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The Month in International Trade – May 2018

June 8, 2018

In this issue:

This news bulletin is provided by the International Trade Group of Crowell & Moring. If you have questions or need assistance on trade law matters, please contact Jeff Snyder or any member of the International Trade Group.



To do so, please subscribe to Section 232 Investigations, Section 232 (Auto and Automotive Parts), and Section 301 Investigation on Crowell & Moring’s International Trade Law blog.

For more information, contact: Dan Cannistra, Robert Holleyman, Bob LaFrankie, Spencer Toubia, Ru Xiao-Graham, Cherie Walterman


Following the imposition of new U.S. sanctions on Russia in April 2018, Russian lawmakers have introduced two draft bills proposing Russian countersanctions against ‘unfriendly’ states, as well as criminalizing compliance with foreign sanctions in Russia.

The Countermeasures Bill

The first measure, the Draft Bill No. 441399-7 On Measures (Countermeasures) in Response to Unfriendly Actions of the USA and (or) other Foreign States (the Countermeasures Bill) passed both chambers of the Federal Assembly, and was signed into law by President Putin and officially published on June 4, 2018. It is effective from that date.

The Countermeasures Bill was significantly watered down during its passage through the State Duma. Specifically, the Duma removed the specified categories of banned products and services that were proposed in the initial draft. The revised Countermeasures Bill as enacted includes the following six measures which may target the U.S., other ‘unamicable’ foreign states (the Relevant States), entities that are subject to the jurisdiction of the Relevant States, entities that are directly or indirectly owned by entities under the jurisdiction of the Relevant States (the Relevant Entities), officials and citizens of the Relevant States, if they are involved in ‘unamicable’ acts with respect to the Russian Federation:

  • Article 2(1): Termination or suspension of international cooperation between Russia and Russian legal entities and the Relevant States, including entities that are subject to the jurisdiction of the Relevant States, or the Relevant Entities, relating to sectors to be determined by a separate decision of the Russian President.
  • Article 2(2): Prohibition or restriction on the import of products and/or raw materials into Russia originating from the Relevant States or manufactured by the Relevant Entities. The list of products and/or raw materials shall be determined by the Russian Government. Significantly, such measures would not apply to (a) products which do not have substitutes manufactured in Russia, or (b) products imported for personal use.
  • Article 2(3): Prohibition or restriction on the export from the Russian Federation of products and/or raw materials by (a) citizens of the Relevant States and/or (b) the Relevant Entities. The list of products and/or raw materials will be determined by the Russian Government.
  • Article 2(4): Prohibition or restriction on access, directly or indirectly, to public procurement for providers of works/services that are Relevant Entities. The list of particular works/services prohibited from public procurement will be determined by the Russian Government.
  • Article 2(5): Prohibition or restriction on participation in privatization of state or municipal property for (a) citizens of the Relevant States and/or (b) the Relevant Entities. Prohibition or restriction for such persons from (a) providing works/services for the organization of sale of federal property in the name of the Russian Federation and/or (b) fulfilling functions as a seller of federal property.
  • Article 2(6): All other measures determined by a separate decision of the Russian President.

Such measures must be implemented by all federal and municipal bodies, as well as the citizens of the Russian Federation and entities under Russian jurisdiction (Article 1(4)).

The Criminalization Bill

On May 14, 2018, Russian lawmakers filed another draft bill in connection with the proposed countermeasures, this time proposing criminal liability for Russian citizens complying with non-Russian sanctions. The Draft Bill No. 464757-7 On Amendments to the Criminal Code of the Russian Federation (the Criminalization Bill) passed its first hearing stage with only minor changes. The second hearing for the Criminalization Bill was scheduled for May 17, 2018 but was postponed, pending further consultations with the Russian government and the business community. A new date for the hearing has not yet been set.

The draft bill introduces a new Article 2842 of the Russian Criminal Code, which creates the following two new types of criminal offenses and related liability:

  • Article 2842(1): Actions (or omission to act) aimed at compliance with a decision of a foreign state, union of foreign states or international organization to impose restrictive measures, if this action (omission to act) restricts or prohibits Russian citizens, legal entities incorporated in Russia, Russian Federation, subjects of the Russian Federation, municipal entities or entities controlled by any of the above (Russian private or public entities of entities controlled by them) to fulfil “ordinary economic operations or transactions”. Liability for such criminal offense ranges from (a) a fine of up to RUB 600,000 or four annual salaries or income, to (b) up to four years of imprisonment and also potentially a fine of up to RUB 200,000 or one annual salary or income.
  • Article 2842(2): Willful actions by Russian citizens that contribute to the imposition of restrictive measures by a foreign state, union of foreign states, international organization on Russian individuals, public and private entities (including their controlled entities). Such actions may involve recommendations and provision of information that led to the imposition of anti-Russian sanctions. Liability for such offense ranges from (a) a fine of up to RUB 500,000 or three annual salaries or income, to (b) up to three years of imprisonment and potentially a fine of up to RUB 200,000 or one annual salary or income.

