On September 18, 2020, the US Commerce Department announced the prohibited transactions (which would be effective as of September 20, subject to a court-ordered suspension discussed below) aimed at limiting the use of WeChat (and possibly also TikTok) within the United States. These prohibitions may have some effect outside the United States as well. Technology companies, Internet infrastructure companies, financial institutions, and other companies that support these apps should take particular note since the prohibitions are directed at business-to- business engagement, as opposed to individual users of these apps. However, users should consider that their ability to continue to use WeChat in particular within the United States may become severely restricted, and perhaps eventually eliminated. The Commerce Department’s September 18 announcement explains that these prohibitions are intended to “protect users in the U.S. by eliminating access to these applications and significantly reducing their functionality.”

As background, on August 6, President Trump issued Executive Orders 13942 and 13943, directing the Secretary of Commerce to identify, within 45 days, specific types of prohibited transactions related to ByteDance Ltd. (including TikTok) and WeChat. See our earlier blog post for more detail. In two Notifications issued on September 18 (the WeChat notice is available here, and the ByteDance / TikTok notice is here), the Commerce Department identified a broad set of business-to-business transactions involving WeChat and ByteDance / TikTok that would be prohibited under US law.

Importantly, the timing for these prohibitions is different for each of the two Notifications.

  • The WeChat prohibitions were to take effect on September 20. However, they were temporarily blocked by a preliminary injunction issued by a US federal magistrate judge on September 19. The outcome of this litigation remains uncertain.
  • The limited ByteDance / TikTok prohibitions that were slated to take effect on September 20 were suspended by the Commerce Department until September 27 at 11:59 p.m. eastern. In a press release issued after the Notifications themselves, the Commerce Department stated that this delay was provided “in light of recent positive developments . . . at the direction of President Trump.” The effective date of most of the ByteDance / TikTok prohibitions as stated in the Notification is not until November 12, 2020, which would align with the 90-day period for divestment of TikTok in the United States that was ordered by the President on August 14. A proposed divestment or other type of partnership to operate TikTok within the United States is currently under review by the Committee on Foreign Investment in the United States (CFIUS). President Trump stated that he has given the most recent proposed deal for TikTok his “blessing,” but the CFIUS process is not yet complete; nor has the deal closed. Commerce’s press release states that “the President has provided until November 12 for the national security concerns posed by TikTok to be resolved. If they are, the prohibitions in this order may be lifted.” The Chinese government has also indicated that any such deal would be subject to its approval as well.

Continue Reading US Commerce Department Identifies Prohibited Transactions Involving WeChat and TikTok

The US Department of Homeland Security’s Customs and Border Protection agency (CBP) announced on September 14 the issuance of five new withhold release orders (WROs) on entities allegedly using forced labor in or from China’s western Xinjiang Uyghur Autonomous Region (XUAR). The WROs bar the import into the United States of various goods alleged to

On August 28, China’s Ministry of Commerce and Ministry of Science and Technology jointly released a newly revised Catalogue of Technologies Prohibited and Restricted from Export (“Catalogue”), which is the second revision since the creation of the Catalogue in 2001. While China has separate control lists for items (including technology) controlled for non-proliferation reasons (i.e. nuclear, biological, chemical and missile-related control lists), this Catalogue sets forth technologies that otherwise warrant control, including on grounds of national security, public interests, environmental protection, etc.[1]

The Catalogue is structured in accordance with the industry classification issued by China’s National Bureau of Statistics, with the controlled technologies listed by category under each industry with a code assigned to the category. Before the revision, the Catalogue contained 150 categories/codes of technologies related to 34 industries, including 33 prohibited categories and 117 restricted categories. The controlled technologies include techniques related to China’s indigenous cultural and natural resources (e.g. manufacturing techniques of certain tea, alcohol, food and Chinese medicine, certain panda nurturing techniques) as well as technologies that are important to safeguarding China’s economic interests and national security.

The revision this time removed 4 categories of “prohibited” technologies and 5 categories of “restricted” technologies, while adding 23 new categories of “restricted” technologies. Moreover, changes were made to 21 existing categories with respect to the nature and parameters of the specific technology covered. Those newly added include technologies related to encryption, cyber defense, metal 3D printing, aero remote sensors, UAVs, lasers, major power and petrochemical facilities, etc.

Continue Reading China Updates its Catalogue of Technologies Prohibited and Restricted from Export

The Trump administration is considering a ban on US imports of Xinjiang-origin cotton and other products due to allegations of widespread forced labor. The scope of the possible restrictions has not been made public but credible reporting suggests that it could include cotton and tomato products from the Xinjiang Uyghur Autonomous Region (XUAR) or wider

On September 1, 2020, several US government agencies issued an advisory warning industry of the risks of inadvertent involvement in North Korea’s ballistic missile procurement activity. The advisory focuses not only on the producers and traders of products that can be misused for ballistic missile purposes, but also logistics providers and financial institutions that may unwittingly support this unlawful trade.

