20-0812 Wednesday “Daily Bugle”

20-0812 Wednesday “Daily Bugle”

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Wednesday, 12 August 2020

  1. Treasury/OFAC: “Blocking or Unblocking of Persons and Properties (I)”
  1. Items Scheduled for Future Federal Register Edition
  2. Commerce/BIS: (No new postings)
  3. State/DDTC: (No new postings)
  4. Treasury/OFAC: “Issuance of new Sudan Program and Darfur Sanctions Guidance and Related FAQ”
  5. Treasury/OFAC: “Settlement Agreement between the U.S. Department of the Treasury’s Office of Foreign Assets Control and An Individual”
  6. Singapore Customs: “Tradenet Extended Downtime”
  1. Defense News: “Watchdog Report: Pompeo Acted Properly in Saudi Arms Sale”
  1. Arent Fox: “Importers Have Until September 25 to Comply with New Marking Requirements for Goods from Hong Kong”
  2. Benesch: “Export Controls – The Forwarder’s Perspective”
  3. Husch Blackwell: “CBP Issues Marking Guidance for Goods Produced in Hong Kong”
  4. ST&R Trade Report: “Export Restrictions on Personal Protective Equipment Extended, Amended”
  1. FCC Academy Presents 4 Webinars: U.S. Export Controls: ITAR & EAR | FMS | Designing and Implementing an ICP
  1. Bartlett’s Unfamiliar Quotations 
  2. How to Publish Your Article in the Daily Bugle 
  3. Are Your Copies of Regulations Up to Date? Find the Latest Amendments Here. 
  4. Weekly Highlights of the Daily Bugle Top Stories 
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85 FR 48632: Notice
* AGENCY: Office of Foreign Assets Control, Treasury.
* ACTION: Notice.
* SUMMARY: The Department of the Treasury’s Office of Foreign Assets Control (OFAC) is publishing the names of one or more persons that have been placed on OFAC’s Specially Designated Nationals and Blocked Persons List (the SDN List) based on OFAC’s determination that one or more applicable legal criteria were satisfied. All property and interests in property subject to U.S. jurisdiction of these persons are blocked, and U.S. persons are generally prohibited from engaging in transactions with them. Additionally, OFAC is publishing the names of one or more persons that have been removed from the SDN List. Their property and interests in property are no longer blocked, and U.S. persons are no longer generally prohibited from engaging in transactions with them.

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(Source: Federal Register)

* USTR; NOTICES; Product Exclusion Amendment:China’s Acts, Policies, and Practices Related to Technology Transfer, Intellectual Property, and Innovation; [Pub. Date: 13 Aug 202] (PDF) (PDF)

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OGS_a23. Commerce/BIS: (No new postings)

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The Department of the Treasury’s Office of Foreign Assets Control (OFAC) is publishing Sudan Program and Darfur Sanctions Guidance and a Frequently Asked Question (FAQ) and removing eleven Sudan-related Frequently Asked Questions (FAQs).  OFAC is amending the following FAQs pertaining to the Trade Sanctions Reform and Export Enhancement Act of 2000 (TSRA) as it applies to Sudan and five general and compliance FAQs to reflect that Sudan has not been a comprehensively sanctioned country since October 12, 2017.  

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(Source: Treasury/OFAC, 11 Aug 2020)
The U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) today announced a $5,000 settlement with a natural U.S. person (“U.S. Person-1”).  U.S. Person-1, who at the time of the apparent violations was a civilian direct hire of the U.S. Army and stationed at the U.S. embassy in Bogota, has agreed to settle their potential civil liability for 24 apparent violations of the Foreign Narcotics Kingpin Sanctions Regulations (FNKSR), 31 C.F.R. part 598.  Specifically, between approximately October 2015 and August 2016, U.S. Person-1 engaged in at least 24 transactions that dealt in the blocked property interests of a foreign individual who at the time was a specially designated narcotics trafficker in apparent violation of the FNKSR.  OFAC determined that U.S. Person-1 did not voluntarily disclose the apparent violations, and that the apparent violations constitute an egregious case.

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(Source: Singapore Customs, 12 Aug 2020)
(1) In addition to the usual housekeeping time for TradeNet on Sundays from 4am to 8am and the extended downtime on 16 Aug 2020 (as indicated in Notice No. 10/2020), we wish to inform you that Singapore Customs will be performing system maintenance work which will affect TradeNet for the following date(s) and time.
Date: 30 Aug 2020
Time Duration: 4am to 12pm 8 hours
(2) You are advised not to submit any applications through TradeNet during the above mentioned period. Please submit your applications through TradeNet after the indicated timing above.
(3) Please bring the contents of this Notice to the attention of your staff. Kindly plan in advance and submit applications before the downtime, to minimise disruptions to your business operations. We apologise for any inconvenience caused.

