The US Government has taken coordinated actions this week that target Huawei Technologies Co. Ltd (“Huawei”), effectively cutting it off from sourcing US products and technology and likely barring its products from being used in US communications infrastructure and networks. The US export/reexport restrictions targeting Huawei took effect immediately on May 16, 2019. The expected prohibition on the use of Huawei products in US communications infrastructure is likely to take several months to implement.
On April 8, 2019, the Trump administration escalated pressure on Iran by announcing its plan to designate the Islamic Revolutionary Guard Corps (“IRGC”) as a Foreign Terrorist Organization (“FTO”) under Section 219 of the Immigration and Nationality Act. The designation marks the first time the United States has branded a foreign government military entity a terrorist group. In retaliation, Iran designated US forces in the Middle East as a terrorist group.
Alexandre Lamy published an article, “Supply Chain Risks Related to US Sanctions and Export Control Issues,” in the February 2019 issue of Baker McKenzie’s “Aerospace & Defense Compliance Bulletin.” The text of that article is provided below.
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Supply Chain Risks Related to US Sanctions and Export Control Issues
When companies and compliance departments think about US sanctions and export control risks, they often focus on sales to customers and exports/reexports from one country to another. In that context, the compliance focus is typically on confirming that a customer and other parties involved in a sale and shipment are not restricted parties and that the transfer of a product is authorized under applicable export-control regulations. This is only half the story. Companies can have similar risks in their supply chain, which can be disruptive to a company’s operations beyond one transaction or customer relationship if not property managed.
On July 2, 2018 the US Department of Commerce’s Bureau of Industry and Security (“BIS”) issued a temporary authorization permitting certain limited transactions with Zhongxing Telecommunications Equipment Corporation (“ZTE Corporation”) and ZTE Kangxun Telecommunications Ltd. (“ZTE Kangxun” and, collectively with ZTE Corporation, “ZTE”) that would otherwise be prohibited under the denial order BIS activated against ZTE on April 15, 2018. The license grants authorization to all persons, aside from those located in Cuba, Iran, North Korea, Sudan and Syria, to resume certain technical support activities with ZTE from July 2 to August 1, 2018.