20-0818 Tuesday ” Daily Bugle “

20-0818 Tuesday “Daily Bugle”

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Tuesday, 18 August 2020

  1. USTR: “Notice of China’s Compliance with World Trade Organization Commitments”
  1. Items Scheduled for Future Federal Register Edition
  2. Commerce/BIS: (No new postings)
  3. State/DDTC: (No new postings)
  1. EU Sanctions: “UNSC Defeats Draft Resolution to Extend Iran Arms Embargo”
  2. Reuters: “U.S. Tightening Restrictions on Huawei Access to Technology, Chips”
  1. Arent Fox: “Huawei Rule Part 2: You ‘Use’, You Lose (Government Contracts)”
  2. Blakes: “New U.S. Tariffs on Canadian Aluminum and Canadian Retaliatory Surtaxes Coming”
  3. Nicholas Turner: “Sanctions Top-5 for the Week Ending 14 Aug”
  1. ECS Presents:”3rd Annual ITAR/EAR Symposium and Managing ITAR/EAR Complexities”
  2. FCC Academy Presents 4 Webinars: U.S. Export Controls: ITAR & EAR | FMS | Designing and Implementing an ICP
  1. Bartlett’s Unfamiliar Quotations 
  2. Are Your Copies of Regulations Up to Date? Find the Latest Amendments Here. 
  3. Weekly Highlights of the Daily Bugle Top Stories 
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  5. Submit Your Event and View All Approaching Events 

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85 FR 50864: Notice
* AGENCY: Office of the United States Trade Representative.
* ACTION: Notice.
* SUMMARY: The interagency Trade Policy Staff Committee (TPSC) invites comments to assist the Office of the United States Trade Representative (USTR) in the preparation of its annual report to Congress on China’s compliance with the commitments made in connection with its accession to the World Trade Organization (WTO). Due to COVID-19, the TPSC will foster public participation via written questions and responses relating to the comments received by the TPSC rather than an in-person hearing. This notice includes the schedule for submission of comments, questions and responses.
* DATES: – September 16, 2020 at 11:59 p.m. EDT: Deadline for submission of comments.
– September 30, 2020 at 11:59 p.m. EDT: Deadline for the TPSC to pose questions on comments.
– October 14, 2020 at 11:59 p.m. EDT: Deadline for submission of commenters’ responses to TPSC questions.
* ADDRESSES: USTR strongly prefers electronic submissions made through the Federal eRulemaking Portal: http://www.regulations.gov (Regulations.gov). The instructions for submitting comments are in sections 3 and 4 below. The docket number is USTR-2020-0033. For alternatives to online submissions, please contact Yvonne Jamison at Yvonne_D_Jamison@ustr.eop.gov or (202) 395-3475 before transmitting a comment and in advance of the relevant deadline.
* FOR FURTHER INFORMATION CONTACT: For procedural questions concerning written submissions, contact Yvonne Jamison at Yvonne_D_Jamison@ustr.eop.gov or (202) 395-3475. Direct all other questions to Tsering Dhongthog, Senior Director for China Affairs, at (202) 395-3900, or Arthur N. Tsao, Chief Counsel for China Enforcement, at (202) 395-3150.

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(Source: Federal Register)


* Commerce/BIS: RULES; Addition of Huawei Non-U.S. Affiliates to the Entity List, the Removal of Temporary General License, and Amendments to General Prohibition Three (Foreign-Produced Direct Product Rule) [Pub. Date: 20 Aug 2020] (PDF)

* Commerce/BIS: RULES; Clarification of Entity List Requirements for Listed Entities When Acting as a Party to the Transaction under the Export Administration Regulations) [Pub. Date: 20 Aug 2020] (PDF)

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OGS_a23. Commerce/BIS: (No new postings)

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(Source: EU Sanctions, 17 Aug 2020) [Excerpts]

