New Articles

OFAC Implements Hong Kong-Related Sanctions Regulations Pursuant to E.O. 13936


OFAC Implements Hong Kong-Related Sanctions Regulations Pursuant to E.O. 13936

The U.S. Department of Treasury’s Office of Foreign Assets Control (“OFAC”) published regulations in the Federal Register on January 15, 2021, to implement Executive Order 13936 (“E.O. 13936”), titled “The President’s Executive Order on Hong Kong Normalization.”  The President determined on July 14, 2020, in E.O. 13936 that Hong Kong was no longer sufficiently autonomous to justify special treatment under U.S. law, due to the implementation of the Law of the People’s Republic of China on Safeguarding National Security in the Hong Kong Administrative Region (“National Security Law”). Additionally, E.O. 13936 directed the Department of Treasury to implement sanctions on persons undermining democracy in Hong Kong.

OFAC’s Hong Kong regulations formally block transactions prohibited by E.O. 13936 and establish the process by which persons and entities are added to OFAC’s Specially Designated Nationals and Blocked Persons List (“SDN List”). On January 15, 2021 OFAC also added six (6) persons to the SDN List pursuant to E.O. 13936. These persons were found to have been involved in the implementation of the National Security Law and to be undermining democratic processes in Hong Kong. As a result, all property and interests in property of 50% or greater belonging to these persons—which are in the U.S. or held by U.S. persons—must be blocked and reported to OFAC.

OFAC stated in its final rule that the regulations “are being published in abbreviated form at this time for the purpose of providing immediate guidance to the public,” and that OFAC intends to supplement with “a more comprehensive set of regulations.” However, since the OFAC regulations are a published final rule, they are not impacted by the President’s “Regulatory Freeze Pending Review Memorandum” and are therefore in effect until amended or withdrawn.


Cortney O’Toole Morgan is a Washington D.C.-based partner with the law firm Husch Blackwell LLP. She leads the firm’s International Trade & Supply Chain group.

Grant Leach is an Omaha-based partner with the law firm Husch Blackwell LLP focusing on international trade, export controls, trade sanctions and anti-corruption compliance.

Julia Banegas is an attorney in Husch Blackwell LLP’s Washington, D.C. office.

Camron Greer is an Assistant Trade Analyst in Husch Blackwell LLP’s Washington D.C. office.


What the Regional Comprehensive Economic Partnership Agreement Means for U.S. and Foreign Companies

The Regional Comprehensive Economic Partnership (RCEP) Agreement is a mega free trade agreement signed on November 15, 2020 by 15 Asia-Pacific countries, including Australia, Brunei, Cambodia, China, Indonesia, Japan, Laos, Malaysia, Myanmar, New Zealand, the Philippines, Singapore, South Korea, Thailand, and Vietnam. The 15 countries represent nearly 30 percent of the world’s GDP and 2.2 billion people. Meanwhile, RCEP brings together China, Japan, and South Korea for the first time under a single free trade agreement. The Peterson Institute for International Economics estimates that by 2030, the RCEP could add $186 billion to global national income annually. India originally planned to join RCEP but later pulled out in November 2019.

Summary of RCEP

The RCEP Agreement consists of 20 chapters covering a wide range of areas including trade in goods, rules of origin, customs procedures and trade facilitation, sanitary and phytosanitary measures, intellectual property rights, trade in services, E-commerce, and government procurement. Although the RCEP Agreement does not establish unified standards on labor and environmental protection, many scholars and practitioners believe that RCEP will effectively remove some common trade barriers in Asian countries.

Rules of Origin. Under the RCEP Agreement, the rules of origin will be unified for all member states, which means that companies only need to acquire one certificate of origin for trading in all member states. Surprisingly, only 40 percent of RCEP regional value of content is required for goods to meet the rules of origin requirement.

Trade in Goods. The chapter addressing trade in goods consists of key clauses that implement the member states’ goods-related commitments, including granting national treatment to other member states; reduction or elimination of customs duties, and duty-free temporary admission of goods. For example, tariffs likely will be eliminated on 86 percent of industrial goods exported from Japan to China. Overall, under RCEP the total number of zero-tariff products in trade in goods exceeds 90 percent of total products.

Investment. The chapter addressing investment includes several investment protection standards commonly used in other trade and investment treaties such as most-favored-nation treatment, fair and equitable treatment, and just compensation. Additionally, RCEP stipulates the rules for expropriation and covers both direct and indirect expropriation. In order to rise to the level of indirect expropriation, several factors must be exercised including the economic impact of government actions; whether the government actions violate its prior binding written commitments to the investor; and the nature of the government actions.

E-Commerce. Considering the digitalization of the trade and commerce among the member states, the chapter focused on e-commerce aims to promote e-commerce among the member states and use of e-commerce globally. This chapter requires all member states to adopt legal mechanisms to create a conducive environment for e-commerce transactions and development, including protection of personal data and information, and cross-border information transfer. In addition, all member states are required to maintain the current practice of not imposing duties for electronic transmissions.

