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Lowenstein Sandler LLP

Abbey E. Baker

Abbey E. Baker

Counsel

Lowenstein Sandler LLP
D.C., U.S.A.

tel: 202.753.3806
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Profile

Abbey advises domestic and foreign companies on navigating dynamic trade policies, remaining compliant with U.S. and foreign regulatory requirements, and managing and reducing liabilities in cross-border M&A and investment transactions, agreements, and distribution contracts for foreign sales. She counsels clients on a broad array of trade compliance issues, including import and export controls, economic sanctions on foreign countries (including Iran, Cuba, North Korea, and Russia/Crimea), secondary sanctions on third-country entities, anti-bribery compliance, anti-boycott compliance, Committee on Foreign Investment in the U.S. (CFIUS) and Foreign Investment Risk Review Modernization Act (FIRRMA) reviews and filings, U.S. Customs and Border Protection (CBP) procedures and regulations, USCIS Form I-129 Part 6 Certifications, and sanctions issues pertaining to EB-5 immigration matters.

Abbey works with businesses and entrepreneurs seeking to expand their market position in the global economy. Her experience analyzing, identifying, and leveraging opportunities for doing business worldwide while avoiding the pitfalls associated with global trade has allowed her to guide clients through obstacles in regions around the world. She remains diligently focused on ensuring her clients are in alignment with U.S. trade regulations through the creation of comprehensive compliance programs, including tailored manuals, trainings, and other effective risk management materials. Abbey also performs internal investigations and audits, restricted party and other trade compliance diligence, and trade controls liability assessments. Training program topics include the International Traffic in Arms Regulations (ITAR), the Export Administration Regulations (EAR), the Foreign Corrupt Practices Act (FCPA) and U.K. Bribery Act, and U.S. embargoes and sanctions.

Notably, Abbey delivers honed skill in the aerospace and aviation industry as well as in trade in defense articles and services. She regularly assists clients in trade in technology; trade in health care products and medical devices; country of origin determinations; Bureau of Economic Analysis (BEA) inbound and outbound foreign investment filings; customs seizures; import and export classifications; CBP ruling requests; and obtaining licenses from and navigating the disclosure process under the Department of Commerce's Bureau of Industry and Security (BIS), the Department of State's Directorate of Defense Trade Controls (DDTC), and the Department of the Treasury's Office of Foreign Assets Controls (OFAC).

Bar Admissions

    District of Columbia
    Massachusetts

Education

American University Washington College of Law (J.D. 2011)
University of Massachusetts Boston (2008), summa cum laude
Areas of Practice
Professional Career

Professional Associations

Member, Massachusetts Bar AssociationMember, American Bar Association


Professional Activities and Experience

Accolades
  • Rising Star - Super Lawyers - Abbey Baker
  • D.C. Bar Pro Bono High Honors - Abbey Baker
  • D.C. Court of Appeals and D.C. Superior Court Capital Pro Bono High Honor Roll - Abbey Baker

Articles

Every day we hear more and more about the changing landscape of American–Iranian politics, and, if you read the newspapers, it looks like some U.S. businesses are beginning to benefit. It’s a good potential market. There are approximately 80 million consumers, a young population and an interest in U.S. goods and investment in the United States. But, what is really allowed and what does that mean for Iranian EB-5 investors? Is unencumbered Iranian investment in the U.S. the new reality?


The short answer is, no. It’s not that simple. But there are opportunities, and EB-5 investment is possible if you do your homework and stay compliant with the rules.


EB-5 Investment Procedures
An Iranian investor looking to obtain a U.S. EB-5 Visa through investment in a regional center must go through a variety of procedures in order to utilize the EB-5 program. First, potential investors need to determine whether their EB-5 funds transfer falls within the Department of Treasury’s Office of Foreign Assets Control’s (“OFAC”) General License. They may need an opinion letter from legal counsel providing financial institutions evidence that the transfer does not violate the sanctions program. Restricted party screenings must also be completed to ensure the individuals and entities involved in the investment are not U.S. government prohibited parties. Such parties are restricted from doing business in the United States or with a U.S. Person (this includes U.S. businesses).

