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The Month in International Trade – July 2023

Client Alert | 10 min read | 08.07.23

Top Trade Developments

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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 Jana del-Cerro, Anand Sithian, or Simeon Yerokun or any member of the International Trade Group.

Top Trade Developments

Reforming the Union Customs Code: A Proposal from the European Commission towards Harmonizing European Union Customs Digitalization

On May 17, 2023, ten years after the EU adopted its Union Customs Code (UCC), the European Commission published a proposal intended to begin the complex journey of modernizing this crucial cog in the EU’s customs union. The proposal includes numerous changes to the current rules, adding new elements and replacing outdated provisions, and attempts to take into account developments in multiple areas such as technology, e-commerce, and customs administration.

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For more information, contact: Vassilis Akritidis, Oleksii Yuzko

DOJ, OFAC, and BIS Issue “Tri-Seal Compliance Note” Focusing on Voluntary Self-Disclosures

On July 26, 2023, the U.S. Department of Justice (“DOJ”), the U.S. Department of Commerce’s Bureau of Industry and Security (“BIS”), and the U.S. Department of the Treasury’s Office of Foreign Assets Control (“OFAC”) issued a Tri-Seal Compliance Note outlining their respective voluntary self-disclosure (“VSD”) procedures for potential violations of U.S. export controls and sanctions. This announcement highlights the agencies’ focus on compliance with export controls, sanctions, and other U.S. national security laws, and reminds industry of the incentives for voluntarily disclosing potential violations, including mitigation of civil and criminal penalties.

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For more information, contact: Caroline Brown, Jana del-Cerro, Carlton Greene, Jason Prince, Laura Schwartz, Anand Sithian, David H. Favre, Richard Stella

EU Restrictive Measures against Iranian Unmanned Aerial Vehicles

On July 25, 2023, the EU published in its Official Journal two legal acts aimed at strengthening EU sanctions in the context of Russian-Ukrainian war, by sanctioning Iran, a third country that helps Russia. The measures are designed to tackle the production of Iranian Unmanned Aerial Vehicles (UAVs), which are used in combat by Russian forces, thereby weakening Iran’s support to Russia. The EU measures send a clear signal to third countries providing assistance to Russia that their practices may have consequences.

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For more information, contact: Vassilis Akritidis, Oleksii Yuzko

Mandatory Notifications (and Potential Prohibitions) on Outbound Investment in China Ahead?

On July 25, 2023, the Senate overwhelmingly approved a measure to add mandatory notifications of certain investments in China to the National Defense Authorization Act (“NDAA”). The Outbound Investment Transparency Act, authored by Senators John Cornyn (R-TX) and Bob Casey (D-PA), would require U.S. companies to notify the government of investments in certain Chinese sectors, but does not allow for blanket investment bans. Last year, a more expansive version of the bill that would have established an interagency process for reviewing investments in China involving critical supply chains and specific critical and emerging technologies sectors was ultimately dropped from the CHIPS and Science Act.

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For more information, contact: Caroline Brown, Evan Chuck

State Department Publishes Fact Sheet on AUKUS Trade Authorization Mechanism

On July 10, 2023, the State Department released a Fact Sheet with additional details on the AUKUS Trade Authorization Mechanism (ATAM). ATAM appears likely to operate as a license exemption under the International Traffic in Arms Regulations (ITAR), leveraging the existing ITAR §126.4, to authorize transfers of certain approved categories of defense articles and services to previously approved parties in the UK or Australia, for use in enumerated AUKUS-related programs/end uses and subject to recordkeeping requirements. AUKUS is a trilateral security pact between the U.S., the UK, and Australia, and is one of the Biden-Harris Administration’s key national security initiatives from the 2022 National Defense Strategy. Click here to continue reading the full version of this article.

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For more information, contact: Jana del-Cerro, Jason Prince, Kelsey Clinton

Commerce Window Closes for Proposed Commerce Antidumping and Countervailing Duty Rules: Foreign Governments, Trade Associations, and Companies Weigh in on Contentious Charges

The comment window for the Department of Commerce’s (“the Department”) proposed rules for Antidumping and Countervailing Duty (“ADCVD”) Regulations closed on July 10, 2023. Pursuant to its authority under Title VII of the Tariff Act of 1930, the Department proposed to amend its regulations to strengthen its enforcement of trade remedies by revising many of its procedures, codifying many areas of its practice, and enhancing certain areas of its methodologies and analyses to address price and cost distortions in different capacities. The proposed rules touched on 22 different topics related to ADCVD procedures including transnational subsidies, CVD calculations (such as loan, benefit, equity, debt forgiveness, and direct taxes), the CVD adverse facts available (“AFA”) hierarchy, procedures for placing previous analysis on the record, extensions of time, scope inquiries of merchandise not yet imported, and clarifications about references and citations. The full list of proposed regulations can be found here.