What U.S. and Foreign Companies Can Expect

Lenient Rules of Origin. For U.S. and foreign companies doing business and operating in ASEAN, China, and other Asia Pacific region, RCEP probably offers the most lenient rules of origin compared to other major free trade agreements. As discussed above, the basic value of the content rule of 40 percent RCEP content is surprisingly low and is favorable to many U.S. and foreign companies. For example, a U.S. company may manufacture a product with 60 percent U.S. content and then export the product to Indonesia where the remaining 40 percent of content (from any other RCEP member) is added. Once the U.S. company establishes the 40 percent RCEP content, it can label the products as “Made in Indonesia,” and export the products to any RCEP member state, including China, and enjoy low or zero tariffs.

Supply Chain and End Market. In response to the worsening U.S. – China trade relationship, many U.S. companies have started to optimize and diversify their global supply chains throughout Southeast Asia. Because RCEP lowers tariffs, reduces non-tariff trade barriers, and improves market access for goods and services in the region, investment in Southeast Asia becomes even more attractive and economically feasible for those companies looking to sell their products or services in the region. For example, for many U.S. companies, buying Chinese components and/or selling products in China can be an expensive proposition due to the many tariffs and non-tariff barriers that exist between the countries. However, U.S. companies now have an opportunity to avoid these burdens by importing parts from China and completing the manufacturing process in an RCEP member state, and then selling the final products to China’s huge market while taking advantage of the benefits of RCEP.

How Member States and U.S. Companies May Benefit

RCEP will benefit its member states by reducing trade and investment barriers and increasing the economic integration among the members. U.S. companies may also benefit by reconfiguring their global supply chains to include more trade and investment in the region which will allow these companies to avoid many of the currently high tariffs and regulatory burdens that they currently experience.


Frank Xue and John Scannapieco are attorneys at Baker Donelson and members of the firm’s Global Business Team.

global business

Best Tips for Online Branding Your Global Business

In the wake of the pandemic, it seems that there is no point in talking about expanding a business and going global. Yet, many companies are not scared of the virus that has disrupted the entire business world and still work on bringing their global expansion plans to life.

The poll by Corporate Compliance Insights surveyed over 1,000 tech businesses from the U.S., and all of them confirmed that they are planning to go global despite the fact that the pandemic is still going on.

If you are among those fearless who still plan to go global in the nearest future, you need to start putting your online brand into that perspective as well. Today, we’re going to take a look at a few tips on how you can make that happen.

1. Think about Your Target Audience

It is essential to collect all the details to understand customer behavior when you’re entering the foreign market. But it’s also important to create a marketing strategy with the consideration of that audience’s language and culture. And, if you skip that step, it can undermine all your online branding efforts.

Besides, such negligence can undermine the reputation of your brand even before you enter the foreign market. It happened to KFC during its attempt to enter the Chinese market because of the improper translation of their slogan Finger-Lickin’ Good into Eat Your Fingers Off.

Even though this mishap didn’t ruin the company’s plans to succeed in China, it is still remembered in the business world as a poor practice which you should avoid at all costs. So, when developing the online brand for your global business, show respect to the target audience’s culture by localizing all your branding materials properly.

2. Find Local Influencers to Help Promote Your Global Brand

If you have plans to expand your business to different markets abroad, you need to make an effort to appear relatable to the local audiences. One of the most effective ways to achieve that is to partner with local influencers who can help you promote your brand in the respective market.

Airbnb is a great example of this strategy in action, as it often shows the hosts that sublet the apartments through Airbnb’s services around the world:

Image credit: Airbnb

With this approach, Airbnb tries to make its customers feel more welcome, no matter where they are and where they are coming from.

However, there is a trick with this strategy, as it requires you to find the influencer that has experience in your niche. For instance, if you’re expanding your foreign language school where people can study fluent English to other countries like Italy, Germany, and Russia, you need to find influencers there within the education industry who can help you promote your business locally.

It’s also worth mentioning that partnership with local influencers within your niche will also help you attract the right audience right away.

3. Create a Social Media Profile for Each Market

If you want your foreign audience to recognize you as a brand, when it comes to your digital marketing strategies, you need to speak your audience’s language. They need to have an opportunity to review your products and business updates in their native language to ensure that there is a full understanding between you and them.

And since people mostly use social media for brand updates, it makes sense to have a separate social media account for each country which you are planning to enter. IKEA is a great example in this case, as it has different Instagram profiles for every country where it sells its products:

Image credit: IKEA France

Such an approach also creates an opportunity for you to communicate with your target audience more, let them share their insights, and find out how you can improve your online branding strategy for your global business even more.

Over to You

Of course, going global with your business won’t deliver quick results. There are a lot of points to consider, and online branding is one of them.

That being said, the most important point in online branding for a global business is to understand the target audience and speak its language. If you achieve that, then your online branding efforts will definitely not go to waste.


Ryan is a passionate blogger and writer who likes sharing his thoughts. Now he works as a content editor and internet researcher, you can check his site. He likes to travel and explore new countries.


Brazil’s Electric Power Transmission Auction Paves the Way in Economic Recovery and Foreign Investment

On December 17th, Brazil will kick off its upcoming Electric Power Transmission Auction. This event, which will take place in São Paulo, is critical for Brazil’s forward-movement in economic recovery since the pandemic. ANEEL – the Brazilian Electricity Regulatory Agency, will be hosting the auction to attract investments to the energy sector, and ultimately create jobs. Global Trade Magazine heard directly from Roberto Escoto, Investment Manager of Apex-Brasil (the Brazilian Trade and Investment Promotion Agency) to learn more about the event and its importance in the foreign investment arena.





