The expression of interest will request specific information to gauge the interest of the international market that will permit the ROP to make a preliminary determination of the experience, financial capacity, track record, and prior airport operations experience of potential bidders. The ROP has indicated that a comprehensive database related to each airport will be made to available to all interested bidders to permit them to obtain all the necessary information regarding key operating metrics of each airport in connection with their submission. Following the publication of the expression of interest, the ROP will further define the bidding process for the concession including whether the bidding procedure for the concession will be carried out pursuant to the regulations for the administration of airports in Panama, a concession similar to the current concession related to Tocumen International Airport in Panama City, or the Public-Private Partnership Law in effect in Panama since 2019.

The ROP has relied heavily on the private sector to develop and maintain key infrastructure assets. The strategic use of concessions by ROP has not only facilitated major infrastructure and development projects but has also played a crucial role in attracting foreign investment, driving economic growth, and enhancing the country’s competitive edge in the region.

These proposed changes demonstrate an increasing willingness by CFIUS to aggressively enforce its authority over transactions impacting U.S. national security. Transaction parties before CFIUS (and their investors) should carefully evaluate CFIUS risk early in the life cycle of any investment or strategic transaction.

Background. On April 11, 2024, the U.S. Treasury Department, as chair of the Committee on Foreign Investment in the United States (“CFIUS” or “the Committee”), issued a Notice of Promised Rulemaking (“NPRM”) to revise certain CFIUS procedures and strengthen the penalty and enforcement authorities of CFIUS. The proposed rule changes would (1) expand the categories of information the Committee may request from parties; (2) expand the Committee’s subpoena authority; (3) require transaction parties to respond to mitigation agreement drafts within three business days; and (4) significantly increase the civil monetary penalty for violations.

Expanded Authority to Request Information: The proposed rules would (i) expand the categories of information CFIUS can request transaction (and non-transaction) parties to submit with respect to non-notified transactions (i.e., transactions for which no notice or declaration was submitted to CFIUS) and (ii) require parties to provide information enabling CFIUS to monitor compliance with the terms of a mitigation agreement and to also determine whether transaction parties have made a material misstatement or omitted material information during the course of a previous review or investigation.

• Although the current regulations permit CFIUS to request parties to a non-notified transaction to provide information necessary to determine whether the transaction is a “covered transaction” or a “covered real estate transaction,” other types of information are not specifically addressed by the current rules. For example, the current rules do not address requests for information that would enable CFIUS to determine whether a transaction meets the criteria for a “mandatory declaration” or may raise national security considerations.
• While it is the existing practice of the Committee to make these sorts of requests, the proposed rules would make this authority explicit—which the Committee could rely on in the event that parties refuse to provide the requested information.
• Similarly, CFIUS has recently begun more vigorously monitoring existing mitigation agreements. The proposed rules make this authority explicit and ensure CFIUS possesses the tools necessary to enforce mitigation agreements against transaction parties.

Expanded Subpoena Authority: Currently, CFIUS has subpoena authority “if deemed necessary. . . .” CFIUS is proposing to alter the rule to provide that “if deemed appropriate by the Committee,” CFIUS may issue a subpoena to obtain information. This relaxed standard more closely tracks the authority granted to other federal agencies (e.g., the SEC) and potentially signals a willingness by CFIUS to employ a more adversarial approach with transaction parties by Committee staff during the review process.

Timeline for Transaction Parties to Respond to Risk Mitigation Proposals: The proposed rules would specify a three business day period for transaction parties to respond to mitigation agreement drafts unless the parties request a longer time frame and the Staff Chairperson grants the request in writing. Current rules do not impose any specific time frame for responses of this nature, although ironically it is often the Committee itself—not transaction parties—that is the source of delays in the review process. Accordingly, we do not expect this requirement to meaningfully change the way transaction parties respond to draft mitigation proposals.

Increased Civil Monetary Penalties: The proposed rules would significantly increase the maximum civil monetary penalty available for violations of certain requirements imposed by the CFIUS regulations and mitigation agreements. Currently, a civil monetary penalty may not exceed $250,000 per violation or, in certain instances, the greater of $250,000 or the value of the transaction. The proposed rule would establish the following penalties:

• For material misstatements or omissions in materials provided to CFIUS: a maximum of $5 million per violation.
• For failure to submit a mandatory CFIUS filing: The greater of $5 million or the value of the underlying transaction.
• For a violation of material provisions of mitigation agreements, material conditions imposed by the Committee, or orders issued by the Committee: The greater of (1) $5 million; (2) the value of the violating party’s interest in the U.S. business (or covered real estate); (3) the value of the violating party’s interest in the U.S. business (or covered real estate) at the time of the violation (or the most proximate time available); or (4) the value of the underlying transaction.

*****

The NPRM invites comments on the proposed rule changes, which must be filed by May 15, 2024.

If you have any questions about this NPRM, or the potential changes to the CFIUS review process, please contact a member of Sheppard Mullin’s CFIUS Team.

The change affects economic sanctions programs managed by the U.S. Department of Treasury, Office of Foreign Assets Control (“OFAC”) and Department of Commerce programs administered under IEEPA (such as the Information and Communications Technology and Services (“ICTS”) program). Note the change does not affect the five-year SoL for transactions under the Export Administration Regulations (“EAR”) or International Traffic in Arms Regulations (“ITAR”), but this sanctions change raises a question about future legislative updates to the authorizing statutes for those export regulations.