   We reported on 6 August 2020 that the US had proposed a draft resolution to the UN Security Council to extend the arms embargo on Iran, which is due to expire on 18 October 2020. A second draft resolution was subsequently put forward on 13 August 2020, which was defeated by a vote of 2 in favour (the US and the Dominican Republic), 2 against (China and Russia), and 11 abstentions. See press release.
   Following the vote, the US Ambassador to the UN, Kelly Craft, said in a statement that, under Resolution 2231, the US has a right to initiate a snapback of provisions contained in previous resolutions (which would re-impose sanctions on Iran), and that “in the coming days, the United States will follow through on that promise to stop at nothing to extend the arms embargo”.
   The UK issued a statement on its decision to abstain, saying that because the resolution lacked support and could not achieve consensus, it would not contribute to security and stability in the region. It reiterated that the UK does not support a snapback of sanctions, as this would be incompatible with the E3’s efforts to preserve the nuclear deal.

(Source: Reuters, 17 Aug 2020) [Excerpts]

  The Trump administration on Monday announced it will further tighten restrictions on Huawei Technologies Co, aimed at cracking down on its access to commercially available chips.
  The U.S. Commerce Department actions expand restrictions announced in May aimed at preventing the Chinese telecommunications giant from obtaining semiconductors without a special license – including chips made by foreign firms that have been developed or produced with U.S. software or technology. 
The administration also added 38 Huawei affiliates in 21 countries to the U.S. government’s economic blacklist, the sources said, raising the total to 152 affiliates since Huawei was first added in May 2019. 
  ... “The new rule makes it clear that any use of American software or American fabrication equipment is banned and requires a license.” 
With U.S.-China relations at their worst in decades, Washington is pushing governments around to world to squeeze out Huawei, arguing it would hand over data to the Chinese government for spying. Huawei denies it spies for China. 
  The new actions, effective immediately, should prevent Huawei’s attempts to circumvent U.S. export controls, Commerce said. 
  A new separate rule requires companies on the economic blacklist to obtain a license when a company on the list, like Huawei, acts “as a purchaser, intermediate consignee, ultimate consignee, or end user.” 
  The department also confirmed it will not extend a temporary general license that expired Friday for users of Huawei devices and telecommunication providers. Parties must now submit license applications for transactions previously authorized. 
  The department said it was allowing the temporary general license to expire covering support to existing “personal consumer electronic devices.” 
  Huawei’s HiSilicon division has relied on software from U.S. companies such as Cadence Design Systems Inc (CDNS.O) and Synopsys Inc (SNPS.O) to design its chips. It outsourced the production to Taiwan Semiconductor Manufacturing Co (TSMC) (2330.TW), which uses equipment from U.S. companies. 
  TSMC has said it will not ship wafers to Huawei after Sept. 15.


(Source: Arent Fox, 13 Aug 2020)

