New Articles

President Biden Issues Executive Order Banning U.S. Imports of Russian Origin Oil, Gas, and Coal

President Biden Issues Executive Order Banning U.S. Imports of Russian Origin Oil, Gas, and Coal

On March 8, 2022, President Biden issued Executive Order 14066 which prohibits the following actions:

-The importation into the United States of any “crude oil; petroleum; petroleum fuels, oils, and products of their distillation; liquefied natural gas; coal; and coal products” of “Russian Federation origin”;

-New investment in the Russian energy sector by U.S. persons, wherever located; and

-Any approval, financing, facilitation, or guarantee by a U.S. person, wherever located, of any transaction conducted by a non-U.S. person that would be prohibited by Executive Order 14066 if performed by a U.S. person or within the United States.

The Executive Order further prohibits any transaction by anyone (whether a U.S. person or a non-U.S. person) that evades or avoids, has the purpose of evading or avoiding, causes a violation of, or attempts to violate any of Executive Order 14066’s prohibitions, as well as conspiracies to violate the prohibitions.

In a Fact Sheet, the Biden Administration stated that the Executive Order is intended to “further deprive President Putin of the economic resources he uses to continue his needless war of choice”.  A  press release from the U.S. Department of the Treasury also stated that “[t]he United States continues to take severe action to hold the Russian Federation accountable for its brutal, unprovoked invasion of Ukraine.  Treasury has targeted the infrastructure supporting President Putin’s invasion of Ukraine”.

Executive Order 14066 is immediately effective.  However, the U.S. Treasury Department’s Office of the Foreign Assets Control (“OFAC”) has issued General License 16 authorizing all transactions that are “ordinarily incident and necessary to the importation into the United States” of certain products of “Russian Federation Origin”, if performed pursuant to written contracts or written agreements entered into prior to March 8, 2022.  The products of “Russian Federation Origin” authorized for import into the U.S. under General License 16 are:

-Crude oil;


-Petroleum fuels;

-Oils, and products of their distillation;

-Liquified natural gas; and

-Coal products.

General License 16 will remain effective until April 22, 2022, at which time all such transactions will be fully prohibited.  General License 16 does not  authorize any other actions that are prohibited under the existing Russian Harmful Foreign Activities Sanctions Regulations or transactions with persons who are otherwise subject to blocking sanctions unless such actions or transactions are separately authorized by OFAC.

OFAC also issued new Frequently Asked Questions (FAQ) guidance and updated existing FAQ guidance in order to clarify certain aspects of the Executive Order.  Among other things, these FAQs establish definitions for the terms “Russian Federation origin”, “new investment in the energy sector in the Russian Federation” and “energy sector”.  The FAQs also clarify that the Executive Order’s prohibitions do not extend to products that are not of Russian Federation origin “even if such products transit through or depart from the Russian Federation”.

Additionally, U.S. Customs and Border Protection (“CBP”) issued Cargo Systems Messaging Service Number 51260049 indicating that it will “be requiring filers of entries or admissions to Foreign Trade Zones for shipments of [the Russian Federation origin banned products] to provide purchase orders and/or executed contracts and/or any other documentation showing when the order and/or contract went into effect” through the expiration of General License 16 on April 22, 2022.  CBP also stated it will require the documentation prior to unlading and it “should include conveyance information, bill of lading number(s) and entry number(s) or FTZ admission information.”

Anyone reviewing Executive Order 14066 should also be aware of the significant sanctions and export controls that the U.S. government imposed on Russia prior to Executive Order 14066.


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.

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.

Tony Busch is an attorney in Husch Blackwell LLP’s Washington, D.C. office and is a member of the firm’s International Trade & Supply Chain practice team.


Why the U.S. Infrastructure Bill Can’t Just Be About Building New Roads & Bridges

As U.S. President Joe Biden recently signed the Infrastructure Investment and Jobs Act into law, many outdated state and local roads, bridges and transit systems will be improved, not only to keep up with consumer demand but also to provide increased safety in reducing crashes and fatalities.

This Bipartisan Infrastructure Deal will (1) boost transit funding for communities all over the country by an average of 30% and will also help transit agencies reduce the current maintenance backlog by 15% and replace more than 500 aging subway, light rail, and commuter rail cars. It also aims to reduce traffic crashes impacting pedestrians and cyclists through a “Safe Streets and Roads for All” program.

Infrastructure Investments Must Go Beyond New Roads and Bridges

While this is the largest investment in American infrastructure in generations and marks an inflection point for American transportation, building and upgrading is simply not enough in the technological landscape we live in, where intelligent and autonomous transportation technology creates opportunities and has hopes of helping the U.S. achieve vision zero. It is one of the more revolutionary plans aimed at eliminating deaths and severe injuries due to road traffic as well as unsafe infrastructure.

Smart Infrastructure Must Play A Significant Role

Instead of just investing in traditional infrastructure or simply rebuilding highways and bridges, “smart infrastructure,” or the technology designed to enable safer, more connected and efficient roads need to be at the forefront of the future of the transportation ecosystem. From (2) improved traffic and pedestrian safety to less congested roadways and lower CO2 emissions, and eventually city-wide autonomous vehicles deployments, the future of transportation is rooted in smart infrastructure.

