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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 [email protected].

Customs Attorney Charles Crowley

Customs Attorney Charles Crowley

China bans all crypto transactions

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.

What does the Evergrande debt crisis mean for China’s economy?

As the COVID-19 virus spread across China in the early months of 2020, some expert commentators dubbed it as China’s “Chernobyl moment” – an event that would undermine the legitimacy and rule of the Communist Party. A much more likely candidate for that title has emerged, though, in the form of the debt crisis enveloping Evergrande Real Estate Group.

China’s second largest property developer and the most indebted developer in the world with over $300bn of liabilities is out of money, and unable to meet interest payments due to both banks and foreign bondholders — though it was reported on Wednesday 22 September that some agreement has been reached to meet an interest payment to domestic bond holders. Evergrande Real Estate Group is also a kind of metaphor for the wider debt crisis in the Chinese economy. Material consequences for both China and the global system are sure to follow in the coming months.

The immediate problem is the unravelling of Evergrande Real Estate Group, which owns more than 1300 properties in more than 280 cities across China. Until now, the Chinese government has refrained from stepping in, choosing instead to make an example of Evergrande’s “capitalist excesses” to banks and others as a way to encourage more conservative methods.

Yet some sort of state bailout or restructuring is inevitable for the developer, at least to buy time. Otherwise, the financial contagion, and economic and social instability consequences of a messy default, would be catastrophic for Xi Jinping, especially ahead of the important 20th party Congress in November 2022. Consider that much of Evergrande Real Estate Group’s liabilities comprise pre-sale deposits by almost 1.5 million households, all of which would see their savings lost. Evergrande’s employees and others bought financial products that it issued to help fund itself, and they too would risk losing money in a worst case scenario. The Chinese government will not want unhappy citizens to be on the hook. We expect that rather than a spectacular “Lehman-type” crisis, China will go through a period of financial distress, which will postpone growth.

Kirkland Represents Hosen Capital on Successful Fundraising

Kirkland & Ellis advised Hosen Capital (Hosen), 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. 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.

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.

Read Hosen’s press release

Kuehne+Nagel acquires Asian logistics provider Apex

Leading global law firm Baker McKenzie has advised global transport and logistics group Kuehne+Nagel on its acquisition of Apex International Corporation (Apex) from private equity firm MBK Partners and management, its largest acquisition to date.

Apex is one of Asia’s leading freight forwarders, especially in the transpacific and intra-Asia. The company was founded in China in 2001 and has expanded throughout Asia and beyond over the years of its growth history. With approximately 1,600 employees, Apex generates yearly turnover in excess of CHF 2.1 billion. In 2020, the company handled total air freight volume of approximately 750,000 tons and sea freight volume of 190,000 TEU.

Dr. Detlef Trefzger, CEO of Kuehne+Nagel International AG, says: “The combination of Apex and Kuehne+Nagel provides us with an opportunity to offer our customers a compelling proposition in the competitive Asian logistics industry, especially in e-commerce fulfilment, hi-tech and e-mobility. We are looking forward to welcoming the Apex colleagues to the Kuehne+Nagel family.”

The Baker McKenzie team was led by Alexander Fischer, together with Howard Wu, Alexander Blaeser, Matthias Trautmann, and with the following deal team members: Zurich: Boris Wenger, Matthias Courvoisier, Eva-Maria Strobel, Markus Wolf, Yves Mauchle, Roger Thomi, Zarina Fueglister, Tiziana Hongler and Jan Lusti; PRC: Zheng Lu, Terry Xu, Gege Li, Merry Du, Coco Xi, Emma Zhao, Leo Zhang, Sufi Shang, Luis Zhang, Rachel Ye, Cora Wu, Lucca Li, Xi Chen, Hunt Wu, Kevin Yuan and Laura Liu; Hong Kong: Harold Van Kooten, Isabella Liu, Jannice Lau, Joel Cheung, Mandy Hung, Bryan Ng, Stephen Crosswell, Charlie Wong, Thomas Jenkins, Amy Ling, Lu Zhou, Jannie Mak, Rainbow Fu, Lesley Jingyu Luo and Antonia Chan; USA: Eunkyung Shin, Jeanne Song, Andrew Sagor, Chen Tang, Derek Liu, Stuart Seidel, John Fedele, Jennifer Trock, Alexander Matthews and Arvind Miriyala; Australia: Eric Thianpiriya; Canada: Yana Ermak; Germany: Alexander Ehrle; Mexico: Reynaldo Vizcarra-Mendez and Jesus Antonio Perez-Palazuelos; Netherlands: Christiaan Van der Meer, Danielle Pinedo, Florian Fehres, Emile Doelwijt, Julie Wulfften Palthe, Maarten van Laar, Philip Luckmann and Anastasia Moonen-Vaes; Taiwan: Gwyneth Gu and Yiting Lin; Thailand: Pornapa Luengwattanakit, Narumol Chinawong Teo, Sirikan Buranasiri and Kritchaya Rattanasakul; Vietnam: Lan Phuong Nguyen, Chi Hoang Yen Ngo and Xuan Nghi Ma.

The acquisition is subject to customary closing conditions, including merger clearance by the competent competition authorities. The purchase price will be financed by available liquid sources and, if needed, by available credit lines. Following closing of the transaction, a minor stake of Apex shares is to remain with the experienced and entrepreneurial management of Apex.

Chambers Global 2021 highlights our cross-border strengths

Norton Rose Fulbright ranked first among all law firms with 18 ranked lawyers in the Chambers Global 2021 global-wide practice rankings, as well as standing in the top 10 for total number of global-wide departmental practice rankings, practice rankings across all categories and lawyers ranked overall.

The firm earned 22 global-wide practice rankings, and was ranked in 185 practice areas across all categories, including global-wide and country-specific. The 185 practice area rankings include 16 top tier rankings in China, Greece, Malaysia, Morocco, Myanmar, the United Kingdom, the United Arab Emirates and the United States.

A total of 234 Norton Rose Fulbright lawyers were individually ranked as leaders in their field. The firm also picked up six new departmental rankings in Africa, Latin America, Russia, the United Kingdom and United States.

In its analysis, Chambers cited clients who provided feedback on the firm’s work, praising its extensive global reach.

“The (Norton Rose Fulbright) international network has become an increasingly important component of their service delivery as cross-border business grows,” one client told Chambers. Another praised the firm’s “ability to function seamlessly with team members in different offices and across time zones.”

A full list of our rankings is available online.