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(Source: Defense News, 12 Aug 2020) [Excerpts]
The State Department’s internal watchdog has found that Secretary of State Mike Pompeo did not act improperly last year when he approved billions of dollars in arms sales to Saudi Arabia without the consent of Congress.
The State Department Office of Inspector General concluded in a report released Tuesday that Pompeo had the legal authority to declare an emergency and bypass Congress under the Arms Export Control Act. … 

The report concluded that the law grants the secretary the discretion to decide what constitutes an emergency, something three previous administrations have done with respect to arms sales to Saudi Arabia.

The official said the “big takeaway” from the report is that Pompeo and the department acted “in accordance with the law” as it sought to aid the Saudi-led coalition in Yemen. The report notes that the grinding, five-year-old civil war in Yemen has led to what the United Nations has called the world’s worst humanitarian crisis.


(Source: Arent Fox, 11 Aug 2020)
* Principal Author: Teresa M. Polino, Esq., 1-202-350-3745, Arent Fox
Because of the time needed to mark, pack, and ship goods from Hong Kong to the US, it is imperative that importers act quickly to ensure compliance with this new requirement.
As reported previously and as a result of the growing tensions between US and China, President Trump issued an Executive Order on July 14, 2020, concerning certain import and export trade requirements between the two countries. Among these changes, it was mandated that goods produced in Hong Kong now be required to be marked with China as their country of origin in accordance with the requirements of 19 U.S.C.A. § 1304 and 19 C.F.R. Part 134. US Customs and Border Protection (CBP) has now prepared a Federal Register Notice for publication on August 11, 2020, providing an effective date for such marking and noting the repercussions if goods from Hong Kong are not so marked.
Requirement Details
Currently, goods produced in Hong Kong are marked as “Made in Hong Kong.”  According to the notice from CBP, goods produced in Hong Kong, which are entered or withdrawn from warehouse for consumption into the United States will have to be marked country of origin “China” starting 45 days after the notice is published in the Federal Register. The Notice is currently scheduled to be published on August 11, 2020. This means that, unless otherwise excepted from marking, goods produced in Hong Kong which enter US customs territory on or after September 25, 2020, will be subject to the new marking requirement.
Marking is governed by Section 304 of the Tariff Act of 1930, as amended (19 U.S.C.A. § 1304), and 19 C.F.R. Part 134. The statute provides that unless excepted, every article of foreign origin (or its container) imported into the United States shall be marked in a conspicuous place as legibly, indelibly, and permanently as the nature of the article (or its container) will permit, in such a many as to indicate to the ultimate purchaser in the United States the English name of the country of origin of the article. Further, a 10% ad valorem duty will be applied to articles that are not properly marked in accordance with the requirements of 19 U.S.C.A. § 1304 and 19 C.F.R. Part 134.
At this time it is not clear whether, or when, goods produced in Hong Kong would also become subject to tariffs that otherwise apply to Chinese-origin products.
Why Is This Happening Now?
On July 14, 2020, the President issued Executive Order 13936 on Hong Kong Normalization. Among other things, this Order stated that because Hong Kong was determined to no longer be sufficiently autonomous from China to justify differential treatment in relation to China, the President was suspending application of section 201(a) of the United States-Hong Kong Policy Act of 1992, as amended (22 U.S.C. 5721(a)), to certain statutes, including 19 U.S.C. 1304. The Order also provided that within 15 days appropriate actions must be commenced by relevant agencies.
Next Steps
Effective on September 25, 2020, every Article of Hong Kong origin imported into the US will be subject to the same marking requirements as goods produced in China. Absent any further notice or guidance from CBP, it is expected that CBP will begin enforcement of the requirements at or about that time. Shipments from Hong Kong are easily identified and thus could become an easy target for verification of compliance with the new marking rule.

Because of the time needed to mark, pack, and ship goods from Hong Kong to the US, it is imperative that importers act quickly to ensure compliance with this new requirement. 