* Principal Author: Travis L. Mullaney, Esq., 1-202-828-3477, Arent Fox LLP
   The new regulations prohibit government agencies from entering into, extending, or renewing a contract with contractors if they use any equipment, system, or service that uses certain Chinese telecommunications equipment or services as a substantial or essential components of any system, or as critical technology as part of any system.
   On July 14, the member agencies of the US government Federal Acquisition Regulation (“FAR”) Council, published a long-awaited interim rule (the “Interim Rule”) implementing Section 889(a)(1)(B) of the 2019 National Defense Authorization Act (FY19 NDAA), which prohibits government agencies from “enter[ing] into a contract (or extend[ing] or renew[ing] a contract) with an entity that uses any equipment, system, or service that uses covered telecommunications equipment or services as a substantial or essential component of any system, or as a critical technology as part of a system.” (emphasis added). The Interim Rule, which goes into effect August 13, 2020, represents the second phase of implementation of Section 889. It follows on the heels of the rule implementing Section 889(a)(1)(A) last year, which prohibits government agencies from procuring or obtaining such equipment, systems, or services. For purposes of both sections, “[c]overed telecommunications equipment” includes, among others, telecommunications equipment manufactured by Huawei or ZTE, as well as video surveillance and telecommunications equipment (when used for public safety, national security, or security of government facilities and critical infrastructure) produced by three Chinese telecom companies, their subsidiaries and affiliates, and others that may be identified in future.
In a Nutshell
   The Interim Rule imposes a dramatic, wide-sweeping additional restriction on government contractors, requiring a representation with each offer “whether covered telecommunications equipment or services are used by the offeror.” The new rule clarifies that the Section 889(a)(1)(B) restriction extends beyond a government contractor’s business with the US government to a government contractor’s entire business. Given the breadth of companies that the Interim Rule currently applies to, and the fact that additional companies may be added to the list in future, government contractors now face a daunting task of identifying and representing to the US government whether or not they use covered telecommunications equipment in any of their businesses. The consequences of failing to comply are significant, as an inaccurate representation could constitute a breach of contract, expose the contractor to potential false claims liability, and lead to significant financial loss for government contractors.
   The restrictions in the FY19 NDAA stem from an effort to eliminate a perceived threat to the supply chain posed by certain Chinese companies, including Huawei and ZTE, as well as concerns regarding certain Chinese companies’ use of video surveillance and facial recognition technology. Specifically, the Interim Rule cautions that “[t]he exfiltration of sensitive data from contractor systems arising from contractors’ use of covered telecommunications equipment or services could also harm important governmental, privacy, and business interests.”
   As we reported in our alert last year, the rule implementing Section 889(a)(1)(A) of the FY19 NDAA took effect on August 13, 2019. That interim rule prohibited executive agencies from:
procuring or obtaining, or extending or renewing a contract to procure or obtain, any equipment, system, or service that uses covered telecommunications equipment or services as a substantial or essential component of any system, or as critical technology as part of any system, unless [an exception or waiver applies].
   This initial prohibition flows down to a government contractor’s subcontractors at all tiers.
   While Section 889(a)(1)(A) and its implementing rule remain in effect, the restrictions imposed by the now-effective Section 889(a)(1)(B) take an expansive next step. By prohibiting government agencies from entering into a contract (or extending or renewing one) with an entity that even uses any equipment, system, or service that itself makes use of covered telecommunications equipment or services as a substantial or essential component of any system, or as critical technology as part of any system, the government has eliminated any required direct nexus between the covered telecommunications equipment and the government contract.
The Interim Rule implementing Section 889(a)(1)(B) amends the following sections of the FAR:
  • FAR subpart 4.21, Prohibition on Contracting for Certain Telecommunications and Video Surveillance Services or Equipment.
  • The provision at 52.204-24, Representation Regarding Certain Telecommunications and Video Surveillance Services or Equipment.
  • The contract clause at 52.204-25, Prohibition on Contracting for Certain Telecommunications and Video Surveillance Services or Equipment.