U.S. foreign policy is moving fast these days, especially when it comes to sanctions and the aviation industry. While U.S. aviation and leasing has not been given a complete go-ahead, steady changes are continuing to open aviation markets in both Iran and Cuba. Everyone should pay attention to the details, because most aircraft have at least some small amount of U.S. content, falling under U.S. rules.


Commercial Aviation Sales and Leasing in Iran


On Jan. 16, 2016, it was confirmed that Iran implemented key nuclear-related measures described in the Joint Comprehensive Plan of Action (JCPOA). This confirmation triggered Implementation Day, the day that the U.S. and other parties agreed to lift nuclear related-sanctions against Iran. These lifted sanctions generally relate to secondary sanctions or those imposed by the U.S. government against non-U.S. persons.


Although U.S. parties are still prohibited from entering into most activities with Iran, there are exceptions for the U.S. civil aviation industry. These changes include the adoption of a Favorable Licensing Policy for commercial airline transactions. Specific licenses may be issued on a case-by-case basis and may authorize various activities such as export, re-export, sale, lease, or transfer of commercial passenger aircraft, spare parts and components, and the provision of certain associated services. Conditions may apply, so always carefully read any license you obtain and consult export counsel.

President-elect Trump recently targeted General Motors Co. and Ford Motor Co. over trade issues, threatening to impose import taxes based on their overseas manufacturing. The retail and manufacturing industries responded quickly, condemning such measures and the resulting cost to American consumers. Trump has made numerous claims about overhauling U.S. trade policies, but what is the real potential for major change and how will it impact our local economy?


Trump vowed to renegotiate or terminate the North American Free Trade Agreement (NAFTA). Is this possible? Probably.


Though the President arguably can pull out of NAFTA without Congressional approval, the political and economic realities likely do not support such a unilateral move. If the U.S. did successfully withdraw, the agreement would remain in force between Mexico and Canada, leaving the U.S. as the outside man. Similarly, withdrawal without Congressional approval would release Mexico and Canada from obligations, leaving only the U.S. bound to the statutorily implemented NAFTA rules. U.S. companies could lose access to relied upon NAFTA dispute resolution mechanisms.


Moving forward, the U.S. and Canada could reestablish the Canada-United States Free Trade Agreement, but U.S.- Mexico trade relations would revert to World Trade Organization agreements and disproportionately increase duties between the U.S. and Mexico. Taxes on imported Mexican goods would increase only an average of about 3.5 percent, while tariffs on certain U.S. exports to Mexico could skyrocket to 36 percent.


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In today’s trade policy environment, it seems as if there is a new business risk every day. One day, it is sanctions on Chinese entities for doing business in North Korea; the next day, it is the activities of Russian oligarchs. Then companies are hit with four waves of increased import duties on steel, aluminum, and most raw materials and finished products from China. Even if firms are not importing on their own, US manufacturers are receiving “the letter” stating that they must pay additional fees on parts and other inputs. Sometimes the affected products simply involve imported packaging or aluminum can made in America from imported raw material. With so much change and uncertainty, how do investors identify and evaluate these and other trade-related risks that may impact their portfolio companies?


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The U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) doesn’t care whether a company means to violate the law or is unaware of U.S. sanctions. The regulatory organization’s role is to dole out significant penalties and even jail time for violations and it’s turning its sights on the tech world.


Many startups reason that since they aren’t technically financial institutions or operating off of open source code, they aren’t subject to stifling and irritating regulations.


However, when it comes to U.S. sanctions, these companies are wrong, and that ignorance can lead to significant consequences. Recent headline-making OFAC cases such as Chinese telecom giant ZTE being fined $1.2 billion or the high-drama Canadian arrest of Huawei CFO Meng Wanzhou have underscored the impact of violating U.S. sanctions laws.

