On October 5, 2020, the Centers for Disease Control and Prevention (CDC) published in the Federal Register a notice that announces a third modification and extension of the No Sail Order and Other Measures Related to Operations that was issued on July 16, 2020. The Order applies to cruise ships defined as commercial, non-cargo, passenger-carrying vessels with the capacity to carry 250 or more individuals (passengers and crew) and with an itinerary anticipating an overnight stay onboard or a 24- hour stay onboard for either passengers or crew, that are operating in international, interstate, or intrastate waterways, subject to the jurisdiction of the United States. This Order shall additionally apply to cruise ships operating outside of U.S. waters if the cruise ship operator intends for the ship to return to operating in international, interstate, or intrastate waterways, subject to the jurisdiction of the United States during the period that this Order is in effect. This action was effective September 30, 2020.

This Order shall remain in effect until the earliest of (1) the expiration of the Secretary of Health and Human Services’ declaration that COVID–19 constitutes a public health emergency; (2) the CDC Director rescinds or modifies the order based on specific public health or other considerations; or (3) October 31, 2020. A copy of the order is provided below and a copy of the signed order can be found here.

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On October 5, 2020, the Office of the United States Trade Representative (USTR) published in the Federal Register a notice that announces the USTR’s determination to extend certain exclusions from October 2, 2020, through December 31, 2020 for products from China on Tranche/List 1 ($34 Bn.).

  • Annex A to the notice establishes a new HTSUS heading/subheading 9903.88.60 and new US note 20 (mmm) to cover the nine product extensions and makes conforming amendments,
  • Annex B contains a list of the original product exclusions that are being extended, showing the former US note 20(x) number and 9903.88.19 HTSUS heading/subheading and the new US note 20 (mmm) and 9903.88.60 HTSUS heading/subheading.

Also on October 5, 2020, the Office of the United States Trade Representative (USTR) published in the Federal Register a notice that announces the USTR’s determination to extend certain exclusions from October 2, 2020, through December 31, 2020 for products from China on Tranche/List 2 ($16 Bn.).

  • Annex A to the notice establishes a new HTSUS heading/subheading 9903.88.61 and new US note 20 (nnn) to cover the 28 product extensions and makes conforming amendments,
  • Annex B contains a list of the original product exclusions that are being extended, showing the former US note 20(y) number and 9903.88.20 HTSUS heading/subheading and the new US note 20 (nnn) and 9903.88.61 HTSUS heading/subheading.

The exclusions for both lists are available for any product that meets the description in the Annexes, regardless of whether the importer filed an exclusion request. Further, the scope of each exclusion is governed by the scope of the ten-digit HTSUS headings and product descriptions in the Annexes to this notice, and not by the product descriptions set out in any particular request for exclusion. USTR states that CBP will issue instructions.

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On October 6, 2020, the Bureau of Industry and Security (BIS) published in the Federal Register a final rule [Docket No. 200624-0168] amending the Export Administration Regulations (EAR) by revising, in part, the licensing policy for items controlled for crime control (CC) reasons, which is designed to promote respect for human rights throughout the world. BIS also is amending the EAR to provide that, except for items controlled for short supply reasons, it will consider human rights concerns when reviewing license applications for items controlled for reasons other than CC. This revision is necessary to clarify to the exporting community that licensing decisions are based in part upon US Government assessments of whether items may be used to engage in, or enable violations or abuses of, human rights including those involving censorship, surveillance, detention, or excessive use of force.

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On October 6, 2020, the Bureau of Industry and Security (BIS) published in the Federal Register a final rule [Docket No. 200929-0260] sets forth the procedure for classified national security information to be submitted ex parte and in camera to a court reviewing any agency action under the Export Administration Regulations (EAR) . BIS is taking this action to safeguard national security information by ensuring that access to such information is controlled. BIS is adding to part 756 of the EAR new § 756.3, which is entitled “Judicial Review of Agency Action.” Section 4.1(e) of Executive Order (E.O.) 13526 provides that “Persons authorized to disseminate classified information outside the executive branch shall ensure the protection of the information in a manner equivalent to that provided within the executive branch.” By providing such information ex parte and in camera to a reviewing court, BIS can limit access to the information and prevent public disclosure of the information during the course of litigation.

