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Insights

BIS further tightens export control on China and other countries

A lot of changes are happening in the export control area lately. Since April 28, 2020,  the U.S. Department of Commerce Bureau of Industry and Security (BIS) has made at least five announcements altering export control policy. We will explain these changes in detail, but the complexity of these new export control rules will certainly generate interpretive questions and compliance challenges for anyone in the export businesses.
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New Section 301 investigations initiated relating to digital services taxes from multiple countries

On June 5, 2020, the Office of the U.S. Trade Representatives (USTR) published a Notice re Initiation of Section 301 Investigation of Digital Services Taxes, announcing that the USTR is commencing a Section 301 investigation relating to Digital Services Taxes adopted or under consideration by Austria, Brazil, the Czech Republic, the European Union, India, Indonesia, Italy, Spain, Turkey and the United Kingdom, pursuant to the Trade Act. The deadline to submit public comments to this Notice is July 15, 2020.
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What you need to know about Section 889 compliance as we move closer to the August 2020 implementation deadline

A major portion of the sweeping John S. McCain National Defense Authorization Act for Fiscal Year 2019 (NDAA) that impacts federal contracts will take effect in August. Section 889 prohibits the federal government from directly procuring “any equipment, system or service that uses covered telecommunications equipment or services as a substantial or essential component of any system, or as critical technology as a part of any system” or entering into a contract with any entity that uses such covered telecommunications equipment or services.
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FDA further updates its Emergency Use Authorization for KN95 respirators from China

On June 6, 2020, the U.S. Food and Drug Administration (FDA) issued an updated Emergency Use Authorization (EUA) on Non-NIOSH-Approved Disposable Filtering Facepiece Respirators (FFRs) Manufactured in China. The following day, the FDA issued an updated Appendix A listing Chinese manufacturers with EUAs to import KN95 respirators from China. Details regarding the previous issued April 3, 2020 and May 7, 2020 EUAs may both be found in this Porter Wright Law Alert.
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BIS further extending temporary license to Huawei

Following the previously reported public comments period on whether the U.S. Department of Commerce Bureau of Industry and Security (BIS) should further extend temporary general licenses for companies doing business with Huawei Technologies Co. Ltd. and its non-U.S. affiliates (Huawei) and whether other changes should be made to the temporary general license practice, for which the deadline was originally set to expire on March 25, 2020, and later extended to April 22, the BIS announced on May 15, 2020, that it will further extend the terms of the existing temporary general license authorizations for Huawei for another 90 days until Aug. 13, 2020.
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Additional Section 301 tariffs exemption granted to products of Chinese origin

Following the Section 301 tariffs exemption granted to certain medical and sanitary products as part of the effort to fight COVID-19 discussed in this previous Porter Wright Law Alert, the U.S. Trade Representative (USTR) announced in its Notice on May 8, 2020, that it will exempt a wide range of products of Chinese origin from Section 301 tariffs, retroactively from Sept. 24, 2018 to Aug. 7, 2020.
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Treasury proposes to amend rules on CFIUS mandatory filing requirement

On May 21, 2020, the U.S. Department of Treasury issued the Provisions Pertaining to Certain Investments in the United States by Foreign Persons, modifying certain provisions in the regulations of the Committee on Foreign Investment in the United States (CFIUS) that implement section 721 of the Defense Production Act of 1950, as amended by the Foreign Investment Risk Review Modernization Act of 2018 (FIRRMA).
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China’s Supreme People’s Court provides guidance on application of force majeure doctrine for COVID-19-related civil disputes

As the COVID-19 pandemic continues to spread across the globe, the supply chain of many countries, including the U.S. and China, have been, and will continue to be, severely interrupted. Many Chinese companies may find it difficult or impossible to fully perform commercial contracts with U.S. counterparties as a result of the COVID-19 outbreak.
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USTR accepting comments on whether to continue section 301 exclusions for products of Chinese origin

On April 30, 2020, the Office of the U.S. Trade Representative (USTR) published two notices, seeking public comments on whether to continue certain Section 301 exclusions for $50 billion worth of products of Chinese origin that it granted in July 2019.[1] If the USTR determines not to continue the exclusions, each product will become subject to Section 301 duties at a rate of 25% after the current exclusions expire in July 2020. Under the two notices, comments must be submitted to the USTR for consideration by June 1, 2020.
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FDA updates its Emergency Use Authorization for KN95 respirators from China