President Trump’s Executive Order No. 13884 significantly expanded U.S. economic sanctions against the Government of Venezuela.


The EO took effect Aug. 5, and authorizes two types of sanctions: primary sanctions and secondary sanctions. Primary sanctions apply to transactions with a nexus to the U.S., such as those involving U.S. entities, goods, or services.


Secondary sanctions can target a person or company involved in a Venezuelan transaction even if there is no U.S. nexus. The imposition of secondary sanctions can block an entity from doing business in the U.S. and can even affect its ability to transact abroad.


Primary Sanctions


All property and interests in property of the government of Venezuela are now fully blocked. The EO provides that no “United States Person” can have any dealings, unless otherwise exempted, with the government of Venezuela. A “United States Person” is a U.S. citizen, permanent resident alien, entity organized under the laws of the U.S. or any jurisdiction within the U.S. (including foreign branches), or any person located in the U.S.


The “Government of Venezuela” is defined to include any political subdivision, agency, or instrumentality of the government of Venezuela, including the Central Bank of Venezuela and Petroleos de Venezuela, S.A. (PdVSA). It also includes any entity owned or controlled, directly or indirectly, by the Venezuelan government or any person who has acted or purported to act directly or indirectly on the government’s behalf. This includes members of the Maduro regime.


While this definition of the government of Venezuela does not include all private persons and companies within Venezuela, it may implicate commercial business in Venezuela that either have some government ownership, government control, or are directly or indirectly acting on the Venezuelan’s government’s behalf.


This means that those doing business in Venezuela must vet their business partners carefully to identify any government ownership or other government nexus. 


Secondary Sanctions


The EO allows the U.S. government to block all the property of any individual or company worldwide if it is found to have materially assisted, sponsored, or provided support to the government of Venezuela or any party listed under the EO as a specially designated nationals and blocked person (SDN). This sanctioned activity is deemed to include the provision of goods and services or other financial, material, or technological support.


These secondary sanctions now place any person or company anywhere in the world in jeopardy of being locked out of the U.S. economy if they facilitate or provide support to the government of Venezuela as defined above. Some potentially affected actors might include insurance companies, brokers, freight forwarders, distributors, sales agents, service providers, or financial institutions.


Accordingly, any company doing business in Venezuela needs to understand how these new requirements will affect its business. It will likely have to choose carefully if it can do business with Venezuela or possibly risk losing the ability to do business in the U.S. This is a major decision and must be analyzed correctly so that the company itself is not targeted by the U.S. for a violation of the secondary sanctions, and added to the SDN List.


Note that there are exemptions related to food, clothing, and medicine. In addition, OFAC has authorized general licenses for personal remittances, international organizations, receipt and transmission of telecommunications and mail and packages, services, software or technology incident to exchange of certain communications over the Internet and humanitarian projects, democracy building, educations and environmental protection in Venezuela. 


Proceed With Caution


Before your company proceeds with a Venezuela-related transaction, you should ensure it:



  1. Conducts due diligence inquiries, such as screening and background checks, regarding all parties to the transaction to insure that no party to a proposed transaction could arguably fall within the definition of “Government of Venezuela” as defined above.

  2. Keeps complete written records for five years of your due diligence inquiries and applicable general license exemptions.

  3. Maintains a memo for five years explaining why you have concluded the transaction does not involve a party that could arguably fall within the definition of “Government of Venezuela” as defined above.

  4. Ensures that you notify your financial institution as to why the proposed transaction does not violate U.S. sanctions so that it won’t be rejected. 

  5. Reviews the U.S. Export Administration Regulations (EAR) for additional restrictions on U.S. and non-U.S. persons exporting or re-exporting items subject to U.S. export control jurisdiction to Venezuela.

  6. Notifies OFAC within 10 business days if your company blocks or rejects a transaction due to any sanctions program, including Venezuela. Failure to file with OFAC a required report may itself constitute a violation.


WSG's members are independent firms and are not affiliated in the joint practice of professional services. Each member exercises its own individual judgments on all client matters.

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