November 18, 2022: “Navigating the Maze of Embargoes and Sanctions”

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Blank Rome partner Anthony Rapa will serve as a panelist at the International Trademark Association’s (“INTA”) 2022 Leadership Meeting, being held November 15 through 18, 2022, in Miami, Florida.

Anthony’s session, “Navigating the Maze of Embargoes and Sanctions,” will take place on Friday, November 18, from 11:30 a.m. to 12:30 p.m.

For more details, visit our website.

New CFIUS Enforcement Guidelines: Executive Briefing

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Anthony Rapa ●

On October 20, 2022, the U.S. Department of the Treasury (“Treasury”), in its role as chair of the Committee on Foreign Investment in the United States (“CFIUS”), issued the first-ever CFIUS Enforcement and Penalty Guidelines (the “Guidelines”). The Guidelines apprise the public of CFIUS’s intention to penalize violations of the CFIUS regulations, emphasize the importance of voluntary self-disclosures of violations, and provide a basic overview of the penalty process.

As a threshold matter, it is important to clarify what constitutes a “violation” in the CFIUS context. The relevant regulations provide for CFIUS review of certain foreign investments in U.S. businesses and empower CFIUS to block or mitigate such investments on national security grounds. While CFIUS retains broad discretion to take such action in the context of transactions, “violations” punishable by monetary penalties only arise in specific circumstances.

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New Semiconductor Export Controls: Executive Briefing

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Anthony Rapa ●

On October 7, 2022, the U.S. Department of Commerce’s Bureau of Industry and Security (“BIS”) issued sweeping new export controls under the Export Administration Regulations (“EAR”) aiming to cut off support for China’s advanced computing and supercomputing capabilities, with the new controls targeting specified chips, chipmaking equipment, and related services.

The BIS rule, which runs over 100 pages, is the most significant expansion of semiconductor-related export controls in recent memory, if not the history of the EAR, and marks a decisive inflection point in the U.S. strategic competition with China. Companies in the semiconductor industry should gauge their exposure to China-related risk, which could be present in oblique and non-obvious ways, and service providers to the industry should assess their risk exposure in light of the rule’s provisions regarding U.S. person “support” for restricted activities.

Continue readingNew Semiconductor Export Controls: Executive Briefing

Westlaw Today: U.S. Commerce Department Issues Semiconductor-Related Export Controls

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Westlaw Today, October 7, 2022

Anthony Rapa and Matthew J. Thomas ●

On August 15, 2022, the U.S. Department of Commerce’s Bureau of Industry and Security (BIS) issued an interim final rule imposing new export controls relating to certain semiconductor technology.

Specifically, the rule establishes a requirement under the Export Administration Regulations (EAR) to obtain a license from BIS before exporting to certain destinations the following materials and technologies:

      • Substrates of gallium oxide and diamond (ultra-wide bandgap semiconductors); and
      • Electronic Computer Aided Design (ECAD) software for the development of integrated circuits with Gate All-Around Field Effect Transistor (GAAFET) structures.

The control for the specified substrates is effective Aug. 15, 2022, while the control for the ECAD/GAAFET software is effective Oct. 14, 2022, with a comment period for industry that ran through Sept. 14, 2022.

The rulemaking follows public reports in July 2022 indicating that BIS had sent letters to chipmaking equipment manufacturers directing them not to export to China equipment capable of fabricating chips at 14 nanometers and below.

You can read more on our website.

New York Law Journal: Recent Developments in U.S. Supply Chain Security

Preparing for Compliance Risks Under the ICTS Rules, the Uyghur Forced Labor Prevention Act, and the National Critical Capabilities Defense Act

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New York Law Journal, September 22, 2022

Anthony Rapa and Justin A. Chiarodo ●

Supply chain security remains a key bipartisan policy goal and burgeoning compliance risk area. This article examines three recent initiatives that exemplify these trends: the regulations on securing the Information and Communications Technology and Services supply chain, the Uyghur Forced Labor Prevention Act, and the proposed National Critical Capabilities Defense Act.

