As the new crown virus is spreading and there have been many demonstrations that "blacks are also fate," the US Congress has increased its work during the election year, threatening to strengthen sanctions against China and Russia. The Hong Kong Autonomy Act, a recent bill of this kind, was passed in the U.S. Senate and House of Representatives with ease in early July, indicating that both parties have agreed to take tough measures to deal with developments in Hong Kong. It is worth noting that the U.S. Congress passed the "Hong Kong Autonomy Act" only two weeks after another sanctions bill against China, the Uyghur Human Rights Policy Act, was signed into law.

The key points of legislative activities are:

• As the US Congress and the Trump administration responded to the new Hong Kong National Security Law promulgated by China, the tension between China and the United States has become increasingly severe.
• The U.S. Congress seems determined to insist on opposing the so-called erosion of Hong Kong’s autonomy, because the Hong Kong Autonomy Act authorizes and provides for the implementation of primary and secondary sanctions, even against anyone identified as aiding such erosion of autonomy. Foreign financial institutions that conduct transactions impose sanctions.
• Believing that the Trump administration’s stance on Russia is weak, the U.S. Congress continues to take the lead in opposing Russia’s intervention in the election and the Beixi 2 and Turkey Creek natural gas pipeline projects.

China

In recent months, the responsibilities of China and the United States for the global pandemic, developments in Hong Kong, and a series of international trade and financial policy issues have continued to clash, and the tension between China and the United States has become increasingly serious. A similar policy controversy occurred last year, which eventually led to the passage of two pieces of legislation in the US Congress, which we introduced in the previous legal newsletter . These two pieces of legislation require the Trump administration to impose some Hong Kong-related sanctions and export restrictions (the Trump administration should submit certain necessary reports to the U.S. Congress within 6 months after passing the two bills in November 2019, 2020 The deadline is May 25. Now the deadline has passed, but no obvious action has been taken yet). Recent legislative measures include:

1. "Hong Kong Autonomy Law"

The US government believes that China’s enactment of a new national security law against Hong Kong has restricted Hong Kong’s civil liberties and weakened Hong Kong’s historical autonomy. To this end, U.S. President Trump announced at a press conference on May 29, 2020 that the Trump administration will initiate procedures to abolish the "full agreement" that provides for the differential treatment of Hong Kong and mainland China. Before the President announced the above news, Secretary of State Mike Pompeo submitted a report and certification to the U.S. Congress on May 27, 2020 , stating that the U.S. Department of State has determined that it has been revised in accordance with the Hong Kong Human Rights and Democracy Act of 2019. The Hong Kong Policy Law of 1992 stipulates that Hong Kong no longer enjoys a high degree of autonomy outside the mainland of China. A very important point is that Secretary of State Mike Pompeo’s announcement has significant political and economic implications, such as the suspension of the provision of separate, independent, More favorable treatment.

Unsure whether President Trump is willing to take the risk of intensifying tensions with China, and President Trump's commitment to strengthening Sino-US trade relations, the US Congress quickly responded to the new Hong Kong National Security Act. On July 1, a group of bipartisan congressmen composed of California Democrat Brad Sherman (California 30th District Democrat) and 11 other U.S. congressmen proposed the "Hong Kong Autonomy Act . " The law authorizes sanctions against “people and entities that help the Chinese government fail to fulfill its obligations under the Sino-British Joint Declaration or the Basic Law”, including the implementation of list-based sanctions against financial institutions that conduct major transactions with such persons. Secondary sanctions. The US House of Representatives passed the "Hong Kong Autonomy Act" unanimously on the day the bill was introduced. Then the Senate passed the "Hong Kong Autonomy Law" unanimously on the second day, July 2. President Trump signed the Hong Kong Autonomy Act into law on July 14, 2020. On the same day, he also signed an executive order to terminate Hong Kong’s special treatment.

According to Article 5 of the Act, the Secretary of State is required to submit a report to Congress within 90 days after the enactment of the Act, identifying “foreign persons” (individuals or entities) that the Secretary of State believes have made important contributions to the erosion of Hong Kong’s autonomy. The law authorizes sanctions against these identified foreigners, including prohibiting transactions in US property and imposing visa bans. Given that the deadline for this report is about mid-October, a few weeks before the US election, the Trump administration may consider political issues very seriously, but it is difficult to predict that political pressure will stimulate the Trump administration to adopt legal permission. Of radical actions, or will completely avoid any action.

