As global economic and geopolitical environments enter a new era, companies need to continuously develop and adjust their coherent global business strategies to secure and further expand business opportunities in all markets while minimizing political and legal risks by ensuring compliance. To assist you with that task, Mayer Brown’s US-China Trade Monthly provides news and insights related to the latest US developments impacting the US-China bilateral trade relationship.

In the current issue, we will discuss: (1) the US-Japan agreement on mineral supply chains; (2) the recently released Export Controls and Human Rights Initiative Code of Conduct, which contains specific provisions on surveillance technology; (3) an update on potential outbound investment restrictions from the Departments of Commerce and Treasury; and (4) a proposed rule from the Department of Commerce on funding restrictions in the CHIPS and Science Act related to foreign countries of concern.

US and Japan Enter into Critical Minerals Trade Deal

On March 28, 2023, in an effort to support their partnership as allies in the race to strengthen their critical mineral supply chains for electric vehicle batteries, the US and Japan entered into the Agreement Between the Government of the United States of America and the Government of Japan on Strengthening Critical Minerals Supply Chains (the “Trade Agreement”). For the US, this is another step toward ending its reliance on non-ally countries for sourcing the critical minerals needed for electric vehicle batteries. The Trade Agreement builds on the 2019 US-Japan Trade Agreement.

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US and International Partners Publish Code of Conduct for Export Controls and Human Rights Initiative

On March 30, the US Department of Commerce’s Bureau of Industry and Security (“BIS”) and the US Department of State announced the publication of a Code of Conduct for the Export Controls and Human Rights Initiative (“the Initiative”), with which all Initiative participants are expected to comply. The publication of the Code of Conduct was among the stated goals from the launch of the Initiative in 2021. 

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Commerce and Treasury Release Update on Outbound Investment Provisions

On March 7, the US Department of Commerce and the US Department of the Treasury released two reports to Congress on the status of their work on the Biden Administration's consideration of a mechanism to review outbound investments from the US to other countries. The reports preview the actions the Biden Administration may take in a future outbound investment executive order and indicate that the Administration plans to take a targeted approach to reviewing outbound investment.

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US Department of Commerce Releases Proposed Rules to Implement National Security Guardrails Included in the CHIPS Act’s Incentive Program 

On March 21, 2023, the US Department of Commerce (“Commerce” or the “Department”)) released a Notice of Proposed Rulemaking (“NPRM”) for the guardrails included in the CHIPS Act’s incentive program.  The CHIPS Act, which was signed into law on August 9, 2022, and discussed in our previous legal alert, “established an incentives program to reestablish and sustain US leadership across the semiconductor supply chain.”  This program provide[s] funding, including via grants, cooperative agreements, loans, loan guarantees, and other transactions, to support investments in the construction, expansion, and modernization of facilities in the US for the fabrication, assembly, testing, advanced packaging, production, or research and development of semiconductors, materials used to manufacture semiconductors, or semiconductor manufacturing equipment. 

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