Key Takeaways

1. Higher Risk of Sanctions Enforcement: Previously, sanctions civil enforcement actions and criminal prosecutions had been subject to the catch-all five-year statute of limitations (in 28 U.S.C. 2462). With the new extension, OFAC and the Department of Justice (“DOJ”) now have a decade to pursue legal action against those suspected to be in violation of sanctions regulations. The new SoL took immediate effect on April 24, 2024. However, it remains yet to be seen whether OFAC and DOJ will seek to apply the new SoL retroactively.[1] In any case, U.S. government agencies will have more time and less pressure as they sift through waves of potential sanctions violations that are likely arising out of the sudden and sweeping sanctions on Russia in the past two years.
2. More Russia Risk: The extension of the SoL was first raised relating to Russia-related sanctions. Thus, we should expect to see OFAC continue to prioritize enforcement of the Russia-related sanctions, including for the decade to come. This means that companies who may have stumbled when exiting Russia may no longer count on 2027 bringing potential relief. Moreover, those who continue to conduct limited business in Russia should assess the strength of their compliance programs.
3. Heightened Compliance Imperatives: In addition to Russia-related transactions, the SoL extension underscores the importance of strong compliance measures for companies generally engaging in international transactions. Due to the extended liability window, companies should ensure that compliance programs are comprehensive, up-to-date, and effectively implemented across all levels of operations. The SoL change likely mandates a change to company document retention or recordkeeping policies. While OFAC has not yet updated its document retention regulation (that currently requires five years), we may expect to see that change soon to match the new SoL.
4. Increased Due Diligence: The longer SoL adds a layer of complexity to risk management. Now, companies will need to conduct due diligence on potential vendors and customers for a longer period. For M&A, the extended SoL means new deals may be riskier because companies have typically not been retaining sanctions compliance records for ten years, so it may be difficult to assess sanctions compliance older than five years. Recently closed deals might warrant a refreshed sanctions review as well to determine whether the acquiring parties could be on the line for liabilities from 5-10 years ago that were initially not flagged as impacting sanctions enforcement risks.
5. Global Ramifications: While the extension directly impacts entities subject to U.S. jurisdiction, its implications are far-reaching. The United States plays a leading role in shaping international sanctions regimes, so the extension sets a precedent that may influence SoL developments in other jurisdictions. Businesses with cross-border operations or transactions should therefore take heed and prioritize ensuring compliance with applicable sanctions laws in relevant jurisdictions.

Overall, the extension of the SoL for U.S. sanctions violations is a significant shift in the regulatory framework governing international trade compliance. Businesses need to be aware of these changes and take appropriate actions to maintain compliance records over the extended period. Businesses can navigate the complexities of compliance in the evolving regulatory landscape of sanctions by implementing robust compliance frameworks and fostering a proactive approach to risk management.

FOOTNOTES

[1] As lawyers, we hesitate to engage in anything math-related, but this may mean we see U.S. agencies seeking to change 5-year SoL periods currently running to 10-year periods.

The North American Free Trade Agreement (NAFTA) may have been replaced effective July 1, 2020 by the United States-Mexico-Canada Agreement (USMCA), but the rules of NAFTA remain alive and well in the halls of the enforcement agencies on both sides of the border.

Mexican Customs, through its Tax Services Administration (SAT), continues actively to verify not only USMCA origin claims, but is still pursuing NAFTA verifications going back up to five years. There remain nearly two years of US exports to Mexico (and US imports from Mexico or Canada) that remain open to verification under NAFTA. (Not to mention that the usual Customs statute of limitations of five years does not begin to run for claims of fraud until discovery of the fraud.)

Although the text of NAFTA has disappeared from the usual United States Trade Representative (USTR) and US Customs and Border Protection (CBP) website pages where it was once readily available, producers and exporters from the US sending goods to Mexico (or vice versa) who issued NAFTA certificates of origin need to be prepared to respond quickly if the authorities from SAT send a verification request. 

Requests from SAT concerning NAFTA are continuing at a steady pace and we expect this to continue for at least the next two years until the five-year anniversary of July 1, 2020, when NAFTA was replaced by USMCA. 

The information requested for a verification of origin is detailed, and SAT is known to be very strict about time deadlines. The party who issued the certificate in the US or Mexico must reply to the SAT questionnaire and include all the supporting documentation (bills of material, purchase orders, invoices, bills of lading, etc.) within 30 days, or it will receive a notice of intent to deny benefits, at which point just 30 more days remain to file that complete response. Further extensions are not granted, and an insufficient response will leave the Mexican importer liable for unpaid duties plus surcharges, penalties and interest. Mexican importers who relied upon certificates issued by US parties will, in turn, hold them accountable.

Those responding to such SAT verification questionnaires also should not assume that their responses can simply be dropped in the mail or given to a courier for delivery to Mexico City. To assure a successful SAT filing the best practice is to submit the complete filing at SAT headquarters in Mexico City – with the required translations into Spanish.

Additionally, like NAFTA, the USMCA permits the importing country’s customs authority to conduct on-site verification of origin questionnaire responses. Thus, an exporter who has received a questionnaire should anticipate the possibility of a visit from officers of the foreign customs authority to the premises of the exporter or producer. Verification visits can last up to two weeks, during which the foreign customs agents have the right to examine records supporting the origin claim, and to examine the facilities used in the production of the goods.

