On January 12, 2026, the U.S. House of Representatives overwhelming passed (369-22) the Remote Access Security Act, modernizing U.S. export controls to address foreign adversaries’ remote access to controlled technologies through cloud computing services.  

Currently, the U.S. Department of Commerce’s Bureau of Industry and Security (BIS) does not consider the provision of cloud computing services to be exports. If passed into law, the bill (H.R. 2683) would modify the Export Control Reform Act of 2018 to authorize BIS to regulate the remote access of items, in addition to the export, reexport, and transfer of items, as well as issue licenses and impose penalties related to remote access of export controlled items.

The bill, sponsored by Rep. Michael Lawler (R-NY-17), directly responds to concerns that Chinese entities have exploited cloud services to evade U.S. export controls on advanced semiconductors and AI technologies by accessing computing power remotely through offshore data centers. It would apply U.S. export control restrictions to remote access and cloud-based exposure of controlled items—including advanced AI chips and semiconductors. In addition, the bill could significantly disrupt cloud computing companies’ compliance operations, which have been based on the understanding that the provision of cloud computing power does not qualify as an export for nearly twenty years.

The Remote Access Security Act would not become law until passage in the Senate and signature by the President. Senators David McCormick (R-PA), Ron Wyden (D-OR), Tom Cotton (R-AR), and Chris Coons (D-DE) and the sponsors and cosponsors of the Senate version (S. 3519).

Key Takeaways

  • Companies should expect increased regulatory scrutiny of cloud service arrangements involving foreign users, particularly those with potential ties to China. Enhanced due diligence, customer verification, and transaction-level documentation procedures will be necessary for compliance.
  • The policy implications of this bill extend beyond traditional hardware manufacturers to cloud service providers, data center operators, and technology platforms offering remote computing capabilities.

On January 7, 2026, the U.S. Department of Commerce’s Bureau of Industry and Security (“BIS”) imposed a $1.5 million civil penalty on Exyte Management GmbH (“Exyte”), a Germany- headquartered engineering and procurement company, after its Shanghai affiliate Exyte Shanghai Ltd., (“Exyte China”) admitted to illegally causing the transfer of approximately $2.8 million in EAR-subject semiconductor equipment to Semiconductor Manufacturing International Corp. (“SMIC”), China’s largest chip manufacturer. BIS designated SMIC on the Entity List in 2020, resulting in the prohibition of the export, reexport, and transfer of all items subject to the Export Administration Regulations (EAR) to SMIC without specific authorization. Exyte must pay the penalty within 75 days to maintain its BIS export privileges.

The settlement continues an ongoing theme by BIS to enforce provisions of the EAR that prohibit activities other than exports, reexports, or transfers. Here, each of the violations were due to Exyte China “causing” another violation of the EAR, a penalty more akin to what is typical in a U.S. Department of the Treasury Office of Foreign Assets Control (“OFAC”) settlement. It also reflects a continued focus on transactions that involve companies that are listed on the Entity List and on transactions that involve sensitive technologies, including semiconductors.

Between March 2021 and March 2022, Exyte China facilitated 13 in-country transfers totaling 884 items, including voltage sag protectors, programmable logic controllers, flowmeters, and pressure transmitters from Chinese suppliers to SMIC. All items were classified as EAR99 and used in chip fabrication facilities. Despite knowing the items were destined for SMIC, Exyte failed to recognize that an export license was required.

BIS cited Exyte’s “inadequate corporate compliance controls” as the root cause, noting the company “did not appreciate” that EAR licensing requirements applied to in-country transfers from Chinese distributors to Entity List customers. Exyte’s voluntary self-disclosure after discovering the violations influenced the settlement outcome.

This action highlights a critical compliance gap: in-country transfers within China remain subject to the EAR when U.S.-controlled items are destined for Entity List parties, even absent cross-border movement. Companies using local affiliates or distributors in China must ensure their compliance programs capture downstream transfers to restricted end users as BIS continues expanding Entity List designations in the semiconductor sector.

