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The Month in International Trade – August 2021

Client Alert | 14 min read | 09.09.21

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.

Top Trade Developments

Latest U.S. Trade Actions/Tariffs and Other Countries Retaliatory Measures

Please click here anytime for the latest actions, covered products rate increases, and effective dates.

For more information, contact: Dan Cannistra, Robert Holleyman, Bob LaFrankie, Ru Xiao-Graham, Sam Boone, Clayton Kaier

Latest on Section 301 Product Exclusions

Please click here anytime for the latest actions regarding Section 301 Product Exclusions.

For more information, contact: Dan Cannistra, Robert Holleyman, Bob LaFrankie, Ru Xiao-Graham, Sam Boone, Clayton Kaier

Crowell & Moring International’s Himamauli Das Named Acting Director Of FINCEN

Himamauli Das, senior advisor at Crowell & Moring International, LLC, has been named acting director of the Financial Crimes Enforcement Network, the anti-money-laundering unit of the U.S. Treasury Department. Das assumes the role at a time when FinCEN is moving to implement provisions of the Anti-Money Laundering Act of 2020, which became law in January of 2021 and makes the most sweeping changes to U.S. anti-money laundering laws since the USA PATRIOT Act of 2001.

Over the course of his career, Das has served in high-level government positions in in the administrations of George W. Bush, Barack Obama and Donald Trump. Most recently, he was counselor to the agency’s general counsel. He also previously served at the Treasury as assistant general counsel for international affairs and acting deputy assistant secretary for trade and investment. In addition, Das served as senior director for international trade and investment at the National Security Council, where he oversaw efforts to impose sanctions.

At C&M International, Das has advised clients on international economic policy and foreign relations, which includes trade, foreign investment, national security, export controls and sanctions, financial regulation, export promotion, climate change, sustainability and other matters. Das also serves as senior managing director of K2 Integrity, a risk, compliance, investigations, and monitoring firm.

“We are delighted for Him as he takes on this new role protecting the financial system and ensuring robust anti-money laundering policies and procedures remain strong in the face of ongoing challenges,” said Robert Holleyman, president and CEO of Crowell & Moring International and a partner in Crowell & Moring’s International Trade, and Privacy and Cybersecurity groups. “Having had the pleasure of working with Him not only currently at C&M International, but also during his time at the White House and Treasury while I was Deputy U.S. Trade Representative, I can say with certainty that the nation and his new colleagues are fortunate to have such an outstanding public servant at the helm of FinCEN.”

“I am honored to be the new acting director of FinCEN as it carries out its important mission to maintain and protect the financial system of the United States,” Das said. “I am grateful for the support and the opportunity to work together with colleagues at C&M International over recent years.”

For more information: Andrew Loeb

DJ Wolff And Derek Hahn Author U.S. Chapter of WorldECR’s Managing Investigations Global Guide

Crowell & Moring’s Derek Hahn and Dj Wolff have co-authored the United States chapter of WorldECR’s Managing Investigations: Best Practice in Government and Internal Investigations. The guide provides information about investigatory authorities in 21 countries responsible for sanctions, export control, anti-corruption, and AML enforcement, and answers questions on related policies, procedures, and best practices in each jurisdiction. The United States chapter covers the American “enforcement landscape, and the key issues faced by those hoping to successfully navigate it.”

Wolff is a partner in the International Trade Group where he splits his time between the firm’s DC and London offices, as well as a director at C&M International, the firm’s trade policy affiliate. His practice at the firm focuses on compliance with U.S. economic sanctions, export controls and antiboycott regimes. He counsels U.S. and non-U.S. clients with all aspects of complying with, and assessing risk pursuant to, U.S. economic sanctions, including day-to-day counseling, virtual and on-site compliance trainings, managing voluntary or involuntary responses to government inquiries, conducting internal investigations in the U.S., Asia, and Europe, and, in close collaboration with colleagues in the White Collar & Regulatory Enforcement Group, during civil and criminal enforcement proceedings. 

Hahn is a partner in the White Collar & Regulatory Enforcement Group and a member of the firm’s Investigations Practice. His practice focuses on white collar defense, internal investigations, complex litigation, and compliance counseling. He represents clients in an array of government investigations and enforcement actions, and has extensive experience managing matters involving the Foreign Corrupt Practices Act (“FCPA”), having counseled clients in multiple industries on FCPA matters across six continents. His FCPA experience includes government and internal investigations, third-party due diligence reviews, compliance program and training development, and anti-corruption risk assessments. He has defended multiple FCPA investigations brought by the Department of Justice and the Securities and Exchange Commission, and has counseled clients through numerous self-reports to those agencies.