An explanatory note to the new Article 2842 clarifies that “ordinary economic operations or transactions” means legal actions, aimed at performing contractual or other legal obligations, if such operation or transactions are carried on in the ordinary course of business, or other lawful activities, by individuals or entities (or foreign entities controlled by them) who are subject to restrictive measures (e.g., specially designated nationals or SDNs). Such transactions would include opening of bank accounts, making and accepting payments, trading securities, etc.

Based on the difference in terminology (insofar as the latter is limited to “actions by Russian citizens”), the proposed Article 2842(1) appears to apply both to Russian and to foreign citizens subject to Russian jurisdiction, in contrast to Article 2842(2), which appears to apply to Russian citizens only.

Russian business groups reportedly voiced opposition to the current draft of the Criminalization Bill. Russian President Putin has stated that the new law “should be balanced” and that it “must not do harm to our own economy and to those of our partners with good conscience do business in Russia.” We would therefore expect that the Criminalization Bill will be amended before being passed through its second hearing.

On May 23, 2018, the State Duma’s Law-making Committee held a meeting among policymakers and representatives of, among others, the Russian Union of Industrialists and Entrepreneurs, Retail Companies Association, European Businesses Association, and Russian banks and retailers. The majority view on the business side appears to be that the appropriate liability for compliance with foreign sanctions (i.e. the new criminal offense under Article 2842(1)) would be administrative (e.g. a fine), not criminal. However, the proposed criminal offense of contributing to the imposition of foreign sanctions, etc. (i.e. under Article 2842(2)) is likely to remain in the Criminal Code. The Law-making Committee will now consult on the results of these discussions with the Russian government and the responsible ministries. The next step would be for the Committee to prepare a revised draft of the bill. It is expected that the second draft would be ready for another round of discussions between the Committee and the business community representatives a week after the consultations with the government, and will then be submitted for the second hearing at the Duma.

If the Criminalization Bill is enacted in the current version (which does not appear likely given President Putin’s comments), companies operating in Russia and, in particular Russian citizen managers of the operation of Russian subsidiaries of U.S. or non-Russian companies, would face a substantial risk arising from the potential conflict generated by U.S. obligations that can apply to even non-U.S. entities (e.g., “secondary” sanctions or the designation authority in Section 228 of the Countering America’s Adversaries Through Sanctions Act (CAATSA) and the provisions in the Criminalization Bill.

For more information, contact: Cari Stinebower, Michelle Linderman, Dj Wolff, Elena Klonitskaya, Chris Monahan, and Sergey Kvitkin


On May 8, 2018, President Trump announced the United States’ withdrawal from the Joint Comprehensive Plan of Action (JCPOA) pursuant to which the United States had provided relief from certain direct sanctions and even more secondary sanctions. Following his remarks, the president signed a National Security Presidential Memorandum directing the Departments of State and the Treasury to “begin reinstating” U.S. nuclear sanctions that had been lifted in connection with JCPOA implementation.

Immediately following the president’s announcement, the Treasury Department’s Office of Foreign Assets Control (OFAC) issued guidance regarding the re-imposition of sanctions in the form of Frequently Asked Questions. The FAQs make clear that all sanctions measures that have been lifted pursuant to the JCPOA will be re-imposed following 90- or 180-day wind-down periods, on August 6, 2018 and November 4, 2018, respectively.

For key elements of the re-imposed U.S. sanctions, their impact, and the FAQ guidance, please see Crowell & Moring’s Client Alert. 