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On October 2, 2020, the Office of the United States Trade Representative (USTR) announced that at the direction of President Trump, it is initiating an investigation addressing two significant issues with respect to Vietnam.  USTR will investigate Vietnam’s acts, policies, and practices related to the import and use of timber that is illegally harvested or traded, and will investigate Vietnam’s acts, policies, and practices that may contribute to the undervaluation of its currency and the resultant harm caused to US commerce.  USTR will conduct the investigation under Section 301 of the 1974 Trade Act.

USTR has posted two advance copies of Federal Register notices to be published on October 8, 2020, which request comments via www.Regulations.gov  by November 12, 2020. When submitting comments, look up the docket number and insure that your comments go the correct notice.

The first notice [Docket No. USTR-2020-0036] relates to the initiation of an investigation regarding Vietnam’s acts, policies, and practices related to the import and use of timber that is illegally harvested or traded. The notice states:

Vietnam is one of the world’s largest exporters of wood products, including to the United States. In 2019, Vietnam exported to the United States more than $3.7 billion of wooden furniture. To supply the timber inputs needed for its wood products manufacturing sector, Vietnam relies on imports of timber harvested in other countries. Available evidence suggests that a significant portion of that imported timber was illegally harvested or traded (illegal timber). Some of that timber may be from species listed under the Convention on International Trade in Endangered Species of Wild Fauna and Flora (CITES).

Evidence indicates that much of the timber imported by Vietnam was harvested against the laws of the source country. Reports indicate that a significant amount of the timber exported from Cambodia to Vietnam was harvested on protected lands, such as wildlife sanctuaries, or outside of and therefore in violation of legal timber concessions. Cambodia nevertheless remains a significant source of Vietnam’s timber imports. Similarly, timber sourced from other countries, such as Cameroon and the Democratic Republic of the Congo (DRC), may have been harvested against those countries’ laws.

In addition, Vietnamese timber imports may be traded illegally. For example, it appears that most timber exported from Cambodia to Vietnam crosses the border in violation of Cambodia’s log export ban. In addition, aspects of the importation and processing of this timber also may violate Vietnam’s domestic law and be inconsistent with CITES

The second notice [Docket No. USTR-2020-0037]  relates to the initiation of an investigation regarding Vietnam’s acts, policies, and practices related to the valuation of its currency. USTR will consult with the Department of the Treasury as to matters of currency valuation and Vietnam’s exchange rate policy According to the notice:

The Government of Vietnam (GOV), through the State Bank of Vietnam (SBV), tightly manages the value of its currency – the dong. The SBV’s management of Vietnam’s currency is closely tied to the US dollar. Available analysis indicates that Vietnam’s currency has been undervalued over the past three years. Specifically, analysis indicates that the dong was undervalued on a real effective basis by approximately 7 percent in 2017 and by approximately 8.4 percent in 2018. Furthermore, analysis indicates that the dong’s real effective exchange rate was undervalued in 2019 as well.

Available evidence also indicates that the GOV, through the SBV, actively intervened in the exchange market, which contributed to the dong’s undervaluation in 2019. Specifically, the evidence indicates that in 2019, the SBV undertook net purchases of foreign exchange totaling approximately $22 billion, which had the effect of undervaluing the dong’s exchange rate with the US dollar during that year. Analysis suggests that Vietnam’s action on the exchange rate in 2019 caused the average nominal bilateral exchange rate against the dollar over the year, 23,224 dong per dollar, to be undervalued by approximately 1,090 dong per dollar relative to the level consistent the equilibrium real effective exchange rate.

The investigations will determine whether an act, policy, or practice of the GOV is actionable under section 301 of the Trade Act. Actionable matters under section 301 include acts, policies, and practices of a foreign country that are unreasonable or discriminatory and burden or restrict US commerce. An act, policy, or practice is unreasonable if, while not necessarily in violation of, or inconsistent with, the international legal rights of the United States, it is otherwise unfair and inequitable. In conducting its investigation, USTR will consult with the Department of the Treasury as to matters of currency valuation and Vietnam’s exchange rate policy. See the individual notices for instructions on the submission of information containing confidential business information.

