The Executive Office of the President, via the National Science and Technology Council, has released an updated list of critical and emerging technologies that are potentially significant to U.S. national security. This list updates and revises the critical technologies list identified in the October 2020 report, “National Strategy for Critical and Emerging Technologies” and an updated report in February 2022. See SmarTrade Updates of October 19, 2020 and February 15, 2022. For the purposes of the national strategy, critical and emerging technologies (CET) are defined as “those technologies that have been identified and assessed by the National Security Council (NSC) to be critical, or to potentially become critical, to the United States’ national security advantage, including military, intelligence, and economic advantages.”

The 2024 update identifies the following CET areas:

  • Advanced Computing
  • Advanced Engineering Materials
  • Advanced Gas Turbine Engine Technologies
  • Advanced and Networked Sensing and Signature Management
  • Advanced Manufacturing
  • Artificial Intelligence
  • Biotechnologies
  • Clean Energy Generation and Storage
  • Data Privacy, Data Security, and Cybersecurity Technologies
  • Directed Energy
  • Highly Automated, Autonomous, and Uncrewed Systems, and Robotics
  • Human-Machine Interfaces
  • Hypersonics
  • Integrated Communication and Networking Technologies
  • Positioning, Navigation, and Timing Technologies
  • Quantum Information and Enabling Technologies
  • Semiconductors and Microelectronics
  • Space Technologies and Systems

This updated document expands upon the original 2020 CET list and the February 2022 update. Three new categories include (i) clean energy generation and storage; (ii) data privacy, data security, and cybersecurity technologies; and, (iii) positioning, navigation, and timing technologies. The list continues to identify subfields under each sector that describe the intended scope in more detail and, where possible, focuses on core technologies rather than on technology application areas or performance characteristics.

On December 22, 2023, President Joseph Biden amended Executive Order (EO) 14068 by additionally authorizing the prohibition on the importation and entry into the United States of diamonds of Russian Federation origin. See Thompson Hine Update of January 2, 2024. The EO required that such a ban be implemented only after the issuance of a determination “from appropriate U.S. departments and agencies, the importation of certain products mined, extracted, produced, or manufactured wholly or in part in Russia, even if these products are then transformed in a third country.” On February 8, 2024, the Department of the Treasury’s Office of Foreign Assets Control (OFAC) issued two such determinations.

First, OFAC issued a determination prohibiting the importation of non-industrial diamonds mined or extracted in Russia, notwithstanding whether they have been substantially transformed into other products in a third country. Effective March 1, 2024, non-industrial diamonds with a weight of 1.0 carat or greater will be banned from importation. This will expand on September 1, 2024, to include non-industrial diamonds with a weight of 0.5 carats or greater.

Second, OFAC issued a determination prohibiting the importation of diamond jewelry and unsorted diamonds of Russian Federation origin or exported from Russia, effective March 1, 2024.

These prohibitions are intended to implement the December 2023 G7 commitments to impose phased restrictions on the importation of diamonds mined or extracted in Russia. As a result of these determinations, the importation and entry into the United States, including importation for admission into a foreign trade zone located in the United States, of such diamonds and diamond jewelry of Russian Federation origin will be prohibited, except to the extent provided by law, or unless licensed or otherwise authorized by OFAC.

OFAC notes that it intends to issue additional public guidance regarding these determinations.

On February 1, 2024, the Department of the Treasury’s Office of Foreign Assets Control (OFAC) published an Oil Price Cap Compliance and Enforcement Alert to provide “[a]n overview of [five] key … evasion methods and [corresponding] recommendations for identifying such methods and [subsequently] mitigating their risks and negative impacts.” The price cap referenced by the Alert refers to the price caps on Russian oil and petroleum products imposed by an international coalition consisting of the United States, the G7, the European Union, and Australia to constrain two key revenue streams for Russia that could then be used to fund its ongoing full-scale invasion of Ukraine. See Updates of December 5, 2022 and January 2, 2024 for additional background.

The first three key evasion methods the Alert highlights are: (1) falsified documentation and attestations “used to disguise the true price paid” for Russian oil and petroleum products, as well other important transaction details; (2) opaque shipping and ancillary costs (including shipping, freight, customs, and insurance costs), which can “be used to obfuscate Russian oil and [petroleum] products being purchased above the price cap”; and, (3) third country supply chain intermediaries and complex and irregular corporate structures “to disguise the ultimate beneficial owner of Russian oil and oil products.” The Alert indicates that these evasion methods can be mitigated in a similar manner: enhanced due diligence across the supply chain. Accordingly, the Alert emphasizes Know Your Customer (KYC) and Know Your Customer’s Customer (KYCC) procedures as vital to minimizing illicit activity.