(Source: Benesch Alerts, 10 Aug 2020)
* Principal Author: Jonathan Todd, Esq., 1-216-363-4658, Benesch Law
The international forwarding community was not immune from headlines, advisories, and rulemaking dealing with U.S. export controls and economic sanctions in 2020 despite never-ending attention due the global COVID-19 pandemic. Those developments include the issuance of a Final Rule by the U.S. Department of Commerce’s Bureau of Industry and Security (“BIS”) on April 28 that further restricts exports to military end users and tightens the Electronic Export Information (EEI) filing requirements among other changes. Shortly thereafter, a Sanctions Advisory issued by the U.S. Department of Treasury (among other agencies) warning on May 14 against illicit global shipping and sanctions evasion practices particularly dealing with trade involving proscribed countries such as Iran and North Korea.
Now is the time to evaluate and improve upon trade compliance programs, operating procedures, and internal controls – rather than in defense of a regulatory investigation that could find its way to both bottom lines and the headlines. Forwarders have always held a unique position in the export of goods from the United States. As a community, Forwarders neither have close contact with all parties to the transaction nor have intimate knowledge of cargoes and their potential use. The obligations for compliance with international trade restrictions such as export controls and economic sanctions can nonetheless lay a trap for even the most diligent operators. Changes in the regulatory landscape, particularly during the worst global health crisis in living memory, make this moment in time uniquely challenging for international forwarders.
A level-set is always helpful as we look to take stock in our current operations for purposes of risk assessment and improvement. The U.S. regulatory landscape is complex although, in general, all parties involved in the export of goods must pay close attention to three government agencies: the Department of Commerce, the Department of State, and the Department of Treasury. Key programs maintained and enforced by each of those agencies are summarized below.
Export Administration Regulations –  BIS enforces the Export Administration Regulations (“EAR”) found at 15 CFR Parts 730 to 780. Those export controls principally restrict the export and reexport of items and technology, including participating in or facilitating such export, based on item, country-specific embargoes, and end users. Items under control include any non-military goods, software, or technology that are physically located in the U.S. or of U.S. origin, of foreign origin but containing more than de minimis U.S. content, or of foreign origin but a direct product of U.S. technology or software. The EAR applies to U.S. persons but also foreign subsidiaries that are controlled, directly or indirectly, by a domestic entity (15 CFR 760.1).
Importantly for transportation and logistics providers, one of the Ten General Prohibitions found in the EAR makes it unlawful to proceed with transactions with the knowledge that a violation has occurred or is about to occur (General Prohibition Ten, found at 15 CFR 736.2). General Prohibition Ten has appeared as a specific area of enforcement against service providers in recent years.
International Traffic in Arms Regulations –  The Department of State’s Defense Directorate of Trade Controls (“DDTC”) enforces the International Traffic in Arms Regulations (“ITAR”) found at 22 CFR Parts 120 to 130. Those export controls restrict the import, export, and temporary import or export, of defense articles, technical data, and defense services. The ITAR applies to any items designated on the United States Munitions List (“USML”) found at 22 CFR 121.1 including firearms, ammunition, missiles, explosives, training equipment, military electronics, optics, and spacecraft systems. The DDTC requires registration of certain actors involved in the trade of arms including, from time to time, service providers particularly where their activities may be considered brokering of defense articles and services. Unlawful brokering and participation with knowledge of violations have been areas of exposure for service providers in recent years.
OFAC Economic Sanctions –  The Treasury Department’s Office of Foreign Asset Controls (“OFAC”) administers approximately 30 different sanctions programs against countries and persons. Those programs generally prohibit the transfer of property or funds, including participating in or facilitating such transfer, to restricted parties. All U.S. Persons must comply including any non-US entities owned or controlled by a U.S. person as determined under the country specific sanction (See 31 CFR 535.329). A service provider’s mere participation in a restricted transaction has been an area for exposure in recent years. Traffic involving Cuba and Iran have been a unique area of difficulty for industry due to the swift evolution of U.S. policy over the last decade.
The task for each forwarder is to assess risk for the operation and tailor an appropriate program together with training and process controls. There is neither a one-size-fits-all approach to trade compliance nor any real benefit in adopting compliance programs and practices that will not be followed. The tactical elements of a strong compliance program include: developing internal leadership and subject matter expertise on trade controls; sticking to process fundamentals such as denied parties screening; and watching for the gamesmanship among shippers that can cause liability for even the most well-meaning of operators.
An awareness of weaknesses and “red flags” help personnel to remain vigilant and to escalate issues where they arise. The best example of this tactic is found in the “Know Your Customer Guidance” published by the Department of Commerce in Supplement No. 1 to Part 732 of the EAR. That guidance amounts to: (1) deciding whether “red flags” exist; (2) inquiring further if necessary; (3) avoiding self-blinding against bad facts; (4) training sales and operations staff; (5) re-evaluating situations as new facts are learned; and (6) consulting with the respective agencies or counsel before proceeding if “red flags” or other risks cannot be resolved. A few important “red flags” for transportation and logistics providers to guard against as part of trade compliance programs include:
  • The customer is reluctant to offer information about the end-use of a product.
  • The product’s capabilities do not fit the buyer’s line of business.
  • The product ordered is incompatible with the technical level of the country to which the product is being shipped.
  • The customer has little or no business background.
  • Deliveries are planned for out-of-the-way destinations.
  • A freight forwarding is listed as the product’s final destination.
  • The shipping route is abnormal for the product and destination.
  • Packaging is inconsistent with the method of shipment or destination.
If historic violations come to light during the development or updating of a compliance program, or during day-to-day business operations, then options are available for determining the path forward and potentially limiting exposure. Real or potential violations can arise for even the most well-meaning of operators. Exposure for these and similar regimes can often extend five years in the past, which is a relatively long tail to consider when a history of violations is found. One of the most useful tools for consideration is the use of voluntary self-disclosures to those agencies having jurisdiction, which are available for the regulatory regimes described here and others that maybe implicated. Giving notice to an agency should not be taken lightly although it can serve as a pathway for closing out a file with mitigated financial exposure (and often little or no exposure).