In light of the uncertainties arising from COVID-19 restrictions, USTR is not at this time scheduling public hearings in these investigation. USTR will provide further information in a subsequent notice if it will hold a hearing in either investigation.

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FDA Food Safety Modernization Act Proposed Rule to Advance Traceability of Foods

Key Takeaways

On September 23, 2020, the Food and Drug Administration (FDA, the Agency) released its proposal to establish additional recordkeeping requirements for those that manufacture, process, pack, or hold foods on the Food Traceability List by collecting Key Data Elements (KDEs) associated with different Critical Tracking Events (CTEs). If finalized, this rule has the potential to impact a significant number of organizations in the food supply industry and implementation can be costly. The rule also offers opportunity for players in the digital technology sector to develop and offer novel software platforms to assist industry execute more digital traceability systems.

Entities are advised to assess current food traceability programs, as the new traceability requirements will require substantial changes to many existing programs. Also, entities are advised to determine whether they may be subject to the rule to the extent new offerings or services may require compliance with these proposed requirements. Those subject to the rule should consider conducting a supply chain audit and develop a work plan to update their recordkeeping program in the near future. Proper preparation, clear understanding of the requirements and effective implementation will be monumental in meeting the proposed compliance timeline.

In more detail

The proposed requirements to impose additional record keeping requirements are intended to help the Agency rapidly and effectively identify recipients of contaminated food product to prevent or mitigate foodborne illness outbreaks and address credible threats of serious public health consequences resulting from foods being adulterated or misbranded. Section 204 of the FDA Food Safety Modernization Act (FSMA) requires the FDA to designate foods for which additional recordkeeping requirements are appropriate and necessary to protect public health, and to establish those recordkeeping requirements. “While the proposed requirements would only apply to those foods on the Food Traceability List (FTL), they were designed to be suitable for all FDA-regulated food products,” the Agency said. The Agency plans to endorse “voluntary adoption of these practices industry-wide.”

This proposed rule will allow the Agency to trace food product movement through the supply chain, thereby increasing the speed and precision at which the food causing the illness is identified, removed from the market and strategies to curb future contamination are developed.

Currently, many food traceability programs focus on procedures for internal use to help ensure the safety of the entity’s products and the security of their supply chains; complying with the one-up, one-back recordkeeping requirements. However, it has become readily apparent a more robust supply chain system linking incoming and outgoing product throughout the supply chain would be more efficient and impactful from a public health perspective. Consistent data and information collection, harmonized food tracing terminology, electronic records (encouraged) and uniform methodology to connect records could bridge the gap to decrease the spread of contamination and prevent future outbreaks.

Thus, the FDA has determined requiring entities to create and maintain KDE linked to specific CTEs in a listed food’s supply chain, including the growing, receiving, transforming, creating, and shipping of listed foods, would aid in product tracing during an investigation of a foodborne illness outbreak or recall. This type of sweeping regulatory oversight has been contemplated for years and the Agency’s advancement of this proposed rule is a pioneering development in end-to-end food traceability across the industry.

Key Points of the Proposed Rule

Determination of foods on the Food Traceability List:

FDA developed a risk-ranking model with consult to external expert panels. Using the risk-ranking model, FDA tentatively identified foods for the Food Traceability List for which additional traceability records will be required.  The term “Food Traceability List” (FTL) refers not only to the foods specifically listed, but also to any foods that contain listed foods as ingredients.

Who is Subject to the Proposed Rule:

Persons who manufacture, process, pack, or hold foods the Agency has designated for inclusion on the Food Traceability List are subject to the proposed rule. Foreign and domestic suppliers manufacturing, processing, packing or holding foods on the FTL and marketed in the US will be subject to the proposed rule. Further, those subject to the rule will expect entities involved or tangential to their supply chain to provide information and/or implement policies to assist the regulated entities to maintain compliance with the regulatory requirements.

