Tag: International

Understanding How U.S. Export Controls Affect Manufacturers’ Hiring Practices

The U.S. government has adjusted export control regulations in an effort to protect U.S. national security interests. The revisions primarily affect export of electronic computing items and semiconductors to prevent foreign powers from obtaining critical technologies that may threaten national security. As manufacturers are facing increased demand for their products and critical labor shortages, they may find themselves seeking to hire foreign national talent and navigating U.S. export control and immigration and anti-discrimination laws.

Export Control Laws in United States

The primary export control laws in the United States are the International Traffic in Arms Regulations (ITAR) and Export Administration Regulations (EAR). Under these regulations, U.S. Persons working for U.S. companies can access export-controlled items without authorization from the U.S. government. U.S. Persons include: U.S. citizens, U.S. nationals, Lawful permanent residents, Refugees, and Asylees. Employers might need authorization from the appropriate federal agency to “export” (in lay terms, share or release) export-controlled items to workers who are not U.S. Persons, which the regulations call foreign persons. Employers apply for such authorization from either the U.S. Department of State or the U.S. Department of Commerce, depending on the item.

The release of technical data or technology to a foreign person that occurs within the United States is “deemed” to be an export to the foreign person’s “home country.” Whether an export license is required for a particular release may depend on both the nature of export controls applicable to the technology or technical data (including whether it is subject to the ITAR or EAR) and the citizenship of the foreign person.

Recent revisions to the EAR cover controls on advanced computing integrated circuits (ICs), computer commodities that contain such ICs, and certain semiconductor manufacturing items, among other controls. These revisions particularly affect semiconductor and chip manufacturers and exporters.

Intersection With Immigration and Anti-Discrimination Laws

The U.S. Immigration and Nationality Act (INA) and Title VII of the Civil Rights Act 1964 prohibit discrimination based on protected characteristics.

The INA prohibits discrimination based on national origin or citizenship, among other characteristics. Title VII prohibits discrimination based on race and national origin, which typically includes discrimination based on citizenship or immigration status. Furthermore, the INA prohibits “unfair documentary practices,” which are identified as instances where employers request more or different documents than those necessary to verify employment eligibility or request such documents with the intent to discriminate based on national origin or citizenship.

The intersection of export control laws, immigration, and anti-discrimination laws can create a confusing landscape for employers, particularly manufacturers or exporters of export-controlled items. Manufacturers and exporters, like all employers, must collect identity and employment authorization documentation to ensure I-9 compliance. At the same time, however, they must collect information relating to a U.S. Person in connection with export compliance assessments. To address these areas of exposure for employers, the U.S. Department of Justice’s Civil Rights Division released an employer fact sheet to provide guidance for employers that includes best practices to avoid discrimination.

Implications

To ensure compliance under these rules, employers should separate the I-9 employment authorization documentation process from the export control U.S. Person or foreign person identification process. Employers should implement or revisit internal procedures and provide updated training to employees.

The export rule revisions highlight the challenges for employers in avoiding discrimination when complying with export control laws. Manufacturers and exporters should review their compliance practices regarding U.S. export control, immigration, and anti-discrimination laws with experienced counsel. Employers should implement policies and procedures reasonably tailored to address export control compliance requirements while not engaging in discrimination on the basis of citizenship or national origin.

Jackson Lewis P.C. © 2024

by: Maurice G. Jenkins , Kimberly M. Bennett of Jackson Lewis P.C.

For more news on Export Control Laws, visit the NLR Antitrust & Trade Regulation section.

US to Expand Vaccination Requirement for Foreign National Travelers to Include All Land Border Crossers from Canada and Mexico in January

Starting Jan. 22, 2022, the Biden administration will require foreign national travelers engaged in essential travel to be fully vaccinated when crossing U.S. land borders or ferry terminals. Essential travel includes travel for work or study in the United States, emergency response, and public health. The new rules apply to foreign nationals; U.S. citizens and permanent residents may still enter the United States regardless of their vaccination status but are subject to additional testing requirements.

The new rules for essential travelers are in line with those that took effect Nov. 8, 2021, when the Biden administration lifted travel restrictions to allow fully vaccinated travelers engaged in non-essential (leisure) travel to enter the United States.

While much cross-border traffic was shut down in the early days of the COVID-19 pandemic, essential travelers have been able to travel unimpeded via land borders or ferry terminals. Starting Jan. 22, 2022, however, all foreign national travelers crossing U.S. land borders or ferry terminals – traveling for essential and non-essential reasons – must be fully vaccinated for COVID-19 and provide related proof of vaccination. Any exceptions to the vaccination requirement available to travelers at U.S. land borders are expected to be limited, just as exceptions currently available for air travel have been limited. See CDC guidance for details.