On January 6, 2026, China’s Ministry of Commerce (“MOFCOM”) issued Announcement No. 1 [2026], imposing export controls on dual-use items destined for Japan. The measures took effect immediately, with no wind-down period.

Under the announcement, exports of all dual-use items from China are prohibited where the end user or end use: (i) involves Japanese military users; (ii) supports military end uses; or (iii) otherwise contributes to enhancing Japan’s military capabilities.

The announcement represents a further escalation in China’s use of export controls as a policy tool amid recent heightened tensions with Japan. Several aspects of the measures merit close attention from companies engaged in China-related supply chains.

First, the scope of the restrictions is intentionally broad. The inclusion of end users or end uses that could enhance Japan’s military capabilities expands the controls beyond traditional defense recipients. As a result, exports previously viewed as commercial or civilian in nature may now warrant additional scrutiny.

Second, companies should expect MOFCOM to increase its focus on end-use and end-user due diligence for exports involving Japan. Requests for more detailed certifications, supporting documentation, and transaction-level explanations are likely moving forward. Given the policy sensitivity and ambiguity surrounding the new criteria, exporters should also anticipate longer license review timelines and potential follow-up inquiries.

Third, the scope is not limited to direct exports from China to Japan. The controls also apply extraterritorially, covering transfers of Chinese-origin dual-use items through third countries, as well as in-country transfers, where the end users or end uses fall within the scope of these controls.

Crowell & Moring will continue to monitor developments related to Chinese export controls and their potential impact to industry.

The U.S. Department of the Treasury will cease issuing paper checks for all U.S. Customs and Border Protection (“CBP”) refunds starting on February 6, 2026 according to an Interim Final Rule. A recipient may continue to receive paper checks provided that they have an approved waiver in place in accordance with 31 C.F.R. § 208. Individuals and firms seeking refunds for IEEPA tariffs are unlikely to fall under one of the specific cases provided for in 31 C.F.R. § 208.4(a). Therefore, importers seeking possible refunds of IEEPA tariffs in the event that the Supreme Court finds such tariffs unlawful should ensure that Automated Clearing House (“ACH”) refunds are authorized in the Automated Commercial Environment (“ACE”) Portal.

ACH Refund is available to anyone who has a federally assigned taxpayer identification number, Social Security number, or CBP’s assigned number, and a U.S. bank account with U.S. bank routing number. Trade users can use the new ACH refund authorization tool in ACE to complete this process using the one-page guide provided by CBP.

The basic steps to ensure proper ACH refund receipt are as follows.

  1. Log in to your ACE Portal top account as TAO or as an authorized Proxy TAO or Trade Account User.
  2. Navigate to the importer sub-account view and locate the ACH Refund Authorization tab.
  3. View, add, and update U.S. bank information for receiving refunds

For more information on authorizing ACH refunds and other questions regarding ACE Portal functionality, please feel free to reach out to Crowell & Moring for assistance.

On December 19, 2025, the Department of Justice (DOJ) announced a $54.4 million settlement with Ceratizit USA, LLC, a distributor of tungsten carbide products, resolving allegations that the company violated the False Claims Act (FCA) by evading customs duties on products imported from China. This settlement is believed to be the largest ever customs-related FCA resolution, and this high-water mark underscores the government’s heightened enforcement focus on tariff evasion.

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As part of ongoing EU customs reform, the EU’s Council has agreed to remove the duty-free entry of goods valued below €150, formerly known as de minimis, to address the surge in low-value e-commerce shipments. Noticing large volumes imported from foreign marketplaces, the Netherlands proposed in January 2025 to remove simplifications for individual e-commerce packages and promote business-to-business (B2B) trade by placing goods in EU warehouses for further distribution.

The reform indicates that customs duties for all goods entering the EU will ultimately be managed via the EU Customs Data Hub. But as the Customs Data Hub is still under establishment and is not expected to be operational before 2028, an additional temporary customs levy has been introduced in the interim.