Key Features of the Proposed Rule:

  • Critical Tracking Events (CTEs)

Pursuant to the proposed rule, the CTEs, which require records containing KDEs, are growing, receiving, transforming, creating, and shipping. The required KDEs would vary depending on the CTE. The CTE records would need to contain and link the traceability lot code of the food to the relevant KDEs.

  • Traceability Program Records

The proposed rule also requires persons who manufacture, process, pack or hold foods on the FTL to establish and maintain traceability program records.

  • Additional Requirements
    • Maintenance of records as either original paper records, electronic records, or true copies; they all must be legible and stored to prevent deterioration or loss.
    • Provision of traceability records to FDA as soon as possible, but no later than 24 hours after a request is made.
    • Provision of an electronic sortable spreadsheet containing relevant traceability information to FDA within 24 hours of a request when necessary to assist FDA during an outbreak, recall or other threat to public health.

Exemptions and Modified Requirements:

The proposed rule provides for exemptions for certain types of foods and certain persons who manufacture, process, pack or hold foods on the Food Traceability List, including the following:

  • Exemption for Certain Types of Small Originators
  • Exemption for Farms That Sell Directly to Consumers
  • Exemption for Foods that Receive Certain Types of Processing
  • Exemption for Produce that is Rarely Consumed Raw
  • Partial Exemption for Commingled RACs (raw agricultural commodities)
  • Co-proposal for Small Retail Food Establishments
  • Partial Exemption for Retail Food Establishments
  • Partial Exemption for Farm-to-School and Farm-to-Institution Programs
  • Partial Exemption for Food from Fishing Vessels
  • Exemption for Transporters
  • Exemption for Nonprofit Food Establishments
  • Exemption for Personal Consumption
  • Exemption for Persons who Hold Food for Individual Consumers
  • Special Requirements for Foods Subjected to a Kill Step

Implementation:

  • Compliance Dates

The FDA proposes that any final rule on additional traceability recordkeeping requirements for foods on the FTL would become effective 60 days after it is published in the Federal Register.  The proposed compliance date for all persons subject to the recordkeeping requirements would be 2 years after the effective date of the final regulation.

  • Enforcement

Section 301(e) of the Federal Food, Drug, and Cosmetic Act (FD&C Act) prohibits the violation of any recordkeeping requirement under section 204 of FSMA. Furthermore, an article of food is subject to refusal of admission under section 801(a)(4) of the FD&C Act if there is noncompliance with the recordkeeping requirements under section 204 of FSMA.

Proposed rule available for comment

The proposed rule and draft Food Traceability List are available for public comment until 21 January 2021.

The proposed rule can be accessed here.

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On September 19, 2020, the US State Department issued a press release announcing the re-imposition of sanctions against Iran pursuant to the snapback process under UN Security Council Resolution 2231, the resolution that essentially terminated all UN sanctions on Iran pursuant to the Joint Comprehensive Plan of Action (“JCPOA”). At the same time, the international community has rejected this unilateral US attempt to snapback UN sanctions.

To implement the snapback of UN sanctions, on September 21, 2020, the US State DepartmentUS Treasury Department, and the US Commerce Department issued a series of new US sanctions against Iran pursuant to a new Executive Order (“Iran Conventional Arms EO”) and the pre-existing Executive Order 13382 imposing WMD non-proliferation sanctions (“EO 13882”), among other authorities.

Attempt to Snapback UN Sanctions

The US Government’s announcement of the snapback of Iran sanctions followed its August 20, 2020, notification to the President of the UN Security Council of Iran’s “significant non-performance” of its JCPOA commitments, which the US determined sufficient basis to trigger the 30-day process leading to the snapback of previously terminated UN sanctions. The snapback of UN sanctions would consist of a return of UN sanctions previously terminated under the JCPOA.  These include extending the UN conventional arms embargo and would obligate the Iranian Government to refrain from testing ballistic missiles and suspend enrichment-related activities that could support development of a nuclear weapon.

