Insights on Export Controls & Economic Sanctions

Based on recent votes in Congress, the possibility of a partial shutdown of Department of Homeland Security (DHS) activities for at least a brief period of time is looming larger. On February 27, 2015, Congress extended DHS funding for one week.

The long-awaited final Federal Acquisition Regulation (FAR) and Defense Federal Acquisition Regulation Supplement (DFARS) provisions modifying the Human Trafficking regulations were published on January 29, 2015.

In 2014, the Departments of State and Commerce implemented final rules that overhauled 11 United States Munitions List (USML) Categories. These changes have affected a wide range of industries.

The Treasury Department’s Office of Foreign Assets Control and the Commerce Department’s Bureau of Industry and Security released their much-anticipated regulations governing trade with Cuba, and they were published in the Federal Register and became effective on January 16, 2015.

Canada’s Department of Foreign Affairs, Trade, and Development announced an enhanced Corporate Social Responsibility Strategy when it released a report entitled “Doing Business the Canadian Way: A Strategy to Advance Corporate Social Responsibility in Canada’s Extractive Sector Abroad.”

The United States and the European Union imposed additional sanctions on Russia and Crimea.

In a live press conference yesterday, President Barack Obama announced the beginning to a thaw in more than 50 years of chilly relations with Cuba.

On November 7, 2014, the Department of Commerce’s Bureau of Industry and Security (BIS) amended its Export Administration Regulations (EAR) to impose license requirements on the export, re-export, or transfer (in-country) of certain items to or within Venezuela when intended for a “military end use”

Import managers and compliance personnel can now be held personally liable in circumstances other than fraud for imports that violate US custom laws.

Investment Services Targeted, Sectoral Sanctions Move Debt Sanctions from 90 to 30 days, Certain Oil Exploration/Production Exports and Services Prohibited

After announcing planned additional sanctions in the energy and military end-use sectors, the European Union and the United States both made good on their promises.

On July 16, 2014, the US Office of Foreign Assets Control (OFAC) escalated Russian sanctions by issuing “Sectoral Sanctions” — prohibitions on certain finance related transactions with certain entities, including two major Russian banks and two oil and natural gas producers.

The US Department of Justice recently announced that Fokker Services BV (FSBV), a Dutch aerospace services provider, agreed to forfeit $10.5 million to the United States.

This round includes US export control sanctions on trade in controlled products and technology.

On April 14, the US Court of Appeals for the DC Circuit stuck down portions of the Security and Exchange Commission’s (SEC) Final Rule on Conflict Minerals (Final Rule) as unconstitutional.

On April 3, 2014, President Barack Obama signed an Executive Order sanctioning those responsible for the conflict in South Sudan. The Executive Order blocks the property and entry of designated entities and individuals.

Activity levels involving Russia and Ukraine continue at a torrid pace, with daily developments. In the past few days, there have been diplomatic overtures, a suspension of export licenses to Russia, legislative action, and further sanction releases.

President Obama signs Second Executive Order Expanding Sanctions to Cover Wide Range of Potential Russian Targets; OFAC adds names to SDN List; Senate and House Propose Bills; EU Sanctions Also Keeping Pace.

In a recent case of first impression, the Delaware Court of Chancery issued a decision that is a valuable example of how US courts often resolve cross-border discovery issues arising when a party relies on a foreign blocking statute.

Companies Are Warned Over Optimism for Future Negotiations

Attention employers with employees working in the United States on L-1 (intra-company transferee) visas: US Citizenship and Immigration Services (USCIS) has begun conducting worksite visits under its Fraud Detection and National Security (FDNS) site inspection program.

In the category of lesser regulatory changes that occurred during the pre-holiday season, on December 19, 2013, the Department of Commerce’s Bureau of Industry and Security (BIS) amended its Export Administration Regulations (EAR) for exports to persons listed on the Unverified List (UVL).

As experienced members of the fashion industry can attest, trade matters such as duties and taxes, and other regulations can have a huge impact on global sales and sourcing decisions.