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For more information, contact: Daniel Cannistra, Robert L. LaFrankie, Sam Boone, Tori Auerhan

New U.S. Department of Defense Policy Imposes Security Reviews for Universities and Labs Engaging in Fundamental Research

Last month, the U.S. Department of Defense (“DoD”) issued a memorandum explaining new requirements in its efforts to “Counter[] Unwanted Foreign Influence in Department-Funded Research at Institutions of Higher Education” (the “Memorandum”). The Memorandum discusses DoD’s new processes to review proposals from higher education institutions for fundamental research opportunities, with a focus on security threats posed by China, Russia, and other malign actors.

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For more information, contact: Michael Atkinson, Peter J. Eyre, Jeremy Iloulian

EU Considers Adding More Teeth to Sanctions Enforcement with Adoption of Draft Law Criminalizing Sanctions Evasion

On July 6, 2023, members of the European Parliament’s Civil Liberties Committee (CLC) adopted a draft negotiating mandate that would target those violating or circumventing EU Sanctions.

The legislation under consideration is a proposed directive, published by the European Commission in December 2022, on the definition of criminal offences and penalties for the violation of Union restrictive measures. It would introduce a common definition of violations and set minimum penalties to ensure that the perpetrators can be punished everywhere within the EU. Although the scope of the proposed directive is not limited to restrictive measures taken against Russia, its primary aim is to address problems of legal circumvention that have been identified since the invasion of Ukraine.

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For more information, contact: Vassilis Akritidis, Jean-Baptiste Blancardi

Crowell Webinars

How U.S. Companies Should Think About China’s Counterespionage Law and Other Actions Taken in Response to U.S. Restrictions

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  • While the Biden’s administration’s recent corporate enforcement actions and initiatives have garnered significant press attention, China has engaged in recent months in a series of less-publicized corporate enforcement actions and initiatives against non-Chinese companies (mostly, but not exclusively, U.S.-based) operating in the country, including through new investigations, raids of China-based offices, and even detention of employees. China has taken many of these actions based on alleged violations of laws established or updated in the last five years, some of which were issued in response to actions taken by the United States in the ongoing U.S.-China Strategic Competition.
  • This program will provide an understanding of some of the national security and trade restrictions aimed at China that the United States has taken, and China’s responses, including China’s updated Counterespionage Law, which went into effect on July 1, 2023, with a particular focus on how you and your company should approach risk mitigation.

Participants: Michael K. Atkinson, Caroline E. Brown, Evan Y. Chuck

Contact: Ana Lopez at ALopez@crowell.com.

Crowell Speaks

Latest DOJ, Treasury, Commerce guidance implies more than it updates
July 28, 2023 — Global Investigations Review
Related Professionals: Caroline E. Brown

Top Trade Policy Moves To Watch in 2023: Midyear Report
July 28, 2023 — Law360
Related Professionals: Robert Holleyman

Defense Contractors Caught in Anti-Boycott Blunder
July 26, 2023 — Export Compliance Manager
Related Professionals: Dj Wolff

Top International Trade Rulings of 2023 So Far
July 18, 2023 — Law360
Related Professionals: John Brew

US Warns Banks Over Wagner Group Gold Risks
July 5, 2023 — Global Trade Review
Related Professionals: Jason Prince

Contacts

Insights

Client Alert | 3 min read | 04.26.24

CFIUS Proposes Enhanced Enforcement and Mitigation Rules and Steeper Penalties for Non-Compliance

On April 11, 2024, the Committee on Foreign Investment in the United States (“CFIUS” or the “Committee”) announced proposed amendments to its enforcement and mitigation regulations, marking the first substantive update to CFIUS’s mitigation and enforcement provisions since the enactment of the Foreign Investment Risk Review Modernization Act of 2018.  The Committee issued a notice of proposed rulemaking ("NPRM”) that would modify the regulations that apply to certain investments and acquisitions, as well as real estate transactions, by foreign persons as follows:...

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