Producers in the US, exporters to Mexico and importers into Mexico should ask themselves: Does our company or our US supplier who issued our NAFTA certificates have the necessary certainty that they were correctly completed and that the supporting records remain readily available to be able to reply quickly when asked by SAT? The same should be asked in reverse for imports into the US from Mexico, and the same questions obviously apply equally to certificates issued under the USMCA/T-MEC.

The timelines to act in this area are so short and strictly enforced that it reminds us of the old adage “an ounce of prevention is worth a pound of cure.” The Sheppard Mullin international trade team can help you do the necessary NAFTA/USMCA check-up, and avoid a frantic last minute fire drill, by reviewing and confirming that your certificates have been issued accurately and that all the supporting evidence and documents are in order.

The Fundamental Holding

The Panel noted that the fundamental problem with the U.S. position was the clarity of the USMCA text about the consequences of a Core Part or Super Core Part satisfying Article 3.7 to 3.9 of the Auto Appendix. In the Panel’s words:

• 145. The Panel is not persuaded by the United States’ reading of the text. . . . . The VNM calculation methodologies set out in Articles 3.7 through 3.9 provide a means for determining the core parts RVC. The core parts RVC is an input into the vehicle RVC. . . .
• 146. The key term that supports this reading of the text is “originating”. The Panel observes that under Article 1.5 of the Agreement, “originating” means “qualifying as originating under the rules of origin set out in Chapter 4 (Rules of Origin) or Chapter 6 (Textile and Apparel Goods)”. . . .
• 148. The United States’ position is that the meaning of “originating” depends upon the context in which it is used. According to the United States, the context here is a separate, standalone core parts “origination requirement”.
• 149. The Panel sees no reason to attribute different meanings to the term “originating” which is used throughout Article 3. Nothing about the context of the term’s deployment in different parts of the Article suggests otherwise.
• 150. Article 3.7 gives producers a means by which to determine that their core parts are originating, and indeed requires them to do so. Once the core parts are found to be originating, Article 4.5.4 permits the producer to roll-up the RVC of the core parts when calculating the vehicle RVC. To conclude otherwise would require an express exemption or the use of different language entirely. (emphasis added)

Alternative Staging

The USMCA also provided in Article 8 of the Auto Appendix that the parties would allow Alternative Staging Regimes (ASRs) for up to 10% of a producer’s North American production, allowing them to reach the RVC (generally 75%) required after five years at a slower pace on that portion of their production. The United States issued its ASR approvals, however, subject to a condition that required producers to follow the U.S. vehicle RVC methodology, the one the Disputes Panel has now rejected. The Disputes Panel held that this U.S. ASR condition breached Article 8 of the Auto Appendix. 

Accumulation

One other interesting aspect of the Disputes Panel’s decision is its confirmation that all three parties (U.S., Canada and Mexico) agreed that producers, in doing their Core Part or Super Core Part calculations using option (b), i.e., using Auto Appendix Article 3.8(b) or 3.9(b), are to count the VNM of a non-originating component in Column 2 of Table A.2 as the non-originating value that goes into the Core Part or Super Core Part calculation. In the Disputes Panel’s words: “The Panel notes the Parties interpret “the value of any non-originating components” in Article 3.8(b) to mean the VNM of non-originating components.” This is a useful confirmation of the correct interpretation of this text in Articles 3.8(b) and 3.9(b), which means that the principle of accumulation in Chapter 4, Article 4.11 applies here as it does generally to RVC calculations under USMCA.

Implications of the Decision 

The United States said that it found the Decision “disappointing” and would discuss a possible resolution with Canada and Mexico. Unlike some WTO decisions which have gone against the United States (e.g., the WTO steel and aluminum tariffs ruling of December 9, 2022), there has not been a statement by the United States that it rejects or will ignore this USMCA Decision. One hopes that by the end of the 45-day consultation period provided under USMCA, there will be a confirmation by the United States that it will indeed follow the Decision. It is hard to believe that the last U.S. Administration, which negotiated the text of Articles 3.7 to 3.9 of the Autos Appendix, did not understand that Core Parts and Super Core Parts found to be “originating “ under those RVC tests would indeed count as “originating” in the vehicle RVC calculation. Indeed, in accordance with the Vienna Convention on the Law of Treaties, the Disputes Panel cited as a supplemental means of interpretation an email sent by the lead U.S. negotiator on rules of origin to his Canadian counterpart in June 2020 that endorsed the Canadian position on this very issue.

As Canada also pointed out in the hearing of the Dispute, the Decision on this issue does not mean that the United States has not secured significant additional North American content requirements in the auto sector under the USMCA. The USMCA has not only raised the vehicle RVC from 62.5% under NAFTA to 75% under USMCA, it has also imposed in the auto sector new North American steel and aluminum sourcing requirements and Labor Value Content requirements, as well as a rapid response mechanism for compliance with the labor terms of the USMCA, a mechanism that the United States has already invoked, including successfully, a number of times.

The USMCA changed NAFTA to impose a series of new requirements in the auto sector, among which are the following:

• The specified Core Parts need to be originating viewed separately from the vehicle as a whole
• There must be a sufficient level of North American-sourced steel
• There must be a sufficient level of North American-sourced aluminum
• There must be a sufficient level of labor content value at wages of US$16 per hour or above

The crux of the issue in the current Dispute is whether a producer, after applying the Core Parts rules and determining its Core Parts are originating, can then treat them as originating in the vehicle RVC calculation. In particular, Article 3 of the Auto Appendix to Chapter 4 of the USMCA sets forth in paragraphs 7, 8 and 9 four alternative methodologies a producer can use to determine if its Core Parts are originating. The United States contends that these four alternatives are available for meeting the requirement that the Core Parts be originating, but that when doing a vehicle RVC calculation only the first of the four alternatives (found in paragraph 8.a) can be used.