To read the full Managing Investigations U.S. chapter, visit here.

For more information: Andrew Loeb

Customs and Border Protection Publishes Trade Statistics Showing Increase in Enforcement Actions and Forced Labor Detentions

On August 26, 2021, U.S. Customs and Border Protection (CBP) announced that for FY 2021 between October 1, 2020 and August 6, 2021, the agency had detained approximately $368 million ($367,743,052) worth of cargo in relation to forced labor by issuing Withhold Release Orders (WROs). As noted by the agency’s trade statistics, this represented a total number of 967 detained shipments during this period of time, which marks an increase of 331 stopped shipments from the previous release of statistics in June 2021. In terms of total value of detained cargo, this represented a 562% increase compared to FY 2020 where CBP detained $56 million ($55,541,383) worth of cargo in relation to forced labor.

This increase shows the U.S. government’s continued efforts to exclude goods suspected of using forced labor from entering the United States. During its forced labor investigations, CBP works to identify if any of the International Labour Organization’s (ILO’s) 11 indicators of forced labor exist in an entity’s operations, which include the following:

  • Abuse of vulnerability
  • Deception
  • Restriction of movement
  • Isolation
  • Physical and sexual violence
  • Intimidation and threats
  • Retention of identity documents
  • Withholding of wages
  • Debt bondage
  • Abusive working and living conditions
  • Excessive overtime

WROs are issued by the U.S. government when information reasonably but not conclusively indicates goods were made in whole or in part using forced labor. Merchandise detained under a WRO order must be exported immediately or a substantial submission made that provides specific information showing that the goods were not made with forced labor. To obtain a release of any shipment that has been subjected to a WRO, a certificate of origin along with this detailed statement regarding the merchandise’s production and supply chain origin must be submitted to CBP. CBP makes a determination on a case-by-case basis.

The latest trade statistics are available here.

For more information on actions Withhold Release Orders (WROs) and forced labor violations, contact our team and see previous posts below.

CBP Issues Withhold Release Order (WRO) on Certain Silica-Based Products from Xinjiang, PRC | International Trade Law (cmtradelaw.com)

Customs Denies Protest and Excludes Shipment of Cotton Garments for Violation of Xinjiang Withhold Release Order (WRO) | International Trade Law (cmtradelaw.com)

For more information: David Stepp, Frances Hadfield, Maria Vanikiotis, Martín Yerovi

BIS Announces $469,060 Settlement Agreement with California-Based Semiconductor Company for Conspiracy Involving Exports to Two Entity Listed Chinese Companies

On August 16, 2021, the U.S. Department of Commerce’s Bureau of Industry and Security (BIS) that it had reached a settlement agreement with Dynatex International (“Dynatex” or “the company”) – a California-based semiconductor company – where the company would pay a civil penalty of $469,060 for allegedly violating the Export Administration Regulations (EAR).

In its Proposed Charging Letter (PCL), BIS charged Dynatex with only one violation of Conspiracy (15 C.F.R. § 764.2(d)), alleging that Dynatex conspired with “others known and unknown,” between December 14, 2015 and January 17, 2020, to export a “DTX-150 MDB scribe and break tool and associated consumables and accessories, items subject to the Regulations and designated EAR99,” to the following two companies on BIS’s Entity List:

(1) Chengdu GaStone Technology Company (CGTC) (also known as Chengdu HiWafer Semiconductor); and

(2) China Electronics Technology Group Corporation 55th Research Institute (CETC 55).

Notably, the PCL details some of the activity, including that “prior to engaging in the transactions, Dynatex that CGTC was on a black list and was asked for clarification that Dynatex could ship the scriber breaker machine to CGTC in China without a problem. Dynatex was also informed that CGTC’s name should not be shown on shipping documents.” Dynatex responded that the transaction could continue because “CGTC was not their customer, but that of their distributor.” The company also continued to ship items to both Chinese companies without the required licenses even after becoming aware that CGTC and CETC 55 were on the Entity List.

BIS states that at all times relevant, both CGTC and CETC 55, were (and remain) listed on BIS’s Entity List. . Additional licenses are required for the exportation, re-exportation, and transfer of commodities, software, and technology to any listed entities.

The Proposed Charging Letter and Settlement Agreement are available here.

For more information on BIS’s Entity List, the EAR, or possible violations of the EAR, contact our team and see previous posts below.

