UN Tightens the Screws on North Korea with Additional Trade and Banking Sanctions

On November 30, 2016, UN Security Council Resolution (UNSCR) 2321 was adopted, pushing the limits on how far international economic sanctions can go in isolating the North Korean regime without entirely collapsing the country’s economy.  The resolution also lays out a handful of additional legal restrictions that will be pertinent for US and international stakeholders that may still have direct or indirect connections with North Korea, and closes some of the gaps left by a previous resolution from March 2016, UNSCR 2270, on which we previously advised.  Following this resolution, on December 2, 2016, the US Treasury Department’s Office of Foreign Assets Control (OFAC) announced related sanctions designations of additional individuals, entities and aircraft in North Korea.  For more information, please see our advisory.

U.S. Removes Restrictions on Government-to-Government Assistance for Myanmar

As we discussed in a previous post, the United States terminated its economic sanctions program targeting Myanmar (which the U.S. Government still calls “Burma”) on October 7, 2016.  Building upon the normalization of relations that led to the lifting of sanctions, the U.S. Government has determined that the circumstances now allow for a resumption of certain types of government-to-government assistance as well.  On December 2, 2016, the President issued a determination pursuant to Section 570(a) of the Foreign Operations, Export Financing, and Related Programs Appropriations Act of 1997 (Public Law 104-208) that “that Burma has made measurable and substantial progress in improving human rights practices and implementing democratic government.”  Under Section 570(a), such a determination renders inapplicable a statutory prohibition on government-to-government assistance to Myanmar and allows for the possibility that government-to-government assistance may now resume.  (A few areas were never affected by the statutory prohibition in the first place, specifically humanitarian assistance, counter-narcotics or crop substitution assistance, and assistance promoting human rights and democratic values.  Those areas of assistance can continue as before.)  This determination also does away with the requirement that the United States vote in international financial institutions (IFIs) against any loans or other assistance for Myanmar, and allows the U.S. Government to begin granting entry visas in the normal course to government officials from Myanmar.  Pending appropriations from Congress and lending decisions at IFIs, this could potentially unleash a considerable amount of development assistance for Myanmar and make it easier for multinational companies to invest there. Continue Reading

CFIUS History Redux: President Obama Blocks Chinese Purchase of Aixtron, Inc.

On Friday, December 2 – for just the third time since the creation of the Committee on Foreign Investment in the United States (“CFIUS”) – the President acted on a recommendation by CFIUS to block a foreign investment.

President Obama issued an Executive Order blocking the proposed acquisition of Aixtron, Inc., a California-based U.S. subsidiary of the German parent company Aixtron SE.  The parent was the subject of a proposed acquisition by Grand Chip Investment GMBH.  Grand Chip is a German company, but it is ultimately controlled by GC Investment of Luxembourg and Fujian Grand Chip Investment Fund, a Chinese limited partnership.  According to Bloomberg, Aixtron, Inc. generates roughly 20% of the sales of Aixtron SE. Continue Reading

Employers Must Use Revised Form I-9 Starting January 22, 2017

The USCIS has released a newly-revised version of Form I-9, Employment Eligibility Verification. The revised form contains enhancements intended to facilitate computerized completion. As of January 22, 2017, employers must use only the revised edition, dated November 14, 2016. Until that time, employers may use either the new, November 14, 2016, edition or the prior version, dated March 8, 2013.

Form I-9 is Mandatory for all U.S. Employers

This change affects all employers. The Form I-9 is a mandatory part of the hiring and employment process for all employees in the U.S. Employers face substantial civil penalties for I-9 violations and potential criminal liability for employing undocumented workers. Compliance includes utilizing the correct I-9 edition valid at the time of I-9 completion. Continue Reading

