The ongoing U.S.-China trade war has unsurprisingly impacted legal work, but firms say that there have been a number of bright spots.

While the inconvenient truth is that China-US trade war is harming the economy and enterprises at large on both sides, it also has lingering implications on the work of law firms in China, especially international law firms.

On the corporate side, foreign direct investment is shrinking due to the uncertainties arising out of the trade war. Not only are new investors hesitating when making investment decisions, not knowing what tariffs their products may face when exported to the U.S., but many companies that currently operate in China are considering pulling out from the country.

 “This has led to an increase in work relating to entities winding up and employee layoffs,” says Andrew McGinty, partner at Hogan Lovells.

The new Foreign Investment Law (FIL), which was passed on March 15 and which takes effect on Jan. 1 next year “creates another layer of uncertainty,” notes McGinty, because the version that was passed had most of the details stripped out, and the implementing regulations have yet to be promulgated.

 “This leaves foreign investors wanting to set up Sino-foreign equity or cooperative joint ventures in something of a dilemma due to the change in governance structures,” McGinty observes. “Do they set up a JV now under the old rules and renegotiate with their partner down the line, or do they agree two sets of documents now and have a ‘flip-over’ to the new documents on Jan. 1, or do they wait till the effective date of the FIL thus giving them better visibility as to the outcome of the trade war and what the implementing regulations will look like?”

“The FIL also sets forth new rules for the protection of intellectual property and technology transfer compliance, both in response to an escalation of disputes in these two areas and as China takes new steps towards market reform.  While the new law aims to promote trade and break down barriers for foreign investment, the ongoing trade tensions have caused multinationals to adopt a more cautious approach towards market entry or exit in the U.S. and China,” says Dora Wang, a Partner in Reed Smith’s Global Regulatory Enforcement group.

“Many Chinese and U.S. companies have also become more vigilant in managing the compliance issues and commercial and employment disputes that often surface during wind-downs or corporate restructuring, which could be corruption or bribery, HR-related disputes or even environmental noncompliance, or any issues that might trigger a government investigation. These MNCs recognize that they need to step up their efforts to curtail and remediate noncompliance in order to avoid becoming targets of regulatory enforcement in China or the U.S.,” Wang comments.

NEW OPPORTUNITIES

Additionally, on June 30, China issued the 2019 Negative List, which is notably shorter than its predecessor and offers concessions in the finance sector and motor vehicle manufacturing sector. Investment in these industries is growing, with companies like J.P Morgan, Nomura Securities, and BMW growing their presence in China.

“Most multinational companies view the Chinese market as a critical part of their global strategy. With China’s moves to further open market access, they continue to explore opportunities to build or reinforce their presence in the country. The greatest value we provide is to give companies a holistic view of the latest legal developments in conjunction with market insight, practical risk mitigation strategies, and best practices,” says Wang.  

On the capital markets side, the harsh domestic environment when it comes to obtaining financing is pushing Chinese companies to Hong Kong. “We have, therefore, seen an uptick in HK IPO work,” says McGinty. “Shenzhen, Shanghai and London are also becoming attractive to Chinese companies,” Wang adds.

Both lawyers also see a marked increase in international trade and regulatory compliance issues. “We are helping our clients avoid falling into common compliance pitfalls, and helping them rethink and readjust their investment strategies in the U.S. or in China,” says Wang.

“We are seeing a significant uptick in legal risk assessments, investigations and regulatory advisory work in the areas with the most enforcement activity—trade sanctions, antitrust and competition law, cybersecurity, and anti-corruption and anti-bribery compliance, for example—as there is a growing concern among multinational companies that they face heightened regulatory scrutiny in the current environment.  Chinese companies and foreign companies that transact business with Chinese entities are seeking our legal advice in recalibrating their risk profiles and risk mitigation strategies in light of the changes they see in the external environment,” Wang notes. 

“For example, a client may contact us for advice on how to restructure its supply chain or reroute its logistics in order to minimize the impact of tariffs and comply with international sanctions.  In doing so, the client may discover previous noncompliance, or disputes may arise as a result of stopping payment or the delivery of goods in connection with the sanctions. Over the course of our representation, we could end up assisting the client with advice on international trade sanctions, multijurisdictional import and tariff rules, contract disputes, banking regulations, and international shipping, as well as conducted an internal investigation and a compliance system upgrade.”

With the recent news about Huawei and other major Chinese firms, “many Chinese companies are reaching out to us on advice regarding how to comply with U.S. export controls and sanctions,” says McGinty. “We help them set up export control compliance programs and guide them when they discover a potential violation of U.S. or other jurisdictions’ export control laws.”

On the trade remedies side, the number of U.S. investigations has doubled in the past two years. “So, we have represented a wide array of Chinese companies and their U.S. importers in front of the Department of Commerce and the International Trade Commission assisting in either reducing the tariff levels or making arguments that the U.S. industry was not ‘injured’ as a result of the tariffs,” he notes.

