American Trade & Manufacturing Blog

Impact of the United States-Mexico-Canada Agreement on Data Privacy Rules

Posted in Trade Agreement Compliance

On September 30, the United States, Mexico and Canada reached agreement on the United States-Mexico-Canada Agreement (USMCA) to replace the North American Free Trade Agreement (NAFTA). The agreement also significantly updates NAFTA with new rules, including rules regarding data privacy. The Administration intends to use the USMCA as a template for future potential trade agreements with Japan, the United Kingdom, the European Union (EU), and others. Therefore, the new rules in the USMCA potentially will impact not just doing business in Canada and Mexico, but potentially also in other significant markets.

The USMCA data privacy rules are included in the digital trade chapter. This is an important update to NAFTA, which does not contain any rules on data privacy or digital trade in general. This also means that the data privacy rules should be viewed along with the overall objectives of the USMCA’s digital trade chapter to reduce cross-border data flow barriers and limit domestic data storage requirements. Thus, while the USMCA’s data privacy rules are not a trade-off per se for liberalizing cross-border data flows, they certainly help address concerns about the impact on individuals of allowing such data flows.

The USMCA requires the United States, Canada, and Mexico to maintain a legal framework to protect personal data but leaves the content and enforceability of such laws up to each country. Specifically, the agreement creates only two hard commitments: 1) to adopt or maintain a legal framework that protects the personal information of the users of digital trade; and 2) to publish information on the personal information protections the country provides to users of digital trade, including how individuals can pursue remedies and businesses can comply with any legal requirements.

While the remaining data privacy rules are not obligatory importantly, they encourage the United States, Canada, and Mexico to have their respective privacy regimes reflect a common set of principles and be compatible. These principles include limitation on collection and use of data; security safeguards; transparency; individual participation; and accountability. Moreover, each country is urged to consider principles and guidelines of relevant international bodies, such as the Asia-Pacific Economic Cooperation (APEC) Privacy Framework and the Organisation for Economic Co-operation and Development (OECD). Recommendation of the Council concerning Guidelines governing the Protection of Privacy and Transborder Flows of Personal Data. Finally, the United States, Canada, and Mexico jointly recognize in the agreement that compliance with data privacy protections and any restrictions on cross-border flows of personal information should be necessary and proportionate to the risks presented and should not discriminate against parties from the other USMCA countries.

Regardless of the above, the USMCA specifically recognizes that there are different legal approaches to protecting personal information, including comprehensive privacy, personal information, or personal data protection laws; sector-specific laws covering privacy; or laws that provide for the enforcement of voluntary private sector undertakings. However, the United States, Canada, and Mexico agreed to promote compatibility and exchange information on their respective mechanisms. The USMCA specifically identifies the APEC Cross-Border Privacy Rules system as a valid mechanism to facilitate cross-border information transfers while protecting personal information.

The USMCA’s data privacy rules appear to be supported by most stakeholders and commenters. While some may wish that the rules were stricter, they recognize that the USMCA’s rules go farther than those in the Trans-Pacific Partnership agreement in requiring data protection and promoting compatibility. There is particular support for the USMCA allowing different approaches to data privacy while also promoting the APEC Cross-Border Privacy Rules.

The next steps are for the three countries to sign the USMCA, likely by the end of November, and then for Congress to pass legislation to approve and implement the agreement. Congressional consideration of the USMCA probably will not occur until next year. The combination of Congress’ full schedule after the midterm elections and various procedural and reporting requirements that apply to USMCA legislation prevent it from being voted on this year.

Webinar: What You Need to Know About the USMCA Agreement

Posted in Announcements, Antidumping

What You Need to Know About the USMCA Agreement: What’s In It, How It Will Affect Your Business, How It Is Different from NAFTA, and What’s Next

The US-Mexico-Canada Agreement (USMCA) is a modernization of the North American Free Trade Agreement (NAFTA), the 24-year old trilateral trade deal. Dan Pickard, Steve Claeys, and Nova Daly will discuss the details of the agreement, how it will affect U.S. industries, antidumping orders and enforcement concerns, the approval process, and how parties affected by the agreement may comment and seek clarifications as it goes on to Congressional review.

| DATE: Wednesday, November 7, 2018

| TIME: 12:00 p.m. – 1:00 p.m. (EDT)

Please join us for our in-depth discussion on the new trade agreement

RSVP Here

About the Speakers:

Dan Pickard, partner, counsels U.S. and international clients on the laws and regulations governing international trade, with particular emphasis on import remedy, anti-bribery, national security, and export control issues. He represents and advises clients in matters related to trade remedy investigations (including antidumping, countervailing duty, and safeguard cases), U.S. economic sanctions, export controls, anti-boycott measures, and the Foreign Corrupt Practices Act (FCPA). View full bio

Steve Claeys, partner, assists clients on a variety of international trade law and policy matters, including bilateral and multilateral trade agreements, trade remedies and safeguards, foreign market access barriers, e-commerce and digital trade, agriculture trade, and customs enforcement. He has 25 years of experience advising members of Congress, senior White House and U.S. Department of Commerce officials. View full bio

Nova Daly, a senior public policy advisor and experienced international investment and trade policy professional, has held senior leadership positions at the U.S. Departments of the Treasury and Commerce, the White House, and the U.S. Senate. Drawing on his experience, including as a member of the Trump Transition Team for trade, he provides both high-level insight and deep operational experience to help clients navigate the policy and regulatory environment surrounding cross-border business activities. View full bio

More Info

  • This event is complementary but advance registration is required.
  • Webinar instructions will be distributed prior to the webinar. Materials may be provided following the webinar. CLE credit is not being offered for this program.
  • For more information, please email Lynne Stabler at lstabler@wileyrein.com.

Webinar: The New Immediate & MANDATORY CFIUS Filing Regulations – What You Need to Know and Do Before the Regulations Take Effect on November 10

Posted in Announcements

The New Immediate & MANDATORY CFIUS Filing Regulations – What You Need to Know and Do Before the Regulations Take Effect on November 10

Wednesday, October 24, 2018 | 12:00 p.m. – 1:00 p.m. (EDT)

New CFIUS regulations were announced on October 10, 2018, and will go into effect on November 10, 2018. Rick, Nova, and Lori will discuss these new rules – which require mandatory reporting of deals to CFIUS – including possible civil penalties, and will explain how these regulations will affect your business. They will also provide insight on the fast comment process on these new regulations that will close on November 10, 2018.

RSVP Here

More Info:

  • This event is complementary but advance registration is required.
  • Webinar instructions will be distributed prior to the webinar. Materials may be provided following the webinar. CLE credit is not being offered for this program.
  • For more information, please email Lynne Stabler at lstabler@wileyrein.com.

Wiley Rein Publishes Updated Foreign Corrupt Practices Act Handbook

Posted in Announcements, FCPA

Wiley Rein’s Foreign Corrupt Pratices Act (FCPA) and Anti-Corruption Practice has published an updated FCPA Handbook (Seventh Edition). Since 1977, U.S. companies conducting business with foreign government entities and government officials have had to comply with the FCPA, which prohibits U.S. companies from bribing any foreign official to obtain or retain business.  Companies and individuals found in violation of the FCPA may be subject to substantial fines, imprisonment, and/or forfeiture of property.

The handbook briefly reviews the principal provisions of the FCPA, outlines issues and factors likely to signal FCPA-sensitive situations, and summarizes recent developments that have returned international bribery and corruption to the political spotlight. U.S. companies should rigorously review their FCPA compliance programs and ensure that their overseas branches, subsidiaries, managers and agents are aware of corporate procedures for handling contracts with foreign government entities or involving government officials. A well-conceived compliance program is an essential element for avoiding trouble and, should problems arise, a critical mitigating factor under the corporate sentencing guidelines.

An excerpt of the updated handbook can be read here.

Wiley Rein attorneys are prepared to answer questions on the FCPA and respond to specific corporate compliance concerns and enforcement concerns. For a complete copy of the handbook, or for more information about the FCPA, please contact one of the authors listed on this alert.

To view the 2018 Annual FCPA Mid-Year Review webinar, click here.

New Regulations Implement Significant Expansion of CFIUS Jurisdiction – Mandatory Filings and Civil Penalties

Posted in CFIUS

On October 10, 2018, the U.S. Department of the Treasury took the first step toward implementing the recently enacted Foreign Investment Risk Review Modernization Act (FIRRMA) by publishing new regulations that empower the Committee on Foreign Investment in the United States (CFIUS) to review transactions that were not previously subject to CFIUS scrutiny. Treasury also implemented several conforming amendments to the existing CFIUS regulations. CFIUS is a multi-agency committee that reviews foreign investment in U.S. companies for national security considerations. Its rulings have significant impacts on U.S. investment policy and foreign investment flows into the U.S., especially those from China. On August 13, 2018, the President signed FIRRMA into law as part of the National Defense Authorization Act for Fiscal Year 2019 (NDAA). Our summary of the law’s major provisions is available here.

