New Year Sanctions Roundup: Where Do We Stand?

By Fatema Merchant on January 15, 2019 Posted in Sanctions

Happy new year everyone. The government is shut down, but there has already been a flurry of activity in 2019 on the economic sanctions and embargoes front. Here is a summary of where we stand on various sanctions regimes.

Russia. On January 10, 2019, the Trump administration defended its decision to ease U.S. sanctions against companies connected to the Russian oligarch Oleg Deripaska. In 2017, the “Countering America’s Adversaries Through Sanctions Act” (CAATSA) passed Congress overwhelmingly and was signed into law by President Trump. As we blogged here and here, CAATSA codified strict Russia sanctions. It also allows Congress to block any termination of sanctions by the Executive. In December 2018, the Treasury department announced that it would lift sanctions on three of Deripaska’s companies: EN+ group, Rusal, and JSC EuroSibEnergo. Though Deripaska would continue to be subject to sanctions personally, Secretary Mnuchin reportedly told members of Congress in a briefing that the three companies had committed to “significantly diminish Deripaska’s ownership and sever his control.” Many lawmakers left the briefing unimpressed, and expressed concern that lifting sanctions would result in a tremendous financial benefit to Deripaska, whose designation by Treasury for sanctions last year reads like a mafia indictment. For now, it is unlikely that Congress is united enough to use its CAATSA powers to maintain the sanctions in the face of the Administration’s decision to lift them. But it is clear that Congressional Democrats intend to exercise their oversight powers when it comes to sanctions (or lack thereof) against Russia. Continue Reading

Comment Deadline Extended: Export Controls on Emerging Technologies

By J. Scott Maberry, Reid Whitten, Curtis Dombek, A. Joseph Jay, III, Fatema Merchant, Lisa Mays and Enumale Agada on December 11, 2018 Posted in Export Administration Regulations (EAR) and Commercial Exports

*This is an updated version of the December 10th blog post.

Key Takeaways:

Emerging technology sectors are being reviewed now for new export controls that could take effect in 2019 (list below).
You may submit comments on the criteria the U.S. government will use to determine what technologies are subject to export controls.
The deadline for comments has been extended to January 10, 2019.
We can help.

The Traps of a CFIUS Like EU FDI Screening Mechanism

By Yaniss Aiche on November 29, 2018 Posted in CFIUS

Finally, the much awaited harmonized screening framework of foreign investments into the EU (Regulation 2017/0224) has been agreed upon on 20 November 2018 by the EU Parliament, the Council and the Commission.

The agreed package will ensure that the EU and its Member States are equipped to protect their “essential interests” while remaining “one of the most open investment regimes” in the world. Protecting an open economy may sound like a comical oxymoron, but the press release of the European Commission on this topics does make for an amusing read!

The Little Regulation That Will Make a Big Change in How You Do Business: Department of Commerce to Establish New Export Controls on Emerging Technologies

By Reid Whitten, J. Scott Maberry, Curtis Dombek and Lisa Mays on November 19, 2018 Posted in CFIUS, Export Administration Regulations (EAR) and Commercial Exports

Key Takeaways:

Emerging technology sectors will soon be subject to new export controls.
Affected sectors include biotech, computing, artificial intelligence, positioning and navigation, data analytics, additive manufacturing, robotics, brain-machine interface, advanced materials, and surveillance.
New export controls on these sectors will likely require companies to obtain a license to export products to China and other destinations, and impose restrictions on sharing information with foreign nationals.
These sectors will also be added the list of industries subject to enhanced foreign investment scrutiny by the U.S. Committee on Foreign Investment in the United States (CFIUS).
The U.S. government has invited comments on the criteria to be used to establish new controls. The deadline for comments is December 19, 2018.

Export controls and other regulations often lag a step or two behind the times. That trend has accelerated with the pace of technological advancement. As a result, for many years, technical know-how in many cutting-edge technical fields has not been subject to export controls. This has meant that many commercial technical innovations could be freely exported without significant restrictions. As long as they were not designed for a military application, and no encryption technology involved, many new ideas developed in the United States were simply unaccounted for in the U.S. Export Administration Regulations (EAR).

But the U.S. Department of Commerce, Bureau of Industry and Security (BIS) is about to make up a lot of ground in a single, large leap. Continue Reading

CLIENT ALERT: Iran Sanctions Are Back On: Can Business Continue?