Canada and Mexico point out that Auto Appendix Article 3, paragraph 9 states explicitly that if the RVCs of the Core Parts (which are listed in Table A.2 of the Auto Appendix) meet the required threshold under one of the alternatives “then each Party shall provide that all parts under Table A.2 of this Appendix are originating and the passenger vehicle or light truck will be considered to have met the requirement under paragraph 7.” They note that this provision clearly states that the Core Parts not only meet the requirement of paragraph 7 but are also “originating,” a term which has a single definition in the USMCA. They also point out that there is nothing anywhere in the USMCA text to suggest that the meaning of “originating” changes from one part of the USMCA to another. Once found to be “originating,” a Core Part or a Super Core should, they argue, contribute to the vehicle RVC just like any other “originating” component of the vehicle. 

The U.S. response consists of essentially two arguments:

1. The structure of Article 3 of the Auto Appendix and the accompanying Tables suggest that the test of whether Core Parts are originating should be considered as separate from how the vehicle RVC calculation is done. Canada and Mexico respond to this argument by saying essentially “separate or not, the USMCA says in paragraph 9 that Core Parts that meet the test not only meet the paragraph 7 requirement but are also ‘originating,’ and there is no qualification in paragraph 9 or elsewhere that limits them to being originating for only one purpose and not others.” Core Parts that meet the test are, simply, “originating,” with all that normally implies. It seems fair for Canada and Mexico to ask: If the United States did not intend a Core Part found to meet the test in paragraphs 7 to 9 also to be “originating” for the vehicle RVC, then why did it agree to the text in paragraph 9 which states explicitly “that all parts under Table A.2 of this Appendix are originating” when they meet one of the alternative tests? Indeed, on the U.S. interpretation, it seems that the words “that all parts under Table A.2 of this Appendix are originating” would become surplusage, violating the canon of statutory construction that in determining the ordinary meaning of a statute, treaty or regulation, effect must be given to all the words of the text if possible.
2. The United States also argues that, if Canada’s and Mexico’s interpretation were adopted, the net effect of the USMCA auto rules of origin would be to leave a loophole that would require much less North American content than otherwise, which was not the parties’ intent. Canada and Mexico, however, point to various ways in which the higher RVC under USMCA (75% vs. 62.5% under NAFTA) still has a significant impact on auto and auto parts qualification and is, moreover, accompanied by new USMCA requirements for steel, aluminum and labor value content. Clearly the USMCA has imposed many new content requirements, and the agreement that was made included all kinds of trade-offs. The net effect was certainly to increase North American content requirements in many respects. Canada and Mexico also note that it is not the job of the Disputes Panel to rewrite text in order to promote one party’s policy objective that was not actually negotiated in the agreed USMCA text.

The Panel asked many questions seeking to clarify the overall operation of the Core Parts and vehicle RVC calculations and how they relate to the USMCA text. At the conclusion of the hearing, the Chair announced that a draft decision will be prepared by October 12 and that a final decision will be issued by November 10.

The microphone had barely been switched off at the hearing before the U.S. International Trade Commission announced that it was launching an investigation into the economic impact and operation of the automotive rules of origin in the USMCA, with a public hearing conveniently scheduled to take place on November 3, just a week before the Disputes Panel is to issue its final decision in the pending case. The political pressure around these issues seems sure to continue in full force for the foreseeable future.

Sheppard Mullin’s international trade team has extensive experience assisting industry with understanding and fulfilling its obligations under the USMCA. For further information on these issues, please do not hesitate to contact us.

The electronic H-1B lottery application window starts on March 1 and ends on March 18 at 12 noon EST / 9 am PST. If you desire to have one or more candidates entered into the H-1B lottery, please let immigration counsel know before March 1.

If the case is selected, then immigration counsel would file a full H-1B petition with USCIS with an employment start date of October 1. This electronic lottery process allows immigration counsel to do a preliminary streamlined filing on your behalf. Employers no longer have to go “all-in” with a full petition filing up-front without knowing whether the petition has been accepted into the cap. This should result in substantial cost savings for employers.

H-1Bs are for college degreed professionals, such as software developers, engineers, scientists and financial analysts. The annual quota is 85,000 visas and demand is expected to be twice or three times that number.

Employers should check to see if they have a need for such a visa for either a possible new hire, or to keep a current foreign national employee work authorized who is on Optional Practical Training (OPT) or STEM OPT.

H-1Bs are good for three years and can be extended for an additional three years. They can be extended beyond year 6 as well if the company has sponsored the individual for permanent residency.

General H-1B Requirements

• Must have a college degree in a field related to the job offer.
• The position must be a specialty occupation. This is defined as an occupation that requires the theoretical and practical application of a body of highly specialized knowledge and the attainment of a bachelor’s degree or higher in the specific specialty (or equivalent) as the minimum for entry into the occupation in the United States.
• The employer must comply with the U.S. Department of Labor (DOL) prevailing wage requirements and pay the same wages as U.S. workers receive doing the same job or the prevailing wage, whichever is higher.
• The foreign national can only work for the sponsoring employer, but can transfer employment with a new H-1B visa petition filed by a subsequent employer.
• The initial H-1B petition filed for the first time for an individual is subject to an annual quota of 85,000 visas, and the quota is quickly used up each year. Of the 85,000 visas, there are 20,000 visas set aside for those who have graduated with a U.S. master’s or higher
• For an initial H-1B petition (where the foreign national has never been in H-1B status before), the employer must file via the H-1B electronic lottery in March and indicate a start date of October 1. The quota is quite small compared to demand. Perhaps less than 50% of U.S. Masters get into the quota and 30% of bachelor degreed applicants.
• A first time H-1B is subject to strict quotas. H-1B transfers are exempt. Certain non-profit and university employers are exempt from the H-1B quota.

