On February 20, 2024, Hoshine Silicon (Jia Xing) Industry Co., Ltd. (“Jiaxing Hoshine”), a wholly owned subsidiary of Hoshine Silicon Industry Co., Ltd., filed a complaint at the United States Court of International Trade (USCIT) challenging the U.S. Customs and Border Protection’s (CBP) June 2021 decision to issue a withhold release order (WRO) against Hoshine Silicon Industry Co., Ltd. and its subsidiaries (collectively, “Hoshine Silicon”). The WRO instructs CBP personnel to detain all shipments containing silica-based products made by Hoshine Silicon entities. The complaint also challenges CBP’s subsequent refusal to grant Jiaxing Hoshine’s petition to modify the WRO. The WRO applies to materials and final goods derived from or produced using those silica-based products, regardless of where the materials and final goods are produced.

According to the complaint, following the issuance of the June 2021 WRO, Jiaxing Hoshine and its counsel repeatedly engaged with CBP officers and on September 12, 2023, submitted a modification petition to CBP asking that, inter alia, a narrowly defined supply chain for products made by Jiaxing Hoshine be excluded from the WRO as “the identified supply chain is located entirely outside of Xinjiang and involves no use of forced labor.” On November 3, 2023, CBP denied the petition after finding that modifying the WRO to exclude a specific supply chain would undermine the CBP’s enforcement efforts and that companies subject to a WRO must “demonstrate full remediation of all forced labor indicators present at all of company locations.”

In its complaint, Jiaxing Hoshine asserts that CBP acted unlawfully in at least two ways: (1) CBP failed to provide any evidentiary basis for its decision to include Jiaxing Hoshine within the scope of the WRO, and (2) CBP has no legal basis for its decision to reject the modification petition and its refusal to exclude Jiaxing Hoshine from the WRO. Jiaxing Hoshine is asking the USCIT to vacate the CBP’s determinations to add Jiaxing Hoshine to the WRO and to deny the modification petition.

President Biden signed the National Defense Authorization Act for Fiscal Year 2024 into law (P.L. 118-31) (NDAA 2024 or Act) in December 2023. Lawmakers frequently target this type of “must pass” legislation as a vehicle to codify their own, often unrelated policy priorities or “rider” provisions. The NDAA 2024 is no exception, containing a patchwork of trade-related riders that have important ramifications regarding U.S. export controls, sanctions, supply chain issues and other areas of international trade law.

Key Notes:

  • Processes and procedures for sending defense articles, defense services and technical data within the trilateral AUKUS security partnership have been streamlined.
  • Many sanctions-related provisions overlap with government contract provisions prohibiting the federal government from contracting with certain proscribed or denied persons, especially those owned or controlled by foreign competitors like China and Russia.
  • The NDAA 2024 implements the American Security Drone Act of 2023 and the Combating Global Corruption Act.
  • The NDAA 2024 requires an analysis of foreign ownership and control of major U.S. container ports that may implicate national and economic security interests.
  • Numerous supply chain provisions aim to identify ways for ensuring greater transparency and/or independence of supply chains for critical metals and minerals and address forced labor in China.
  • The NDAA 2024 declares the United States should not accept and instead advocate for the end of China’s “developing nation” status in various treaties and international organizations.

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On February 23, 2024, the eve before Russia’s full-scale invasion of Ukraine officially enters its third year, the United States issued another sanctions package against Russia, taking particular aim at Russia’s financial sector, energy production revenue streams, and military-industrial complex. Specifically, the package sanctions more than 500 entities and individuals by having them added to the Specially Designated Nationals and Blocked Persons List by the Department of the Treasury and the Department of State, respectively, while the Department of Commerce imposes new export restrictions against nearly 100 entities by adding them to the Entity List maintained by the Bureau of Industry and Security. The targeted entities and individuals span across Europe, East Asia, Central Asia, and the Middle East, and are known for supplying critical technology and equipment to Russia’s military and for evading sanctions. Additionally, some of the targeted individuals were sanctioned because they were connected to the death of prominent opposition leader Aleksey Navalny, who died under mysterious circumstances in a Russian prison last week.

Perhaps the most notable inclusion in the sanctions package is the state-owned National Payment Card System Joint Stock Company, which operates Russia’s national payment system, known as Mir. Nonetheless, the package also targets two of Russia’s largest companies by revenue: SUEK, a transportation and logistics operation company that serves the Russian military, and Mechel, a major producer of specialty steels. The sanctions also target SPB Bank, which is owned by SPB Exchange—Russia’s second-largest stock exchange specializing in trading foreign shares—as well as companies involved in the Arctic LNG 2 energy project, and various manufacturers of weapons, metals, lubricants, industrial chemicals, electronics, robotics, ball bearings, and batteries used by the Russian military.