The UN, EU and E3 (the UK, France and Germany) have rejected this unilateral US action. The foreign ministers of the UK, France and Germany released a joint statement explaining that the US’ attempt to “snapback” UN sanctions did not have legal effect. Their statement cited paragraph 11 of UNSCR 2231, which permits a JCPOA participant to claim “significant non-performance of commitments under the JCPOA” and trigger the snapback procedure. The E3 contends that the US was no longer a JCPOA participant following its withdrawal from the deal in May 2018 and therefore its notification under UNSCR 2231 was invalid.

This was also the view taken by Josep Borrell, the High Representative of the EU for Foreign Affairs and Security Policy and coordinator of the JCPOA Joint Commission, who stated that the US “”cannot initiate the process of reinstating UN sanctions under the UN Security Council resolution 2231” and “sanctions lifting commitments under the Joint Comprehensive Plan of Action continue to apply.”  The UN’s stance was similar, with the UN Secretary-General, Antonio Guterres, stating that the UN would not support the re-imposition of sanctions on Iran until it received clarity from the UN Security Council; Guterres noted that the majority of UN Security Council members were of the view that snapback had not been triggered.

US Government Imposes New Sanctions Against Iran

To strengthen implementation of the snapback of UN sanctions, on September 21, 2020, the US State Department, the US Treasury Department, and the US Commerce Department all announced a series of new sanctions against Iran, including:

  • Issuing the Iran Conventional Arms EO extending the UN arms embargo with regard to Iran indefinitely (it was set to expire in October 2020), and providing specific authority to designate parties involved in Iran’s conventional arms acquisitions, Iran’s indigenous manufacturing programs, and Iran’s ability to support paramilitary organizations with arms and materials.
  • Designating the following parties on the US Treasury Department’s Office of Foreign Assets Control’s (“OFAC”) Specially Designated Nationals and Blocked Persons List (“SDN List”), as outlined on OFAC’s website:
    • Iran’s Ministry of Defense and Armed Forces Logistics, Iran’s Defense Industries Organization, and its Director, Mehrdad Akhlaghi-Ketabchi, added pursuant the Iran Conventional Arms EO;
    • Venezuela’s President Nicolas Maduro for conventional arms-related activities and assisting Iran in circumventing the UN arms embargo added pursuant to the Iran Conventional Arms EO (Maduro was previously designated under Venezuela Executive Order 13692 in 2017);
    • Six individuals and three entities associated with the Atomic Energy Organization of Iran (“AEOI”) added pursuant to EO 13382, which targets WMD proliferators; and
    •  Three individuals and four entities associated with Iran’s liquid propellant ballistic missile organization, the Shahid Hemmat Industrial Group pursuant to EO 13382.

As a result of being added to the SDN List, all property and interests in property of the identified persons and entities that are in the United States or in the possession or control of US Persons must be blocked and reported to OFAC. For purposes of the Iran Conventional Arms EO and EO 13382, “US Person” is defined as (i) US citizens and permanent residents, (ii) entities organized under the laws of the United States and their foreign branches, and (iii) any individual or entity located in the United States. In addition, non-US persons that engage in certain transactions with the Iranian individuals and entities designated may themselves be exposed to sanctions or subject to an enforcement action. Furthermore, OFAC has made clear via its press release that, unless an exception applies, any foreign financial institution that knowingly facilitates a significant transaction for any of the individuals or entities designated could be subject to US sanctions.

  • Adding to the Entity List maintained by the US Commerce Department’s Bureau of Industry and Security (“BIS”) five individuals affiliated with the AEOI for alleged involvement in Iran’s nuclear weapons development program.

    As a result of such additions, BIS has now imposed an export license requirement for exports/reexports and transfers to these parties by anyone of all items subject to US jurisdiction under the Export Administration Regulations (i.e., items manufactured in the United States, items exported from the United States, items manufactured outside of the United States with more than de minimis levels of controlled US content, and certain direct products of technology controlled for national security reasons), with a license review policy of presumption of denial. No license exceptions are available.

The State Department has issued a detailed Fact Sheet on these actions. For additional recent updates on US sanctions against Iran, please see our blog posts here and here.

