Department of Commerce Extends Comment Period on “Supply Chain” Proposed Rule that Points to Broad Jurisdiction and Significant Agency Discretion

On November 26, the US Department of Commerce (“DOC”) issued a proposed rule to implement Executive Order 13873 (Executive Order on Securing the Information and Communications Technology and Services Supply Chain) that could have far-reaching consequences for certain transactions involving information and communications technology and services (“ICTS”).  The proposed rule covers a wide variety of transactions and would give DOC significant discretion to review, prohibit, or require mitigation for such transactions.  The public comment period, initially set to close on December 27, has been extended to January 10, 2020, after which DOC will review submitted comments before taking further action.

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State Department publishes long-awaited ITAR rule on encryption and other excluded activities

On December 26 the State Department will publish a long-awaited rule amending the International Traffic in Arms Regulations (ITAR) by providing a definition of activities that are not exports, reexports, retransfers, or temporary imports at 22 CFR section 120.54. Notably, this definition provides much-needed guidance on whether and under what circumstances end-to-end encrypted technical data is controlled under the ITAR. Published as an interim final rule, the State Department will accept comments through January 25, 2020, which could result in additional changes. However, the effective date of the interim final rule is set to be March 25, 2020, ninety days after publication in the Federal Register.

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US-China Phase One Trade Agreement: Key Provisions, Next Steps and Open Issues

The Office of the United States Trade Representative (USTR) announced December 13, 2019 that the US and China have reached a “historic and enforceable agreement” on a Phase One trade deal, though significant questions remain as to its terms and the future of the current US-China trade conflict. 

While the text of the agreement has not yet been finalized, the deal purportedly includes concessions by China in the areas of intellectual property, technology transfer, agriculture, financial services, and currency and foreign exchange. Additionally, the agreement includes a commitment by China that it will make “substantial additional purchases of US goods and services in the coming years,” according to the USTR. In exchange for these commitments, the United States has agreed to defer some tariffs on Chinese imports indefinitely, and to reduce others. 

For more information, please see our advisory on the Phase One agreement, the next steps in US-China trade relations, and issues that remain open after the agreement. 

US Threatens to Ramp Up Pressure on EU in Boeing-Airbus Subsidy Dispute with Tariffs up to 100% on Range of European Products

On December 12, the Office of the United States Trade Representative (USTR) published in the Federal Register a notice proposing to impose tariffs of up to 100% ad valorem on a wide range of European products. If enacted, these proposed tariffs would escalate the US response to the European Union’s (EU) subsidization of Airbus, which the World Trade Organization’s (WTO) Appellate Body found to violate WTO rules. USTR has already imposed duties of 10% and 25% – effective October 18, 2019 – on a variety of European goods in response to these subsidies. USTR is currently seeking comments on the December 12 proposal with respect to both product coverage and duty rates, which must be submitted January 13, 2020.

USTR’s proposal to impose additional duties on European products follows recent developments in the decades-old dispute between the United States and Europe at the WTO. In particular, since the imposition of 10% and 25% duties on $7.5 billion of European goods on October 18, which followed an arbitral award permitting the United States to retaliate up to $7.5 billion, a WTO compliance panel determined that the EU had not ceased providing WTO-inconsistent subsidies to Airbus. Citing the compliance panel’s report and the “lack of progress in efforts to resolve this dispute,” USTR announced that it was initiating a process to assess whether it should subject additional European products to duties, and also whether it should increase tariff rates on products covered under the original $7.5 billion action.

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EU Common Rules on the Control of Exports of Military Technology and Equipment: Council Adopts new Decision, Conclusions and a Revised User’s Guide

The Council of the European Union recently adopted a Decision amending Council Common Position 2008/944/CFSP of December 8, 2008 defining common rules governing control of exports of military technology and equipment. The new Council Decision takes account of the developments at EU and international level since the adoption of the original 2008 Common Position. The Council Decision is accompanied by Conclusions and an updated version of the User’s Guide to Council Common Position 2008/944/CFSP defining common rules governing the control of exports of military technology and equipment.