For more information, contact: Cari Stinebower, Carlton Greene, Alan W.H. Gourley, Dj Wolff, Erik Woodhouse, Dalal Hasan


On May 18, the EU Commission announced plans to protect EU companies doing business in Iran. This announcement comes in response to President Trump’s decision to withdraw from the Joint Comprehensive Plan of Action (JCPOA), known as the Iran nuclear deal, and re-impose U.S. sanctions on Iran. The EU Commission plans to mitigate the extraterritorial effect of U.S. sanctions on EU companies in four ways:

  1. Blocking Statute: Revive and update a 1996 “blocking statute” to forbid EU companies from complying with U.S. sanctions against Iran and make foreign court judgments based on these sanctions ineffective in the EU. The blocking statute was originally proposed to counter the effects on EU companies of the U.S. embargo on Cuba. It will be necessary to update the list of U.S. sanctions on Iran that fall within its scope. The Commission hopes to have this measure in place by August 6, 2018, when the first set of U.S. sanctions takes effect.
  2. EIB Investment: Remove obstacles to allow the European Investment Bank (EIB) to support EU investment in Iran.
  3. Sectoral Cooperation: Strengthen sectoral cooperation with Iran, including “in the energy sector and with regard to small and medium-sized companies.” To facilitate this, Commissioner for Climate Action and Energy, Miguel Arias Cañete, plans to travel to Tehran this weekend. Additionally, the Development Cooperation or Partnership Instruments will provide financial assistance.
  4. Central Bank of Iran Transfers: Encourage Member States to “explore the possibility of one-off bank transfers” to the Central Bank of Iran. The U.S. sanctions could target EU entities active in oil transactions with Iran, so this would help Iranian authorities receive their oil-related revenues.

After the first two measures are formally proposed, the European Parliament and the Council will have two months to object to them. If neither institution objects, however, this period can be shortened.

EU leaders gave unanimous backing to the above proposals when they were presented to them at an informal meeting in Sofia, Bulgaria, by European Commission President Jean-Claude Juncker on 16 May 2018.

UPDATE: On June 6, the European Commission adopted the update to the Blocking Statute and of the European Investment Bank (EIB)'s External Lending Mandate.

For more information, contact: Michelle Linderman, Alex Rosen


Although the focus of many companies regarding the EU General Data Protection Regulation (GDPR) was on the May 25, 2018 effective date, we see that date as the beginning, not the end, of implementing a global GDPR compliance program.

First, the risk-based GDPR framework for privacy and data security is an ongoing compliance process, not a “one-and-done” activity. Second, the EU Member State Data Protection Authorities (DPAs), charged with enforcing GDPR compliance, are grappling with how best to approach the operational issues that arise as entities interpret and implement GDPR’s data protection principles. Third, we expect the issuance of additional guidance that will potentially impact a number of companies’ activities, including the interaction between GDPR and the not-yet-final EU ePrivacy Regulation for online data activities. As a result, we expect to see DPA interpretations of GDPR, including through enforcement activities that will provide clearer compliance guidance.

For more guidance on developing and implementing GDPR compliance programs, please see Crowell & Moring’s Client Alert.

For more information, contact: Emmanuel Plasschaert, Jeffrey Poston, Jeane Thomas, Peter Miller, Maarten Stassen, Frederik Van Remoortel


On May 21, President Trump issued a new Executive Order (E.O.) “Prohibiting Certain Additional Transactions with Respect to Venezuela.” The new E.O. targets the Venezuelan Government’s ability to factor receivables and liquidate equity interest in exchange for cash.
The E.O. prohibits U.S. persons or persons within the United States from all transactions related to, or providing financing for, and other dealings—including evading, avoiding or conspiracy transactions—in:

  • The purchase of any debt owed to the GoV, including accounts receivable.
  • Any debt owed to the GoV that is pledged as collateral after the effective date of the E.O. (i.e., May 21, 2018).
  • The sale, transfer, assignment, or pledging as collateral by the GoV of any equity interest in an entity in which the GoV has at least 50 percent interest.

Consistent with previous sanctions, the E.O. also defines the term “Government of Venezuela” (GoV) as any political subdivision, agency, or instrumentality thereof, including the Central Bank of Venezuela, and Petróleos de Venezuela (PDVSA), as well as any person owned or controlled by, or acting for or on behalf of, the GoV.

The new measure further tightens already existing financial sanctions against the GoV in effect since August 2017. In particular, the new E.O. is expected to directly restrict PDVSA’s ability to engage in accounts receivable financing, which may accelerate the oil company’s liquidity struggles.

For more details on the E.O. issued on August 24, 2017, see Crowell & Moring’s Client Alert.

For more information, contact: Dj Wolff, Eduardo Mathison


On May 18, 2018, CBP issued a Withhold Release Order (WRO) banning the importation of all Turkmenistan cotton or products produced in whole or in part with Turkmenistan cotton. The Trade Facilitation and Trade Enforcement Act of 2015 (TFTEA) was signed into law P.L. 114-125 on February 24, 2016. It was created to ensure a fair and competitive trade environment. TFTEA prohibits all products made by forced labor, including child labor, from being imported into the United States.

