On October 15, 2020, the White House released a report, “National Strategy for Critical and Emerging Technologies,” outlining steps the United States will take to preserve its competitive edge in certain critical and emerging technologies. Noting in a statement the importance of U.S. dominance in the science and technology sectors, the White House press secretary indicated that, “The United States will not turn a blind eye to the tactics of countries like China and Russia, which steal technology, coerce companies into handing over intellectual property, undercut free and fair markets, and surreptitiously divert emerging civilian technologies to build up their militaries.” The report briefly summarizes the efforts both China and Russia are undertaking to develop and advance their science and technology sectors, including both licit and illicit efforts of technology transfers, coercing companies to disclose intellectual property, illicit procurement networks, requiring access to source code from technology companies seeking to do business in their countries, and promoting authoritarian practices that run counter to democratic values.

For the purposes of the national strategy, critical and emerging technologies 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 report identifies 20 specific areas:

  • Advanced Computing
  • Advanced Conventional Weapons Technologies
  • Advanced Engineering Materials
  • Advanced Manufacturing
  • Advanced Sensing
  • Aero-Engine Technologies
  • Agricultural Technologies
  • Artificial Intelligence
  • Autonomous Systems
  • Biotechnologies
  • Chemical, Biological, Radiological, and Nuclear (CBRN) Mitigation Technologies
  • Communication and Networking Technologies
  • Data Science and Storage
  • Distributed Ledger Technologies
  • Energy Technologies
  • Human-Machine Interfaces
  • Medical and Public Health Technologies
  • Quantum Information Science
  • Semiconductors and Microelectronics
  • Space Technologies

The report states that the United States, with its allies and partners, will promote continued leadership in critical and emerging technology by Promot[ing] the National Security Innovation Base (NSIB) (Pillar I) and Protect[ing Our] Technology Advantage (Pillar II). Promote the NSIB entails investing in STEM education, an advanced technical workforce; and early-stage research and development. The report also calls for innovation-friendly regulations; venture capital investment; collaboration between the U.S. governments, academia, and the private sector; and, working with allies and partners. Protect Technology Advantage includes, but is not limited to, ensuring that competitors do not use illicit means to acquire United States companies’ intellectual property and technologies, appropriate application of export controls, and encouraging allies to develop national security restrictions on foreign investment similar to the U.S. Committee on Foreign Investment in the United States.

On October 16, 2020, the Department of Commerce’s Bureau of Industry and Security (BIS) issued a notice announcing that exporters may request six-month validity period extensions for export licenses that are currently due to expire on or before December 31, 2020. Acting Under Secretary for Industry and Security, Cordell Hull stated, “The streamlined process will help ensure that exporters with licenses due to expire on or before the end of 2020, who may not have been able to ship orders due to resource constraints during the pandemic, have the opportunity to benefit fully from the authorizations granted on their licenses.”

The notice states that BIS has established a central electronic mailbox for submission of extension requests: LicenseExtensionRequest@bis.doc.gov. Upon receipt of the request, the original export license will be reviewed and, according to BIS, “in most cases, the validity extended via the electronic system.” BIS estimates that the majority of extension validity requests should be processed and approved within two to three business days.

On October 14, 2020, pursuant to the Hong Kong Autonomy Act (HKAA), the State Department submitted to Congress a report identifying foreign persons “who are materially contributing to, have materially contributed to, or attempt to materially contribute to the failure of the People’s Republic of China (China) to meet its obligations under the Sino-British Joint Declaration or Hong Kong’s Basic Law.” For background, see Update of July 16, 2020. The report identifies 10 Chinese and Hong Kong government officials whose actions under the recently implemented National Security Law have undermined freedoms of assembly, speech, press, or the rule of law, and reduced the autonomy of Hong Kong. The report notes recent disturbing developments in Hong Kong, including the arrest of opposition lawmakers and peaceful protestors, the editing of textbooks to remove references to civil disobedience and separation of powers in Hong Kong, and arrest warrants issued for statements made supporting democracy in Hong Kong. It also cites the denial of visas to those who could be considered critical of the administration, arrests on “spurious” charges to limit international travel, and Chinese state-owned media suggestions that Hong Kong residents meeting with foreign diplomats could be subject to “collusion” charges under the National Security Law.

