INTERNATIONAL TECH INVESTMENT ISSUE – Threats to Technology Investment from Global Politics: How to Succeed as Borders Tighten

By Reid Whitten and J. Scott Maberry on April 10, 2019 Posted in CFIUS

Over the past year, the impact of international political risks on the global tech industry has been unprecedented.”
– Tung Tzu-hsien, Chairman of iPhone’s Chinese assembly company, Pegatron

Technology investment is getting harder. A few years ago, strategic and private equity technology acquisitions, multinational joint venture creation, and cross-border R&D collaboration were not only relatively straightforward, they were an economic engine driving the global technology economy.

Now, U.S. export controls, technology transfer restrictions, CFIUS and other investment reviews, and tariffs and non-tariff barriers have begun to limit the options for successful transactions in the tech sector. In this article, we examine the new and emerging challenges and suggest a strategies for navigating the changing currents of global trade and politics to get your deal done despite the shifting landscape. Continue Reading

INTERNATIONAL TECH INVESTMENT ISSUE – Investments With Borders: CFIUS-Style Foreign Investment Review Goes Global

By Reid Whitten and Julien Blanquart* on April 10, 2019 Posted in CFIUS

The Committee on Foreign Investment in the United States, CFIUS, is the U.S. government agency that conducts national security reviews of foreign direct investment in the United States. The CFIUS rules have been significantly tightened over time, which has created major obstacles, particularly to technology investments, and particularly for Chinese investors.

But as investors turn elsewhere looking for more a more streamlined investment process, they may be disappointed. Around the world, countries are creating new laws, or dusting off old ones, to allow their governments to examine and restrict foreign investment.

This article presents an overview of the emerging (or reemerging) foreign investment legal regimes in the EU – including domestic laws in France, Germany, Italy and the UK – Canada, Norway, South Korea, Japan, Australia, and New Zealand. For brevity in this article, we summarize our analysis in graphics and tables. However, we recommend that investors obtain a thorough legal analysis from local counsel before proceeding with an investment in any of the countries discussed here. Continue Reading

INTERNATIONAL TECH INVESTMENT ISSUE – A Wave of Export Regulation to Hit US Technologies

By Reid Whitten and Lisa Mays on April 10, 2019 Posted in Export Control Reform (ECR)

This article originally appeared in Risk & Compliance magazine in the UK, a publication of Financier Worldwide. The piece includes UK spelling and grammar.

Key Takeaways:

A wave is coming. An enormous wave of regulation will soon crash on Silicon Valley, Boston and other tech centres around the United States, and very few people have their surfboards ready.

Major technologies in exciting emerging fields (among them, biomedicines, virtual reality, and robotics) will soon be subject to strict export controls that will limit who can receive the technologies, who can use them, and even who can research them.

Forthcoming export controls will disrupt logistics planning, information sharing, R&D, and acquisition strategies for companies in the United States and all around the world. Continue Reading

Clear for More Takeoffs: Now is the Time to Have Your Voice Heard on New Satellite and Launch Regulations

By Reid Whitten and Fatema Merchant on March 19, 2019 Posted in Export Control Reform (ECR), ITAR and Defense Exports

On March 8, the U.S. government signaled regulatory changes that may create new opportunities for international collaboration on satellite development, global sales of satellite and launch equipment, and even sharing launch technology.

. . . and the Government wants you to weigh in. Continue Reading

The New Suits of Havana: How Non-U.S. Companies May Soon Be Sued for Their Business in Cuba

By Reid Whitten and Lisa Mays on March 19, 2019 Posted in Sanctions

Picture your company being hauled into U.S. court to defend litigation for your Cuba business that is lawful in your home country. That is the scenario that the Trump administration and Cuba hawks in Congress are aiming to arrange. The Trump administration is preparing to part the practice of past presidents to allow U.S. persons to sue non-U.S., non-Cuban companies for doing business in Cuba, dealing in property seized by the Cuban government since the 1959 revolution. Continue Reading

Update from the Trump Trade War Front: Tariffs Will Not Increase March 2*

By Lisa Mays and J. Scott Maberry on March 1, 2019 Posted in Import and Customs

*This is an updated version of the February 21st blog post.

Key Takeaways:

Many U.S. companies continue to struggle under the burden of President Trump’s tariffs on imports from China. The President has postponed a scheduled March 2, 2019 deadline to increase the tariff rate on many Chinese products from 10 to 25 percent.

When we went to press with the first version of this article (February 21, 2019), negotiations between the United States and China had failed to reach an agreement that would prevent the tariff increase.

Now the President has decided that progress in those negotiations has been “substantial.” On that basis, he directed U.S. Trade Representative Robert Lighthizer to postpone the March 2 tariff increase until further notice. Continue Reading

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

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