In addition, the law authorizes and later provides for sanctions on any foreign financial institution that “with knowledge” conducts “significant” transactions with any foreign person identified in the Secretary of State’s report. These financial institutions will be confirmed in the annual report submitted to the U.S. Congress by the Secretary of the Treasury 60 days after submitting the above-mentioned Secretary of State report. Then, these financial institutions will be subject to “list-based” secondary sanctions. Specifically, if a foreign financial institution is still listed in the above-mentioned report submitted to the US Congress one year after it was originally listed, it will be subject to 5 of the following 10 sanctions Sanctions. If a financial institution has not been removed from subsequent reports after two years from the date it was first listed in the report, the law requires that it must impose the following 10 sanctions (United States Department of Treasury Office of Foreign Assets Control ( “ OFAC ”) can implement such sanctions through the list of financial institutions in its specially designated nationals and prohibited persons list (“ SDN list ”):

• Prohibit these financial institutions from obtaining loans or credits from U.S. financial institutions
• It is forbidden to designate these financial institutions as primary dealers of U.S. government debt instruments
• Prohibit these financial institutions from acting as depository institutions for U.S. government funds
• Prohibit these financial institutions from conducting foreign exchange transactions under U.S. jurisdiction
• Prohibit these financial institutions from transferring credit or funds between financial institutions under the jurisdiction of the United States
• Prohibit these financial institutions from conducting property transactions under U.S. jurisdiction
• It is forbidden for these financial institutions to export, re-export, and transfer domestically originated goods, software and technology to a financial institution
• These financial institutions are prohibited from obtaining equity or debt investment from any U.S. person
• Prohibit foreign financial institutions’ company managers, principals or controlling shareholders from entering the United States
• Sanctions are imposed on key managers of foreign financial institutions in the same way as the sanctions imposed on any other foreign person under the Act

2. "Uyghur Human Rights Policy Law"

Only a few weeks before the passage of the Hong Kong Autonomy Act, President Trump signed the Uyghur Human Rights Policy Act into law on June 17, 2020. Sen. Marco Rubio, a Republican of Florida, originally proposed the Uyghur Human Rights Policy Act in the Senate on May 14, 2020, and won the support of 66 co-sponsors from both parties. The Uyghur Human Rights Policy Law requires relevant federal departments and agencies to submit reports to Congress listing Chinese officials, entities and other persons responsible for human rights violations in the Xinjiang Uyghur Autonomous Region (" Xinjiang "). Once confirmed, the individuals and entities identified in the report will be subject to traditional blockade sanctions and visa bans.

The bill also requires the Secretary of State to submit a report to Congress to clarify some of the concerns identified in the bill, including (1) human rights violations in Xinjiang; (2) to protect U.S. citizens and residents (including ethnic Uyghurs studying or working in the United States). (3) The work done by the Chinese government to avoid harassment and intimidation by the Chinese government; and (3) The acquisition and technological development of the Chinese government to facilitate imprisonment and mass surveillance in Xinjiang.

After the passage of the Uyghur Human Rights Policy Act, the U.S. Department of State, the Department of Treasury, the Department of Commerce, and the Department of Homeland Security issued the “Combined Enterprise Recommendations” on July 1, 2020, which warned against being deemed to have committed “forced labor and other violations” in Xinjiang. Companies that have a supply chain relationship as entities of "human rights behaviors" should pay attention to "reputation, economic, legal and other risks" and recommend that these companies "implement human rights-related due diligence policies and procedures."

Although the Uyghur Human Rights Policy Act has been signed into law, some news media reported that President Trump will postpone the implementation of these sanctions to protect the first phase of the Sino-US trade agreement. In response, a group of bipartisan senators and congressmen led by Sen. Joni Ernst, the Republican of Iowa, wrote to the Secretary of State and the Secretary of Treasury, urging the Trump administration to take action. Following pressure from the U.S. Congress, OFAC announced on July 9, 2020, that four Chinese officials including the Xinjiang Public Security Department and the Xinjiang Party Secretary Chen Quanguo would be sanctioned in accordance with the Magnitsky Act.