Discuss the goals for the upcoming Electric Power Transmission Auction and the issues it’s aiming to solve.

The upcoming Electric Power Transmission Auction will be held on December 17, 2020 by the Brazilian Electricity Regulatory Agency (ANEEL) at B3 S/A – Brasil, headquartered in São Paulo.

There are 11 lots of projects, covering 1,940 km of transmission lines and substations with a transformation capacity of 6,420 MVA. The transmission facilities that will be auctioned involve investments of about BRL $7.4 billion, with the potential of generating 15,434 thousand jobs during construction of the projects.

The term for commercial operation of the facilities varies from 42 to 60 months, for concessions of 30 years valid from the signing date of the contracts. Concessions will be tendered for the construction, operation, and maintenance of 16 transmission lines and 12 substations.

Brazil’s main transmission network, the National Interconnected System (Sistema Interligado Nacional – or SIN), consists of four interconnected subsystems (North, Northeast, Southeast and Center-West, and South). Together, this makes up one of the largest interconnected subsystems in the world. The Brazilian network has interconnections with neighboring Paraguay (through the Itaipu Binational project), as well as with Uruguay, Argentina, and Venezuela.

The system operator (ONS) expects the Brazilian transmission network to grow extensively by 2024.  More specifically, ONS envisages an extension of the grid towards the less well-connected regions of Brazil, as well as work to make further improvements to the existing grid in other parts of the country. The upcoming Electric Power Transmission Auction in December 2020 aims to assist in achieving these goals.

How does the region create and maintain a competitive environment for initiatives in the energy sector and foreign investment?

The electricity sector in Brazil – in generation, transmission, and distribution – is now one of the largest destinations of foreign direct investment in the world. The growing interest from foreign investors is driven by strong business opportunities, with private players having the chance to compete in all segments of the sector, combined with the strengthening of Brazil’s regulatory framework.

What major companies are already benefiting from investment opportunities/energy sector in this region? 

Companies from all around the world are benefiting from the investment opportunities within Brazil’s energy sector, including but not limited to Iberdrola, Enel, EDP, Engie, EDF, EDP, Statkraft, Equinor, State Grid, China Three Gorges, CGN, Brookfield, Suncor, Canadian Solar, and more.

Discuss how you identify and lead multi-sector business development opportunities? 

Apex-Brasil has an extensive international network of partner organizations, associations, and companies. We have offices in the U.S. (Miami and San Francisco), Europe (Brussels), Israel (Jerusalem), Russia (Moscow), China (Shanghai and Beijing), the United Arab Emirates (Dubai), and Colombia (Bogota). Additionally, since we work in close partnership with the Brazilian Ministry of Foreign Affairs, we have access to over 100 Embassies around the world. Finally, we have a market intelligence unit that supports our efforts with relevant information on the international economy, business, and key players.

This global reach and intelligence allow us to map and prospect the right investors, as well as introduce Brazilian companies to foreign investors on international business trips.

How is the workforce prepared for incoming investors? How about for current investors?

Brazil is a populous country with a workforce of over 100 million people. The sectors that usually gather the largest number of Brazilian workers, according to IBGE’s statistic report (PNAD), are retail and mechanic workshops, public administration, defense, education, health, social services, information and communications services, financial activities, realty, and administration.

In 2017, Brazil’s Congress approved a reform in the country’s work legislation, known as the Consolidation of Labor Laws (CLT). The main goal of this reform was to make the laws more flexible, with a specific focus on negotiations between employers and employees.

As a result, new rules have emerged, allowing for outsourcing of labor in a company’s main activity, home-office regulation, and more accountability for employees in lawsuits against employers. That said, collective bargaining agreements between employers and unions may offset some points written in the law, adjusting the terms to the necessities of the workers. Some of these topics include working hours, profit sharing, and sanitary standards (which were previously established only by the employer).

However, this does not mean that workers are left unprotected, as their fundamental rights cannot be negotiated under CLT. These rights include maternity and paternity leave, holidays, minimum wage, 13th salary, retirement, and the Guarantee Fund for Continuing Service (FGTS), which is a type of savings account taken directly from workers’ salaries that aims to protect the worker’s subsistence in case of dismissal but can also be used to buy residential properties.

Also, Brazil has first-rank universities and engineers with expertise in onshore and offshore technologies, as well as in EPC entrepreneurships.

Brazil has a skilled and diversified labor market, as well as favorable labor framework conditions for investors.

Let’s discuss how the region has managed the energy sector climate during the pandemic and other disruptions. What should companies know and how are you addressing it?

Brazil is taking concrete actions to combat the Covid-19 pandemic and still remain globally competitive. Among other measures, the Brazilian government has launched a package to protect both workers, especially the most vulnerable people, and SMEs.

When it comes to the power sector specifically, several initiatives have been introduced since the start of the pandemic. This includes but is not limited to the following measures:

First, a Committee of Crisis and Monitoring, composed of the Ministry of Mines and Energy (MME), and other authorities and experts, has been established to map and act quickly on the challenges that the pandemic has imposed.

