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Recent public reports indicate Sen. Chuck Schumer (D-NY), the Senate Democratic Leader, has authored a letter to President Trump requesting the President order the Committee on Foreign Investment in the United States (CFIUS) to suspend the approval of all covered transactions by Chinese entities.  Sen. Schumer explains that such action would place severe economic pressure on China and force the country to take more stringent action against North Korea.  While President Trump has publicly expressed “disappointment” with China over its perceived lack of response to recent North Korean missile tests, it is unclear what actions, if any, the President might take to spur action from China.

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On July 11, 2017, the President issued an Executive Order (E.O.) extending the review period for the possible permanent revocation of sanctions on Sudan for an additional three months.  The Executive Order is available here.

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On June 29, 2017, the U.S. Treasury Department announced new steps applying pressure on North Korea in relation to its proliferation activities.  Specifically, this involved (1) sanctions designations against Chinese shipping company Dalian Global Unity Shipping Co., Ltd. and two Chinese individuals; and (2) anti-money laundering special measures against China’s Bank of Dandong.  All were involved in business with North Korea according to the Treasury Department’s announcement.

The Special Measures for Bank of Dandong under Section 311 of the USA PATRIOT Act prohibit U.S. financial institutions from maintaining correspondent accounts for, or on behalf of, that bank.  This would prevent access to the U.S. banking system for dollar transactions or wiring services.

None of the sanctioned parties appear to be systemically important companies for China, but the sanctions may be intended, or viewed, as an effort by the Trump Administration to pressure China into doing more to restrain North Korea’s nuclear activities.

 

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As the Trump Administration continues to examine its trade relationship with China, legislators in Congress are looking to modernize the Committee on Foreign Investment in the United States (CFIUS) review process in order to effectively respond to increased foreign direct investment in the U.S. and perceived threats to U.S. national security. On June 22, 2017, Senator John Cornyn (R-TX) spoke at the Council on Foreign Relations where he highlighted key features of his proposed Foreign Investment Risk Review Modernization Act (FIRRMA).  The bill would make certain changes to the CFIUS review process in order to close perceived gaps.  As described, however, it appears that CFIUS already has the legislative and regulatory authority to address many of these issues.

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On June 16, 2017, President Trump issued a National Security Presidential Memorandum on Strengthening the Policy of the United States Toward Cuba, which begins a process to alter some aspects of U.S. policy towards Cuba, but retains much of the Obama Administration’s reforms to travel, business and trade with Cuba.

The signaled changes focus on limiting business with companies related to Cuba’s military, intelligence and security apparatus and tightening aspects of the administration of existing travel allowances. Existing business and travel arrangements affected by the changes may be grandfathered.

There are no immediate changes to U.S. sanctions or export control policy. The memorandum sets the framework for the Office of Foreign Assets Control (OFAC), Bureau of Industry and Security (BIS) and other agencies to consider regulatory changes in the coming months.

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On June 15, 2017, the Senate passed the Countering Iran’s Destabilizing Activities Act of 2017 (S.722) by a vote of 98-2.  Included with the bill is a significant Russia sanctions amendment, the Countering Russian Influence in Europe and Eurasia Act of 2017, which would expand U.S. primary and secondary sanctions for Russia and limit the President’s ability to ease existing sanctions.

The bill represents a bi-partisan compromise among key legislators to advance Iran and Russia sanctions measures together. The House of Representatives is now beginning to consider its own Iran and Russia sanctions measure, with the potential for final legislation this fall. Continue reading →

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Questions continue to swirl around the future of U.S.-Cuba policy as recent reports of a Trump Administration plan to strengthen Cuba sanctions surfaced over the weekend. These reports should be assessed against the backdrop of an increased Congressional effort to end the embargo on Cuba.

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On April 18, 2017, President Trump signed the “Presidential Executive Order on Buy American and Hire American.” While there is no immediate impact, the Executive Order (“EO”) sets the stage for executive agencies to perform reviews of compliance with Buy American laws and could potentially lead to changes in how these laws are implemented.  Note that although there is a “Buy American Act” the term “Buy American” is also used as a generic term to describe a variety of laws and regulations that impose domestic content requirements.

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On April 19, 2017, the Department of Commerce (DOC), through its Bureau of Industry and Security, self-initiated an investigation into the effects that steel imports may be having on U.S. national security interests. The investigation was initiated under a rarely-used statutory authority, Section 232 of the Trade Expansion Act 1962 (19 U.S.C. § 1862).

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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 →