3. Senate Bill 945 "Foreign Company Accountability Act"

On May 20, 2020, the U.S. Senate unanimously agreed to pass the "Foreign Company Accountability Act." · The bipartisan support of Chris Van Hollen. The main impact of the "Foreign Company Accountability Act" is that if the U.S. Public Company Accounting Oversight Board (" Listed Company Accounting Oversight Board ") fails to inspect the audited accounts of a foreign company for three consecutive years, the foreign company will be prohibited from trading in the United States Listed and traded. Although the "Foreign Company Accountability Law" will apply to any country and company that violates its regulations, it is generally believed that the law is in response to the restrictions imposed by the Chinese government on the ability of the Accounting Supervision Committee of Listed Companies to inspect the work of audit agencies of Chinese companies listed in the United States. , And the drafters of the "Foreign Company Accountability Law" clearly pointed out that its targets are China and Chinese companies.

California Democrat Rep. Bradley Sherman (Bradley Sherman) introduced the same legislation in the House of Representatives. Speaker Nancy Pelosi (California Democrat Rep. Nancy Pelosi) confirmed that the relevant House Committee is reviewing the bill. Analysts pointed out that the foreign company accountability law is being enacted at an " astounding speed " and that " it is only a matter of time before this bill (or similar bill) is signed into law ."

Russia

In this election year, because Russia is reportedly attempting to continue to interfere in American elections and European energy security, the Democrats and Republicans in Congress seem determined to maintain pressure on the Russian government. Although President Trump has been widely criticized by members of Congress for not resisting malicious activities such as Russian interference in elections, the US government seems to want to block the Beixi 2 natural gas pipeline project that will connect Russia to Germany through the Baltic Sea as much as Congress. The Beixi No. 2 pipeline will be parallel to the completed Beixi pipeline, doubling the gas transmission capacity along the line.

1. Beixi 2

As we discussed in the previous issue of the Legal News , President Trump signed the "Energy Security Defense of Europe Act 2019" (" The Defense of European Energy Security Act ") into law on December 20, 2019 , as the "2020 Part of the Fiscal Year National Defense Authorization Act (" National Defense Authorization Act "). The “Energy Security in Europe Act” requires the Secretary of State of the United States to issue reports on the following ships and personnel within 60 days and every 90 days thereafter: (1) 100 feet or more below sea level for the construction of the North Stream 2 Pipeline, Turkey Stream Pipeline or Any subsequent projects engaged in pipeline laying; and (2) were found to have deliberately (i) sold, leased, or provided these vessels for the construction of any such pipeline; or (ii) assisted in the provision of such vessels for such projects Deceptive or organized transactions by foreign persons. The result identified in any such report is to face the following mandatory sanctions (unless the President proves that any designated foreign person (whether an individual or entity) has made a good faith effort to stop sanctioned operations within 30 days of the implementation of the law) : (A) Any foreign person identified in item (2) above whose assets under the jurisdiction of the United States need to be blocked (or frozen); (B) an enterprise that owns any company that owns a vessel identified in item (1) above Executives and major shareholders, as well as any foreigners identified in item (2) above, will be denied visas and barred from entering the United States.

It is not clear whether the U.S. government completed the above report within the time limit stipulated by the European Energy Security Act, but only the threat of sanctions under the European Energy Security Act successfully prompted the European pipeline laying company Allseas to cease its operations. It was originally planned to work on Beixi No. 2 Project. Although Allseas left the project and there was a major threat of sanctions, Russia vowed to continue building the remaining 100 miles of pipeline. In response to the propaganda surrounding the continued construction and recent provocations by Russian leaders (such as Russian Foreign Minister Sergey Lavrov who said "I don't think the project can be blocked"), including Texas Republican Senator Ted Cruz (Ted Cruz) A group of bipartisan lawmakers included on June 4, 2020, proposed a motion to add additional sanctions to the Beixi No. 2 project.