The advisory, issued by the US Departments of the Treasury, State, and Commerce, specifically highlights North Korea’s “collaborat[ion]” with “foreign-incorporated companies, such as Chinese and Russian entities, to acquire foreign-sourced basic commercial components.” It describes some of the deceptive tactics that these intermediaries may use, including concealing the true end-user and mislabeling export documentation, such as by “falsely declaring specialized materials to instead be general-purpose items that are widely commercially available.” The advisory notes that “most” of the products North Korea sources internationally for its ballistic missile program do not meet the thresholds of UN-mandated restrictions on trade with North Korea or of national export control lists, “and are widely available from overseas distributors, highlighting the importance of complying with ‘catch-all’ controls, as required by [United Nations Security Council Resolution (‘UNSCR’)] 2270.”

Continue Reading US Advisory on North Korea Ballistic Missile Procurement Highlights Risk of “Catch-all” Export Controls

On August 27, 2020, the US Department of Defense (“DoD”) published a second tranche to its list of “Communist Chinese military companies,” pursuant to Section 1237 of the of the National Defense Authorization Act for Fiscal Year 1999 (the “DoD List”).

The announcement follows the DoD’s June 24, 2020, publication of a letter to Senator Tom Cotton enclosing a list of twenty companies headquartered in the People’s Republic of China (“PRC”) which DoD determined are operating directly or indirectly in the United States and are “Communist Chinese military companies.”

(Click here for Steptoe’s blog post following the June 24, 2020 publication of the DoD letter.)

Continue Reading Update: US Department of Defense Publishes Update to List of “Communist Chinese Military Companies”

On August 27, 2020, the U.S. Commerce Department’s Bureau of Industry and Security (“BIS”) published an advance notice of proposed rulemaking (“ANPRM”) to solicit comments from industry and other stakeholders about how BIS should approach the establishment of new export controls on “foundational technologies” under the U.S. Export Administration Regulations (“EAR”).   Comments must be received by October 26, 2020.   This is an important opportunity for both U.S. and non-U.S. companies, industry groups, academic institutions and others to have a role in shaping this new U.S. regulatory process at an early stage.

The U.S. government is required under Section 1758 of the Export Control Reform Act of 2018 (“ECRA”) to “identify emerging and foundational technologies” that are “essential to the national security of the United States” and that are not yet subject to export controls for most countries, and then to “establish appropriate controls” on such technologies, which “at a minimum” are to include restrictions on providing such technologies to China and other U.S. arms-embargoed countries.  Therefore, the end result of this process may be new U.S. export controls on China and other countries that are viewed as more sensitive from the perspective of U.S. national security.  Any controls ultimately established for foundational technologies will be relevant not just for export controls, but also other regulatory areas.  Notably, “emerging and foundational technologies” controlled pursuant to Section 1758 of ECRA will be treated as “critical technologies” for the purpose of foreign investment national security reviews led by the Committee on Foreign Investment in the United States (“CFIUS”), as we previously advised.

Continue Reading Export Controls on “Foundational Technologies” – Opportunity for Public Comment

On July 14, the president issued Executive Order (EO) 13936, directing US federal agencies to revoke or suspend the Hong Kong Special Administrative Region’s (HKSAR) special status from mainland China under select laws and regulations.  As of August 15, several agencies had announced rule changes or proposed changes to implement the president’s directive. After

On August 4, a massive explosion tore through Beirut’s port and surrounding neighborhoods, killing over 200 people and displacing an estimated 300,000 from their homes. In the aftermath of the explosion, angry protesters took to the streets and the country’s cabinet resigned.

In the days since the blast, countries around the world have pledged US$300m in humanitarian assistance for Lebanon and a number of charity drives have raised considerable funds. Initial estimates put the material cost of the explosion as high as US$15 billion.

The purpose of this blog post is to provide some topline US sanctions and export control considerations for institutions and individuals considering the distribution of funds and/or goods or services to Lebanon.

For organizations looking for specific advice on navigating US sanctions and export controls, including Steptoe’s pro bono engagements, contact a member of our Economic Sanctions or Export Controls teams.

Continue Reading Charitable giving in times of crisis: Lebanon

On August 6, 2020, the White House issued a pair of Executive Orders (EOs) (available here and here) under the International Emergency Economic Powers Act (IEEPA) that could limit US users’ access to mobile apps from China’s Tencent Holdings Ltd. (Tencent) and ByteDance Ltd. (ByteDance). The EOs, which direct the Commerce Department to identify prohibited transactions within 45 days, could also limit other transactions involving US-origin goods, technology, and software to the companies and certain subsidiaries.

The two EOs build on the IEEPA national emergency declared in EO 13873 of May 15, 2019, Securing the Information and Communications Technology and Services Supply Chain, which, among other things, directs the Commerce Department to restrict the “acquisition, importation, transfer, installation, dealing in, or use of any information and communications technology or service” that is “designed, developed, manufactured, or supplied, by persons owned by, controlled by, or subject to the jurisdiction or direction of a foreign adversary.”

(Click here to read Steptoe’s earlier blog post on EO 13873.)

Continue Reading Executive Orders Aim to Restrict US Dealings with Chinese App Makers TenCent, ByteDance within 45 Days