Another Day Another Tariff… and Other Recent Restrictions on China

J. Scott MaberryLisa MaysBy J. Scott Maberry and Lisa Mays on Posted in CFIUS, Import and Customs

In what has become his trademark Trumpian manner, the President announced last Friday that new tariffs and trade restrictions against China are on again, at the same moment that his senior Commerce and Treasury Department negotiators were trying to work out a deal in Beijing. This came just a handful of days after Department of Treasury Secretary Steven Mnuchin announced that the trade war with China was “on hold.” The President has declared again in a tweet Saturday that America “can’t lose” a trade war with China. We’ve debunked that fallacy here. But even if one accepts the premise that we should prosecute a trade war, it’s well established that a micromanaging general quickly loses the confidence of his ground troops. Wars have been lost for less. On trade, the President’s conflicting directives have everyone a little confused. Here are the highlights for the time being: Continue Reading

Your Way-Too-Early Guide to North Korean Investment: Big Opportunities, Big Risks, and the Regulatory Guidance to Identify Both

Reid WhittenBy Reid Whitten on Posted in Sanctions

I spent last week in Seoul talking to clients about the latest changes to U.S. trade and sanctions policy (as South Korea is one of Iran’s largest trading partners, it is understandable that some concerns have arisen there in May). Interestingly, a topic that came up often was how to reenter the North Korean market. The people with whom I spoke, in industries ranging from financial, to manufacturing, to technology, to legal, were sanguine on the possibility of a détente and the resulting opportunities for investment, growth, and profit in a reopened North Korea. Continue Reading

Client Alert: Iran Sanctions Return

Reid WhittenJ. Scott MaberryCurtis DombekA. Joseph Jay, IIIEnumale AgadaBy Reid Whitten, J. Scott Maberry, Curtis Dombek, A. Joseph Jay, III and Enumale Agada on Posted in Sanctions

Key Points

1. All sanctions on Iran that were in place before January 2016 will be re-imposed no later than November, 4 2018.

2. Secondary sanctions that penalize non-U.S. persons doing business with Iran will be reinstated.

3. General License H, allowing non-U.S. subsidiaries of U.S. companies to do business in Iran, will be revoked.

4. In some cases, companies may take payments or repayments for sales, loans, or credits to Iran after November 4, 2018 Continue Reading

Five Things You Must Know About Trade Wars

J. Scott MaberryBy J. Scott Maberry on Posted in Antidumping and Countervailing Duties, Free Trade Agreements (FTA), Import and Customs

On April 3, 2018, President Trump’s U.S. Trade Representative released a list of 1300 categories of Chinese goods that will be subject to 25% tariffs. That followed a tit-for-tat exchange in which President Trump announced a round of steel and aluminum tariffs on March 8, and China announced tariffs on U.S. imports worth around $3 billion on April 2 (including American pork, fruit, wine and steel pipes). On April 5, China responded with a list of $50 billion of U.S. goods that will be subject to increased tariffs (including aircraft, automobiles, and soybeans). That same day, Mr. Trump announced that he is looking for $100 billion additional Chinese goods to tax. Continue Reading

The Great Wall Against China: Washington’s Barriers to a Wave of Capital from the Far East

Reid WhittenBy Reid Whitten and Julien Blanquart* on Posted in CFIUS

Chinese investment in the United States plummeted in 2017 and is likely to continue to fall. According to the Wall Street Journal, Chinese foreign direct investment in the United States declined 36% last year, from $46.2 billion in 2016 to $29.4 billion in 2017. We expect the 2018 figures to be even lower. What could explain the precipitous decline?

Well, haven’t you heard? We’re building a wall.