COM_a311. Husch Blackwell: “CBP Issues Marking Guidance for Goods Produced in Hong Kong”

(Source: Husch Blackwell, 10 Aug 2020)
* Principal Author: Stephen Brophy, Esq., 1-202-378-2408, Husch Blackwell
On August 10, 2020, U.S. Customs & Border Protection (CBP) issued a notice that goods produced in Hong Kong will need to be marked as a product of China starting on September 25, 2020. The marking changes are the result of the July 14, 2020 Executive Order on Hong Kong Normalization that ended Hong Kong’s special trade status.
CBP is allowing for a 45-day transition period after the date of publication in the Federal Register to implement the requirements due to the “commercial realities.” The notice does not specify how the changes affect tariff treatment of Hong Kong goods.  An administration official has stated that the Executive Order does not “provide for new U.S. tariffs on goods from Hong Kong”, but that the Administration is continuing to evaluate its policies.  Therefore, at this time, it remains unclear whether goods originating in Hong Kong will be subject to the same tariffs as Chinese origin goods, including antidumping duties, countervailing duties and Section 301 duties.  Additional guidance from CBP, USTR and the U.S. Department of Commerce is expected.

COM_a412. ST&R Trade Report: “Export Restrictions on Personal Protective Equipment Extended, Amended”

(Source: Sandler, Travis & Rosenberg Trade Report, 12 Aug) [Excerpts] 


* Contact: messages@strtrade.com, 1-305-894-1035
The Department of Homeland Security has amended and extended its prohibition on exports of personal protective equipment being used to treat COVID-19 without explicit approval by the Federal Emergency Management Agency.
This prohibition has been lifted with respect to the following products.
– other filtering facepiece respirators (e.g., those designated as N99, N100, R95, R99, R100, P95, P99, or P100), including single-use, disposable half-mask respiratory protective devices that cover the user’s airway (nose and mouth) and offer protection from particulate materials at an N95 filtration efficiency level.
   – elastomeric, air-purifying respirators and appropriate particulate filters/cartridges
However, DHS has continued or modified this prohibition with respect to the following articles, which will be effective from Aug. 10 until Dec. 31.
   – surgical N95 filtering facepiece respirators, including devices that are disposable half-face-piece non-powered air-purifying particulate respirators intended for use to cover the nose and mouth of the wearer to help reduce wearer exposure to pathogenic biological airborne particulates (no change)
   – PPE surgical masks, including those that cover the user’s nose and mouth and provide a physical barrier to fluids and particulate materials (no change)
   – PPE nitrile gloves, including those defined at 21 CFR 880.6250 (exam gloves) and 878.4460 (surgical gloves) and other such nitrile gloves intended for the same purposes (latex and vinyl gloves are no longer subject to the restrictions). In addition, DHS has newly added the following products to this prohibition, also effective from Aug. 10 until Dec. 31.
   – level 3 and 4 surgical gowns and surgical isolation gowns that meet all the requirements in ANSI/AAMI PB70 and ASTM F2407-06 and are classified by surgical gown barrier performance based on AAMI PB70 (newly added)
DHS states that before any shipments of restricted materials may leave the U.S., U.S. Customs and Border Protection will detain the shipment temporarily, during which time FEMA will determine whether to return for domestic use, issue a rated (purchase) order for, or allow the export of part or all of the shipment. FEMA will make such determinations within a reasonable time of being notified of an intended shipment and will endeavor to minimize disruptions to the supply chain.
FEMA will not purchase covered materials from shipments made by or on behalf of U.S. manufacturers with continuous export agreements with customers in other countries since at least Jan. 1, 2020, so long as at least 80 percent of such manufacturer’s domestic production of covered materials, on a per item basis, was distributed in the U.S. in the preceding 12 months. If FEMA determines that a shipment of covered materials falls within this exemption, such materials may be transferred out of the U.S. without further review by FEMA, although this exemption may be waived if FEMA determines that doing so is necessary or appropriate to promote the national defense. FEMA may also establish additional exemptions in the future.
The ten additional exemptions announced in April 2020 also remain in effect.
Failure to comply fully with this rule is a crime punishable by a fine of not more than $10,000, imprisonment for not more than one year, or both. In addition, pursuant to 18 USC 554, whoever fraudulently or knowingly exports or sends (or attempts to) from the U.S. any merchandise, article, or object contrary to any U.S. law or regulation, or receives, conceals, buys, sells, or in any manner facilitates the transportation, concealment, or sale of such merchandise, article, or object, prior to exportation, knowing the same to be intended for exportation contrary to any U.S. law or regulation, faces up to 10 years’ imprisonment, a fine, or both if convicted.


