Hundreds of vessels dredged sand in North Korea’s Haeju Bay before illegally exporting it to China, according to a March report from C4ADS, a nonprofit data analysis organization. The operation, which took place in May 2019, violated United Nations Security Council resolutions and demonstrates “a level of sophistication unlike other known cases of North Korean sanctions evasion at sea,” the report said, shedding light on North Korea’s ability to “execute complex operations” to export goods. The sand was dredged by a “large fleet” that sailed from Chinese waters to North Korea, spiking traffic in Automatic Identification System traffic in the waters, the report said. The traffic was unusual because vessels rarely transmit their AIS numbers, in order “to avoid scrutiny from sanctions monitors.” The sand can be used to construct concrete, glass and silicon chips used on electronic devices, the report said.
The United Kingdom government emphasized that its National Health Service will not pay more for drugs as a result of a U.S.-United Kingdom free trade deal, and that Britain “will not compromise on our high environmental protection, animal welfare and food standards.” The latter seems to be a reference to sanitary standards that frustrate U.S. exporters, such as a ban on anti-bacterial washes of chicken. The government issued its negotiating objectives and an analysis of the economic benefit to the U.K. of a free trade deal in the March 2 document.
The Treasury Department’s recent settlement with a Swiss telecommunications and information technology organization highlighted the agency’s ability to “effectively” impose primary sanctions obligations on a non-U.S. person, according to a Feb. 28 post from MassPoint Legal and Strategy Advisory. It also showed how the Treasury’s Office of Foreign Assets Control can base sanctions jurisdiction on the “involvement in foreign transactions of U.S.-origin software and technology and telecommunications hardware” located in the U.S.
A Canadian government analysis of NAFTA's replacement -- known as the Canada-U.S.-Mexico Agreement in that country -- estimates that it will increase Canadian GDP by just under 0.25% over five years. The estimate is based on comparing CUSMA to a withdrawal from NAFTA, not from the present trade deal.
A pro-free trade think tank in Canada published an analysis of the new NAFTA, known as CUSMA in Canada, and finds it lacking. “CUSMA has little traditional tariff liberalization, introducing only minor changes to market access compared to the NAFTA, and limited improvements in trade facilitation, while at the same time introducing a number of features that promise to be more restrictive of trade,” wrote the authors of the C.D. Howe Institute paper.
Foreign Investment Risk Review Modernization Act (FIRRMA) implementation is in its early days, with new rules taking effect on Feb. 13 (see 2002110042), but it's generally assumed the number of transactions coming under Committee on Foreign Investment in the U.S. (CFIUS) jurisdiction will quadruple, said David Plotinsky, DOJ National Security Division principal deputy chief, at a Federal Communications Bar Association event Feb. 19. He said the number of telecom deals subject to CFIUS also likely will quadruple, though there's less concern about deals on “the pipes” of telecom than on data. CFIUS experts said prospective deals now have to take CFIUS issues and possible mitigation steps into consideration early in the planning.
United Kingdom companies are facing challenges navigating sanctions conflicts between the U.S. and the United Kingdom, which is leading to confusion over which items they can legally export, according to Roger Arthey, chair of the Institute of Export & International Trade’s Export Control Profession and the former head of export control compliance for Rolls-Royce. Those challenges were complicated by the U.S.’s withdrawal from the Joint Comprehensive Plan of Action in 2018 and the introduction of the European Union Blocking Regulation, which blocks EU businesses from complying with certain U.S. sanctions (see 1906240014).
Export Compliance Daily is providing readers with some of the top stories for Jan. 21-24 in case you missed them.
Not only are the purchase requirements in the new China trade deal unrealistic, other developments in China's economy and the trading relationship make them even further out of reach, according to an analysis by economist Chad Bown, a senior fellow at the Peterson Institute for International Economics. Bown notes that the rate of growth needed to meet the targets is higher than when China's economy was growing at 10 percent a year, and China's economy is growing more slowly now. Additionally, the tariffs on Chinese goods that remain in place after phase one are a further drag on the economy.
The Drug Enforcement Administration is removing the opioid antagonist 6-beta-naltrexol from schedule II of the Controlled Substances Act, it said in a final rule. Effective Jan. 24, DEA is removing “regulatory controls and administrative, civil, and criminal sanctions applicable to controlled substances, including those specific to schedule II controlled substances, on persons who handle (manufacture, distribute, reverse distribute, dispense, conduct research, import, export, or conduct chemical analysis) or propose to handle” 6-beta-naltrexol, it said.