1.  Reverse CFIUS Expected To Be Narrow and Only Forward-Looking

Laura Black, a former Treasury Department official, recently discussed how companies should prepare for any potential U.S. outbound investment review process. She noted that the Biden administration is unlikely to look back at deals that have already closed but rather will look only at deals focused on sensitive technologies in the near term. Thus, companies considering overseas investments should consider the possibility of new restrictions in their planning processes, especially if they involve sensitive technologies like quantum computing, artificial intelligence, and semiconductor technologies, which appear to be among the Biden administration’s new narrower focus.

2.  House Creates Select Committee on China

On January 10, the U.S. House of Representatives voted 365-65 to create a Select Committee on China. The bipartisan committee was created to investigate and submit policy recommendations to counter China’s economic, technological, and security threats against the United States. Rep. Mike Gallagher, R-Wis., will chair the committee. He outlined four objectives for the committee: (1) restore supply chains and end critical economic dependencies on China, (2) strengthen the U.S. military, (3) end China’s theft of personal data and intellectual property from the United States, and (4) contrast China’s techno-totalitarian state with the values of the free world. This new committee could serve to complement the existing U.S.-China Economic and Security Review Commission, an independent legislative branch agency that provides annual reports to Congress on its findings on the national security implications of bilateral trade with China.

3.  USTR Further Extends Exclusions of COVID-19-Related Products From China Section 301 Tariffs

On February 3, the Office of the United States Trade Representative (USTR) announced an additional 75-day extension of the COVID-19-related product exclusions in the China Section 301 investigation. The exclusions for these 81 medical-care products were originally granted on December 29, 2020, and are now valid through May 15. The government is also seeking comments on whether to extend exclusions for these products for another six months and asks interested companies to submit comments via the online portal before March 7.

4.  Appropriations Bills Address Sanctions and Export Controls

At the end of 2022, President Biden signed into law the National Defense Authorization Act (NDAA) for Fiscal Year 2023 and the Consolidated Appropriations Act, 2023, which contain provisions with implications for sanctions, export controls, and supply chain restrictions. The NDAA would strengthen and revise sanctions programs for Syria, Myanmar, Russia, and Iran; prohibit the U.S. government from procuring certain semiconductor products and services; extend certain export controls of covered munitions items to the Hong Kong Police Force; and require the Director of National Intelligence to conduct a pilot program to evaluate the feasibility of using enhanced intelligence support to aid in export controls and foreign investment screening functions. The Consolidated Appropriations Act would establish a fund similar to that of the Securities and Exchange Commission to award whistleblowers who report incidents of sanctions evasion or money laundering, continue funding to strengthen implementation of the Global Magnitsky Human Rights Accountability Act, and fully fund implementation of the Uyghur Forced Labor Prevention Act (UFLPA).

TRADE TIP OF THE MONTH: 

In late 2022, U.S. Customs and Border Protection (CBP) delayed the implementation of a new reporting requirement for importers of China-origin articles. Now CBP has announced that on March 18, it will deploy the UFLPA Region Alert. Importers of China-origin articles will be required to declare the Chinese postal code of the manufacturer that produced the goods when submitting entry documentation to CBP. The goal of this new import requirement is to flag possible entries of concern under the UFLPA by automatically checking the postal code against codes in the Xinjiang Uyghur Autonomous Region of China. This requirement is the latest step CBP has taken to ramp up enforcement of the UFLPA forced labor import prohibition, and it underscores the need for companies to continue to map and trace their supply chains to address forced labor risks and avoid related detentions at the border.

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