The Alert also warns of flagging and reflagging activities, which can be used to conceal a vessel’s true ownership and/or affiliation with Russia. To minimize such a risk, the Alert advises flagging registries to routinely inform registrants and vessel owners that sanctionable or illicit conduct is grounds for immediate removal of registration. Similarly, the Alert also recommends caution when dealing with the so-called “shadow” fleet (also referred to as the “ghost,” “dark,” or “parallel” fleet): older vessels engaged in various deceptive shipping practices and/or with opaque corporate ownership structures). The Alert notes engaging with the “shadow” fleet can be minimized by insisting upon reviewing a vessel’s maritime insurance policy, thereby ensuring coverage is continuous throughout a vessel’s entire voyage, appropriate given the ship’s purported activities, and derives from a legitimate insurance provider.

Finally, the Alert emphasizes wariness of voyage irregularities “from the port of loading to the final destination.” The Alert acknowledges changes to a voyage can occur for legitimate reasons, but stakeholders should be aware that changes can also be intentional to disguise a cargo’s origin, ultimate destination, or recipients. Accordingly, stakeholders should obtain sufficient explanations and shipment details to justify when changes are made, especially when they include indirect routing, unscheduled detours, or seemingly transshipment through third countries. 

The Alert concludes by providing an up-to-date list of price cap coalition members and how persons can report suspected breaches of either price cap to competent authorities within each country.

On February 1, 2024, the United States introduced new sanctions to promote peace in the West Bank, targeting recent actions that jeopardize the region’s stability, including attacks by Israeli settlers against Palestinians and Palestinian attacks against Israelis. This follows the related visa restriction policy announced by the State Department on December 5, 2023. 

The sanctions have been introduced under a new Executive Order (E.O.) “Imposing Certain Sanctions on Persons Undermining Peace, Security, and Stability in the West Bank,” giving the authority to the U.S. Department of State and the U.S. Department of the Treasury to apply financial sanctions against persons who are contributing to the conflict and instability in the West Bank. The order aims to address the recent increase in violence, including attacks on civilians, and to hold those responsible accountable. It targets persons involved in activities that threaten peace, security, and stability in the region.

Following this E.O., the Department of the Treasury’s Office of Foreign Assets Control (OFAC) added four individuals to the Specially Designated Nationals (SDNs) and Blocked Persons List due to their roles in promoting conflict and instability in the West Bank. Additional persons may be designated pursuant to this E.O. by the Department of State or Department of the Treasury in the future.

In accordance with the new E.O., all property and interests in property of the designated persons that are in the United States or in possession or control of U.S. persons are blocked and must be reported to OFAC. Additionally, all entities that are owned, either directly or indirectly, 50% or more by one or more blocked persons are also blocked. All transactions by U.S. persons or within (or transiting) the United States that involve any property or interests in property of designated or otherwise blocked persons are prohibited unless authorized by a general or specific license issued by OFAC or exempt. These prohibitions include the making of any contribution or provision of funds, goods, or services by, to, or for the benefit of any blocked person and the receipt of any contribution or provision of funds, goods, or services from any such person. Additionally, the entry of designated individuals into the United States is suspended pursuant to Presidential Proclamation 8693.

On January 30, 2024, the Department of State announced in a press release that the United States would be reinstating certain sanctions actions on Venezuela in light of recent activities by President Nicolás Maduro and his regime, including the recent barring of opposition candidates from competing in Venezuela’s 2024 presidential election.

In October 2023, the Department of the Treasury’s Office of Foreign Assets Control (OFAC) issued several new Venezuela-related General Licenses authorizing various transactions that would otherwise be prohibited under U.S. sanctions toward Venezuela. These earlier developments were in response to a political agreement between Maduro’s representatives and the Unitary Platform that appeared to indicate a step forward in restoring democracy in Venezuela. At the time of relaxation of these U.S. sanctions, OFAC indicated they were conditional and could be rescinded if commitments were not met. See Thompson Hine Update of October 24, 2023, for additional details on the original relaxation of sanctions.

