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United States to Ban Goods Made in Xinjiang China

Under a new law the United States will ban imports of all goods made in whole or in part from any good from the Xinjiang Uyghur Autonomous Region in China, effective June 21, 2022. Companies need to use the next 180 days to ensure their supply chains do not include such goods.

President Biden signed into law Dec. 23 the Uyghur Forced Labour Prevention Act, which effectively deems all goods mined, produced, or manufactured in the XUAR to be produced by forced labour in China. Even those not importing directly from China may have goods detained if the materials used to produce the imported goods in a second country are tied at any level to XUAR or specific entities or commodities associated with forced labour in China.

Under this law, imports of goods from the XUAR will be banned unless United States Customs and Border Protection determines that:

  1. the importer of record has fully complied with relevant guidance to be provided by CBP, as well as any regulations issued to implement that guidance;
  2. the importer has completely and substantively responded to all inquiries for information submitted by CBP to ascertain whether the goods were made wholly or in part with forced labour; and
  3. by clear and convincing evidence, the goods were not made wholly or in part by forced labour.

Any good from the XUAR that thus overcomes the rebuttable presumption of being made with forced labour will be included in a public list to be issued by CBP 30 days after making such determination.

Further, an interagency Forced Labour Enforcement Task Force will have to develop a strategy to prevent the importation of forced labour goods from China along with the following lists:

  1. entities in the XUAR that produce goods with forced labour
  2. entities working with the government of the XUAR to recruit, transport, transfer, harbour, or receive forced labour or Uyghurs, Kazakhs, Kyrgyz, or members of other persecuted groups out of the XUAR
  3. products made wholly or in part by such entities
  4. entities that exported products made with forced labour from China to the United States
  5. facilities and entities, including the Xinjiang Production and Construction Corps, that source material from the XUAR or persons working with the government of the XUAR or the XPCC for purposes of poverty alleviation program or pairing-assistance program or any other government labour scheme that uses forced labour

The Task Force must seek public input no later than Jan. 24, 2022, and the public will be given no less than 45 days to submit comments. A public hearing must be held within 45 days after the close of the public comment period.

The State Department must then submit a report to Congress by March 23, 2022, that provides a strategy to address forced labour in the XUAR along with lists of (1) entities in China or affiliates that use or benefit from forced labour in the XUAR and (2) foreign persons that acted as agents of such entities or affiliates to import goods into the United States The final strategy to be developed by the Task Force must be in place by June 21, 2022.

Importantly, the UFLPA calls for the Task Force to provide guidance to importers with respect to the following:

  1. due diligence, effective supply chain tracing, and supply chain management measures to ensure they do not import any goods made with forced labour from mainland China and especially from the XUAR
  2. the type, nature, and extent of evidence that demonstrates that goods originating in mainland China were not made wholly or in part in the XUAR
  3. the type, nature, and extent of evidence that demonstrates that goods originating mainland China, including goods detained or seized pursuant to Section 307, were not made wholly or in part with forced labour

Sandler, Travis & Rosenberg, P.A., has developed a program to help companies review their supply chain visibility. The STR program first provides a stocktaking of procedures, policies, and programs in place to evaluate the level of due diligence and reasonable care. Next is testing and tracking to review a shipment to determine if the procedures in place can timely provide the necessary documents to CBP to rebut a claim of forced labour. Finally, CBP will assist in responding to any CBP-issued detentions.

For more information on ST&R’s import compliance reviews and how they can benefit your company, please contact Charles L. Crowley at (914) 433-6178 ccrowley@strtrade.com.

Customs Attorney Charles Crowley

Customs Attorney Charles Crowley

China Enforces Nationwide Ban on Any and All Crypto Transactions

China, officially the People’s Republic of China, is a country in East Asia. It is the world’s most populous country, with a population of more than 1.4 billion. China spans five geographical time zones and borders 14 countries, the second most of any country in the world after Russia.

China has officially banned all cryptocurrency transactions and vowed to stop crypto mining, delivering the toughest blow yet to the industry.

Cryptocurrency transactions are now considered illicit financial activity in China, including services provided by offshore exchanges, the People’s Bank of China has said. The PBC added that crypto, including Bitcoin and Ethereum, are not fiat currency and cannot be circulated.

Bitcoin slumped in the wake of the news, falling 8% to about £30000.

Chinese officials are going further to stamp out cryptocurrency trading for its ties to fraud, money laundering and excessive energy usage. China already has rules that stops banks from offering cryptocurrency related services. To get around such rules, traders have moved to digital platforms and offshore exchanges.

Cryptocurrency mining’s massive energy consumption is another reason why the industry is coming under attack. In a separate statement, China’s economic planning agency said it’s an urgent task to stop cryptocurrency mining and the crackdown is important to meet carbon goals.

China is facing a power crisis that’s already curbed commodities from aluminium to steel, and several industries have seen their power supplies restrained in recent weeks.

China is home to a large concentration of cryptocurrency miners and as recently as April had a 46% share of the global hash rate, a measure of computing power used in mining and processing, according to the Cambridge Bitcoin Electricity Consumption Index.