The report identifies each foreign person and provides an explanation for why each individual was identified and a description of the activity that resulted in their identification. On August 7, 2020, the Treasury Department’s Office of Foreign Assets Control (OFAC) imposed sanctions on these same individuals and placed them on the Specially Designated National (SDN) List. See Update of August 10, 2020. OFAC has further noted that the HKAA requires blocking sanctions on persons identified by the State Department and that the Treasury secretary must (within 30-60 days thereafter) identify – and potentially sanction – any foreign financial institution that knowingly conducts significant transactions with such identified foreign persons.

On October 13, 2020, a World Trade Organization (WTO) arbitrator ruled that the European Union (EU) may take countermeasures/implement retaliatory tariffs against the United States for illegal subsidies to Boeing. This ruling allows the EU to request authorization from the WTO’s Dispute Settlement Body (DSB) to take countermeasures against the United States at a level not to exceed $3,993,212,564 annually.

This ruling is part of the longstanding dispute between the United States and the EU over subsidies to their largest civil aircraft manufacturers, Airbus and Boeing. The arbitrator determined that payments to Boeing by the National Aeronautics and Space Administration (NASA) and the Department of Defense were not subsidies but that certain state of Washington tax exemptions and exclusions were subsidies in violation of the WTO’s Agreement on Subsidies and Countervailing Measures. The arbitrator concluded that Airbus suffered “adverse effects” of these subsidies from three sales won by Boeing between 2012 and 2015 that a previous WTO ruling determined would have been won by Airbus had a state of Washington tax break not been in place for Boeing.

This latest WTO ruling follows a 2019 decision allowing the United States to impose retaliatory tariffs of approximately $7.5 billion annually on various EU goods. See Updates of October 4, 2019 and August 13, 2020. Upon release of the ruling, U.S. Trade Representative Robert Lighthizer issued a statement that the EU has “no lawful basis to impose tariffs on imports from the United States.” He added, “Because Washington State repealed that tax break earlier this year, the EU has no valid basis to retaliate against any U.S. products. Any imposition of tariffs based on a measure that has been eliminated is plainly contrary to WTO principles and will force a U.S. response.”

The EU’s Executive Vice-President and Commissioner for Trade, Valdis Dombrovskis, in a statement, said:

This long-awaited decision allows the European Union to impose tariffs on American products entering Europe. I would much prefer not to do so – additional duties are not in the economic interest of either side, particularly as we strive to recover from the Covid-19 recession. I have been engaging with my American counterpart, Ambassador Lighthizer, and it is my hope that the U.S. will now drop the tariffs imposed on EU exports last year. This would generate positive momentum both economically and politically, and help us to find common ground in other key areas. The EU will continue to vigorously pursue this outcome. If it does not happen, we will be forced to exercise our rights and impose similar tariffs. While we are fully prepared for this possibility, we will do so reluctantly.

In his statement, Ambassador Lighthizer indicated that the United States also wished to negotiate a settlement to a WTO dispute that began in 2004, noting that he was “waiting for a response from the EU to a recent U.S. proposal and will intensify our ongoing negotiations with the EU to restore fair competition and a level playing field to this sector.”

Effective October 15, 2020, the Department of the Treasury’s September 15 final rule (“Rule”) will modify certain regulations of the Committee on Foreign Investment in the United States (CFIUS) pursuant to the Foreign Investment Risk Review Modernization Act of 2018 (FIRRMA). In a previous blog post, we noted that the Rule would change the requirements for making mandatory disclosures to the U.S. government prior to completing certain types of foreign investments in, or acquisitions of, certain types of U.S. businesses. These changes are comprehensive and will require parties entering into these types of transactions to undertake new due diligence efforts to ensure they are in compliance with CFIUS’s strict liability requirements and avoid penalties for noncompliance. This update describes the underlying legislation as well as the legal and practical implications of the Rule.

