Articles Posted in China

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This past year saw a continued trend in building supply chain resiliency, as this topic has grown increasingly important following COVID-19, the conflict in Ukraine, shifting landscape on tariffs, forced labor concerns and a number of other factors. Increasingly, supply chains are having to respond to policy concerns requiring shifting production away from China, either through onshoring or friend shoring as a means of strengthening US national and economic security interests.

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During 2023 both Congress and the Biden Administration repeatedly expressed the need to secure critical supply chains, particularly batteries that rely heavily on lithium and critical minerals sourced from China. Concerns have been framed in terms of national security focusing on the danger of relying too heavily on products integral to our defense or economy or human rights relating to enforcement of the Uyghur Forced Labor Prevention Act (UFLPA). Continue reading →

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In 2023, the United States sharpened its focus on deterring China’s ability to develop advanced technology with the potential to threaten U.S. national security. To do so, the U.S. government has implemented several new restrictions and requirements related to critical technologies. Some of these measures, such as the announcement of an outbound investment regime, are entirely new tools. Others, like updates to semiconductor related export controls and newly sanctioned entities, build on existing regimes.

Below, we outline several of the key developments aimed at restricting China’s technology sector which U.S. and multinational businesses should remain aware of. Continue reading →

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2023 witnessed significant developments from the United States government aimed at countering China’s influence and curbing potential threats to U.S. national security. These developments have spanned legislative and administrative action, shifting long-standing paradigms within export controls, import controls, and sanctions. The Biden Administration is increasingly utilizing these tools as strategic elements of foreign policy, often in conjunction with allied nations.

The restrictions on trade with China are rapidly evolving and increasingly nuanced, influenced by growing Congressional attention on the U.S.-China relationship, increased pressure on the Department of Commerce, and international interest in upholding strong supply chains. For companies to navigate these tensions, they must remain well-informed regarding the myriad of regulations which have been imposed in the past year.

This post is the first in a series dedicated to highlighting notable developments in the sanctions and export controls realm targeting China. This series will span across three sectors in which our team has been notably engaged: technology, energy, and supply chain resiliency. The final blog in the series will forecast expected developments through 2024.

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After more than a year of deliberations, the U.S. government appears close to implementing an outbound investment review mechanism that would regulate certain U.S.-origin investments in countries of concern, notably China. These efforts are part of a wider effort by the U.S. government to restrict access to certain sectors of the Chinese market in the name of national security. In “All Eyes on China: Upcoming Restrictions on Outbound Investment,” colleagues Nancy Fischer, Matthew Rabinowitz, Zachary Rozen, Samantha Franks, Ata Akiner, Laura Killalea, Amaris Trozzo and Jack Ko examine these potential restrictions and the pending legislation by which they would likely be informed.

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Overview of the Proposed “Reverse CFIUS” Process via the National Critical Capabilities Defense Act of 2022

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On June 8, 2023, the United States and the United Kingdom announced the Atlantic Declaration for a Twenty-First Century U.S.-UK Economic Partnership (“Declaration”). The Declaration reaffirms the need to adapt and reimagine the unique alliance between the two countries. From critical and emerging technologies to digital transformation, clean energy, and defense collaboration, businesses can leverage the partnership to exploit new trans-Atlantic opportunities.

(This is the first post of a three-part series on U.S., UK and EU alignment on economic security strategy.)

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On March 21, 2023, the U.S. Department of Commerce released a Notice of Proposed Rulemaking (NPRM) imposing guardrails preventing the “improper use of funds” made available under the CHIPS Act of 2022. In “Commerce Releases New Proposed Rule Governing Restrictions on Chinese Investments by CHIPS Act Applicants,” members of our International Trade team break down the proposed rule, which tightens restrictions on activities by “affiliates” and clarifies scope of statutory clawbacks.

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The Cyberspace Administration of China (CAC) issued the final version of the Measures on the Standard Contract for the Cross-Border Transfer of Personal Information (Standard Contract Measures) on February 24, 2023, which includes a template standard contract (Standard Contract). The Measures will take effect on June 1, 2023, but set forth a six-month grace period until December 1, 2023, to provide companies with time to take actions for compliance.

In their recent client alert, “China Publishes Measures on Standard Contract for Cross-Border Transfer of Personal Information,” colleagues Jenny (Jia) Sheng, Chunbin Xu and Wenjun Cai break down the details of this final version, including a discussion of when Standard Contract Measures apply, the Personal Information Protection Impact Assessment (PIPIA) and notable compliance obligations.

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On November 2, 2022, Assistant Secretary of the U.S. Department of Commerce Thea Rozman Kendler answered questions on the Bureau of Industry and Security’s (BIS) October 13 interim final rule (“the Rule”) regarding restrictions on certain advanced computing integrated circuits and semiconducting manufacturing items exported to the People’s Republic of China (PRC).  Pillsbury has described the Rule here. Comments on the Rule will be accepted until January 31, 2023. (Previously, comments were accepted until December 12, 2022. This date was extended on December 7, 2022.)

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On October 28, 2022, the U.S. Department of Commerce’s Bureau of Industry and Security (BIS) issued guidance on its October 7, 2022 interim final rule (Rule) that imposed new export controls on certain advanced computing integrated circuits (ICs), computer commodities that contain such ICs, and semiconductor manufacturing items exported to the People’s Republic of China (PRC). Comments on the Rule will be accepted until December 12, 2022. Our previous blog post on the Rule may be found here.

The guidance offers several important clarifications, including regarding the definition of a covered “facility,” the impact of the Rule on deemed exports, and the scope of the “activities of U.S. persons” restrictions. An overview may be found below.

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