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US Threatens Up To 100% Tariff on French Luxury Imports

On Monday, the US Trade Representative (USTR) issued a notice proposing the imposition of up to a 100% tariff on $2.4 billion worth of French imports. This proposed tariff is the result of a Section 301 investigation which found that France’s Digital Services Tax is unreasonable, discriminatory, and restricts US commerce. The full Section 301 report can be found here. USTR’s preliminary list of goods subject to the tariff covered a wide range of French imports, including dairy and cheese products, makeup, handbags, and household goods.

USTR is soliciting comments regarding this action, including why products should be included or excluded from the final list. USTR is also inviting comments on possible fees or restrictions on services of France. Interested parties have until January 6, 2020 to file comments. There will also be a public hearing on January 7, 2020 (with requests to appear due on December 30, 2019). Post-hearing rebuttal comments will be due on January 14, 2020.

DOJ Launches Procurement Collusion Strike Force

The Department of Justice (DOJ) recently announced the formation of the Procurement Collusion Strike Force, which will focus on one of the DOJ’s top priorities: protecting public funds from bid rigging and fraud. As DOJ’s Deputy Assistant Attorney General for Criminal Enforcement stated in a speech just before the announcement, it is DOJ’s view that public procurement is “particularly vulnerable to collusion” because the predictable and repetitive nature of the procurement process, and the availability of few qualified sellers for any given procurement render the system particularly susceptible to manipulation. The Strike Force, therefore, seeks to deter, detect, investigate and prosecute antitrust crimes, such as bid-rigging conspiracies and related fraudulent schemes, which undermine competition in government procurement, grant, and program funding.

For more information on the DOJ Procurement Collusion Strike Force, see our advisory.

DIY Justice?

In November 2016, a tram in Croydon, England derailed on a sharp bend and resulted in the death of seven passengers and injuries to a further 62.  The tram was travelling in excess of the speed limit when it derailed and the tram driver was initially arrested by British Transport Police on suspicion of manslaughter before subsequently being released on bail.  While a subsequent report from the Rail Accident Investigation Branch concluded that driver error was the cause of the accident, on 31 October 2019 the U.K. Crown Prosecution Service (CPS) declined to pursue charges against the driver.

According to the CPS, the evidence did not support prosecution of the driver for the offence of gross negligence manslaughter.  Additionally, the CPS declined to pursue charges of corporate manslaughter against Transport for London or the tram operator, Tram Operations Ltd.

Families of the victims have vowed to fight for further answers and commentators have noted that the decision of the CPS not to pursue any prosecution does not prevent a private prosecution being pursued by those affected by the crash. Continue Reading

Public Charge Health Insurance Mandate and Self-Sufficiency Declarations Enjoined

On November 2, the Trump Administration issued a 28-day Temporary Restraining Order (TRO) in an effort to revamp “public charge” financial immigration provisions. The TRO halts a Presidential Proclamation conditioning immigration eligibility upon health insurance coverage. The Proclamation is part of an effort to restrict legal US immigration through reinterpretation of long-established provisions which tie financial self-sufficiency and/or financial support to immigration eligibility. Under these restrictions, individuals who are likely to be a financial burden to the US government are inadmissible to the US and, accordingly, not permitted to immigrate.

For more information on the scope and status of the efforts to control US immigration levels through changes to the public charge provisions, see our advisory.

EU Issues Guidance on Internal Compliance Programs for Dual-Use Trade Controls

The European Commission recently published a non-binding Guidance with recommendations on internal compliance programs for dual-use trade controls under the EU Dual-Use Regulation. The Guidance aims to provide a framework to help exporters identify, manage and mitigate risks associated with dual-use trade controls and to ensure compliance with the relevant EU and national laws and regulations.

For more information on the EU Guidance on internal compliance programs for dual-use trade controls, see our advisory.