Key Notes:

  • On September 15, 2020, the Department of the Treasury published in the Federal Register a final rule amending the disclosure regulations of the Committee on Foreign Investment in the United States (CFIUS) pursuant to the Foreign Investment Risk Review Modernization Act of 2018 (FIRRMA).
  • The final rule significantly alters the mandatory CFIUS filing requirements relating to foreign persons’ investments in or acquisitions of U.S. businesses involving critical technologies, critical infrastructure or sensitive personal data.
  • The final rule comes into effect on October 15, 2020.

Continue reading: view this client update in HTML or PDF format.

On October 8, 2020, the Departments of State and the Treasury announced sanctions on numerous Iranian financial institutions. The Department of the Treasury’s Office of Foreign Assets Control (OFAC) has sanctioned eighteen major Iranian banks. Secretary of the Treasury Steven Mnuchin stated that the sanctions “reflect our commitment to stop illicit access to U.S. dollars.” Secretary of State Mike Pompeo stated that the sanctions “further depriv[e] the Islamic Republic of Iran of funds to carry out its support for terrorist activities and nuclear extortion that threatens the world.” Both the State and Treasury Departments note that these new sanctions do not affect existing authorizations and exceptions for humanitarian exports to Iran.

These new sanctions, which essentially cover all remaining Iranian banks not previously sanctioned by OFAC, have been taken in order to deny the Iranian government financial resources that may be used to fund and support its nuclear program, missile development, terrorism and terrorist proxy networks, and malign regional influence. OFAC has designated and placed on the Specially Designated Nationals (SDN) List the following Iranian banks: (1) Amin Investment Bank, (2) Bank Keshavarzi Iran, (3) Bank Maskan, (4) Bank Refah Kargaran, (5) Bank-e Shahr, (6) Eghtesad Novin Bank, (7) Gharzolhasaneh Resalat Bank, (8) Hekmat Iranian Bank, (9) Iran Zamin Bank, (10) Karafarin Bank, (11) Khavarmianeh Bank (also known as Middle East Bank), (12) Mehr Iran Credit Union Bank, (13) Pasargad Bank, (14) Saman Bank, (15) Sarmayeh Bank, (16) Tosee Taavon Bank (also known as Cooperative Development Bank), (17) Tourism Bank, and (18) Islamic Regional Cooperation Bank (owned or controlled by Eghtesad Novin Bank).

OFAC has authorized U.S. persons to engage in transactions and activities involving these Iranian SDN financial institutions otherwise sanctioned and blocked under E.O. 13902 if such transactions are authorized, exempt, or otherwise not prohibited under the Iranian Transactions and Sanctions Regulations (ITSR). This includes activity permitted under specific licenses issued pursuant to the ITSR as well as activity permitted under the ITSR or general licenses, such as provision of medicine and medical devices, provision of agricultural products, humanitarian activity, certain journalistic activity and other permitted activity.

Non-U.S. persons may be subject to “secondary” sanctions if they engage in transactions involving financial institutions sanctioned under E.O. 13902. However, OFAC’s guidance and FAQs make clear that non-U.S. persons would not be subject to “secondary” sanctions for engaging in humanitarian or other activity permitted for U.S. persons under General License L or other provisions. In addition, OFAC is providing a 45-day period – until November 22, 2020 – for non-U.S. persons to wind down previously non-sanctionable activity with these newly designated Iranian banks.

OFAC has updated its Iran FAQs, providing further guidance on the scope of General License L, and outline the effects of these sanctions on both U.S. and non-U.S. persons, including secondary sanctions exposure. See FAQs 842, 843, 844, 845, 846, and 847.