Temporary Customs Levy

On December 12, 2025, the EU’s Council decided to temporarily impose a €3 customs duty on all low-valued B2C parcels of €150 or less, starting July 1, 2026. This measure will apply until the EU imposes a “Union handling fee” in November 2026. However, the implementation should be linked to the EU Customs Data Hub, which, in all likelihood, will not be operational by the end of 2026. The additional duty aims at reducing e-commerce flows from China and improving product safety while preventing duty avoidance through parcel splitting.

The €3 charge applies to each item based on its 4-digit tariff headings. If items fall under different headings within a shipment, charges will apply per each heading. Guidance from the European Commission on this is still pending.

Union Handling Fee

The Council  revised the Union Customs Code after its June 2025 first reading to explicitly incorporate a Union handling fee for low-value e-commerce consignments. This was not included in the initial 2023 proposal. In February 2025, the need for a non-discriminatory handling fee was discussed by the European Commission.

The Council’s aim is “[t]o cover the increasing costs of ensuring the release of compliant goods for free circulation by checking the data provided, carrying out risk analysis, performing documentary and physical controls when needed.”

The Council plans for a fixed fee for items with the same tariff classification. While the amount is not finalised, reports suggest it may be around €2. The Union handling fee is anticipated to apply as from November 1, 2026.

Union Handling Fee: National Perspective

Several EU Member States are expediting the process since the Union handling fee cannot be applied until the proposal becomes the law. In the meantime, France, the Netherlands, Belgium and Romania have introduced, or are finalising the introduction of, national handling fees, as follows:

  • France: An initial €2 fee for low-value parcels was raised to €5 following the upper Parliament’s first reading on December 15, 2025. Effective from January 1, 2026, this fee will apply until a Union-wide fee is decided. The final legislation is yet to be passed.
  • Netherlands: A €2 fee proposal for low-value consignments is set to begin on February 1, 2026. The fee applies per declaration line regardless of the quantity. It will be payable monthly and will be abolished once the Union handling fee is in place. Final approval is pending.
  • Romania: A logistics fee for sub-€150 goods was introduced, amounting to 25 lei (approximately €5), effective January 1, 2026. This fee is not tied to the Union handling fee and may continue concurrently (to be seen how).
  • Belgium: Reports indicate a €2 fee, but implementation details remain unclear.

Conclusions

The EU is now advancing fast towards abolishing the de minimis €150 duty-free regime, with imported goods already made subject to EU VAT. However, there is inconsistency among the various implementing measures. While the EU is responsible for customs, some Member States have pre-emptively introduced national fees. Not all Member States plan to follow suit, potentially undermining customs’ charges uniformity. One should keep in mind that Member States cannot unilaterally impose measures of commercial policy, which is centrally governed by the European Commission.

Moreover, as the Union customs reform is yet to become the law, modifications affecting the Union handling fee’s application are still possible.

It remains uncertain how the €3 temporary duty will interact with national measures, but the two will likely coexist until the Union handling fee’s full rollout.

On December 15, 2025, the Department of the Treasury’s Office of Foreign Assets Control (“OFAC”) issued Belarus General License 13, “Authorizing Transactions Involving Joint Stock Company Belarusian Potash Company, Agrorozkvit LLC, and Belaruskali OAO.” The general license authorizes all transactions prohibited by the Belarus Sanctions Regulations, 31 CFR part 548 (“BSR”), involving Joint Stock Company Belarusian Potash Company, Agrorozkvit LLC, Belaruskali OAO, and any entity in which one or more of these entities own, directly or indirectly, individually or in the aggregate, a 50 percent or greater interest. However, the general license does not authorize the unblocking of any blocked property, nor does it permit transactions involving any other blocked persons under the BSR beyond the three specifically named entities and their majority-owned subsidiaries.

This development brings Belarus closer to Russia in terms of U.S. sanctions relief for exports of potash, a key input in fertilizers essential for global food production and crop yields. The significance of this action is amplified by the fact that Belaruskali is one of the largest state-owned companies in Belarus, making potash exports a meaningful source of revenue for the Belarusian regime.