Several AI companies have created this focus on smart infrastructure, as platforms have been specifically developed, using real-time advanced analytics, to have “eyes” and “brains” on the road infrastructure. These platforms allow for greater visibility overall for all road users, making the transportation not only safer, but more comfortable and with even better performance. For example, they can monitor the trajectories and predict the intents for all vehicles, cyclists and pedestrians in the field of view of traffic sensors, creating a comprehensive understanding of road user behavior that helps identify and predict potential conflicts or collisions and in-turn dangerous spots on the roads. This will also result in less-congested roads. For an average U.S. citizen, congestion costs 99 hours of their time and US$1,377 each year (3). Smart infrastructure can prevent traffic backups by adjusting traffic signals when needed. Finally, the autonomous vehicle (AV) industry is realizing that smart infrastructure is an important piece of the puzzle when it comes to accelerating the ability to deploy more AV routes in different cities and countries in a safe and scalable way.

Smart Infrastructure Already Beginning in Some Areas

The good news is that smart infrastructure has already been on the radar as well as an area of focus for many communities around the U.S. For example, the city of Fremont in California has teamed up with CT Group and Derq to deploy AI intersection analytics systems as a key component of a safe and smart corridor project along a nine-mile section of Fremont Boulevard (4). In Michigan, the DOT teamed up with Cavnue and other regional partners to develop a major connected and autonomous corridor between Detroit and Ann Arbor, starting with connected buses and expanding to additional types of CAVs (5). These points of emphasis serve as a baseline from which the new Infrastructure Bill can build upon. In fact, the Infrastructure Investment and Jobs Act has already prompted deployment of several transportation technologies in programs such as “the Vulnerable Road User Research” and “Congestion Relief Program” programs (6).

Innovative Technologies at the Heart of Smart Infrastructure

The new infrastructure bill offers signs of progress in leveraging advanced AI and data analytics to smart infrastructure buildouts. For example, the bill establishes the Safety Data Initiative where the DOT can conduct projects, award grant, and also use other strategies that leverage new data visualization, sharing, and analytic tools that Federal, State, and Local entities can use to enhance surface transportation safety.

In order to truly build an infrastructure transportation network that serves as a global model, investments in US smart infrastructure cannot just be pilot trial programs. This technology must be central to the development of a nationwide transportation network that paves the way for the future of intelligent and autonomous mobility. As much as it is exciting to see a new and improved U.S transportation infrastructure now in the works, it is significant to realize that none of these roads will be more efficient and provide the utmost safety standards without smart infrastructure leading the way. By utilizing AI startup companies’ tested and proven technologies, road users across the country will see more reliable transit service, drive on smarter roads, and walk feeling much safer on the streets, creating more ways for people to get to work, to play, to access healthcare, and to visit friends and family.


Dr. Georges Aoude is CEO and co-founder of Derq, an MIT-spinoff powering the future of connected and autonomous roads, making cities smarter and safer for all road users, and enabling the deployment of autonomous vehicles at scale. Derq provides cities and fleets with an award-winning and patented smart infrastructure Platform powered by AI that helps them tackle the most challenging road safety and traffic management problems. You can find the company on Facebook, LinkedIn, and Twitter










Victorious after World War II and the Cold War, the United States and its allies largely wrote the rules for international trade and investment. Critically, the United States and European Union drove the creation of the World Trade Organization (WTO) in 1995 with the aim of opening trade in goods and services for their products, ramping up protection for their intellectual property, and transforming national trade-related law and institutions within countries around the world to look more like American and European law and institutions. Developing countries joined the WTO, but often complained that its rules were skewed. As a result, it was argued, the U.S. and European Union could rule the global economy through rules. They were incredibly successful, as WTO norms transformed laws and institutions within emerging economies.

Yet by 2020, 25 years after the WTO’s creation, it was the U.S. that has become the great disrupter—disenchanted with the rules’ constraints, including on its ability to create new rules. It was the U.S. that flouted WTO rules in the name of “national security” and the national interest—even to protect American producers of aluminum siding, and to pressure countries to block migration from Mexico and Central America. It was the U.S. that neutered trade dispute settlement and threatened to withdraw from the organization. Meanwhile, the United Kingdom— the EU’s second largest economy—voted by referendum to leave the European Union. As nationalist parties rose in prominence throughout Europe, the EU was pressed to turn inward to protect its very existence, curtailing its role on the global stage. It continues to defend multilateralism, but it is in a much weaker position following the euro crisis, internal divisions over migration, Brexit and the ravages of the COVID-19 virus, than it was in the 1990s. 

Paradoxically, China and other emerging economies became stakeholders and (at times) defenders of economic globalization and the rules regulating it, even while they too have taken nationalist turns. Before the World Economic Forum in Davos, that paragon of global institutions, China’s President Xi declared in his 2016 keynote address, “We must remain committed to developing global free trade and investment, promote trade and investment liberalization and facilitation through opening up and say no to protectionism.” 

