central government of the People’s Republic of China (PRC) as well as provincial and city level governments across the country have announced numerous incentives and supporting measures to assist companies, including wholly foreign owned enterprises (commonly referred to as WFOEs) and Sino-foreign joint ventures, in resuming production and operations that were adversely impacted by the COVID-19 outbreak. In China, provincial and municipal governments often have discretion to implement specific rules pursuant to broad policy guidelines or requirements issued by the central government so long as the local rules do not provide benefits or incentives that are lower than that provided in the national guidelines. Accordingly, companies should confirm the local rules at provincial or municipal levels as specific implementing measures may vary.

On March 26, 2020, the Ministry of Foreign Affairs of the People’s Republic of China (“MFA”) announced a decision to temporarily suspend entry into China by foreign nationals holding valid visas or residence permits (including APEC Business Travel Cards) as a preventative measure against the COVID-19 pandemic starting from midnight, March 28, 2020.

Yesterday, New York City Mayor Bill De Blasio announced his intention to sign an executive order requiring restaurants and bars to limit services to take out and delivery orders. Similar operational limits are also in place in other jurisdictions around the country, with several more sure to come. Retailers such as Apple, Nike, Urban Outfitters, Abercrombie and Fitch, Patagonia and Lululemon also announced that they were either temporarily closing their retail stores or significantly limiting their hours and scope of operation. Teleworking is quickly becoming the trend to encourage social distancing and reduce the risk of exposure to COVID-19. The Coronavirus has made the previously unthinkable option of business closure the new reality, with no end in sight.  

Each day brings new developments regarding the coronavirus pandemic. Over half of the states in the U.S., as well as many cities of all sizes, have declared states of emergency. Schools have been closed state-wide in Maryland, Ohio and Michigan. A containment area has been established in New Rochelle, New York.  Further governmental actions may well be forthcoming. To say the least, employers are faced with crucial challenges on multiple fronts. In view of these extraordinary developments, we recommend that one top priority, for companies that have not done so already, is to develop and maintain strong and effective communications with employees regarding the impact of these issues. A notice to employees, adapted to address the specific facts and circumstances of your workplace, will go a long way to maximize efficient operation, minimize potential liability and address the concerns of your employees. For example, such a communication can address, among other subjects, the following:

The World Health Organization, on March 11, 2020, officially declared the spread of COVID-19 a pandemic. By now, most multinational companies have already been grappling with the effects of the coronavirus and are considering the steps they should be taking to ensure the health and safety of their employees. 

With the coronavirus disrupting business in parts of Asia and with increasing impacts in the United States, it is important that government contractors are prepared for the potential issues that may result if the virus spreads across the United States and across other countries where U.S. government contracts are performed. In addition to being proactive and mindful of health and safety, contractors should be prepared to assert their rights to any cost or schedule impacts that may result if the coronavirus impacts contract performance.