The export of products and services comprises an essential part of conducting international trade.

1. 1
Coronavirus: update
on export controls and
other compliance issues
The varied controls on –
and definitions of – arms brokering
W O R L D E C R . C O MA P R I L 2 0 2 0
I S S U E # 8 8
Navigating the new CFIUS landscape
Reconciling US export control law with
Swedish data privacy

2. 2
Covid-19: Bringing what you know to bear
US brokering under Export Control Reform
Germany: high barriers to export amidst
geopolitical uncertainty
UAE export controls: commitment commendable
– but there’s work to do
10
22
29
35
A broken picture? The varied controls on –
and definitions of – arms brokering
20
Navigating the new CFIUS landscape for foreign
investment in the US
23
The increasing relevance of internal compliance
programmes in India
32
In this issue

3. NEWS AND ALERTS
3
BAFA announces ‘e-book’ for notification of weapons inventory
Canada adds
Salisbury
attack
chemicals to
control list
Headache for importers as UK bans parallel exports of
paracetamol, morphine, adrenaline
Germany’s Federal Office for
Economic Affairs and Export
Control (‘BAFA’) has announced
that 1 April sees the launch of an
electronic ‘War Weapons Book’
(Kriegswaffenbuches – eKWB). It
explains that: ‘the War Weapons
Control Act (‘KrWaffKontrG’)
obliges all those who handle
war weapons to report to the
Federal Office of Economics and
The UK’s Department of Health
and Social Care has announced a
ban on parallel exports of more
than 80 medicines, including
adrenaline, insulin, paracetamol
and morphine, so as to prevent
domestic shortages during the
COVID-19 outbreak.
It explains: ‘Parallel
exporting is when companies
buy medicines meant for
UK patients and sell on for
a higher price in another
country, potentially causing or
aggravating supply problems. All
medicines on the list are in high
demand across Europe as health
Export Control (‘BAFA’) every six
months on the stocks and changes
in stocks of war weapons… The
introduction of the eKWB will
replace the previous paper-based
war weapons register reports
with an electronic reporting
procedure…
‘The amendment of the 2nd
Implementing Regulation (‘DVO’)
to the KrWaffKontrG creates the
systems come under increasing
pressure from coronavirus
(COVID-19).
‘The restrictions are a
standard measure to manage
potential medicine shortages and
protect UK patients by ensuring
the NHS has the treatments to
continue providing world-class
care. Companies that parallel
export a medicine on the ban
list may face tough enforcement
action from the Medicines and
Healthcare products Regulatory
Agency (‘MHRA’) and risk
having their trading licence
revoked for serious breaches.’
legal basis for this. On 19 March
2020, the “Third Ordinance
amending the Second Ordinance
for the Implementation of the
War Weapons Control Act” was
published in the Federal Law
Gazette Part I No. 13 (page 521)
and thus entered into force on 20
March 2020.
‘Accordingly, the electronic
reporting procedure will start with
the reporting period beginning
on 1 April 2020. The first regular
electronic report to BAFA is to
be submitted by the reporting
deadline of 30 September 2020.
However, the reporting on the
reporting date 31 March 2020 will
still be in paper form.’
FURTHER INFORMATION ON THE
EKWB CAN ALSO BE FOUND AT
WWW.BAFA.DE/EKWB
SEE: HTTPS://LAWS-LOIS.JUSTICE.
GC.CA/ENG/ACTS/C-27.6/PAGE-1.HTML
SEE: WWW.GOV.UK/GOVERNMENT/NEWS/
CRUCIAL-MEDICINES-PROTECTED-FOR-CORONAVIRUS-COVID-19-PATIENTS
WORLDECR WELCOMES NEWS AND ALERTS.
EMAIL TOM.BLASS@WORLDECR.COM
Canada’s Minister of Foreign
Affairs announced, 10 March,
that the Canadian government
was ‘taking a strong stance for
a safer world’ by controlling
‘dangerous chemicals’ – the
Novichok class of chemical
weapons, used against the
Skripals in Salisbury, England,
in March 2018 – under the
Chemical Weapons Convention
Implementation Act (‘CWCIA’).
Since that attack, Global
Affairs Canada said, it had
become clear that those weapons
should be subject to declaration
and verification.
In a statement, it explained:
‘Last fall, States Parties to the
Chemical Weapons Convention
(‘CWC’) agreed unanimously
to add Novichoks to the list
of chemicals banned by the
Organisation for the Prohibition
of Chemical Weapons (‘OPCW’)
– the first time new toxic
chemicals had been added to the
OPCW list.
‘Today, Canada is tabling
amendments to the CWC to add
four new categories of controlled
chemicals – including Novichoks
– as agreed at the 24th Session
of the Conference of the States
Parties of the CWC, held in
The Hague, Netherlands, in
November 2019.
‘Canada is also introducing
legislation to amend the
CWCIA by clarifying the list
of controlled chemicals for
those who work in this field.
This will ensure that Canada’s
implementation of the CWC is
constantly up to date.’
It said that the original
version of the Canadian CWCIA
‘contained a copy of the original
list of chemicals controlled by
the OPCW; this list will soon
be out of date. The amendments
to the CWCIA remove the old
list and make clear that the
correct list of chemicals is the
one maintained by the OPCW,
easily accessible on its public
website.’

4. NEWS AND ALERTS
4
‘Processing applications for strategic
export licences has been identified
as a business-critical operation for
the Department for International
Trade. We recognise that it is
essential that businesses continue to
receive the authorisations required
to export items of a military and
dual-use nature.’
So says the UK body responsible
for licensing-controlled exports,
the Export Control Joint Unit, in
a 20 March statement, in which it
said: ‘We have put in place business
continuity measures to ensure that
licensing continues. This includes
technical assessments, end-use
checks and reviewing applications
against our strict licensing
criteria…
‘The compliance/inspection
programme will continue, although
site audits will no longer take place.
We have now moved to remote
audits as a means to meet legislative
requirements. Those sites due to be
inspected soon have already been
engaged so that your inspector
is able to determine an effective
communication route.’
However, the Export Control
Joint Unit (‘ECJU’) says that during
the crisis, ‘site audits will no longer
take place.’
‘We have put in place business
continuity measures to ensure that
licensing continues. This includes
technical assessments, end-use
checks and reviewing applications
against our strict licensing criteria.
We recognise that it is essential that
businesses continue to receive the
authorisations required to export
items of a military and dual-use
nature.’
INDIA BANS EXPORTS OF VENTILATORS AND MASKS
India’s government has amended its export policy to prohibit the export
of ventilators and sanitisers with immediate effect.
SEE: HTTP://DGFT.GOV.IN/SITES/DEFAULT/FILES/NOTI%2053_0.PDF
UK ECJU: Coronavirus won’t slow export licence applications
SEE: WWW.GOV.UK/GOVERNMENT/PUBLICATIONS/NOTICE-TO-EXPORTERS-202008-CORONAVIRUS-COVID-19-EXPORT-LICENCE-HANDLING/
NOTICE-TO-EXPORTERS-202008-CORONAVIRUS-COVID-19-EXPORT-LICENCE-HANDLING
Switzerland said it is waiting for
face masks and protective gear
from the European Union, which
banned exports earlier this month
after landing at the epicentre of
the coronavirus pandemic and
struggling to cope with shortages.
Swiss media reported the news
after Swiss Economy Minister
Guy Parmelin tweeted he had
achieved a ‘breakthrough’.
‘After several contacts with EU
Trade Commissioner Phil Hogan,
Brussels has instructed European
Union Member States to stop
blocking exports of protective
equipment to Switzerland and the
other countries of
the European Free Trade
Association (EFTA),’ reported
swissinfo.ch, the international
service of Switzerland’s public
broadcaster.
In February the European
Commission placed restrictions
on personal protective gear
as Member States went into
lockdown, warning it was short
of protective gear for medical
staff and the public.
But on 24 March, the
Commission announced that
a joint procurement effort for
protective equipment, launched
in February, had been successful.
A Commission statement said
that unidentified suppliers
were offering to meet or exceed
volumes of all requisitioned
equipment, including masks,
gloves, goggles, face-shields,
surgical masks and overalls. The
equipment should be available in
about two weeks after Member
States sign the contracts with
bidders, ‘which they should do
very rapidly,’ the Commission
said.
Switzerland, with almost
20,000 coronavirus cases and
over 500 deaths, is bracing for a
surge in infections, with some
hospitals warning they only have
a week’s supply of protective
gear for medical staff.
Germany, Switzerland’s
larger neighbour, sparked
a diplomatic uproar earlier
this month when it stopped a
truckload of 240,000 face masks
from crossing into Switzerland,
after unilaterally banning all
exports of protective gear out of
Germany.
Swiss announce ‘breakthrough’ in deal for face masks
and protective gear from the EU
WWW.SWISSINFO.CH/ENG/CORONAVIRUS-PROTECTION-_EU-AGREES-TO-DELIVER-
MASKS-AND-PROTECTIVE-GEAR-TO-SWITZERLAND-/45631040
HTTPS://EC.EUROPA.EU/COMMISSION/PRESSCORNER/DETAIL/EN/IP_20_523
Drop export controls on
‘critical materials’ to speed up
coronavirus fight, Philips tells
governments
WWW.PHILIPS.COM/A-W/ABOUT/NEWS/ARCHIVE/STANDARD/NEWS/
PRESS/2020/20190322-PHILIPS-RAMPS-UP-PRODUCTION-OF-CRITICAL-HEALTH-
TECHNOLOGY-PRODUCTS-IN-RESPONSE-TO-COVID-19-PANDEMIC.HTML
Health technology giant Philips has called on all governments to drop
export controls and tariffs on ‘critical materials and components’ to
speed up a global response to the devastating coronavirus pandemic.
The Dutch multinational said it is ‘calling on governments to
facilitate enhanced access to critical materials and components by
not imposing restrictions such as export controls and tariffs.’ It said
governments should ‘provide help to accelerate logistics, as well as
exemptions for critical suppliers from lockdown measures.’
Philips is boosting production of certain equipment which is used
to diagnose and treat the COVID-19 virus. It said it is ‘ramping up
the production of hospital ventilators and plans to double production
within the next eight weeks and achieve a four-fold increase by the
third quarter of 2020.’
A global shortage of respirators, which is expected to worsen as
the virus continues to spread, is causing panic around the world.
Philips said it wants critical medical equipment such as hospital
ventilators and patient monitors to be ‘made available across the
world, prioritizing those communities and countries that need it the
most.’

