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On 16 March 2017, the European Parliament approved a draft EU regulation intended to ensure that trade in certain minerals and metals from high-risk or warn-torn areas does not fund conflict and human rights abuses. The regulation would apply to trade in tin, tantalum, tungsten and gold which are used in a variety of industries ranging from electronics, automotive, jewelry, aerospace, packaging, construction, lighting, industrial machinery and tooling.

The regulation is expected to come into effect as of 1 January 2021, at which time it would apply to up to 95% of EU imports.  Although this presents a substantial delay in implementation, the scope of impact means that this regulation bears watching and merits advance compliance consideration. Continue reading →

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On January 27, 2017, the Commerce Department’s Bureau of Industry and Security (BIS) recently made two significant changes to the Export Administration Regulations (EAR) concerning India that will facilitate the export of controlled items to that country.

The regulations reflect a June 7, 2016 joint U.S.-India statement in which the United States recognized India as a Major Defense Partner, laying the ground work for facilitating technology sharing with India on a level commensurate with that of the United States’ closest allies and partners. The two countries reached an understanding under which India would receive license-free access to a wide range of dual-use technologies in conjunction with steps that India committed to take to advance its export control objectives.

Favorable Licensing Policy

BIS has amended section 742.4 and section 742.6 pertaining to controls for purposes of National Security and Regional Stability reasons to state that export, reexport, or transfer items, including “600 series” items, for civil or military end uses in India will be assessed under a general policy of approval. The items can also be for the ultimate end use by the Government of India, for reexport to countries in Country Group A:5, or for return to the United States, so long as such items are not for use in nuclear, missile, or chemical or biological weapons activities. The rule does not amend any licensing policies with respect to Missile Technology items.

Companies seeing to export controlled items to India can now expect that their license applications will be reviewed more favorably and will routinely receive approvals for transactions as opposed to the “case-by-case” approach previously followed by BIS in reviewing license applications for India, which involved more rigorous scrutiny and possible denials of license applications. Continue reading →

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Policy makers in Europe continue to explore responses to the Panama Papers revelations and recent terrorist attacks. On 28 February, European law makers approved important amendments to the EU’s Anti-Money Laundering (AML) Directive, 2015/849 (the “Directive”) that would implement new rules to combat money-laundering, terrorism financing and tax evasion.

The amendments would include:

  • Expansion of AML obligations to trusts and certain virtual currency platforms;
  • Public access to registers of beneficial ownership information; and
  • Lower value thresholds for regulation of pre-paid instruments.

Continue reading →

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“We will follow two simple rules: buy American and hire American.” While world leaders are pondering what these words from President Trump’s Inaugural Address mean for international trade, a different question looms for U.S. Government contractors—what is on the horizon as far as the Buy American Act and similar protectionist regulations?

  • Any new infrastructure spending bill that provides funding for state and local public works projects likely will incorporate domestic preference requirements similar to those incorporated in 2009’s American Recovery and Reinvestment Act.
  • The process for issuing new waivers when a particular item is not available in commercial quantities from U.S. producers may be further restricted, and some existing waivers could be cancelled.
  • Even if no new rules are implemented, contractors should be prepared for increased enforcement.

The Buy American Act, Balance of Payments Program, Cargo Preference Act, Berry Amendment and similar regulations all require U.S. Government contractors to exclusively use, or give a preference to, U.S. suppliers. Further, the Trade Agreements Act prohibits U.S. Government purchases of products from many foreign countries. Continue reading →

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OFAC has issued a new General License to address problems raised by the sanctioning of the Federal Security Services (FSB).  This adjustment serves to authorize permits by the FSB needed for certain commercial transactions and is a limited exception to the sanctions listing of the FSB on December 28, 2016 in connection with Russia’s alleged interference in the U.S. presidential election.

Continue reading →

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On May 23, 2016, during President Obama’s visit to Ho Chi Minh City, the United States announced the termination its long-standing arms embargo policy for Vietnam. Exports of defense articles and defense services to Vietnam will still require a license, but the Directorate of Defense Trade Controls (DDTC) will now consider license applications on a case-by-case basis.

DDTC issued an Industry Notice stating that the change is effective immediately, with conforming changes to Section 126.1 of the International Traffic in Arms Regulations (ITAR) to be published soon. The lifting of the embargo also will apply to items transitioned to control under the Export Administration Regulations, including 600-series (military-related) and 9×515 (spacecraft-related) items.

The arms embargo had been in effect for approximately 50 years. The countries have worked to improve relations, however, with the U.S.-Vietnam Bilateral Trade Agreement in 2001 and more recently with Vietnam becoming a signatory to the Trans-Pacific Partnership (TPP) trade agreement. Lifting the embargo opens the door to additional trade with Vietnam, which is currently the world’s eighth-largest arms importer per World Bank SIPRI data.

This announcement follows similar changes in policy with respect to the arms embargoes for Sri Lanka and Cote d’Ivoire earlier this month.

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In January the EU and the US lifted economic and financial sanctions against Iran in a ground-breaking deal that unfroze billions of pounds of assets and opened up new markets for the first time since 2010.

Despite the fanfare surrounding the deal, in the small print a warning remains: some EU and US financial sanctions nevertheless remain in place against certain Iranian businesses and individuals.

Read more at City A.M.

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January 16, 2016 was “Implementation Day” under the Joint Comprehensive Plan of Action (JCPOA), bringing into effect the sanctions commitments of the United States and European Union (EU).  The International Atomic Energy Agency (IAEA) confirmed in Vienna that Iran had met its JCPOA milestones with respect to its nuclear program.  The U.S. sanctions changes involve partial relief within a complex regime with continuing primary sanctions and designations on Iranian parties which carry secondary sanctions.

The U.S. Treasury Department’s Office of Foreign Assets Control (OFAC)  issued Implementation Day guidance describing the changes to the U.S. sanctions program for Iran, which largely reflect what had been expected under the JCPOA.  This includes the ending of secondary sanctions on Iran related to nuclear weapons proliferation; delisting of over 400 Iranian and Iran-related Specially Designated Nationals (SDNs); issuance of general licenses for non-U.S. entities owned or controlled by U.S. persons to engage in certain activities in Iran, as well as for import to the United States of Iranian carpets and foodstuffs including pistachios and caviar; and adjustment of licensing policy to allow authorization of certain exports, sales, leasing and transfers of civilian passenger aircraft.  Existing authorizations for agricultural commodities (including food), medicine, and medical supplies remain unchanged.  Exports and reexports of U.S. origin products (as well as foreign-origin products with more than 10% U.S. content) still require a license, and U.S. persons still may not participate in business transactions with Iran unless licensed.

Following will be a series of posts on key aspects of the adjustments to U.S. and EU regulations relating to Iran.

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Importers of wood products should take note of the Justice Department’s first wood-related criminal conviction under the Lacey Act, which prohibits trade in illegally harvested plants or wildlife, and requires import declarations for certain products. On October 7, 2015, Lumber Liquidators pleaded guilty to five criminal counts, including entry by means of false statements, transport of illegally imported timber, and import of illegally harvested timber.  In a recent client alert, William Sullivan, Jr., and Benjamin Cote discuss the implications of the plea agreement’s onerous compliance requirements for interpreting the scope of the Lacey Act’s “due care” requirement, and the potential implications for companies wishing to avoid violations.

Client Alert:  Lacey Act Lessons From The Lumber Liquidators $13 Million Settlement: Has The Definition Of “Due Care” Been Expanded? [client alert link]