©2021 Greenberg Traurig, LLP. All rights reserved.
For more on vaccine requirements, visit the NLR Coronavirus News section.

Game Changing Reform to NSW Environment Protection Laws

The NSW Government has introduced the Environment Legislation Amendment Bill 2021 (NSW) (Bill) which proposes wide ranging reforms to NSW environmental laws to enable the NSW Environment Protection Authority (EPA) to “crack down” on environmental offenders.

The Bill makes good on Minister Matt Kean’s commitment to ensure that “the book [is] thrown at anyone who has done the wrong thing”. While the EPA has made it clear that the reforms are “aimed solely at those who deliberately choose to circumvent the law”, the amendments proposed by the Bill will materially increase environmental liabilities for all NSW operators.

This article outlines the key reforms proposed by the Bill which will amend a raft of environmental legislation, including the Protection of the Environment Operations Act 1997 (NSW) (POEO Act) and Contaminated Land Management Act 1997 (NSW) (CLM Act) and include:

  • the creation of new environmental offences;
  • increasing the penalties for a number of existing offences;
  • increasing the powers of the EPA and other environment regulators to hold to account those perceived to be responsible for pollution or contamination and to enforce environment protection licence conditions;
  • enabling the EPA to recover profits arising from the commission of environmental offences and the cost of remediating contaminated land from related bodies corporate and directors and managers of offending corporations; and
  • making it easier for the EPA to prove certain environmental offences.

The Bill is expected to be debated by Parliament in early 2022 and, if passed, will result in the largest overhaul of NSW environmental laws in over five years.

KEY REFORMS

Description Analysis
Greater Liability for Directors, Managers and Related Bodies Corporate
  • New power for the EPA and other environment regulators to issue clean-up notices and prevention notices to:
    • current and former directors and persons concerned in management; and
    • related bodies corporate, of companies responsible pollution or contamination, if the company does not comply with notices issued to it.
  • Making it an offence for a:
    • director or person concerned in management;
    • related body corporate; or
    • director or person concerned in management of a related body corporate,

to receive or accrue a monetary benefit as a result of certain proven environmental offences by a company.

  • New and expanded powers for the EPA and other prosecutors to obtain monetary benefit orders requiring:
    • directors or persons concerned in management;
    • related bodies corporate; and
    • directors or persons concerned in management of related bodies corporate,

to repay monetary benefits accrued as a result of certain proven environmental offences by a company.

If passed, the Bill will significantly increase potential liability of those concerned in the management of companies (including related bodies corporate) who commit environmental offences or fail to comply with environment protection notices in NSW.

Managers, directors and related bodies corporate could be put on the hook:

  • to clean up pollution or contamination caused by a company;
  • to carry out works required by a prevention notice to ensure that activities of the corporation are carried on in future in an environmentally satisfactory manner; and
  • to repay “monetary benefits” received as a result of any proven offence.

The proposed measures are not entirely unique to NSW. Queensland passed “chain of responsibility” environment legislation in 2016 and put it to use in the long-running Linc Energy matter.

However, the proposal for directors and related bodies corporate to be automatically liable for an offence if they profit from a proven offence of a corporation under environment protection legislation is likely to be the source of significant concern. This is especially the case as the Bill does not propose any defences. This means that a director or person concerned in management could potentially be liable even if they have taken all due diligence to prevent the commission of the offence by the company, although the EPA is unlikely to commence a prosecution in such circumstances.
New EPA Powers to Regulate Contaminated Land
  • New powers for the EPA to issue clean-up notices and prevention notices as soon as the EPA is notified of contamination of land, even before the EPA has determined that the land is “significantly contaminated”.
  • New power for the EPA to require financial assurances to ensure compliance with under ongoing maintenance orders, restrictions and public positive covenants.
 The new reforms demonstrate the importance on engaging with the EPA at an early stage and on an ongoing basis in relation to contaminated land.

If passed, the Bill would enable the EPA to take strong and proactive action without agreement even before it determines that the land is “significantly contaminated” and warrants contamination.
New Offence of Giving False or Misleading Information to the EPA
  • The Bill includes a new general offence of giving information to the EPA that is false or misleading in a material respect.
  • A defence applies where the person took all reasonable steps to ensure the information was not false or misleading in a material respect.
  • Greater penalties apply where the false or misleading information is provided knowingly.
  • Directors and other persons involved in the management of the corporation will be liable for any offence committed by the company under the new provision if they ought reasonably to know that the offence would be committed and failed to take all reasonable steps to prevent the provision of false and misleading information.