5. NEWS AND ALERTS
5
Second Rosneft
subsidiary in
a month lands
on OFAC list
for alleged
Venezuela oil
ties
HTTPS://HOME.TREASURY.GOV/NEWS/
PRESS-RELEASES/SM937
The US Department of the
Treasury’s Office of Foreign
Assets Control (‘OFAC’) has
sanctioned a subsidiary of
Russia’s giant Rosneft Oil
Company – the second in a
month – accusing it of helping
sell embargoed Venezuelan
crude, as US Treasury Secretary
Steve Mnuchin vowed that the
US ‘remains committed’ to going
after backers of President Nicolas
Maduro’s regime.
OFAC ‘designated TNK
Trading International S.A. (‘TTI’)
for operating in the oil sector of
the Venezuelan economy,’ the
US Treasury Department said in
a statement on 12 March. It said
TTI had stepped in to take over
transport and sale of Venezuelan
oil after another Rosneft
subsidiary, Rosneft Trading S.A
(‘RTSA’), was blacklisted by the
Treasury Department on 18
February.
‘TNK Trading International
S.A. is another Rosneft
subsidiary brokering the sale
and transport of Venezuelan
crude oil, which is subject to
sanctions,’ said US Treasury
Secretary Steven Mnuchin. ‘The
Trump Administration remains
committed to targeting those
who support the corrupt regime’s
exploitation of Venezuela’s oil
assets,’ he added.
TTI, which Rosneft obtained
in December 2017, is registered
in Switzerland, according to
the Treasury statement, which
claims that ‘Together, TTI
and RTSA handled a large
percentage of Venezuela’s oil
exports in 2019. In January
2020, TTI purchased nearly 14
million barrels of crude oil from
Petroleos de Venezuela.’
‘All property and interests
in property of TTI that are
in the United States or in the
possession or control of US
persons, and of any entities
that are owned, directly or
indirectly, 50% or more by the
designated individuals and
entity, are blocked and must be
reported to OFAC,’ the Treasury
said.
A federal court in Seattle
has issued a preliminary
injunction blocking the Trump
Administration from handing
regulations and export controls
over gun printing software
and technology to the US
Department of Commerce,
which a coalition of 21 attorney
generals opposes because it says
the agency ‘will lack the power
to regulate 3D-printed guns in
any meaningful way.’
‘The Court must
acknowledge the grave reality
that is likely to occur without
injunctive relief,’ Judge Richard
Jones said in his 6 March
Motion for a preliminary
injunction, which keeps
software and technology for
3D-printed guns under the
State Department and subject to
International Traffic in Arms
Regulations (‘ITAR’).
‘As the agency’s specific
findings in the record show, the
proliferation of 3D gun files
on the internet likely renders
ineffective arms embargoes,
export controls, and other
measures used to restrict
the availability of uniquely
dangerous weapons sought by
those seeking to commit acts of
terrorism or other serious crime
— implicates serious national
security and public interests,’
the judge said in his motion.
The court order has the
effect of maintaining on the
US Munitions List (‘USML’)
‘technical data and software
directly related to the
production of firearm and
firearm parts using a 3D-printer
or similar equipment,’ the State
Department’s Directorate of
Defense Controls said following
the injunction.
‘Persons engaging in
activities controlled under
the International Traffic in
Arms Regulations (‘ITAR’)
related to such technical data
and software must continue
to comply with all ITAR
requirements,’ it said in a
statement.
Last November, a federal
judge ruled that the Trump
Administration violated federal
law in its efforts to allow
3D-printed gun files to be
released on the internet.
‘After losing in court, the
Trump Administration is trying
again, this time by publishing
new rules that would transfer
regulation of 3D-printed guns
from the State Department to
the Department of Commerce,
effectively allowing their
unlimited distribution,’ said
Washington State’s Attorney
General Bob Ferguson, who
leads a coalition of 21 pro-gun
control state attorneys.
‘Due to loopholes in the
Commerce regulations, the
agency will lack the power to
regulate 3D-printed guns in any
meaningful way,’ Ferguson said
in a press release.
Injunction keeps gun printing software and technology under ITAR
HTTPS://AGPORTAL-S3BUCKET.S3.AMAZONAWS.COM/UPLOADEDFILES/ANOTHER/NEWS/PRESS_RELEASES/094_ORDERGRANTINGINPARTMOTPI.PDF
WWW.ATG.WA.GOV/NEWS/NEWS-RELEASES/JUDGE-BLOCKS-NEW-TRUMP-ADMINISTRATION-EFFORT-ALLOW-RELEASE-3D-PRINTED-GHOST-GUNS
The Trump administration has hit back at the UN Human Rights
Council for publishing a list of US and international companies doing
business with Israeli settlements in occupied Palestinian territories,
calling it a ‘blacklist’ and encouraging all firms to continue working.
‘The UN “blacklist” is anti-business, seeks to isolate Israel, has
no factual basis or legal force whatsoever, and should not be adhered
to in any respect,’ US Secretary of Commerce Wilbur Ross said in a
statement, on 3 March. ‘Boycotts against Israel and companies doing
business with and in Israel are contrary to longstanding US policy,’
he added.
A UN database of companies working in disputed Israeli
settlements, published in February, lists 112 businesses, 94 based in
Israel, six in the United States and 12 in five other countries. The US
companies are TripAdvisor, Airbnb, Booking Holdings, Expedia,
General Mills and Motorola Solutions, according to information on
the database.
‘The Government of the United States fully supports the US
companies identified on the list and encourages all US businesses
to continue to work with and invest in Israeli as well as Palestinian
communities,’ Ross said. The database was published following a
2016 request by the UN Human Rights Council in Geneva.
US backs companies doing business in Israeli settlements
WWW.COMMERCE.GOV/NEWS/PRESS-RELEASES/2020/03/STATEMENT-US-
SECRETARY-COMMERCE-WILBUR-ROSS-UN-BLACKLIST-COMPANIES

6. NEWS AND ALERTS
6
Metro Bank faces lawsuit for freezing accounts of UK-based
Iranians
accounting error of £900
million in loans. Metro was
also involved in breach of US
sanctions on Iran and Cuba in
2017 and 2019.
Any potential trial in the
latest case involving the Iranian
The UK’s Metro Bank Plc is
facing a lawsuit by British-
based Iranians and Britons of
Iranian origin who are seeking
compensation for denial of
access to their accounts without
notice or explanation. So says
the law firm representing 17
claimants.
Law firm Ronald Fletcher
Baker said it has investigated
cases between 20 May 2019
and 5 September 2019, during
which some of the claimants
were unable to access funds or
banking facilities. ‘None were
found to have acted improperly
and most of the accounts have
since been closed,’ the firm said.
The lawsuit claims that
Metro Bank restricted the
bank accounts of 17 Iranian
and British nationals and
British companies with Iranian
directors. ‘Ronald Fletcher
Baker is seeking all available
remedies from Court for its
clients including appropriate
declarations regarding Metro
Bank’s breaches of law,
compensation, interest, and
legal costs,’ the firm said.
The Guardian newspaper has
reported that the 17 claimants
are expected to seek at least £1.5
million in damages.
‘Our clients are all UK
residents and they have made
it clear to Metro Bank Plc that
they did not use their accounts
in an unlawful or illegitimate
manner,’ said Rokhsareh
Vahid, Sanctions and Banking
Specialist at Ronald Fletcher
Baker. ‘Metro Bank has not
alleged that any of the claimants
were involved in any illegal
or illegitimate activities,’ she
explained.
The latest lawsuit comes as
Metro Bank faces a US class
action suit over a massive
HTTPS://RFBLEGAL.CO.UK/LATEST-NEWS/
563-IRANIANS-CLAIM-AGAINST-METRO-BANK-PLC.HTML
clients in Britain is expected
to take place about a year from
now. The newspaper quoted a
bank spokeswoman as saying
that ‘Metro Bank will defend
itself vigorously should this go
any further.’
US blacklists
24 for nuclear,
WMD work
with Iran and
Pakistan
The United States is adding
six people and 18 corporations
to its sanctions blacklist,
accusing them of assisting
Iran’s nuclear programme,
Pakistan’s nuclear and missile
programmes, and ‘Russian
military modernization efforts,’
the Commerce Department has
announced.
The new additions to the
Entity List of the department’s
Bureau of Industry and Security
(‘BIS’) include five Iranian
officials, one company in Iran,
two entities in China, nine in
Pakistan, and five in the United
Arab Emirates (‘UAE’).
The designated parties
were ‘involved in assisting
weapons of mass destruction
(‘WMD’) activities in Iran
and Pakistan,’ and the pair
of companies in Russia were
added ‘for circumventing
license requirements for a party
previously added to the Entity
List.’
‘The actions… constrict
the export of items subject to
the Export Administration
Regulations (‘EAR’) to these
24 entities,’ the Commerce
Department added.
The Commerce Department
explained that the five Iranian
nuclear officials were added to
the list ‘for their involvement in
nuclear-related activities’ that are
contrary to US interests. The five
other Iranian and UAE names
were added for working with
Iran’s defence ministry and with
Iranian entities that are already
on the US sanctions list, including
the Islamic Revolutionary Guard
Corps.
‘The Entity List additions
also include 12 companies in
Pakistan and the UAE that have
been involved or have made
significant contributions to
Pakistan’s unsafeguarded nuclear
and missile programs,’ the
department said.
‘Efforts by companies to
illicitly procure US technologies
in support of unsafeguarded
WMD programs are unacceptable
and will not be tolerated,’ US
Secretary Wilbur Ross said as
he announced the expanded
blacklist.
WWW.COMMERCE.GOV/NEWS/PRESS-RELEASES/2020/03/SECRETARY-COMMERCE-WILBUR-ROSS-ANNOUNCES-ADDITIONS-ENTITY-LIST