How did this come to be? How did the emerging powers invest in trade law to defend their interests? What has this meant for their own internal economic governance? And what does it mean for the future of the trade legal order in light of intensified rivalry between the U.S. and China, triggering a new economic cold war? 

Many economists write of China’s rise in terms of efficiency—a combination of Western know-how and Chinese wages that triggered a “manufacturing miracle” where China became producer for the world. In his book The Great Convergence, Richard Baldwin explains how the revolution in information and communications technology in the 1990s led Western firms to outsource production of goods and services to countries such as China and India, creating a new unbundling of production through global supply chains. This unbundling “created a new style of industrial competitiveness—one that combined G7 know-how with developing-nation labor.” China became the manufacturer for the world. Its share of world manufacturing surged from 3% percent in 1990 to 19% in 2015. Western firms outsourced services to India, whose services exports increased more than 22-fold from US$8.9 billion in 1997 to US$204 billion in 2018, while its manufacturing grew in parallel. Such growth triggered a commodity boom for Brazil’s highly competitive agribusiness and mining sectors. 

These economic shifts catalyzed dramatic changes in shares of global gross domestic product. In just 29 years, the share of the G7 (U.S., Japan, Germany, U.K., France, Canada and Italy) plummeted 18 percentage points, from 64% (in 1990) to 46% (in 2019) in nominal terms, and to 30% measured by purchasing power parity. In contrast, China’s and India’s share soared. At the start of 2020, the share of global GDP of China, India and Brazil approached that of the U.S. in nominal terms (21% compared to 24%) and almost doubled it in terms of purchasing power (29% to 15%). Within a decade, China should become—once more—the world’s largest economy.

These changes in the share of global GDP gave rise to shifts in power, as political scientists stress. While the U.S. and Europe turned inwards, emerging powers like China gained confidence and became central players in the global economy. The creation of the G20 for global economic governance first reflected this transition. 

The growing U.S-China rivalry now dramatizes it. China, India and Brazil each play a leadership role in regional economic governance, and they aim to play a growing role globally. Although the U.S. wishes to halt China’s rise, the reality is that two-thirds of countries trade more goods with China than the U.S., compared to just one-fifth in 2001, the year China joined the WTO. Simply put, the economies and market size of China and other emerging powers matter, providing the country with negotiating leverage, constituting a form of power. 

So, what about law? Stated simply, it is not just structural and material power that govern the world, but also law, legal institutions and their practices. They are complementary, and they affect each other. Law and legal institutions provide normative resources that actors harness to advance their interests. They simultaneously affect the normative environment in which actors operate, which shapes their understanding and pursuit of interests. The story of emerging powers’ rise and the implications for global trade governance requires a complementary story about law and their deployment of it. My book, Emerging Powers and the World Trading System, provides that story. It tells the past story of trade law’s impact within large, emerging powers and their response to trade law, which, in turn, helps us understand the current context and responses to this context that will shape international trade and economic law’s future. The book shows how emerging powers changed internally to engage better externally.

These countries’ institutional changes and investments in legal capacity shaped the international trade legal order. They learned how to play the legal game to thwart U.S. and European dominance of the trade regime, both in negotiations and in litigation over the meaning of legal texts. This dynamic, in turn, constrained U.S. and E.U.EU policymaking, ranging from agricultural subsidies to industrial protection through import relief law. When the U.S. and European Union turned away from the WTO to create new rules through bilateral and regional trade and investment agreements, China and other emerging powers developed their own initiatives and models as well. 

The challenges for the future of the multilateral legal order for trade are clearly material, structural and ideological, as well as legal. On the one hand, they reflect the growing economic power of China, and the impact of trade from China and other emerging economies within the United States. On the other hand, traditional narratives of the benefits of free trade that ignore the impact on the economically vulnerable, have been destabilized, especially in the United States. 

The development of legal capacity to use, make, shape and apply law are is a critical part of this story, and they will continue to shape the evolving ecology of the trading system. By defining the trade order in terms of rules and judicialized dispute settlement, the WTO system created an opening for emerging economies to invest in trade law capacity and take on the U.S. and Europe at their own legal game. As a system of law purportedly in service of fairness and equal treatment, weaker players could also win. Law’s ideology of rationality and fairness could constrain the powerful, shape the interpretation of norms, and affect their strategies. The legal order for trade, although slanted in favor of the powerful, offered opportunities to weaker parties who could compete through building legal capacity. China’s, Brazil’s and India’s investments in legal capacity help explain the paradox of the U.S. abandoning the legal order that it created.

The U.S. challenge to the legitimacy and efficacy of the international trade regime that it created, and emerging powers’ defense of that regime, is a paradox that cuts across international relations theories.

John Ikenberry, in his book After Victory, published a decade after the end of the Cold War and five years after the WTO’s creation, asked this central political question: “What do states that have just won major wars do with their newly acquired powers.” His answer was a legal one: They create the rules of the game. In this situation, he wrote, states “have sought to hold onto that power and make it last” through institutionalizing it. He called the order that the U.S. created a “liberal hegemonic order” because other states consented to it in the context of American unipolar power, while the U.S. agreed to constrain itself under the rules to “make it acceptable.”