Companies with cross-border supply chains should assess their exposure under these emerging regimes and prioritize their compliance efforts accordingly. The risk profile is greatest for companies developing technology and software across borders; companies importing items produced in (or incorporating components produced in) the Xinjiang region of China; parties seeking to invest in certain critical capabilities outside the United States; and government contractors that may be exposed to foreign adversaries in their supply chains.

Information and Communications Technology and Services Rules

One pillar of the U.S. government’s developing architecture for supply chain security is the U.S. Department of Commerce’s (Commerce’s) regulations on Securing the Information and Communications Technology and Services (ICTS) Supply Chain (ICTS Regulations), set out at 15 C.F.R. Part 7. Promulgated pursuant to Executive Order 13873, the rulemaking identifies the ICTS supply chain as critical to “nearly every aspect” of national security, acknowledging the degree to which American government, business, and the economy at large rely on ICTS. See Securing the Information and Communications Technology and Services Supply Chain, 86 Fed. Reg. 4909 (Jan. 19, 2021).

The ICTS Regulations empower Commerce to review, prohibit, or restrict specified “ICTS Transactions” that present national security risks. The term “ICTS Transactions” is defined broadly to include: “any acquisition, importation, transfer, installation, dealing in, or use of any information and communications technology or service, including ongoing activities, such as managed services, data transmission, software updates, repairs, or the platforming or data hosting of applications for consumer download.”

You can read more on our website.

C4ISRNET: Congress May Tighten Scrutiny of U.S. Investment in Foreign Technologies

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C4ISRNET, September 1, 2022

Justin A. Chiarodo and Anthony Rapa ●

Building on recent national security initiatives to shore up the protection of U.S. critical assets from strategic adversaries (notably including China and Russia), Congress is considering new government powers to review outbound U.S. investments in certain high-technology sectors.

Inbound foreign investments in key sectors are reviewed by the Committee on Foreign Investment in the United States (CFIUS). However, screening of outbound investments – a so-called “reverse CFIUS” – would be new, and could significantly impact industries ranging from aerospace and defense to fintech to pharmaceuticals.

How did we get here?

The last several years have witnessed an accelerated national security pivot from the twenty-year global war on terror to strategic competition with major state adversaries. Unclassified assessments of the U.S. national security posture reveal significant threats in domains ranging from artificial intelligence to hypersonic weapons to energy, many of which have been exacerbated by the theft of U.S. technology. The legislation proposing a “reverse CFIUS” review would seek to counter these threats by adding new controls to the flow of U.S. capital and intellectual property abroad.

The contemplated regime formally originated with the proposed National Critical Capabilities Defense Act (NCCDA), which passed the House of Representatives in February 2022 as part of the America COMPETES Act of 2022, H.R. 4521, a larger package focused on U.S. domestic semiconductor production and other aspects of U.S. competitiveness (certain elements of which, not including the NCCDA, eventually were signed into law as part of the CHIPS and Science Act in August 2022). Most notably, the NCCDA would create a Committee on National Critical Capabilities (the “Committee”), with authority to review – and block – covered outbound foreign investments.

You can read more on our website.

Westlaw Today: The ICTS Supply Chain Rules: Towards a U.S.-China Tech Decoupling?

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Westlaw Today, August 9, 2022

Anthony Rapa ●

A July 2022 report relayed the news that the U.S. Department of Commerce (Commerce) is investigating the installation of Huawei equipment into cell towers situated near U.S. military bases and missile silos, based on concerns the equipment could hoover up sensitive data and transmit it to China.

The report indicates that Commerce is carrying out the investigation pursuant to its rules implementing Executive Order (EO) 13873 on “Securing the Information and Communications Technology and Services Supply Chain” (the ICTS Rules).

What are the ICTS Rules, and how will they be enforced? The ICTS Rules empower Commerce to review — and as warranted, to mitigate, block, or unwind — dealings in information and communications technology and services (ICTS) that have a nexus with a designated “foreign adversary,” including China and Russia.