What Does the Interim Rule Cover?
   As mentioned, the Interim rule applies to federal contractors that use “covered telecommunications equipment or services as a substantial or essential component of any system, or as critical technology as part of any system.” It applies to all US government contractors with FAR-covered contracts. The Interim Rule applies only to “offeror” entities and does not flow down to subcontractors, unlike Section 889(a)(1)(A). While the current definition of offeror does not cover corporate families (such as domestic affiliates and subsidiaries), the FAR Council is considering extending the restriction to domestic corporate families in one year’s time by August 13, 2021, but apparently is not currently considering extending the restriction to affiliated parties outside the United States.
   The Interim Rule maintains the same definition of “critical technology” set forth in the Foreign Investment Risk Review Modernization Act of 2018 (“FIRRMA”), which primarily consists of export-controlled items, as well as the definitions of “Covered foreign country,” “Covered telecommunications equipment or services,” and “Substantial or essential component.”
   Notably, “substantial or essential component” is defined broadly in FAR 4.2101 to mean “any component necessary for the proper function or performance of a piece of equipment, system, or service.”
What Do Government Contractors Have to Do Now?
   The Interim Rule requires government contractors to provide a submission along with each offer that represents, “after conducting a reasonable inquiry, whether covered telecommunications equipment or services are used by the offeror.” The representation would be added as an additional section to FAR 52.204-24, Representation Regarding Certain Telecommunications and Video Surveillance Services or Equipment. While this representation is currently being imposed on a solicitation-by-solicitation, contract-by-contract basis, the representation eventually will be added as just one of the myriad representations required for contractors to submit (and update at least annually) in the System for Award Management (SAM).
   The Interim Rule provides that “[a]n entity may represent that it does not use covered telecommunications equipment or services, or use any equipment, system, or service that uses covered telecommunications equipment or services within the meaning of this rule, if a reasonable inquiry by the entity does not reveal or identify any such use.” The Interim Rule defines “reasonable inquiry” as one “designed to uncover any information in the entity’s possession about the identity of the producer or provider of covered telecommunications equipment or services used by the entity. A reasonable inquiry need not include an internal or third-party audit.” However, the preamble to the Interim Rule does clarify that the FAR Council expects the offeror’s “reasonable inquiry” to include the covered telecommunications equipment of any supplier or subcontractor, “regardless of whether that used is in performance of work under a Federal Contract.”
   If the offeror indicates that it does use covered telecommunications equipment, the offeror will be required to provide an explanation for why such usage does not violate the restrictions imposed by the act and regulation.
No Third-Party Backhaul Services Exception for Contractors under 889(a)(1)(B) 
   As we noted in our prior alert, the statute includes two exceptions at 889(a)(2)(A) and (B). First, section 889(a)(2)(A) allows the head of an executive agency to procure with an entity “to provide a service that connects to the facilities of a third-party, such as backhaul, roaming, or interconnection arrangements.”
   The Interim Rule now has a definition of “backhaul,” which “means intermediate links between the core network, or backbone network, and the small subnetworks at the edge of the network (e.g., connecting cell phones/towers to the core telephone network). Backhaul can be wireless (e.g., microwave) or wired (e.g., fiber optic, coaxial cable, Ethernet).” 
   However, the Interim Rule adds that the 889(a)(2)(A) exception “does not apply to a contractor’s use of a service that connects to the facilities of a third-party, such as backhaul, roaming, or interconnection arrangements.”  Thus, this exception does not apply to contractors using such systems under 889(a)(1)(B).
  Second, section 889(a)(2)(B) allows an entity to use “telecommunications equipment that cannot route or redirect user data traffic or [cannot] permit visibility into any user data or packets that such equipment transmits or otherwise handles.” It is not clear whether the exception would apply if the telecommunications equipment were capable of transmitting data but is appropriately air-gapped to prevent transmission of that data (such as using covered video surveillance devices as part of a closed-circuit system).
One-time Waiver Process