7. NEWS – FEATURE
7
F
ood exporters,
pharmaceutical
companies and charities
have been forced into lengthy
and costly means by which to
find banking channels for Iran-
related business, since 2018,
when the US locked Tehran out
of the Belgium-based Society
for Worldwide Interbank
Financial Telecommunication
(‘SWIFT’), which connects
more than 10,000 financial
institutions in 212 countries.
Since then, it has grown
increasingly difficult to fulfil
humanitarian or related
business obligations, even where
exempt from the US-imposed
restrictions.
Without SWIFT, creating
a bank messaging system that
links a chain of banks together
from deposit to receipt is so
complex, lengthy and costly –
and the multiple layers of US
sanctions are so opaque and
full of risk – that only a handful
of exporters or charities have
braved on.
Those that have are facing
not only the sanctions and
banking problems but also
the region’s worst outbreak of
COVID-19 (aka ‘coronavirus’).
As at early April, Iran’s death
toll from the disease has
exceeded 3,000.
‘I have received many calls
from pharmaceutical companies
who have ended up closing
the door on business with
Iran because they could not
transfer a single penny in or
out,’ said Mahdi Hayatbakhsh,
an Alliance Experts consultant
in Tehran, whose work includes
advising foreign businesses
interested in Iran. ‘In order
to receive a payment from
Iran, a foreign company must
open an account at a bank it
has never worked with before,
perhaps in one of Iran’s
neighbouring countries. Then,
it still has to figure out how
to transfer money back from
the intermediary bank into
its own bank. For many, that
just becomes too complex and
costly,’ Hayatbakhsh explained.
The Norwegian Refugee
Council (‘NRC’), an NGO
soldiering on in Iran despite the
hurdles, says it went through
a complex and lengthy process
in order to set up a banking
channel. ‘NRC has currently no
major challenges in transferring
funds into Iran, although for
nearly one year the cash flow
was disrupted due to over-
compliance of the banking
sector,’ said Beatriz Ochoa,
NRC’s Advocacy Manager in
Iran. ‘During this period, we
advocated with our banks,
including intermediary banks,
in a lengthy process to secure
transfers. Since August 2019, we
are again receiving funds via
official banking channels,’ she
said. ‘[But] we are concerned
that banks could become
more risk averse following US
sanctions imposed in January,’
she said.
Although food exports are
also exempt from sanctions, rice
exporters in India complain that
banking woes and the US ban
on Iranian oil sales have locked
them out of their biggest market.
Vijay Setia, former
president of the All Indian
Rice Exporters’ Association
and executive director of one
of India’s largest rice shippers,
said that sales used to be paid
for from oil imports. But
since last April, when the US
warned all nations against
buying Iranian oil, Indian
rice shipments to Iran have
plummeted. ‘Exports for
January, February and March, I
suspect, will be very bleak – no
exports at all,’ Setia said.
Sanctions lawyer Erich
Ferrari of Ferrari & Associates
in Washington D.C., described
some of the complexities of
banking with Iran:
‘If you’re an intermediary
bank and you process a payment
that causes a US person to
violate the law, whether it’s
another US correspondent
bank or some other US
person, you are in violation
for causing them to violate
it. So, there’s liability there.
There’s also potential liability
under secondary sanctions
regimes. Although a lot of the
sanctions authorities exempt
humanitarian-related trade, not
all of them expressly do. And
further, even the ones that do
would not accept humanitarian
trade where there is a party
blacklisted under certain
sanctions programmes’.
Amongst the entities
affected by secondary sanctions
are included hugely wealthy
foundations, trusts and
charities owning a sprawling
web of businesses, from
hospitals, factories and airlines
to companies producing
food, medicines and military
supplies, making due diligence
difficult, and the risk of falling
foul of sanctions all too easy.
MEANWHILE – US AND
TEHRAN SPAR OVER
SANCTIONS AND SWISS AID
CHANNEL
In late January, the US
government announced
the launch of the Swiss
Humanitarian Trade
Arrangement (‘SHTA’) as a
payment gateway for Iran’s
humanitarian purchases. ‘The
United States is determined
to ensure the Iranian people
have access to food, life-
saving medicines, and other
humanitarian goods,’ US
Treasury Secretary Steven T.
Mnuchin said as the mechanism
was launched.
But Iranian foreign ministry
spokesman Abbas Mousavi said
the SHTA would not facilitate
purchase of all the medicines
and equipment it wanted, and
complained that the gateway
was only open to Swiss-based
suppliers.
‘Although the Americans
claim that medicines are not
subject to sanctions, they have in
reality closed the door [to Iran]
and have not allowed our sources
(suppliers) in other countries
IRAN PRODUCES
ABOUT 70% OF ITS
OWN MEDICINES, BUT
THE INGREDIENTS
FOR THESE ARE HARD
TO OBTAIN AND PAY
FOR UNDER THE
SANCTIONS.
SWIFT ban limits pharma, food and
NGOs as Iran fights raging pandemic

8. NEWS – FEATURE
8
to get into the Swiss channel,’
Mousavi said in an Iranian TV
interview. He suggested the SHTA
was designed more with Swiss
interests in mind than to fulfil
Iranian needs.
Iran now meets around 70%
of its pharmaceutical needs,
importing the remainder. But
some specialist drugs, such as
for use in oncological treatments
– and to fight COVID-19 – are
difficult for it to obtain, and there
have been growing international
calls on President Trump to
ease or lift all sanctions against
the country. On 1 April, an
open letter signed by three
dozen US politicians asked the
US government ‘to find a way
to deliver aid directly to the
Iranian people to support the
Iranian people’s fight against
Coronavirus, as many other
nations have done.’
It said that ‘there is
precedent for both of these
steps, as the George W. Bush
administration eased sanctions
and delivered aid to Iran
following a deadly earthquake
near Bam in 2003.’
The White House, and the
State Department have given
no indication that their Iran
strategy will be fundamentally
altered by the pandemic.
(SEE TANK TALK BELOW FOR A
PERSPECTIVE THAT QUESTIONS
THE IMPACT OF SANCTIONS
ON IRAN’S ABILITY TO IMPORT
PHARMACEUTICALS.)
Humanitarian goods or services
EU joins ban on export of protective gear
As the European Union went
into lockdown to battle the
Coronavirus (COVID-19),
the European Commission
announced restrictions on
exports of personal protective
gear outside the bloc, while
warning that existing stocks
and ramped-up production ‘will
not be sufficient to meet the
demand within the Union.’
‘In order to remedy and
prevent a critical situation,
it is in the Union’s interest
that the Commission takes an
immediate action of a limited
duration in order to ensure that
exports of personal protective
equipment are subject to an
authorisation in order to
ensure adequacy of supply in
the Union in order to meet the
vital demand,’ the Commission
said in its official journal on 15
March, explaining that controls
will remain for six weeks.
‘Exports of certain quantities
of specific products may be
authorised under specific
circumstances such as to ensure
assistance provided to third
countries, and depending on the
needs of the Member States,’ the
Commission said. It explained
that the Member States
themselves would be in charge
of authorising any exports.’
Commission Implementing
Regulation 2020/402 notes
that there: ‘are vital needs of
protective equipment within the
Union with regard to hospitals,
patients, field workers, civil
protection authorities. Such
vital needs are constantly
monitored through the Union
civil protection mechanism.’
Article two of the Regulation
provides guidance on
procedural aspects of applying
and granting authorisations
noting, inter alia, that: ‘If the
protective equipment is located
in one or more Member States
HTTPS://EUR-LEX.EUROPA.EU/LEGAL-CONTENT/EN/TXT/
PDF/?URI=CELEX:32020R0402&FROM=EN
other than the one where
the application for export
authorisation has been made,
that fact shall be indicated in
the application. The competent
authorities of the Member State
to which the application for
export authorisation has been
made shall immediately consult
the competent authorities of
the Member State or States
in question and provide the
relevant information.
In deciding whether to
grant an export authorisation
under this Regulation, Member
States shall take into account
all relevant considerations
including, where appropriate,
whether the export serves, inter
alia:
• ‘to fulfil supply obligations
under a joint procurement
procedure in accordance
with Article 5 of Decision
No 1082/2013/EU of the
European Parliament and of
the Council of 22 October
2013 on serious cross-border
threats to health;
• to support concerted support
actions coordinated by the
Integrated Political Crisis
Response Mechanism
(‘IPCR’), the European
Commission or other Union
institutions;
• to respond to the requests
of assistance addressed to
and handled by the Union
Civil Protection Mechanism,
by third countries or
international organisations;
• to support the statutory
activities of support
companies abroad that enjoy
protection under the Geneva
Convention, and in so far as
they do not impair the ability
to work as a national support
company;
• to support the activities of the
World Health Organisation’s
Global Outbreak Alert &
Response Network;
• to supply foreign operations
of EU Member States
including, military
operations, international
police missions and/
or civilian international
peacekeeping missions;
• for the supply of EU and
Member State delegations
abroad.’
On 27 February, the US Department of Treasury’s
Office of Foreign Assets Control (‘OFAC’) issued
a licence authorising certain transactions for
humanitarian goods or services with the Central
Bank of Iran (‘CBI’).
General License No. 8, together with a
humanitarian channel to Iran that the United States
has set up in cooperation with the Swiss government,
is intended to facilitate transfers, transactions and
some activities connected to the export and re-export
of medicines, agricultural commodities and related
equipment, including software.
The licence authorises certain payments,
financing and brokering for exports and re-exports
of medicines, agricultural commodities and related
equipment and devices.
The authorisations coincided with a 27
February announcement that the US and
Switzerland had finalised the terms of the Swiss
Humanitarian Trade Arrangement (‘SHTA’),
which, the Treasury Department said, ‘is now fully
operational.’
‘While the United States maintains broad
exceptions and authorizations for the conduct of
humanitarian trade with Iran, the SHTA presents
a voluntary option for facilitating payment
for exports of agricultural commodities, food,
medicine, and medical devices to Iran in a manner
that ensures the upmost transparency,’ the Treasury
Department said.
‘Under the SHTA, participating financial
institutions commit to conducting enhanced due
diligence to ensure that humanitarian goods reach
the people of Iran and are not misused by the
Iranian regime,’ it added. ‘Parties may continue
to avail themselves of existing exceptions and
authorizations to conduct humanitarian trade with
Iran outside of the humanitarian channel.’