On October 10, 2020, President Donald Trump issued a Presidential Proclamation announcing further action to safeguard domestic production of crystalline silicon photovoltaic (CSPV) cells (i.e., solar cells). In June 2018, the president implemented tariffs on imports of certain solar cells (see Update of January 23, 2018) under Section 201 of the Trade Act of 1974 for a four-year period. The tariffs started at 30 percent the first year but were set to decrease 5 percent annually. The remedy implemented in 2018 excluded certain types of solar cells, such as 2.5 gigawatts (GW) CSPV cells.

In March 2020, the U.S. International Trade Commission (USITC) issued a report addressing the probable economic effect on the domestic solar cell manufacturing industry of modifying the Section 201 safeguard measure to increase the level of the tariff rate quotas (TRQ) on CSPV cells from the current 2.5 GW to 4.0, 5.0, or 6.0 GW. The USITC advised that increasing the TRQ “would help to continue growth in solar module production but that expanded access to imported cells not subject to safeguard duties would put downward pressure on prices for United States cells.” The report concluded that “the exclusion of bifacial modules from the safeguard measure will likely result in substantial increases in imports of bifacial modules if such exclusion remains in effect” and that these bifacial modules would compete with domestically produced CSPV products and “apply significant downward pressure on prices of domestically produced CSPV modules.”

Accordingly, the Presidential Proclamation announced that while the domestic industry “has begun to make positive adjustment to import competition,” modifications to the safeguards are necessary for imports of CSPV cells under Harmonized Tariff Schedule (HTS) subheading 8541.40.6025 and other CSPV products, such as modules under HTS subheading 8541.40.6015. The proclamation revokes the exemption from the tariffs for bifacial modules and adjusts the duty rate of the safeguard tariff for the fourth year of the safeguard measure to 18 percent instead of the previously scheduled rate of 15 percent.

On October 6, 2020, the U.S. Department of Commerce’s Bureau of Industry and Security (BIS) published two final rules in the Federal Register, “Controls on Exports and Reexports of Water Cannon Systems” (“Water Cannon Controls”) and “Amendment to Licensing Policy for Items Controlled for Crime Control Reasons,” (“Licensing Policy Amendment”) meant to promote the respect of human rights around the world.  Both rules became effective immediately.

The Water Cannon Controls require a license for the export and reexport of water cannon systems intended for riot or crowd control, parts and components specially designed therefor and related software and technology to all countries designated with an “X” for crime control on Column 1 of the Commerce Country Chart, Supplement No. 1 to Part 738 of the EAR.   This includes most countries worldwide, other than NATO member countries and certain other military allies.  The amendment is intended to “enable the Government to more effectively control exports of water cannons to the Hong Kong Police Force, consistent with a 2019 Congressional mandate to prohibit the licensing of such transactions.”

The Licensing Policy Amendment amends section 742.7 of the EAR in two ways.  One, specifying in a new subparagraph 742.7 (b)(1) that BIS generally will consider favorably, on a case-by-case basis, license applications for a CC-controlled item “unless there is civil disorder in the country or region of destination or if BIS assesses that there is a risk that the items will be used in a violation or abuse of human rights”.  Two, stating in a new 742.7 (b)(2) that BIS will also consider these same issues when reviewing items controlled for reasons other than CC, with the exception of items controlled only for short supply.


In accordance with a formal request from the Office of the U.S. Trade Representative (see Update of October 5, 2020), the U.S. International Trade Commission (USITC) has initiated a Section 201 global safeguard investigation “to determine whether fresh, chilled or frozen blueberries are being imported into the United States in such increased quantities as to be a substantial cause of serious injury, or the threat thereof, to the domestic industry producing an article like or directly competitive with the imported article.” Under Section 201 of the Trade Act of 1974, domestic industries seriously injured or threatened by increased imports may seek import relief from the USITC. In a Section 201 investigation, no determination of unfair trade practices is required; instead, a determination of injury or threatened injury must be “serious,” showing that the increased imports are a “substantial cause” of injury or threatened injury.