Prevailing Wage Requirements

The employer must pay the higher of the prevailing wage or what other U.S. workers at the company doing the same job are being paid. The U.S. Department of Labor publishes their wage survey, known as the Office of Foreign Labor Certification (OFLC) online data center wage survey at: http://flcdatacenter.com/

Other Non-Immigrant Visa Options

Besides the H-1B visa, immigration counsel can review your company and talent needs and explore other possible non-immigrant visas as well including:

• E-1/E-2 investor/manager/essential employee
• E-3 specialty occupation for Australians
• F-1 student, OPT, and STEM OPT
• H-1B1 specialty occupation for Chileans and Singaporeans
• J-1 interns, trainees, and scholars
• L-1A executives and managers
• L-1B specialized knowledge workers
• Blanket L option for large companies
• O-1 extraordinary ability
• P-1A extraordinary athletes and teams
• P-1B extraordinary entertainment groups
• R religious workers
• TN: Trade NAFTA workers—Canada
• TN: Trade NAFTA workers—Mexico

Employment-Based Immigrant Visa Options (Permanent Residency)

• Employment-based first preference.
  • EB-1(A) extraordinary ability.
  • EB-1(B) outstanding researcher.
  • EB-1(C) multinational manager.
• Employment-based second preference (EB-2) exceptional ability with national interest waiver.
• EB-2 advanced degree with national interest waiver.
• EB-2 advanced degree with certified PERM application from DOL.
• Employment-based third preference (EB-3) with certified PERM (college degree required).
• EB-3 skilled with certified PERM (at least two years of experience required).
• EB-3 other (unskilled)—less than two years of experience—same priority date as EB-3.
• Schedule A for nurses and physical therapists.
• EB-4 (miscellaneous categories, including former U.S. Embassy and government employees abroad, Amerasians, religious workers, special immigrant juveniles, Panama Canal employees, employees of international organizations such as the United Nations, members of the armed forces, self-petitioning spouse or child of an abusive USC/LPR spouse).
• EB-5 investor—direct job creation in own business.

On October 25, 2021, President Biden announced the suspension of the COVID-19 travel bans from Brazil, China, India, Iran, Ireland, the Schengen Area, South Africa, and the United Kingdom.  Previously, a National Interest Exception waiver was required.  With this new Proclamation, the White House announced a global vaccination requirement for all adult foreign national air travelers and authorized the Centers for Disease Control (CDC) to provide specific regulations.  The White House announcement can be found here.

Key Provisions of the New Air Travel Restrictions

National Interest Exception (NIE) Waiver No Longer Valid for Travel:  Any traveler that had a valid NIE waiver from the U.S. Embassy or Consulate can no longer use it to enter the U.S. as of November 8, 2021.  They were voided by the White House repeal of the country specific travel bans.  Instead the new vaccinations rules will apply to all air travelers to the U.S. from any country around the world.

General Rule – Must Be Fully Vaccinated:  Starting November 8, most foreign national air travelers to the United States will be required to be fully vaccinated and to provide proof of vaccination status prior to boarding a flight to the U.S.  There will only be limited exceptions.  See the U.S. State Department FAQ’s here.

Acceptable Vaccines:  Must have FDA or World Health Organization approval.  Combinations of accepted COVID-19 vaccinations are OK.  14 days must have passed since the final dose of vaccine is received before boarding a flight to the U.S.

Proof of Vaccination:  The traveler must show the airline a paper or digital record issued by an official source at the time of boarding.  The record should include the traveler’s name and date of birth, as well as the vaccine product and date(s) of administration for all doses the traveler received.

Children Under Age 18: These travelers will be exempt from the vaccination requirement.  However, children between the ages of 2 and 17 are required to take a pre-departure test.  If a child is not fully vaccinated and traveling with a fully vaccinated adult, they can show proof of a negative viral test from a sample taken within three days before departure (consistent with the timeline for fully vaccinated adults).  If an unvaccinated child is traveling alone or with an unvaccinated adult, they will have to show proof of a negative viral test from a sample taken within one day of departure.

Exception for Low Vaccination Countries and Foreign National Coming on a Work Visa:  The CDC has listed 50 countries (primarily in Africa and the Middle East) that have 10% vaccination rates or lower.  For these countries, citizens with a work visa may enter the U.S. without the vaccinations, but must provide one-day negative test results prior to boarding, as well as agree to quarantine for 7 days after arrival, take another test 3 to 5 days after arrival, and must then be vaccinated within 60 days of arriving in the U.S. if they plan to stay in the country for 60 days or more  Tourists on a B-1 or B-2 visa will not be allowed in the U.S. from these countries without a vaccination.  See the full CDC guidance here.

Other Limited Exceptions to the Vaccination Requirement:  Diplomats, children under age 18, those with medical contraindications to COVID-19 vaccines, humanitarian or emergency exceptions, air and sea crew members, and those whose admission would be in the national interest.