Given recent suppression of the democratic opposition in Venezuela, two OFAC-issued Venezuela General Licenses (GL) will be impacted:

  • Venezuela GL 43 authorized transactions involving CVG Compania General de Mineria de Venezuela CA, the Venezuelan state-owned gold mining company. This GL is revoked as of February 13, 2024, and U.S. persons have 14 days to wind down any transactions that were previously authorized by this GL.
  • Venezuela GL 44 temporarily authorized all transactions that are related to the oil and gas sector operations in Venezuela that would otherwise be prohibited under the Venezuelan Sanctions Regulations. According to the State Department’s press release, “Absent progress between Maduro and his representatives and the opposition Unitary Platform, particularly on allowing all presidential candidates to compete in this year’s election,” this GL will not be renewed when it expires on April 18, 2024.

It is assumed that at a later date, OFAC will revise its Venezuela FAQs to address the resumption of these sanctions. All other sanctions on Venezuela remain in effect.

The “S” in “ESG” (environmental, social, and governance) includes an extensive list of factors like workplace culture; environmental justice; health and safety; policies on diversity, equity, and inclusion; labor standards; data privacy; human rights; racial justice; and product safety. In the past several years, consumers and shareholders have become increasingly focused on company performance in these areas and any perceived disconnects between a company’s stated commitments to social action and its actions. The failure to follow through on stated social commitments, even if negligent, can create valuation risk for a company and mislead investors who prioritize this non-financial factor in investment decisions. These perceived disconnects can also capture the attention of plaintiffs and regulators who seek legal remedies to align company practices with stated goals.

Social washing, like its older sibling greenwashing, also relates to the lack of substantiation and veracity in an entity’s ESG credentials. Greenwashing, however, resolves solely around misleading environmental benefit claims about a product, policy, or activity, whereas social washing strictly relates to the misalignment between a company’s perceived commitment to social issues and its actions.

In this article published in The Global Trade Law Journal, Thompson Hine partner Tanya C. Nesbitt and associate Kerem Bilge examine “social washing” and offer some steps that companies should consider using to avoid accusations of social washing and mitigate potential violations of existing human rights laws.

View/download full article.

Key Notes:

  • The policy memorandum builds upon two previous updates to the VSD process announced in June 2022 and April 2023. It gives direction to companies wishing to take advantage of certain faster processing options for VSDs.
  • Cuts some requirements for submissions of minor or technical infractions of U.S. export controls to reduce the administrative burden associated with submitting such disclosures.
  • Clarifies how BIS will handle requests from parties seeking to employ “corrective action” to mitigate the repercussions of an illegal export.

On January 16, 2024, the Bureau of Industry and Security within the Department of Commerce (BIS) issued a major policy memorandum of “further enhancements to our voluntary self-disclosure process” prescribed in the Export Administration Regulations (EAR).

Specifically, the memorandum details four improvements to the voluntary self-disclosure (VSD) process, which the Assistant Secretary for Export Enforcement, Matthew Axelrod, described in a subsequent speech detailing the improvements as a win-win for government and industry. He noted that the changes will not only help both the public and private sectors conserve finite compliance and enforcement resources but also “further drive prioritization … of your time—and ours—so that it’s spent on the most significant threats to our national security.”

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On January 26, 2024, the Office of the U.S. Trade Representative (USTR) released a Supplemental Business Advisory highlighting continued risks and exposure of doing business in Burma. In January 2022, the U.S. Departments of State, the Treasury, Commerce, Homeland Security, Labor and the USTR first published a business advisory on heightened risk of doing business in Burma after the 2021 military coup (see Thompson Hine Update of February 14, 2022). This supplemental advisory builds on the previous advisory, and “is intended to inform individuals, businesses, financial institutions, and other persons, including investors, consultants, non-governmental organizations, and due diligence service providers … of the continued risks and considerations for businesses and individuals with exposure to entities responsible for undermining democratic processes, facilitating corruption, and committing human rights and labor rights abuses in Burma.”

The Supplemental Business Advisory notes the following additional sectors and activities are of concern within Burma:

Sectors of concern:

  • Rare earth elements;
  • Base metals and gold;
  • Timber; and
  • Aviation services, components, and fuel.

The Supplemental Business Advisory indicates that these economic sectors “generate revenue for the military, often operating under state monopolies or monopoly-like concessions, and/or are linked with corruption and human rights or labor rights abuses.” The advisory provides brief overviews of these economic sectors and cautions U.S. businesses “to be on the lookout for direct and indirect linkages to Burma’s military regime and to sanctioned Burma individuals and entities” when sourcing materials and products from Burma. It notes that businesses and individuals “should be wary of reputational, economic, and legal risks associated with conducting business and utilizing supply chains involving these sectors and activities because of their links to Burma’s military.”