On April 6, 2016, members of the U.S. Cotton Campaign, Alternative Turkmenistan News, and International Labor Rights Forum had submitted a petition to CBP requesting the agency ban the importation of all goods made with Turkmen cotton produced with forced labor under 19 U.S.C. § 1307. Merchandise made with forced labor is subject to exclusion and/or seizure, and may lead to criminal investigation of the importer(s).

These three groups alleged that the Turkmen government forces public sector employees under threat of punishment, including loss of wages and termination of employment, to pick cotton. Further, the groups claimed that “[i]n the 2017 cotton harvest, in addition to forced mobilization of adults, the government of Turkmenistan forced children 10-15 years old to pick cotton in violation of international and domestic laws,” he added. When information reasonably but not conclusively indicates that merchandise made with forced labor is being imported, CBP may issue a WRO pursuant to 19 C.F.R. § 12.42(e).

CBP’s ban means retailers and brands need to move quickly to identify and eliminate Turkmen cotton from their supply chains.

For more information, contact: John Brew, Frances Hadfield


The Office of the United States Trade Representative (USTR) provided notice in the Federal Register on May 30 that petitions submitted in connection with the 2018 Generalized System of Preferences (GSP) Annual Product Review have been accepted for further review.

The notice includes the schedule for submission of public comments and the dates of a public hearing to be conducted by the GSP Subcommittee of the Trade Policy Staff Committee (TPSC) associated with the review of these petitions and products.

In addition, USTR is announcing the initiation of a country practice review of Thailand's GSP.

For more information, contact: John Brew


Spencer Toubia is an associate in Crowell & Moring’s International Trade Group and a resident in the firm’s Washington, D.C. office. He joins us after four years at the Department of Commerce, where he worked as an Enforcement and Compliance Analyst and AD/CVD Policy Analyst. Spencer conducted several high-profile AD and CVD investigations involving market economy and non-market economy countries. He then spent about a year in the Office of AD Policy, where he focused on instituting and normalizing a rarely used mechanism for self-initiating AD and CVD cases known as “self-initiations.” At Crowell & Moring, Spencer’s practice will focus on all areas of trade remedies, import regulatory compliance, and international trade litigation, drawing on his government experience.


Aaron Marx spoke at the Virginia Manufacturers Association International Round Table on May 7 in Newport News, VA. He was on a panel discussing trade agreements and providing a tariff update, to include the new national security tariffs on imported steel and aluminum.

Dj Wolff will be leading a seminar on June 20 at the South Korean National Assembly for parliament staff and Non-Government Organization (NGO) personnel to discuss the scope of U.S. and UN sanctions on North Korea, including recent changes to these programs, with a focus on how NGO’s can continue to undertake humanitarian work in North Korea in compliance with these restrictions. He will be speaking on behalf of the Eugene Bell Foundation (EBF), an NGO and C&M pro bono client, which provides multi-drug resistant tuberculosis (MDR-TB) treatment in North Korea.

For more information, please contact the professional(s) listed below, or your regular Crowell & Moring contact.

Jeffrey L. Snyder
Partner – Washington, D.C.
Phone: +1.202.624.2790
Edward Goetz
Manager, International Trade Services – Washington, D.C.
Phone: +1.202.508.8968
Michelle J. Linderman
Partner – London
Phone: +44.20.7413.1353
David (Dj) Wolff
Partner; Attorney at Law – London, Washington, D.C.
Phone: +44.20.7413.1368, +1.202.624.2548
Carlton Greene
Partner – Washington, D.C.
Phone: +1.202.624.2818
Alan W. H. Gourley
Partner – Washington, D.C.
Phone: +1.202.624.2561
Emmanuel Plasschaert
Partner – Brussels
Phone: +
Jeffrey L. Poston
Partner – Washington, D.C.
Phone: +1.202.624.2775
Jeane A. Thomas, CIPP/E
Partner – Brussels, Washington, D.C.
Phone: +, +1.202.624.2877
Maarten Stassen
Partner – Brussels
Phone: +
Frederik Van Remoortel
Partner – Brussels
Phone: +
Eduardo Mathison
Counsel – Washington, D.C.
Phone: +1.202.654.6717
John B. Brew
Partner – Washington, D.C.
Phone: +1.202.624.2720