Second, MME and ANEEL, along with banks, have designed and implemented the “COVID account,” which offers loans of a total of USD $16.1 billion for energy companies, with the goal of providing liquidity to the sector, especially in the key segment of distribution.

Finally, MME has launched the green bonds program, which is favorable for obtaining financing for new energy projects, with an estimated gradual release of USD $250 by 2030. It is envisioned that this particular program will contribute to expanding 25 GW for new wind energy, 8GW for solar and energy, and 3 GW for small hydro plants.

Please share anything else you’d like the readers to know about Brazil’s investment climate.

Brazil has one of the cleanest electric matrices in the world, with over 80% of our electricity coming from renewable sources. Currently, hydro represents 58% of the Brazilian power generation mix, while biomass, wind, and solar have a share of 11%, 9%, and 2%, respectively. In 2029, it is expected that these sources will represent 42%, 10%, 16%, and 8%, respectively, of our power generation mix. With this forecast in mind, it is clear that wind and solar energies are increasing fast and constantly, underscoring their importance now and in the future. That said, this growth is not a surprise: Solar and wind are very competitive areas, and Brazil offers unique differentiators for investors to consider.

For example, Brazil has one of the highest capacity factors for wind energy in the world, with an average above 40%. Brazil also has the highest growth rate for wind in Latin America over the last 10 years. Additionally, our solar irradiation is higher than those of other counties, such as Spain, France, and Germany. What’s more, the power generation segment has opportunities in auctions, free market (Corporate Power Purchase Agreements model), and distributed market (i.e. type of net metering model) – these are all important drivers for the growth of these two sources.

To conclude, Brazil´s energy sector has a successful regulatory framework that is prime for foreign direct investment. Additionally, all of the energy segments in Brazil (generation, transmission, and distribution) are open to private investors. Lastly, Brazil has a solid track record of success and growth in this sector, which is the reason why the power sector attracted so much foreign investment in 2019, as well as why we expect this growth to continue in the coming years.


How to Complete Foreign Direct Investment Projects Amid the Pandemic

The coronavirus pandemic has created significant challenges for companies with foreign direct investment (FDI) projects in their pipeline. Restrictions on travel, immigration, and budgets are making it harder to make in-person visits to potential sites, bring over key executives, and solidify project financing amid an uncertain economy. But whether a project is in the site selection stage or a company is already in operation and considering additional investment, companies have plenty of options to keep their strategic projects moving. The key is to revisit the initial strategy, adapt to changing times by utilizing virtual tools, and consider all options with immigration and project budgets – including the potential for new incentives.

Revisit the Strategy

New investments in foreign jurisdictions are almost always long-term decisions. However, as global markets shift and new trends emerge, companies should revisit these decisions for projects in the pipeline to ensure the long-term strategy still makes sense. In most cases we have advised on, the answer is yes. But the scope may need to change.

The pandemic has caused businesses across industry sectors to take a fresh look at their supply chains and corporate footprints. In some cases, this has resulted in strategic changes. For example, some manufacturers that had previously been planning one large facility but experienced disruptions in the supply chain may now consider multiple smaller facilities to help diversify their footprint and be closer to key markets. Other companies who previously planned North American distribution facilities have pivoted to assembly or manufacturing. But as an overarching observation, many companies that had a clear strategic reason to enter or expand in the U.S. are finding they now have an even stronger argument to do so.

It is also important for companies to consider feasible time frames for making informed location decisions and starting operations. After a company decides to undertake a project, it can be two to three years before the company is producing a product. During the planning stages, companies should build in time for location evaluation, machinery and equipment orders, construction, hiring and training. Factoring in this lead time is critical as companies react to today’s markets but also continue proactive planning for the future.

Adapt With Virtual Site Selection

Without a doubt, the collapse of international travel has had a huge impact on site selection. But this is one area of the pandemic that has a silver lining: it has accelerated a shift toward enabling more of the site selection process to happen virtually, and it has improved the quality of those virtual tools.

Prior to COVID-19, many of the more innovative economic development organizations (EDOs) were already creating cutting-edge digital portfolios for their communities in response to enhanced online activity by site selectors and companies. It is now more fundamental for EDOs to develop virtual showcase pieces on available properties, which often include videos and drone footage, high definition site photos, and other due diligence materials. These tools make it easier for companies and consultants to review potential properties from the comfort of their home office at any time of day, and positions the community to get a site or building on the short-list for the next project. Site selection consultants can also help companies virtually evaluate a potential site using GIS mapping tools and digital data sets, packaged into an online storybook portal that simulates an in-person visit.  This virtual approach has proven to be extremely valuable for teams working odd hours, whether that’s due to different time zones or the need to supervise children during remote school days.

It’s clear that in this virtual environment, corporate decisionmakers have more considerations than ever when it comes to making site location decisions. Not being able to inspect a site in-person or meet face-to-face makes it even more critical to have trusted partners on the ground in the United States – partners who are looking out for a company’s best interest, eliminating risk and helping the company consider all options. Working with consultants and attorneys who understand the process, the resources available, and the roadblocks will give companies the best chance of success.