9. TANK TALK
9
W
riting in the National
Interest magazine,
Martijn Rasser, Fellow
at the Center for New American
Security (‘CNAS’) says that the
coronavirus crisis ‘makes clear
that America doesn’t need an
overseas war or a nasty trade
dispute to have a major supply
chain problem on its hands.’
The US, he says, is critically
vulnerable ‘because of highly
concentrated logistics networks.
Key supply chains must be
diversified and secured. Doing so
will be complex, costly, and time-
consuming.’
Three steps are required, he
argues:
‘Officials from the
departments of Commerce,
Defense, and State, the White
House and the intelligence
community, in cooperation with
Congress must identify the supply
chains where such vulnerabilities
pose an unacceptable risk to
US national security, economic
security, and core necessities.
Some of this work has already
been done, such as with
microelectronics and critical
minerals. The United States
must do the same for things like
pharmaceuticals and medical
equipment.’
That done, government should
work with business to ‘audit these
networks, map them, and identify
knowledge gaps. Ideally, the
private industry would cooperate
on these issues proactively.
Many firms already dedicate
considerable resources to supply
chain risk management and data
analytics.’
The next step, says Rasser,
is to craft a plan ‘to disentangle
and diversify these essential
supply chains’ – led by a special
interagency task force.
‘While the United States
can achieve a lot on its own, its
allies and partners have a strong
vested interest in doing the same.
Multilateral cooperation on such
broad technology policy issues
would lessen the economic impact
and help to ease the burden on
the inevitable but necessary
upheaval these actions will
create,’ he writes.
C
ontrary to reports, Iranian
imports of much-needed
pharmaceuticals have
not been majorly impacted by
sanctions. So says David Adesnik,
Fellow of the Foundation for the
Defense of Democracies (‘FDD’),
and Saeed Ghasseminejad, in a
10 March policy brief, basing
their conclusions on publicly-
available trade data.
‘According to the official
Eurostat database, total EU
exports to Iran fell from
€8.9 billion in 2018 to €4.5 billion
in 2019, while pharmaceutical
exports fell from €738 million
to €698 million. Most US
sanctions went into effect in
November 2018, six months
after the US withdrawal from
the Iran nuclear deal. Thus, a
year-on-year comparison of 2018
to 2019 provides a good, though
imperfect, approximation of the
sanctions’ impact,’ they write.
‘US sanctions on Iran have
never prohibited trade in food,
medicine, or other humanitarian
goods,’ they observe. ‘While
Iranian Foreign Minister Javad
Zarif often insists that sanctions
prevent Iran from importing
medicine, the regime’s own
health officials have consistently
denied that this is the case…
Western media frequently
report as fact that sanctions
are responsible for shortages.
While acknowledging that
US law allows humanitarian
trade, media reports allege that
Western firms’ fear of sanctions
create a “chilling effect” that
creates an aversion even to
legitimate transactions. Despite
anecdotal evidence of such
concerns, official data provide a
very different picture.’
Tank Talk
NEWS AND RESEARCH FROM THE EXPORT CONTROL,
NON-PROLIFERATION AND POLICY WORLD
HTTPS://NATIONALINTEREST.ORG/FEATURE/PANDEMIC-PROBLEM-AMERICAS-
SUPPLY-CHAINS-ARE-DANGEROUSLY-BRITTLE-134022
I
n a piece for the Carnegie
Endowment for International
Peace, Paul Haenle, who
holds the Maurice R. Greenberg
Director’s Chair at the Carnegie–
Tsinghua Center based at
Tsinghua University in Beijing,
explores the ramifications of the
coronavirus on Beijing’s foreign
policy and Sino-US relations.
Mistrust, since the beginning
of the pandemic, between the
two nations has hampered ‘the
global coordination such a crisis
requires’, he says, and President
Trump’s rejection of engagement
will now have consequences:
‘Under previous
administrations, the US
Centers for Disease Control
and Prevention maintained
a substantial presence on the
ground in China. US public
health experts established
relationships with Chinese
counterparts and instituted
procedures that were called upon
when the severe acute respiratory
syndrome (‘SARS’) outbreak
took place in 2002 and 2003. The
Trump Administration has rolled
back much of that presence.’
As regards the three-
phase trade deal between the
two countries, ‘it’s difficult
to tell’ what the impact will
be of Covid-19, but, ‘if either
side struggles to meet its
commitments, the coronavirus
could offer an out. As the US
presidential race picks up, Trump
will likely do everything he can
to prevent the deal from falling
apart or being pilloried as a
failure. Beijing is equally eager to
keep the deal in place to avoid a
return to previous tariff levels and
increased uncertainty, especially
amid efforts to jump-start the
Chinese economy.’
HTTPS://CARNEGIEENDOWMENT.ORG/2020/03/11/
WHAT-CORONAVIRUS-MEANS-FOR-CHINA-S-FOREIGN-POLICY-PUB-81259
HTTPS://EC.EUROPA.EU/EUROSTAT/DATA/DATABASE
WWW.FDD.ORG/ANALYSIS/2020/03/10/TRADE-DATA-SHOWS-SANCTIONS-HAVE-
LITTLE-IMPACT-ON-IRANIAN-PHARMA-IMPORTS
American supply chains are ‘dangerously brittle’
China, the US and Covid-19
Iran drug supplies ‘not affected’ by sanctions

10. EDITORIAL
1 0
T
he COVID-19 pandemic
has spawned myriads of
individual tragedies – and
revealed heroes (and villains)
in every walk of life. And it has
posed urgent questions to the
trade compliance and policy
community: how can we protect
the national interest at the same
time as working globally to
ensure supply chain continuity?
Is the continuation of sanctions
programmes in their current
form appropriate, if the loss of
life is to be minimised? How can
valuable logistical information
be shared amongst competitors
in the greater interest? Is it right
to introduce new export controls
on medical equipment when your
neighbour might need it more
than you?
Awed we may be by the self-
sacrifice of the front-line workers
in healthcare and the emergency
services, but there is a valuable
– critical – role to be played by
the constituents of WorldECR,
lending their collective experience
of supply chain logistics, trade
networks, Customs procedures,
authorisation requirements,
to ensure that much-needed
equipment gets to where it most
needs to be, that where possible
businesses stay viable and jobs are
safeguarded.
Many of you have knowledge
of specialist areas such as
bioscience, pharmaceuticals
and medical equipment. Others
may find yourselves on a steep
learning curve as companies
redeploy their manufacturing
capabilities to meet national or
international needs: and lest it
be forgotten, the usual drivers
of compliance remain intact –
there is always the possibility
of bad actors looking to take
advantage of these confusing
times. (Even working from
home – a norm now for most
professional services firms,
carries compliance risks.)
WorldECR will be discussing
the appropriate responses to
COVID-19 that are within the
gift of our community. We want
to flag/champion the role of the
trade compliance profession
during this unprecedented crisis.
Please let us know how we can
help you. Is there best practice
you’d like to share? Or that you’d
like others to? Are there choke
points in the supply chain that
need easing? Be in touch.
Tom Blass, April 2020
Tom.Blass@worldecr.com
IS IT RIGHT TO
INTRODUCE NEW
EXPORT CONTROLS ON
MEDICAL EQUIPMENT
WHEN YOUR
NEIGHBOUR MIGHT
NEED IT MORE
THAN YOU?
Bringing what
you know to bear
Dual-use export controls in
international transit and
transhipment
Dual-Use Export Controls in International Transit and Transhipment
provides guidance on the regulations governing different types of
carriage in more than 40 countries worldwide.
FOR FULL DETAILS AND TO ORDER YOUR COPY, VISIT:
WWW.WORLDECR.COM/BOOKS

11. Export
Compliance
Manager
Risk assessments: managing the changing regulatory landscape
“Selling the sizzle” – A case study in marketing trade compliance
How can non-US technology companies best manage OFAC risk?
A week in the life of IBM’s Export Regulation Office
Issue 1. MARCH 2020
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12. BULLETINS
1 2
Coronavirus: update on US controls and other compliance issues
The outbreak of COVID-19 is
impacting international trade
as global markets deal with
uncertain supply and companies
and governments work to
ensure personal safety while
developing contingency plans
for handling the virus. Here we
address key points for navigating
international trade risks.
COVID-19 VIRUS SAMPLES
ARE NOT EXPORT-
CONTROLLED, BUT
EQUIPMENT MAY BE
CONTROLLED
Companies operating in the
life sciences industry, including
pharmaceutical companies,
equipment manufacturers and
distributors, face export control
and sanctions restrictions on
the global distribution of their
products – challenges which must
be addressed even as the urgent
global demand for their products
expands.
The US Department of
Commerce’s Bureau of Industry
and Security (‘BIS’) is one of the
US agencies with the authority
to regulate export transactions
in US goods. BIS’ controls apply
to many life sciences goods,
including human and animal
pathogens and viruses.
Included in the list of viruses
that are subject to a BIS export
licence requirement is the SARS
virus, defined in the regulations
as ‘Severe acute respiratory
syndrome-related coronavirus
(SARS-related coronavirus).’ On 7
February 2020, the International
Committee on Taxonomy of
Viruses (‘ICTV’) officially
named COVID-19 ‘severe acute
respiratory syndrome coronavirus
2’ (‘SARS-CoV-2’). Due to the
similarity in nomenclature, BIS
issued guidance that COVID-19
is distinct from the SARS virus
and is considered uncontrolled
for export purposes. Companies
operating in the vaccine industry
should continue to monitor for
potential controls on COVID-19.
In addition to the virus itself,
equipment used to manufacture
vaccines (such as fermenters,
centrifugal separators and
filtration systems) and products
designed to protect against
biological threats (such as
protective suits and respirators)
may be subject to export
licensing requirements based on
the product, where the product
will be sent, and who will use
the product. Items such as latex
gloves and surgical masks (as
well as the COVID-19 virus)
are considered uncontrolled
for export, meaning an export
licence is generally not required.
However, an export licence
for such uncontrolled items
may be required if the end-user
is subject to restriction or the
destination of the export is
subject to sanctions (i.e., Iran,
Cuba, North Korea). Licence
exceptions authorise the export
of many medical-related products
to sanctioned countries. Prior
to engaging in any export to a
sanctioned country, companies
should evaluate the applicable
licence exception and ensure
the entire transaction, including
payment terms, fully complies
with the relevant exception. If an
exception cannot be used, and
a licence is required, companies
will need to get a licence.
HUMANITARIAN
ASSISTANCE TO IRAN
AND OTHER SANCTIONED
TERRITORIES
The US Department of Treasury’s
Office of Foreign Assets Control
(‘OFAC’) has responded to the
COVID-19 outbreak in Iran by
issuing General License
(‘GL’) 8, which authorises
transactions involving the
Central Bank of Iran where
such transactions involve the
authorised export of food,
medicine and medical devices
to Iran. OFAC has also issued
guidance highlighting other
exemptions and GLs in place
that authorise the making of
humanitarian donations to
Iran and activities of non-
governmental organisations
(‘NGOs’) in Iran.
OFAC may issue additional
GLs given the likelihood that
the virus will spread into other
countries subject to US sanctions.
Companies and NGOs seeking to
provide humanitarian assistance
or trade in sanctioned countries
should pay close attention to
the terms of such authorisations
and, where transactions are not
explicitly authorised, engage
proactively with OFAC and the
US State Department to secure
the requisite licences.
CONTRACTS AND FORCE
MAJEURE: SANCTIONS
PRECEDENT
As the global community
works to mitigate the impact
of COVID-19, it is becoming
increasingly common for
businesses to suspend or limit
operations. When an entity
integrated in a global supply
chain limits its operations, and
therefore its ability to provide
products and services, a breach of
contract can occur.
Sanctions provide an
analogous precedent for dealing
with situations like COVID-19.
Force majeure often is invoked
when sanctions are imposed.
There are almost always
notification and mitigation
requirements. Successfully
navigating the use of force
majeure expertise resides
with the company’s sanctions
compliance team.
TRADE COMPLIANCE WHILE
WORKING REMOTELY
In preparing response plans
of action, all companies – not
only those in the life sciences
industry – should evaluate
how their interim procedures
may impact export compliance
risks and procedures. For many
companies, enabling employees to
work from home, or reassigning
employees to alternative work
locations, may help prevent
against the spread of the virus.
However, remote work and the
use of a virtual private network,
or operating at new locations,
may impact export controls
obligations for companies
that deal in export-controlled
technology, operate under a
government-authorised export
licence or use licence exceptions.
When assessing mitigation
plans, companies should
engage compliance personnel
to ensure that performance of
work at alternative locations,
use of software, access to
information and employee travel
do not impact export licence
authorisations or security
obligations.
F.AMANDA DEBUSK, MICHAEL GRANT – DECHERT
WWW.DECHERT.COM
CORONAVIRUS
COVID-19 BULLETIN ROUNDUP
Many law firms have been producing client alerts exploring various legal
and trade aspects of the COVID-19 epidemic. See more details in the links
below:
• Hogan Lovells has produced a round-up of measures taken by EU and
Member States to ensure continuity of personal protective equipment
(‘PPE’) and address shortages of healthcare equipment. See its alert at:
www.hoganlovells.com/en/publications/the-eu-and-various-member-
states-measures-on-personal-protective-equipment-in-response-to-the-
covid-19-outbreak
• Arent Fox has produced an alert looking at the challenges of importing
equipment into the United States… www.arentfox.com/perspectives/
alerts/the-importation-personal-protective-equipment-treatment-
covid-19
… and a table charting worldwide export controls on personal protective
equipment: https://mcusercontent.com/31e15e5fee7b5a6208b646806/
files/679857a4-939f-4371-8632-e4c9d3a68b7b/Reference_Guide_
Export_Controls_Face_Masks_PPE_20200324.03.pdf
• See also this briefing on ‘COVID-19 across Asia’ from Akin Gump:
www.akingump.com/en/news-insights/covid-19-across-asia-your-
essential-toolkit-in-the-rapidly-changing-commercial-and-legal-risk-
landscape.html

