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Eunkyung Kim Shin (US)

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Commerce Proposes Rules re Securing the Information and Communications Technology and Services Supply Chain; Comments Due on or Before December 27

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On November 26, 2019, the US Department of Commerce (“Commerce”) issued a highly anticipated proposed rule with proposed regulations (“Proposed Regulations”) to implement Executive Order 13873, “Securing the Information and Communications Technology and Services Supply Chain” (“Executive Order 13873“).

Executive Order 13873 gives the Secretary of Commerce (“Secretary”) sweeping, unprecedented authority to prevent or modify transactions involving information and communications technology and services (“ICTS”) originating in countries designated as “foreign adversaries” which pose an undue risk to critical infrastructure or the digital economy in the United States, or an unacceptable risk to US national security or the safety of United States persons. All industries are potentially affected by the Proposed Regulations, whether directly or indirectly, which allow for case-by-case reviews of transactions at the Secretary’s discretion. Any transaction that is ongoing as of, or was initiated on or after, May 15, 2019, can be reviewed and there is no mechanism by which a company may seek to clear transactions in advance.

A summary of the background and the Proposed Regulations is provided below:

US Government Expands Restrictions Against Cuba: BIS Further Restricts Exports to Cuba and DOT Suspends Scheduled Air Service for Cuba

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On October 21, 2019, the US Commerce Department’s Bureau of Industry and Security (“BIS”) amended the Export Administration Regulations (“EAR”) to further restrict exports and reexports of items to Cuba (“the Amendment“).  According to BIS, the Amendment was made to further restrict the Cuban government’s access to items subject to the EAR, thereby supporting the US government’s national security and foreign policy decision to hold the Cuban regime accountable for its repression of the Cuban people and its continuing support for the Maduro regime in Venezuela.  The Amendment further implements President Trump’s June 2017 National Security Presidential Memorandum on Strengthening the Policy of the United States Toward Cuba.  BIS also updated Frequently Asked Questions regarding Cuba, and the US Commerce Department issued a related press release here.

The same week, Secretary of State Michael R. Pompeo wrote to the Secretary of Transportation noting the Administration’s policy and requested that the Department of Transportation (“DOT”) suspend all scheduled US carrier flights between the United States and all airports in Cuba, except José Martí International Airport (HAV) in Havana.  DOT issued an order suspending service on October 25, 2019.  US air carriers have 45 days to discontinue all scheduled air service between the United States and all airports in Cuba, except José Martí International Airport.  Please see here for the State Department’s press release.

A summary of specific changes/clarifications made by the Amendment are described below:

US Government Designates Iran’s National Development Fund and Etemad Tejarat Pars Co. and Imposes Additional Sanctions on Iran’s Central Bank

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On September 20, 2019, in response to recent attacks on certain Saudi Arabian oil facilities, the US Treasury Department’s Office of Foreign Assets Control (“OFAC”) took action pursuant to Executive Order 13224 against three Iranian entities: (i) the National Development Fund of Iran (“NDF”) (ii) Etemad Tejarat Pars Co., and (iii) the Central Bank of Iran (“CBI”). Executive Order 13224 authorizes the designation of parties if, among other things, they attempt to commit, or pose a significant risk of committing, acts of terrorism.

US Government Eliminates “U-Turn” Financial Transactions and Restricts Remittances to Cuba

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On September 6, 2019, the US Treasury Department Office of Foreign Assets Control (“OFAC”) announced that it is amending the Cuban Assets Control Regulations (“CACR”) to further financially isolate the Cuban government and implement President Trump’s June 2017 National Security Presidential Memorandum (“NSPM”) Strengthening the Policy of the United States Towards Cuba (the “CACR Amendment”). The CACR Amendment (1) removes the authorization for banks subject to US jurisdiction to process pass-through or “U-turn” transactions, and (2) eliminates or restricts certain types of remittances to Cuba. The CACR Amendment was published in the Federal Register on September 9, 2019, and will take effect on October 9, 2019.

OFAC also published Frequently Asked Questions and a Fact Sheet on the CACR Amendment.

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