On May 7, 2020, the U.S. Food and Drug Administration (FDA) issued an updated Emergency Use Authorization (EUA) with an updated Appendix A listing Chinese manufacturers with EUAs to import KN95 respirators from China. Details regarding the previous issued April 3, 2020 EUA may be found in this Porter Wright Law Alert.
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Importing masks and respirators from overseas during COVID-19 under FDA’s relaxed rules

The U.S. generally classifies face masks into three categories: (1) face masks and N95 respirators not intended for a medical purpose; (2) face masks intended for a medical purpose, but not to provide a liquid barrier protection; or (3) surgical masks intended to provide a liquid barrier protection.
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Legal issues to be aware of when importing personal protective equipment during COVID-19

With the continuing COVID-19 pandemic and the increasing need for personal protective equipment (PPE) including respirators, gloves, goggles and glasses, gowns and thermometers, businesses are looking overseas for PPE to satisfy U.S. domestic needs. On April 3, 2020, the U.S. Centers for Disease Control and Prevention (CDC) recommended that people wear a cloth face covering in public settings where other social distancing measures are difficult to maintain – especially in areas of significant community-based transmission.
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Further tariff exemptions for medical products of Chinese origin announced in response to COVID-19 and additional U.S.-China trade considerations

As the United States and China work on implementing Phase I of the Trade Deal entered into in January 2020, the United States Trade Representative (USTR) continues to evaluate Section 301 product exclusion requests that they have received, and, in some instances, has decided to grant them. In a recent Notice, the USTR announced the standards it considers in evaluating whether to grant or deny a Section 301 exclusion request for products of Chinese origin.
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What to know for importation and marketing of thermometers under FDA’s relaxed standard during COVID-19

Clinical electronic thermometers, including any contact and non-contact clinical electronic thermometers, are regulated as Class II devices under the 21 CFR 880.2910, product code FLL. Under normal circumstances, manufacturers of clinical electronic thermometers are required to submit a premarket notification under section 510(k) of the Federal Food, Drug, and Cosmetic Act (FD&C Act) to the U.S. Food and Drug Administration (FDA) and to receive FDA clearance prior to marketing these devices in the United States.
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Main Street Lending Program summary

On April 9, 2020, U.S. Treasury Secretary Steve Mnuchin announced the details for a “Main Street Lending Program” intended to provide financing opportunities to small- and medium–sized businesses. Secretary Mnuchin said, “The Main Street Business Lending Program will make a significant difference for the 40,000 medium-sized businesses that employ 35 million Americans.” The program supplements the relief efforts already available to certain businesses, such as the Paycheck Protection Program, Employee Retention Tax Credits, and Economic Impact Payments for individuals, without increasing taxes on individuals.
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China further exempts products of U.S. origin from retaliatory tariffs amid coronavirus

As part of the Phase I trade agreement between the U.S. and China, China has committed to increase its purchases of U.S. goods and services by $200 billion over two years. The recent coronavirus outbreak has raised concerns about China’s ability to meet the purchasing targets set forth in the trade agreement. Despite that, in early February, White House adviser Larry Kudlow said that Chinese President Xi Jinping informed U.S. President Donald Trump that China will still meet its Phase I trade deal purchasing targets. China additionally made the announcements outlined below in this post as part of its efforts to implement the Phase I trade agreement and encourage the purchase of specific U.S. goods related to the ongoing coronavirus outbreak. Those announcements bring potential good news for U.S. companies with Chinese business connections.
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Coronavirus and securities compliance related considerations

Porter Wright attorneys Brian Dunlay and Matt Navarre posted this on our Federal Securities Law Source blog.