13. BULLETINS
1 3
Europe doubling down on foreign takeovers amid COVID-19 crisis
The disruption linked to
COVID-19 already affects the
global economy significantly,
including M&A transactions
in Europe and across the globe.
On the regulatory side, many
deals face challenges caused by
national authorities’ reduced
capacities, while some authorities
struggle to uphold business
as usual. On the other hand,
concerns about investors taking
advantage of the volatility or
undervaluation of European
stock markets by acquiring
valuable assets are widespread in
Europe. Against this backdrop,
the European Commission
published a guidance note
‘to ensure a strong EU-wide
approach to foreign investment
screening’ in the current crisis,
while various Member States
have already increased scrutiny
or even prohibited certain foreign
takeovers.
On 25 March 2020, the
European Commission
(‘Commission’) issued guidance
to EU Member States concerning
foreign direct investment (‘FDI’)
and the protection of Europe’s
strategic assets during the
COVID-19 crisis (‘Guidance’).
The Commission calls on
Member States to preserve
companies and assets from
foreign takeovers in the current
public health crisis, without
undermining the EU’s general
openness to foreign investment.
The Commission singles out the
healthcare sector as particularly
vulnerable due to the COVID-19
crisis. However, the scope of
the Guidance is much broader
and relevant to parties in M&A
transactions in all strategic
sectors involving non-European
acquirers:
‘FDI screening should take
into account the impact on the
European Union as a whole, in
particular with a view to ensuring
the continued critical capacity of
EU industry, going well beyond
the healthcare sector. The risks
to the EU’s broader strategic
capacities may be exacerbated by
the volatility or undervaluation of
European stock markets. Strategic
assets are crucial to Europe’s
security, and are part of the
backbone of its economy and, as
a result, of its capability for a fast
recovery.’
The Guidance follows the
imposition of restrictions on
the export of certain personal
protective equipment (‘PPE’) to
counter the COVID-19 crisis,
adopted by the EU on 19 March
2020.
THE EU GUIDANCE AND FDI
FRAMEWORK REGULATION
To address the issue of takeovers
by non-EU investors of EU
companies in sensitive and
strategic sectors, the EU adopted
Regulation (EU) 2019/452 of 19
March 2019 (‘the FDI Framework
Regulation’). The FDI Framework
Regulation is intended to ensure
the protection of legitimate public
policy objectives and national
security if these are threatened by
takeovers by non-EU investors.
The FDI Framework Regulation
will become fully applicable on
11 October 2020. Furthermore,
and as opposed to merger control,
the responsibility for screening
FDI ultimately rests with Member
States. The FDI Framework
Regulation mainly provides
principles and structures for
communication and coordination
regarding FDI between the EU
and Member States in cases where
interests of the EU or its Member
States are affected.
Within the said framework
and in anticipation of it
becoming fully applicable, the
newly adopted Guidance urges
Member States to be ‘particularly
vigilant to avoid that the current
health crisis does not result in a
sell-off of Europe’s business and
industrial actors, including small
and medium-sized enterprises
(‘SMEs’)’, which are crucial
to Europe’s security and its
capability for a fast recovery.
Specifically, the Commission calls
on Member States to:
a. Make full use of the
mechanisms of the FDI
Framework Regulation and
to take fully into account
the risks to critical health
infrastructures, supply of
critical inputs, and other
critical sectors if national
screening mechanisms are
already in force.
b. For those Member States
which currently do not
have a national screening
mechanism, or whose
screening mechanisms do not
cover all relevant transactions,
set up a full-fledged screening
mechanism. In the meantime,
such Member States should
use all other available options
to address cases where
the acquisition or control
of a particular business,
infrastructure or technology
would create a risk to security
or public order in the EU,
including a risk to critical
health infrastructures and
supply of critical inputs.
The Guidance also identifies
measures that Member States can
take with regards to investments
that do not constitute FDI – i.e.,
portfolio investments, such as
retaining special rights (‘golden
shares’) to block or set limits to
certain types of investments in
the companies concerned.
DEVELOPMENTS AND
OVERVIEW OF FDI RULES IN
THE EU27 AND THE UK
Member States continue to
review FDIs on the grounds of
security or public order, and to
take measures to address specific
risks. These risks, as explained
in the Guidance, include
threats linked to a public health
emergency. Pursuant to the FDI
Framework Regulation, the
review and, when required, the
adoption of measures preventing
or conditioning an investment
on grounds of security or
public order is the ultimate
responsibility of Member States.
The Commission may address
opinions recommending specific
actions to the Member State
when there is a risk that the
investment affects projects and
programmes of Union interest.
Member States may also chime in
if they see their interests affected
by FDI into other Member States.
To date, 14 of the 27 Member
States have adopted mechanisms
to scrutinise FDI, ranging
from screening procedures to
partial or total prohibition of
FDI in specific sectors. Among
these countries are Europe’s
largest economies – including
France, Germany, Spain and
the UK – all of which recently
tightened their FDI screening
regimes. Following a global
trend in recent years, even
European countries that are
traditionally recognised as
the most open economies,
such as the Netherlands, are
in the course of adopting or
considering FDI screening
regulations. The COVID-19
outbreak is likely to accelerate
this process significantly and
companies should prepare for a
tougher M&A level playing field
post-crisis.
INDIVIDUAL MEASURES
TAKEN
Various EU Member States have
already announced that they
will intervene to protect their
strategic assets by blocking
FDIs in view of the current
COVID-19 public health
crisis in Europe. In particular,
southern European countries
aim to avoid losing important
economic assets after the
economic crisis:
LOURDES CATRAIN, ALINE DOUSSIN, FALK SCHÖNING – HOGAN LOVELLS
WWW.HOGANLOVELLS.COM
EU

14. BULLETINS
1 4
Spain
In Spain, Royal Decree-law
8/2020 of 17 March 2020, as last
amended by Royal Decree-law
11/2020 of 31 March 2020, sets
out urgent measures to deal with
the economic and social impact
caused by the COVID-19 crisis.
These measures subject
acquisitions of stakes in Spanish
companies operating in specific
strategic sectors to prior
authorisation, provided that the
stake is equal to or exceeds 10% of
the share capital or entails effective
participation in the management
or control of the Spanish company,
and the investor: (i) is based
outside the EU and the European
Free Trade Association (EFTA);
or (ii) is based in the EU/EFTA
but its beneficial ownership (i.e.,
a stake exceeding 25% of the
share capital or voting rights, or
direct or indirect control by any
other means) is held, directly or
indirectly, by a non-EU/EEA entity.
The strategic sectors covered
by these new measures include
critical infrastructures (such
as energy, transport, water,
health, media, data processing
or storage, aerospace, defence);
critical technologies and
dual-use products (such as
artificial intelligence, robotics,
semiconductors, cybersecurity,
aerospace, defence, energy
storage, nanotechnologies and
biotechnologies); supply of
fundamental inputs (particularly
energy, raw materials, food
safety); and sectors with access or
control of sensitive information
such as personal data and media.
The covered sectors can be
further expanded for reasons of
public security, public order and
public health. Further, a prior
authorization would be required for
the acquisition of any assets in the
following scenarios: (i) the foreign
investor is directly or indirectly
controlled by the government of
a third country; (ii) the foreign
investor has made investments or
participated in activities in sectors
that affect safety, public order and
public health in another Member
State; and (iii) there are on-going
administrative or legal proceedings
concerning unlawful or criminal
activities against the foreign
investor in another country.
New developments to the
FDI legal framework aimed to
exempt the prior authorisation
requirement for acquisitions
below a certain threshold are
expected in the next weeks. Until
then, an expedited procedure
before the Directorate General
of International Trade and
Investment of the Ministry of
Industry, Trade and Tourism
(prior report from the Board of
Foreign Investments) is applicable
to: (i) acquisitions where there
is an agreement or binding offer
with a price determined before
18 March 2020; and (ii)
acquisitions for an amount
between €1 million and €5
million. Further acquisitions
below €1 million are exempted
from prior authorisation.
These new rules will be
applicable during the term of the
national emergency and possibly
thereafter.
France
In France, in time of crisis the
government has the legislative
powers to increase its interests
in strategic companies, or even
acquire control of strategic
companies if it passed specific
laws in this regard. At time of
writing, however, the government
has not announced any intention
to nationalise specific companies,
although it is monitoring the
situation very closely. Separately
from the nationalisation
speculations, the government
has confirmed that its current
rules on FDI screening approvals
are designed to prevent any
foreign acquisition or minority
ownership in strategic sectors of
the French economy from causing
national security concerns.
Independent of the crisis, the
French Parliament has already
approved a tightening of the
current regime, which enters into
force on 1 April 2020.
Italy
In Italy, Prime Minister Conte
affirmed on 25 March 2020
that the government is ‘ready
to act to defend the industrial
and business assets of our
country without precluding
[the Italian government] from
expanding the intervention to
other strategic sectors’. Prior
to that, the government had
already started to defend strategic
companies, in the energy and four
aerospace sectors. For ongoing
FDI screening procedures,
review periods have already been
suspended until 15 April 2020.
Germany
Germany has not adopted any
specific measures regarding
the crisis yet. However, we have
recently experienced increased
scrutiny and delays in ongoing
screening procedures by the
German Federal Ministry of
Economics to address concerns of
foreign takeovers taking advantage
of the crisis. Independent of the
crisis, a far-reaching reform to
tighten the existing rules for FDI
screenings is being proposed and
currently under discussion by
the government. The reform is
aimed to adapt the German legal
framework to the coordination
system introduced by the FDI
Framework Regulation.
UK
The UK has not publicly
announced any specific measures
in relation to FDI screening
regarding the crisis yet. However,
a number of changes to the UK
national security landscape have
been implemented to strengthen
the UK government’s powers
and to allow for intervention in
certain categories of transactions.
Although the current regime is
voluntary, the UK government
can ultimately block a transaction
in strategic sectors of the UK
economy if the deal raises national
security concerns.
The above measures reflect
the situation in the EU on 31
March 2020. Companies affected
by these measures should
remain vigilant to any further
developments.
KEY TAKEAWAYS
The COVID-19 crisis intensifies an
ongoing trend in major Western
economies such as the US, Japan,
as well as France, Germany, Spain,
the UK, and others in Europe to
tighten FDI. Generally speaking,
government intervention under
FDI screening rules is already
much harder to predict than
government intervention under
the long-established merger
control regimes, particularly as the
security concerns associated with
FDI are often not communicated
or discussed openly during the
review process. Such difficulties
for transaction parties will likely
further increase in the wake of the
crisis.
Companies can expect
authorities to widely remain active
and closely follow FDIs into their
respective economies. Concerns
about investors taking advantage
of the crisis by acquiring valuable
assets are widespread in Europe
and will likely result in authorities
making full use of their screening
powers (as in France) or even
expand their existing screening
powers (as in Spain and potentially
Italy). Additionally, the vocal
engagement of the EU has raised
awareness of these issues across the
EU, even in Member States that,
so far, are coping comparably well
with the crisis, such as Germany.
Authorities may require more
detailed explanations and further
documentation as to the rationale
of foreign takeovers, in order to
seek reassurance that the current
crisis is not being exploited. Even
in cases where transactions have
been envisaged long before the
crisis, companies may still face
increased scrutiny.
If the crisis continues to
worsen, FDI review periods
could also be suspended in other
countries, in line with Italy.
Where possible, reviews might
also be delayed or postponed.
Particularly in the case of ongoing
transactions, companies need to
closely monitor the developments
in order to avoid or mitigate
negative impacts on deal timelines.
While UNCTAD (United
Nations Conference on Trade
and Development) has already
predicted FDI to potentially shrink
by between five and 15% due to the
crisis, the measures will likely not
be suitable to ease the impact on
companies planning cross-border
transactions.
EU
LINKS AND NOTES
• The Guidance: https://trade.ec.europa.eu/doclib/docs/2020/march/
tradoc_158676.pdf
• Press release accompanying Guidance:
https://trade.ec.europa.eu/doclib/press/index.cfm?id=2124
• Regulation (EU) 2019/452 of 19 March 2019:
https://eur-lex.europa.eu/eli/reg/2019/452/oj

