Companies with international operations face a complex array of laws and regulations, including:
- Economic sanctions regulations, which generally restrict the ability to do business with certain countries, entities, and individuals;
- Export control regulations, which generally restrict the ability to deal in and ship certain items and information: and
- Import laws and regulations, which regulate the entry of goods into the United States.
Companies need to ensure that they have appropriate policies and procedures to address these various international trade regimes. Companies that focus their compliance programs on only one area of international risk do so at their own peril.
There have been a remarkable number of changes to U.S. sanctions regulations over the past year. These changes have made compliance even more challenging. For example, with respect to Russia, President Trump has expanded sectoral sanctions against Russia, and now has the authority to impose significant sanctions against the Russian defense or intelligence sectors. In regard to Venezuela, the U.S. government prohibits most transactions and dealings involving new debt and certain bonds, and direct or indirect purchases of securities from the government of Venezuela. And then finally, North Korea – the U.S. government now has authority to impose sanctions against individuals or entities that conduct or facilitate business with North Korea.
In addition, the U.S. government has pursued significant penalties for violations of U.S. export controls. Most notably, China-based telecommunications giant ZTE paid almost $1 billion to settle alleged violations of U.S. sanctions and export control laws. Collectively, these changes signal that the Trump administration has been aggressive in using sanctions and export control laws to enforce U.S. policy, and companies—both in the United States and overseas—are advised to take notice.
There is also a significant likelihood of further regulatory changes in 2018. Companies should closely monitor geopolitical developments, which could have a significant impact on their operations. In January, President Trump extended sanctions relief against Iran. However, he also signaled that this would be the final time he would do so. If President Trump does not extend sanctions relief again in May, prior sanctions could "snap back." Among other things, secondary sanctions targeting non-U.S. entities that do business with Iran's petrochemical sector and other industries could be reimposed. Personnel changes in the Trump administration further underscore the uncertainty over what will happen next. In this climate of uncertainty, compliance with international trade laws has never been more important.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.