Like the "Energy Security Protection of Europe Act " , Senator Cruz's follow-up bill "Clarification Act for the Protection of European Energy Security" has been repackaged as an amendment to the "National Defense Authorization Act for Fiscal Year 2021", that is, Senate Amendment No. 1886 . As part of a package of 79 amendments pre-approved by the administrators of the Republican and Democratic bills, the amendment was passed unanimously by the Senate. Although similar regulations did not appear in the House of Representatives' revised version of the National Defense Authorization Act for fiscal year 2021, we believe that the regulations are likely to be included in the final version of the bill. This is because the Senate is the chairman of this year’s inter-chamber conference committee, and the co-sponsors of the 1886 Senate Amendment, senior members of the Senate Armed Services Committee Tom Cotton (Arizona Republican) and Jeanne Shaheen (Jeanne Shaheen) , The Democratic Party of New Hampshire) is likely to become a member of the inter-chamber conference committee.

The amendment will expand the scope of sanctions and include penalties for a wider range of participants in pipeline laying activities. In the amendment, pipeline laying activities are defined as "activities that help pipeline laying, including site preparation, trenching, measurement, stone placement, backfilling, pipe laying, pipe bending, welding, coating, and pipe down" . In addition, the amendment also targets foreigners who provide support for the expanded pipeline laying activities through the following example activities: such as providing underwriting services, insurance or reinsurance for ships; upgrading or installing welding equipment for related ships. Modification or tethering to provide services or facilities; or to provide services for testing, inspection, or certification necessary for Beixi No. 2 pipeline or related to its operation.

The two other Russian-related bills detailed below continue to be brewed, but they have not received as much support as efforts to thwart the Beixi 2 and Turkish Creek projects.

2. "The Defence Against Kremlin Infringement of American Security Act" ("The Anti-Kremlin Invasion Act")

In February 2019, under the leadership of Senator Graham, a group of bipartisan senators proposed the Anti-Kerman Palace Violation Act . This is a comprehensive and wide-ranging bill that covers many controversial issues related to Russia, such as Russia’s continued intervention in the democratic process of the United States and abroad, its negative influence in Syria, its continued aggression against Ukraine, and criminal organizations and other support for cyberspace. Malicious actors. The Anti-Kegong Violation Law contains several sanctions, including the following:

• Sanctions against anyone who deliberately makes new large-scale investments in LNG export facilities outside Russia or any energy project outside Russia that is "supported" by a Russian parastatal entity or an entity owned or controlled by the Russian government;
• Sanctions on the sale, leasing or provision of high-value goods, services, technology, financing or other support that have contributed significantly to the Russian government’s development and production of crude oil resources in Russia, including the maintenance or modernization of infrastructure (but not applicable to The maintenance of the projects that were still in progress on the date of promulgation of the Anti-Kergong Infringement Law);
• Sanctions are linked to President Putin and the Russian oligarch who facilitates bad behavior on his behalf;
• Americans are prohibited from buying and selling new Russian sovereign debt with a maturity of more than 14 days-including bonds issued by the Central Bank of Russia, the National Wealth Fund or the Federal Ministry of Finance, as well as foreign exchange swap agreements signed with them;
• Sanctions on Russian financial institutions that provide funds or other support for the Russian government to intervene in the democratic process outside Russia; and
• The US Secretary of State must determine quarterly whether the Russian government is interfering in freedom of navigation anywhere in the world, and if so, impose sanctions on all entities operating in the Russian shipbuilding sector.

The Anti-Kergong Infringement Act was approved by the Senate Foreign Relations Committee in December 2019, but has not yet been voted by the entire Senate.

3. "The Law on the Establishment of Red Lines to Defend Elections from Threats in 2019" ("The Law on Defending Elections")

The " Defend the Election Act " proposed by Senators Rubio and Van Hollen in April 2019 will require: (1) The Director of National Intelligence of the United States shall determine and report to Congress within 60 days of the US election Is there a high degree of confidence that a foreign government or a foreign government agent has deliberately interfered in the election; (2) Submit a report to Congress every year, providing information on Russian oligarchs, senior politicians and parastatal entities; and (3) Report to Congress twice a year The wealth, source of wealth and use of wealth of these people (including Russian President Putin). If it is determined that Russia has intervened in any US elections, it will trigger mandatory sanctions, including blockade sanctions and the prohibition of certain transactions and investments related to Russia. The Defending the Electoral Act was obstructed by Senate Republicans in December 2019, and apparently no progress has been made since.

Legal analyst at Morrison & Foerster national security division of Raymond ∙ Reeve ( Raymond Rif ) provides legal assistance to the current newsletter.

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