Michael Zurn, in his theory of global governance, argues that such regimes create resistance because they are “embedded in a normative and institutional structure that contains hierarchies and power inequalities.” He thus contends that “counter-institutionalization is the preferred strategy by rising powers.”

And the realist Graham Allison, in his book Destined for War, writes, “Americans urge other powers to accept a ‘rule-based international order.’ But through Chinese eyes, this appears to be an order in which Americans make the rules, and others obey the orders.” The paradox with the trade legal order is that China and other emerging powers became its defenders, while the U.S., under the Trump administration, attacked it as illegitimate and neutered its dispute settlement system. The U.S. became the revisionist power. So far, the Biden administration has continued these policies, although with a more constrained rhetoric and without the 3 a.m. tweets.

Political fault lines over trade are not just between states, but also within them. Such politics shape legal ordering internationally. Developments in China implicate companies and workers in the U.S.; the rise of U.S. economic nationalism implicates companies and workers in China. International law and institutions such as the WTO can provide an interface that helps to shape those interactions, but international law and institutions are also reciprocally shaped by them. International law and institutions are both medium and outcome.

For trade liberals, this has the arc of a tragedy. International trade law rose in prominence and trade law norms permeated deeply within emerging powers’ laws, institutions and professions. Yet, the very success of such legal ordering triggered unintended consequences. As these countries rose in economic importance and built legal capacity to wield WTO law to defend and advance their positions, the U.S. became disenchanted with the legal order it had created. It elected an economic nationalist who became “a wrecking ball,” unsettling the international legal order for trade and broader economic governance.

Effective international legal orders must be grounded in common perceptions of problems that law can address. If perceptions of underlying problems shift in radically divergent ways within the U.S., E.U.EU and these emerging powers, then the WTO as a multilateral institution based on common rules that permeate domestic laws and institutions becomes unsettled. There is no end of history, no unidirectional force toward a particular manifestation, breadth or depth of international legal ordering. Norms settle and unsettle, internationally and domestically, often in parallel. Now the centralized WTO legal order for trade is declining, giving rise to fragmenting, overlapping and competing regional and bilateral legal ordering.

The challenge for states will be how to maintain and adapt the international trade legal order to changing political and economic contexts. To maintain the international trading system to foster economic order, sustainable and inclusive growth, and the pacific settlement of disputes through law, the U.S., E.U.EU, China, India and Brazil will need to collaborate to define rules governing the interface of their economies. International trade law and institutions are no nirvana, but the alternative to them could be dire. We are in the history and make the history with the choices we make today. 

The Trump administration may have neutered the WTO’s dispute settlement system and brazenly ignored WTO rules. So far, the Biden administration has done little to nothing to change this. Its legacy for the multilateral trading system will depend on the decisions it makes in the months to come.


Gregory Shaffer is Chancellor’s Professor at the University of California, Irvine School of Law and President-Elect of the American Society of International Law. This essay is taken from his book Emerging Powers and the World Trading System (2021, Cambridge University Press).


How Will the Biden Administration Enforce Tariffs?

It was no secret that the Trump administration had an aggressive trade policy with higher tariffs on China, tariffs on steel and aluminum products, new trade agreements, and pulling out of others. Customs duty revenue increased drastically under the Trump administration from $34.6 billion in 2017 to $74.4 billion in 2020. This major increase in revenue for the federal government has left many asking what the priorities will be for the Biden administration when it comes to U.S. trade deals.

Most experts do not expect any drastic changes in the early months of the Biden administration. Biden himself has stated that he will not make any immediate moves on tariffs with China. Some think he will stay tough on trade with China but may ease tariffs with allied countries. It is also presumed that he will make certain exceptions to the Section 232 tariffs on steel and aluminum for imports from certain allies.

These duties and tariffs have not been popular among many importers and foreign exporters. Some of these companies have resorted to fraud to avoid paying what they owe. As a result, the federal government has renewed a commitment to take enforcement action against companies who evade duties owed on imported goods.

Customs duties are implemented in order to level the playing field for U.S. manufacturers. In addition, the money the government collects from these duties goes directly to paying for programs such as veterans’ benefits, education, and infrastructure. When companies scheme to avoid paying the proper duties, they obtain an unfair advantage in the U.S. markets and cheat the federal government and taxpayers. Many companies have found schemes to avoid duties that are easy to pull off and give them a significant advantage over competing manufacturers and importers.

U.S. Customs and Border Protection is responsible for enforcing trade laws, including import compliance and revenue collection. However, CBP has limited resources and can’t possibly check every shipment for compliance. With millions of containers entering the U.S. each day, CBP tries to best allocate its resources to detect the imports at the highest risk of violation, making it easy for many fraudulent schemes to slip through the cracks. Some companies see the low risk of detection as an opportunity to save money by lying on import declarations to avoid paying higher duties.

