Background

China has implemented a new law imposing consequences on individuals and organizations that directly or indirectly participate in implementing foreign sanctions against Chinese citizens or organizations. This law could impact the ability of Chinese vendors to comply with U.S. requests to avoid entities named on U.S. Customs and Border Protection’s withhold release orders related to forced labor. Not only is this likely to impact due diligence on forced labor avoidance but also due diligence procedures on U.S. sanctions.

Consequences for violating the new Chinese law may include restrictions on immigration, asset seizure, restricting transactions through local sanctions, and other measures.

Chinese government officials have begun making inquiries of Chinese companies, including whether they are doing business with certain entities and if they have been requested to avoid using materials identified on CBP’s WRO list.

Companies should take this into consideration when implementing due diligence procedures, particularly with regard to China supply chain partners and employees.

For more information, please contact attorneys Elise Shibles (at (415) 490-1403 or via email) or Kristine Pirnia (at (202) 730-4964 or via email).

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