Navigating Immigration Restrictions

One of the most important aspects of FDI projects – bringing executives over to help oversee them – can be a challenge because of closed consulates around the world. Some consulates in Asia are not even scheduling visa interviews until December, whereas before the pandemic it would take seven to 10 days to get an interview. A variety of immigration restrictions remain in effect under the Trump administration as well.

But business immigration is slowly opening back up, and companies still have the necessary tools to bring essential workers to the U.S. Based on what country the foreign national is coming from and the immigration attorneys can help companies fashion creative solutions. Even if the category in question faces a ban, it’s possible to secure a waiver for high-level executives who are essential to keep the business running. With all immigration needs though, companies should plan for additional vetting and longer timeframes than in the past.

Companies should also carefully plan for their personnel’s return trip. Certain countries are requiring their citizens to quarantine for 14 days after they return from the U.S., which can outweigh the benefits of shorter trips to the States. There have also been instances where a country has denied entry from U.S. travelers, creating a risk of key personnel getting stuck. To avoid surprises, companies should work through these considerations before sending travelers overseas.

Adjusting to Budget Challenges

Companies trying to reduce expenses as they weather an extremely uncertain economic climate have several options with FDI projects. In some cases, they can adjust the scope of their project where that project is a critical element of the company’s long-term strategy.

Another option for companies that were planning on a greenfield project is to consider acquiring another company or starting a partnership instead. These options can sometimes reduce costs and time compared to starting from the ground up. But there are downsides to consider as well, including less control over the particulars of the facility, such as labor quality and availability, utility costs, taxes and more. There can also be potential surprises as the pandemic makes certain targets’ financial situations harder to gauge.

Before adjusting scope, companies already in the midst of new projects or who have had recent projects should explore how incentives at the state or local level could be impacted – negatively or positively. A variety of counties and states in the Southeast U.S., for example, are adjusting incentives programs to better fit the reality of remote work and maintain economic development. Some companies may also have a need to renegotiate incentives to avoid potential clawbacks as a result of change in strategy, a delayed project or reduction of force. Consultants and attorneys can help companies explore their options and develop solutions.

Bottom Line

Companies that stay aligned with their strategic plan, take advantage of virtual tools, and partner with experienced advisors can still implement FDI projects successfully. Forward-thinking businesses in the position to keep long-term investments moving will be in an even stronger position once the pandemic ends and will have a head start on competitors who remained in cost-cutting mode.


Sam Moses and Michael Chen are international business attorneys at Parker Poe, and Morgan Crapps is a site selection and economic development consultant at Parker Poe Consulting. They can be reached at,, and


Treasury Proposes Filing Fees for CFIUS Voluntary Notices

On Monday, March 9, 2020, the U.S. Department of the Treasury (“Treasury Department”) published a proposed rule in the Federal Register establishing a tiered filing fee system for parties filing voluntary notices with the Committee on Foreign Investment in the United States (“CFIUS”). The proposed rule accompanies other recently implemented regulations issued by the Treasury Department that implement the Foreign Investment Review Modernization Act of 2018 (“FIRRMA”), effective since February 13, 2020.  We have previously summarized the FIRRMA implementing regulations here and here.

FIRRMA expanded the scope of transactions subject to CFIUS review and modernized the review process. FIRRMA also authorized CFIUS to collect filing fees up to the lesser of 1 percent of the value of a transaction or $300,000. The proposed rule establishes a fee structure intended, according to the Treasury Department, to “not discourage filings and…allow parties to continue the practice of determining whether to file a voluntary written notice based on an evaluation of the facts and circumstances of the transaction.” The fees were set to only be a small proportion of the value of any transaction, in order to avoid discouraging voluntary filings. Under the proposed fee structure, the required fees are in proportion to the value of the transaction, as follows:

The same fee structure applies to both foreign investments under Part 800 and real estate transactions under Part 802. Fee requirements are only in place for voluntary CFIUS notices, however, and there are no filing fees for declarations or for unilateral reviews of transactions self-initiated by CFIUS. Accordingly, parties for whom the filing fee would be particularly burdensome, or parties engaged in low-risk transactions, can take advantage of the mandatory or voluntary declarations authorized by CFIUS under Parts 800 and 802.

The proposed rule requires parties to pay the fee at the time a notice is filed, so parties must calculate the total value of a transaction prior to filing. To calculate the value of a transaction, parties should include “the total value of all consideration that has been or will be paid in the context of the transaction by or on behalf of the foreign person who is a party to the transaction, including cash, assets, shares or other ownership interests, debt forgiveness, services, or other in-kind consideration.” Because transactions often include consideration paid in securities or non-cash assets, the rule provides the following guidance:

-Value on national securities exchange: value is calculated based on the closing price on the national securities exchange on which the securities are primarily listed on the trading day immediately prior to the date the parties file a notice with CFIUS. If the security was not traded the day prior to the date of filing, then the last published closing price will apply.

-Non-cash assets, interests, or services or other in-kind consideration:  value is calculated based on the fair market value as of the date the parties file the notice.

-Lending transaction: value is calculated based on the cash value of the loan or other similar financing arrangement.