Religious/Moral Exception Not Available:  There are no exceptions under the Presidential Proclamation and CDC’s Order for religious reasons or other moral convictions.

Day Count for Required Tests: A 3-day test prior to departure is actually 4 days – i.e., a flight departing on Thursday will require a negative test result taken on or after Monday.  For a 1-day test prior to departure, that will require that the test be taken the day before the flight or the day of the flight.

Self-Test: A self-test can be used if it meets the requirements of the order including real-time proctoring by a telehealth service affiliated with the manufacturer of the test and that generates a test result that can be reviewed by the airline before boarding.

U.S. Citizens and Lawful Permanent Residents: If not vaccinated, U.S. citizens and permanent residents can still board an aircraft and be admitted to the U.S. but must present the airline with a negative test result within 24 hours prior to boarding.

Arrive Early to the Airport Due to the Lengthy COVID-19 Screening Process: Airlines will be charged with properly reviewing all vaccination paperwork for each traveler prior to boarding.  This is expected to create longer lines and delays in the pre-boarding process.

CBP Land Border Travel Restrictions:  Beginning November 8, travelers from Mexico and Canada who are fully vaccinated for COVID-19 may enter the United States for non-essential purposes, including to visit friends and family or for tourism, via land and ferry border crossings.  The travelers will be required to have appropriate paperwork that provides proof of vaccination.

Beginning in early January 2022, DHS will require that all inbound foreign national travelers crossing U.S. land or ferry POEs – whether for essential or non-essential reasons – be fully vaccinated for COVID-19 and provide related proof of vaccination.  This approach will provide ample time for essential travelers such as truckers, students, and healthcare workers to get vaccinated.  See: Secretary Mayorkas to Allow Fully Vaccinated Travelers from Canada and Mexico to Enter U.S. at Land Borders and Ferry Crossings

General Guidance Regarding Monitoring Travel Document Expiration Dates: One must be diligent in monitoring all expiration dates including:

• Passport expiration – ensure that your passport is valid for at least 6 months beyond the intended stay, otherwise U.S. Customs and Border Protection (CBP) may deny entry or severely limit the period of stay.
• ESTA visa waiver registration expiration or visa expiration registration.
• If entering on a work visa, the petition expiration date (PED).
• I-94 expiration of authorized stay issued by CBP at the port of entry. To obtain an I-94, visit the official website here.

Sheppard Mullin’s Immigration Practice provides a robust array of services for employers including general counsel, human resource managers, executives, scientists, engineers, software developers, investors, and entrepreneurs. Contact your Sheppard Mullin attorney or the authors for additional assistance.

For companies engaged in international trade, there are many dilemmas to confront in implementing your ESG agenda. Not least is how parts of that agenda may be in tension with your company’s growth and revenue goals. For example, how to grow export revenue while doing your part to protect the environment. Or how far to go in auditing the import supply chain to comply with expanding prohibitions on products manufactured with forced labor. Yet there is very little guidance out there on managing those dilemmas.

In our view, one principal step is to go back to the company’s core values. If you can identify your core values, you can better weigh competing interests. Moreover, connecting international trade policy with core institutional values may help the company better connect with employees, which can improve performance and compliance. It can also help steer the company clear of regulatory enforcement actions and protect the company’s reputation..

Out with the old

In past, U.S. trade regulation focused more on foreign policy, national security, and economic security than on environment, social justice, or governance. For example, many U.S. sanctions programs are aimed at isolating foreign adversaries such as Iran and North Korea. Another example is antidumping and countervailing duties, which are imposed to protect U.S. manufacturing from unfair foreign competition. Similarly, U.S. export regulations are designed to protect U.S. technological and military superiority.

In reaction, most international companies have rightly designed their trade compliance policy to mitigate risk of regulatory violations. Manuals and trainings, supported by a company culture of compliance, drive employees to advance the business while complying with the applicable regulations, which helps advance U.S. national security and foreign policy.

In with the new

More recently, U.S. international trade regulations are targeting ESG goals. The biggest example is the recent surge in regulations confronting the use of forced labor in foreign supply chains. Recent examples abound. There has been a rapid increase in U.S. Customs and Border Protection (CBP) enforcement actions to prevent entry of imports made using forced labor. The Department of Labor has issued a list of foreign goods likely to be made with forced or indentured child labor. The United States-Mexico-Canada agreement (which replaced NAFTA last year) repackaged labor principles with access to a the Rapid Response Labor Panel to provide for better enforcement of worker protections abroad. Last year, the Department of Commerce issued a rulemaking proposing additional export controls on facial recognition technology and related surveillance tools used against Uighurs, Kazakhs, and other members of Muslim minority groups in the Xinjiang region China. The Department of Commerce also added over 40 Chinese entities to the Entity List for reasons of human rights abuses against Uighur Muslims in the Xinjiang regions.

As a result of these regulatory trends, environmental, social, and governance goals now have to be part of international trade compliance efforts. That is a daunting task, and it forces us to take a new look at compliance. But it also gives us a unique opportunity to reexamine our corporate values, and refresh our policies to align with company values.