The United States did not act alone to escalate economic pressure on Russia this week.  Adopting its 13th sanctions package against Russia on February 23, 2024 as well, the European Union designated about 200 entities and individuals connected to Russia’s weapons procurement network. Similarly, Canada also imposed sanctions against 153 entities and 10 individuals known to support the Russian military through finance, logistics, and sanctions evasion on February 23, 2024. And earlier in the week, the United Kingdom levied 50 new sanctions against parties linked to Russia’s ammunition supply chain, and targeted 6 individuals known to oversee the Arctic prison colony where Navalny died. Notwithstanding the multilateral sanctions package imposed by the United States and Europe this week, though, there are still ongoing debates by the western allies about enacting even more aggressive measures to stymie Russia’s economic abilities to continue its full-scale invasion of Ukraine.

Still, the U.S. sanctions package to mark the second anniversary of Russia’s full-scale invasion of Ukraine is significant because it aligns with the ongoing trend of the United States and its allies to levy sanctions and export restrictions against Russia on each anniversary of the invasion. See Update of February 24, 2023 and Update of February 24, 2023, respectively.

On February 20, 2024, the Department of the Treasury’s Office of Foreign Assets Control (OFAC) extended Russia-related General License (GL) 83 by issuing a revised version: GL 83A, “Authorizing Certain Transactions Related to Imports of Certain Categories of Fish, Seafood, and Preparations Thereof Prohibited by Executive Order 14068.” The modified GL 83A maintains the authorization to engage in transactions “that are ordinarily incident and necessary to the importation into the United States of seafood derivative products” of Russian Federation origin pursuant to written contracts or written agreements entered into prior to December 22, 2023, but extends the deadline to load such seafood derivative products onto a vessel at the port of loading until 12:01 a.m. Eastern Daylight Time, May 31, 2024. The original deadline set by the preceding GL 83 had been 12:01 a.m. Eastern Standard Time, February 21, 2024.

GL 83A and its antecedent were issued pursuant to Executive Order 14114—published on December 22, 2023—which, among other things, amended Executive Order 14068 so as to also prohibit the importation and entry into the United States, including into a foreign trade zone located in the United States, “fish, seafood, and preparations thereof” whether produced or manufactured wholly or in part in the Russian Federation, or harvested in waters under the jurisdiction of the Russian Federation or by Russia-flagged vessels, notwithstanding whether such products have been incorporated or substantially transformed into other products outside of the Russian Federation. See Update of January 2, 2024.

In addition to its role in enforcing U.S. export control laws, the Department of Commerce’s Bureau of Industry and Security (BIS) is charged with administering and enforcing the antiboycott laws under the Export Administration Act. These antiboycott laws were adopted to encourage and, in some circumstances, require U.S. companies to refuse to participate in foreign boycotts that the United States government does not sanction. According to BIS, the laws “have the effect of preventing U.S. persons from advancing foreign policies of other nations that run counter to U.S. policy.” Together, the Department of the Treasury (via the 1976 Tax Reform Act) and BIS’s Office of Antiboycott Compliance have oversight as to efforts to counteract the participation of U.S. persons and companies in other countries’ economic boycotts or embargoes.

Semi-annually, Treasury releases a notice to the public of countries that require or may require participation in, or cooperation with, an international boycott. In a Federal Register notice of February 16, 2024, the following countries were identified:

  • Iraq
  • Kuwait
  • Lebanon
  • Libya
  • Qatar
  • Saudi Arabia
  • Syria
  • Yemen

For these listed countries, U.S. companies must report to BIS’ Office of Antiboycott Compliance any receipt of certain boycott-related requests such as a provision in a proposed agreement to refuse to do business with a boycotted country, requests to furnish information about any person’s business relationships with a boycotted country or with blacklisted persons, and requests for implementation (by U.S. banking entities) of letters of credit that include prohibited boycott-related terms or conditions. Examples of boycott requests are available here.

The Executive Office of the President, via the National Science and Technology Council, has released an updated list of critical and emerging technologies that are potentially significant to U.S. national security. This list updates and revises the critical technologies list identified in the October 2020 report, “National Strategy for Critical and Emerging Technologies” and an updated report in February 2022. See SmarTrade Updates of October 19, 2020 and February 15, 2022. For the purposes of the national strategy, critical and emerging technologies (CET) are defined as “those technologies that have been identified and assessed by the National Security Council (NSC) to be critical, or to potentially become critical, to the United States’ national security advantage, including military, intelligence, and economic advantages.”