You can read more on our website.

Complying with the Uyghur Forced Labor Prevention Act’s Strict Supply Chain Rules

Anthony Rapa, Matthew J. Thomas, and Patrick F. Collins 


The Uyghur Forced Labor Prevention Act (“UFLPA” or “Act”), which took effect last month, ushers in a new era of supply chain diligence for importers. The Act creates a rebuttable presumption that any goods produced in whole or in part in the Xinjiang Uyghur Autonomous Region (“XUAR”) of the People’s Republic of China (“PRC”), or by entities identified by the U.S. government on the UFLPA Entity List (“Entity List”), are presumed to be made with forced labor and thus are prohibited from entry into the United States under Section 307 of the Tariff Act of 1930 (19 U.S.C. § 1307). Notably, the presumption applies to downstream products that incorporate restricted goods, regardless of where the downstream products are made.

U.S. Customs and Border Protection (“CBP”) is now authorized to detain and exclude and/or seize goods that it suspects were produced in the XUAR or by entities on the Entity List.

Importers whose supply chains have links to the XUAR and China should be aware of the implications of UFLPA enforcement, including with respect to due diligence considerations, supply chain tracing and management, and the evidence required to overcome the UFLPA’s rebuttable presumption. There is no grace period for enforcement.

UFLPA OVERVIEW

President Biden signed the UFLPA into law on December 23, 2021. Effective on June 21, 2022, the UFLPA established a rebuttable presumption that the importation of any “goods, wares, articles, and merchandise mined, produced, or manufactured wholly or in part” in the XUAR, or produced by entities designated by the Forced Labor Enforcement Task Force (“FLETF”) as involved in specified XUAR-related activity, is prohibited by Section 307 of the Tariff Act of 1930, which prohibits the importation of items made from forced labor. The presumption applies unless CBP determines that the importer completely and substantively responded to all CBP inquiries, fully complied with FLETF’s guidance, and established by clear and convincing evidence that the goods were not produced using forced labor.

To read the full client alert, please visit our website

Law360: How Russia Sanctions Are Affecting Compliance

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Law360, May 25, 2022

Anthony Rapa and Matthew J. Thomas

The wide-ranging sanctions and export controls that the U.S. and its partners have imposed on Russia in recent months pose complex compliance challenges for parties operating across borders, even when there is not a direct or obvious nexus with Russia.

Notably, the U.S. rules include restrictions relating to dealings with sanctioned persons, exports to Russia of a broad range of items, certain services, banknotes, certain imports, and new investment. Furthermore, the annexed Crimea region of Ukraine is subject to a comprehensive U.S. embargo, as are the so-called Donetsk People’s Republic, or DNR, and the Luhansk People’s Republic, or LNR.

This article provides practical guidance for compliance with such restrictions, which can affect commercial operations, investments, and processing of financial transactions.

You can read the full article on our website.

New York Law Journal: A Snapshot of Russia-Related Sanctions and Export Controls

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New York Law Journal, May 19, 2022

Anthony Rapa and Matthew J. Thomas

Since Russia’s invasion of Ukraine on February 24, the United States and its partners have imposed a web of complex economic sanctions and export controls targeting Russia. These restrictions have broadened and intensified over the course of the conflict, at times at a dizzying pace.

At this point, the United States has not yet imposed a comprehensive embargo on Russia akin to the sanctions on Iran, Cuba, Syria, or North Korea. Rather, the Russia sanctions mainly are aimed at specific individuals, companies, and other entities. In addition, there are U.S. restrictions on certain types of imports (including energy), exports (including a broad range of goods and certain services), and new investment. Accordingly, the Biden Administration has ample opportunity to further expand restrictions to ramp up the impact on Russia’s economy.

This article provides a snapshot of the U.S. measures currently in place. It should be noted that the situation remains fluid, and the applicable restrictions are subject to change.

You can read the full article on our website.

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