15. BULLETINS
1 5
Swiss National Council in favour of creating a statutory basis on the
export of spyware
On 3 March, the Grand Chamber
of the Swiss National Council
approved an amendment to the
Goods Control Act, which will
see the legislation amended to
place the licensing of exports or
brokering of goods that can be
used for internet or mobile phone
surveillance placed under the
auspices of the Federal Council.
However, several other related
proposals were rejected by the
National Council.
The Social Democratic
Party and the Green Party of
Switzerland had proposed that
the statute should stipulate
that a permit should be refused
where there is reason to believe
that fundamental rights could
be violated or repression could
be exercised in the importing
country. The proposal failed by
123 votes to 70.
Other groups had called
for a more precise definition of
export controls. One grouping
had proposed that not only
goods, but also related advisory
services should be covered by
the statute. The majority were
satisfied with the detail provided
by the provision proposed by the
Federal Council is sufficiently
detailed – the consensus being
that further criteria could cause
implementation difficulties.
ONLY A FEW REQUESTS
REJECTED
The Federal Council can already
prohibit the export of surveillance
software and equipment if there
is a reason to believe that they
are being used for repression.
However, this is not made
possible by statute, but by a
regulation of 2015, which is based
directly on the Constitution and
is therefore limited to four years.
Last year, the Federal Council
extended the regulation by four
years. From the government’s
point of view, the regulation has
proved its worth. In its dispatch
to parliament, the government
wrote that only a few applications
had been rejected so far. However,
the Federal Council wanted to
create a statutory basis for an
unlimited rule.
Last year, the Security
Policy Committee – still in its
old composition – spoke out
against it and asked the National
Council to suspend business in
order to gain further experience
with the regulation. However,
the National Council rejected it.
The Council of States will now
decide on the rule.
CONTROVERSIAL
DECODING SOFTWARE
In the recent past, several
applications for mobile
subscriber identity catchers
(‘IMSI-catchers’) and devices
and software for decoding and
analysing radio signals have
been rejected by the Federal
Government. These applications
were worth a total of
CHF 1.6 million.
IMSI-catchers simulate
a base station so that the
communication of all mobile
phones in the reception area
also runs via the catcher. In this
way, phones can be located, calls
can be listened in on, and data
exchange can be read. IMSI-
catchers can be used to combat
terrorism or for repression.
The 41 partner states of
the Wassenaar Arrangement
are negotiating which goods
are covered by the export ban.
However, they are free to decide
whether or not to grant export
licences in individual cases.
ANDREAS FURRER, CHRIS GSCHWEND, PETER HENSCHEL – MME
WWW.MME.CH
SWITZERLAND
• There were 28 sanctions list
amendments in March identified
(compared to 34 in February),
affecting 364 entries and 36
different sanctions programmes/
regimes across OFAC SDN, EU, UK
and UN Consolidated Sanctions
Lists.
• A volume increase of 41 entries
was identified on the OFAC SDN
List (52 added, 11 removed entries),
marginal volume changes on EU,
UK and UN Consolidated Lists
only.
• From 52 entries added on the
OFAC SDN List, many of them are
linked to Iran-related sanctions
programmes (additions on 13
programmes in total). At the same
time, 11 entries were removed
from this list, related to Zimbabwe,
Syria, North Korea and Global
Magnitsky programmes.
• Two added/removed entries were
listed under both, US OFAC SDN
List and OFAC Consolidated List
(‘Non-SDN’) at the same time,
affecting Sectoral Sanctions
Identifications, SSI and Foreign
Sanctions Evaders List.
– www.treasury.gov/resource-
center/sanctions/OFAC-
Enforcement/Pages/20200312.aspx
– www.treasury.gov/resource-
center/sanctions/OFAC-
Enforcement/Pages/20200317.aspx
• There was a large number of
changed entries on EU and UK
HMT Consolidated Sanctions
Lists, which include content and
formatting changes.
Check relevance for your screening
systems and seek professional advice
where needed.
Please see full analysis and definitions
for further information
www.sanctions-intelligence.com/
news/news/sanctions-statistics-
march-2020
Reprinted with permission from
GCRD international Dr. Pascal Ditté /
sanctionsintelligence.com
Sanctions Watch
Analysis of US OFAC SDN, EU, UK HMT
and UN Consolidated Sanctions List
Key developments, March 2020

16. BULLETINS
1 6
Reconciling US export control law with Swedish data privacy
Multinational organisations
subject to privacy laws, such as
the EU General Data Protection
Regulation (‘GDPR’), are
sometimes also subject to
seemingly conflicting trade law.
One area of US trade law
requires that before exporting
certain products or technologies,
companies screen against US
sanctions lists to prevent the goods
from being available to states or
individuals deemed bad actors.
The lists often contain sensitive
information, including personal
data relating to suspected or
confirmed criminal liability.
It can be challenging to
justify the screenings under
the GDPR, which furthers a
historical tension between EU
privacy law and US export control
law. This tension has received
little attention in practice, but
a decision by the Swedish data
protection authority1
offers a
path to complying with both the
US screening requirements and
Swedish privacy law.
KEY GDPR PROVISIONS
RELEVANT TO SCREENINGS
AND SUPPLEMENTAL
SWEDISH LAW
Under Article 10 of the GDPR,2
processing personal data relating
to criminal convictions and
offences or related security
measures based on Article 6(1)
of the GDPR shall be carried
out only under the control
of official authority or when
the processing is authorised
by EU (or EU Member State)
law providing for appropriate
safeguards for the rights and
freedoms of data subjects. This
is one example of where the
GDPR contains a so-called
opener clause, allowing for
supplemental national legislation
by authorising processing of
personal data when authorised
by Member State law. And under
Swedish law, it is possible for
private companies to apply to
the Swedish data protection
authority, the Datainspektionen
(‘DPA’), for a permit to
process personal data relating
to criminal convictions and
offences – a key type of personal
data processed in connection
with sanctions screenings. For
private companies to process
such personal data (if not
required to do so under EU or
Swedish law), they must have
a permit to not be in breach of
the GDPR and supplementary
provisions of the Swedish Data
Protection Act.
THE SWEDISH SECURITY
AND DEFENCE INDUSTRY
ASSOCIATION DECISION
The DPA granted such a permit
to the Swedish Security and
Defence Industry Association,
which applied for it on behalf
of its member companies. The
decision identifies which of
the sanction lists – such as the
Specially Designated Nationals
and Blocked Persons List and
the Consolidated Sanctions List
– the permit covers and which
members are free to screen
against without breaching the
GDPR, which was in line with the
application.
In its decision, the DPA
considered the sizable fines
Swedish companies would face in
case of non-compliance with US
requirements, the risk of losing
export licences and risk of the
company itself becoming listed
on a sanctions list. If a company
loses its export licences and,
consequently, the right to buy
US products and technology,
it may not be able to fulfil its
contractual obligations. In the
long term, this could result in
a lack of supply to the Swedish
military and the Swedish
government unable to secure
access to certain products.
Against this background, the
companies were considered to
have a legitimate interest under
Article 6(1)(f) of the GDPR
to conduct the processing
necessary in connection with
the screenings. The privacy
concerns of the individuals
were deemed limited because
the lists are published by
US authorities and publicly
accessible on the internet, and
the companies were considered
to have methods in place to
prevent conflating individuals
with the same or similar name
as a name appearing on a
list. The decision presumes
the companies will otherwise
comply with applicable data
protection law and, for example,
provide advance notice to the
data subject that their personal
data will be processed in
connection with the screenings
and could be recalled if it
turns out the companies are
not otherwise processing the
personal data in accordance
with the GDPR.
There is no prescribed form
for applying for this kind of
permit from the Swedish DPA,
but it is safe to say it should
be thoroughly elaborated and
motivated. It should also be
JENNIE NILSSON, HELENA ENGELFELDT – BAKER MCKENZIE
WWW.BAKERMCKENZIE.COM
SWEDEN
Canada’s export controls: what you need to know
Wednesday, 29 April 2020 – 16:00 - 17:00 GMT
In this 40-minute webinar, Cyndee Todgham Cherniak, founding lawyer with Toronto-
based international trade law firm LexSage, will present on key elements of Canada's
export control regime, walking participants through recent developments and tools
and illustrating with reference to specific developments.
By the end of the session, attendees will have a clear understanding of:
• Canada’s economic sanctions and brokering rules
• Recent significant changes to export control lists
• New mandatory tests (Substantial Risk Test)
• Rules and exceptions regarding the US
• Canada's stepped-up review of exports to China
Duration: ca one hour (40 minutes plus 15 minutes for questions).
Price: £99 + VAT
To reserve your place, go to:
https://www.eventbrite.co.uk/e/canadas-export-controls-what-you-need-to-know-tickets-92346600167