ITAR & EAR from a non-US perspective
Tuesday, 8 September 2020
More Info
The ABC of Foreign Military Sales (FMS)
Tuesday, 29 September 2020
Designing and Implementing an ICP
Tuesday, 6 October 2020 More Info
Wednesday, 7 October
More Info
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EN_a114. Bartlett’s Unfamiliar Quotations

(Source: Editor)

* Robert Southey (12 Aug 1774 – 21 Mar 1843; was an English poet of the Romantic school, and Poet Laureate from 1813 until his death.)
  – “If you would be pungent, be brief; for it is with words as with sunbeams – the more they are condensed, the deeper they burn.”
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EN_a115. How to Publish Your Article in the Daily Bugle

(Source: Jim Bartlett, Daily Bugle Editor)
Your analysis and commentary on a current trade issue can generate new clients from among the Daily Bugle’s subscribers (over 10,000 world-wide). We receive far more articles every day from law firms and consultants than we can publish, but if you would like have your article published, please contact Jim Bartlett at 1-202-802-0646 or JEBartlett@JEBartlett.com.
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The official versions of the following regulations are published annually in the U.S. Code of Federal Regulations (C.F.R.), but are updated as amended in the Federal Register.  The latest amendments are listed below.
Latest Update 


5 Apr 2019: 84 FR 13499:

Civil Monetary Penalty Adjustments for Inflation. 
31 Jul 2020: 85 FR 45998: Revision of the Export Administration Regulations and Suspension of License Exceptions for Hong Kong. 
DOC FOREIGN TRADE REGULATIONS (FTR): 15 CFR Part 30.   24 Apr 2018: 83 FR 17749: Foreign Trade Regulations (FTR): Clarification on the Collection and Confidentiality of Kimberley Process Certificates.  

: DoD 5220.22-M. Implemented by Dep’t of Defense. 

18 May 2016: Change 2: Implement an insider threat program; reporting requirements for Cleared Defense Contractors; alignment with Federal standards for classified information systems; incorporated and cancelled Supp. 1 to the NISPOM (Summary here.)  
DOE ASSISTANCE TO FOREIGN ATOMIC ENERGY ACTIVITIES: 10 CFR Part 810.    23 Feb 2015: 80 FR 9359: comprehensive updating of regulations, updates the activities and technologies subject to specific authorization and DOE reporting requirements. 

15 Nov 2017, 82 FR 52823: miscellaneous corrections include correcting references, an address and a misspelling.

DOJ ATF ARMS IMPORT REGULATIONS: 27 CFR Part 447-Importation of Arms, Ammunition, and Implements of War. 
14 Mar 2019: 84 FR 9239: Bump-Stock-Type Devices.


29 Jul 2020: 85 FR 45513 Extension to Certain Temporary Suspensions, Modifications, and Exceptions due to Corona Virus.  The latest edition of the BITAR is 29 July 2020.  

DOT FOREIGN ASSETS CONTROL REGULATIONS (OFAC FACR): 31 CFR, Parts 500-599, Embargoes, Sanctions, Executive Orders

17 Jul 2020: 85 FR 43436: Nicaragua Sanctions Regulations. 


1 Jan 2019: 19 USC 1202 Annex.
  – HTS codes for AES are available here.
  – HTS codes that are not valid for AES are available here.

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