The 2024 update identifies the following CET areas:

  • Advanced Computing
  • Advanced Engineering Materials
  • Advanced Gas Turbine Engine Technologies
  • Advanced and Networked Sensing and Signature Management
  • Advanced Manufacturing
  • Artificial Intelligence
  • Biotechnologies
  • Clean Energy Generation and Storage
  • Data Privacy, Data Security, and Cybersecurity Technologies
  • Directed Energy
  • Highly Automated, Autonomous, and Uncrewed Systems, and Robotics
  • Human-Machine Interfaces
  • Hypersonics
  • Integrated Communication and Networking Technologies
  • Positioning, Navigation, and Timing Technologies
  • Quantum Information and Enabling Technologies
  • Semiconductors and Microelectronics
  • Space Technologies and Systems

This updated document expands upon the original 2020 CET list and the February 2022 update. Three new categories include (i) clean energy generation and storage; (ii) data privacy, data security, and cybersecurity technologies; and, (iii) positioning, navigation, and timing technologies. The list continues to identify subfields under each sector that describe the intended scope in more detail and, where possible, focuses on core technologies rather than on technology application areas or performance characteristics.

On December 22, 2023, President Joseph Biden amended Executive Order (EO) 14068 by additionally authorizing the prohibition on the importation and entry into the United States of diamonds of Russian Federation origin. See Thompson Hine Update of January 2, 2024. The EO required that such a ban be implemented only after the issuance of a determination “from appropriate U.S. departments and agencies, the importation of certain products mined, extracted, produced, or manufactured wholly or in part in Russia, even if these products are then transformed in a third country.” On February 8, 2024, the Department of the Treasury’s Office of Foreign Assets Control (OFAC) issued two such determinations.

First, OFAC issued a determination prohibiting the importation of non-industrial diamonds mined or extracted in Russia, notwithstanding whether they have been substantially transformed into other products in a third country. Effective March 1, 2024, non-industrial diamonds with a weight of 1.0 carat or greater will be banned from importation. This will expand on September 1, 2024, to include non-industrial diamonds with a weight of 0.5 carats or greater.

Second, OFAC issued a determination prohibiting the importation of diamond jewelry and unsorted diamonds of Russian Federation origin or exported from Russia, effective March 1, 2024.

These prohibitions are intended to implement the December 2023 G7 commitments to impose phased restrictions on the importation of diamonds mined or extracted in Russia. As a result of these determinations, the importation and entry into the United States, including importation for admission into a foreign trade zone located in the United States, of such diamonds and diamond jewelry of Russian Federation origin will be prohibited, except to the extent provided by law, or unless licensed or otherwise authorized by OFAC.

OFAC notes that it intends to issue additional public guidance regarding these determinations.

On February 1, 2024, the Department of the Treasury’s Office of Foreign Assets Control (OFAC) published an Oil Price Cap Compliance and Enforcement Alert to provide “[a]n overview of [five] key … evasion methods and [corresponding] recommendations for identifying such methods and [subsequently] mitigating their risks and negative impacts.” The price cap referenced by the Alert refers to the price caps on Russian oil and petroleum products imposed by an international coalition consisting of the United States, the G7, the European Union, and Australia to constrain two key revenue streams for Russia that could then be used to fund its ongoing full-scale invasion of Ukraine. See Updates of December 5, 2022 and January 2, 2024 for additional background.

The first three key evasion methods the Alert highlights are: (1) falsified documentation and attestations “used to disguise the true price paid” for Russian oil and petroleum products, as well other important transaction details; (2) opaque shipping and ancillary costs (including shipping, freight, customs, and insurance costs), which can “be used to obfuscate Russian oil and [petroleum] products being purchased above the price cap”; and, (3) third country supply chain intermediaries and complex and irregular corporate structures “to disguise the ultimate beneficial owner of Russian oil and oil products.” The Alert indicates that these evasion methods can be mitigated in a similar manner: enhanced due diligence across the supply chain. Accordingly, the Alert emphasizes Know Your Customer (KYC) and Know Your Customer’s Customer (KYCC) procedures as vital to minimizing illicit activity.