17. BULLETINS
1 7
noted that under Swedish law
public documents, which the
application materials would
constitute, can generally be
accessed by anyone who requests
them unless they are subject
to secrecy, which is decided
on a case-by-case basis by the
authority at hand.
It remains to be seen if the
tension between US export
control law and EU privacy law
will receive the same attention in
the way that it has in Sweden in
other EU Member States and if
more companies in Sweden will
use this path of applying for a
permit for screening practices.
SWEDEN
Swiss telecoms company pays $7.8 million to settle
OFAC sanctions violations
The US Department of
Treasury’s Office of Foreign
Assets Control (‘OFAC’)
continues to aggressively enforce
its sanctions programmes.
In its latest enforcement
action, OFAC agreed with
Société Internationale
de Télécommunications
Aéronautiques SCRL (‘SITA’),
a Swiss telecoms company,
to an approximately $7.8
million civil penalty for 9,256
alleged violations of the Global
Terrorism Sanctions Regulations
(‘GTSR’).
SITA provides
telecommunications services
to companies in the civilian air
transport industry. Membership
in SITA is open to industry
operators worldwide and
services are provided to both
member and non-member air
transport companies. The SITA
group includes US subsidiaries
that develop, host, and support
certain SITA products.
SITA allegedly violated
the GTSR during the period
April 2013 to February 2018 by
providing commercial services
and software to benefit several
airlines designated by OFAC
as specially designated global
terrorists (‘SDGTs’).
OFAC initiated this
investigation after identifying
that Mahan Air (‘Mahan’),
Syrian Arab Airlines (‘Syrian’),
and Caspian Air (‘Caspian’),
which were designated by
OFAC as SDGTs on 11 October
2011, 16 May 2013 and 29
August 2014, respectively, were
members and owners of SITA,
and that these airlines benefited
from SITA’s goods, services and
technology provided, in part,
from the United States. During
the OFAC investigation, SITA
identified services it provided
to other SDGT airlines – Meraj
Air (‘Meraj’) and Al-Naser
Airlines (‘Al-Naser’) – which
were designated as SDGTs on 29
August 2014 and 21 May 2015.
SITA provided several
specific services to these
airlines, including Type B
messaging (‘TBM’), Maestro
DCS Local (‘Maestro’), and
WorldTracer.
TBM is a messaging
service that allows users to
communicate with others in
the industry to order aircraft
maintenance, refuel plans,
arrange and change routes,
facilitate baggage transfers and
book passengers. TM messages
are routed through ‘mega-
switches’ in Atlanta, Georgia
and Singapore.
Maestro is a US-origin
software application that allows
shared users of a common
terminal to manage processes
such as check-in and baggage
management.
WorldTracer is a global lost
baggage tracing and matching
system that is hosted on
SITA’s servers in the US, and
maintained by SITA’s subsidiary
located in the US.
OFAC asserted jurisdiction
over these services and software
because they were provided
from, or transited through, the
United States or involved the
provision of US-origin software
with knowledge that customers
designated as SDGTs would
benefit from use of that software.
OFAC noted that SITA
knew it was providing services
to SDGTs and implemented
periodic measures to comply
with US economic sanctions.
For example, after designation
of several airlines, SITA
terminated many of the services
provided to airlines that it knew
were subject to US jurisdiction.
In addition, in 2016, SITA
conducted a comprehensive
risk assessment but failed to
focus adequate attention on
sanctions risks. In response
to specific designations, SITA
terminated a number of services
to the airlines but continued
to provide TBM, Maestro and
WorldTracer.
As noted, SITA did not
voluntarily disclose the
violations. On the aggravating
side, SITA had knowledge
that it was providing services
to prohibited airlines; SITA
harmed the GTSR foreign
policy objectives; and SITA is
a commercially sophisticated
entity.
On the mitigating side,
SITA had no enforcement
actions against it in the five-
years preceding the date of
the earliest transactions; the
transactions represented a small
percentage of SITA’s annual
revenues; SITA implemented
extensive remedial efforts to
its compliance programme,
and customer and supplier
screening. SITA also cooperated
with OFAC’s investigation.
To prevent recurrence of any
violations, SITA:
• Established a global trade
board to monitor and vet
compliance risk involving
customers, suppliers, and
other parties.
• Established a trade
compliance committee
to act as an information
sharing and advisory board
in relation to trade and
sanctions law matters.
• Appointed a dedicated
global head of ethics and
compliance.
• Implemented new sanctions
legal compliance reviews
when onboarding new
customers and suppliers, and
when extending or adding
new products or services
to existing customers in
sanctioned countries.
• Updated and created new
compliance policies and
guidelines.
• Committed to monitoring
and auditing its products and
services.
• Required all new SITA
employees to attend sanctions
compliance training.
• Required sanctions
compliance training for all
SITA employees every year on
an annual basis.
MICHAEL VOLKOV – VOLKOV LAW
VOLKOVLAW.COM
USA
LINKS AND NOTES
1
Swedish decision: https://soff.se/wp-content/uploads/2019/09/
Datainspektionen-beslut-om-att-bevilja-undantag-f%C3%B6r-SOFFs-
medlemmar.pdf
2
https://iapp.org/resources/article/gdpr-genius/

18. BULLETINS
1 8
US government targets supply chains linked to
forced labour in Xinjiang, China
WHAT HAS CHANGED?
On 11 March 2020, the
Congressional-Executive
Commission on China (‘CECC’)
announced new proposed
legislation,1
the Uyghur Forced
Labor Prevention Act, co-
sponsored by the chairs of the
CECC, Rep. Jim McGovern (D
– MA) and Sen. Marco Rubio
(R – FL), targeting supply chains
linked to forced labour in the
Xinjiang Uyghur Autonomous
Region in China. The Uyghur
Forced Labor Prevention Act
would establish a rebuttable
presumption that all labour
occurring in Xinjiang, China,
or by persons anywhere in
China who are involved with the
‘re-education through labour’
programme targeting Chinese
Turkic Muslims constitutes
forced labour within the
meaning of the US forced labour
import ban, 19 U.S.C. § 1307. The
Uyghur Forced Labor Prevention
Act would also impose sanctions,
require reporting and strategic
guidance on policy concerns
from the Secretary of State,
and impose an SEC disclosure
requirement addressed to the
commercial engagement of
US publicly-traded companies
with individuals or entities in
Xinjiang, China.
The CECC concurrently
issued a report,2
detailing the
intersection of global supply
chains with forced labour –
specifically, the ‘systematic
repression of ethnic minority
groups’ in Xinjiang – citing
‘credible reports’ linking a
range of products and specific
companies with such forced
labour. Among the products
highlighted are textiles,
including yarn and cotton,
electronics, including cell
phones and computer hardware,
and various food products.
The CECC recommends a
range of actions, including
Magnitsky Act sanctions and
Entity List designations, as well
as enforcement activity by US
Customs and Border Protection
(‘CBP’) under 19 U.S.C. § 1307.
If the Uyghur Forced Labor
Prevention Act is enacted, any
US imports which originated to
any degree in Xinjiang, China,
or which were produced by
Chinese suppliers that have
participated in a labour pairing
programme offering subsidised
employment opportunities for
participants in the re-education
through labour programme,
will be presumptively subject to
denial of entry into the United
States.
Whether or not the Uyghur
Forced Labor Prevention Act
is enacted, CBP is very likely
to engage in additional forced
labour enforcement activity,
which could impact a broad
range of goods imported from
China.
WHAT DOES IT MEAN?
The CECC Report on ‘Global
Supply Chains, Forced Labor,
and the Xinjiang Uyghur
Autonomous Region’ lays out
an array of concerns about
the Chinese government’s
‘re-education through labour’
programme for Chinese Turkic
Muslims (including Uyghurs,
Kazakhs, Kyrgyz and others)
in Xinjiang, China. The
existence of this programme is
acknowledged by the Chinese
government and promoted
as a means of ‘job training’
and ‘poverty alleviation’ for
the rural poor in Xinjiang,
China. The CECC views the
programme as a ‘targeted
campaign of repression, mass
internment, and indoctrination
of ethnic minorities in the
[Xinjiang] region.’ Individuals
in the re-education through
labour programme may work
in Xinjiang, China, or with
partnering Chinese companies
outside Xinjiang, China
pursuant to ‘mutual pairing
assistance’ programmes.
A number of such Chinese
companies have been identified
in journalistic and NGO
reporting on this issue and are
cited in the CECC report and
proposed legislation.
By establishing a rebuttable
presumption that all labour in
Xinjiang, China is forced labour
and imposing an SEC disclosure
requirement regarding the
same, the Uyghur Forced Labor
Prevention Act would require
all companies importing
JOHN FOOTE, EUNKYUNG KIM SHIN, MALEENA PAAL – BAKER MCKENZIE
WWW.BAKERMCKENZIE.COM
USA
The United States has had a ban on importing goods made
wholly or in part with forced labour (19 U.S.C. § 1307)
since the early 20th century. For much of this history,
the law contained an exception – goods not available
in sufficient quantities in the United States to satisfy
‘consumptive demand’ were not subject to the ban. Thus,
a company could import goods made wholly or in part
with forced labour, if there was not enough competing
US-produced product to satisfy domestic demand.
In 2016, Congress eliminated the consumptive
demand exception, triggering a new era of forced
labour enforcement by Customs and Border Protection
(‘CBP’). Under the current approach to enforcement,
CBP issues withhold release orders (‘WROs’) against
products for which it identifies evidence ‘reasonably,
but not conclusively’ indicating production, wholly or
in part, with forced labour. WROs have been issued
against specific products manufactured by individual
companies, as well as against entire classes of products
from entire countries.
In 2017, Congress established a ‘rebuttable
presumption’ with respect to North Korean labour
similar to the one now proposed for Xinjiang labour
in the Uyghur Forced Labor Prevention Act. In the
Countering America’s Adversaries with Sanctions Act,
CAATSA (Pub. L. 115-44), Congress shifted the burden
of proof with respect to the use of the labour of North
Korean nationals or citizens, regardless of the location
where such labour might take place. Pursuant to
Section 321 in CAATSA, goods manufactured by North
Korean labour are presumptively inadmissible, absent
proof from the importer that the labour of such North
Korean nationals did not constitute forced labour.
In 2019, the Uyghur Human Rights Policy Act of
2019 (S.178) passed the Senate (by unanimous consent)
and the House (406-1) with minor differences that have
not yet been resolved. That bill would also authorise
the imposition of Magnitsky Act sanctions, and would
impose export controls on certain types of surveillance
items for China.
Background on 19 U.S.C. § 1307, the use of ‘rebuttable presumptions’ in the forced labour
context, and related legislation addressed to Uyghurs

