Although national security lawyers aren’t expecting many changes to the goals of the Committee on Foreign Investment in the U.S. under the Biden administration (see 2101220034), they are expecting more of an effort by CFIUS to keep its transactions and actions out of the spotlight. “We do expect to see a return to a normal course of business for CFIUS, for the deliberations to take place behind closed doors,” said Caroline Brown, a trade lawyer with Crowell & Moring, speaking during a Feb. 17 event hosted by the law firm.
China is looking into the prospect of placing export controls on rare earth minerals crucial for the manufacture of U.S. F-35 fighter jets and other crucial weaponry, according to a report in The Financial Times. The details of the proposed controls come a month after China's Ministry of Industry and Information Technology proposed draft controls on the production and export of 17 rare earth minerals in China -- the country that controls about 80% of global supply. “The government wants to know if the US may have trouble making F-35 fighter jets if China imposes an export ban,” said a Chinese government adviser who asked not to be identified.
The State Department’s Directorate of Defense Trade Controls on Feb. 17 released its notifications to Congress of recently proposed export licenses. The 34 notifications, from July through September, feature arms sales to numerous countries including the United Kingdom, Israel, Australia, Canada, Germany, Italy and Pakistan.
Rep. Michael McCaul, R-Texas, said the Bureau of Industry and Security isn’t complying with congressional oversight requirements because it hasn’t yet provided him with information about its China licensing process that he requested in November. After McCaul requested “detailed information” on how BIS licenses U.S. technology to Chinese entities, BIS told him the data was “too difficult and time-consuming to compile,” McCaul said Feb. 16. But McCaul said BIS allowed “the same information to be shared with the media,” referencing a Feb 11 Reuters report on Huawei restrictions (see 2102120008). McCaul called BIS’s actions “completely inappropriate and only furthers my concerns that BIS has not woken up to the growing threat of the Chinese Community Party.” A BIS spokesperson didn’t comment.
The United Nations special rapporteur for human rights called on the U.S., the European Union and other countries to lift their unilateral sanctions against Venezuela, saying the measures are disproportionately affecting innocent civilians, nongovernmental organizations and third-country companies. U.S. sanctions are having an especially “severe” impact, the official, Alena Douhan, said Feb. 12. The restrictions are impeding the flow of humanitarian aid as well as “necessary machinery” and essential goods such as electricity, water, fuel and food. “The devastating effect of sanctions imposed is multiplied by extra-territoriality and over-compliance adversely affecting” Venezuela, Douhan said, adding that she plans to issue a comprehensive report on the sanctions in September.
The Office of Foreign Assets Control deleted several designations, revoked five general licenses and removed three frequently asked questions from its website to reflect the State Department’s decision last week to revoke the terrorist designation of Ansarallah (see 2102100016). The changes, which took effect Feb. 16, rescinded several general licenses that authorized humanitarian-related trade and other transactions with Yemen and Ansarallah, the Iran-backed Houthi movement (see 2101250043 and 2101190016). OFAC clarified that U.S. people and companies no longer require OFAC authorization “to engage in transactions or activities with Ansarallah, provided such activities do not involve blocked persons or otherwise prohibited activities.”
Panama recently removed five tankers from its flag registry for “sanctions-evading practices,” Lloyd’s List reported Feb. 12. One tanker participated in illegal ship-to-ship transfers of Iranian crude oil, the report said, adding that an additional 17 tankers are being investigated for failing to transmit vessel-tracking signals. The U.S. and the United Kingdom both have issued guidance warning the maritime industry of illegal shipping practices involving trade with Iran, North Korea and other sanctioned countries, which may conduct illegal ship transfers and manipulate their vessels’ automatic identification systems (see 2007290019 and 2005140039).
Export Compliance Daily is providing readers with the top stories for Feb. 8-12 in case you missed them. You can find any article by searching on the title or by clicking on the hyperlinked reference number.
Chinese telecommunications giant Huawei Technologies says federal prosecutors are withholding key evidence that could help exonerate the company from charges of bank fraud, sanctions violations, racketeering and trade secret theft. In a letter filed Feb. 7 in the U.S. District Court for the Eastern District of New York, Huawei argues that the government must turn over the exculpatory information that undermines allegations that Huawei and its CFO Meng Wanzhou defrauded numerous global financial institutions by lying about its relationship with its Iranian affiliate Skycom. In the letter, Huawei's defense team said it needs more of the government's information about Huawei's communications with these financial institutions, particularly London-based HSBC. The defense team claims that Huawei was transparent about its relationship with Skycom and that currently withheld government information could prove that.
The Combating Global Corruption Act, introduced by Sens. Ben Cardin, D-Md., and Todd Young, R-Ind., and five other Democratic senators, would require the State Department to rank all foreign countries in three tiers based on their efforts to fight corruption. The bill, introduced Jan. 22, asks the Treasury and State departments to evaluate all foreigners “engaged in grand corruption” in tier 3 countries, to see if they should have Global Magnitsky Human Rights Accountability Act sanctions against them. Congress wants an annual report of who was evaluated, who was sanctioned, and why.