New Year Update: New US restrictions on narcotics trafficking, Xinjiang and Cambodia, and expanded EU sanctions framework on Mali
During the weeks leading up to Christmas, the US adopted sanctions and other restrictions relating to narcotics trafficking, Xinjiang forced labour and Cambodia related exports and imports, whilst the EU has established an autonomous sanctions framework on Mali.
We have briefly summarised these developments below.
Strengthened US import ban and sanctions authority relating to the Xinjiang region of China
23 December 2021, President Biden signed into law the Uyghur Forced Labour Prevention Act (the "Act"). In effect, the Act will prohibit the import to the US of goods, wares, articles and merchandise that are mined, produced or manufactured wholly or in part in Xinjiang or by an entity placed on a forthcoming entity lists, unless it can be (among other requirements) clearly demonstrated that the good was not made wholly or in part by forced labour.
The Act seeks to combat the exploitation of forced labour in Xinjiang by preventing goods that (presumably) have been made with forced labour in the Xinjiang region of China from entering US markets.
The Act will come into effect in June 2022. The Act's presumption that goods originating from Xinjiang are made by use of forced labour may affect businesses in the US that source or have supply chain linkages to China, and especially to Xinjiang or entities listed under the Act. Within the coming months, the Forced Labor Enforcement Task Force will publish guidance which will address inter alia the expectations for effective supply chain management and the nature and extent of evidence which could demonstrate that goods originating in China were not made in Xinjiang or by use of forced labour.
In addition, the Act authorises additional sanctions under the Uyghur Human Rights Policy Act of 2020, by authorising the imposition of sanctions on foreign persons determined to be responsible for serious human rights abuses in connection with forced labour of the Uyghur and other minority ethnic groups in Xinjiang.
The Act comes in response to gross human rights abuse against minorities in Xinjiang. Earlier, the US government has declared that the Chinese government has committed, and still commits, genocide against the Uyghurs and other ethnic and religious minority groups in Xinjiang. The Act also follows the Xinjiang Supply Chain Business Advisory issued by the US Department of State, alongside the US Department of the Treasury, the Department of Commerce, the Department of Homeland Security, the Office of the Trade Representative, and the Department of Labor on 1 July 2020 and last updated on 13 July 2020, to highlight the heightened risks for businesses with supply chain and investment links to Xinjiang.
New US counter narcotics trafficking sanctions
On 15 December 2021, President Biden issued Executive Order 14059 named "Imposing Sanctions on Foreign Persons Involved in the Global Illicit Drug Trade" (the "EO").
The EO seeks to prevent the trafficking into the US of illegal drugs, and the illicit production, global sale and widespread distribution of such drugs, essentially by seeking to disrupt the global supply chain and financial networks that enable illegal drugs to reach US markets. The EO expands and modernises the existing US counter narcotics trafficking sanctions regime.
Broadly, the EO authorises the imposition of sanctions (such as asset blocking measures and financial restrictions) against foreign persons or entities determined:
- to have, or attempted to be, engaged in activities or transaction that have materially contributed to, or pose a significant risk of materially contributing to, international "proliferation of illicit drugs" or their means of production;
- to have received any property that the foreign person knows either (i) constitutes, or is derived from, proceeds of international illicit drug proliferation activity, or (ii) was used or intended to be used to commit or to facilitate international illicit drug proliferation activity; or
- to have provided, or attempted to provide, support (financial, material or technological) for certain international illicit drug proliferation activity, or to any person sanctioned under the EO.
In addition, the EO authorises the imposition of sanctions on any foreign person who is owned, controlled or directed by, or have acted for or on behalf of, a person sanctioned under the EO.
For the purpose of the EO, the term "proliferation of illicit drugs" means any illicit activity to produce, manufacture, distribute, sell, or knowingly finance or transport, narcotic drugs or other controlled substances or chemicals.
OFAC has already added several persons and entities to the Specially Designated National ("SDN") list pursuant to the EO.
New US arms embargo and enhanced export controls on Cambodia
On 9 December 2021, the US imposed an arms embargo and enhanced export controls relating to Cambodia.
First, the US Department of State implemented an arms embargo by adding Cambodia to the list of countries for which it is the policy of the US to deny approvals for exports and imports of defense articles and defense services under the US International Traffic in Arms Regulations ("ITAR"). As a consequence, the export or import of defence articles and defence services destined for or originating in Cambodia is now prohibited under ITAR, with certain exceptions.
Second, the US Department of Commerce's Bureau of Industry and Security ("BIS") implemented four broad enhancements to the restrictions for exports and reexports to, and transfers within, Cambodia of items subject to the Export Administration Regulations ("EAR"). Inter alia, BIS added Cambodia to the two EAR lists of countries subject to military end use(r) and military-intelligence end use(r) restrictions respectively. In addition, Cambodia was added to the so-called EAR "Country Group D:5" which includes countries subject to US arms embargoes, in order to reflect the above change of the ITAR.
The changes to the ITAR and EAR were made in response to what the US deems to be the deepening Chinese military influence in Cambodia, as well as growing corruption and human rights abuses by the government of Cambodia.
Expanded EU sanctions framework on Mali
On 13 December 2021, the EU implemented an autonomous sanctions framework against Mali, by including new criteria to its existing sanctions regime, see Council Regulation (EU) 2021/2201, Council Decision (CFSP) 2021/2208 and press release.
The new criteria will allow for the EU to autonomously impose targeted sanctions against individuals and entities found by the Council of the EU to be responsible for threatening the peace, security or stability of Mali, or for obstructing the implementation of its political transition. Prior to this event, the EU has only been able to transpose into EU law the sanctions against Mali adopted by the UN.
The targeted sanctions may consist of travel bans and asset freezes. In addition, persons and entities in the EU will be forbidden from making funds available to those listed, either directly or indirectly.
No individuals or entities has currently been listed by the EU pursuant to the new criteria.
WR Sanctions Alerts provide you with updates on material developments in the country-specific sanctions programmes implemented by the US, the UN, the UK, the EU and Norway. We will not provide updates on mere prolongations, without material changes, of existing sanctions programmes, nor on any listings or de-listings of individuals/entities placed on implemented sanctions lists . Please note that the WR Sanctions Alerts are provided as general information and do not constitute legal advice.