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The recent U.S. indictment of Sue Mi Terry for allegedly violating the Foreign Agents Registration Act, or "FARA," is the latest example of the U.S. government's scrutiny of foreign influence in American politics, commerce, and popular culture. FARA requires disclosure and transparency about foreign efforts to influence U.S. policy and public opinion. Suspected violations can lead to investigations by the U.S. Department of Justice ("DOJ") and the U.S. Congress, as well as criminal prosecutions and civil lawsuits. As a result, Korean companies with subsidiaries, lobbyists, and other operations in the United States must be aware of FARA and the scope of its relevant commercial exemptions.
FARA was originally enacted in 1938 to combat Nazi propaganda in the United States. Later, in the 1960s, the U.S. embargo of Cuba reshaped the American market for imported sugar, and lobbyists for other nations flooded Washington, D.C. in order to win favorable allocations of U.S. tariff-rate quotas on imported sugar. As a result, FARA was expanded to focus on foreign efforts to influence U.S. economic and political policy-making.
Today, FARA requires that anyone who acts within the United States as an agent of a "foreign principal" must register with DOJ, unless a statutory exemption covers their activities. A "foreign principal" can be a foreign government or political party, as well as individuals or entities with no government connections at all, such as private businesses and non-profit organizations.
FARA covers four categories of activities: (1) serving as a political or public relations consultant; (2) soliciting or distributing funds or other things of value; (3) representing the foreign principal's interests before the U.S. government; and (4) "political activities. FARA defines "political activities" as efforts to influence either the U.S. federal government or "any section" of the American public about U.S. foreign or domestic policies or about the interests of foreign governments or political parties. "Any section" of the American public can include state or local governments, the private sector, and members of the general public.
The U.S. Department of Justice ("DOJ") broadly interprets the phrase "political activities. Political activities include lobbying American government officials at any level—whether in the U.S. Congress, the federal Executive Branch, or state or local governments—in order to influence government policy. Political activities can even include promoting U.S. investment and tourism in foreign countries, as well as efforts to change private U.S. companies' supply chain strategies.
Although FARA's scope is broad, it also exempts many legal, commercial, and other activities from registration. For example, one exemption covers "private and nonpolitical" commercial activities that advance a foreign principal's "bona fide trade or commerce." This "nonpolitical" commercial exemption should cover a Korean company's traditional commercial activities like selling products through a U.S. agent or subsidiary.
But what if, for example, a Korean company wants to lobby the U.S. government about to change its tariffs on certain products imported into the United States? Or launch a publicity campaign encouraging American consumers to call their government representatives and support this change? DOJ and Congress would likely conclude that these are "political" activities, so the "nonpolitical" commercial exemption would not apply.
However, there is a second commercial exemption for political activities, as long as they do not serve "predominantly a foreign interest." DOJ's current interpretation of this exemption might protect the hypothetical Korean company's lobbying campaign, if three criteria are met. First, the lobbying must advance the company's own "bona fide commercial, industrial, or financial operations." Second, the campaign cannot be directed by the Korean government (or any other foreign government or political party). Third, the campaign cannot "directly promote" the Korean (or any other) government's interests. Whether this hypothetical lobbying "directly promotes" the Korean government's interests would depend on the specific facts involved.
DOJ may soon narrow this second commercial exemption. In December 2023, DOJ announced that it is rewriting the regulation that interprets this exemption, in order to focus on protecting political activities that predominantly benefit a "domestic interest," such as the U.S. subsidiary of a foreign company. The revised FARA regulations are expected any day now. Depending on what they say and whether DOJ finalizes them without any legal challenges, the hypothetical Korean company's tariff lobbying might no longer be exempt. If so, then the company's U.S. operatives would need to register under FARA—or a related statute, the U.S. Lobbying Disclosure Act—before they could interact with government officials or launch their publicity campaign.
FARA enforcement remains a top DOJ and congressional priority, and DOJ's upcoming regulatory revisions will likely raise many new questions about what FARA does or does not require. Korean companies doing business in the United States should remain alert to new FARA developments and seek timely advice about whether this complex law covers their activities.
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