For this Section 201 blueberry investigation, the USITC has designated the proceeding as “extraordinarily complicated,” allowing it more time to conduct the investigation and collect data and other information from a large number of firms involved in the domestic production, processing and/or marketing of blueberries. Interested parties planning to participate in the investigation must file an entry of appearance with the USITC Secretary no later than 21 days after publication of this notice in the Federal Register. (NOTE: The October 6, 2020 initiation notice has not yet been published but is available from the USITC website.) The key dates currently for this investigation are:

  • December 17, 2020 – Approximate date of USITC Prehearing Report
  • December 29, 2020 – Prehearing briefs due on injury
  • December 30, 2020 – Submission of request for all parties and nonparties to appear at hearing on injury
  • January 11, 2021 – All parties and nonparties seeking to appear at the hearings and make oral presentations must participate in injury prehearing conference and provide a copy of their oral statement
  • January 12, 2021 – Hearing on injury
  • January 19, 2021 – Posthearing briefs due on injury
  • February 3, 2021 – Approximate date of staff report on injury submitted to the Commissioners
  • February 11, 2021 – Approximate date of USITC vote on injury
  • February 18, 2021 – Prehearing briefs due on remedy
  • February 19, 2021 – Submission of request for all parties and nonparties to appear at hearing on remedy (only if there is an affirmative injury determination)
  • February 24, 2021 – All parties and nonparties seeking to appear at the hearings and make oral presentations must participate in remedy prehearing conference and provide a copy of their oral statement
  • February 25, 2021 – Hearing on remedy
  • March 3, 2021 – Posthearing briefs due on remedy
  • March 12, 2021 – Approximate date of staff report on remedy submitted to the Commissioners
  • March 19, 2021 – Approximate date of USITC vote on remedy

Thompson Hine’s International Trade attorneys and professionals will continue to monitor this investigation and provide further updates as necessary.

The U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) announced that it has issued General License (GL) 5E (Authorizing Certain Transactions Related to the Petróleos de Venezuela, S.A. 2020 8.5 Percent Bond on or After January 19, 2021), which continues to delay U.S. persons’ ability to enforce bondholder rights to the CITGO shares serving as collateral for the Petróleos de Venezuela, S.A. (PdVSA) 2020 8.5% bond until on or after January 19, 2021. Effective October 6, 2020, this GL 5E replaces GL 5D. Additionally, OFAC modified frequently asked question #595 to address the scope of GL 5E.

On May 21, 2018, President Donald Trump issued Executive Order (EO) 13835 which, among other things, prohibits U.S. persons from engaging in transactions related to the sale, transfer, assignment or pledging as collateral by the Venezuelan government of any equity interest in an entity owned 50% or more by the Venezuelan government. Thereafter, on July 19, 2018, OFAC issued GL 5, which removed E.O. 13835 as an obstacle to holders of the PdVSA 2020 8.5% bond from gaining access to their collateral.

Starting in January 2019, however, Trump continued expanding the sanctions targeting PdVSA (see Update of January 19, 2019). Eventually, on October 29, 2019, GL 5 was replaced and superseded by GL 5A (and eventually 5B, 5C, and most recently, 5D), which delayed the effective date of GL 5’s authorizations relating until October 20, 2020 (see Update of July 16, 2020). The most recent version, GL 5E, again delays the effective date of the GL 5 authorizations to January 19, 2021.

Between October 24, 2019 and January 19, 2021, U.S. persons are prohibited from engaging in any transactions related to the sale or transfer of CITGO shares in connection with the PdVSA 2020 8.5%, unless specifically authorized by OFAC. In the modified FAQ 595, OFAC notes a favorable licensing policy toward those seeking to apply for a specific license in an effort to reach an agreement on proposals to “restructure or refinance payments due to the holders of the PdVSA 2020 8.5 percent bond.”