Importers must declare the value of goods, country of origin, classification of goods, and amount of duties owed. Essentially, the process works on an honor system in which the importer is responsible for making sure the information declared is accurate. However, foreign exporters and U.S. importers have found ways to cheat the system by not accurately reporting information on their customs import declarations. Below are some of the common schemes used to avoid customs duties:

1, Undervaluing goods – Import duties are based on the value of goods as declared by the importer. By undervaluing the price of goods on declarations, importers wrongfully avoid paying the appropriate duties.

2. Misrepresenting country of origin – Shipments imported into the U.S. must be marked with the country of origin. Tariff rates vary by country of origin and certain countries are subject to anti-dumping tariffs and countervailing duties. By disguising the country of origin, importers avoid paying certain tariffs and duties. Most commonly, transshipping is a scheme used to misrepresent the country of origin. Transshipping involves shipping goods to another destination prior to reaching the final point of entry and relabeling to conceal the true country of origin.

3. Misclassifying goods – Import duties are also determined by the classification or category of goods being imported. Importers avoid paying the full amount of customs duties by falsely declaring goods under a different category that is subject to a lower duty.

Since these acts are so easily committed and concealed, customs fraud is often difficult to detect. The federal government relies heavily on whistleblowers to come forward and aid in the undercovering and prosecuting of customs violations. Insiders and competitors are typically in the best position to uncover and report customs fraud.

The False Claims Act (FCA) authorizes individuals to bring a lawsuit on behalf of the federal government and share in the monetary recovery from that lawsuit. Whistleblowers who have evidence of customs fraud may bring a lawsuit under the FCA.

Many people are concerned about reporting their employers or others for committing fraud because they fear retaliation. The FCA ensures whistleblowers are protected from retaliation, such as being fired, demoted, or denied benefits. A whistleblower attorney can help ensure these protections.

Maintaining the integrity of U.S. trade policies is critical to the nation’s economic stability and security. The revenue collected from customs duties belongs to the American people. The federal government, taxpayers, and other U.S. businesses get cheated when dishonest companies scam their way out of paying tariffs and duties. Rooting out these fraudsters is made easier when brave and honest individuals come forward to do what’s right.


About Andrew Miller

Andrew Miller is a shareholder at Baron & Budd where he represents whistleblowers in qui tam cases. To learn more about whistleblower protections, go to

The Amended Order

President Biden Issues Executive Order Modifying, but Mostly Retaining, the Trump Era Chinese Military Company Securities Ban

On June 3, 2021, in one of his first major China-related actions, President Biden issued an Executive Order that amends, but keeps intact the core elements of, previous orders issued by President Trump prohibiting US Persons from investing in the publicly traded securities of certain Chinese Military Companies designated on the Department of Treasury’s Non-SDN-Communist Chinese Military Company (NS-CCMC) List (Amended Order).

While the details of the Amended Order and addition of other named Chinese companies are discussed below, one major takeaway is that the Biden Administration does not plan a wholesale pullback from this type of trading ban. In fact, reports indicate that the Biden Administration is actively considering adding more companies to the list in the future. According to the White House, the Amended Order “allows the United States to prohibit—in a targeted and scoped manner—US investments in Chinese companies that undermine the security or democratic values of the United States and [its] allies.”

Further, the Amended Order also extends the trading ban to additional Chinese companies with capabilities in defense, surveillance and related areas in a new Annex that supersedes the Annex from the original order. These newly covered companies include aerospace technology and electronics companies Shaanxi Zhongtian Rocket Technology Company and China Satellite Communications Co., and telecommunications companies, including China Telecom Corporation and China Unicom (Hong Kong). Also, the Amended Order removes a handful of Chinese companies, including Chinese chemical company Sinochem Group.

The Biden Administration’s application of the securities trading ban to new Chinese companies, some of which do not appear to be state-owned, comes on the heels of recent court actions by companies who have sought and obtained their removal from the list on the grounds that their ties to the Chinese military are too tenuous. In particular, two Chinese companies, Xiaomi Corporation and Luokung Technology Corp., have since been removed from the list after filing successful suits in the US District Court for the District of Columbia. The Amended Order appears to attempt to address this issue by expressly covering entities that, in part, “operate or have operated in the defense and related materiel [sic] sector or the surveillance technology sector of the economy” of China, as detailed more fully below.

The prohibition and impacted Chinese Companies

Similar to the original, under the Amended Order US persons are prohibited from purchasing or selling any publicly traded securities, or any publicly traded securities that are derivative of such securities or are designed to provide investment exposure to such securities, of any entity listed in the Annex. The Amended Order also changes the name of the list from the NS-CCMC List to the Non-SDN Chinese Military-Industrial Complex Companies (NS-CMIC) List.

However, the Amended Order clarifies which entities will be subject to possible future designation, providing that the prohibition is extended to entities determined by the Secretary of the Treasury, in consultation with the Secretary of State and the Secretary of Defense to: (1) operate or have operated in the defense and related material sector or the surveillance technology sector of the Chinese economy; or (2) own or control, or to be owned or controlled by, directly or indirectly, a person who operates or has operated in the defense and related material sector or surveillance technology sector.

The Amended Order establishes a new effective date of August 2, 2021 at 12:01 am for the entities listed in the Annex. Going forward, for companies not on the Annex today that are later designated by the Secretary of the Treasury, the effective date will be 60 days after the Treasury designation.

