On August 20, 2020, the U.S. Department of Commerce, Bureau of Industry and Security (“BIS”) published a final rule[1] that further tightens restrictions under the Export Administration Regulations (“EAR”) on Huawei Technologies Co., Ltd. and its affiliates designated on the Entity List administered by BIS (“Huawei”) (the “Final Rule”).  The Final Rule: (i) expands the prohibition on providing items manufactured with controlled U.S. technology or software to Huawei to include all items transferred to Huawei or for a Huawei device, whether or not specifically designed by or for Huawei ; (ii) removes most of the Temporary General License (“TGL”) that permitted some transactions involving Huawei, including activities that support existing networks and equipment; and (iii) added 38 non-U.S. affiliates of Huawei to the Entity List.  The Final Rule was published in the Federal Register on August 20, but became effective upon being made available for public inspection on August 17.

In a contemporaneous final rule,[2] BIS clarified that license requirements for entities included on the Entity List apply regardless of the role that the listed entity has in the transaction (i.e., purchaser, intermediate consignee, ultimate consignee or end-user) (the “Entity List Final Rule”).  This clarification applies to all entities on the Entity List, not just Huawei.
Continue Reading BIS Further Tightens Export Restrictions on Huawei

Following completion of a review by the Committee on Foreign Investment in the United States (“CFIUS”), President Trump recently issued an Executive Order requiring ByteDance to, among other things, divest itself of assets and property that enable or support operation of the TikTok application in the United States within 90 days (the “CFIUS Order”).  This was not an unexpected outcome.  We previously reported on the unusual nature of CFIUS’s review here.  The week before, President Trump issued a different Executive Order authorizing the Commerce Department to prohibit transactions involving a U.S. person or within the jurisdiction of the United States with ByteDance (the “Commerce Order”), with details of the restrictions to come in 45 days.  We previously reported on the Commerce Order here.  According to press reports, negotiations for a possible acquisition of TikTok continue, and it remains to be seen whether those restrictions will come to fruition and on what timetable.
Continue Reading President Trump Orders TikTok Divestment; Sweeping Order Appears to Indicate a Broadening of CFIUS’s Jurisdiction

Last night, President Trump issued two Executive Orders establishing a framework for prohibiting transactions involving popular Chinese-owned communications apps WeChat and TikTok.[1]  Contrary to some press reports, the Executive Orders do not prohibit all transactions with their respective parent companies; they do not in fact set out the scope of the restrictions.  Rather, they give the Commerce Department authority to prohibit any transaction involving a U.S. person or within the jurisdiction of the United States involving the two services; each of the Executive Orders clearly states “45 days after the date of this order, the Secretary shall identify the transactions subject to subsection (a) of this section [which contains the broad authority to prohibit].”[2]  Furthermore, the scope of Commerce’s authority is subtly (and no doubt intentionally) different in the two Executive Orders: with respect to TikTok, the authority covers any transaction with ByteDance, TikTok’s parent; with respect to WeChat, the authority covers any transaction relating to WeChat involving its parent, Tencent Holding.  Commerce will, within 45 days, take further action specifying exactly which transactions will be prohibited; it is even possible, particularly with respect to TikTok if the mooted divestiture of U.S. operations occurs, that no restrictions will be imposed.[3]  Unless and until Commerce implements the Executive Orders, no restrictions are in place and their precise future scope is unknown.
Continue Reading President Trump Authorizes Restrictions on WeChat and TikTok; Details to Come

Initial press reports last November that the Committee on Foreign Investment in the United States (CFIUS) had commenced a review of ByteDance’s acquisition of Musical.ly, the service that was merged into ByteDance’s video-sharing site TikTok and helped fuel its expansion, were not particularly surprising to those familiar with CFIUS and its concerns.  However, recent departures from established CFIUS processes in the TikTok matter are striking and concerning for persons engaging in cross-border transactions involving the United States, calling into question the scope, apolitical nature, confidentiality, and security focus of the CFIUS process.
Continue Reading TikTok: Familiar Issues, Unfamiliar Responses

Yesterday, updated guidance from the U.S. Department of State relating to Section 232 of the Countering America’s Adversaries Through Sanctions Act of 2017 (“CAATSA”) was published in the Federal Register.[1]  The updated guidance, which became effective on July 15, 2020, expands the potential applicability of secondary sanctions pursuant to Section 232 with respect to Nord Stream 2 and the second line of TurkStream.  Any work on or financial involvement in NordStream 2 or the second line of TurkStream will now be sanctionable, even if undertaken pursuant to an existing contract.  This could affect, among other things, lending and other financing to companies (including European companies) with any connection to either project.

Continue Reading Updated Guidance for Section 232 of CAATSA Published

On July 14, President Trump issued an Executive Order pursuant to the Hong Kong Policy Act eliminating the separate status of Hong Kong and China under various provisions of U.S. law, including export controls, immigration, tax, and extradition, as well as providing for the implementation of recent Hong-Kong related sanctions authorities.

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Today, President Donald Trump signed into law the Hong Kong Autonomy Act (“HKAA”), authorizing the U.S. administration to impose blocking sanctions against individuals and entities (as well as visa bans in the case of individuals) determined to “materially contribute” to the erosion of Hong Kong’s autonomy.  The HKAA further authorizes secondary sanctions, including the imposition of blocking sanctions, against foreign financial institutions that knowingly conduct a significant transaction with foreign persons sanctioned under this authority.[1]
Continue Reading United States Enacts Additional Hong-Kong Related Sanctions; Impact Remains Unclear

On June 3, 2020, the International Chamber of the Paris Court of Appeal rejected an annulment application brought against an arbitral award rendered by a Paris-seated ICC arbitration tribunal. The ICC tribunal on December 27, 2018 rendered an award in favor of the Iranian Natural Gas Storage Company (“NGSC”), in a dispute arising out of

On June 4, 2020, the U.S. Department of the Treasury, Office of Foreign Assets Control (OFAC) issued the Syria-Related Sanctions Regulations (SRSR).  Not to be confused with the pre-existing Syrian Sanctions Regulations found in 31 C.F.R. Part 542, the SRSR, which are found in 31 C.F.R. Part 569, are intended to

On May 15, 2020, the U.S. Department of Commerce, Bureau of Industry and Security (BIS) issued an interim final rule (the Interim Rule) amending the direct product rule under the Export Administration Regulations (EAR) to further restrict Huawei Technologies Co., Ltd. (Huawei) and its affiliates designated on the Entity List from receiving semiconductor and other products produced outside the United States using U.S.-origin software and technology.  The changes, which are effective immediately (but subject to two savings clauses), could have a significant impact on the ability of non-U.S. foundries that manufacture semiconductor products for Huawei and its affiliates (e.g., HiSilicon) using U.S.-origin software or technology to continue to do so (and could have a corresponding significant impact on the competitiveness of U.S. semiconductor manufacturing equipment and software).  BIS also extended the temporary general license (TGL) that authorizes certain activities subject to the EAR involving Huawei and its affiliates through August 13, 2020.[1]
Continue Reading BIS Expands Export Restrictions on Huawei, Extends Temporary General License