This new false and misleading information offence is significant because it applies regardless of whether the information was provided:

  1. voluntarily; or
  2. in circumstances where the information was known to be false or misleading.

The new offence is an apparent response to the decision in Environment Protection Authority v Eastern Creek Operations Pty Limited [2020] NSWLEC 182, where the defendant successfully resisted an EPA prosecution which alleged that the provision of false or misleading information by establishing that the notice in response to which the information was provided was legally invalid.

The new offence would create material new risks for entities regulated by the EPA, and highlights the need to take great care in taking “all reasonable steps” to ensure that information provided to the EPA is not false or misleading.
Higher Maximum Penalties for Some Environmental Offences
  • Substantial increases to some maximum penalties for offences under environment protection legislation, including the CLM Act, to more than double the current maximum penalties.
 The Second Reading Speech states that maximum penalties have been increased so that “they reflect the true cost of the crime”
Increased Liability for Suspected “Contributors” to Pollution
  • New power for the EPA and other environmental regulators to issue a clean-up notice to persons who is “reasonably suspected of contributing”, to any extent, to a pollution incident.
  • New powers for public authorities to recover costs and expenses of taking clean-up action from persons the authority “reasonably suspects contributed” to the pollution incident, in addition to occupiers and persons the authority reasonably suspects caused the pollution incident.
  • New right for person issued a clean-up notice to recover costs from others who caused or contributed to pollution incidents as a debt.

These new provisions are likely to be of significant concern, as they enable the EPA to issue clean-up notices requiring alleged contributors to pollution incidents to clean-up all of the pollution, at its cost. This has the potential to lead to the unintended result that:

  •  suspected contributors could be made liable for clean-up costs far exceeding their actual contribution; and
  • the EPA may seek to regulate the potential contributor with the “deepest pockets” – rather than the person most directly responsible.

While the Bill includes a right for a contributor to recover costs from others who caused or contributed to the pollution incident as a debt, this offers very limited protection to suspected contributors issued a clean-up notice, particularly if the person responsible or other persons responsible have limited financial capacity.
Expanded Environmental Licensing Powers
  • The Bill includes a new power for the EPA to require restrictions on the use of land or pubic positive covenants to enforcing environment protection licence conditions (including conditions imposed on the suspension, revocation or surrender of the licence). In line with this, the Bill also includes new provisions to enable a person other than the holder, or former holder, of a licence, to apply to vary the conditions of the suspension, revocation or surrender of the licence.
  • New ability for the EPA to deny environment protection licences to corporations where current or former directors of the corporation, related bodies corporate or for current or former directors of related bodies corporate have contravened relevant legislation.
 The proposed power to impose restrictions on use and public positive covenants to enforce licence conditions is material as, currently, licence condition only bind the holder of the environment protection licence. The changes proposed will enable the EPA to legally enforce conditions against land owners or occupiers, even if the activity regulated by the environment protection licence was conducted by a former land owner or tenant.

The EPA will now be able to take a deeper look at the overall environmental compliance history of an entity in licensing decisions, meaning that it will be even more important for corporations, directors and managers to maintain a strong environmental compliance history.
Consistent Court Powers including for Cost Recovery
  • Additional powers for public authorities including the EPA or other persons to recover costs, expenses and compensation from offenders in the Land and Environment Court.
  • Additional powers for the Land and Environment Court to make specific kinds of orders where environment offences are proven.
 The Bill proposes to have more consistent provisions across environment protection legislation in terms of the orders a court can make in relation to offenders, and the cost recovery that the EPA can seek from the Court.
New Offence to Delay Authorised Officers
  • The Bill contains a new offence of delaying, obstructing, assaulting, threatening or intimidating an authorised officer in the exercise of the officer’s powers, in addition to the existing offence of wilfully delaying or obstructing an authorised office.

This is an apparent response to the McClelland and Turnbull matters which involved the assault or delay of environment protection officers. The new offence is significant because the EPA would not be required to prove that the relevant delay or obstruction was willful, and so a person could be held liable for unintentional delays or obstructions.
Expanded Prohibition Notice Powers
  • Expanded power for the Minister to issue prohibition notices to occupiers of a class of premises or to a class of persons.
  • Expanded power to issue prohibition notices to directors, former directors or related bodies corporate of a corporation who has not complied with a prohibition notice.
 Currently, the Minister can only issue prohibition notices requiring occupiers or persons to cease carrying on an activity.