New “Pilot Program” Regulations

Whereas CFIUS was previously a voluntary process with authority to review only transactions that could result in foreign control of a U.S. business, effective November 10, 2018, CFIUS will now require reviews of even certain non-controlling critical technology investments from any country, including ANY acquisition of an equity interest that affords a foreign person with access to specified information or governance rights. Failure to file either a new short-form “Declaration” or a full CFIUS notice 45 days before closure of a deal could result in civil monetary penalties up to the value of the transaction.[1]

Foreign investments covered under these “Pilot Program” regulations are those in which the foreign investor acquires any of the following powers:

  1. Access to any material nonpublic technical information in the possession of the target U.S. business;
  2. Membership or observer rights on the board of directors or equivalent governing body of the U.S. business, or the right to nominate an individual to a position on the board of directors or equivalent governing body of the U.S. business; or
  3. Any involvement, other than through voting of shares, in substantive decision-making of the U.S. business regarding the use, development, acquisition, or release of critical technology.

The U.S. critical technology businesses covered under the Pilot Program are those that produce, design, test, manufacture, fabricate, or develop a critical technology that is either (1) utilized in connection with the U.S. business’s activity in one or more Pilot Program Industries or (2) designed by the U.S. business specifically for use in one or more Pilot Program Industries. Critical technology is defined by FIRRMA to include, among others, emerging and foundational technologies which will be later identified and controlled pursuant to the Export Control Reform Act of 2018. The Pilot Program only applies to U.S. critical technology businesses in the following 27 industries identified by their respective North American Industry Classification System (NAICS) code:

  • Aircraft Manufacturing NAICS Code: 336411
  • Aircraft Engine and Engine Parts Manufacturing NAICS Code: 336412
  • Alumina Refining and Primary Aluminum Production NAICS Code: 331313
  • Ball and Roller Bearing Manufacturing NAICS Code: 332991
  • Computer Storage Device Manufacturing NAICS Code: 334112
  • Electronic Computer Manufacturing NAICS Code: 334111
  • Guided Missile and Space Vehicle Manufacturing NAICS Code: 336414
  • Guided Missile and Space Vehicle Propulsion Unit and Propulsion Unit Parts Manufacturing NAICS Code: 336415
  • Military Armored Vehicle, Tank, and Tank Component Manufacturing NAICS Code: 336992
  • Nuclear Electric Power Generation NAICS Code: 221113
  • Optical Instrument and Lens Manufacturing NAICS Code: 333314
  • Other Basic Inorganic Chemical Manufacturing NAICS Code: 325180
  • Other Guided Missile and Space Vehicle Parts and Auxiliary Equipment Manufacturing NAICS Code: 336419
  • Petrochemical Manufacturing NAICS Code: 325110
  • Powder Metallurgy Part Manufacturing NAICS Code: 332117
  • Power, Distribution, and Specialty Transformer Manufacturing NAICS Code: 335311
  • Primary Battery Manufacturing NAICS Code: 335912
  • Radio and Television Broadcasting and Wireless Communications Equipment Manufacturing NAICS Code: 334220
  • Research and Development in Nanotechnology NAICS Code: 541713
  • Research and Development in Biotechnology (except Nanobiotechnology) NAICS Code: 541714
  • Secondary Smelting and Alloying of Aluminum NAICS Code: 331314
  • Search, Detection, Navigation, Guidance, Aeronautical, and Nautical System and Instrument Manufacturing NAICS Code: 334511
  • Semiconductor and Related Device Manufacturing NAICS Code: 334413
  • Semiconductor Machinery Manufacturing NAICS Code: 333242
  • Storage Battery Manufacturing NAICS Code: 335911
  • Telephone Apparatus Manufacturing NAICS Code: 334210
  • Turbine and Turbine Generator Set Units Manufacturing NAICS Code: 333611

Conforming Amendments to Existing CFIUS Regulations

In addition to the new Pilot Program regulations which become effective on November 10, 2018, Treasury has also implemented several conforming amendments to the existing CFIUS regulations. These changes are effective October 11, 2018 and include the following amendments to 31 CFR Part 800:

