Lindsey Roskopf Announced as New Partner at McGinnis Lochridge for 2021 |
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Lindsey Roskopf was recently elected to Partner at McGinnis Lochridge. Lindsey’s hard work and dedication to the firm was recognized by Managing Partner Doug Dodds when he complimented her “legal acumen and unwavering dedication to providing our clients the highest standard of legal counsel and business insight.”
Lindsey assists clients with developing export-licensing strategies, determining the export jurisdiction and classification of equipment and technology, and responding to government inquiries. She also has extensive experience in advising clients on compliance with U.S. sanctions, particularly with respect to Russia, Iran, Cuba, and Venezuela. Congratulations, Lindsey!
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Upcoming Webinar on February 10 with Jamie Joiner: “What to Expect for U.S. Trade Relations Under the Biden Administration”
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On Wednesday, February 10, Jamie Joiner will co-present a webinar on What to Expect for U.S. Trade Relations Under the Biden Administration. Jamie’s co-presenter is Chris Olson, director at the Mayor’s Office of Trade and International Affairs with the City of Houston. Topics include US-China tensions, impact and likelihood of a US-UK Free Trade Agreement, US-Africa policy, and US-Russia relations. Register for the webinar here.
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Recent Regulatory Updates |
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Increasing Geopolitical Tensions with China Lead to New Restrictions on Dealings with Chinese Entities |
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The U.S. Government has implemented several new restrictions on dealings with certain Chinese entities due in part to China’s activities in the South China Sea and the diversion of U.S. goods and technology to the Chinese military. Summaries of the more significant actions are provided below:
1. CNOOC added to BIS Entity List. On January 14, 2021, China National Offshore Oil Corporation Ltd. (CNOOC) was added to the Entity List maintained by the U.S. Department of Commerce’s Bureau of Industry and Security (BIS). Typically, all exports subject to the Export Administration Regulations (EAR) require a license to companies on the Entity List, but CNOOC’s addition is unique in that there are several exceptions. The Entity List license requirements and exceptions are provided below:
All items subjects to the EAR except for:
- crude oil, condensates, aromatics, natural gas liquids, hydrocarbon gas liquids, natural gas plant liquids, refined petroleum products, liquefied natural gas, natural gas, synthetic natural gas, and compressed natural gas under the following Harmonized System (HS) codes: 271111, 2711210000, 2711210000, 2709, 2709002010, 2707, 27075000, 2710, 271019, 271112, 271113, 271114, 271119, 27111990, 271311, 271312, 271012250, 2901, 290511, 2701, 29109020, 29151310, 29155020, 29156050, 29159020, 29161210, 29280025, 29321910, 29362920, 29419030, 2909300000, 2917194500, 2922504500, 2924296000, 2925294500, 2928002500, 2933194350; or
- required for the continued operation of joint ventures with persons from countries in Country Group A:1 in supplement no. 1 to part 740 of the EAR not operating in the South China Sea.
Any exports involving CNOOC that are subject to the EAR should be closely scrutinized to determine whether they meet one of the above exceptions to the license requirements.
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BIS Publishes Final Rule Amending the EAR to Reflect Sudan’s Removal from State Sponsor of Terrorism List |
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On January 19, 2021, the Bureau of Industry and Security (BIS) published a final rule amending the Export Administration Regulations (EAR) to reflect and implement the State Department’s rescission of the country of Sudan as a designated State Sponsor of Terrorism (SSOT) on December 14, 2020.
As detailed in the Federal Register notice, various export control changes as they relate to Sudan have now been put into place. BIS’ final rule removes Sudan from Country Group E:1 in Supplement No. 1 to part 740, the Country Group placement for all countries deemed to support terrorism, and moves Sudan to Country Group B. This means items controlled only for Anti-Terrorism (AT) reasons on the Commerce Control List, such as certain civil aircraft and related parts and components, telecommunications, and information security products, no longer require a license for export or reexport to Sudan. The rule entirely removes § 742.10, entitled “Anti-Terrorism: Sudan,” from the EAR. The rescission of Sudan’s SSOT designation also raises the de minimis level from 10 to 25 percent for most foreign-origin items located abroad that are destined for Sudan.
The inclusion of Sudan in Country Group B means, as a general matter, more license exceptions will be available for exports and reexports to Sudan. However, License Exception Group B Shipments (GBS) and License Exception Technology and Software Under Restriction (TSR) will still be unavailable for any exports or reexports to Sudan.
It is important to be aware that Sudan continues to be included in Country Group D:5 (U.S. Arms Embargoed Countries) which impacts the availability of certain license exceptions in connection with items controlled under certain Export Control Classification Numbers (ECCNs) such as “600 series” ECCNs. In addition, the Office of Foreign Assets Control (OFAC) continues to administer sanctions on individuals and entities in connection with the conflict in Darfur.
BIS’s final rule went into effect on January 14, 2021. FAQs regarding these changes are published here.
