Trade Matters – August 2021 | Lowenstein Sandler LLP


1. Business posture of the Biden administration

The Biden administration slowly and steadily reviews the decisions of the Trump administration. So far, the administration has reached an agreement with the EU to end the 17-year dispute over subsidies to Boeing and Airbus, has continued to use the sanctions as a mechanism to promote national security and foreign policy of the United States, and addresses domestic economic policy issues aimed at improving American manufacturing of critical technologies and protecting American technology from unfair foreign trade practices. At the same time, President Biden is leveraging relations with strategic partners such as the EU and Australia to reform the WTO, strengthen the Paris Agreement on climate change and promote a Chinese-led option. “the Belt and the Road” with the OECD and the G-7. This balance between free trade and the protection of domestic industry is tenuous. On the one hand, Biden maintained tariffs on steel and aluminum and duties on rare earth metals from China. On the other hand, to build new products in the United States, we need rare earths, which are more readily available in China, which is increasingly against American national security policy. In addition, openness and free trade with foreign countries, including China, lower prices for American consumers. The next six months will tell us more, as Congress and the administration use domestic politics to strengthen their strength from within and engender multinational cooperation.

2. Payoneer Settles OFAC Sanction Violations Over $ 1.4 Million

The Office of Foreign Assets Control (OFAC) settled with Payoneer Inc., a New York-based, publicly traded online money transmitter, $ 1.4 million in civil fines for 2,260 apparent violations related to the processing of payments for either party located in the Crimean region of Ukraine. , Iran, Sudan and Syria, or those on the Specially Designated Nationals and Stranded Persons List. OFAC also determined that Payoneer’s sanctions compliance program was deficient in the screening, testing, auditing and review procedures for transactions. OFAC found that Payoneer had reason to know the location of users it subsequently identified as subject to sanctions based on common location indicators in its possession. There are cost effective ways to avoid such violation of sanctions. Please let us know if you want to know more.

3. Biden administration advises companies to leave Xinjiang

In an updated Xinjiang Supply Chain Business Advisory, the Biden administration advises companies to consider exiting supply chains and investments related to forced labor or surveillance systems in Xinjiang or in d ‘other provinces of China; otherwise, they run the risk of violating US law. The advisory, released jointly by the state, the Treasury, Commerce, Homeland Security, Labor and the Office of the U.S. Trade Representative, urges companies with operations in the region to take enhanced due diligence measures. However, the opinion warns that performing adequate due diligence to fully identify and avoid complicity in human rights violations may not be possible due to lack of transparency from government and business, the threat of detention for listeners and reactive workers; and the atmosphere of the police state in Xinjiang. These factors have led companies to refuse to perform audits in this region. This issue is not just a concern of American companies, as the focus of the G-7 meetings on ending forced labor shows.

4. US government issues advisory for companies on the risks of doing business in Hong Kong

In another interagency advisory, published on July 16, the US government advises companies operating in Hong Kong that they face regulatory, financial, legal and reputational risks. Companies operating in Hong Kong, as well as individuals and foreign nationals, are subject to the recently enacted Chinese National Security Law (NSL) and its vague and general criminal provisions. As such, Hong Kong authorities can require companies to provide information about their customers, censor their customers’ online speech, and hand over data. Businesses must continue to monitor the implementation of the NSL and be prepared to respond if the Hong Kong government takes action against them. Hong Kong is no longer considered a separate destination under export administration regulations, so companies exporting to Hong Kong must follow the rules for exporting to China.

5. Top foreign investors reporting include Japan and Sweden according to CFIUS annual report

The Committee on Foreign Investment in the United States (CFIUS) provided its annual report to Congress, detailing statistics on critical technology claims and key determinations, and providing an overview of transactions reviewed by CFIUS. The main foreign investors in US companies producing critical technologies are Japan, Sweden, Canada, Germany and the United Kingdom. Israel and China are at the bottom of the list.

6. Beware, tech companies: the United States and Australia are negotiating a technology transfer agreement

As of July 1, the United States and Australia began negotiating a bilateral technology safeguards agreement to increase cooperation and exchange of sensitive technology and data in the civilian space sector. The deal will set out rules that will allow US companies to collaborate with their Australian counterparts, while appropriately managing the movement of sensitive technology and goods.

7. Biden administration’s first FCPA enforcement action offers compliance reminders

Switzerland-based global engineering firm Amec Foster Wheeler Limited (Foster Wheeler) entered into a three-year deferred prosecution agreement with the Department of Justice and agreed to pay $ 41 million in penalties for violating the law on corrupt practices abroad (FCPA). Foster Wheeler did not exercise due diligence with third party agents prior to hiring them. These third-party agents obtained confidential internal information from a government official. While Foster Wheeler is a Swiss company owned by a UK parent company, US authorities have asserted jurisdiction because the company traded on the Nasdaq and exchanged project-related emails on a US-based mail server. , pointing out that even minimal US activities can trigger jurisdiction.

8. China Tariffs (Article 301) Update of the court case

In the pending International Trade Tribunal (CIT) case challenging the legality of “Section 301” duties imposed under Lists 3 and 4A, the CIT granted a preliminary injunction stopping the liquidation of entries that include such charges. rights. The plaintiffs requested an injunction to maintain the unliquidated listings in order to preserve their rights to 301 refunds of duties on those listings. The request was made because the government refused to stipulate that the CIT has the power to grant reimbursement of 301 duties on liquidated registrations, even if the plaintiffs ultimately win. Following the injunction, the case is effectively put on hold while the CIT and the parties work to agree on a process to stop the liquidation of correct entries and address the practical implications of this potentially lasting liquidation freeze. years. The government has until August 6 to establish a process to identify and freeze entries that must remain unliquidated. In the meantime, it is still possible to join the litigation and this gives companies the opportunity to reclaim List 3 and List 4A rights in case they are found to be illegal.

Business tip of the month: The Biden administration has stepped up sanctions against a number of countries, including Russia, Belarus and China, and added more entities to the United States’ restricted party lists. U.S. businesses should ensure that their compliance programs are able to identify specially designated nationals, industry sanctioned parties, or other restricted parties. The regular performance of checks by restricted parties against trading partners will help prevent sanctions violations.

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