On March 4, 2020, the Securities and Exchange Commission issued an Order granting conditional relief from certain filing obligations under the federal securities laws for reporting companies whose compliance may be delayed by the coronavirus disease (COVID-19). In the press release accompanying this unprecedented Order, SEC Chairman Jay Clayton noted, “The health and safety of all participants in our markets is of paramount importance. While timely public filing of Exchange Act reports is a cornerstone of well-functioning markets, we recognize that this situation may prevent certain issuers from compiling these reports within the required timeframe.”
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Chinese employment law guidelines for subsidiaries operating in China during the coronavirus outbreak

Porter Wright attorney Sunny Yang posted this on our Employer Law Report blog.

he coronavirus outbreak has become a global emergency. In an effort to slow the spread of the virus, Chinese authorities imposed quarantines and restricted travel throughout the country. National and local governments have issued various rules dealing with the coronavirus outbreak. On Jan. 24, the Office of the Ministry of Human Resources and Social Security issued a notice on the proper handling of labor relations related to the virus. Many provincial and municipal governments (including Beijing, Shanghai, Wuhan, Suzhou and Chongqing as well as the Guangdong, Shandong, and Zhejiang provinces) have issued stricter rules in accordance with authorizations provided under China’s Emergency Response law and other regulations.
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Force majeure – Legal impact of recent coronavirus outbreak on international trade

COVID-19, a new virus commonly known as coronavirus, that is causing an outbreak of respiratory illness, has now become a serious disease detected in more than 60 countries. First identified in early December 2019 in the city of Wuhan, Hubei Province, China, the coronavirus quickly spread across the globe. 
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Chinese employment law guidelines for subsidiaries operating in China during the coronavirus outbreak

On Jan. 30, 2020, the World Health Organization declared the coronavirus a global emergency. The declaration came after China reported its largest increase in deaths in a single day, with the number of confirmed cases across the globe continuing to rise.
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Economic and trade agreement with China brings investment opportunity for U.S. companies to enter China market

On Jan. 15, 2020, the United States and China entered into the Economic and Trade Agreement Between the Government of the United States of America and the Government of the People’s Republic of China, which successfully concluded Phase I of trade negotiations between the two countries. Entering into the agreement, both the United States and China recognize that “it is in the interests of both countries that trade grow,” that “there is adherence to international norms so as to promote market-based outcomes,” and further acknowledge “the existing trade and investment concerns that have been identified by the Parties.”
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Consumer privacy protection in recent state legislation

Porter Wright attorney Sean Klammer posted this on our Technology Law Source blog.

Since California passed the California Consumer Privacy Act (CCPA), many states have introduced similar consumer data privacy legislation, but so far only Maine and Nevada have passed legislation successfully. Nevada focuses on internet website operators, whereas Maine focuses on broadband internet access service providers. Both laws are generally narrower than CCPA, although Maine’s law has an opt-in only provision.
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2019 Transatlantic Business Outlook

Porter Wright's Will Sjoberg is taking part in a panel at the 2019 Transatlantic Business Outlook from the European American Chamber of Commerce of Greater Cincinnati on Oct. 9, 2019. The panel will explore some of the milestones that may lie ahead due to shifts in U.S. and global trade policies, how manufacturers in our region are being impacted by uncertainty, and offer some tools to mitigate the risks. For more information and to register, click here.


  

Myths, rumors and clarification on the status of the H-4 EAD

Porter Wright attorney Rob Cohen posted this on our Employer Law Report blog.

In February of this year, USCIS announced that the proposed rule to eliminate the ability of foreign nationals in H-4 status to apply for an Employment Authorization Document (EAD) was sent to the Office of Management and Budget (OMB) for final approval. Five months later, OMB has still not released the proposed rule for publication. The delay likely reflects substantive issues and is more than mere bureaucratic delay. In the meantime, the H-4 EAD is alive and well. The proposed rule must still clear several administrative hurdles before it becomes effective and can be implemented.

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President Trump schedules more duties in trade dispute with China

Pursuant to section 301 of the Tariff Act of 1974, President Trump announced that he would impose 10 percent duties on a new group of products originating in China, the value of which is approximately $300 billion. 08.14.19 FR Notice. 
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The GDPR: A year in review

Porter Wright attorney Sean Klammer posted this on our Technology Law Source blog.

On May 25, 2018, the General Data Protection Regulation (GDPR) became effective across the European Union. The GDPR is a regulation designed to give EU residents control over their personal data and simplify the regulatory framework for international organizations doing business in the EU. In its infancy, it was not entirely clear how the GDPR would be enforced. Now, one year later, the regulation is beginning to show some teeth.
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Section 301 duty exclusions announced

On June 4, 2019, the Office of the U.S. Trade Representative will announce another round of product exclusions associated with the first set or tranche of Chinese-origin products on which USTR imposed 25 percent duties. The value of the products on which the duties were originally imposed approximated $34 billion.
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Section 301 duties: New exclusion process announced

On May 21, 2019, the Office of the United States Trade Representative (USTR) announced its intention to implement a product exclusion process related to the China-origin products valued at $200 billion (the Third Tranche) on which U.S. import duties were recently increased from 10 to 25 percent. 
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The United States Patent and Trademark Office’s intellectual property attaché program offers valuable resources to guide U.S. businesses in navigating IP systems abroad

Porter Wright attorney Bill Storey posted this on our Technology Law Source blog.

