DOJ’s ‘China Initiative’ to investigate and prosecute Chinese companies for FCPA violations.


84th US Attorney General – Jeff Sessions. Source:

As released on the website on November 1st, then acting Attorney General Jeff Sessions announced the “China Initiative” fact sheet on the Department of Justice (DOJ) website.

The purpose of the China Initiative is in response to several Trump administration reports that showed concern regarding China’s trade practices and “various acts, polices and practices of Chinese industrial policy uses in seeking to acquire the intellectual property and technologies of the world and to capture the emerging high-technology industries that will drive future growth”.

The release also explains in detail the National Security Division (NSD): “The National Security Division (NSD) is responsible for countering nation state threats to the country’s critical infrastructure and private sector. In addition to identifying and prosecuting those engaged in trade secret theft, hacking and economic espionage, the initiative will increase efforts to protect our critical infrastructure against external threats including foreign direct investment, supply chain threats and the foreign agents seeking to influence the American public and policymakers without proper registration.”

According to the release, the goals of the China Initiative include:

  1. — Identify priority trade secret theft cases, ensure that investigations are adequately resourced; and work to bring them to fruition in a timely manner and according to the facts and applicable law;
  2. — Develop an enforcement strategy concerning non-traditional collectors (e.g., researchers in labs, universities, and the defense industrial base) that are being coopted into transferring technology contrary to U.S. interests;
  3. — Educate colleges and universities about potential threats to academic freedom and open discourse from influence efforts on campus;
  4. — Apply the Foreign Agents Registration Act to unregistered agents seeking to advance China’s political agenda, bringing enforcement actions when appropriate;
  5. —Equip the nation’s U.S. Attorneys with intelligence and materials they can use to raise awareness of these threats within their Districts and support their outreach efforts;
  6. — Implement the Foreign Investment Risk Review Modernization Act (FIRMA) for DOJ (including by working with Treasury to develop regulations under the statute and prepare for increased workflow);
  7. — Identify opportunities to better address supply chain threats, especially ones impacting the telecommunications sector, prior to the transition to 5G networks;
  8. — Identify Foreign Corrupt Practices Act (FCPA) cases involving Chinese companies that compete with American businesses;
  9. —Increase efforts to improve Chinese responses to requests under the Mutual Legal Assistance Agreement (MLAA) with the United States; and
  10. — Evaluate whether additional legislative and administrative authorities are required to protect our national assets from foreign economic aggression.

If you have any concerns about whether your Chinese company will have issues or be subject to scrutiny under the new DOJ “China Initiative”, call experienced FCPA attorney David Hsu at 832-896-6288 or email at

China drafts new technology transfer law – will this be enough to alleviate US concerns?

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According to a just published South China Morning Post article – new legislation has been introduced in China that banns forced technology transfers. The draft foreign investment law was revealed on Sunday and includes a clause on protection of intellectual property.

According to the SCMP article, the newest version of the law states that “forced technology transfer through administrative measures is prohibited, and technology cooperation should be “based on voluntarily agreed terms and business practices”.

A similar law was written in 2015 but was not enacted at that time. However, given the US/China trade war and one of the main concerns on forced technology transfer – 2019 may see an enactment of the new law. Will update this article as more news peoples available.

If you have any questions regarding, trade, import, export, compliance or FCPA issues and how they may impact your business, contact experienced compliance attorney David Hsu at 832-896-6288 or by email at

CHS Inc. SEC filing discloses FCPA violations.

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Tell me more about the CHS FCPA violation:
In an August 31, 2018 Form 10-K filing with the United States Securities and Exchange Commission (SEC), CHS Inc. disclosed FCPA violations related to:

“a small number of reimbursements the Company made to Mexican customs agents in the 2014-2015 time period for payments the customs agents made to Mexican customs officials in connection with inspections of grain crossing the U.S.-Mexican border by railcar. We are fully cooperating with the government, including with the assistance of legal counsel, which assistance includes investigating other areas of potential interest to the government. We are unable at this time to predict when our or the government agencies’ review of these matters will be completed or what regulatory or other outcomes may result.”

The full 10-K filing can be found here (link opens in a new window).

Who is CHS?
CHS is a Fortune 100 business based in Minnesota and operates food processing and wholesale, farm supply, Cenex brand fuel, financial services, and retail businesses. CHS employs 12,000 people and are also large operators in grain, soybean and sunflower production and transport.

What is the FCPA?
In short – the Foreign Corrupt Practices Act of 1977 was enacted for the purpose of making it unlawful for certain classes of persons and entities to make payments to foreign government officials to assist in obtaining or retaining business. Payments, promises to pay or even authorization for payment is a violation and the definition of a foreign official is also very broad.

What does the FCPA have to do with importers and exporters?
Everything! The FCPA applies to all U.S. persons and many of our clients have FCPA risks without even knowing they do. FCPA violations and penalties are severe and individuals have also been found to be personally liable for violations that were committed by the company. The CHS FCPA violations highlight just some of the risks US based exporters face when doing business (exporting) overseas.