China’s crackdown against cryptocurrency mining and trading activity started in May 2021. That was the first time they had singled out cryptocurrency mining at the national level since dropping it in 2019 from a proposed list of dirty industries to be eliminated.

The announcement caused a collapse in cryptocurrency prices, with Bitcoin losing about half its value between April and July this year. While the market has since gained stability, it’s still far below the all-time high of £46000.

Kirkland & Ellis Represents Hosen Capital

Kirkland & Ellis advised Hosen Capital a leading private equity firm focused on investing in middle-market control and growth opportunities in the food and consumer sectors in China, on the fundraising and final closing of its third USD fund at $800 million.

Hosen Capital is headquartered in Beijing and has additional offices in Chengdu, Shanghai, and Guangzhou. The firm has $2.31 billion in assets under management and focuses on investments in companies in the food and agribusiness-related companies that are either directly located in China or are directly involved in meeting demand on the Chinese market.

Hosen Capital was founded by Chris Wang and Alex Zhang and sponsored by New Hope Group, an agribusiness conglomerate in China.

The fund receives strong support from a broad mix of global investors, including prominent sovereigns, pensions, endowments, financial institutions, corporates, family offices and fund of funds.

Kirkland & Ellis LLP is an American law firm. Founded in 1909 in Chicago, Illinois, Kirkland & Ellis is the largest law firm in the world by revenue, the seventh-largest by number of attorneys, and is the first law firm in the world to reach US$4 billion in revenue.

The Kirkland team was led by investment funds partners Carol Liu and Jennifer Feng and included investment funds partners Josh Westerholm and Christopher Scully, financial services regulatory partner Romin Dabir, tax partner Aalok Virmani, government and internal investigations partner Nick Niles, employee benefits partner Elizabeth Dyer and banking regulatory of counsel Julie Kunetka.

Trade War with China is impacting Natural Stone Prices

Natural stones are formed in nature with no human’s interference. If a stone is identified as natural, this means that it has not been treated, enhanced, or altered. These gemstones are mined, cut, faceted and finally polished.

The Trump administration has announced this year that the United States will impose a tariff on a massive amount of imported goods from China.

Many of these goods fall into the home improvement category in the American market. Things like stone tile, natural stone slabs, hard surfaces and there is no telling on how high the retail price will go for American consumers as the tariffs continue to stay in place.

This all comes at a time when China has very lax laws on who and how natural stone can be mined, China has a large amount of undeveloped land with natural stone able to be harvested and they are able to meet the growing demand of natural stone seen in American consumers.

One of the largest questions is how much the price of natural stone countertops will rise within the next year. One particular stone concern is granite, and how much it will cost to purchase and install depending on what project you’re working on.

For most questions the answer is to purchase now because the cost of granite is only expected to rise. Using this useful reference, currently, prices for granite countertops start at around $35 per square foot installed, and can go well beyond $100 per square foot for exotic and rare materials.

With trade negotiations continuing as they are now it has been projected that the price per square foot of granite is expected to increase to over $200 per square foot by early 2020.

When purchasing your stone, it is also important to research the seller. Big box retailers that provide countertops won’t be as detail oriented as their local counterparts mainly due to the lack of knowledge of the staff that will be assisting you.

This is because a big box store has a higher turnover of staff and less of a risk to damage their reputation. Also a large retailer will typically have a more limited selection of stone and a more rigid outline of their services, typically a price is set and adhered to in a large retailer.

A local fabricator, more often than not, will negotiate pricing, accommodate specific requests, and handle customers with a higher degree of quality solely based on the fact that they are trying to compete with not only other local business but the large retailers as well.

It would be advantageous to look into your local options and weigh them against large retail stores, depending on what you’re looking to have done one might be more beneficial than the other!

Knowing what you’re paying for will also be beneficial as the price of the stone increases with the tariffs. There are a lot of factors that make up the final price of your countertop including, the cut-outs, edging, backsplash, finish, and colour of the stone.

By limiting the extra details you’re able to keep the overall price lower. The type of sink you install has an effect of the type of cut-out which then has a price on the slab. Edging the counter will have an effect on the final bill as well because the more decorative the final edge look the higher the cost per foot will be! Some styles can rise as high as $10/foot.

Choosing to have a matching stone backsplash obviously will heighten the price of your stone bill, but there are other ways to design a backsplash if this puts your costs too high. Tile is a great alternative or a shorter four or five-inch backsplash can help protect your walls against stains.

The colour of the actual stone can also play a factor in pricing as blue granite is often more expensive than other colours and marble with a more intricate or unique pattern can fetch a higher price.

These are all things that, regardless of the trade war with China, will affect your final budget and should be considered!

These tariffs are not expected to go away anytime soon so if you’re planning a renovation or are in the middle of one currently and have yet to purchase your counters, do it! Having a plan of attack and being in the right place to order them will save you money before the end of the year as natural stone prices continue to rise.