The Bill proposes to enable the Minister to prohibit occupiers of a class of premises or a class of persons from carrying on an activity. This would enable the Minister to shut down all of the premises of so-called “rogue operators”, if recommended to do so by the EPA. While it is likely to be rarely (if ever) used, the expanded power could potentially be relied on by the Minister where a pattern of non-compliance is identified across a specific industry or across multiple premises of one organisation.
Administrative Reforms to EPA
  • The Bill also proposes a range of administrative The most notable reform is to considerably reduce the Minister’s control of the EPA so that the EPA is no longer subject to the control or direction of the Minister, and that the Minister only has a limited power to issue directions of a general nature to the EPA.
 The EPA is generally regarded as an “independent” regulator, and the proposed reform formally reduces Ministerial control of the EPA thereby increasing its independence.

The Bill also includes some additional measures regarding board appointments to achieve greater diversity of collective skills, including expertise in human health and Aboriginal cultural values.

PUBLIC CONSULTATION ON POEO ACT REGULATIONS

In addition to the reforms contemplated by the Bill, the EPA is currently consulting on the following regulations under the POEO Act:

  • Protection of the Environment Operations (Clean Air) Regulation 2021 (NSW); and
  • Protection of the Environment Operations (General) Regulation 2021 (NSW).

Each of these regulations:

  • were remade with only minor amendments earlier this year, to avoid automatic repeal under the Subordinate Legislation Act 1989 (NSW); and
  • will be substantively amended in 2022. The EPA has committed to carrying out consultation on the proposed changes in 2022.

IMPLICATIONS

The reforms contained in the Bill demonstrate how important it is for all businesses which operate in NSW, and their related bodies corporate, directors and managers to:

  • take environmental compliance very seriously; and
  • work effectively with the EPA to address any pollution and contamination issues.

Copyright 2021 K & L Gates

Article by Kirstie Richards and Luke Salem with K&L Gates.

For more articles on climate change initiatives, visit the NLR Environmental & Energy section.

New Rules Offer Clarity On China’s Outbound M&A Crackdown

On August 18, 2017, China’s State Council issued guidelines clarifying rules passed a year ago by the State Administration of Foreign Exchange (SAFE) limiting outbound investments as cover-up to move money out of China.

The new guidelines provide different policies for Chinese companies’ investment overseas, broadly dividing overseas investment into three categories:

  • investments in “real estate, hotels, entertainment, sport clubs, [and] outdated industries” are restricted;

  • investments in sectors that could “jeopardize China’s national interest and security, including output of unauthorized core military technology and products” and investments in gambling and pornography are prohibited; and

  • investments in establishing R&D centers abroad and in sectors like high-tech and advanced manufacturing enterprises that could boost China’s Belt and Road Initiative, and investments that would benefit Chinese products and technology will be encouraged by Chinese outbound regulators.

These guidelines are new and we have to wait and see how they will be interpreted and implemented by regulators. Still, there may be reasons to believe they will have a net positive effect on the China-U.S. M&A market. The new guidelines bring about greater certainty to buyers, lenders and targets on whether a deal will get approved by Chinese regulators.

The volume and size of Chinese outbound M&A is already on an upward trajectory in the second quarter of 2017, as buyers are already getting more acclimated to SAFE rules announced at the end of 2016 restricting the outflow of Chinese capital. Chinese buyers completed 94 deals totaling $36 billion in Q2, compared to the 74 deals totaling $12 billion in Q1. The current Chinese outbound M&A trend, coupled with greater certainty under the new guidelines, is likely to result in more Chinese outbound M&A deals during the last quarter of 2017, as well as in 2018.

This post was written by Shang Kong & Zhu Julie Lee of Foley & Lardner LLP © 2017

For more legal analysis go to The National Law Review

Doing Business at ART HK: Better, Bigger, Faster, Stronger

Recently posted in the National Law Review an article by Sheppard, Mullin, Richter & Hampton’s Art Law Practice regarding the Hong Kong International Art Fair:

 

On the verge of becoming an international institution, the recent Hong Kong International Art Fair, known as “ART HK,” represents an exciting development in the state of the art world in China. This growth has critical, yet profoundly inspiring, implications upon the international art community.  Since its humble beginnings in 2008, ART HK has shown rapid growth with over 260 galleries from over 38 countries participating in the recent fair.  Momentum of ART HK’s success and prominence was recently propelled by an announcement that MCH Swiss Exhibition, owners of Art Basel, the world’s biggest contemporary art fair, have just signed an agreement with Asian Art Fairs, the owners of ART HK, to purchase a majority stake in ART HK, which went into effect on July 1, 2011.  This tactical move, combined with rising auction revenue, favorable tax considerations, a newfound interest in art as an asset class, and interest based on national identity, cements China’s role in the global art market.