FCPA consultation and audit at no obligation or cost to you.
If you don’t have a FCPA compliance program in place or have not updated your compliance program – call experienced trade and compliance attorney David Hsu at 832-896-6288 or by email at

The FCPA penalties and compliance risk to you and your company is high, call David Hsu today.



China and US plan trade negotiations in January.

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According to Bloomberg, China and US held vice-ministerial level talks today to discuss a resolution to the ongoing trade war and are moving closer to a January meeting.

Both sides spoke on the phone and are making arrangements for a face-to-face meeting sometime next month. We’ll see if both sides can reach an agreement concerning the trade imbalance, market access, technology transfers and other trade related matters.

China imports zero U.S. soybeans in November – first time since trade war started.

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According to Reuters, China imported zero U.S soybeans in November, the first time since the trade war started earlier this year. China is the world’s largest soybean buyer and according to Reuters, sourced soybeans from Brazil to replace U.S. soybean imports.

China imported 5.07 million tonnes of soybeans from Brazil in November whereas U.S. soybean imports dropped to only 67,000 tonnes in October (a sharp drop from the 4.7 million tonnes imported to China in November 2017).

Trade in soybeans totaled over $12 billion in 2017 when the U.S. was the second largest supplier of soybeans to China. U.S. soybean imports have a duty of 25%, the same percentage the Trump administration levied on over $200 billion in Chinese goods.

Check back for the latest news. If you have any questions on how to importing/exporting or how the China duties may impact your business – contact experienced trade and customs attorney David Hsu at 832.896.6288 or by email at

Vietnam becomes member of UN Commission on International Trade Law.

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According to the Bridge website – Vietnam was voted in by the UN General Assembly for membership into the UN Commission on International Trade Law (UNCITRAL) last week.

The goal of UNICTRAL is to remove legal obstacles to international trade and Vietnam’s membership shows Vietnam’s increasing importance in trade in Southeast Asia. I believe the US-China trade war may help this along by pushing companies to seek other countries for manufacturing of goods to avoid the 10-25% duties on goods from China.

As written on my blog multiple times, Vietnam is also a party to the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP).

Chinese President Xi emphasizes China’s right to pursue its own path.

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According to a CNBC report, here is a summary of Chinese President Xi Jinping’s address commemorating the 40th anniversary of China’s “reform and opening up”:

  1. President Xi said “No one is in a position to dictate to the Chinese people what should or should not be done” according to the official translation broadcast through Chinese state media.
  2. He called for China to “stay the course” on its current path.
  3. “We will resolutely reform what should and can be reformed, and make no change where there should and cannot be any reform.
  4. “The past 40 years eloquently prove that the path, theory, system and the culture of Socialism with Chinese Characteristics pioneered in the wake of the Third Plenary session of the 11th (Communist Party of China) Central Committee by the Chinese people of all ethnic groups rallying under the leadership of the CPC are completely correct, and that CPC theory line and policy that have since taken shape are completely correct,” Xi said.
  5. “The past 40 years eloquently prove that China’s development provides a successful experience and offers a bright prospect for other developing countries as they strive for marketization,” he added.

Today marks the 40th anniversary of former Chinese Leader Deng Xiaoping’s restructuring of the Chinese economy in 1978 that led to the individual ownership of industries and the start of foreign companies to have limited access in China.

At the ceremony, Beijing also awarded the “China Friendship Medal” to Alibaba founder Jack Ma, Tencent CEO POny Ma, retired NBA basketball star Yao Ming along with AIG CEO Maurice Greenberg and founder of the World Economic Forum – Klaus Schwab.

The nationalistic tone in Chinese President Xi Jinping’s speech does not appear to show much room for negotiation on a trade deal with the US.




TESLA drops China car prices due to tariffs.

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As reported by Reuters in late November, Tesla dropped the price of the Model X and Model S cars by 12 – 26 percent to help make the cars more affordable to customers in China. Back in June of this year, Tesla was one of the first carmakers to raise their prices in response to Tariffs.  The price increase came after a price decrease in May when Tesla lowered prices in China after Beijing said they would cut import tariffs for all auto imports.

The article also indicates Tesla is looking to speed up the construction of their Gigafactory in Shanghai. By producing cars in Shanghai, Tesla shields itself from any future import tariffs.

A few days ago, I wrote a blog post that China is also suspending the increase in tariffs on US cars, not sure if Tesla has raised the prices of their cars following the most recent December announcement.

Cambodia’s largest ivory seizure – 3.2 tonnes of tusks.

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According to Asia Times, Cambodia seized a record 3.2 tonnes of elephant tusks hidden in a storage container from Mozambique at the Phnom Penh Autonomous Port. The container arrived at Phnom Penh last year and the owner never picked up the container.

Officials in Cambodia were alerted to the tusks from a tip from the US embassy. This most recent seizure is one of many in the past 5 years in Cambodia, and further adds to Cambodia’s reputation as a trafficking hub. Another reason may be Thailand’s crackdown on ivory and Cambodia’s close proximity to China and Vietnam.