-Conversion of contingent equity interest previously acquired by a foreign person: value is calculated including the consideration that was paid by or on behalf of the foreign person to initially acquire the contingent equity interest in addition to any other consideration.

-Real estate leases: value is calculated by the sum of fixed payments to be paid by the foreign person over the term of the lease; variable payments that depend on an index or rate over the term of the lease, measured by using the index or rate as of the date of the filing of the notice; and any non-cash or in-kind consideration to be provided by the lessee to the lessor over the term of the lease, as reasonably determined as of the date of the notice.

In light of the calculation requirements, the proposed rule also adjusts the content requirements for joint voluntary notices, requiring parties to provide the value of the transaction and the methodology used to calculate the value, along with the applicable fee.

Because parties are required to pay applicable fees at the time the notice is filed, CFIUS is authorized to delay its review until and unless the fee has been paid. In general, CFIUS will not require parties to submit double payments if it requires parties to withdraw and re-file a notice, absent a material change to the transaction or a material inaccuracy or omission in the initial filing. The proposed rule also allows for fee refunds in certain limited circumstances.

CFIUS will refund the filing fee if it later determines that the notified transaction is not a covered transaction, and it may issue partial refunds if parties can demonstrate that they paid a higher filing fee than required by the tiered fee structure. Notably, CFIUS has not indicated that it will refund the filing fees if a transaction is blocked.  Although CFIUS is also authorized to waive fees, it may only do so under “extraordinary circumstances relating to national security,” and the proposed rule states that it anticipates infrequent partial or total waivers.

The proposed fee schedule has not yet gone into effect, and it will only apply after the Treasury Department publishes its final rule.  Interested parties have until April 8, 2020, to submit comments on the proposed rule. Specifically, the Treasury Department has solicited comments from the public “on the impact of the proposed tiered fixed-fee structure and whether additional tiers or additional features should be considered.”


By Ryan Fayhee, Roy (Ruoweng) Liu, Alan G. Kashdan, Tyler Grove and Sydney Stringer at Hughes Hubbard & Reed LLP


The UAE Foreign Direct Investment (FDI) Law

For a great many years, global businesses have viewed the United Arab Emirates as an attractive global investment market. With a strong presence of high-net-worth consumers and a geographically strategic location from which to distribute throughout the Middle East and North Africa, the UAE is rife with opportunity.

Yet, many international corporations could not own companies outright in the UAE and were restricted to a maximum ownership of 49%. Ownership laws, however, are now being revisited to diversify the country’s economy beyond the energy sector, which has been the source of UAE wealth for decades. But precisely the degree to which economic liberalization is taking place is very much based on one’s perspective.


The United Arab Emirates (UAE), a federation of seven Emirates (member states), has served as a global centre for trade for centuries. However, most global businesses had often expressed discomfort with the country’s investment laws which, despite allowing 100 percent foreign ownership of businesses in the country’s Free Trade Zones (FTZs), stipulated that at least 51 percent of a company established  within the UAE, and outside a Free Trade Zone, must be owned by UAE citizens, or companies wholly owned by UAE citizens.

In addition, agency and distributor laws require that only a local commercial agent could sell products in the UAE market; and only UAE citizens or companies wholly owned by UAE citizens could register with the Ministry of Economy as commercial agents. Regulations also prevent the termination, or non-renewal, of a commercial agency contract unless the principal has a material reason to justify the termination or non-renewal; and the principal must often approach a court to terminate a contract.

Legislating Economic Diversification

The most recent Trade Policy Statement issued by the UAE through the World Trade Organization’s Trade Policy Review mechanism in 2016 stated the country aims to drive towards economic diversification by being less reliant on the oil sector and to increase its attractiveness to foreign investment.

The UAE enacted Federal Law No. 19, the Foreign Direct Investment Law (FDI Law) in November 2018. To promote and develop the investment environment and attract foreign direct investment in line with the developmental policies of the country, the Law established a framework for the country’s Cabinet to mandate which sectors and activities of the economy would be eligible for 100 percent foreign ownership. However, a list of eligible economic sectors and activities was not published by the UAE Cabinet until July 2019.

The list comprised of 122 economic activities across 13 sectors that would be eligible for up to 100 percent foreign ownership. The decision simultaneously conveyed that each emirate (member state of the UAE) could determine the percentage of foreign ownership under each activity suggesting that foreign ownership levels could vary from emirate to emirate. It was also clarified that oil & gas production and exploration sectors, air transport, and security and military sectors would be excluded from the purview of the FDI Law.

A Method of Recourse

It is also of interest that news reports indicate that for activities that are not included in the list of activities/sectors eligible for 100 percent foreign ownership, companies could approach the government for permission for a higher level of ownership; and that approvals may be granted on a case-by-case basis. The sectors that would allow 100 percent foreign ownership include:


-Renewable Energy



-Road Transport & Storage

-Hospitality and Food Services

-Information and Communication Services

-Professional, Scientific and Technical activities

-Administration and Support Services



-Art & Entertainment; and


For those businesses that do qualify under the FDI law, their products will be treated as being of UAE origin and therefore, eligible for such treatment under international agreements to which the UAE is a party. This is a privilege that is not available to goods manufactured by foreign-owned companies based in UAE Free Trade Zones. In addition, they can transfer abroad operating profits and proceeds from sale of investment or other assets.

