International Trade

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  • Economic sanctions and export restrictions extended
  • Russian investment in United States likely subject to heightened scrutiny
  • Diligence on Russia transactions and business partners is essential to ensure compliance

Since the beginning of August 2018, the United States has taken multiple actions that will affect U.S. trade with Russia.  The actions cover exports to Russia, doing business with Russian partners, and potential Russian investment in the United States.  These actions have added to the already challenging landscape of conducting business in and with Russia.

Economic Sanctions in Place Since 2014 Are Expanded Again

The United States has maintained targeted economic sanctions on Russia since 2014.  Most of these sanctions are administered by the U.S. Treasury Department, Office of Foreign Assets Control (OFAC).

These sanctions ensnare many prominent Russian individuals and entities.  They have also ensnared prominent U.S. companies: see our July 2017 blog post on penalties imposed against Exxon for Russia sanctions violations.  For an example of how sanctions have been periodically and consistently extended, see our September 2016 blog post.

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  • Ericsson Caused Violation by Having U.S. Party Ship Equipment to Sudan
  • U.S. Employee Facilitated Sudan Business
  • OFAC Expects Parties Conducting International Business to Have Robust Compliance Processes

In June 2018, the U.S. Treasury Department, Office of Foreign Assets Control (OFAC) announced that Ericsson, a Swedish telecommunications company, agreed to pay approximately $145,000 for violating U.S. sanctions on Sudan.  Among other things, this is one of the few OFAC enforcement actions explicitly premised on a non-U.S. actor causing a U.S. company to violate U.S. sanctions.

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  •  Previously permissible activities must be wound down in 90 or 180 days
  • Non-U.S. companies at particular risk of enforcement action
  • Only limited guidance issued so far, unclear what authority U.S. companies have

On May 8, 2018, President Trump announced that the United States is leaving the Joint Comprehensive Plan of Action (JCPOA).  The U.S. Treasury, Office of Foreign Assets Control (OFAC), which administers most U.S. economic sanctions programs, has taken an initial stab at providing guidance in a set of Frequently Asked Questions (FAQs) released the same day as the President’s announcement.

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  • 7-year denial order imposed against Chinese telecommunications equipment maker
  • Denial order strictly limits business with company
  • Action comes as U.S. imposes other trade restrictions on China

On April 16, U.S. Commerce Secretary Wilbur Ross announced a seven-year denial order (the Order) against Chinese telecommunications company Zhongxing Telecommunications Equipment Corporation (ZTE).  The Order prohibits ZTE from engaging in virtually any trade or other activities involving U.S.-origin goods or technologies.

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  • Many medical products can be exported to Iran – so long as a license is obtained
  • Imposition of successor liability underscores importance of pre-transaction due diligence
  • OFAC enforcement, as in the past, continues to take a long time

In December 2017, the U.S. Office of Foreign Assets Control (OFAC) announced a penalty of $1.2 million against DENTSPLY SIRONA Inc. (DSI), one of the world’s largest manufacturers of dental products, for violating U.S. sanctions on Iran.  DSI, which is publicly traded in the United States, is based in York, Pennsylvania, and maintains operations around the world.

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I am presenting a Clear Law Institute (CLI) webinar titled, “Hot Topics in U.S. Sanctions.” The United States continues to use economic sanctions and embargoes to limit trade with countries, entities, and individuals that are deemed to pose a threat to U.S. national security. Yet the sanctions maintained by the U.S. government can change quickly.…

In a November 10 article published by PaymentsCompliance, I commented on expanded sanctions the United States has imposed against North Korea. These newest sanctions prohibit access to the U.S. financial system for certain entities found to be aiding North Korea. In the article I note that, “the recent U.S. sanctions actions related to North Korea…

The Future of U.S. Sanctions on Iran | Webinar | Thad McBride: PresenterU.S. Sanctions on Iran continue to be in a state of flux.  Yet the opportunities in Iran mean that more and more companies are considering the possibility of entering the Iranian market.  The continued uncertainty regarding the future of U.S. Sanctions on Iran implies the need for international companies to be prepared for any possible…

Thad McBride | Export Controls: Compliance Challenges and Best Practices | WebinarI am presenting a Clear Law Institute (CLI) webinar titled, “Export Controls: Compliance Challenges and Best Practices.” As the government continues to aggressively enforce its export laws, it is increasingly essential for exporters to understand the laws and their corresponding obligations. This webinar will explore the key challenges companies face when engaging in export transactions,…

More Acquisitions May Be Blocked in the Future

Last month, asserting national security concerns, President Trump blocked a $1.3 billion acquisition of Oregon-based Lattice Semiconductor by a subsidiary of the Canyon Bridge Fund (Canyon Bridge), a private equity fund backed by Chinese investors.  This is one of the few instances to date in which a sale to a non-U.S. buyer of a U.S. company has been blocked under rules administered by the U.S. Committee on Foreign Investment in the United States (CFIUS).  Yet the facts of this matter suggest that more potential acquisitions are likely to be blocked in the future.

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