Biden Likely to Continue US Trend of Heavy Sanctions Use, Observers Say

While the Joe Biden administration will likely pursue more multilateral sanctions than the Trump administration, industry should not expect the Office of Foreign Assets Control to reverse its yearslong trend of increased sanctions, a former OFAC official and law firms said.

“Presidents at least since [Bill] Clinton have embraced the use of sanctions, and there’s no reason to expect President-elect Biden to be any different,” Winston & Strawn's Cari Stinebower, a former OFAC attorney, wrote in a Nov. 23 post. Companies should definitely not expect a rollback of sanctions against China or Hong Kong, Steptoe lawyers said Nov. 24. Although Biden may seek to ease sanctions against Iran (see 2010160039) and possibly restrictions against Cuba (see 2011250025), the firm said companies should “not expect to see dramatic changes for other regimes.”

The Biden administration is expected to continue sanctions against China (see 2008070039) under the Hong Kong Autonomy Act and the Uyghur Human Rights Policy Act, Steptoe said, and will likely continue to impose export controls on Chinese companies. “Some commentators have suggested that economic sanctions could play a prominent, if not central, role in the Biden administration's China policy,” the firm said.

Squire Patton agreed Biden will “likely continue many of President [Donald] Trump’s China policies.” The firm also said Biden will be more likely than Trump to criticize Chinese human rights abuses (see 2006220023). “We expect the Biden Administration to continue enforcing U.S. sanctions laws against Chinese individuals and entities and better coordinate messaging on human rights across the Executive Branch,” the firm said Nov. 19.

Although sanctions will continue under Biden, observers said, the measures may be more predictable and supplemented with more guidance. Recent U.S. sanctions against China have led to confusion and concern for a range of U.S. companies, particularly Trump’s Nov. 12 executive order to ban Americans from investing in Chinese firms with military ties (see 2011130026), Stinebower said. She said the order is a “major concern” for her clients. “Guidance from the Administration is needed here,” she said, adding that OFAC plans to issue frequently asked questions on the order. A Treasury Department spokesperson said the agency plans to issue guidance “as appropriate.”

Stinebower also said companies should monitor how OFAC invests in staffing and personnel under Biden, which will affect sanctions programs. The agency lost a record number of employees last year, which has led to longer processing times and a rise in the number of inexperienced officials (see 2010290028). “One sign to watch will be resource allocation and hiring at OFAC,” Stinebower said. “Replacing personnel in both OFAC and Counsel’s Office will be key to effective sanctions administration.”