The Alert also warns of flagging and reflagging activities, which can be used to conceal a vessel’s true ownership and/or affiliation with Russia. To minimize such a risk, the Alert advises flagging registries to routinely inform registrants and vessel owners that sanctionable or illicit conduct is grounds for immediate removal of registration. Similarly, the Alert also recommends caution when dealing with the so-called “shadow” fleet (also referred to as the “ghost,” “dark,” or “parallel” fleet): older vessels engaged in various deceptive shipping practices and/or with opaque corporate ownership structures). The Alert notes engaging with the “shadow” fleet can be minimized by insisting upon reviewing a vessel’s maritime insurance policy, thereby ensuring coverage is continuous throughout a vessel’s entire voyage, appropriate given the ship’s purported activities, and derives from a legitimate insurance provider.

Finally, the Alert emphasizes wariness of voyage irregularities “from the port of loading to the final destination.” The Alert acknowledges changes to a voyage can occur for legitimate reasons, but stakeholders should be aware that changes can also be intentional to disguise a cargo’s origin, ultimate destination, or recipients. Accordingly, stakeholders should obtain sufficient explanations and shipment details to justify when changes are made, especially when they include indirect routing, unscheduled detours, or seemingly transshipment through third countries. 

The Alert concludes by providing an up-to-date list of price cap coalition members and how persons can report suspected breaches of either price cap to competent authorities within each country.

On February 1, 2024, the United States introduced new sanctions to promote peace in the West Bank, targeting recent actions that jeopardize the region’s stability, including attacks by Israeli settlers against Palestinians and Palestinian attacks against Israelis. This follows the related visa restriction policy announced by the State Department on December 5, 2023. 

The sanctions have been introduced under a new Executive Order (E.O.) “Imposing Certain Sanctions on Persons Undermining Peace, Security, and Stability in the West Bank,” giving the authority to the U.S. Department of State and the U.S. Department of the Treasury to apply financial sanctions against persons who are contributing to the conflict and instability in the West Bank. The order aims to address the recent increase in violence, including attacks on civilians, and to hold those responsible accountable. It targets persons involved in activities that threaten peace, security, and stability in the region.

Following this E.O., the Department of the Treasury’s Office of Foreign Assets Control (OFAC) added four individuals to the Specially Designated Nationals (SDNs) and Blocked Persons List due to their roles in promoting conflict and instability in the West Bank. Additional persons may be designated pursuant to this E.O. by the Department of State or Department of the Treasury in the future.

In accordance with the new E.O., all property and interests in property of the designated persons that are in the United States or in possession or control of U.S. persons are blocked and must be reported to OFAC. Additionally, all entities that are owned, either directly or indirectly, 50% or more by one or more blocked persons are also blocked. All transactions by U.S. persons or within (or transiting) the United States that involve any property or interests in property of designated or otherwise blocked persons are prohibited unless authorized by a general or specific license issued by OFAC or exempt. These prohibitions include the making of any contribution or provision of funds, goods, or services by, to, or for the benefit of any blocked person and the receipt of any contribution or provision of funds, goods, or services from any such person. Additionally, the entry of designated individuals into the United States is suspended pursuant to Presidential Proclamation 8693.

On January 30, 2024, the Department of State announced in a press release that the United States would be reinstating certain sanctions actions on Venezuela in light of recent activities by President Nicolás Maduro and his regime, including the recent barring of opposition candidates from competing in Venezuela’s 2024 presidential election.

In October 2023, the Department of the Treasury’s Office of Foreign Assets Control (OFAC) issued several new Venezuela-related General Licenses authorizing various transactions that would otherwise be prohibited under U.S. sanctions toward Venezuela. These earlier developments were in response to a political agreement between Maduro’s representatives and the Unitary Platform that appeared to indicate a step forward in restoring democracy in Venezuela. At the time of relaxation of these U.S. sanctions, OFAC indicated they were conditional and could be rescinded if commitments were not met. See Thompson Hine Update of October 24, 2023, for additional details on the original relaxation of sanctions.

Given recent suppression of the democratic opposition in Venezuela, two OFAC-issued Venezuela General Licenses (GL) will now be revoked:

  • Venezuela GL 43 authorized transactions involving CVG Compania General de Mineria de Venezuela CA, the Venezuelan state-owned gold mining company. This GL is revoked as of February 13, 2024, and U.S. persons have 14 days to wind down any transactions that were previously authorized by this GL.
  • Venezuela GL 44 temporarily authorized all transactions that are related to the oil and gas sector operations in Venezuela that would otherwise be prohibited under the Venezuelan Sanctions Regulations. According to the State Department’s press release, “Absent progress between Maduro and his representatives and the opposition Unitary Platform, particularly on allowing all presidential candidates to compete in this year’s election,” this GL will not be renewed when it expires on April 18, 2024.

It is assumed that at a later date, OFAC will revise its Venezuela FAQs to address the resumption of these sanctions. All other sanctions on Venezuela remain in effect.