19. BULLETINS
1 9
from China to engage in new
compliance activity, and will
impose new constraints on
the business activity of any
companies which have any
degree of sourcing reliance on
Xinjiang, China.
The new compliance
obligation will be to evaluate
whether any direct or indirect
suppliers are located in
Xinjiang, China and whether
any production, processing
or raw materials sourcing has
taken place in Xinjiang, China
or with suppliers affiliated
with the re-education through
labour programme pursuant
to a mutual pairing assistance
programme. The new obligation
on businesses under this
proposed legislation will be
to eliminate all such sourcing
for goods destined to the US
market.
ACTIONS TO TAKE… NOW
Companies importing into the
United States from China should:
• Convene an intra-
company working group
of stakeholders with
responsibility for affected
business operations – e.g.,
directors of sourcing/supply
chain/procurement, social
and labour compliance, and
trade compliance.
• Review and update policy
documents and sourcing
agreements as appropriate.
• Develop a plan for
supply chain mapping,
communicating policy
changes to suppliers, and
adjusting sourcing activity as
necessary.
USA
LINKS AND NOTES
1
See the legislation at: www.cecc.gov/sites/chinacommission.house.
gov/files/documents/MCGOVE_039_xml%20as%20introduced..pdf
2
The CECC report is at: www.cecc.gov/sites/chinacommission.
house.gov/files/documents/CECC%20Staff%20Report%20
March%202020%20-%20Global%20Supply%20Chains%2C%20
Forced%20Labor%2C%20and%20the%20Xinjiang%20Uyghur%20
Autonomous%20Region.pdf
BIS adds companies to the Entity List, including Iran Air
As of 16 March 2020, Iran Air
and a number of other entities
were placed on the Bureau of
Industry and Security’s (‘BIS’)
Entity List.
Companies that use Iran
Air as transport, particularly
companies engaging in the sale
of food, medicine, and medical
devices pursuant to the general
licence – 31 C.F.R. § 560.530, or
the ag/med general licence (‘GL’)
– issued by the Office of Foreign
Assets Control (‘OFAC’),
should review their business
arrangements for such sales and
assess any potential impact of
this designation. While use of
Iran Air to transport authorised
items is not per se prohibited,
involvement of Iran Air is a
red flag that would need to be
addressed as described below.
BIS’ action comes shortly
after OFAC provided guidance
regarding the Central Bank
of Iran’s involvement in sales
authorised under the ag/med
GL.
KEY POINTS
The Entity List, which is part
of the Export Administration
Regulations (‘EAR’), identifies
entities that have been or may be
involved in activities contrary to
US national security or foreign
policy. According to BIS, Iran
Air was added to the Entity List
in part because it has facilitated
‘the Iranian regime’s malign
activities throughout the Middle
East,’ including transporting
military-related equipment
on behalf of the Islamic
Revolutionary Guards Corps and
diverting spare aircraft parts
intended for civil aviation for
military purposes.
The EAR imposes additional
licensing requirements on
exports, reexports, and in-
country transfers to Entity List
entities. In prior guidance, BIS
has advised that the shipment
of items subject to the EAR by a
carrier on the Entity List is not
itself prohibited, provided that
the designated carrier is not a
consignee of the goods.
However, BIS has advised
that a transaction involving
such a designated carrier carries
a ‘red flag,’ and companies
should exercise caution and
strong oversight if they use
such a carrier, because even if
the Entity List carrier is not
the end-user of the items, it
will likely have access to them,
increasing the risk of diversion.
This means that companies are
not automatically prohibited by
this Entity List designation from
using Iran Air as a carrier if
they are already exporting food,
medicine, or medical devices
pursuant to the ag/med GL.
Because Iran Air is only
designated with the [IRAN]
tag on OFAC’s List of Specially
Designated Nationals and
Blocked Persons, its use for such
authorised BIS adds a number
of companies to the Entity List,
including Iran Air transactions
is not prohibited by the ag/med
GL, unlike other Iranian airlines
that are designated under
additional programmes, such
as Mahan Air. However, a BIS
licence is required if Iran Air is
the end-user or a consignee of
the goods, with a licence review
policy of case-by-case review for
licences for the safety of civil
aviation and the safe operation
of aircraft, and a presumption
of denial for all other licences.
Therefore, companies exporting
to Iran under the ag/med GL
using Iran Air should confirm
that they are not also consigning
goods to Iran Air.
INTERNATIONAL TRADE TEAM – HOGAN LOVELLS
WWW.HOGANLOVELLS.COM
USA

20. BROKERING
2 0
A
s do people in many
types of business, arms
brokers bring buyers
and sellers together to complete
transactions. To combat the
facilitation of weapons to bad
actors, international agreements
such as the Arms Trade Treaty
and the Wassenaar Arrangement
include requirements for
governments to control the
brokering of defence goods. To
complicate matters, however,
there is no universally recognised
definition of what constitutes
arms brokering. Some countries
regulate the brokering of defence
goods entering and leaving their
territory, while others see those
transactions falling under existing
export and import controls and
thus only focus on transactions
between two third countries. Yet
more require there to be some
form of benefit for the would-be
broker for restrictions to apply.
This article looks at a few of the
many different brokering control
measures taken by countries
around the world.
EUROPEAN UNION
The EU has required Member
States’ national licensing
authorities to license arms
brokering activity since 2003.
Council Common Position
2003/468/CFSP of 23 June 2003
on the control of arms brokering
is the first regulation to place
those requirements on Member
States and was born out of
the 1998 EU Code of Conduct
on Arms Exports. 2003/468/
CFSP was supplemented by the
more comprehensive Council
Common Position 2008/944/
CFSP, 8 December 2008, defining
common rules governing control
of exports of military technology
and equipment. Both of the
aforementioned regulations
lay out the main requirements
Member States must implement
in their national legislations. As
seen below, this leaves plenty
of room for those states to have
vastly different definitions and
requirements for brokers.
UNITED KINGDOM
The UK only controls brokering
transactions between two third
countries, as any transaction
entering or leaving the country
already falls under existing trade
controls. The Export Control
Order 2008 gives an exemption
to unwittingly financing,
insuring, or conducting general
advertising or promotion
services related to brokering
Category B and C goods, but it
gives no such exceptions related
to brokering Category A goods
or any goods destined to an
embargoed destination.
FRANCE
In France, intermediation
activity has two definitions:
either bringing two parties
together to conclude an
agreement on the sale, purchase,
etc. of defence goods, or
organising the sale of defence
goods within an EU Member
State, from a Member State to
another Member State, from
A broken picture?
The varied controls on – and
definitions of – arms brokering
Valtteri Tamminen looks at the gamut of brokering regulations in key jurisdictions and finds that
‘brokering’ isn’t necessarily the same from one country to the next.
TO COMPLICATE
MATTERS, THERE
IS NO UNIVERSALLY
RECOGNISED
DEFINITION OF WHAT
CONSTITUTES ARMS
BROKERING.
a Member State to a third
country, or from a third country
to a Member State. Under the
latter definition, organising
the sale of goods between two
third countries does not seem
to be controlled, even if the
intermediary is French.
BELGIUM
While licensing the export
and transit of military goods
is handled individually by the
three regional governments of
Belgium, brokering is handled
by the federal government.
Belgian federal law applies when
there are no applicable regional
controls and none of the regional
governments has implemented
brokering controls.
Article 10 of the federal
arms export control law, Law
1991-08-05/68, regulates
brokering activities, which it
defines broadly as creating the
conditions for the conclusion of
an arms transaction or contract,
regardless of the source or
the destination of the goods
or benefit to the broker. The
criteria for a brokering licence
include fulfilling legal and
moral conditions required, as

21. BROKERING
2 1
well as paying a deposit to the
Ministry of Finance, which will
be refunded when the brokered
activity has completed and the
end-user has certified receipt of
the goods. The process includes
a background investigation
(for companies, all directors,
managers, commissioners or
administrative or management)
and taking an exam with
a written and oral section
organised by the Federal Arms
service. The exam will be
reviewed by a ‘jury’ composed
of officials and members of
professional organisations.
Upon passing the exam, if
the application is deemed
admissible, the governor
(who ultimately approves
applications) asks the opinion
of a number of experts. On
completion of those enquiries,
the governor can grant the
licence.
UNITED STATES
22 CFR Section 129.2 defines
brokering activity as facilitating
‘the manufacture, export,
permanent import, transfer,
reexport, or retransfer of a US
or foreign defense article or
defense service…’.
Persons seeking to engage
in such activity must register
with the Directorate of Defense
Trade Controls (‘DDTC’) before
they can apply for a licence to
complete transactions.
Section 129.2 additionally
considers brokering activities
to include insuring, financing,
transporting and freight
forwarding, a broader definition
than most countries have.
However, persons engaging in
those specific actions are not
usually required to register or
seek permits.
CANADA
The Export and Import Permits
Act requires a permit for
brokering goods and technology
listed in the Brokering Control
List. A permit is required to
broker items in Groups 2 and
9 of the Export Control List
– which covers defence goods
and ATT goods (controlled
under the Arms Trade Treaty),
respectively – or Groups 1, 3, 4,
6 and 7 if a broker suspects that
the goods or technology may
be used in the proliferation of
weapons of mass destruction
(‘WMD’) or their delivery
systems.
There are two explicit
exceptions to the brokering
requirements. Activities
occurring within a company
or with its affiliates are
not considered brokering,
nor is a Canadian citizen
brokering goods outside of
Canada on behalf of a foreign
company (an exception to
this exception being Group 9
goods). Additionally, General
Brokering Permit No. 1 allows
for brokering Group 2 goods to
31 countries without having to
apply for an individual permit
for each transaction.
SINGAPORE
The Strategic Goods (Control)
(Brokering) Order 2019
controls brokering of a limited
number of munitions list
(‘ML’) categories. Individuals
and companies are required
to register as brokers if they
intend to generally engage
in the brokering of goods in
categories ML1 to ML4 and
ML8. A permit is required to
broker technology in ML21 and
ML22 (specific software and
technology for military items,
respectively). This leaves 15 ML
categories that do not have any
brokering controls on them,
unless they fall under the catch-
alls mentioned in the Strategic
Goods (Control) Act. The act
requires a permit for brokering
any goods that a broker suspects
will be used for the production,
development, etc. of WMD or
their delivery systems.
INDIA
India maintains a ban on
brokering both defence and
dual-use goods. The SCOMET
List is governed by the Foreign
Trade Act, which explicitly
places brokering and other
forms of trade under the WMD
Act. The WMD Act then bans
brokering outright without
giving a definition. This
includes ‘facilitation’ which is
also not defined.
AUSTRALIA
In order to conduct brokering
in Australia, would-be brokers
must first register themselves
with Defence Export Controls
before they are allowed to
apply for transactional permits.
The Defense Trade Controls
Act defines brokering as
occurring when a person acts
as an intermediary or agent
between two or more parties to
supply goods on the Defence
and Strategic Goods List.
The broker must also receive
some sort of benefit from
the transaction or otherwise
be advancing a political,
religious or ideological cause.
The brokering must happen
between two third countries
and transactions within a single
country are not considered
brokering. Furthermore, it is not
Valtteri Tamminen is
a research associate at
TradeSecure, LLC.
HTTP://TRADESECURE.NET
INDIA MAINTAINS A
BAN ON BROKERING
BOTH DEFENCE AND
DUAL-USE GOODS.
a violation of the act if either of
the two countries is a member of
the Wassenaar Arrangement.
As is the case with most
countries in this overview,
Australia extends brokering
controls on its citizens no
matter where they are in
the world. However, there
is an exemption for citizens
conducting brokering on behalf
of a foreign company that is not
subject to Australian controls.
CONCLUSION
This is an evolving space – a
recent update on measures
taken by EU Member States to
implement Regulation 428/2009
shows that only half of them
have actually put in place an
authorisation requirement for
brokering activities. And while
the risk of prosecution – at least
in the EU – is regarded as low,
it’s also true that brokering
potentially covers a wide
gamut of activities: ergo, it is a
compliance area that deserves
close and continued scrutiny.
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