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Huawei: Update on Export Controls & Economic Sanctions with China, Dec 2020

by Heidi Meyers | Dec 18, 2020 | Articles

Since Huawei and its non-U.S. affiliates were added to the US Dept of Commerce, Bureau of Industry and Security (BIS)’s export controls entity list, the BIS has imposed additional restrictions on Huawei, making it difficult to do business with Huawei unless a company has a license.

Your U.S. company is not allowed to export, reexport or transfer (in-country) any items controlled by the EAR (Export Administration Regulations) to Huawei, unless you have a license. Even if the customer is a Huawei location within the U.S., your company would have to find out if the items are meant to be exported to Huawei and its listed entities abroad.

On the other hand, companies may be able to import Huawei goods into the U.S. However, your company would be prohibited from returning the phones to Huawei without a license.

The Commerce Dept has expanded the foreign-made direct product rule to prevent Huawei from subverting US export controls. Even items manufactured outside the U.S. may be subject to export control restrictions, and your company may be forbidden from selling through a third party, to Huawei and its affiliates these items if they use US technology or software controlled by the EAR or produced in a manufacturing plant or by equipment that is the direct product of controlled US technology or software. You may also be prohibited from providing foreign-made items that include US technology or software to a customer who in turn re-sells it to Huawei. Thus, even though your direct customer is not on the entity list, if the customer in turn re-sells the controlled technology to Huawei or another company or person on the Commerce Dept’s entity list, that is a violation of the export controls regulations.

See: https://www.commerce.gov/news/press-releases/2020/05/commerce-addresses-huaweis-efforts-undermine-entity-list-restricts.

While a violation of the export controls on Huawei requires the US government to show that the company had “knowledge” of the violation, company officers cannot just look the other way and pretend they did not know a violation was occurring. Any U.S. company doing business in China needs to have sophisticated “Know Your Customer” (KYC) procedures and a compliance program in place. BIS has a helpful list of “Red Flag” indicators, see

https://www.bis.doc.gov/index.php/all-articles/23-compliance-a-training/51-red-flag-indicators

In general, you need to know your customer’s customer and suppliers. Your company cannot just ignore any red flags. For example, if the customer does not want to provide information on their own customers (the end-user) and is vague and evasive, that is a red flag. Or if the customer does not know anything about the product they are purchasing, and declines routine installation and maintenance, these are all red flags.

Your company needs to protect its entire supply chain, and ensure consistent export and economic sanctions compliance at all steps in the process. The company must be vigilant about what its branches, offices abroad and affiliates are doing. Also, with any mergers and acquisitions, the company should follow-up and ensure the newly acquired subsidiary or affiliate is following all the rules. You must provide ongoing training to your employees. You need an effective communication process for employees to communicate red flags and other negative information up the company’s hierarchy. Top management must be on board with export and economic sanctions compliance and keep updated on the issues. Internal audits are important to uncover inadvertent or intentional subverting of the policies by employees down the line.

If your company wishes to do business with Huawei in any EAR-controlled items or technology, you need to apply to BIS for a license. Unfortunately, the US government has a presumption of denial when reviewing license applications. However, Intel and AMD received some licenses from BIS to supply chips for Huawei’s PCs and servers. Samsung Display of South Korea also succeeded in getting a license from BIS to provide its panels to Huawei Technologies.

In addition to the export control regulations, your company also must be concerned with economic sanctions issues if dealing with Huawei, as the Chief Financial Officer Wanzhou Meng and the company are currently facing an indictment charging criminal violations of the IEEPA and economic sanctions against Iran and North Korea. See, https://www.justice.gov/opa/pr/chinese-telecommunications-conglomerate-huawei-and-subsidiaries-charged-racketeering

Huawei is not the only company you need to be worried about if doing business in China. This applies to any industry seeking to export to China or Chinese companies, as now many Chinese and Hong Kong companies and persons are not only on the export controls Entity List, but also OFAC’s Specially Designated National (SDN) list which are subject to economic sanctions. For example, Xinjiang Production and Construction Corps (XPCC), certain of its officials, and its multitudinous subsidiaries are subject to US economic sanctions for violating the human rights of the Uyghurs. See my video on Youtube, on OFAC’s 50 percent rule and XPCC, https://www.youtube.com/watch?v=6SeohBca0jo&t=324s.

Plus, contrary to the export controls issues, any violation of the economic sanctions rules is generally considered to be strict liability (i.e., the government does not have to prove that you or your company knew or realized there was a violation).

Thus, doing business not only with Huawei but also with a myriad of other Chinese companies, officials, and Hong Kong officials, may expose your company to violations of the export controls and economic sanctions regulations. Any company wishing to pursue the Chinese market or supply chain must have stringent compliance, KYC and due diligence procedures in place.

