Trade Law

Washington, D.C. partner Kevin Wolf, London partner Jasper Helder and Emily Kilcrease with the Center for New American Security submitted a detailed comment to U.S. and EU export control authorities to help guide and inform efforts to rationalize U.S. and EU export controls.  It can also be a useful resource for anyone interested in the topic and wanting to understand the history and context to current export control policy issues. They note that the US-EU Joint Statement on the role and purpose of export controls “is far more significant than generally recognized because it is the first time the EU (represented by the EC) or any other US ally has stated so explicitly and publicly since the end of the Cold War an agreement with the US that export controls should be used to achieve country-specific and other policy objectives not directly related to weapons of mass destruction or conventional military items.”

Invoking statutory authority not used in almost two decades, President Trump on April 20, 2017, directed the U.S. Department of Commerce (DOC) to conduct an investigation into the effects of steel imports on U.S. national security. Citing the more than 150 antidumping and countervailing orders currently in place on steel products imported from various countries, the Presidential Memorandum announcing the investigation claims that U.S. steel producers continue to be harmed by continued unfair trade practices, such as subsidies provided by foreign governments and excess production capacity in producing countries. These systemic trade abuses, according to the Presidential Memorandum, jeopardize long-term investment in the U.S. industry and weaken the pool of qualified workers for this strategic industry.

Cree Inc. (“Cree”), the U.S.-based LED lighting and semiconductor company, announced last month that it is terminating its agreement to sell its Wolfspeed Power & RF division (“Wolfspeed”) to Infineon Technologies AG of Germany (“Infineon”) for USD $850 million. The decision to terminate the deal came shortly after Cree announced that CFIUS raised objections to the acquisition and that the parties were working within the deal structure to mitigate CFIUS’ concerns. This outcome underscores that CFIUS risk can exist in transactions involving buyers from countries that are closely allied to the United States. 

On January 13, 2017, the departments of State and Commerce published notices of inquiry (NOI) requesting comments on additional proposals for U.S. Munitions List (USML) Category XII and related controls for items subject to the Export Administration Regulations (EAR).¹ The requests are particularly relevant for companies that deal with sensors, lasers, infrared detection items and guidance equipment. The agencies published these NOIs within two weeks of corresponding Export Control Reform (ECR) changes that went into effect on December 31, 2016, for these items.² Public comments are due by March 14, 2017.

(Washington, D.C.) – Kevin J. Wolf, a former senior U.S. Department of Commerce official who served for the past seven years as Assistant Secretary of Commerce for Export Administration, has joined Akin Gump as a partner in its international trade practice in Washington, D.C., the firm announced today. He is accompanied by Steve Emme, who served for five years as Senior Advisor to Assistant Secretary Wolf.

On January 19, 2017, the Department of Commerce’s Bureau of Industry and Security (BIS) published new regulations that establish a licensing policy of general approval for exports or reexports to, or transfers within, India for most military, satellite and other items subject to the Export Administration Regulations (EAR) that do not involve weapons of mass destruction. Specifically, the items at issue in the new policy are those that are controlled for “National Security” or “Regional Stability” reasons only, which include most “600 series” military items and most satellite items. Additionally, BIS has significantly expanded the scope of potential license-free exports, reexports and transfers of items to India by allowing military end uses for the first time under the Validated End-User (VEU) program, in addition to civil end uses. This rulemaking follows the Obama administration’s recognition of India as a “Major Defense Partner” on June 7, 2016, and implements various commitments made by the United States related to that unique partnership status. It is the first major change to the India VEU program since July 2009, and the broader policy changes reflect the ongoing expansion of U.S.-India cooperation in civil space, defense and other high-technology sectors since 2010. Importantly, today’s changes create opportunities for more production of military, satellite and controlled dual-use items in India involving U.S.-origin items with fewer regulatory burdens and delays.     

CFIUS: Account for CFIUS risks in transactions involving non-U.S. investments in businesses with a U.S. presence

Over the past year, the Committee on Foreign Investment in the United States (CFIUS), an interagency committee chaired by the Department of the Treasury, has been particularly active in reviewing and, at times, intervening, in non-U.S. investments in U.S. businesses to address national security concerns. CFIUS has the authority to impose mitigation measures on a transaction before it can proceed. It may also recommend that the President block a pending transaction or order divestiture of a U.S. business in a completed transaction. Consequently, companies that have not sufficiently accounted for CFIUS risks may face significant hurdles in successfully closing a deal. With the incoming Trump administration, there is also the potential for an expanded role for CFIUS, particularly in light of campaign statements opposing certain foreign investments.

On July 29, 2016, the U.S. Department of the Treasury, Office of Foreign Assets Control (OFAC) issued a new General License J (GL-J). GL-J authorizes the reexportation of certain civil aircraft on temporary sojourn to Iran, as well as related transactions involving the reexportation of spare parts, components and technology to Iran. GL-J therefore provides long-needed authorization for commercial passenger and cargo airline operators to fly into and out of Iran using aircraft subject to U.S. export controls. The authorizations contained in GL-J are subject to certain conditions, which are outlined below.