BIS Again Extends ZTE Temporary General License

On November 18, 2016, the Department of Commerce’s Bureau of Industry and Security (“BIS”) announced that it extended its temporary general license for exports, reexports, and in-country transfers to Zhongxing Telecommunications Equipment Corporation (ZTE Corporation) and ZTE Kangxun.  The temporary general license benefitting these two ZTE entities was scheduled to expire on November 27, 2016, but has now been extended to February 27, 2017.  This authority is necessary because the entities – along with two other ZTE affiliates – were placed on BIS’ Entity List on March 8, 2016.  The extension of the temporary general license allows exporters and reexporters to continue using the Export Administration Regulations’ No License Required (“NLR”) authority and license exceptions that were available to ship to these entities before they were added to the Entity List.  The other two ZTE entities on the Entity List that do not benefit from the temporary general license remain subject to additional restrictions. Continue Reading

DOD Rule Would Create Export Control Issues For Contractors

On October 31, 2016, the US Department of Defense published a proposed rule titled Withholding of Unclassified Technical Data and Technology from the Public Disclosure.  Public comments on the rule are due December 30, 2016.  Essentially, the proposed rule sets forth procedures already incorporated in pre-existing DOD directives regarding the dissemination and withholding of export-controlled information associated with DOD programs.  The view of the DOD is that the rule does not otherwise change or supplant the International Traffic in Arms Regulations or the Export Administration Regulations, however the proposed rule includes provisions that should be of concern to DOD contractors.  Particularly, the rule notes that when a DOD component has “substantial and credible information” that a qualified US contractor has violated US export control law, or engaged in other potentially problematic conduct associated with the completion of a certification that contractors are required to submit to gain access to DOD-origin export controlled information, the DOD will temporarily revoke, and could ultimately disqualify a contractor, from receiving DOD-origin export control information.  For more information, please see our advisory.

TN Visa Category Faces Uncertain Future

Throughout the Presidential campaign, President-Elect Trump pledged to re-negotiate the North American Free Trade Agreement (NAFTA), often referring to it as the “worst trade deal in history.”  Unless he is able to successfully renegotiate the terms of NAFTA with Mexico and Canada, Trump threatens, he plans to withdraw from the agreement.  Mr. Trump’s threat could carry enormous consequences for the TN (Trade NAFTA) immigration category.  With a new and radically different incoming administration, employers should reduce their exposure to immigration risks associated with sudden policy developments.  For more information, please see our advisory.

Two Questions and Partial Answers About What a Trump Administration Could Mean for CFIUS

The Committee on Foreign Investment in the United States (“CFIUS”) is a powerful tool of the executive branch.  CFIUS effectively can impose conditions on, block, or even unwind foreign investments in U.S. companies.  But the tool has been wielded, thus far, only to safeguard U.S. national security.

Two common questions about CFIUS, in view of the coming Trump administration, are:

  1. Can President Trump cause CFIUS to reconsider transactions that CFIUS previously has cleared?
  2. Can President Trump cause CFIUS to consider trade and other economic issues, rather than focusing exclusively on national security, when deciding whether to clear a deal?

Continue Reading

What a Trump Administration Could Mean for International Regulatory Compliance

After the November 8, 2016 elections, Washington is preparing for a new Congress and the transition of power from eight years of the Democratic Obama administration to the Republican administration of President-elect Donald Trump.  As the incoming president builds his transition team and sets out his policy priorities, Steptoe will examine what these changes may mean for international trade and economic sanctions regimes, global businesses and their compliance obligations, and the international regulatory community.

On January 20, 2017, President-elect Trump will be sworn in as the 45th president of the United States. One of his first responsibilities will be appointing Cabinet officials and nominating other senior government leaders to implement his policy priorities.  The transition team reportedly is specifically seeking officials with business experience, which could be a boon for businesses that must comply with a sometimes-dizzying array of international trade regulations promulgated by the Departments of Commerce, Treasury, and State.  However, these licensing and enforcement agencies may struggle with “brain drain” if a number of political appointees and career bureaucrats – who are responsible for implementing complex export controls and economic sanctions regulations – are replaced with newcomers lacking regulatory experience. Continue Reading

DFARS Proposed Rule Provides Guidance on Indirect Offset Costs

On November 4, 2016, the Department of Defense (DoD) published a proposed rule to modify the Defense Federal Acquisition Regulation Supplement (DFARS) and apply statutory changes pertaining to costs associated with indirect offsets under foreign military sales (FMS) agreements. For more information, please see our advisory.

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