   Section 889(d)(1) of the FY2019 NDAA allows the head of an executive agency to issue a one-time waiver on a case-by-case basis. Any such waiver will expire no later than August 13, 2022. Once this period expires, executive agencies must comply with the prohibition.
  The Interim Rule provides that the executive agency’s decision whether to start the waiver process will be “based on market research and feedback from Government contractors during the acquisition process, in concert with other internal factors.”
   The Interim Rule makes clear that, if an offeror submits an offer with a representation “that it uses covered telecommunications equipment or services as a substantial or essential component of a system, or as critical technology as part of any system and no exception applies,” the offeror will be treated as seeking a waiver. Following such a submission, the contracting officer will have to consider whether a waiver is necessary, and then request information on the following from the offeror:
  1. a compelling justification for additional time to implement the requirements under section 889(a)(1)(B);
  2. “a full and complete laydown of the presences of covered telecommunications or video surveillance equipment or services in the entity’s supply chain”; and
  3. “a phase-out plan to eliminate such covered telecommunications equipment or services from the entity’s systems.”
   An offeror may also proactively submit this information along with their offer before the contracting officer has decided to initiate the formal waiver process.
The Interim Rule notes that it might not be possible to determine whether a waiver should be considered until offers have been received and the executive agency has analyzed representations from offerors.
Compliance Steps and Noncompliance Risks
   The Interim Rule highlights the importance “for contractors to develop a compliance plan that will allow them to submit accurate representations to the Government in the course of their offers.” The Interim Rule, therefore, suggests that “a robust, risk-based compliance approach will help reduce the likelihood of noncompliance.” It notes that the FAR Council assumes the following steps would be a part of a compliance plan developed by any entity:
  1. Entities should familiarize themselves with the rule.
  2. Entities must “determine through a reasonable inquiry whether the entity itself uses ‘covered telecommunications’ equipment or services as a substantial or essential component of any system, or as critical technology as part of any system.” As noted above, this inquiry should include subcontractors and suppliers providing the offeror with covered telecommunications equipment and services.
  3. Entities should educate their “purchasing/procurement, and materials management professionals to ensure they are familiar with the entity’s compliance plan.”
  4. If covered equipment and services are identified, an entity must “implement procedures if the entity decides to replace existing covered telecommunications equipment or services and ensure new equipment and services acquired for use by the entity are compliant.”
  5. An entity should “provide representation to the Government regarding whether the entity uses covered telecommunications equipment and services and alert the Government if use is discovered during contract performance.”
  6. “For entities for which a waiver will be requested, (1) develop a phase-out plan to phase-out existing covered telecommunications equipment or services, and (2) provide waiver information to the Government to include the phase-out plan and the complete laydown of the presence of the covered telecommunications equipment or services.”
   The Interim Rule notes that failure to comply constitutes a breach of contract from a purely contractual point of view, and may consequently “lead to cancellation, termination, and financial consequences.” As the contractor must also submit an affirmative representation as to whether it uses covered equipment, a misrepresentation could expose to the contractor to false claims liability as well.
   The Interim Rule allows interested parties to submit written comments on or before September 14, 2020, to be considered in the formation of the final rule. Interested parties may want to comment on the following issues:
  • The Interim Rule does not define “use,” “system,” or “critical infrastructure.” These definitions are critical to identifying the scope of the rule.
  • The Interim Rule was issued very shortly before the effective date of Section 889(a)(1)(B), giving stakeholders little time to implement compliance measures. The cost of compliance with this rule may be significant, and government contractors may not have many viable alternatives to the covered telecommunications equipment. Commenters may want to urge the government to consider implementing a grace period for compliance, in addition to the waiver provision already set forth in the rule.
  Comments can be submitted on the Federal eRulemaking portal under FAR Case 2019-009. 

