Contractors involved in the Federal Government’s procurement of information technology (IT) systems should consider taking affirmative steps to prepare for significant legal uncertainties arising from a confusing provision enacted by Congress to combat Chinese cyber-espionage. The new provision, which Congress recently included in the “must-pass” appropriations measure that averted a government shutdown, generally prohibits certain [...]
Contractors involved in the Federal Government’s procurement of information technology (IT) systems should consider taking affirmative steps to prepare for significant legal uncertainties arising from a confusing provision enacted by Congress to combat Chinese cyber-espionage. The new provision, which Congress recently included in the “must-pass” appropriations measure that averted a government shutdown, generally prohibits certain agencies from acquiring IT systems that potentially have even a remote connection to the Chinese government. The White House expressed concerns about the provision, but these concerns did not prevent the President from signing the larger package. U.S. businesses, particularly in the high-tech sector, have been critical of the provision, and the White House reportedly has indicated that it may seek to modify or even drop the provision in future years. In the meantime, however, the provision is the law of the land, and contractors should be aware of its potential effects.
Background
Section 516 of the FY 2013 Continuing Appropriations Act, which funds the Federal Government through September 30, 2013, generally prohibits the Departments of Commerce and Justice, as well as NASA and the National Science Foundation, from acquiring IT systems “produced, manufactured or assembled” by entities that are “owned, directed or subsidized by the People’s Republic of China.” Agencies may only make such acquisitions if the head of the agency, in consultation with the FBI, assesses the risks of cyber-espionage associated with the acquisition and certifies to Congress that the acquisition is “in the national interest of the United States.”
The House Appropriations Committee originally added the legislation during its consideration of the FY 2013 spending measure in April 2012. While the Senate version did not include such a provision, it was nevertheless among the provisions that survived into the final package presented to the President. Although the measure applies only to procurement of IT systems throughout the remainder of FY 2013, now that the template has been set, it is possible that similar prohibitions could be included in future appropriations measures.
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Source: Lawrence A. Schneider & Paul A. Howard | Arnold & Porter LLP
Senators Ron Wyden (D-Or.) and John Thune (R – S.D.) recently introduced the Low Value Shipment Regulatory Modernization Act of 2013, which would raise the de minimis value from $200 to $800. The de minimis is the threshold at which shipments coming into the United States are exempt from tariffs, taxes or customs procedures. “If [...]
Senators Ron Wyden (D-Or.) and John Thune (R – S.D.) recently introduced the Low Value Shipment Regulatory Modernization Act of 2013, which would raise the de minimis value from $200 to $800. The de minimis is the threshold at which shipments coming into the United States are exempt from tariffs, taxes or customs procedures.
“If you bring back goods from abroad, you’re allowed up to $800 [worth as tax free],” says Eugene Laney, vice-president of international trade affairs for DHL Express. “But for commercial products, it’s only $200.”
By raising the de minimis level, Laney says that the government’s workload will be reduced and simplified – a benefit that he says is increasingly valuable due to the spending cuts caused by sequestration.
Laney also says an increase to $800 will help domestic manufacturers, as they will be able to import goods and materials more quickly.
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Source: Gabrielle Karol | FOX Business
When the U.S. Congress enacted it in 1996, the Economic Espionage Act (EAA) made the theft, transmission, or receipt of trade secrets a federal crime. Two recent amendments to the law add new teeth to the law and suggest that employers might be wise to revisit their trade secret policies, protection mechanisms, and training programs [...]
When the U.S. Congress enacted it in 1996, the Economic Espionage Act (EAA) made the theft, transmission, or receipt of trade secrets a federal crime. Two recent amendments to the law add new teeth to the law and suggest that employers might be wise to revisit their trade secret policies, protection mechanisms, and training programs in response. Under Section 1831 of the EAA, a conviction requires that the individual intend or know that the offense would “benefit any foreign government, foreign instrumentality, or foreign agent.” Under the original version of the law, the maximum penalties for a violation of that section were fines of up to $500,000 and imprisonment for up to 15 years for individuals, and for corporations fines of up to $10 million. Conversely, for a conviction under Section 1832, there is no need for this foreign element, but rather simply that the individual 
intend to benefit “anyone other than the owner thereof,” while also “intending and knowing that the offense will … injure the owner of that trade secret.” Originally, a Section 1832 conviction also required the trade secret to be “related to or included in a product that is produced for or placed in interstate or foreign commerce.”
