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The Foreign Investment Regulations Putting Buyers, Sellers, and M&A Practitioners at Risk: In recent memory, enforcement of the Committee on Foreign Investment in the United States (“CFIUS” or the “Committee”) regulations has been mostly limited and sporadic. But recently, the U.S. government is reviving and enhancing these regulations as a direct response to the national security and foreign policy concerns ensuing from an increasingly tumultuous geopolitical environment. A CFIUS due diligence review is fundamentally related to export control laws and regulations — even for businesses that have never engaged in any exports.

EP sat down with Chuck Schroeder of Textron Aviation to reflect on and discuss some the changes he's seen in his three-decade career in Aerospace Export Compliance. From the day I started my trade compliance career, I have enjoyed doing this type of work. Really, I mean it. Back in those days you did not get trained for a Trade/export compliance job, you were self-taught. There was nowhere to go for any type of formal operational training, so you just learned the scope of the regulatory world as part of the job. I have had what most may consider to be an incredibly good career. It has certainly been great and equally rewarding for me. I have been involved with super people, mentors, and programs, ranging from supporting NORAD, NATO F-16 deployment, then to Boeing and NASA, where I was involved with launching the shuttle for the International Space Station, and then to Seattle for the 787 and P-8 programs, and now the work in Wichita at Textron Aviation on our Business Jets, Prop aircraft, etc.  

The Export Practitioner is continuing with a series of upgrades and enhancements with this upgraded newsletter and e-edition. The process began with a redesign of our print edition last January. When you visit our site to read this issue of Export Practitioner, you'll find we feature all of our content in an online format.  Further improvements and enhancements will be coming to keep you better informed about critical developments in export management, enforcement and policies. If you have any questions about access or editorial, reach out anytime to info@traderegs.com or the editor, Frank Ruffing at +1.703.283.5220 – Frank Ruffing, Editor 

The Export Practitioner is continuing with a series of upgrades and enhancements with this upgraded newsletter and e-edition. The process began with a redesign of our print edition last January. When you visit our site to read this issue of Export Practitioner, you'll find we feature all of our content in an online, searchable format.  Further improvements and enhancements will be coming to best keep you informed of critical developments in export compliance, enforcement and policies. If you have questions about subscriber access or editorial, reach out anytime to info@traderegs.com or the editor, Frank Ruffing at +1.703.283.5220

ASML, a Dutch semiconductor producer, had its license to ship two types of machines that make semiconductors partially revoked. This comes after ASML canceled some of its shipments ahead of tightening Dutch restrictions on exports. "China opposes the US’s overstretching the national security concept and using all sorts of pretexts to coerce other countries into joining its technological blockade against China," said Foreign Ministry Spokesperson Wang Wenbin.  

In a wide ranging conversation at Georgetown University, Under Secretary of Commerce for Industry and Security Alan Estevez shared his perspective on the evolution of export controls and the road ahead. "I believe now that we are at sort of a foundational inflection point as to the role and purpose of export controls," Estevez said. " Commerce is in the middle of national security in a number of spheres these days.

"We do it from two perspectives. We do it from offense and we do it from defense. Offense is things like Chips Act. So how are we going to build chip production in the United States, where we have assured supply? Semiconductors are the foundation of a lot of what goes on in our economy. "The core of the defense structure is our export controls. Protecting the technology that our adversaries could use against us, should it ever come to any kind of kinetic action...

A report by the House Foreign Affairs Committee highlights shortcomings in the U.S. export control system and calls for reforms, legislative and administrative.   Drawing extensively on the work of former Defense Department Export Control Official Stephen Coonen, the report offers a preview of the reception BIS officials can expect in next week's hearing. "Both the Trump and Biden administrations, principally from the White House, have rightly begun exerting more control over the Commerce Department’s Bureau of Industry and Security (BIS). However, no administration will be able to fully leverage the power of export controls to protect U.S. national security without Congressional action. Now, Congress must solidify the efforts of successive administrations so our future will be better secured," the authors assert. Central to the committee's findings is the concern that BIS, under the Commerce Department, has been too lenient in granting licenses for dual-use technology transfers to China, failing to adequately consider the likelihood of military or surveillance use.

Defense Chiefs of the AUKUS military-industrial alliance met at the Defense Innovation Unit Headquarters at Moffett Field in  California to discuss progress for the partnership, especially Pillar II, the broad based defense industrial collaboration. The three nations are also establishing an AUKUS Industry Forum with trilateral government and industry representatives to help inform policy, technical and commercial frameworks to facilitate the development and delivery of advanced capabilities. The initial meeting of that forum will occur in the first half of 2024.  In a Joint Statement, the Secretaries and Deputy Prime Minister reaffirmed the three nations' commitment to maximize the strategic and technological advantage of AUKUS .  They agreed that advancing AUKUS requires continued commitment to streamlining defense trade controls and information-sharing while minimizing policy and financial barriers across public and private sectors.