  • Section 800.103 is amended to provide clarity with respect to the applicability of the amendments, such as FIRRMA’s extension of the CFIUS review period from 30 days to 45 days.
  • Section 800.104 expands the definition of “covered transaction” to include transactions, transfers, agreements, or arrangements, the structure of which is designed or intended to evade or circumvent CFIUS.
  • Section 800.202 expressly provides for criminal liability under 18 U.S.C. Section 1001 for all information provided to CFIUS.
  • Section 800.207 revises the definition of “covered transaction” to be consistent with FIRRMA.
  • Section 800.209 revises the definition of “critical technologies” to be consistent with FIRRMA and include emerging and foundational technologies controlled pursuant to the Export Control Reform Act of 2018.
  • Section 800.224 revises the definition of “transaction” to be consistent with FIRRMA and includes certain changes in rights that a foreign person has with respect to a U.S. business in which the foreign person has an existing investment, as well as transactions structured to evade or circumvent CFIUS.
  • Sections 800.301 and 800.302 add examples that illustrate the application of the expanded scope of “covered transactions.”
  • Section 800.401 implements a shift to electronic submissions of voluntary notices.
  • Section 800.402 modifies certain of the requirements regarding the content of voluntary notices, including allowing parties to stipulate that a transaction is a covered transaction and, as relevant, a foreign government-controlled transaction.
  • Section 800.502 revises the timing of the review period, extending the period from 30 days to 45 days consistent with FIRRMA.
  • Section 800.506 defines the “extraordinary circumstances” pursuant to which an investigation period can be extended by one 15-day period.
  • Section 800.702 incorporates additional exceptions with respect to information sharing by CFIUS.
  • Section 800.801 removes the language “intentionally or through gross negligence” in the provisions allowing for the imposition of civil penalties.
  • Section 800.802 authorizes the Committee to negotiate a remediation plan for lack of compliance with a mitigation agreement, require filings for future covered transactions, or seek injunctive relief.

Wiley Rein has an unparalleled CFIUS and national security practice that draws on senior government-level experience with CFIUS member agencies and numerous representations of domestic and international companies in complex transactions involving nearly every industry sector subject to CFIUS review. Should you have any questions regarding the immediate impact of this new CFIUS Pilot Program, please do not hesitate to contact one of the members of our CFIUS and national security practice listed on this alert.


[1] Note that these Pilot Program regulations do not apply to any transaction for which:

(1) The completion date is prior to November 10, 2018; or

(2) The following has occurred before October 11, 2018:

(i) The parties to the transaction have executed a binding written agreement or other document establishing the material terms of the transaction;

(ii) A party has made a public offer to shareholders to buy shares of a Pilot Program U.S. business; or

(iii) A shareholder has solicited proxies in connection with an election of the board of directors of a Pilot Program U.S. business or has requested the conversion of convertible voting securities.

Foreign Agents Registration Act Webinar

Posted in Announcements

Foreign Agents Registration Act (FARA): Navigating Audits and Other Compliance Issues in a New Era of Enforcement

Tuesday, October 2, 2018 | 12:00 p.m. – 1:00 p.m. EDT

The Foreign Agents Registration Act (FARA), once a little-known law, continues to garner heightened attention given a recent string of high profile enforcement actions under the statute. The law, which has been on the books since 1938, is a disclosure statute administered and enforced by the Department of Justice (DOJ), which requires that foreign agents engaged in certain covered activities (e.g., lobbying, public relations, political activities, etc.) to make periodic public disclosures to the U.S. government regarding these activities unless an exemption to registration applies.

During this webinar, guided by Dan Pickard and Tessa Capeloto from Wiley Rein’s International Trade Practice, you will learn about a variety of FARA-related topics, including:

  • Registration triggers and exemptions;
  • Measures to ensure compliance;
  • Navigating DOJ audits under FARA; and
  • Recent developments.

Register here.

More Info

  • This event is complementary but advance registration is required.
  • Webinar instructions will be distributed prior to the webinar. Materials may be provided following the webinar. For more information, please email Lynne Stabler at lstabler@wileyrein.com.