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U.S. Continues Rollbacks in Preferential Treatment for Hong Kong as National Security Concerns with China Stay Relevant |
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Beginning in the summer of 2020, tensions between China and the United States began to mount with regard to the People’s Republic of China Special Administrative Region of Hong Kong. In June, the Chinese government imposed national security legislation over Hong Kong, which U.S. officials believed to be undermining the autonomy of the region, as well as heightening the level of risk that sensitive U.S. technology and other items may be diverted to unauthorized end uses or end users in China or elsewhere. Since that time, the U.S. government has taken definitive steps to safeguard U.S. items in danger of misuse by tightening regulations for shipments to Hong Kong, beginning with President Trump’s July 14, 2020 Executive Order 13936 on Hong Kong Normalization, and BIS’s July 31, 2020 suspension of all license exceptions that provided for differential treatment of Hong Kong as compared to China. The United States has continued to enact additional laws and regulations in order to fully implement the changes set forth in E.O. 13936. A summary of key actions is provided in the link below:
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Regulatory Changes on the Horizon |
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Changes Coming to Buy American Requirements for Federal Procurements |
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On January 25, 2021, President Biden issued an Executive Order setting out the new Administration’s policy that Federal procurements should maximize the use of U.S. goods and services. The Executive Order, among other things, directs U.S. Government agencies to propose actions “as soon as practicable” to enforce the policy set forth in the order. The order also creates a Made in America Office at the White House Office of Management and Budget that will review waivers to Buy America/Buy American requirements, thus making it more difficult to obtain foreign products or services. At this time, the broad language in the order leaves many open questions about how the new policy will be implemented, including how the rules for identifying domestic origin will change and whether waivers under the Trade Agreements Act—which allows federal agencies, under certain circumstances, to purchase products from countries that the U.S. has a free trade agreement with as if they were domestic products—will be more difficult to obtain.
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Update on the US-UK Free Trade Agreement Negotiations |
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On May 5, 2020, the United States and United Kingdom began negotiating the much-anticipated US-UK Free Trade Agreement (“US-UK FTA”). Since then, the two counties have engaged in five formal rounds of negotiations and a total of 170 individual sessions. If the US-UK FTA is successfully negotiated, the impact on US businesses – both large and small – could be substantial. The US-UK FTA would be the largest bilateral trade deal in US history, and could add an estimated $10 billion to the US economy. It will likely address critical industries and policies, such as e-commerce, digital media, clean energy, data protection, foreign direct investment, pharmaceuticals, agricultural policy, and tariff burdens. But more than half a year in, where do the US-UK FTA negotiations stand?
On the heels of the US 2020 Presidential Election, the US-UK FTA negotiations are in hiatus. The negotiations could resume once the US Senate confirms President Biden’s nominee for US Trade Representative – Katherine Tai. Prior to her nomination, Ms. Tai served as the chief trade lawyer for the House Ways & Means Committee. Many credit her key role in finalizing the revamped pact with Canada and Mexico, known as USMCA. But given current geopolitical priorities, as well as Ms. Tai’s experience with China and fluency in Mandarin, it is reasonable to assume that Chinese trade policy will be at the top of the US Trade Representative’s agenda.
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Is Your International Compliance Program Current? |
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A number of significant new U.S. laws, regulatory changes, and government guidance documents affecting international trade compliance programs have been issued in recent months. If your organization’s import, export, and sanctions compliance programs have not been reviewed and updated in light of these changes, it’s time for a tune-up. A sampling of the new legal developments includes:
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Forced Labor and Modern Slavery Laws in the U.S. and many foreign countries, including the UK, France, Australia, and the Netherlands, among many others, that particularly impact U.S. importers;
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Numerous other legal changes impacting trade and dealings with China, Hong Kong, Turkey, Russia, Sudan, Venezuela and more.
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Notable Enforcement Actions |
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Princeton University Settles with BIS over Unauthorized Exports of Animal Pathogens to Overseas Research Institutions |
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On February 2, 2021, the Bureau of Industry and Security (BIS) issued a press release regarding its administrative settlement with Princeton University in the amount of $54,000, stemming from allegations that the university exported controlled items overseas without any government authorization on 37 separate occasions. From approximately November 2013 to March 2018, Princeton University shipped numerous strains and recombinants of animal pathogens from the United States to multiple foreign research institutions with no required export licenses. These items, which were controlled for Chemical and Biological Weapons reasons, were valued at around $27,000 in total.
The university voluntarily self-disclosed its potential violations to BIS and fully cooperated with the subsequent investigation, as well as agreed to participate in both external and internal audits of its compliance program, resulting in a mitigation of its penalties in the matter.
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BIS Reaches $3.2 Million Settlement with Singapore-based Distributor Following Illegal Shipments to China and Iran |
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On January 29, 2021, BIS announced a settlement with Avnet Asia Pte. Ltd. (Avnet Asia), a Singapore-based distributor of electronics components and related software, for $3.2 million after the company allegedly exported controlled items through Singapore to China and Iran. Between October 2007 and January 2014, Avnet Asia sold and transferred electronic components on 53 occasions to Chinese and Iranian end users, including one party on the BIS Entity List, without prior government authorization. The items in question, most of which were electronics classified under ECCN 3A001, were valued at a total of over $1.2 million.
On the same date, the Department of Justice unsealed the indictment of Cheng Bo, a Chinese national and former employee of Avnet Asia, who was criminally charged with conspiracy for his role in shipping U.S.-origin power amplifiers to China from 2012 to 2015. Avnet Asia agreed to pay a total of $1,508,000 in order to settle its criminal liability in relation to its prior employees, including Cheng.
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Visit our website for additional notable enforcement actions here.
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For more information on how these could impact your business, contact:
Click here to read more recent updates.
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McGinnis Lochridge International Trade and Transactions Practice Group |
Click here to download our brochure and learn more about some of the key areas of representation we provide to our clients.
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