We have seen a tremendous year in the trade and national security front and are now, more than ever, deeply aware of the impact trade compliance professionals have on safeguarding national security in the face of continued geopolitical threats. Here are some of the 2022 year-end review highlights:
- On the Russia front, after Russia’s unjustified invasion of Ukraine, we saw the United States and its allies pass comprehensive economic sanctions and export control packages that have had a great impact on the Russian economy and the war. We continue to monitor the potential for expanded economic sanctions and export controls and will update our readership on new things to come. For 2023 we predict increased enforcement and vigilance against diversion of U.S. products into Russia, and new packages of sanctions and export controls depending on Russia-Ukraine war developments.
- On the China front, we continue seeing bipartisan support for a tougher stand on China. The Biden administration continues the Trump era tariffs on China, and the USTR is currently accepting comments from importers and interested industry on the impact of the tariffs. On the export controls front, we have seen BIS issue new export controls on chips, expanded restrictions on end users in China, addition of multiple entities to the BIS Entity list, and expansion of end user/use checks. It is being reported that the Biden administration is working on an executive order that would restrict outbound investment in the U.S. into key high-tech industries in China. China launched a trade dispute against the United States in the WTO, challenging US chip curbs and labeling them as “protectionist” measures. We expect continued U.S. enforcement of forced labor laws against Chinese imports under the Uyghur Forced Labor Prevention Act.
- On the Mexico front, we are seeing new challenges being raised under the USMCA. Mexico and Canada filed a complaint about car components against the U.S. and obtained a favorable ruling. Trade disputes between Mexico and the U.S. involving the energy sector and genetically modified corn remain outstanding, with U.S. officials stating that Mexico’s decision to stop importing yellow corn violates the USMCA. The U.S. also continues to raise concerns regarding Mexico’s energy policies. On December 12, Mexico submitted proposal aimed at resolving the energy trade dispute with Washington.
- On the CFIUS front, we saw the issuance of the first ever enforcement and penalty guidelines and predict increased enforcement in 2023. A highly controversial and widely reported deal involving the purchase of farmland by Fufeng Group (Chinese entity) of 370 acres of land near Grand Forks, North Dakota (near to the Grand Forks Air Force Base) may bring changes in the regulations due to the public’s perceived loopholes in the law. CFIUS found the Fufeng land acquisition not to be a “covered transaction.” Some national security critics of this decision are demanding tougher regulations to avoid loopholes and some are even applauding decisions by individual states to create CFIUS-type reviews, e.g., the State of Texas being a prime example.