This notable shift in U.S. sanctions policy toward Belarus contrasts sharply with the European Union (“EU”)’s approach to Belarusian potash and broader sanctions policy. The EU maintains comprehensive restrictions on imports of potash from Belarus under its sanctions framework targeting the Lukashenko regime, which were implemented following the 2020 presidential election and subsequent crackdown on political opposition. JSC Belarusian Potash Company and Belaruskali OAO (along with any entities they own or control) also remain sanctioned by the EU. While the EU has carved out certain humanitarian and agricultural exemptions in its Belarus sanctions program, potash imports remain generally restricted, creating a divergence between U.S. and EU sanctions policies on this commodity.

More recently, the EU broadened its Belarus sanctions regime this week by adding a new asset freezing designation criterion for individuals/entities who (i) plan, direct, engage in support or facilitate foreign information manipulation and interference; (ii) target the functioning of democratic institutions; (iii) enter an EU member state without authorisation; or (iv) interfere with, damage or destroy critical infrastructure. The EU has stated that this new criterion was linked to recent meteorological balloon incursions into Lithuania’s airspace, demonstrating a continued commitment from the EU to maintaining pressure on the Minsk regime.

It is also worth noting that potash was subject to the initial Trump tariffs earlier this year, specifically impacting Canadian and Mexican imports. According to U.S. Customs and Border Protection, these tariffs affected potash imports from North America, adding another layer of trade policy complexity to this critical agricultural input.

Crowell & Moring will continue to monitor developments related to Belarus sanctions and their potential impact to industry.

On December 10th, 2025 the US Trade Representative released the results of the Section 301 investigation initiated in December 2024 into Nicaragua’s alleged violations of labor rights, human rights and the rule of law protections. The investigation detailed extensive infringement of labor and human rights in addition to increasingly authoritative restrictions of individual freedoms and liberty. Significantly, the investigation discovered widespread child labor abuses including up to 47 percent of children between the ages of 10 and 14 being forced to perform hazardous work in the mining industry.

In light of these findings, the US Trade Representative has recommended a phased in approach for additional tariffs on goods from Nicaragua that do not qualify under the Dominican Republic-Central America-United States Free Trade Agreement (CAFTA-DR). While initial tariffs of up to 100% were proposed, the USTR settled on a phased in approach over three years. Additional tariffs will officially begin on January 1st, 2026, although at zero percent and increase to 10 percent on January 1st, 2027, and finally 15% on January 1st, 2028. The tariffs would be in addition to any reciprocal tariffs applied under IEEPA and subject to modification depending on the response and willingness to address these violations by the government of Nicaragua.

The announcement by the USTR has been lauded by the American Apparel & Footwear Association (AAFA) for taking a balanced approach that holds partners accountable for labor practices while supporting the trade agreement bringing vital economic benefits to the United States. The government of Nicaragua has yet to comment on the announcement or propose any response to the issued identified by the USTR.

On December 2, 2025, OFAC announced an ~$11 million penalty settlement with IPI Partners, LLC (“IPI”), a Chicago-based U.S. private equity fund, to settle its civil liability for 51 potential violations of OFAC’s Russia sanctions. The enforcement action underscores the importance of diligence to guard against potential sanctions violations.  In brief, OFAC found that IPI solicited and received investments from a Russian oligarch, Suleiman Kerimov (“Kerimov”), via his representative, and should’ve blocked those funds following OFAC’s designation of Kerimov to its Specially Designated Nationals and Blocked Persons List (“SDN List”).

Facts: In September 2017, a Kerimov family trust signed an agreement to invest $25M in an IPI fund, which then led to a meeting between IPI and Kerimov and his representative, and an additional investment of $25M.  In April 2018, OFAC added Kerimov to the SDN List, which meant that all of his property and “interest in property” became “blocked”.  IPI’s legal counsel advised IPI that it did not have to block the funds in the family trust, based upon what seemed to be rationale grounds at the time; however, OFAC found that IPI never disclosed to its legal counsel the full role of the representative or the fact that IPI met with Kerimov, and IPI knew that its prior attestations weren’t accurate.  OFAC determined that Kerminov had an interest in the funds, and that IPI should have blocked them.