Exceptions and other provisions

The Amended Order allows the purchase or sale of such securities solely for purposes of divestment by US persons, which must occur by June 3, 2022 for entities listed in yesterday’s Annex, or within one year from the date an entity is subsequently designated by the Secretary of the Treasury.

The Amended Order keeps some provisions and language the same, including those that prohibit transactions that evade or avoid, or are meant to evade or avoid, causes a violation of, or attempt to violate the prohibitions of the Amended Order. Similarly, the Amended Order remains broadly applicable not only to direct purchases of publicly traded securities, but also purchases by US persons of shares in investment funds that hold public securities in such companies. Like the original Order, the Amended Order applies to transactions by US persons involving public securities traded on foreign as well as US exchanges.

However, as alluded to by the White House in its statement, the Amended Order is more targeted than the original order issued by President Trump, specifically referencing certain sectors of concern, such as the surveillance technology sector. The specific addition of surveillance in the Amended Order demonstrates a more targeted approach while also signaling that this is an area where the Biden Administration would like to expand the coverage of the securities-trading prohibitions in light of the recent focus on potential human rights abuses in China.

Indeed, the newly-issued Office of Foreign Assets Control (OFAC) FAQ 900 states that OFAC expects to use its discretion to target those whose operations include or support, or have included or supported: (1) surveillance of persons by Chinese technology companies that occurs outside of China; or (2) the development, marketing, sale, or export of Chinese surveillance technology that is, was, or can be used for surveillance of religious or ethnic minorities or to otherwise facilitate repression or serious human rights abuse.

Other new notable OFAC FAQs

OFAC published a handful of other new FAQs that help further clarify some of the Amended Order’s provisions. For instance, FAQ 902 provides that US persons are not prohibited from providing investment advisory, investment management, or similar services to a non-US person, including a foreign entity or foreign fund, in connection with the non-US person’s purchase or sale of a covered security, provided that the underlying purchase or sale would not otherwise violate the Amended Order.

Similarly, FAQ 903 makes clear that US persons employed by non-US entities are not prohibited from being involved in, or otherwise facilitating, purchases or sales related to a covered security on behalf of their non-US employer, provided that such activity is in the ordinary course of their employment and the underlying purchase or sale would not otherwise violate the Amended Order.

Lastly, FAQ 905 expressly provides that the Amended Order does not prohibit activity with entities designated on the list that is unrelated to the purchase and sale of publicly traded securities, such as the purchase or sale of goods or services.


By Jeffrey P. Bialos, Ginger T. Faulk, Mark D. Herlach, Sarah E. Paul, and Nicholas T. Hillman at Eversheds Sutherland (US) LLP


Foreign Direct Investment (FDI) and Supply Chain Disruption: Key Takeaways from the 1st Quarter

Foreign manufacturers are increasingly focused on how evolving “Buy American” requirements may impact them. And like most U.S. domestic manufacturers, foreign manufacturers continue facing challenges with supply chain disruption, with the grounding of the Ever Given in the Suez Canal as just the latest headache. In order to mitigate risks associated with more restrictive local sourcing requirements and complex logistical challenges, foreign manufacturers are revisiting the localization of distribution, assembly and production activities in the U.S.

Those are a few takeaways from our conversations over the past three months with dozens of business leaders from the UK, Germany, Austria, Italy, India, China, South Korea, Mexico and other countries around the world. The focus of those conversations has been navigating foreign direct investment (FDI) and supply chain disruption amid the pandemic. Below are some of the main trends we are seeing and examples of how companies are adapting.

Evolving Content Requirements

There is an increasing awareness of the risk manufacturers face tied to changing content requirements in the U.S. These risks are not totally new. However, the Biden administration is signaling that the U.S. will continue increased focus on this issue, which is expected to impact several industry sectors in particular.

On January 25, President Biden signed an executive order aimed at long-standing “Buy American” provisions the U.S. government follows in its own procurement process. The Biden order instructed the Federal Acquisition Regulatory (FAR) Council to come up with new regulations increasing the Buy American requirements and changing the way those requirements are measured. However, the Biden order does not specify how much to increase content requirements – that will be up to the FAR Council to decide by late July 2021. In the meantime, the U.S. government is already tightening its waiver process that is used to allow certain types of procurement projects to receive exceptions to some “Buy American” requirements.

Combined with higher North American content requirements in the United States-Mexico-Canada Agreement (USMCA), more foreign companies are finding themselves grappling with this issue depending on their industry sector. Those involved in government contracting are right in the crosshairs, and the building materials and information technology industries are likely to see the largest impacts. And the importance of this issue will increase if President Biden’s infrastructure legislation passes Congress.

Those content requirements are contributing to a longer-term trend: more industries are moving manufacturing into the United States. Business leaders say they have several strategic reasons for this, including improved logistics and US content requirements, but also proximity to key customers and reduced currency risks. We also continue to hear interest in Mexico as an alternative to the U.S.  While USMCA’s content and wage requirements may shift some Mexican manufacturing to the U.S., Mexico is still very much in play for FDI projects considering North America.