Two recent amendments to the EAA change these standards. The first, called the Theft of Trade Secrets Clarification Act of 2012 which the president has just signed into law, clarifies that the EEA does not only apply to products a company sells, but it applies to both products and services without regard to whether or not they are sold into commerce or only used internally. The law comes directly in response to a recent Second Circuit decision, United States v. Aleynikov, which concluded that the EEA did not cover source code used by an employer to analyze financial information that was stolen by a former employee because the code was not a product produced for or placed in interstate or foreign commerce. Continue reading »
More than two dozen trade and transportation groups wrote to Senate Finance Committee leaders Aug. 31 asking for their support for drafting a bill that would increase the de minimis level for low value shipments for the first time in nearly 20 years. The groups told Chairman Max Baucus and Ranking Member Orrin Hatch that raising from [...]
More than two dozen trade and transportation groups wrote to Senate Finance Committee leaders Aug. 31 asking for their support for drafting a bill that would increase the de minimis level for low value shipments for the first time in nearly 20 years.
The groups told Chairman Max Baucus and Ranking Member Orrin Hatch that raising from $200 to $1,000 the aggregate retail value of articles that may be imported without entry documentation or payment of duties by one person on one day would “simplify and streamline the customs entry process and offer significant benefits for both trade and the government.”
Raising the de minimis amount “is not a security issue,” the trade groups asserted, but instead is “an issue of efficiency, job creation and economic stimulus.” The letter explained that all shipments are subject to the same security threat analysis and CBP risk assessment processes prior to arrival, regardless of whether they fall under the de minimis level or not, and that simplified entry and release of low value shipments could actually improve security by allowing CBP to focus its resources on larger and higher risk commercial shipments where enforcement is better justified.
The letter added that the entry reforms would pose no increased risk of commercial violations because they would only apply to smaller and lower value shipments and that any decreases in government revenue that might be incurred would be “easily offset” by the savings associated with reallocating CBP resources from entry document processing and review to security, targeting and trade facilitation.
Finally, the letter said, the proposed changes would reduce costs for customers and small businesses and encourage more companies to engage in international trade, which “would generate more business opportunities and economic growth.”
Source: STR Trade Report
The National Retail Federation last week urged Congress to review and revise controversial rules on the importation of wood products and plant material that retailers fear could lead to unfair government seizure of merchandise ranging from furniture to musical instruments. “Retailers recognize the need for environmental conservation but the current law leaves them guessing on [...]
The National Retail Federation last week urged Congress to review and revise controversial rules on the importation of wood products and plant material that retailers fear could lead to unfair government seizure of merchandise ranging from furniture to musical instruments. “Retailers recognize the need for environmental conservation but the current law leaves them guessing on which products are legal and which aren’t,” NRF President and CEO Matthew Shay said. “Congress needs to carefully review the Lacey Act to ensure that the goal of eliminating illegal logging is its primary objective, not penalizing businesses that are doing their best to comply with an unworkable law.”
Shay commented as a subcommittee of the House Natural Resources Committee prepares to hold a hearing this afternoon on legislation that would reform portions of the law. Laurie Everill, regional customs compliance and operations manager for NRF member IKEA-North America, is scheduled to testify to the Subcommittee on Fisheries, Wildlife, Oceans and Insular Affairs on the challenges facing companies seeking to comply with the law, and changes sought by NRF to address those challenges, improve enforcement and compliance with the law, and support its goal to end illegal logging.
At issue is the Lacey Act, a century-old environmental law originally directed at illicit trade in threatened and endangered animals. Congress expanded the law in 2008 to ban trade in products containing illegally harvested wood or plant material. Those changes also require importers to document the genus, species and country of harvest of any wood or plant material contained in an imported product. The Justice Department considers merchandise containing illegally harvested wood or plant products to be contraband, possession of which can result in fines, imprisonment, and seizure and forfeiture of the goods.
Citing departure from existing ‘Buy America’ preferences, CABC offers solution for amended language in the Senate surface transportation reauthorization bill For 25 years, the Canadian American Business Council (CABC) has supported efforts to update and improve infrastructure and spur economic growth and job creation on both sides of the Canada/U.S. border. However, upon learning about [...]
Citing departure from existing ‘Buy America’ preferences, CABC offers solution for amended language in the Senate surface transportation reauthorization bill
For 25 years, the Canadian American Business Council (CABC) has supported efforts to update and improve infrastructure and spur economic growth and job creation on both sides of the Canada/U.S. border. However, upon learning about latest provisions announced to the Moving Ahead for Progress in the 21st Century Act (“MAP Act”) in the U.S. Congress, the CABC yesterday issued a letter to all conferees appointed to work out a compromise on the bill calling for an exemption to protectionist provisions.
