Due diligence

Torres Trade Law is pleased to share our contribution to “The Law Reviews: Mergers & acquisitions” Review 17th Edition. Our Managing Member, Olga Torres, and Senior Associate, Derrick Kyle, authored a chapter on U.S. Trade Compliance Due Diligence. The chapter focuses on two essential considerations when conducting trade due diligence. The chapter discusses U.S. trade due diligence required for M&A transactions, focusing on successor liability from violations by the target company and the impact of foreign investment reviews triggered by acquisition or investment by foreign persons.

The Mergers & Acquisitions Review provides a practical overview of global M&A activity and the legal and regulatory frameworks governing M&A transactions in major jurisdictions worldwide.

*Reproduced with permission from Law Business Research Ltd. This article was first published in January 2024.

The Directorate of Defense Trade Controls, usually referred to as “DDTC,” is somewhat notorious for- as the saying goes- holding their cards close to the vest when it comes to offering guidance on specific topics related to the ITAR and how it applies to exporting goods and services to foreign persons or countries. So, for any U.S. exporter whose products or services are captured under the ITAR, it is important to take notice when DDTC speaks by publishing guidance.  

On March 25, 2024, DDTC published a short series of Frequently Asked Questions regarding joint ventures[1] and how those contractual arrangements affect an exporter’s DDTC registration. Following are a few of the key points from the FAQs.

This article will provide an overview of the global legal landscape for forced labor due diligence, highlight jurisdictions with forced labor due diligence and reporting requirements, and examine the kinds of steps companies should be taking to address forced labor risks in their supply chains and comply with relevant laws.

The U.S. agencies most well-known for their enforcement of U.S. trade and national security laws are the Bureau of Industry and Security (“BIS”), the Directorate of Defense Trade Controls (“DDTC”), the Office of Foreign Assets Control (“OFAC”), and U.S. Customs and Border Protection (“CBP” or “Customs”). However, the Department of Justice (“DOJ”) can often play a critical role in these types of matters. 

Ensuring compliance with U.S. export controls, import regulations, and economic sanctions is common practice for companies that engage in international trade. These companies often have internal compliance policies and due diligence practices that help to monitor compliance for everyday operations. In addition, companies undergoing structural, or ownership changes often must conduct trade-related due diligence to assess compliance risks associated with a relevant target company. 

The discovery of actual or potential International Traffic in Arms Regulations (“ITAR”) violations presents the question of whether to disclose the conduct to the Department of State Directorate of Defense Trade Controls (“DDTC”). For certain violations, the ITAR sets forth mandatory disclosure requirements, and specific circumstances may give rise to an affirmative duty to inform DDTC of certain activities and transactions.

On June 16, 2023, the U.S. Department of Commerce (“Commerce”) issued a long-awaited final rule (the “Final Rule”), effective July 17, 2023, related to the Information and Communications Technology Supply Chain.¹ Among other clarifications, the Final Rule identifies the Under Secretary of Commerce for Industry and Security as responsible

Any person or company in the United States that manufactures, exports, temporarily imports, or brokers items, including technical data and software (defense articles), or performs certain services (defense services) that are controlled under the International Traffic in Arms Regulations (ITAR) is required to register with the U.S. Department of State Directorate of Defense Trade Controls (DDTC) and keep that registration current. Current in the context of the ITAR means not only the information that is current at the time the registration is initially submitted, but the registration information must accurately reflect the registered entity’s current information at any point in its timeline. 

Torres Trade Law is pleased to share our contribution to “The Law Reviews: Mergers & acquisitions” Review 16th Edition. Our Managing Member, Olga Torres, and Senior Associate, Derrick Kyle, authored a chapter on U.S. Trade Compliance Due Diligence. The chapter focuses on two essential considerations when conducting trade due diligence. The chapter discusses U.S. trade due diligence required for M&A transactions, focusing on successor liability from violations by the target company and the impact of foreign investment reviews triggered by acquisition or investment by foreign persons.

The Mergers & Acquisitions Review provides a practical overview of global M&A activity and the legal and regulatory frameworks governing M&A transactions in major jurisdictions worldwide.

To receive a copy of the book, please email operations@torrestradelaw.com. The number of hard copies is limited and will be given on a first come first basis. 

*Reproduced with permission from Law Business Research Ltd. This article was first published in December 2022.   