Design trade policies to support company values

To extend ESG practices into your supply chain, here are some steps companies may wish to consider:

1. Remind yourself of your company’s core values. Many companies have started to spend time and effort digging deep to identify their values. If you’ve already conducted a values survey, or otherwise identified a set of shared beliefs and goals that define the company’s true core values, this is a good time to understand that process. With a little hard work, you can use those findings as a basis for implementing ESG goals into your international trade compliance policy. If your company has not conducted a values project, it may be time to go deeper as an organization, and identify your company’s core values.
2. Determine the intersection with your international business. Identify the intersection between your company’s corporate values and your international trade policies.
3. Set internal targets. Set internal targets to prioritize and address all the goals in the intersection between values and trade policy. And don’t forget to find a way to provide sufficient resources to meet those targets.
4. Understand the risks in your supply chain. Consider conducting a formal review of your supply chain to identify not only listed entities to avoid, but also entities with strong ESG support and reputations. Consider working with suppliers with an ESG focus to put on industry education seminars or release publications.
5. Address forced labor. Implement a subprogram focused on identifying forced labor. This could include a forced labor audit, revisions to the company’s procurement policies, Supplier Code of Conduct, trainings, on-site inspections, self-assessment questionnaires, and rankings for suppliers. Monitor your suppliers with regular due diligence. Refresh your training for employees with key roles in identifying forced labor.
6. Vet third parties. Decide who you want to work with by asking ESG questions. For an exporter, that could be whether customers track greenhouse gas emissions, or for an importer, that could be whether suppliers source from indigenous peoples.
7. Formalize supply chain commitments. Consider formulating a Supplier Code of Conduct or Code of Ethical Purchasing. Consider additional contracts such as for sustainable sourcing, support of renewable energy, or other ESG goals captured in your company values.

In the end, this new perspective on compliance could enable companies to not only get out ahead of potential enforcement actions and reputational threat. It can also help you identify ways to conduct sustainable and profitable business as consumers, regulators, and employees are rewarding businesses for ESG performance.

However, the waiver will only be good for business travel that meets the strict National Interest Exception (NIE) requirements, not for tourism.

The travel bans imposed by the U.S. Government during the COVID-19 national pandemic created enormous logistical challenges for anyone seeking to fly to the U.S. from a country on the travel ban list.  Even today, there is still a great deal of confusion regarding who is subject to the travel ban, what are the exceptions, and how to go about applying for a NIE waiver.  Our NIE checklist to the U.S. travel bans below is intended to help simplify an albeit complicated process.

Latest Update from the U.S. State Department:  June 29, 2021 and publicly announced on July 6, 2021

Countries with Travel Bans:  The Schengen area, the United Kingdom, Ireland, China, India, Brazil, South Africa, and Iran.

Schengen Countries include:  Austria, Belgium, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Iceland, Italy, Latvia, Liechtenstein, Lithuania, Luxembourg, Malta, Netherlands, Norway, Poland, Portugal, Slovakia, Slovenia, Spain, Sweden, and Switzerland.

Transit Through a Banned Country:  If one’s flight originated from a safe country and then makes a connection in a travel ban country, then that will trigger the need for an NIE waiver or to spend 14 days in a safe country before entering the U.S.  Travelers should seek non-stop flights to the U.S. to  avoid stopping in a country on the travel ban list.  For example, a flight from Dubai to Los Angeles with even a short stop-over in London will likely trigger the ban.

Family and Other Exemptions:  U.S. citizens, lawful permanent residents, certain close family members, and other enumerated visa applicants do not need an NIE waiver at all.  See further below for the full list of Exemptions.

14-Day Exemption:  There is an exemption for those who spend 14 days outside of one of the “Banned Countries” (i.e. spending 14 days in Mexico or the Caribbean).

NIE Criteria to Prove to the U.S. Embassy:  Those who are seeking to provide vital support or executive direction for critical infrastructure or for significant economic activity in the United States.  In addition, journalists; students and certain academics covered by the J-1 exchange visitor programs; immigrants; and fiancés may now qualify for an NIE.

Physical Presence in Country at Time of Application:  Must be in the country where the NIE will be filed at the time of submitting the NIE request to the U.S. embassy or consulate.

NIE Travel:  As of July 6, 2021, good for multiple entries within 365 days of issuance.  Previously it was only good for a single entry within 30 days of issuance.

Family members Unlikely to Get an NIE on ESTA:  Spouse and children seeking to get a NIE waiver to travel on ESTA are not likely to be approved since the spirit of the rule is to support critical business travel.

Family members Derivative to a Work Visa:  Family members that are derivative to the primary applicant who holds a work visa (i.e. H-1B, L-1, E-2, O-1 etc.) should be approved since they also need to travel to live in the U.S. with the principal  Their information should be included at the time the principal files the NIE request.   In addition, they are strongly encouraged to travel at the same time as the principal applicant to avoid issues at the port of entry, since NIE data regarding the family members may not be in the U.S. Customs and Border Patrol (CBP) system.  If they must travel separately, they should carry a copy of the NIE approval e-mail from the U.S. Consulate as well as the original request that was sent to the U.S. Embassy, the principal applicant’s passport ID page, their visa or ESTA, marriage certificate with translation for spouses, and birth certificates with translations for children.  Family members cannot use the NIE for tourism.  It must be to follow to join the principal applicant who is in the U.S. on critical business.

ESTA Travel:  Check the local U.S. Consulate for NIE filing instructions.  Make sure your ESTA registration is current.  They are valid for 2 years at a time.  If your ESTA is expiring, you may apply for a new 2-year period at any time but once you do so it will cancel out your current ESTA registration.

Future Travel on Waiver: The one-year NIE waiver can only be used for the purpose under which it was granted.  A NIE waiver for business travel cannot be used for tourism on a subsequent entry.