Removing your old counters as a DIY project might be a good idea as well in order to save even more in a pinch. There are many ways to try to circumvent these price increases and DIY-ing as much as possible is one of them, don’t hesitate to consult a professional but remember that most home jobs can be done with a little research!

Baker McKenzie grows Life Sciences practice in New York

The co-chairman of Morgan, Lewis & Bockius’ life sciences practice, Randall Sunberg, and partner Denis Segota are moving to Baker McKenzie in the Big Apple.

Sunberg and Segota will join Baker McKenzie as partners in its health care industry group and its North America corporate and securities practice, the firm announced Tuesday. Though they are officially members of the firm’s New York office, they will operate out of the life sciences corridor in Princeton, New Jersey.

“The international platform is just unbeatable [at Baker McKenzie],” said Sunberg, who will now serve as co-head of the firm’s North America life sciences practice.

Sunberg joined Morgan Lewis in 1999 from Shook, Hardy & Bacon and has worked with clients on M&A and private financing transactions for more than 35 years.

He works with life sciences clients from biotech startups to multinational pharmaceutical and medical device companies on complex collaborations, joint ventures and licensing transactions, as well as equity investments and alternative financing arrangements. He also works with clients on contractual arrangements for drug discovery, development and manufacturing.

It was the focus on health care and life sciences worldwide that drove the pair to make the jump to Baker McKenzie, Sunberg said. From the number of cross-border transactions to the firm’s role in M&A and emerging markets across the globe, Baker McKenzie offered “a compelling story for us and for our ability to serve our clients on an even larger platform,” he added.

And Baker McKenzie’s presence in these emerging markets provides a strategic advantage for some of the pair’s clients looking to access services in those locations.

“Our pharmaceutical clients are focusing on growth and they’re looking at emerging markets for [that] growth,” said Segota, who spent nearly 20 years at Morgan Lewis advising companies in the pharmaceutical and biotech sectors on joint ventures, strategic alliances, licensing and other arrangements promoting the research and development of new products.

Segota advises clients on M&A and private financing transactions, working with both financial institutions and companies in royalty monetizations, venture capital and other private equity financings.

“Randy and Denis are trusted advisers to companies across the life sciences sector, from biotech startups to global pharmaceutical companies,” Alan Zoccolillo, chairman of Baker McKenzie’s North America health care industry group, said in a statement.

“As health care companies look to grow in a hypercompetitive environment, they need pragmatic, business-focused solutions. Randy and Denis bring deep industry and technical knowledge that will immediately benefit our team and our clients.”

Sunberg said there is a lot of client overlap already between the firm and his and Segota’s practice, but the pair will now bring the licensing and collaboration expertise to representations on a more global scale.

“We are really looking forward to working with the rest of the health care team at Baker McKenzie to build [the practice] and make it even stronger and have a really purposeful approach toward adding elements where we think we need additional expertise to better serve our clients on their worldwide transactions,” he added.

The pair worked with Sabina Lippman and Vijay Luthra of global legal recruitment firm Lippman Jungers in their move.

The addition of Sunberg and Segota is one of the first major hires stateside for Baker McKenzie, which earlier this year added White & Case M&A attorney Peter Lu as a partner and head of the firm’s China group in London. The firm also added consultants Casey Flaherty and Jae Um as director of legal project management and director of pricing strategy, respectively, as the firm looks to re-engineer the delivery of its services.

Griffith Business alumnus becomes Trade & Investment commissioner

Griffith Business School alumnus Julie-Anne Nichols has been announced as Queensland’s new Trade and Investment Commissioner for China.

Premier Annastacia Palaszczuk said Ms Nichols, who holds a Bachelor of International Business and a Graduate Diploma in Mandarin Chinese Language from the University, has exceptional experience as a leader and stakeholder liaison with the Asian business landscape that will serve her well in the key role.

“Ms Nichols has been the Queensland Trade and Investment Commissioner in Hong Kong since February 2017 and was previously the Senior Trade Commissioner for Austrade in Guangzhou and in Singapore, so her experience across Asia is outstanding,” Ms Palaszczuk said.

“She is well placed to represent Queensland’s interests in trade and investment across all industries and has an extensive knowledge of the Chinese market.”

Acting Pro Vice Chancellor (Business) Professor Fabrizio Carmignani congratulated Ms Nichols on her appointment, which will see her work to improve trade and investment ties between Queensland and China.

“We are proud to hear that one of our remarkable Griffith Business School alumni has climbed to such tremendous heights in the international trade and investment sector,” Professor Carmignani said.

“As a university with historically strong ties to the Asia region, it is deeply rewarding to see Julie-Anne living the Griffith value of engaging with our northern neighbours to achieve meaningful outcomes and impacts for the state of Queensland at large.

“We wish Julie-Anne all the best in her new and exciting role, and will be watching eagerly as she continues to move from strength to strength in her career.”

Ms Nichols has been a resident of China for a decade, during which time she has overseen several teams working across eastern China and north-east Asia.

One of her first duties, according to the state government, will be to oversee the 30th anniversary of the Queensland Government Sister-State Agreement with Shanghai Municipal Government, being commemorated this year.