Penalties: IPI did not voluntarily disclose the transaction to OFAC, though OFAC settled with IPI for ~$11 million penalty, a reduction from the ~$14 million maximum penalty, noting the following aggravating factors: (i) IPI knew (or should have known) about Kerimov’s involvement, regardless of the legal guidance; (ii) the violations were against U.S. foreign policy interests; and (iii) IPI is a sophisticated PE fund.  OFAC highlighted two mitigating factors: (i) IPI did not have any penalties in the last five years; and (ii) IPI ultimately cooperated with OFAC.

Takeaways:

  • U.S. Sanctions Obligations Cannot Be Contractually Modified: Written attestations that a party is not violating sanctions or subject to sanctions do not absolve any of the parties’ obligations to ensure there are no sanctioned dealings. In the enforcement action, OFAC explained that “individuals and companies with reason to know of such circumstances cannot later claim ignorance even if a blocked person has no nominal ownership or overt role.”  Accordingly, if a company has knowledge that any party with which it is dealing has direct or indirect ties to a sanctioned person, additional diligence should be performed.
  • Diligence Should Be Calibrated on Perceived Risk: Screening and contractual controls can be sufficient mitigation measures when there is no identifiable risk. However, OFAC notes that “situations involving opaque legal structures or the use of proxies that may obscure a party’s interest in an entity or property—a more exhaustive analysis may be appropriate.”
    • Importance of Disclosure of All Relevant Facts and Cooperation with OFAC: IPI did not provide all relevant information to its counsel, including critical information about the relationship between Kerimov and his representative, which ultimately led to guidance not tailored to the facts and an inability to adequately assess sanctions risks. Though the violation was not voluntarily disclosed, OFAC took into account IPI’s ultimate cooperation with the agency when exacting the penalty. A voluntary disclosure would have further reduced the penalty.

    Dominican Republic-based aluminum extrusions exporter, Kingtom Aluminio SRL (Kingtom) defended a decision issued by the Court of International Trade (CIT) to vacate a forced labor Finding against Kingtom issued by U.S. Customs and Border Protection (CBP). On October 31, 2025, Kingtom filed in opposition to the U.S. government’s motion for a reconsideration of the decision to vacate the Finding.

    For background, CBP issued a forced labor Finding against Kingtom in December 2024. Following an investigation, CBP determined that certain aluminum extrusions, profile products and derivatives from Kingtom were manufactured or produced in whole or in part with forced labor. CBP further determined that these products are being, or likely to be, imported into the U.S.

    CBP’s Finding against Kingtom is significant because it is the first direct Finding issued by CBP. Typically, CBP issues a Withhold Release Order (WRO) prior to the issuance of a Finding, since the threshold to issue a WRO is lower. The threshold for a WRO is met when CBP has reasonable suspicion to believe that the manufacturing or production process for certain goods involved forced labor. When there is probable cause that the goods are manufactured or produced by forced labor, CBP typically elevates the status of a WRO to a Finding. A Finding allows CBP to seize the imported goods at all U.S. ports of entry.

    In September 2025, the CIT found that CBP’s Finding against Kingtom was arbitrary and capricious, in part because the public record did not provide substantial evidence supporting the Finding. The CIT then issued a decision to vacate and remand the Finding. In response, the U.S. government filed a motion requesting the CIT to reconsider its decision. The U.S. government argued, among other points, that the confidential record adequately supports the Finding.

    Kingtom responded to the motion, defending the CIT’s decision and stating that CBP did not provide Kingtom advance notice of the investigation and “skipped over the normal regulatory progression” of beginning with a WRO, then proceeding to a conclusive Finding. The ongoing litigation in this case highlights the likelihood that CBP will need to provide more substantive justification for any direct Findings, and raises doubts about whether CBP will continue to issue direct Findings in the future without first issuing a WRO.

    Crowell continues to monitor developments in the Forced Labor space and their impact on industry.