Work Permit Updates September 2020

by Heidi Meyers | Dec 18, 2020 | Articles

Recently, there have been many issues regarding delays in work permits. Over the summer, USCIS accumulated a backlog of 75,000 cases in which the work authorization card was approved, but the physical card itself had not been produced. So many people were in the unfortunate position of having an approved work permit, but no actual card, and so not able to work.

As a result of a case in federal court, Subramanya et al., v. USCIS, et al., 2:20-cv-03707 (S.D. of Ohio) the federal court in Ohio has now forced USCIS to agree to produce the work permit cards, or EADs (Employment Authorization Documents), and given USCIS a schedule by which they must be produced and mailed out.

Additionally, because of the huge number of people with EAD approval notices but no physical card, on August 19, 2020, USCIS announced that employers can accept the USCIS approval notice in lieu of the physical EAD card for USCIS approvals dated on or after December 1, 2019 through December 1, 2020. Thus, the USCIS approval notice will count as a List C document for purposes of the Form I-9. See, https://www.uscis.gov/i-9-central/form-i-9-verification-during-ead-production-delays-due-to-covid-19.

Aside from not producing EAD cards, USCIS has been sitting on work authorization applications for many months. Many applications are taking five to six and a half months to process. Meanwhile, many hard-working, honest immigrants are left without their work permit, and employers can be subject to penalties if they keep their immigrant workers on payroll. These are folks who qualify for work permits, but because USCIS is just sitting on their applications, many find themselves out of a job, and employers out of valued, skilled, and reliable employees.

The situation is even worse for asylum applicants, as USCIS recently came out with a new rule. Rather than having to wait 150 days after filing your asylum application in order to apply for work authorization, as of August 25, 2020, you now have to wait at least 365 days, a whole year, before you can apply for work authorization. Also, up until now, USCIS was required to adjudicate work permits for asylum applicants within 30 days. With the new DHS rule, the USCIS can sit upon work permit applications for months before issuing an approval. Not only that, but those asylum applicants who are applying for their work permit for the first time will now have to pay a $580 USCIS fee, whereas previously for asylum applicants their first work permit was free. Additionally, those asylum applicants who did not apply for asylum within one year of their arrival into the U.S. will be barred from applying at all until their case is granted. These new rules that harm asylum applicants are currently being challenged in the federal court in Maryland, in the case Casa de Maryland v. Wolf, 8:20-cv-02118 (Dt of Maryland, Southern Div).

If your work permit application has been unreasonably delayed, or you are an employer whose employee has a delayed EAD application, you may contact our office if you are interested in filing in federal court. Law Office of Heidi J Meyers, 11 Broadway, Suite 925 New York NY 10004 [email protected], 212-791-4007 or 646-508-5225.

Acclimate to American Culture Before You Come – Starting a Business in the U.S. Series No. 1

by Heidi Meyers | Dec 18, 2020 | Articles

It might seem like a strange time to start a business, in the midst of a pandemic, economic downturn and period of de-globalization. But in the midst of adversity, there are opportunities, if you take a fresh look, re-assess and examine. While others are going bankrupt and out of business, you can establish a firm foundation for the future.

This will be a weekly series on practical legal issues when coming from abroad to start a business in the U.S., or if you are an immigrant already in the U.S. who wants to start a new business.

While we will focus on very practical legal issues, I will start with a tip that is not legal in nature, but will definitely help you. So, first is to learn about American business culture before you come to the U.S. Or, if you are already here, to not just stay within your own community, but to get out and learn about American entrepreneurial and business culture from other groups or persons not like yourself.

Why am I starting with culture when I am writing a blog on legal issues? Because certain business norms and practices, culture, are reflected in US laws and legal standards. Do not assume what you regularly do in your home country will work or will be legal when operating a business in the U.S.

There are many online resources to help you as you plan your future business. In terms of acquainting yourself with U.S. business culture, there is a plethora of resources. Simply as an example, Gary Vaynerchuk, “Gary Vee”, https://www.youtube.com/user/GaryVaynerchuk, on how to develop your business using social media and EntreLeadership, https://www.youtube.com/channel/UCOwu527B6ufdcVl8l0VYqtQ on the qualities you need to be a leader, and how to motivate your team. Each of these examples come from totally different perspectives – Gary Vee curses a lot, while EntreLeadership comes from a Christian perspective, but both are instructive for entrepreneurs. Both come from a uniquely American perspective, especially if you are coming from abroad and want exposure to various American business outlooks. If you prefer the written word, Harvard Business Review is a great resource, full of good advice. Even though it is written from the perspective of running a large corporation, there is still plenty of insight and good advice for running a small business. You don’t need to agree with everything said. You need to listen to a range of different perspectives. Don’t just listen to those who think like you.