Assistant Secretary of Commerce for Export Administration Thea Kendler held a briefing November 6 to discuss the rules issued October 17th. She explained the new parameters, associated license requirements, the new notified advanced computing license exception, and some of the measures put into place to address possible circumvention of the controls.

The Office of Inspector General (OIG) for the Department of State has released a redacted report detailing its review of end-use monitoring (EUM) for U.S. security assistance in Ukraine. This follows the U.S. commitment of approximately $30 billion in aid since Russia's invasion in February 2022. Findings indicate that Embassy Kyiv conducted limited in-person EUM activities, supplemented by secondary procedures involving Ukrainian government assistance. No misuse of equipment was identified, and commitments from recipients remained unchanged post-invasion. However, challenges like security restrictions and ad-hoc reporting of battlefield losses were noted.

Artificial intelligence, or AI, has been heralded as a way to disrupt the workforce–to the chagrin of many human workers. Tesla CEO Elon Musk was hopeful about the future of AI in a meeting this week with UK Prime Minister Rishi Sunak.

Four individuals were arrested, and an indictment and criminal complaint were unsealed this week regarding two separate conspiracies to unlawfully export controlled, dual-use technologies to Russia. October 31, a criminal complaint was unsealed, and a Brooklyn, New York, resident and two Canadian nationals were arrested in connection with a global procurement scheme in which the defendants used two corporate entities registered in Brooklyn to unlawfully source and purchase dual-use electronics on behalf of end-users in Russia, including companies affiliated with the Russian military. Separately, a Brooklyn resident was arrested, and a four-count indictment was unsealed alleging an illegal exports scheme to procure dual-use electronic components for entities in Russia involved in the development and manufacture of drones for the Russian war effort in Ukraine.

On Tuesday 17 October, the Commerce Department tightened controls over exports of AI-specific semiconductors. This move makes it more challenging for U.S. firms like Nvidia and Intel to market their current products in China or to launch new products as workarounds. Addressing oversights: This step is designed to mend potential oversights in the export regulations declared last year. Those regulations had been met with notable resistance from the international semiconductor sector and increased strains with Beijing.

Deputy Attorney General Lisa Monaco announced a "Department-wide Safe Harbor Policy" for voluntary self-disclosures of misconduct by acquirers in the mergers and acquisition process.  

The Department of Commerce’s Bureau of Industry and Security (BIS) has published new best practice guidance for industry to help prevent items that are considered the most significant to Russian weaponry requirements from being diverted for use in Russia’s war against Ukraine. The. Septermber 28 guidance recommends that exporters and reexporters of these highest priority items seek written assurances of compliance from their customers to help prevent diversion.

Under the Dodd-Frank Act, a whistleblower who exposes fraud can receive a monetary award and anti-retaliation protections through the U.S. Securities and Exchange Commission (SEC) Whistleblower Program - as long as they blow the whistle voluntarily. A definition of “voluntary” may seem simple enough. However, some Dodd-Frank whistleblowers who, acting of their own free will and without legal obligation, report fraud are considered “involuntary” simply because they reported to the media, other government agencies, foreign law enforcement, or a U.S. embassy.

After complaining since at least 2005 that "we really need to do something about ITAR. It is really hurting U.S. industry,” and citing export controls for not hiring eligible non-citizens, South African immigrant Elon Musk's company SpaceX has been sued by the Justice Department for employment discrimination. The United States Department of Justice has filed a lawsuit against Space Exploration Technologies Corp. (SpaceX) for discriminating against asylees and refugees in its hiring process. The lawsuit contends that from September 2018 to May 2022, SpaceX deliberately discouraged such individuals from applying for positions within the company, violating the Immigration and Nationality Act (INA).

Chinese printer manufacture Ninestar, parent of Lexmark International, has filed a lawsuit against the U.S. Department of Homeland Security (DHS) and other related parties of the U.S. government before the U.S. Court of International Trade. DHS added Ninestar and certain of its subsidiaries to the Uyghur Forced Labor Prevention Act (UFLPA) Entity List, and the company "is suffering irreparable harm to its business and reputation based on the listing," according to a statement.

The Bureau of Industry & Security published an advisory opinion on the release of licensed technology to employees of the foreign subsidiary while on temporary work assignment at the home office.  No additional deemed export license is required for these employees, while any new “technology” or “software” that is either “released” to those employees in the United States or created in the United States that is not authorized by the existing BIS license would require a new export license or other authorization from BIS.

Arizona-based First Solar released findings from a third party audit of their Malaysia facility, highlighting unethical practices involving foreign migrant workers. The report details the actions taken by First Solar to address the issues, emphasizing the company's commitment to transparency and responsible solar energy development.

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