Imports of Unfairly Traded Indian Stainless Steel Flanges Plummet As A Result of Recent Trade Case

Posted in Antidumping, Dumping and Subsidies, Trade Remedies

Approximately a year ago, on August 16, 2017, a petition for antidumping (AD) and countervailing (CVD) duties on stainless steel flanges from China and India was filed by the Coalition of American Flange Producers (CAFP), an association of U.S. producers of stainless steel flanges. The case was brought in response to unfairly dumped and subsidized flanges being increasingly imported into the United States by Chinese and Indian producers. Last week, on August 13, 2018, the U.S. Department of Commerce (DOC) issued its final determinations in its AD and CVD investigations of Indian stainless steel imports, finding that Indian flanges are being dumped at rates of 19.16 to 145.25 percent and subsidized at rates of 4.92 to 256.16 percent.

While these margins are high and reflect the substantial degree to which Indian stainless steel flanges are unfairly traded in the United States, even before these determinations, this case has had a significant and positive effect on U.S. imports and the U.S. industry. That is, in the year prior to the filing of the petition, imports of stainless steel flanges from India surged dramatically, rising from approximately 400,000 to 1,000,000 kilograms per month. In the year since the filing of the petition, imports from India have decreased dramatically, falling to just 200,000 kilograms per month.

As shown in the chart above, examined at a more granular level, imports of Indian stainless steel flanges continued to decrease as the case progressed. While the petition was filed in August 2017, import levels actually fluctuated for the remainder of 2017, likely the result of Indian producers rushing flanges into the United States in advance of anticipated AD and CVD duties. However, once DOC issued its preliminary AD and CVD determinations, in which it forecasted high margins, imports plummeted. For instance, on January 23, 2018, DOC issued its CVD preliminary determination finding that Indian imports were being subsidized at rates of 5.00 to 239.61 percent. This caused a sharp decline in Indian imports. Similarly, on March 28, 2018, DOC issued its AD preliminary determination, finding that Indian imports were being dumping at rates of 18.10 to 145.25 percent. This caused an even steeper decline in Indian imports. The point being, as this case progresses, and the extent to which Indian stainless steel flanges are unfairly traded is made more clear, imports of those flanges have continued to plummet.

It should be stressed, however, that even the current duty deposit rates do not reflect the final duties that importers will owe on incoming shipments. Under the U.S. system, the duties paid at entry remain contingent, and changeable, until DOC concludes a post-investigation administrative review of those duties. With respect to stainless steel flanges from India and China, this means that final duty liability for imports subject to the preliminary duties will not be determined until mid-2019 at the earliest. Because of the lengthy contingent liability that AD and CVD duties represent, as well as the potential for final duties to be much higher than those paid at entry, importers may need to seek increased customs bonding to continue to import stainless steel flanges from India and China. Sureties may also require additional fees or security to underwrite bonds on such entries, given the increased uncertainty and risk involved.

Ultimately, Wiley Rein and the CAFP anticipate that DOC’s significant, final AD and CVD margins will cause Indian imports to continue to decrease, keeping them at stable and fair levels. This will allow U.S. stainless steel flange producers to compete on a level playing field, enabling them to produce more flanges and hire more workers here in the United States.

 

 

 

 

 

 

CFIUS Reform Legislation Signed into Law – Important Changes Become Effective Immediately

Posted in CFIUS

President Trump signed the Foreign Investment Risk Review Modernization Act (FIRRMA) into law today, August 13, 2018, as part of the National Defense Authorization Act for Fiscal Year 2019 (NDAA). FIRRMA significantly expands the jurisdiction of the Committee on Foreign Investment in the United States (CFIUS) to review transactions that were not previously subject to CFIUS scrutiny, including certain real estate transactions and non-controlling investments in critical technology companies, critical infrastructure companies, and companies that maintain or collect sensitive personal data of U.S. citizens. The new legislation also allows parties to covered transactions to file short-form “declarations” in lieu of a more detailed notice, requires mandatory filings for certain kinds of transactions, and reforms the CFIUS review process in several other important respects. Our summary of the law’s major provisions is available here.

Many provisions of FIRRMA become effective immediately. These include the extension of the initial review period from 30 days to 45 days, provisions relating to mitigation agreements, and the information sharing and funding aspects of the law. Other provisions (including those expanding the scope of what constitutes a “covered transaction” and provisions governing voluntary and mandatory declarations) will not go into effect until the earlier of 18 months after enactment or 30 days after publication in the Federal Register of a determination by CFIUS that the regulations, organizational structure, personnel, and other resources necessary to administer the law’s provisions are in place.