Activities of concern:

  • Potential diversion to military end uses and end users;
  • Financial and related services to state-owned banks; and
  • Ongoing abuses of Burmese workers’ internationally recognized labor rights.

The Supplemental Business Advisory also reiterates concerns over various deceptive activities when conducting business in Burma. It notes that continuing diligence for potential diversion is necessary since Burma’s military operates “an extensive network of corporate affiliates that are often registered in Thailand, Singapore, India, and the UAE,” in addition to Burma. It also indicates that Burma’s state-owned banks and other enterprises can “offer access to foreign markets for revenue generation,” and can enable Burma’s Ministry of Defense and other sanctioned military entities to purchase arms and other materials from foreign sources. The advisory also serves as a reminder that since the 2021 coup, Burma’s military regime “has repeatedly denied citizens the human rights of peaceful assembly and freedom of association, exacerbating the longstanding and growing need for better labor rights protections in Burma.”

Finally, the advisory also notes continuing concern with money laundering due to “ongoing deficiencies in Burma’s anti-money laundering and counter financing of terrorism (AML/CFT) framework” and that U.S. businesses and individuals should remain vigilant in their “risk analysis, including evaluating their potential exposure to economic and legal risks that may include violations of U.S. AML laws and sanctions.”

For additional background and recent Thompson Hine updates on U.S. restrictions on Burma, please see our other Burma updates here.

Effective January 25, 2024, the Department of Commerce’s Bureau of Industry and Security (BIS) again expanded export controls and sanctions against Russia for its continuing aggression against Ukraine and Belarus for its complicity in such activities. In a Final Rule, BIS is expanding the scope of the Export Administration Regulations’ (EAR) Russian and Belarusian Industry Sector Sanctions and making certain changes to the licensing requirements that apply to the occupied Crimea region of Ukraine. Additionally, the rule revises recent restrictions targeting Iran’s supply of Unmanned Aerial Vehicles to Russia.

  • Expansion of Russia and Belarus Industry Sector Sanctions – The Final Rule adds 95 six-digit Harmonized Tariff Schedule of the United States (HTSUS) codes to the list of items requiring a license for export, reexport, or transfer (in-country) to Russia or Belarus. This expanded list includes certain acids, chemicals, oil and petroleum products, lubricants, metals and metallic minerals, and covers the entirety of Chapter 88 of the HTSUS (aircraft, spacecraft, and parts thereof), thus further restricting Russia’s access to inputs for its defense industrial base. These additions have been added to Supplement No. 4 to part 746 of the EAR and are intended to align with controls imposed by U.S. allies.
  • Expansion of Controls on Items Destined to Iran – The rule also expands controls on certain antennas, antenna reflectors, and parts thereof under six-digit HTSUS 852910 to further restrict such items, which are often used to build unmanned aerial vehicles (UAVs), from going to Iran and Russia when produced abroad with U.S. technology or software. This addition has been added to Supplement No. 7 to part 746 of the EAR and is intended to undermine Iran’s ability to support Russia.
  • Prohibiting the Use of De Minimis U.S. Content for Certain Foreign-Made Items – The Final Rule also removes the lowest-level military and spacecraft-related items from being eligible for de minimis treatment when incorporated into foreign-made items for export from abroad or reexport to Russia or Belarus. Specifically, with implementation of this Final Rule there is no de minimis level for U.S.-origin 9×515 or “600 series” .y items destined for Belarus or Russia. BIS notes that adding Belarus and Russia to this restriction on the use of de minimis “will bring additional foreign-made military and spacecraft items within the scope of the EAR and put additional pressure on Russia’s military and defense industrial base, as well as make it more difficult for foreign suppliers to provide even low-level military and spacecraft items to Belarus and Russia.”
  • Exclusion from Certain License Requirements Related to Deployments by the Armed Forces of Ukraine – Finally, the rule makes several clarifying changes, including by adding under the current special controls on “temporarily occupied Crimea region of Ukraine” (15 C.F.R. § 746.6) an exclusion from BIS license requirements in situations involving exports, reexports, and transfers (in-country) that are related to deployments made by the Armed Forces of Ukraine to or within the temporarily occupied Crimea region of Ukraine and covered regions of Ukraine.