The United States Patent and Trademark Office (USPTO) offers valuable IP-related business resources through an intellectual property (IP) attaché program. The program is structured to generally improve IP policies, laws and regulations abroad for the benefit of U.S. businesses and stakeholders, while providing country-specific IP-related materials and services to teach and inform. However, the program also makes representatives available who can act as points of contact for U.S. businesses to guide actions and to provide interactions with foreign governmental entities to addresses country-specific IP-related legal issues.
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The European Union and Japan agree to eliminate tariffs

On July 17, 2018 the European Union and Japan formally agreed to eliminate nearly all of the tariffs on products in their bilateral trade. In so doing, the European Union and Japan each confirms their respective position as advocates for free trade.

The agreement eliminates approximately 99 percent of the EU tariffs on Japanese products and approximately 94 percent of the Japanese tariffs on EU products; the latter of which is expected to increase to 99 percent over time. According to public statements, the current difference in volume between the tariff reductions is attributable to products that Japan considers politically sensitive, e.g., rice.
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Affidavit avoids new withholding requirements on sale of partnership interests: New IRC Sections 864(c)(8) and 1446(f)

The tax act contains provisions regarding withholding on the sale or redemption of tax partnership interests (including limited liability companies taxed like partnerships) that require immediate attention.

A recent Tax Court case held that a foreign partner’s gain on the redemption of a partnership interest was not U.S.-source income and was not effectively connected income (ECI), even though the partnership was engaged in a U.S. trade or business. The decision was in contrast to prior IRS guidance on the issue. In response to the decision, the tax act added new code provisions.
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Mandatory reporting by U.S. disregarded entities (single-member LLCs) owned by a non-U.S. person

Final Treasury regulations have been released governing the treatment of domestic disregarded entities wholly owned by a foreign person. The rules apply for the limited purposes of the reporting, record maintenance and associated compliance requirements that apply to 25 percent foreign-owned domestic corporations under Code Sec. 6038A.
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Ohio sales and use tax compliance change regarding transactions that are exempted from the definition of sales and use taxable “employment services”

International businesses with operations in Ohio need to keep abreast not only of federal tax changes but also Ohio tax changes. Ohio has taxed “employment services” for years, but there are five statutory exceptions that kick a particular service out of the definition of taxable “employment services.”
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What does it take to bring foreign companies to the US?

On our blog, Antitrust Law Source, host Jay Levine talks to Oded Shenkar, Ford Motor Company Chair in Global Business Management and Ohio State professor, about the challenges and opportunities facing foreign businesses who wish to come to the United States. The duo talks about regulatory matters, strategic factors and how the political climate will affect a company’s decision to doing business in the United States.


  

Takedown of counterfeit goods in China?

Porter Wright attorney Rick Mescher posted this on our Technology Law Source blog.

The elimination of counterfeit goods from online marketplaces in China continues to improve due to support from the Chinese government, changing laws in China which can impose liability on online marketplaces for infringement of intellectual property rights (IPR) and continued pressure from manufactures from around the world.
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Supreme Court to consider international patent exhaustion

Porter Wright attorney Marty Miller posted this on our Technology Law Source blog.

Four years after fully embracing international copyright exhaustion in Kirtsaeng v. John Wiley & Sons, Inc., the U.S. Supreme Court has finally taken up the issue of patent exhaustion. In Impression Products, Inc. v. Lexmark International Inc., the Court has been asked to answer two questions.
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Federal disaster relief available to employees in aftermath of natural disasters

Originally posted on our Employee Benefits Law Report blog.

Natural forces wreaked havoc on a number of states and territories this fall when Hurricanes Harvey, Irma and Maria made landfall. The federal government sprang into action by making disaster declarations for affected areas to provide aid in the aftermath of these tragic events.
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