As global economic and geopolitical environments enter a new era, companies need to continuously develop and adjust their coherent global business strategies to secure and further expand business opportunities in all markets while minimizing political and legal risks by ensuring compliance. To assist you with that task, Mayer Brown’s US-China Trade Monthly provides news and insights related to the latest US developments impacting the US-China bilateral trade relationship.

In the current issue, we will discuss: (1) DOJ announcing first charges brought in connection with the Disruptive Technology Strike Force; (2) OFAC announcing sanctions against Chinese and Mexican individuals and entities for activities related to involvement “in the international proliferation of equipment used to produce illicit drugs,” including pills often laced with fentanyl; (3) the House Select Committee on the Chinese Communist Party adopting first policy proposals, including around forced labor in the XUAR; and (4) the US and its Indo-Pacific Economic Framework partners announcing a potential supply chain agreement.

DOJ Announces First Charges Brought in Connection with the Disruptive Technology Strike Force

On May 16, the US Department of Justice (“DOJ”) announced that, in connection with the multi-agency Disruptive Technology Strike Force (the “Task Force”), it brought criminal charges in five cases and four arrests involving export violations, smuggling, and trade secrets theft. The charges were brought in the Eastern and Southern Districts of New York, the District of Arizona, and the Northern and Central Districts of California.

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OFAC Sanctions 17 Chinese and Mexican Individuals and Entities for Activities Related to the Production of Counterfeit Fentanyl

The US Department of the Treasury’s (“Treasury”) Office of Foreign Assets Control (“OFAC”) announced on May 30 that it had sanctioned 17 Chinese and Mexican individuals and entities based upon a determination that they were “involved in the international proliferation of equipment used to produce illicit drugs.” According to the press release, these “targets are directly or indirectly involved in the sale of pill press machines, die molds, and other equipment used to impress counterfeit trade markings of legitimate pharmaceuticals onto illicitly produced pills, often laced with fentanyl, frequently destined for U.S. markets.” As a result of these sanctions, “all property and interest in property of the designated persons . . . that are in the United States or in the possession of U.S. persons are blocked[.]” This blocking sanction also applies to “any entities that are owned, directly or indirectly, individually or in the aggregate, 50 percent or more by one or more blocked persons[.]”

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House Select Committee on the Chinese Communist Party Adopts First Policy Proposals, Including Several on Forced Labor in the Xinjiang Uyghur Autonomous Region

On May 24, the House Select Committee on the Chinese Communist Party (“the Select Committee”) unanimously adopted its first set of policy proposals, which include a proposal on countering what it views as forced labor among Uyghur populations in the Xinjiang Uyghur Autonomous Region (XUAR). The proposal identifies the Select Committee’s findings related to treatment of Uyghurs in the XUAR, and proposes policy changes to remedy issues identified in these findings. Though the Select Committee’s findings are not binding, its recommendations are well publicized and may influence coming US Congress activity, as the Select Committee’s work has generally been seen as a serious, bipartisan endeavor.

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US, International Partners Conclude Supply Chain Agreement as Part of Indo-Pacific Economic Framework

On May 27, the United States and its Indo-Pacific Economic Framework (“IPEF”) partners announced that they had concluded negotiations for a supply chain agreement under IPEF after talks in Detroit, Michigan. The agreement is the first one concluded under the IPEF negotiating framework; three more “pillars” remain to be negotiated under IPEF.2 Though negotiations on the supply chain agreement have concluded, the IPEF member states must now return to their national governments to finalize the text of the agreement.

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