Bureau of Industry and Security (BIS) Fines Company $200,000 for Violating the Export Administration Regulations (EAR) | International Trade Law (cmtradelaw.com)

Commerce Adds 23 Companies to Entity List Citing Forced-Labor, Military Technology, and Sanctions Concerns | International Trade Law (cmtradelaw.com)

BIS adds more Burmese entities to Entity List | International Trade Law (cmtradelaw.com)

For more information: Jeff Snyder, Chandler Leonard, Martín Yerovi

FINCEN and CFTC Announce $100 Million In Regulatory Settlements with Foreign Cryptocurrency Exchange for BSA Violations and Failures To Register

On August 10, 2021, the Financial Crimes Enforcement Network (“FinCEN”) and the Commodity Futures Trading Commission (“CFTC”) jointly announced $100 million in civil settlements with five entities responsible for the operations of BitMEX, a foreign peer-to-peer convertible virtual currency (“CVC,” or cryptocurrency) derivatives exchange. FinCEN said that the settlement represents FinCEN’s first enforcement action against a futures commission merchant (“FCM”). The settlements signal continued regulatory scrutiny of cryptocurrency exchanges, particularly those based outside the U.S., for their anti-money laundering (“AML”) compliance and compliance with related securities and derivatives laws.

Click here to continue reading the full version of this alert.

For more information: Michelle Ann Gitlitz, Carlton Greene, Caroline Brown, Anand Sithian, Nicole Succar, Chris Murphy

Multiple Post-Argus Decisions Hold No “Assurance of Confidentiality” Required for FOIA Exemption 4

In a string of recent cases following the Supreme Court’s 2019 decision in Food Marketing Institute v. Argus Leader Media, multiple courts have held that a party submitting information to the government need not demonstrate it obtained an assurance of confidentiality from the government in order for the agency to justify withholding that information in response to an information request made under the Freedom of Information Act (FOIA). (Crowell & Moring previously wrote about the new test instituted by Argus Leader here.)

FOIA Exemption 4 allows agencies to withhold documents otherwise responsive to a FOIA request if the documents contain “trade secrets and commercial or financial information obtained from a person [that is] privileged or confidential.” As discussed in our previous post analyzing the Argus Leader decision, the Supreme Court had left open the question of whether the submitting party must have received some assurance from the government that the information would be kept confidential. Recently, in The Washington Post v. U.S. Small Business Administration, the District of Columbia District Court followed the lead of other post-Argus Leader decisions in “declin[ing] to ‘read the word confidential to impose a blanket requirement that the government provide an assurance of privacy in every case in which it asserts Exemption 4.” This ruling follows the court’s observation in Renewable Fuels Assoc. v. U.S. Environmental Protection Agency that “no court has yet held that ‘privately held information lose[s] its confidential character for purposes of Exemption 4 if it’s communicated to the government without’ privacy assurances.” These decisions signal that no “assurance of confidentiality” requirement currently exists.

 For more information: Daniel W. Wolff, Anuj Vohra, John E. McCartney Jr., Monica DiFonzo Sterling

Customs Rulings of The Week

For more information, contact: Frances Hadfield, Martín Yerovi

Crowell & Moring Speaks

Caroline Brown will be a participant at the 3rdVirtual Conference on U.S.-China Trade Controls on September 20, 2021. The event runs from 10:00 AM (EDT) to 4:30 PM (EDT). The official event website may be found here.

Jeff Snyder will be moderating an Inter-Pacific Bar Association virtual webinar titled, “Trade Remedies Update (2).” To register, please click here.

Robert Holleyman was featured in an August 30th Inside U.S. Trade article titled, “Rewind: On revivifying Trade Talks.”

Anand Sithian was featured in an August 12th VIXIO article titled, “FinCEN Stretches Regulatory Reach to Foreign Crypto-Exchanges.”

Dan Cannistra was featured in an August 11th Law360 article titled, “Commerce Whacks Chinese Refrigerant With Steep Early Levy.”

David Stepp was featured in an August 6thBloomberg Law article titled, “Using Tech Can Accelerate International Trade Compliance.”

Contacts

Insights

Client Alert | 3 min read | 12.13.24

New FTC Telemarketing Sales Rule Amendments

The Federal Trade Commission (“FTC”)  recently announced that it approved final amendments to its Telemarketing Sales Rule (“TSR”), broadening the rule’s coverage to inbound calls for technical support (“Tech Support”) services. For example, if a Tech Support company presents a pop-up alert (such as one that claims consumers’ computers or other devices are infected with malware or other problems) or uses a direct mail solicitation to induce consumers to call about Tech Support services, that conduct would violate the amended TSR. ...

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