It was recently reported in Artprice.com, a French-based data service, that China ranks number one in fine art auction revenue, surpassing the U.S.  Moreover, the contemporary Chinese auction market has grown from just below $1 million in 2002 to $167.4 million in 2010. Prominent auction houses, Sotheby’s and Christie’s Hong Kong have seen sales turnover increase by 300% between 2009 and 2010.  The total auction sales value (all categories) for both auction houses in Hong Kong rose by 122 percent, from US$658 million in 2009, to US$1.46 billion in 2010.  Even mainland Chinese state-owned auction houses, such as Poly and Guardian, have seen their Chinese sales seasons grow from $397 million in 2009 to $2.2 billion in 2010.  This year is also set to become a record year in light of the sale of the Ullen Collection at Sotheby’s Hong Kong in April 2011.

The art world focus in Hong Kong, as opposed to mainland China, may have something to do with the tax advantages it provides.  While imported art is taxed by mainland China at a steep 34 percent, Hong Kong offers collectors the advantage of more relaxed sales tax and export policies. Organizers of ART HK are aggressively promoting the incredible tax advantages, since there are no tariffs on the import or export of art as it relates to the initial sale at ART HK.

A newfound interest in art as an asset class has also prompted growth in the Chinese art market.  The affluent in China have begun to invest in art as an asset, traditionally viewed as a Western luxury.  Observers note that the proliferation of art in China is the steady result of a rise in investment-oriented purchases of art, bolstered by China’s growing wealth, and not merely spontaneous overnight purchases.  In response to this, at least three Chinese financial institutions have set up hedge funds investing in Chinese art.  Notably there have been a succession of Chinese clients who have been spending millions of yuan recently at New York auctions.

National identity and pride is showing itself to be another significant factor behind the surge of Chinese interest in the art world.  Such national pride is evident by a report released by Artprice.com on March 19, 2011 showing that 2010 is the first year that four Chinese artists (Fu Baishi, Qi Baishi, Xu Beihong, and Zhang Daqian) have ranked in the top ten of global art auction earners.

In China, the impact of art fair culture through ART HK is no different than in other emerging markets.  Art Basel is itself is a pioneer for developing new markets.  In fact, in 2002, the decision to open Art Basel Miami Beach in the U.S. was partly to explore the emerging Latin American market.  A roaring success – Art Basel Miami provides a new platform for emerging dealers, contemporary artists, new collectors and the art world cognoscenti.

Popularity of the Chinese market for the international art community during ART HK has clearly prompted auction houses to be active.  For example, Christie’s has a partnership with ART HK to hold its spring auctions in the same venue and at the same time as ART HK with sales of art, antiques, wines, watches and jewels.  Other auction houses, particularly smaller Asian ones, are similarly following suit with auction sales planned at hotels around town during ART HK.

On May 23, 2011, ART HK and ArtTactic even announced in two art market reports (China Contemporary Art Market Report 2011 and US & Europe Contemporary Art Market Report 2011) that confidence in the Chinese contemporary art market greatly exceeds confidence in its US and European counterparts.  In fact, the reports claim that 75% of art industry experts indicate that the Chinese market will continue to grow over the next six months, compared to only 36% of art experts indicating growth in the US and European contemporary art markets.

Hong Kong offers a range of comforts for those doing business in the Hong Kong art market. In addition to the tremendous tax advantages in the  importation or exportation of art in Hong Kong, doing business in Hong Kong is made easier by the fact that English is commonly spoken and that Hong Kong adheres to international standards of business law, with a great degree of transparency in transactions. Moreover, in contrast to Shanghai or Beijing, the logistics of obtaining shipments in and out of Hong Kong do not typically involve lengthy turnaround times.

When exporting artwork from Hong Kong, buyers must ensure to complete and submit an export declaration in Hong Kong, as well as an import declaration in the destination country, where import duties and taxes are typically chargeable in the destination country. Where the buyer is shipping the artwork to the same country that the seller originally exported it to Hong Kong from, it may be possible for the buyer to avoid payment of import customs duty in the destination country under a “returned goods relief” procedure, as long as the seller can provide the buyer with the relevant proof of original export.

There are many factors contributing to the strength of China’s position in the international art market, including its beneficial tax considerations, remarkable auction revenue, a newfound interest in art within China as either an investment or because of national identity and a global interest in contemporary Chinese artists.  With offices in Shanghai and Beijing, these are issues encountered frequently here at Sheppard Mullin. Overall the future of the Chinese art world looks optimistic, and it is clear that the impact of the art fair culture, especially vis-à-vis ART HK, has a crucial role to play in this continued growth.

Copyright © 2011, Sheppard Mullin Richter & Hampton LLP.