Measuring Success

The Emirate of Dubai has reported that it has attracted US $12.7 billion in foreign direct investment (FDI) in the first half of 2019 thereby ranking the emirate third globally in FDI capital flows into Greenfield Projects. Also, in October 2019, Dubai assumed the presidency of the World Association of Investment Promotion Agencies (WAIPA), a global entity that works for the smooth flow of cross-border investments.

Although it is still too early to gauge the impact of the FDI Law and other developments, the consensus is that the UAE has taken steps to accelerate foreign direct investment into the country. It remains to be seen whether further steps such as changes to the agency and distributor laws, and changes to regulations related to the termination of agency contracts will be implemented to enhance the attractiveness of the UAE to foreign investors.


JC Pachakkil is a senior consultant in Global Trade Management at trade services firm Livingston International.

foreign investment

New Foreign Investment Restriction Regulations Cement CFIUS Reform

One of the emerging focal points of the U.S.-China trade war involves the implementation of updated foreign investment restrictions in key U.S. industries. 

On September 17, 2019, the Department of the Treasury issued proposed regulations to implement the Foreign Investment Risk Review Modernization Act of 2018 (FIRRMA), legislation that sought to reform and expand the scope of foreign investment reviews conducted by the Committee on Foreign Investment in the United States (CFIUS). CFIUS, an inter-agency committee chaired by the Treasury Department with the authority to review, modify and potentially reject certain types of foreign investment that could adversely affect U.S. national security, has undergone a significant overhaul during the past year in the wake of FIRRMA becoming law in August 2018. It is now more vital than ever that companies understand how their business can be affected by the updated CFIUS regulations when they are seeking or negotiating a merger, acquisition, real estate investment or even a non-controlling investment from a foreign investor.

Typically, CFIUS reviews are voluntary and are conducted for merger or acquisition transactions where a non-U.S. company or a foreign government-controlled entity obtain a controlling interest in a U.S. company. If CFIUS determines that a covered transaction presents a national security risk, it has the authority to impose certain mitigating conditions before allowing the deal to proceed and can refer the transaction to the President for an ultimate decision. 

However, FIRRMA updated and expanded the scope of CFIUS jurisdiction to authorize reviews of additional types of non-controlling foreign investments based on the type of U.S. company involved. The implementing regulations proposed in September 2019 are set to take effect February 13, 2020, and while the CFIUS reform regulations are motivated by concerns directly related to China, the impact of FIRRMA will be felt globally and the new rules will not be tied to or affected by impending trade negotiations. U.S. businesses, particularly those involved in critical technologies, real estate, infrastructure and data collection or maintenance, must take heed of how the updated rules will affect their global business decisions moving forward.

New Regulations for TID Companies Effective February 2020

Effective February 13, 2020, CFIUS will be authorized to review “covered control transactions,” (all foreign acquisitions resulting in direct control in a U.S. business, which CFIUS already had jurisdiction over), as well as non-controlling “covered investments” by a foreign person in a U.S. critical technology, critical infrastructure or sensitive personal data company. The new rules refer to these as “TID U.S. Businesses” (Technology, Infrastructure and Data), or to be more specific, a company that engages in one of the following categories of activity: 

-produces, designs, tests, manufactures, fabricates or develops one or more critical technologies;

-owns, operates, manufactures, supplies or services critical infrastructure; or

-maintains or collects sensitive personal data of U.S. citizens that may be exploited in a manner that threatens national security.

“Critical technologies” include defense articles or defense services under the International Traffic in Arms Regulations, certain nuclear-related products regulated by the Nuclear Regulatory Commission Controls and certain technologies on the Commerce Control List under the Export Administration Regulations. In addition, “critical technologies” will include certain “emerging technologies” that are yet to be defined, and the Commerce Department’s Bureau of Industry and Security is currently reviewing at least 17 technology areas that are anticipated to result in new controls (including bio-tech, artificial intelligence, microprocessors, positional navigation and timing technology, quantum computing and additive manufacturing (3D printing)). 

“Critical infrastructure” includes key industry subsectors such as telecommunications, utilities, energy and transportation. “Sensitive personal data” is defined to include ten categories of data maintained or collected by U.S. businesses that (i) target products or services to sensitive populations (including U.S. military members and federal national security employees); (ii) collect or maintain such data on at least one million individuals; or (iii) have a business objective to collect such data on greater than 1 million individuals and such data is an integrated part of the U.S. business’s primary product or service. The categories of data include types of financial, geolocation and health data. 

Non-Controlling Covered Investments

Under the new regulations, CFIUS will be authorized to review non-controlling covered investment in TID U.S. Businesses. A “covered investment” includes scenarios where a foreign investor obtains:

-access to material non-public technical information;

-membership or observer rights on the board of directors or an equivalent governing body of the business or the right to nominate an individual to a position on that body; or

-any involvement, other than through voting of shares, in substantive decision making regarding sensitive personal data of U.S. citizens, critical technologies, or critical infrastructure.