Moving Forward With Site Selection Amid the Pandemic

While the pandemic has made site selection difficult, many companies that are making strategic investments like those mentioned above are finding ways to carry out their location projects. However, although some travel opened up for business travelers in the 1st quarter of 2021, COVID-19 continued to disrupt many plans.

For example, several leaders of a South Korean business recently traveled to North and South Carolina for a site visit. But after their first meeting, they found out an economic developer in that meeting tested positive for COVID-19. As a result, the South Koreans had to quarantine in their hotel and conduct the remaining meetings virtually – with people who were right down the street.

We know of two other instances in the first quarter where a COVID-19 diagnosis, one in the home-country and one in the U.S. after landing, wrecked a site visit. That is part of the reason many of the visits still happening in the U.S. involve companies that already have an American presence, as travel is easier for their personnel.

Still, while international travel is down, international projects are moving forward. The key is the rapid improvement of virtual tools during the pandemic, including virtual showcases that incorporate GIS mapping data, drone footage, and other elements to help with due diligence. While companies are finding these tools extremely useful, they are also finding it more important than ever to have trusted professionals, including legal counsel, on the ground in the locations they are considering. (You can learn more about navigating virtual site selection here.) By combining the advantages of virtual site selection with an expected increase in the ability to travel this summer due to vaccinations in the U.S., foreign companies can move forward with their site selection.

Dealing With Supply Chain Disruption

There may be no clearer image of supply chain disruption than a 1,300-foot container ship walling-off the Suez Canal. But the Ever Given running aground was simply the latest example of the difficulties companies have faced for more than a year now. Manufacturers and the logistics companies serving them say the cost of shipping goods and the ability to get space for those goods have become terribly challenging.

Much of this still goes back to the inability to get products from the source, whether those products are microchips or wood. While there are fewer lockdowns worldwide now than there were last year, many plants continue operating at low capacity or are struggling to catch up to demand.

Marbach Group, a global manufacturer and supplier of die-cutting tools and equipment based in Germany with more than 20 locations worldwide, has been constantly adapting through the pandemic to address these challenges. The February freeze in Texas, for instance, contributed to a shortage of low-grade plywood that Marbach would typically use to make crates for the transportation of its products.

“In turn we had to use our own manufacturing wood for our products to build crates,” Marbach America CEO Fernando Pires says. “Since the lower-grade wood was not available, we increased our cost margins by having to use higher-grade materials for a simple transfer box for our products.”

That’s just to get their products ready for shipping. Pires has many more examples of challenges the company has faced after its products are shipped.

One-way Marbach and other companies have responded is by building up inventory. (Pires jokes his head of purchasing must have had a crystal ball, as Marbach started increasing its stock levels in January 2020.) Marbach reflects an uptick in interest for distribution and warehouse space in the Southeastern U.S., which is evidenced by the significant construction of new warehouse space in the region. Some companies are temporarily leasing warehouses so they can stock up on raw materials and finished goods to avoid shortages when supply chains are not working correctly.

Foreign manufacturers are also diversifying their supply chains and service capabilities. Some companies that traditionally had one or two suppliers of a certain type of component are now adding additional suppliers of the same component for more robust redundancy in the supply chain. Others whose supply chains were concentrated in one part of the world are looking to add geographic diversity – so the next time a country has a COVID-19 problem, they won’t be so dependent on that one area.

Likewise, companies are diversifying their service capabilities and know-how. Many foreign companies rely on key personnel from their headquarters to fly elsewhere and solve problems when needed. That’s become more challenging with COVID-19 travel restrictions, so companies are diversifying their training programs. One executive described it as onshoring skills.

Surging FDI Down the Road?

The final thing that stood out to us amid conversations with foreign business leaders in the first quarter of 2021 is the potential for a surge in FDI coming out of the pandemic. This potential comes from two key factors.

First (and as noted above), many companies remain committed to their strategic growth plans, although the pandemic may temporarily slow the pace of their investments. Second, companies have been in cash-preservation mode and have cheap borrowing options at the moment. In addition to cheap debt for expansion, investors are also hungry for higher returns and are seeking to invest in innovative foreign companies who have growth potential in markets like the U.S.

For companies that have been able to avoid a severe hit to their financial position, all of these conditions are ripe to create a jolt in FDI as the pandemic subsides.


Sam Moses and Al Guarnieri are leaders in Parker Poe’s Manufacturing & Distribution Industry Team. Sam is based in Columbia, South Carolina, and Al is based in Charlotte, North Carolina. They can be reached at and


FCPA Enforcement Under the Biden Administration: Three Areas to Watch

Foreign Corrupt Practices Act (“FCPA”) enforcement under the Trump administration was both remarkable and perhaps unexpected. As a candidate and private citizen, former President Trump had been openly critical of the FCPA, which he had referred to as a “horrible law.” This led many to wonder whether the long run of FCPA enforcement was coming to an end. Instead, the DOJ and SEC obtained record FCPA penalties from 2017 to 2020. In 2020 alone, the DOJ and SEC secured 18 corporate FCPA resolutions, including the two largest penalties ever issued for FCPA violations (against Airbus and Goldman Sachs). Given the results in 2020, it may seem alarmist to suggest that we will see even more FCPA enforcement during the Biden administration. But, that is exactly what we expect.