(Source: Blakes, 14 Aug 2020)

* Principal Author: Greg Kanargelidis, 1-416-863-4306, Blake, Cassels & Graydon LLP
   On August 6, 2020, President Donald Trump announced that the United States will be re-imposing a 10 per cent tariff on Canadian aluminum as of August 16, 2020. Canada responded immediately by announcing that by September 16, 2020, it will impose surtaxes or similar trade-restrictive countermeasures on aluminum and other aluminum containing goods imported from the U.S., on a dollar-for-dollar basis as the U.S. measures. The proposed Canadian surtaxes will be set at 10 per cent, the same rate that the U.S. will apply against Canadian aluminum.
   The Government of Canada is accepting submissions from industry until September 6, 2020, on the proposed list of affected goods. Companies affected may wish to make submissions by the deadline.
   In May 2018, President Trump, acting pursuant to section 232 of the Trade Expansion Act of 1962, imposed tariffs on steel and aluminum products from Canada on the basis that imports of these goods threatened to impair U.S. national security. Canada responded with countermeasures of its own. One year later, in May 2019, Canada and the U.S. mutually agreed to terminate their respective tariffs and surtaxes, and, in a joint statement, agreed that should imports surge in future and tariffs are re-imposed, the affected country may impose countermeasures, but only in the same affected sector. Since that time, Canada has benefitted from an exemption from the U.S. tariffs on steel and aluminum that remain imposed on other countries. However, by proclamation dated August 6, 2020, President Trump carved out from the exemption non-alloyed unwrought aluminum provided for in subheading 7601.10 of the Harmonized Tariff Schedule of the U.S. Therefore, as of August 16, 2020, all such goods shipped from Canada to the U.S. will be subject to a 10 per cent U.S. tariff.
   The Canadian measures are intended specifically to offset the U.S. measures and affect only U.S. origin goods. They will apply to imports of U.S. origin goods valued at an amount equivalent to the value of Canadas exports to the U.S. that are subject to the U.S. tariffs. Canada has published a list of proposed goods to be subject to a surtax of 10 per cent, the same levels of duties that the U.S. has applied to Canadian aluminum imports.
   As set out in the
 Notice of Intent to Impose Countermeasures Action Against the United States in Response to Tariffs on Canadian Aluminum Products, Canada intends to apply the 10 per cent surtax to certain aluminum products covered primarily by chapter 76 of the List of Tariff Provisions, as well as other chapters covering items related to or including aluminum. For example, potentially affected goods of U.S. origin imported into Canada include the following aluminum goods:
  • Unwrought aluminum
  • Aluminum waste and scrap
  • Aluminum powders
  • Aluminum bars, rods and profiles; wire; plates, sheets and strip; foil; tubes and pipes
  • Aluminum doors and windows
  • Aluminum structures, tanks, vats and similar containers, including aluminum cans
   In addition, Canada is proposing to charge the 10 per cent surtax on various other U.S. origin goods of aluminum, organized by Chapters of Canadas Tariff Schedule as follows:
  • Chapter 26 aluminum ores; slag, ash and residues of aluminum
  • Chapter 28 – aluminum oxide, aluminum hydroxide and fluorides, chlorides and sulfates of aluminum
  • Chapter 32 pigments used in paints and dyes
  • Chapter 38 reaction initiators
  • Chapter 84 refrigerators, washing machines
  • Chapter 87 bicycles; certain livestock trailers
  • Chapter 94 metal furniture; prefabricated buildings
  • Chapter 95 golf clubs; sports articles such as bats, hockey sticks, etc.
   The surtaxes will apply only to goods originating in the U.S. that are entitled to be marked as a good of the U.S. in accordance with the Determination of Country of Origin for the Purposes of Marking Goods (CUSMA Countries) Regulations. This will limit the measures to goods of U.S. origin, rather than goods originating in third-party countries that are transiting through, or merely being distributed by the U.S.
   The proposed Canadian surtaxes are expected to be imposed by September 16, 2020, and the government has given potentially impacted parties until September 6, 2020, to make submissions to the Department of Finance regarding expressed support for, or concern with, the proposed countermeasures. The Canadian government has requested that any submissions focus on products at the eight-digit tariff item level.
   The measures being imposed by the U.S. and Canada come at an unfortunate time, just over one month since the Canada-United States-Mexico Agreement came into force, and in the midst of the COVID-19 pandemic, which has already negatively affected trade between Canada and the U.S. The tariffs and surtaxes will serve to increase production costs in the U.S. and the price of further processed aluminum products such as auto parts and beer and other beverage cans when sold in the U.S. and/or Canada. It is also unclear whether the U.S. is considering re-imposing tariffs on Canadian steel products. In short, the measures announced by the U.S. and by Canada introduce a new level of risk and uncertainty for business at a time when many are vulnerable.
Companies using aluminum in their operations should consider participating in Canada
s consultation process, including making a case for exclusions from any resulting surtaxes should there be a shortage of a particular aluminum product in Canada that is necessary for production.