The above are just a few examples which I personally have found helpful. Do not limit yourself, there are numerous resources out there. Next, week we will address a common legal issue affecting many immigrants as they try to establish a business in the U.S. Stay tuned!

National Interest Exceptions (NIEs) to the Travel Ban on H-1Bs, H-2Bs, L-1s, and certain J-1s

by Heidi Meyers | Dec 18, 2020 | Articles

The Presidential Proclamation 10014 banned H-1B, H-2B, L-1A, L-1B, and certain categories of J-1s (including au pairs, trainees and interns, teachers, camp counselors and summer work program). The ban applied to entry of foreign nationals who were abroad on the date of June 24, 2020, and who did not already have a valid visa. So, all those employers who already filed H-1B petitions for the fiscal year starting October 1, 2020, are not able to bring their employees to the US unless the employee already had a valid H-1B visa as of June 24, 2020. This ban is in effect until December 31, 2020. See, https://www.whitehouse.gov/presidential-actions/proclamation-suspending-entry-aliens-present-risk-u-s-labor-market-following-coronavirus-outbreak/

There are certain exceptions to the recent travel ban on L-1s, H-1Bs, H-2Bs, and J-1s, called National Interest Exceptions (NIEs). For example, there is an exception to the ban on H-1Bs and H-2Bs for IT providers and others with government contracts. As a practical matter, however, because there are so few staff at the US Embassies and Consulates abroad, good luck trying to get a Consular Officer to pay attention to a request for an exception!

Here are the National Interest Exceptions (NIE) to the ban regarding H-1Bs (professionals), H-2Bs (seasonal or temporary workers), L-1As (multinational manager or executive transferees) and L-1B (specialized knowledge workers being transferred from abroad to US parent, subsidiary, affiliate, branch):

1) For H-1Bs and Ls, there is an NIE for public health or healthcare professionals or researchers, whose work relates to Covid-19, or to do research in an area of public health benefit, for example cancer or communicable disease research. There is also an exception for those working on an area not directly related to Covid-19, but is suffering as a result of the secondary effects of Covid-19;

2) For both H-1Bs and H-2Bs, at the request of a US government agency or entity to “meet critical US foreign policy objectives or to satisfy treaty or contractual obligations”. This would include to provide IT or other services to US government agencies or entities. For the H-2B, for example, to work on a construction project, or IT infrastructure, on a US Army base.

Regarding J-1 (exchange visitor) visas, there is no travel ban on J-1 Professors or J-1 Research Scholars. Thus, J-1 Professors and Research Scholars may apply for visas and do not need to qualify for an NIE exception. There is also no travel ban on J-1s for IMGs (International Medical Graduates) coming to the US.

There are several NIE exceptions for the banned categories of J-1s:

1) J-1 au pairs who have specialized skilled to take care of a special needs child. The child does not have to be a U.S. citizen as long as he or she is in legal immigration status. A J-1 au pair NIE exception is also recognized where the care provided by the au pair would prevent a legal individual from becoming a public health charge or ward of the state. Another au pair exemption is to take care of the child of parents providing medical care to Covid-19 patients or doing research on Covid-19;

2) If the J-1 is coming to the US pursuant to an agreement between a foreign government and the U.S.;

3) J-1 interns and trainees on US government-agency sponsored programs, which supports the economic recovery of the US;

4) J-1 specialized teachers teaching primary or secondary students in a foreign language.

For the U.S. State Department’s explanation of the NIE exceptions, see https://travel.state.gov/content/travel/en/News/visas-news/exceptions-to-p-p-10014-10052-suspending-entry-of-immigrants-non-immigrants-presenting-risk-to-us-labor-market-during-economic-recovery.html.

However, there are still certain nonimmigrant visa categories which are not covered by the travel ban and still eligible for visa issuance and to enter the U.S. In addition to J-1 Research Scholars and Professors, E-1 (treaty traders), E-2 (treaty investors), O-1A (extraordinary ability in the sciences, education, business and athletics) and O-1B (extraordinary ability in the arts, broadly defined), P-1 and P-3 visas are not banned, and so you do not need to qualify for any NIE exception to apply. TNs for Canadian and Mexican citizens, H-1B1 for Chileans and Singaporeans, and E-3 for Australians are also not banned. F-1 international students are also not banned. However, there are multiple other travel bans which you may have to consider before trying to enter the U.S. depending upon your particular circumstances.