Global Supply Chain Management – International trade, export controls, and sanctions

Supply chain management is no longer just about the economics

Africa, Asia and Middle East

Recent global events have put the resilience and adaptability of global businesses to the test. Increased protectionism and geopolitics have

led to changes in the regulatory landscape, including broadening of sanctions, import controls, export controls, investment-related
restrictions and other government policies, which affect the boundaries within which companies can structure their business relationships
and strategies.

Challenges arising from the changing regulatory landscape

Changes in the global regulatory environment, described above, have created supply chain challenges for businesses engaging in crossborder
procurement, distribution, resale and import activities.

The following are examples of the new types of supply chain challenges triggered by these regulatory developments on which our
international trade and compliance specialists have been closely advising:

• Business partners (or their business partners) becoming sanctioned
• Increased fines and penalties for violations of trade controls
• Enquiries and investigations relating to potential violations of sanctions, import and export controls
• Enhanced due diligence required by banking partners, suppliers and customers
• Need for localising international trade, export controls, and sanctions  compliance programmes
• Divergence of supply chain standards applied in different jurisdictions
• Shipments being seized by customs
• Broadening of the scope of goods and technology subject to export and import controls
• Inability to source raw materials and products from certain regions, entities or persons
• Conflict of laws
• Delays in import and export licensing
• Companies moving factories to ‘sanctions neutral’ countries

Our relevant experience

• advising an international aviation business headquartered in Asia on global sanctions and trade compliance of its procurement, engineering and cargo and passenger service functions, including completing a trade compliance audit, drafting a comprehensive trade compliance policy and advising its business operations on day-to-day sanctions compliance and party risk assessments
• advising an international airline on the implications of global sanctions on its procurement activities, including resolving potential conflict of laws and drafting sanctions-related provisions to be incorporated into the relevant supply and service agreements
• advising a global chemical manufacturer on the set-up of its supply chains in Asia, including the trade and antitrust compliance aspects of its proposed arrangement with a PRC manufacturer involving the sale and import of raw materials from the US into the PRC for manufacturing and processing trade purposes, and the subsequent distribution of finished products in the US, European and PRC markets
• advising a global luxury goods retailer on the design of its sanctions compliance and party due diligence programme, resulting in a successful licence application to trade in high level precious metals and stones, and advising it on day-to-day sanctions compliance
• advising a global luxury goods producer and retailer on global sanctions and anti-money-laundering compliance aspects of its complex sourcing arrangement involving an extensive number of suppliers based in jurisdictions in Asia, the Middle East and Africa
• advising a multinational agricultural product distribution company on global sanctions compliance in relation to its proposed procurement and payment arrangements involving countries subject to comprehensive sanctions
• advising a global supplier of industrial gas on the implications of sanctions and trade restrictions on its importation and distribution of industrial gas products
• advising the real estate arm of a global conglomerate headquartered in Asia on international trade, export controls, and sanctions compliance, including advising on third party risks associated with its strategic JVs, real estate projects and procurement of construction materials and services, and advising its C-suite on how to ‘future-proof’ its business in light of global sanctions developments
• advising various financial institutions in Asia, including one of the leading banks in the PRC, on the potential impact of global sanctions regimes on their retail, commercial and global investment businesses
• advising a major Chinese state-owned enterprise on the sanctions aspects of a strategic joint venture in the Middle East, which forms a critical part of its global supply chain
• advising a multinational optical retail chain on the conduct of its supplier and distributor audits in Greater China
• advising a global defence and technology sector client on multiple investigations into alleged or potential violations of sanctions and export and import controls applicable to the distribution of controlled goods and technology across Asia, including in Greater China, including advising the client on the conduct of the investigations, managing extensive document review and interviews with relevant client personnel, acting on behalf of the client in its exercises of audit rights against distributors, advising on overall findings and mitigation, and providing follow-on training to the client’s stakeholders and personnel in Greater China
• advising a global special chemicals manufacturer on the conduct of its internal investigation into alleged violations of customs and import control laws in Asia, and advising on the restructuring of its distribution arrangements to mitigate risks of breaching applicable import controls
• advising a global logistics services provider and trading company on a global sanctions audit of its freight forwarding business, covering five years of transaction records, including identifying potential violations of sanctions and export and import controls applicable under the laws of Hong Kong, the PRC, Australia, the UK, the EU and the US, and advising on mitigation including voluntary disclosures. We have continued advising the client on day-to-day global trade compliance, its compliance policies, and the restructuring of its supply chains
• in conjunction with our International Trade team based in London, advising a global biochemical technology company on an internal investigation into alleged diversion of controlled products in breach of applicable Russian sanctions and export controls

Europe

• advising a global automotive manufacturer on the import restrictions relating to iron and steel products. We assisted the client with reviewing and reshaping its internal compliance protocols, submitted a voluntary disclosure on behalf of the business in relation to inadvertent sanctions violations (resulting in no action being taken by competent authorities), and provided strategic advice in relation to managing the client’s due diligence process
• advising a global telecommunications provider on multiple violations of the EU Syria sanctions regime and defending it against an investigation by OFSI
• successfully defending a US-based technology company from a £23.5 million fine imposed by HMRC for multiple violations of export controls, with the fine ultimately being reduced to approximately £700,000
• advising a multinational telecommunications company on compliance with UK, EU and US sanctions and export control laws, including advice on supplying ITAR controlled technology via the diplomatic process
• advising a global software business on shaping trade compliance policy and protocols, the application of sanctions to various aspects of the business, including cloud computing, and advising on the impact of the new sanctions against Russia on cross-border operations
• advising a UK technology company operating in the global (re)insurance market (and owned by a US-listed company) on sanctions. As well as advising in respect of day-to day legal and compliance matters, we were also instructed in relation to a significant sanctions investigation. This investigation was managed by our UK-based team and involved a five-year look back in relation to potential historic sanctions violations. The review population was over 14 million transactions. The investigation led to a voluntary self-disclosure to both US and UK sanctions authorities (OFAC and OFSI) which successfully concluded with no financial penalty being imposed

US

• advising a global logistics provider on an internal investigation concerning potential US and EU sanctions violations. We were required to review information concerning in excess of 2 million transactions
• advising a FTSE 100 company on the export of US and EU 'dual-use' software globally and establishing a global compliance program
• advising US-based CyrusOne Inc. on its agreement to be acquired by KKR and Global Infrastructure Partners (GIP) in a $15bn all-cash transaction. James Lindop spearheaded the Foreign Direct Investment aspects of the transaction for CyrusOne

How we can help

• Party due diligence
• Risk assessments
• Product classification
• Advice on trade controls
• Safeguarding strategic contracts
• Internal investigations
• Exercise of audit rights
• Voluntary disclosures to regulators
• Defending enforcement actions
• Mitigation
• Compliance programmes
• Stakeholders engagement