(Source: Medium, 18 Aug 2020)

* Author: Nicholas Turner, Esq., 852-5998-7559, Steptoe & Johnson HK
Here are five things that happened this week in the world of economic sanctions that I think you should know about.
   (1) The US Department of Justice (DOJ) announced the seizure of more than 1 million barrels of Iranian gasoline from four vessels headed to Venezuela, pursuant to a US federal court order issued in early July 2020. The Wall Street Journal reported that the Greek owners of the ships were persuaded to hand over the gasoline after being threatened with US sanctions. The fuel was loaded on tankers headed to Houston, Texas, where it could be resold to support the US Victims of State Sponsored Terrorism Fund, according to a US State Department announcement.
   (2) You win some you lose some. The United Nations Security Council rejected US-backed Resolution S/2020/797, which would have extended UN sanctions on Iran set to expire in October 2020 under the timetable set in the Joint Comprehensive Plan of Action (JCPOA). The US State Department issued a statement calling the Security Council’s vote “inexcusable.” The UK Foreign & Commonwealth Office stated the UK government remains “resolutely committed” to the JCPOA.
   (3) The US Office of Foreign Assets Control (OFAC) announced a USD 5,000 settlement with an unnamed individual for violations of the Foreign Narcotics Kingpin Sanctions Regulations. According to the settlement notice, the individual, who was employed at the US embassy in Bogotá, Colombia, “bought jewelry, meals, clothing, hotel rooms, and other gifts” for a Specially Designated National (SDN) with whom he or she had a personal relationship.
   (4) Donald Trump issued an Executive Order requiring Bytedance Ltd. to “divest all interests and rights in any assets or property used to enable or support the operation of TikTok” and data related to TikTok’s users in the United States. The order follows a review by the Committee on Foreign Investments in the United States (CFIUS) of ByteDance’s 2017 acquisition of Musical.ly.
   (5) OFAC issued a Sudan Program and Darfur Sanctions Guidance summarizing the restrictions on Sudan and Darfur and reminding everyone that “US persons are no longer prohibited from engaging in transactions with respect to Sudan or the Government of Sudan” since 12 October 2017. Meanwhile, the State Department announced a travel ban against unnamed individuals residing both inside and outside Sudan” believed to be involved in undermining implementation of Sudan’s 2019 Political Agreement and Constitutional Declaration.
   Hark, in fair Bogotá, where we lay our scene. OFAC’s settlement with the unnamed Romeo (or Juliet) sends a commonsense message to US government employees posted overseas: don’t fraternize with SDNs. It looks bad. But it also underscores the broad prohibition against US persons anywhere dealing directly or indirectly with SDNs and other blocked persons. What does dealing mean? As OFAC states in the settlement notice: “All US persons . . . should exercise caution before voluntarily engaging in relationships with foreign persons that the US person knows, or reasonably should know, may have a sanctions nexus, as any financial transaction or exchange of goods or services with a designated person – even in the context of a personal relationship – may constitute a violation of US sanctions.” OFAC does not have a de minimis threshold for violations.
   OFAC’s guidance is particularly timely given last week’s designation of 11 Hong Kong and PRC officials, including several prominent members of the Hong Kong government. Something tells me they won’t be getting as many red packets this year.


* What: 3rd Annual ITAR/EAR Symposium and Managing ITAR/EAR Complexities 2-Day Webinar
* When: September 16-17, 2020
* Where: Your Computer
* Sponsor: Export Compliance Solutions & Consulting (ECS)
* ECS and Guest Speakers: Suzanne Palmer, Mal Zerden, Lisa Bencivenga, Debi Davis, Scott Jackson
* Register: here or write to liz@exportcompliancesolutions.com or call 1-866-238-4018
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ITAR & EAR from a non-US perspective
Tuesday, 8 September 2020
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Tuesday, 29 September 2020
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EN_a112. Bartlett’s Unfamiliar Quotations

(Source: Editor)

Marshall Field (18 Aug 1834 – 16 Jan 1906; was an American entrepreneur and the founder of Marshall Field and Company, the Chicago-based department stores. His business was renowned for its then-exceptional level of quality and customer service.)
  – “Goodwill is the only asset that competition cannot undersell or destroy.”
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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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