As far as tariffs are concerned, companies are seeking exemptions from the bilateral tariffs but both countries have product exclusion processes where companies can argue that a specific product should not face tariffs. “We represent clients before the U.S. Trade Representative. While it is a difficult policy environment, we find that a targeted message regarding the potential economic harm can help avoid the tariffs,” says McGinty.

FRIEND OR FOE

In fear of China's rise, the U.S. may end up falling into the so-called “Thucydides trap,” a case where when a rising power causes fear in an established power, it escalates toward war. In this case, the worry is that the spark from longstanding trade friction will ignite a trade war, whereas in actuality both sides are neither friend nor foe but reliant on each other for the common good.

“There’re always two sides of a coin. The trade tensions present new regulatory challenges, but also provide multinational companies a good opportunity to take stock of the current situation.  In guiding our MNC clients in understanding their legal obligations and navigating the evolving and increasingly complex regulatory environment in various countries, we are their trusted legal advisors and partners in their growth strategies, as we help them identify and balance opportunity and risk, and find ways to mitigate or diversify the risks,” Wang says.

An example in point is the changing desired destination for outbound direct investment. “There has been a slowdown of Chinese investment in the U.S., which has led to a refocusing of investment elsewhere, namely Europe, South-east Asia and Africa,” McGinty observes. This is partially owing to more onerous requirements for approval form the Committee on Foreign Investment in the United States (CFIUS) but also strongly driven by the Chinese government’s promotion of the Belt and Road Initiative (BRI) “We have recently advised several Chinese clients in the motor and hotel/tourist industry on their investments in Europe and Africa.”

However the U.S. market is still very attractive to Chinese companies, and Chinese companies have legitimate concerns about whether their investments will get blocked, with MoneyGram—Ant Financial being just one recent example.

“Many companies, therefore, have already started proactively considering modifying or diversifying their supply chains, looking at alternative investments, or increasing their investments in other countries in the region that are less affected by the trade tensions,” Wang points out. And the most burning questions for them, according to McGinty, are about actual investments currently going through the CFIUS process in Washington.

考验关头

持续不断的中美贸易战无疑也给律师业务带来了影响，但律师们表示其中不乏一些亮点。

中美贸易战给中美两国经济和企业造成了无法忽视的伤害，同时也对在中国的国际律师事务所的业务产生了挥之不去的影响。

公司业务层面，贸易战带来的不确定性一定程度上造成了外商直接投资量的减少：一方面，投资观望情绪随之增加，因为不知道产品出口到美国，关税上会有怎样的起落；另一方面，已在中国营商的投资者，已有一些在考虑撤资事宜。

 “这给律师工作带来的影响就是公司关闭及裁员业务增加，”霍金路伟律师事务所公司部合伙人麦安吉律师说到。

新的《外商投资法》在3月15日通过并将于明年1月1日起正式施行。“新法在一定程度上又增加了一层新的不确定性，” 麦安吉律师指出，新法相较旧的版本去掉了很多细节，截至目前实施条例还未颁布。

 “由于治理结构的变化，这对于考虑在中国设立合资或合作企业的外国投资者来说，陷入了两难境地。” 麦安吉律师谈到，“是应该按照目前现行旧法设立、待日后重新协商？还是目前新旧两法都照顾到、待1月1日再‘翻新’文档？抑或是等到新法正式实施后再设立？因为那时贸易战结果将更明朗、实施细则也将更明确。”

“新的《外商投资法》还对知识产权保护和技术转让的合规性制定了新的规则，以应对与之相关的日益增多的争议解决案件以及中国为市场改革采取的措施，虽然新的《外商投资法》旨在促进贸易并打破外国投资壁垒，但持续的贸易紧张局势已经使得跨国公司对进入或退出美国和中国市场采取更加谨慎的态度。”礼德律师事务所全球监管执行业务团队的合伙人王婉珺律师指出。

“许多中美公司在处理合规性问题和解决纠纷时也变得更加警惕。此类问题和纠纷通常会在公司清算或重组的过程中浮现，其有可能是腐败或贿赂、人力资源方面的纠纷、甚至是环境违规、或者其他任何可能引发政府调查的问题。这些跨国公司认识到他们需要加大力度来限制和纠正违规行为，以避免成为中国或美国监管执法的目标。” 王婉珺律师评论道。

崭新机遇

此外，6月30日，《外商投资准入特别管理措施（负面清单）》（2019年版）发布，在2018年版的基础上又做出较大幅度缩减，金融、汽车制造业领域进一步对外资放开。与之相应，这些领域的投资态势也大幅升温，摩根大通、野村证券、宝马等都加大了在中国的投入。