The U.S. Department of Commerce Bureau of Industry and Security (“BIS”) is cracking down on foreign governments that prevent the end-use checks the BIS uses to ensure compliance with Export Administration Regulations (“EAR”). 

Reprinted with permission from the March 2022 issue of Export Compliance Manager. By Donald Pearce, Senior Advisor in the Global Risk, Monitorship, and Investigations Practice at Torres Trade Advisory, LLC.

We are delighted to share our contribution to “The Law Reviews: Mergers & Acquisitions” Review 15th Edition, where our Managing Member, Olga Torres, and Senior Associate, Derrick Kyle, authored a chapter on US Trade Compliance Due Diligence.

The Mergers & Acquisitions Review provides a practical overview of global M&A activity and the legal and regulatory frameworks governing M&A transactions in major jurisdictions worldwide.

The Chapter provides an overview of the M&A transactions, conducting due diligence related to US trade regulations, and foreign investment regulations in the context of an acquisition by a foreign company. 

Any U.S. company that manufactures, exports, or temporarily imports items or performs defense services that are controlled under the International Traffic in Arms Regulations (ITAR) is required to register with the U.S. Department of State Directorate of Defense Trade Controls (DDTC) and keep that registration current. Current in the context of the ITAR means not only the company information that is current at the time the registration is initially submitted, but the information in the registration must accurately reflect the registered company’s current information at any point in the company’s timeline. When certain changes occur within the registered company, such as a change of control, a merger or acquisition, or a change in executive leadership, those changes must be reported to DDTC and the company’s ITAR registration must be updated. At a minimum, ITAR registration must be renewed annually.

On January 19, 2021, the Department of Commerce (“Commerce”) published its interim final rule on “Securing the Information and Communications Technology and Services Supply Chain” (the “Final Rule”) to implement the provisions of a May 15, 2019 Executive Order on the same topic.

Scheduled to take effect on March 22, 2021, the Final Rule is intended to address the growing security risk to the nation’s information and communications systems from using technology developed by “foreign adversaries.” Commerce has requested public comment on the rule up until the time the rule takes effect (feedback must be received by March 22, 2021).

The sad fact of forced labor in global supply chains cannot be denied. There are many indicators that forced labor is taking place, including restriction of movement and isolation, intimidation and violence, withholding of wages, retention of identification documents, reporting to immigration authorities, debt bondage, abusive working and living conditions, and excessive work schedules.

In response to this growing human rights concern, the U.S. has enacted regulatory controls, including import and export laws, economic sanctions, and regulations impacting U.S. government contracts, to encourage due diligence and responsible business conduct in global supply chains. This article will provide an overview of the recent developments in regulatory requirements governing forced labor prevention in global supply chains and recommended due diligence protocols.

On September 21^st, the U. S. Food and Drug Administration (FDA) announced a proposed rule change to the Food Safety Modernization Act (FSMA).

The COVID-19 pandemic has affected nearly all aspects of everyday life, but sometimes it is easy to forget that the U.S. Government must also adjust its operations to be able to meet regulatory requirements during the pandemic. 

Non-U.S. companies involved in the reexporting of U.S. goods or technology should familiarize themselves with the applicable U.S. export laws, regardless of where they are located. This is because the U.S. export and economic sanctions laws have wide ranging extraterritorial reach. 

Pursuant to Section 231(a) of the Countering America’s Adversaries Through Sanctions Act (“CAATSA” or “the Act”),[1]  beginning January 29, 2018, President Trump is required to impose five or more of the Act’s laundry list of sanctions, found in Section 235, on persons that the President has determined to have knowingly engaged in a “significant transaction” with a person that is part of, or operating for or on behalf of, the defense or intelligence sectors of the Russian government. This article reviews the extraterritorial impact of the Act on non-U.S. persons, and provides some guidance regarding how to best prepare for these new developments.

Aside from a modest rollback regarding the Obama Administration’s effort to allow Americans to travel to Cuba, a number of enforcement cases relating to Iran, some additional designations with respect to Syria, and sanctions-enabling legislation relating to Russia, much of the recent news in economic sanctions has been dominated by two countries: North Korea and Venezuela.

On June 16 2017, President Trump announced changes to the United States’ economic sanctions against Cuba. This article provides a brief synopsis of the announced changes and potential impact.