Filing a CFIUS declaration for a non-controlling covered investment will remain a largely voluntary process, and parties will be able to file a notice or submit a short-form declaration notifying CFIUS of a covered investment in order to receive a potential “safe harbor” letter (after which CFIUS in most scenarios will not initiate a review of a transaction). 

However, if a foreign government holds a “substantial interest” in the foreign investor that obtains a “substantial interest” in a TID U.S. Business, a CFIUS filing will be mandatory. The updated regulations provide that a foreign government is considered to have a substantial interest in the foreign investor if it holds a 49% direct or indirect interest, whereas a foreign person will obtain a substantial interest in a TID U.S. Business if it obtains at least a 25% direct or indirect interest. CFIUS is also authorized to mandate declarations for transactions involving certain types of critical technology companies. 

The proposed rules also include a “white list” provision providing CFIUS the authority to designate certain “excepted investors” and “excepted foreign states” that may be eligible for an exclusion in connection with non-controlling covered investments. 

Global Impact: How Does This Affect My Business? 

The most important practical effect of the updated regulations is the breadth of U.S. companies standing to be impacted or affected by new foreign investment restrictions. U.S. businesses and industries that have previously never had to consider filing a CFIUS declaration, including healthcare companies, tech start-ups, related infrastructure industries, venture capital funds, emerging technology companies and manufacturers, and any company with access to sensitive consumer data, will now have to contemplate the implications of a CFIUS review when considering even passive foreign investment. Robust due diligence on potential investors will be more important than ever to ensure compliance with both mandatory and voluntary CFIUS declaration filings. Cross-border deals will be a costlier and more time-consuming process that will require acute attention to detail when drafting the contractual rights afforded to foreign investors. 

If you have any questions about the impact of the updated CFIUS regulations or how they may affect your company, please contact a member of Baker Donelson’s Global Business Team for additional information.


Joe D. Whitley is a shareholder at Baker Donelson, chair of the Firm’s Government Enforcement and Investigations Group and former General Counsel at the Department of Homeland Security. He can be reached at

Alan Enslen is a shareholder with Baker Donelson and leads the International Trade and National Security Practice and is a member of the Global Business Team. He can be reached at

Julius Bodie is an associate with Baker Donelson who assists U.S. and foreign companies across multiple industries with international trade regulatory issues. He can be reached at


2019 China-California Business Forum Focuses on Sub-National Cooperation

California’s trade and investment involvement with Chinese provinces will take the spotlight at the third annual 2019 China-California Business Forum scheduled for June 5th in Los Angeles. An estimated 150 top Chinese business leaders are expected to attend with the goal of developing
business opportunities between California and Chinese business leaders.

“As the Chinese Secretariat of the China Provinces and U.S. California Joint Working Group on Trade and Investment Cooperation, CCCME together the seven member provinces all attach great importance to the China-California Business Forum and will actively participate in it as always. Over the past few years, as it has become an important platform of facilitating more exchanges and cooperation between Chinese and Californian businesses, the Forum has been fully recognized by Chinese enterprises and has become an annual focus of China-U.S. sub-national cooperation,” said Liu Chun, Vice President of CCCME.

The forum will take place in downtown at the Millennium Biltmore Hotel and dedicate a full day of various sessions discussing trade and investment, clean-tech, cross-border e-commerce, advanced manufacturing, and more.

“Sub-national cooperation is the foundation of China-U.S. economic and trade relations. The China-California Business Forum plays an important role in promoting this cooperation. The Forum is a joint effort by both sides. It not only brings business opportunities, but also enhances China-U.S. sub-national exchanges and cooperation. I look forward to welcoming more Chinese and California business leaders at the event,” said Amb. Zhang Ping, Chinese Consul General in Los Angeles.

Despite previous trade tensions between the two economy’s, business executives are displaying optimism for both sides to reach an agreement through bilateral trade discussions. This year’s Business Forum will ultimately support efforts to strengthen ties and develop mutually beneficial business initiatives.

“California was the number one recipient of foreign direct investment from China, totaling more than $16 Billion in 2017. We are also home to a vibrant Chinese American community. This forum will build on our strong business and cultural ties, strengthen our international partnerships, and grow our economy.” Said Lt. Governor Eleni Kounalakis.


The Port of Vancouver USA Board of Commissioners on Sept. 11 unanimously approved the port’s 2018 Strategic Plan, which includes a new vision statement and outlines 20 goals and 66 strategies to guide the port’s activities and budget for the next decade.

The plan was developed over 11 months with broad public and stakeholder input, including advisory panels, public open houses, commission meetings, public workshops and hundreds of public comments.

“We appreciate all the time and energy our community has put in as we’ve created our new strategic plan,” says CEO Julianna Marler. “We heard from hundreds of people, both within the port and across our community. Their perspectives helped us develop a balanced plan so we can continue to advance as an organization while achieving our state-directed purpose and our mission of creating economic benefit through leadership, stewardship and partnership in marine, industrial and waterfront development.”

The port first developed a strategic plan in the early 2000s and updated it each year as necessary. By 2017, the port needed a new plan to address organizational change, including completion of many key initiatives; marine and industrial business growth; identification of new projects; and changes in staff and elected leadership.

The 2018 Strategic Plan is available at