By Reid Whitten on November 5, 2018 Posted in Sanctions

The Prohibitions

On May 8, 2018, the United States withdrew from the Joint Comprehensive Plan of Action and reimposed all pre-JCPOA sanctions against Iran. We provide a detailed discussion of the reimposition in our article linked here (and linked here is our prediction, a year earlier, that it would happen). After a prescribed wind-down period, all U.S. sanctions on Iran are now in force. Effectively, U.S. sanctions on Iran now return to their pre-2016 levels, including secondary sanctions on non-U.S. companies transacting with the Government of Iran and many of Iran’s industries and financial institutions. Continue Reading

FIRRMA Takes Form as CFIUS Enacts a New Pilot Program Targeting “Critical Technologies”

By Reid Whitten, Brian Weimer, Enumale Agada and Drew Svor on October 11, 2018 Posted in CFIUS

On October 10, 2018, the Committee on Foreign Investment in the United States put into effect the first mandatory filing requirement ever imposed by CFIUS. The Department of Treasury’s summary of the Pilot Program is available here.
Effective November 10, 2018, CFIUS will require reviews of critical technology investments – including certain non-controlling investments – from any country.
A failure to file notice or a new short form declaration to CFIUS may result in a civil monetary penalty up to the value of the transaction.
The requirements will not apply to any transaction that is completed prior to November 10, 2018 or any transaction for which the material terms were established prior to October 11, 2018.

Background

On August 13, 2018, President Trump signed FIRRMA into law. FIRRMA is a transformational expansion of the authority of the Committee on Foreign Investment in the United States (CFIUS) to review certain transactions that previously eluded the Committee’s jurisdiction (discussed in our blog, here). Congress left many critical aspects of the FIRRMA framework to be addressed through regulations promulgated by the Department of Treasury. Although we do not expect final rules to be forthcoming until late 2019 or early 2020, Congress empowered the Department of Treasury to “test-drive” parts of FIRRMA through Pilot Programs. Those programs can be implemented simply, taking effect 30 days after publication of the program requirements in the Federal Register. The adoption and implementation of the Pilot Program for critical technologies represents the Department of Treasury’s first attempt to implement substantive parts of FIRRMA prior to issuing formal regulations. Continue Reading

The New NAFTA: the United States-Mexico-Canada Agreement (USMCA)

By Curtis Dombek and Lisa Mays on October 2, 2018 Posted in Announcements, Free Trade Agreements (FTA)

A tripartite agreement to save the North American Free Trade Agreement (NAFTA) has just been reached. Since June 2017, the United States, Canada, and Mexico have been renegotiating NAFTA. After over a year of negotiations, late on Sunday night, September 30, 2018, Canada agreed to sign the revised agreement. That agreement is called the United States-Mexico-Canada Agreement, or USMCA. Continue Reading

FCC’s Foreign Media Reporting Requirements: Extension of FARA or New Domain?

By Brian Weimer, Fatema Merchant and Drew Svor on September 20, 2018 Posted in Foreign Agents Registration Act (FARA)

On September 4, 2018, the Federal Communications Commission issued a new rule requiring foreign media outlets to submit reports to the FCC disclosing their relationships with foreign principals. The notice was issued pursuant to the 2019 National Defense Authorization Act.[1] Continue Reading

The Latest U.S. Sanctions on Russia

By Lisa Mays and Enumale Agada on September 20, 2018 Posted in Sanctions

A double agent. Nerve gas. Violations of international law. The recently imposed sanctions on Russia have all the makings of a James Bond movie but, unfortunately, those sanctions may cause some less-than-entertaining headaches for your business.

Why These Sanctions

On August 8, the U.S. State Department notified Congress it would impose new sanctions on Russia based on the U.S. Government’s determination that the Russian Government has used chemical and biological weapons in violation of international law. That determination was made under the Chemical and Biological Weapons Control and Warfare Elimination Act of 1991 (“CBW”) after the Russian government’s use of the “Novichok” nerve agent in an attempt to assassinate UK citizen (and double agent to Russia and the UK) Sergei Skripal and his daughter Yulia Skripal. Continue Reading

Expanding CFIUS: New Law Strengthens And Slows Investment Review

By Reid Whitten on August 17, 2018 Posted in CFIUS

This week, you have likely heard about FIRRMA, the Foreign Investment Risk Review Modernization Act, the law that will expand CFIUS. We have written about a number of aspects of the new law as it was being made, including the following:

In this alert, we provide a quick overview of the major points of that law. Continue Reading

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