Need Visa:  Need to first ask for an expedited appointment based on an NIE.

Visa Just Issued:  The NIE approval should already be endorsed on the visa.  Prior to June 29, 2021, the endorsement would show valid for a single entry within 30 days.  These are now valid for 1 year regardless.  On or after June 29, 2021  the visa should show the NIE waiver is valid for multiple entry for 1 year.

Have Visa But it was Issued More than 30 Days Ago:  Based on new guidance, the visa holder can continue to travel on this visa for 1 year since it was approved.  The one year of travel is replacing the 30 day, one-time entry.

Visa Stamping in Another Country:  If traveling from a Banned Country, a person must wait 10 days in that country before entering a U.S. Consulate for visa stamping.  There are limited appointments for third country nationals or nationals not living in the jurisdiction.   Many consulates state that they are not issuing visas to third country nationals due to limited visa services being offered.  May need to make expedite request if appointment is many months out.

Air Travel from Mexico and Canada to the U.S.:  There is currently no travel ban in place, therefore no NIE is required.

Travel from Canada/Mexico via the Ground Border with the U.S.:  Only essential travel is allowed – those with work visas, USC’s, LPRs etc.  There is no  NIE process available.

Passport Expiration:  Ensure that your passport is valid for at least 6 months beyond the intended stay, otherwise U.S. Customs and Border Protection (CBP) may deny entry or severely limit the period of stay.

Negative COVID Test:  The U.S. Center for Disease Control (CDC) and most airlines require a negative COVID test performed within 72 hours of flying to and from the U.S.   

Quarantine Upon Arrival into the U.S.:  Check the local requirements in the state, county, and city that you are flying to:  quarantine requirements vary from none to up to 14 days depending on local conditions.

Monitoring Expiration Dates: One must be diligent in monitoring all expiration dates including:

• One year expiration of the NIE
• Passport expiration
• ESTA registration expiration or visa expiration registration
• If entering on a work visa, the petition expiration date (PED).
• I-94 expiration issued by U.S. Customs and Border Protection at the port of entry

Full List of Family and Other Exemptions from the Travel Ban (NIE not Needed):

○ U.S. citizens (aka USC’s)

○ U.S. nationals

○ Lawful permanent residents of the U.S. (green card holders, or “LPRs”)

○ Spouses of USC’s and LPRs

○ Children of USC’s and LPRs that are single and under the age of 21

○ Siblings under the age of 21 of USC’s and LPRs

○ Parent or legal guardian of a USC or LPR child who is single and under age 21

○ COVID-19 health care workers and researchers

○ Airline and sea crewmembers

○ Ambassadors, diplomats, U.N. workers etc.

○ Journalists

○ Extraordinary humanitarian circumstances

○ National security

○ Public health

○ Support important U.S. law enforcement objectives

○ Students with valid F-1 or M-1 visas traveling to begin or continue an academic program do not need to contact the U.S. Embassy to seek an individual NIE to travel.  They may enter the U.S. no earlier than 30 days before the start of their academic program.  NIE eligibility for students who have been present in Brazil, China, India, Iran, or South Africa applies only to programs that begin on or after August 1, 2021.

○ Very select J-1 exchange visitors, including au pairs.

○ Anyone spending 14 days outside a Banned Country

NIE REQUEST CHECKLIST

1. Confirm that the country is on the COVID Travel Ban List.
2. Confirm that no exemption applies.
3. Check the local U.S. Embassy or Consulate website for specific filing instructions for the National Interest Exception to the COVID Travel Ban.
4. Some U.S. Embassies require that you make a short request on their portal and will send you a formal questionnaire to include with your NIE filing. Others ask that you e-mail them with all the information at the outset. Other embassies indicate that you must first request an expedited appointment with an NIE justification through the Department of State appointment booking system.
5. E-mail your NIE request to the e-mail address specified for your applicable U.S. Consulate:

• In the subject line state: CONSIDERATION FOR NATIONAL INTEREST EXCEPTION – LAST NAME.
• Attach passport ID page of principal applicant.
• Attach passports of spouse and minor children if they are traveling with the principal. (Note:  Some U.S. Consulates are asking that the derivative family members make their own separate request.)
• Attach the current ESTA registration if seeking to travel on ESTA, or a copy of one’s current visa if already obtained. Same with spouse and children if traveling together with the principal.
• Attach a signed NIE support letter, usually from a U.S. company, outlining why the proposed travel will provide vital support or executive direction for critical infrastructure or for significant economic activity in the United States.
• List the following information in the body of the e-mail:
• Name as it appears on passport
• Date of birth (XX-MON-XXXX i.e. 01-JAN-1999)
• Country and city of birth
• Passport #
• Passport date of issuance
• Reason for travel
• Intended travel date
• Proposed itinerary
• A scanned copy of the passport’s biodata page in PDF and right side up.
• A scanned copy of the valid ESTA or visa in PDF and right side up.
• Personal E-mail address (one for each individual applicant)
• Letter from your employer indicating your job title, a brief description of your duties.
• Critical infrastructure industry of your work.
• Exact specific activities you intend to perform.
• How these activities directly support the critical infrastructure.
• Why these activities require your physical presence in the United States.
• Why alternatives such as video conferencing, teleworking, or actions by proxy fail to directly support the critical infrastructure.

For guidance on a particular case, please contact your Sheppard Mullin attorney or the authors.  Thank you.