“The proposed MAP Act includes provisions that represent a significant departure from existing ‘Buy America’ preferences,” the letter stated. “Specifically, if at least one contract for a project receives any federal funding under this act, then all contracts for a project, regardless of their funding source, would be subject to Buy America preferences.”
Alluding to concerns about the ‘Buy America’ provisions’ applicability to Canada and their economic impacts on both countries, the CABC is asking the Senate to consider amending the ‘Buy America’ provision so that purchases of goods from Canada not be deemed to violate this requirement.
A group of Senate Republicans say they are taking aim at the “broad overcriminalization” of a federal law that makes it a crime to import into the United States illegally obtained plants or wildlife. U.S. Sen. Rand Paul (R-KY) is seeking to make violations of the Lacey Act (16 U.S.C. §§ 3371–3378) civil offenses punishable [...]
A group of Senate Republicans say they are taking aim at the “broad overcriminalization” of a federal law that makes it a crime to import into the United States illegally obtained plants or wildlife.
U.S. Sen. Rand Paul (R-KY) is seeking to make violations of the Lacey Act (16 U.S.C. §§ 3371–3378) civil offenses punishable by fines rather than criminal prosecution. His proposed Freedom from Over-Criminalization and Unjust Seizures (FOCUS) Act of 2012 — outlined in S. 2062 — would also jettison references to foreign law in the 112-year-old statute thereby blocking the government from prosecuting companies based on alleged overseas violations.
Paul, who sits on the Senate Energy and Natural Resources Committee, said “victims” of the Lacey Act include Henry Juszkiewicz, chairman and CEO of Gibson Guitar Corp. In August, federal agents raided Gibson Guitar factories in Memphis and Nashville to determine whether Gibson was using illegally harvested ebony wood from protected forests in India.
Hailing the Republican proposal, the National Association of Criminal Defense Lawyers (NACDL) said the FOCUS Act would “bring sanity to the criminal law,” the group’s president, Lisa Wayne, said in a statement. “The law in its current form is overly broad and vague, subject to abuse by prosecutors, and, importantly, can trigger extremely harsh criminal penalties without regard to whether someone accused under the law acted intentionally or knew they were violating a law,” Wayne said.
The U.S. Chamber Institute for Legal Reform (ILR) is also among the bill’s supporters. “The underlying goals of the Lacey Act, including protecting endangered species and promoting stewardship of environmental resources, can and should be upheld, and federal laws ought to give prosecutors the necessary criminal enforcement tools to pursue bad actors” ILR President Lisa Rickard said in a statement.
S. 2062, introduced Feb. 2, is pending before the Senate Committee on Environment and Public Works, chaired by Sen. Barbara Boxer (D-Calif.). The FOCUS Act is cosponsored by Sens. Tom Coburn (R-Okla.), Mike Enzi (R-Wyo.), Jim DeMint (R-S.C.), Mike Lee (R-Utah) and James Risch (R-Idaho).
Source: Chris Rizo | Law & Industry Daily
Administrative reform is needed but may result in troubling consequences for free traders Last week, President Obama announced plans to consolidate six federal agencies related to business and trade into a single agency in order to improve efficiency and the international competitiveness of American companies. Writing in the New York Times “Economix” blog, former Reagan [...]
Administrative reform is needed but may result in troubling consequences for free traders
Last week, President Obama announced plans to consolidate six federal agencies related to business and trade into a single agency in order to improve efficiency and the international competitiveness of American companies.
Writing in the New York Times “Economix” blog, former Reagan and Bush economic policy advisor Bruce Bartlett outlined The Pros and Cons of Obama’s Reorganization Plan – a dubious title given the only “pro” in the article appears to be that it would necessitate elimination of the Small Business Administration, something that conservative groups such as the Heritage Foundation have long called for.
Aside from suggesting the proposal may be nothing more than an election ploy (a not unreasonable assumption, although the same could be said of just about any policy advanced by the administration between now and next November), Bartlett also wonders if it may be indicative of a commitment by President Obama to “discredited industrial policies” (i.e., a heavy-handed command and control model that was ultimately rejected by the Japanese more than a decade ago) and “a subordination of trade policy to political interests.” With regard to the latter concern, Bartlett contends that folding the Office of the Trade Representative into the Commerce Department is a “dreadful idea” that should be troubling to free traders.
I know from personal experience at the Treasury Department that in internal administration discussions of trade policy the various agencies are expected to play certain roles. Commerce always defends whatever business wants because that’s its job. The Council of Economic Advisers always takes the principled free trade position, and so on.