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On September 24, 2020, the US Treasury Department’s Office of Foreign Assets Control (“OFAC”) published a Final Rule in the Federal Register that amended the Cuban Assets Control Regulations (“CACR”) to further implement the President’s foreign policy to deny the Cuban regime sources of revenue.

Major elements of the changes include:

  • Professional (Including Business) Meetings and Conferences: The Final Rule amends a CACR general license to eliminate the authorization for CACR parties to attend or organize professional (including business) meetings or conferences in Cuba, unless it is authorized on a case-by-case basis by OFAC. This change will make it more onerous for CACR parties to travel to engage in preliminary business discussions or negotiations with potential counterparties in Cuba. This amendment, however, keeps in place the authorization for travel to Cuba to conduct professional (including business) research pursuant to a general license.
  • Public Performances, Clinics, Workshops, Competitions, and Exhibitions: The Final Rule removes a general license that authorizes CACR parties to participate in or organize certain public performances, clinics, workshops, other athletic or non-athletic competitions, and exhibitions, and replaces it with a specific licensing policy (i.e., permitting the authorization of specific activities on a case-by-case basis by OFAC). The authorization for travel by amateur and semi-professional athletic teams for athletic competitions in Cuba, however, remains in place.
  • Cuba Prohibited Accommodations List: The Final Rule adds a new prohibition for CACR parties regarding lodging and related transactions (e.g., making reservations or paying for lodging) at certain properties in Cuba identified on the US State Department’s newly created “Cuba Prohibited Accommodations List” (the “CPA List”). This prohibition applies to all categories of Cuba authorized travel except for travel for official government purposes. The CPA List includes 433 properties owned or controlled by the Cuban government, prohibited government officials, members of the Communist Party of Cuba, and close relatives of the foregoing categories of persons. The Trump Administration previously prohibited lodging in hotels identified with links to the Cuban military, intelligence, and security services through the CACR and the “Cuba Restricted List.” In addition, the restrictions related to the Cuba Restricted List do not apply to all categories of Cuba authorized travel.
  • Cuban-Origin Alcohol and Tobacco: The Final Rule amends four CACR general licenses to restrict the importation of Cuban-origin alcohol and tobacco products into the United States. Previously, OFAC had authorized importation of Cuban-origin alcohol and tobacco products for personal, non-commercial use. OFAC has also eliminated the exception that allowed CACR parties to buy Cuban-origin goods in third countries and bring them back to the United States, although such Cuban-origin goods may be purchased and consumed by CACR parties in third countries.

The Final Rule also makes several technical and conforming changes in the CACR. On September 23, OFAC published a number of new and updated Frequently Asked Questions regarding these changes.

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In brief

Please join us for a new weekly video series, hosted by Baker McKenzie’s North America Government Enforcement partners Tom Firestone and Jerome Tomas.

This weekly briefing is available on demand and will cover hot topics and current enforcement actions related to white collar crime and criminal investigations in the US and abroad to arm you with the information you need to start your business week.

As one of the largest global law firms, we will call upon our exceptionally deep and broad bench of white collar experts throughout the world and particularly in the commercial hubs of Europe, Asia, Africa and Latin America to join our weekly discussion series.

These briefings will cover:

  • High-profile DOJ case updates and implications
  • SEC enforcement developments
  • CFTC enforcement developments
  • Other white collar defense industry developments

9 November 2020

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26 October 2020

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19 October 2020

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5 October 2020

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29 September 2020

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8 September 2020

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24 August 2020

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17 August 2020

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10 August 2020

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3 August 2020

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27 July 2020

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20 July 2020

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13 July 2020

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6 July 2020

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29 June 2020

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22 June 2020

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17 June 2020

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9 June 2020

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26 May 2020

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In brief

On 7 October 2020, the Baker McKenzie State and Local Tax (SALT) Subpractice Group covered the latest coast-to-coast state and local tax developments.


The purpose of this webinar is to keep you informed of updates and trends that may affect your business. The presenters focus on hearings and conferences in 2020, new and ongoing litigation, market facilitator updates and more.

View the recorded webinar.

Download the materials.

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