Export Controls & Economic Sanctions

In a January 10th Executive Order, President Trump expanded sanctions on Iran after a ballistic missile attack on two American military bases in Iraq.  Executive Order 13902 expands secondary sanctions on Iran to include “significant” or “material” support transactions between non-U.S. persons and Iran’s construction, mining, manufacturing, and textiles sectors as potentially sanctionable

As we kick off a new year, Husch Blackwell’s International Trade and Supply Chain team offers an analysis of events that shaped the international trade landscape in 2019 as well as insight into what international trade issues are on the horizon in 2020 in a recently published white paper.

The “International Trade Law: 2019

As we discussed in a recent client alert, the U.S. Department of Commerce recently issued a proposed rule (the “Proposed Rule”) which intends to give the U.S. Secretary of Commerce the authority to block, unwind or modify information and communications technology or services (“ICTS”) transactions involving “foreign adversaries” if the Commerce Secretary determines that such transactions threaten U.S. critical infrastructure, the U.S. digital economy or U.S. national security. There were many aspects of the Proposed Rule which were unclear, but the U.S. Department of Commerce indicated its willingness to consider comments from the public which were received on or before Friday, December 27, 2019.

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The U.S. Department of Commerce’s Bureau of Industry and Security (“BIS”) announced on Monday, November 18, 2019 the issuance of a new 90-day extension which will allow U.S. companies to continue doing business with Huawei Technologies Co. Ltd. (“Huawei”) under the Temporary General License (“TGL”). BIS did not make any changes to the TGL other

In May of 2019, the US Department of Commerce’s Bureau of Industry and Security (“BIS”) added Chinese telecommunications giant Huawei Technologies Co. Ltd. (“Huawei”) and sixty-eight of its affiliated companies to BIS’s Entity List.  These designations prohibit anyone, anywhere in the world from exporting, re-exporting or making an in-country transfer of “items subject to the EAR” to the listed Huawei Companies (“Items subject to the EAR” generally consist of US-origin commodities, software or technology, items produced outside the US which include qualifying US-origin content and items that are physically present in or transiting through the US).  Shortly after making these designations, BIS issued a Temporary General License which authorized limited ongoing transactions with Huawei to support existing networks and Huawei equipment and handsets.
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USTR Publishes Notice on Increase in Section 301 List 3 Tariff Rate

On May 8, 2019, USTR released its federal register notice on the tariff increase for the third tranche (List 3) Section 301 tariffs on China. The duty rate on the estimated $200 billion worth of Chinese products will increase from 10% to 25% effective 12:01am ET on Friday, May 10, 2019. The notice also announces that an exclusion process will be instituted for these products in a separate notice.

The rate increase to 25% means that entries of goods

  1. entered for consumption, or withdrawn from warehouse for consumption, on or after 12:01 a.m. eastern daylight time on May 10, 2019, and
  2. exported to the United States on or after May 10, 2019 will now be subject to an additional tariff of 25%. Entries must be subject to both qualifiers-meaning that if a shipment has been exported prior to May 10, 2019 it will still be subject to the 10% duty rate.  However, if the shipment is exported after 12:01am ET on May 10 the 25% duty rate will apply. To see our full post, click here.

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Today, the U.S. Department of Commerce’s Bureau of Industry and Security (BIS) has published a Temporary General License for specific, limited engagement in transactions with Huawei Technologies Co., Ltd. and its sixty-eight non-U.S. affiliates which were added to the BIS Entity List effective May 16, 2019. (See our previous post here).  The license is intended to allow Huawei and its affiliates to work temporarily with U.S. companies to continue to support current customers, headsets and to release software updates for existing hardware.
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On Wednesday, May 15, 2019, the U.S. Department of Commerce’s Bureau of Industry and Security (“BIS”) announced in a press release that it would add Huawei Technologies Co. Ltd. (“Huawei”) and additional Huawei affiliates to BIS’s Entity List.  BIS’s initial press release stated that this designation would become effective upon its publication in the Federal Register (which is scheduled for May 21, 2019).  However, a copy of the designation action posted in the Federal Register Public Inspection List on Thursday, May 16, 2019 stated that the designation would take effect on its May 16 Public Inspection List display date.  BIS explained that it is making this designation because it determined that “[T]here is reasonable cause to believe that Huawei has been involved in activities contrary to the national security or foreign policy interests of the United States.”  Among other reasons, BIS specifically cited Huawei’s Superseding Indictment in the US District Court for the Eastern District of New York for violating US sanctions against Iran.

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On Sunday, January 27, 2019, the U.S. Department of Treasury’s Office of Foreign Assets Control (“OFAC”) announced the lifting of sanctions imposed on En+ Group plc (“En+”), UC Rusal plc (“Rusal”) and JSC EuroSibEnergo (“ESE”).  As previously reported here, this announcement follows the Administration’s notification submitted to Congress on December 19, 2018.
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Venezuela recently  initiated a World Trade Organization (“WTO”)  complaint against U.S. sanctions, claiming that the United States has “imposed certain coercive trade-restrictive measures on the Bolivarian Republic of Venezuela in the context of attempts to isolate Venezuela economically.” The same day, the U.S. imposed additional sanctions on Venezuelan nationals and entities allegedly engaging in corrupt