At the end, the Office of the Trade Representative is the “honest broker,” a role that would be impossible for it to play as part of the parochial Commerce Department. The Office of the Trade Representative’s ability to fulfill this function is now assured by its position as part of the executive office of the president. This allows it to take the broad view of what is in the best interest of the country as a whole and bargain with our trading partners in good faith.
To effectively abolish the Office of the Trade Representative is a dreadful idea. It is a small agency; there are no efficiency gains to be realized by making it another bureau within Commerce. And no matter what promises are made to guarantee its independence, placing the Office of the Trade Representative within Commerce will inevitably politicize the office.
Considering the infamous partisan political gridlock that presently exists in Washington, it seems highly improbable Obama’s reorganization proposal will amount to anything in the immediate future. Even despite that, swift action on something this complex would be quite astounding. As Bartlett notes, President Reagan asked Congress for a similar federal trade agency shake-up almost 20 years ago!
Of course, times have changed radically since then. In the face of challenging economic circumstances and fierce global competition, where the creaking apparatus of government is widely regarded as a hindrance to growth and badly in need of significant overhaul, efforts to modernize and efficiently streamline its workings for the benefit of traders are unavoidable. Whether that comes in the form proposed by the current administration or that of another, it should be hoped the role of those agencies and various aspects of the government that do actually work effectively at present (the Office of the Trade Representative in Bartlett’s example) aren’t unintentionally diminished in the process of reform.
The House Ways and Means Committee approved Oct. 5 three separate bills to implement the free trade agreements with Korea, Colombia and Panama. While only two Democrats voted for the Colombia FTA (which also includes an extension of the Andean Trade Preferences Act) due to ongoing concerns about labour rights protection in that country, most [...]
The House Ways and Means Committee approved Oct. 5 three separate bills to implement the free trade agreements with Korea, Colombia and Panama. While only two Democrats voted for the Colombia FTA (which also includes an extension of the Andean Trade Preferences Act) due to ongoing concerns about labour rights protection in that country, most voted in favor of the Korea and Panama agreements.
It is now anticipated that the full House will vote on the FTA bills the week of Oct. 10. House Speaker John Boehner has said the House will vote on an extension of the Trade Adjustment Assistance program and the Generalized System of Preferences “consecutively and in tandem with” the FTA bills, which could mean the same day. Senate leaders have indicated that once the House votes on Trade Adjustment Assistance (TAA) program, which the Senate approved in September, they will take up the three FTA bills. Supporters are hoping that the entire process will be completed by Oct. 13, when Korean President Lee Myung-bak makes a state visit to Washington, D.C.
Each FTA will not actually take effect, however, until the president certifies the foreign partner’s compliance with the terms of the agreement. In the past this process has typically taken several months, sometimes longer. In submitting the implementing legislation to Congress President Obama indicated that the FTAs will enter into force Jan. 1, 2012, at the earliest.
Source: World Trade Interactive
(Video: Gibson Guitar • Story: Tennessean.com) Seizure of imported hardwood draws attention of lawmakers U.S. Justice Department officials have requested a meeting with Gibson Guitar owners next week, while in Congress lawmakers continue to ask why the factories and offices of the longtime manufacturer of prized guitars were raided on Aug. 24. Gibson CEO Henry [...]
(Video: Gibson Guitar • Story: Tennessean.com)
Seizure of imported hardwood draws attention of lawmakers
U.S. Justice Department officials have requested a meeting with Gibson Guitar owners next week, while in Congress lawmakers continue to ask why the factories and offices of the longtime manufacturer of prized guitars were raided on Aug. 24.
Gibson CEO Henry Juszkiewicz said he will meet with federal officials in Nashville on Wednesday to discuss the raids. Juszkiewicz said he is unsure where the conversation will lead.
In Congress, U.S. Fish & Wildlife officials have agreed to brief lawmakers on the House Energy and Commerce Committee in the next two weeks on the issue, U.S. Rep. Marsha Blackburn, R-Brentwood, said Wednesday.
The agency oversaw the Gibson raids, with agents confiscating computer hard drives, and pallets of wood and guitars suspected of being imported illegally in violation of the U.S. Lacey Act, which bans the importing of environmentally threatened plants and animals. Read more here.
Video: Henry Juszkiewicz, Chairman and CEO of Gibson Guitar Corp., has responded to the August 24 raid of Gibson facilities in Nashville and Memphis by the Federal Government. In a press release, Juszkiewicz said: “Gibson is innocent and will fight to protect its rights. Gibson has complied with foreign laws and believes it is innocent of ANY wrong doing. We will fight aggressively to prove our innocence.”
Related: Guitars and the Law: Guns N’ Rosewood