First, the record-breaking numbers during the Trump administration only tell half of the story. The largest and most noteworthy penalties related to investigations that began years before. FCPA enforcement did not cease during the Trump administration as many speculated, but fewer FCPA-related investigations were initiated year over year from 2017 to 2020. We expect a reversal of that trend under the Biden administration.

Second, Biden and his team appear poised to tackle FCPA violations with renewed vigor. The Biden administration has framed the fight against corruption as a central part of its foreign policy strategy. During the campaign, candidate Biden vowed to “issue a presidential policy directive that establishes combating corruption as a core national security interest and demographic responsibility.”[1]

President Biden’s appointees, ranging from National Security Advisor Jake Sullivan to Attorney General Merrick Garland and SEC Chairman Gary Gensler, have confirmed a commitment to focus on combating corruption around the world. This focus, bolstered by the hiring of seasoned lawyers to fill key roles within the DOJ’s and SEC’s foreign bribery units, as well as new enforcement tools authorized by the U.S. Congress, all but ensures that the FCPA will be a key enforcement priority for the Biden administration.

Finally, the freshly equipped and motivated DOJ and SEC should have no shortage of opportunities to prove their mettle. Since early 2020, companies have been dealing with financial stress caused by the pandemic, while compliance departments have been dealing with layoffs and limitations associated with remote monitoring. History shows that financial stress creates incentives for fraud as companies and employees face pressure to meet financial targets. In other words, the DOJ and SEC, eager to demonstrate a commitment to combating corruption, maybe meeting a wave of potential corruption cases.

There are three areas we suggest watching as the Biden administration’s anti-corruption approach takes shape:

Impact of new tools authorized by Congress – Biden’s FCPA enforcement agenda may be bolstered by new enforcement tools recently authorized by Congress. In particular, in January 2021, Congress enacted the Corporate Transparency Act (“CTA”) as part of the National Defense Authorization Act. The CTA requires companies that are registered in the United States to report their ultimate beneficial ownership to the Treasury Department’s Financial Crime Enforcement Network. The information, though not public, will be available to law enforcement and banks.

The CTA is designed to prevent individuals from hiding transactions behind shell companies to circumvent anti-corruption, anti-money laundering, and other laws. The impact of the CTA on FCPA investigations remains to be seen. Given the international nature of the activities involved, wrongdoers have historically utilized shell companies outside of the U.S., often in jurisdictions that allow for more opaque ownership arrangements. The CTA will have no effect on these companies. However, the CTA could limit corrupt funds from finding safety in the U.S. market and may make it easier for investigators to “follow the money” when U.S. companies are involved.

International Coordination in FCPA Investigations – The largest and most significant FCPA resolutions often demand coordination between the U.S. DOJ and SEC and foreign regulators. In 2020, the DOJ and SEC coordinated with foreign regulators in the resolution of the four largest enforcement actions: those with Goldman Sachs, Airbus, J&F Investmentos, and Vitol. The extent to which the Trump administration’s combativeness toward traditional allies may have affected these resolutions or active investigations is hard to quantify. Nevertheless, given the Biden administration’s pointed emphasis on working closely with allies on most of its foreign policy goals, we expect that coordination with foreign regulators in the FCPA context will only increase, with new partners brought into the fold.

This is a view apparently shared by Daniel Kahn, Acting Fraud Section Chief (DOJ), who indicated during a March 2021 International Bar Association webinar that he expected an increase in multi-jurisdiction investigations and resolutions, including with foreign authorities that U.S. enforcers have not previously coordinated with. In addition, improving relations and cooperation generally could lead to greater efficiency in the way that regulators share evidence and coordinate resolutions. This could potentially significantly reduce the time it takes to conclude these complex cross-border investigations.

Approach Toward Monitorships – In 2020, none of the 18 corporate FCPA resolutions involved the imposition of an independent compliance monitor. Whether this was a result of the changes made in 2018 to the DOJ’s guidance on corporate compliance monitors (in a document often referred to as the “Benczkowski Memo”) is unclear. However, it does appear that the leadership of the DOJ and SEC during the Trump administration took a more restrained approach toward the use of monitors. We expect that the DOJ and SEC under the Biden Administration will be more likely to rely on monitorships in connection with FCPA resolutions, consistent with the approach taken during the Obama administration.

With all signs pointing to an increased focus on anti-corruption enforcement, the question is less if than when. Both the decrease in new investigations under the Trump administration and the practical limits on investigations imposed by the pandemic will take time to reverse. But when the tide eventually comes in, we expect the waves will be large.


Written by Michael DeBernardis, Benjamin Britz, and Debbie Placid at Hughes Hubbard & Reed.

[1] Joseph R. Biden, Jr., Why America Must Lead Again, Rescuing U.S. Foreign Policy after Trump, Foreign Affairs (Jan. 23, 2020).