In announcing these additional export restrictions, BIS noted that the action was undertaken in part “to better align U.S. controls with the stringent measures implemented by partners and allies,” and to “enhance the effectiveness of the multilateral sanctions on Russia by further limiting Russia’s access to items that enable its military capabilities and to sources of revenue that could support those capabilities.”

For related details on Russia and Belarus Industry Sector Sanctions and controls on items destined to Iran, see Thompson Hine Update of May 22, 2023.

Savings Clause

This Final Rule is effective as of January 25, 2024. However, for the changes being implemented by the rule, shipments of items removed from eligibility for a License Exception or export, reexport, or transfer (in-country) without a license (NLR) as a result of this regulatory action and that were en route aboard a carrier to a port of export, reexport, or transfer (in-country), on January 23, 2024, pursuant to actual orders for export, reexport, or transfer (in-country) to or within a foreign destination, may proceed to that destination under the previous eligibility for a License Exception or export, reexport, or transfer (in-country) without a license (NLR), provided the export, reexport, or transfer (in-country) is completed no later than on February 22, 2024.

ContainerShip2

On January 17, 2024, the Department of State announced that it was re-designating Yemen-based Ansarallah, commonly referred to as the Houthis, as a Specially Designated Global Terrorist (SDGT) group. This designation will be effective as of February 16, 2024, when Ansarallah will be placed on the Department of the Treasury’s Office of Foreign Assets Control (OFAC) Specially Designated Nationals (SDN) List.

The designation as a terrorist organization is intended to impede the flow of funding to the Houthi militants and restrict their access to financial markets. National Security Advisor Jake Sullivan stated that, “If the Houthis cease their attacks in the Red Sea and Gulf of Aden, the United States will reevaluate this designation.”

This action was taken pursuant to Executive Order 13224 that targets terrorists, terrorist organizations, leaders of terrorist groups, and those providing support to terrorists or acts of terrorism. The State Department indicated that designating Ansarallah as a global terrorist group is the result of recent attacks against international maritime vessels in the Red Sea and Gulf of Aden that “have endangered mariners, disrupted the free flow of commerce, and interfered with navigational rights and freedoms.” Noting that the Houthis are operating such attacks out of Yemen, the State Department stated that it was taking “significant steps to mitigate any adverse impacts this designation may have on the people of Yemen.” As such, the 30-day implementation delay of the designation will allow for outreach to stakeholders, aid providers, and others “who are crucial to facilitating humanitarian assistance and the commercial import of critical commodities in Yemen.”

Once implemented on February 16, 2024, all property and interests in property of Ansarallah that are in the United States or in the possession or control of U.S. persons are blocked and must be reported to OFAC. In addition, any entities that are owned, directly or indirectly, 50% or more by one or more blocked persons are also blocked. All transactions by U.S. persons or within (or transiting) the United States that involve any property or interests in property of designated or blocked persons are prohibited unless authorized by a general or specific license issued by OFAC or exempt. These prohibitions include the making of any contribution or provision of funds, goods, or services by, to, or for the benefit of any blocked person and the receipt of any contribution or provision of funds, goods, or services from any such person.

OFAC has issued several related Counter Terrorism-related General Licenses (GL) that will authorize certain transactions related to the provision of food, medicine, and fuel, as well as personal remittances, telecommunications and mail, and port and airport operations in Yemen:

  • General License 22 – “Transactions Related to the Provision of Agricultural Commodities, Medicine, Medical Devices, Replacement Parts and Components, or Software Updates Involving Ansarallah”;
  • General License 23 – “Authorizing Transactions Related to Telecommunications Mail, and Certain Internet-Based Communications Involving Ansarallah”;
  • General License 24 – “Authorizing Noncommercial, Personal Remittances Involving Ansarallah”;
  • General License 25 – “Authorizing Transactions Related to Refined Petroleum Products in Yemen Involving Ansarallah”; and
  • General License 26 – “Authorizing Certain Transactions Necessary to Port and Airport Operations Involving Ansarallah.”

These GLs will also be effective as of February 16, 2024. Certain transactions remain unauthorized under these general licenses and therefore require close analysis. OFAC also issued FAQ 1158 to address the impact of the designation noting, among other issues, that as a result of the designation, “transactions by U.S. persons or within (or transiting) the United States involving Ansarallah will be blocked, unless they are otherwise authorized.” OFAC also notes in this FAQ that Yemen “is not subject to jurisdiction-based sanctions, nor will it become subject to jurisdiction-based sanctions on February 16, 2024.”