The United States Government is frantically throwing up barriers to foreign investment, particularly from China. The result of that effort is clear in the swooning Chinese investment numbers. It appears that trend of tightening our defenses will only continue through 2018 and beyond. Continue Reading

Digital Cops and Cyber Robbers: OFAC Guidance on Crypto Currency

Fatema MerchantBy Fatema Merchant on Posted in Anti-Money Laundering, Sanctions

A lot of us in the sanctions compliance world were wondering whether and when OFAC would issue official guidance on its application of sanctions in the digital currency world. On March 18, OFAC issued five FAQs related to virtual currency. Those FAQs convey two important messages:

(1) OFAC sanctions regulations apply to virtual currency transactions just as they apply to “fiat” currency (here’s looking at you dark web crypto-user); and

(2) OFAC will use its existing authority to respond to the growing threat posed by the use of emerging payment systems by malicious actors, including adding digital currency addresses that are associated with blocked persons to the SDN List.

While the first point – that OFAC compliance obligations apply to virtual currency transactions – is not groundbreaking news, the second point is more interesting. Our key takeaway from the FAQs is: OFAC is clearly thinking about how it will enforce its regulations on virtual currency transactions and digital currency operators, so you should too. Continue Reading

5 Steps to Obtaining an Exemption under President Trump’s Steel and Aluminum Tariffs

J. Scott MaberryBy J. Scott Maberry on Posted in Import and Customs

If your company is a U.S. consumer of imported steel or aluminum, the new tariffs announced by President Trump on March 8, 2018 are bad news. The good news is that you can petition the government for exclusions of certain products. Formal procedures for such petitions won’t be published until March 19. But there are steps you can take now to prepare. Continue Reading

Chips on Their Shoulders: CFIUS Intervenes in Broadcom’s Hostile Takeover Bid for Qualcomm

Drew SvorBrian WeimerReid WhittenBy Drew Svor, Brian Weimer and Reid Whitten on Posted in CFIUS
  • CFIUS takes an unprecedented step to fend off a potential foreign acquisition
  • The threat that China will eclipse the U.S. in telecommunications infrastructure and technology is central to U.S. national security
  • Five key takeaways from the most recent CFIUS action

Since late 2017, Singapore-based semiconductor company Broadcom has been pursuing a $117 billion hostile takeover bid for Qualcomm, its U.S.-based rival whose chips are omnipresent in U.S. telecommunications infrastructure, including consumer devices like smartphones and tablets. As part of its hostile bid, Broadcom nominated its own slate of six directors who were to be voted on at Qualcomm’s annual stockholders meeting, originally scheduled for March 6th. However, earlier this week the Committee on Foreign Investment in the United States (CFIUS) announced that it “issued an interim order to Qualcomm directing it to postpone its annual stockholders meeting and election of directors by 30 days. This measure will afford CFIUS the ability to investigate fully Broadcom’s proposed acquisition of Qualcomm.” Continue Reading

Lurches, Leaps, Feints, and Flops: Movements Without Motion in Russian Sanctions Policy

Fatema MerchantReid WhittenBy Fatema Merchant, Reid Whitten and Julien Blanquart* on Posted in Sanctions

Since the U.S. Government determined that Russia interfered in the 2016 election[1], movement around Russia sanctions policy has been vigorous, if not unidirectional. In 2016, the United States implemented twice sanctions against Russia: In September, dozens of individuals and entities were sanctioned with regards to Russian operations in Crimea. In December, President Obama expelled 35 Russian intelligence agents from the U.S. and imposed sanctions on two major intelligence services, as a response to those interferences from Russia. In 2017, concerned that the new Administration might roll back certain sanctions on Russia, Congress overwhelmingly passed the Countering America’s Adversaries Through Sanctions Act, codifying and adding to sanctions on Russia already in place (which we reported on here).

In January, we anticipated two more moves mandated under CAATSA: 1) the publication of a List of Senior Political Figures and Oligarchs in the Russian Federation and 2) sanctions against entities and individuals that had conducted significant transactions with the defense and intelligence sectors in Russia. It appears that one was a feint and the other, a flop. Continue Reading

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