MassPoint PLLC Blog

Tech Wars: Restrictions on Foreign Access to U.S. Technology

Measures to curb foreign access to U.S. technology have taken and will likely take various forms that will cut across industries and legal disciplines. Among them, as discussed below, are restrictions on foreign access to and influence on U.S. technology through (1) foreign investment, (2) supply chain exclusions, (3) limits on participation in academic and other research, (4) legal or political curbs on U.S. technology access or transfers through third countries, and (5) countermeasures against foreign control of raw materials essential to technological manufacturing and innovation.

Sanctions

U.S. Law as Trade War Weapon

The ZTE case puts into focus the Trump Administration’s apparent strategy to use U.S. sanctions, along with anti-corruption and anti-money laundering laws, as trade war weapons, specifically as “economic tools” and “tools of economic diplomacy” that “can be important parts of broader strategies to deter, coerce, and constrain adversaries.”

Sanctions

USMCA Borrows From Secondary Sanctions Playbook to Freeze Out “Non-Market Economy” Nations

The recently published text of the United States-Mexico-Canada trade agreement (USMCA) includes a peculiar provision that confers on each of the parties the right to terminate the USMCA if any of the other parties enters into a “free trade agreement” (FTA) with a country determined by any of the USMCA countries to be a “non-market” economy. Insofar as the USMCA requires the parties to choose between maintaining the trilateral trade agreement or entering into an FTA with a non-market economy country, the USMCA imports the premise that underlies U.S. secondary sanctions.

Anti-money laundering

Banking Transparency for Sanctioned Persons

On September 7, 2018, Congresswoman Mia Love (R-UT) introduced in the House of Representatives H.R. 6751, the Banking Transparency for Sanctioned Persons Act of 2018 to “increase transparency with respect to financial services benefitting state sponsors of terrorism, human rights abusers, and corrupt officials.” This update discusses the Banking Transparency Act’s provisions and what it conveys about the current U.S. legal climate around corruption and human rights sanctions, Congress’ increasingly activist sanctions posture, and the risk management and compliance inferences that U.S. and foreign financial institutions should draw from the Banking Transparency Bill when viewed in context.

Doing Business in Emerging Markets

Technology, Human Rights and Sanctions

Some Congress members are lobbying the Administration to impose human rights sanctions on Chinese officials and companies responsible for or complicit in abuses against China’s Uighur Muslim minority and other minorities. Two companies named, Dahua Technology and Hikvision, are very large, China-based global firms that produce surveillance products and systems. The bottom line is that the tech industry should take note of the development (even if no sanctions are imposed), as it foreshadows the legal and reputation risk issues they will, without doubt, face in connection with tech-enabled abuses, privacy encroachments, and other conduct by consumers of tech products and services.

Critical Minerals

Critical Minerals: National Security, Trade, and Environmental Law Nexus

Against the Trump Administration’s ideological backdrop, a range of conventional and unconventional trade, economic and other measures have been and likely will continue to be taken on “national security” grounds, including domestically. These include measures to increase domestic production of “critical minerals” (among them rare earth elements)–essential to the production of consumer electronics, electric vehicles, defense articles, medical devices, and other manufactured articles. Such actions can be seen on the horizon, if one connects the dots between national security authorities under trade laws, the Administration’s stated goals and actions favoring increased domestic mining of critical minerals, and environmental laws that contain national security/national defense exceptions and are viewed by the Administration and extractives industry interests as prohibitive to domestic production of critical minerals and commercially viable terms.

Sanctions

Global Magnitsky Sanctions: The Swiss Army Knife

The Global Magnitsky Sanctions apply worldwide, without any requirement of a jurisdictional nexus with the United States. They define corruption broadly enough to capture a wide range of conduct and persons. The sanctions target “serious human rights abuse,” but do not define the term. Moreover, the sanctions are readily deployable. No tailored legislation, executive order, or other administrative process—other than a sanctions determination by the Secretary of Treasury in consultation with the Secretary of State—is required to impose sanctions anywhere, anytime. Given their global reach, substantive breadth, and wide applicability, the Global Magnitsky Sanctions have distinct utility value as they can be readily employed for multiple legal, policy and strategic objectives. They are the Swiss Army Knife of sanctions. To date, 78 individuals and entities have been sanctioned for corruption and human rights abuses. The most recent of these sanctions actions, against Turkey, has triggered speculation as to its motives and objectives. This is discussed below, as are some of the provisions that suggest the Global Magnitsky Sanctions were formulated for sweeping applicability and enforcement latitude.

Sanctions

United States Sanctions High-Ranking Turkish Officials Under Global Magnitsky

Today the United States took the extraordinary step of imposing sanctions on Turkey’s Minister of Justice Abdulhamit Gul and Minister of Interior Suleyman Soylu. The sanctions were imposed under the Global Magnitsky Sanctions program, promulgated by Executive Order 13818 pursuant to the Global Magnitsky Act of 2016 and the International Emergency Economic Powers Act, among other legal authorities.

National Security Law

Senate Bill Seeks to Protect Magnitsky Law from Trump-Putin Deal

The introduction of legislation after the Helsinki summit to constrain the President’s sanctions authority vis-a-vis Russia is not surprising. As anticipated in this MassPoint post of July 18, “the Helsinki meeting could have legal consequences, should Congress move to insert itself, beyond its standard law-making and oversight role, in sanctions and trade matters,” including in the mold of CAATSA.