“大多数跨国公司都把中国市场视为其全球战略的重要一环。随着中国进一步对外开放，跨国公司也持续探索开始或加强在中国投入的机会。我们基于对中国市场的洞察力，实际的风险控制策略和丰富的实践经验，为他们提供最新法律发展的整体视图。”王婉珺律师介绍到。

资本市场方面，国内融资环境严峻正推动中国企业赴港上市。“我们的香港IPO业务因此有了一些增幅。” 麦安吉律师说到。“对于中国企业来说，在深圳、上海、伦敦上市，也正变得越来越富有吸引力。”王婉珺律师补充道。

两位律师也均表示，国际贸易与监管合规业务也有显著增长。“我们帮助客户规避常见的合规陷阱，同时帮助他们重新思考和调整在中美的投资战略。”王婉珺律师说。

“我们留意到法律风险评估、调查和监管咨询的工作在以下领域呈显著增长态势，执法活动也主要集中在这些领域——贸易制裁，反托拉斯和反不正当竞争，网络安全，以及反腐败和反贿赂合规等。例如，跨国公司越来越关注他们在当前环境中面临的更加严格的监管审查。同时，与中国公司进行业务往来的中外公司也正在积极寻求我们的法律建议，根据他们在外部环境中可见的变化重新调整其风险评估和风险控制策略。”王婉珺律师强调。

“例如，客户可以联系我们获取有关如何重组其供应链或重新安排其物流的建议，以尽量减少关税的影响并符合国际制裁相关的规定。在此过程中，客户可能会发现以前的违规行为，或者由于停止支付或与交付有关制裁的货物而产生争议。在我们代表客户处理案件的过程中，我们最终可能会就有关国际贸易制裁、多司法管辖区进口和关税规则、合同纠纷、银行监管和国际航运等方面向客户提供建议，同时我们也会为客户进行内部调查和合规系统升级。”王婉珺律师说。

近期，华为等其他中国科技巨头的新闻，“也使得很多中国企业找到我们咨询有关美国出口管制和制裁方面的事项，” 麦安吉律师介绍道，“我们帮助客户制定出口管制合规计划，并在客户发现有可能违法美国或其他司法管辖地的出口管制法律时给与及时指导。”

在贸易救济方面，美国的调查数量在过去两年翻了一番。“所以，我们代表了各类型中国企业和美国进口商，协助他们在美国商务部和美国国际贸易委员会降低关税水平，或者论证美国的工业并未因关税的影响受到‘重创’”。麦安吉律师指出。

就关税而言，企业正寻求从双边关税中获得豁免，但两国的产品排除程序可以支持企业辩称某一特定产品不属于关税征收范围。“我们代表客户与美国贸易代表交涉。政策环境虽然阻碍重重，但我们发现信息中涉及潜在经济损害能有的放矢实现关税减免。”麦安吉律师说道。

是友是敌

面对中国的迅速崛起，美国的担忧和恐惧可能最终逃不过所谓的“修昔底德陷阱”，即新崛起的大国必会挑战现存大国，现存大国也必然要回应这种威胁，战争因此在所难免。中美之间长期贸易摩擦升级成贸易战，令人堪忧；但两国关系的实质是共同利益下的相互依存，非敌亦非友。

“永远是一币两面的问题——贸易局势紧张带来了新的监管挑战，但同时也给跨国公司提供了一个重新审视当下局面的良机。在指导我们的跨国公司客户了解他们的法律义务和驾驭各国不断变化和日益复杂的监管环境的过程中，我们是他们值得信赖的法律顾问，也是他们战略增长的合作伙伴，我们帮助他们识别和平衡机会和风险，并找到降低风险或分摊风险的方法。”王婉珺律师谈到。

对外直接投资主要流向目的地的变化很好地说明了风险分摊的问题。“中国企业赴美投资有所下降，与此同时投资重点开始转向欧洲、东南亚、非洲等地。”麦安吉律师指出，这个变化一方面是因为美国外国投资委员会对外国投资审查的趋严，另一方面是首中国政府“一带一路”倡议的大力推动，“我们近期就协助一些汽车、酒店、旅游业的中国客户投资欧洲和非洲市场。”

尽管如此，美国市场对中国企业来说依然具有吸引力，但中国企业对其在美国的投资是否被拒的担忧并非没有道理——蚂蚁金服收购速汇金的交易被否就是一个例子。

“对此，很多公司已经开始积极考虑修改或多样化其供应链，寻求其他替代性投资机会，或增加对其他受贸易紧张局势影响较小的国家的投资，”王婉珺律师说到。麦安吉律师补充道，对于中国投资者来说，他们最关切的问题就是美国当局对他们目前在美投资的CFIUS态度。

To contact the editorial team, please email ALBEditor@thomsonreuters.com.