The focus now turns to the rulemaking process, where stakeholders will have an opportunity to submit comments and help shape the regulations that the U.S. Department of Treasury ultimately adopts to implement this sweeping new law. We also expect CFIUS to launch one or more pilot programs in the coming months to implement certain new authorities under FIRRMA. The scope and procedures for any pilot programs under FIRRMA will be published in the Federal Register in advance.

Wiley Rein has an unparalleled CFIUS and national security practice that draws on senior government-level experience with CFIUS member agencies and numerous representations of domestic and international companies in complex transactions involving nearly every industry sector subject to CFIUS review. Should you have any questions regarding the immediate impact of FIRRMA on inbound foreign investment, the upcoming notice and comment rulemaking process, or the new CFIUS pilot programs, please do not hesitate to contact one of the members of our CFIUS and national security practice listed on this alert.

BIS Announces Good News for India, Bad News for South Sudan on Export Controls Front

Posted in Export Controls

Does your company export products or technology to India or South Sudan? If so, last Friday, the Commerce Department’s Bureau of Industry and Security (BIS) made changes to the export controls on these countries that may impact your operations, particularly if your company exports “600 series” military commodities, software, or technology or satellite-related items.

First, recognizing India’s membership in three out of four multilateral export control regimes and its status as a Major Defense Partner of the United States, BIS added India to Country Group A:5 in the Export Administration Regulations (EAR)—the list of close U.S. allies granted favorable export status. A key benefit of being an A:5 country is that U.S. companies can now use License Exception STA to export “600 series” military items as well as satellite-related items to India without the need to apply for a specific license. BIS also formally recognized India’s membership in the Wassenaar Arrangement, added India to Country Group A:1, and removed license requirements for EAR items controlled for National Security Column 2 reasons.

On the flip side, BIS also updated the EAR to add South Sudan to Country Group D:5—the list of countries that are subject to arms embargoes. This change is designed to ensure that the EAR’s D:5 list mirrors the State Department’s list of Section 126.1 prohibited countries in the International Traffic in Arms Regulations, to which South Sudan was added earlier this year. Although the amendment is mostly a formality, as the D:5 list includes a note stating that State’s Section 126.1 prohibited countries list is controlling, BIS’s rule serves to put exporters on notice of South Sudan’s new status. One important impact of the arms embargo designation is that exports to South Sudan of satellite-related items and “600 series” military items are subject to a general policy of denial, except for certain types of transactions, such as exports in support of peacekeeping and humanitarian operations. The D:5 designation also limits the ability of foreign companies utilizing U.S. “600 series” (or satellite-related) parts or components from shipping their end products incorporating such parts or components to South Sudan.

 

BIS Adds 44 Chinese Entities and Institutions to its Entity List

Posted in Export Controls

Last week, the Department of Commerce’s Bureau of Industry and Security (BIS) added eight Chinese entities and 36 subordinate institutions to its Entity List, ratcheting up tensions with China and reflecting the administration’s crackdown on U.S. exports that officials believe are being used to strengthen the Chinese military.

Historically, companies often are added to BIS’s Entity List for engaging in activities related to proliferation of weapons of mass destruction. Here, some of the newly designated entities—including China Electronic Technology Group Corporation (CETC) 13 and some of its subordinate institutions—were added due to their alleged illicit procurement of U.S. commodities and technologies for unauthorized military end-uses in China. The remaining entities—including China Aerospace Science and Industry Corporation (CASIC) Second Academy and some of its subordinate institutions—were added to the Entity List based on a risk of diversion of items to military end-uses in China.

The new restrictions prohibit exports, reexports, and transfers (in-country) of any items subject to the U.S. Export Administration Regulations (EAR) to the newly-designated entities, along with any other transaction in which these entities act as a purchaser, intermediate consignee, ultimate consignee, or end-user of items subject to the EAR. In other words, even common, off-the-shelf EAR99 and mass market hardware, software, and technology cannot be provided to these 44 Chinese entities/institutions without U.S. government authorization. Further, export licenses are subject to a policy of denial, and no EAR license exceptions can be used for transactions with the designated entities.

This action is notable because it is part of much larger U.S.-China trade tensions. It also reveals the administration’s concerns regarding China’s use of commercial and dual-use U.S. items for military purposes, including not only proliferation of weapons of mass destruction but also conventional military applications. U.S. companies should brace for more restrictions on trade with China, as the President is expected to sign legislation this month that may be used to impose additional export controls on China/Chinese entities, including on the provision of “emerging and foundational technologies” as well as items for military end-users/end-uses.

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