Law.com Quotes Savio and McCarthy on Impact of Expanded China-Related Export Controls

Akin Gump international trade partners Tatman Savio and Tom McCarthy have been quoted in the Law.com article “Trade Lawyers See Work Spike Amid US Expansion of China-Related Export Controls.” The article reports on the impact of rule changes by the U.S. Department of Commerce that will require export licenses for certain goods that have historically been exported to China without any license at all.

According to Savio, there will likely be “an uptick in compliance work, including drafting due diligence processes and procedures, conducting diligence, improving compliance programs, and preparing license applications.” With the new rules set to take effect June 29, trade involving semiconductors, consumer electronics and the aerospace industry may face new export restrictions and licensing requirements, she said.

Speaking of what this means for trade lawyers, McCarthy, who heads Akin Gump’s international trade practice, said clients are looking for clarity and advice on how to respond. “The short-term work will be dominated by describing the new rules’ expanded obligations, their definitions, and the significantly larger number of items they apply to,” he said. “In particular, one of the rules defines ‘military end use’ and ‘military end user’ far more broadly than most people would understand or translate the terms.”

Looking long-term, though, McCarthy thinks the impact of the coronavirus pandemic on supply chains and economies around the world will far outweigh the impact that any trade policies might have on trade volume, though the level of complexity and the pace of change in the area is certain to increase.

Savio said this complexity will lead to greater need for interpretation and analysis of requirements. “Now more than ever, companies in Asia understand the extraterritorial jurisdiction of the U.S. export control rules and the significant penalties that may result from non-compliance,” she said. “They are paying attention to the recent changes and want to ensure that their compliance programs are agile and responsive.”

McCarthy agreed, observing that China-related work is here to stay. “There is more activity and demand for exports in the dual-use export control area than there has been in the history of the area-much of which is driven by issues involving China,” he said.