20-0910 Thursday “Daily Bugle”

20-0910 Thursday “Daily Bugle”

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Thursday, 10 September 2020

  1. Treasury/OFAC: “Blocking or Unblocking of Persons and Properties”
  1. Items Scheduled for Future Federal Register Edition
  2. Commerce/BIS: (No new postings)
  3. State/DDTC: (No new postings)
  4. Treasury/OFAC: “Settlement with Deutsche Bank Trust Company Americas”
  1. EU Sanctions: “US Senators Call for 2019 Russia Magnitsky Designations to Be Issued”
  1. Husch Blackwell: “CBP Proposes Rule to Eliminate Section 321 Exemption for Imports Subject to Section 301 Tariffs”
  2. Steptoe: “US Weighs Further Xinjiang-Related Enforcement, Including Cotton Import Ban”
  1. ECS Presents: 21-22 Oct; “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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Bartlett’s Annotated ITAR and Bartlett’s Annotated FTR are Word documents to down-

load to your laptop to keep you updated on the latest amendments, and contain over 800 footnotes of section history, key cases, practice tips & tricks, and extensive Tables of Contents. The ITAR amendments to the ITAR that took effect on 9 March and 25 March are included in the current edition of the BITAR.  Subscribers receive updated editions every time the regulations are amended (usually within 24 hours) so you will always have the current versions of the regulations. Subscribe to the BITAR now to guarantee you have an up-to-date ITAR!    

Bartlett’s Annotated ITAR and Bartlett’s Annotated FTR are Word documents to down-

load to your laptop to keep you updated on the latest amendments, and contain over 800 footnotes of section history, key cases, practice tips & tricks, and extensive Tables of Contents. The ITAR amendments to the ITAR that took effect on 9 March and 25 March are included in the current edition of the BITAR.  Subscribers receive updated editions every time the regulations are amended (usually within 24 hours) so you will always have the current versions of the regulations. Subscribe to the BITAR now to guarantee you have an up-to-date ITAR!    

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EXIM_a11. Treasury/OFAC: “Blocking or Unblocking of Persons and Properties”

(Source: Federal Register) [Excerpts]
85 FR 55934: Notice
* AGENCY:Office of Foreign Assets Control, Treasury.
* ACTION:Notice.
* SUMMARY:The U.S. 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 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.

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(Source: Federal Register, 1 Sep 2020)
* Treasury/OFAC; NOTICES; Blocking or Unblocking of Persons and Properties; [Pub. Date: 11 Sep 2020]
* Commerce/BIS; RULES; Wassenaar Arrangement 2018 Plenary Decisions Implementation:Revisions Related to National Security Controls; [Pub. Date: 11 Sep 2020]

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OGS_a23. Commerce/BIS: (No new postings)

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OGS_a45. Treasury/OFAC: “Settlement with Deutsche Bank Trust Company Americas”
(Source: Treasury/OFAC, 9 Sep 2020)
The U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) today announced two settlements totaling $583,100 with Deutsche Bank Trust Company Americas (DBTCA).  The settlements resolve OFAC’s investigations into apparent violations of the Ukraine-Related Sanctions Regulations.   
Specifically, DBTCA agreed to pay $157,500 for processing a large payment, related to a series of purchases of fuel oil, through the United States that involved a property interest of a designated oil company in Cyprus.  At the time it processed the payment, DBTCA had reason to know of the designated oil company’s potential interest, but did not conduct sufficient due diligence to determine whether the designated oil company’s interest in the payment had been extinguished.   
Separately, DBTCA agreed to remit $425,600 for processing payments destined for accounts at a designated financial institution.  DBTCA failed to stop the 61 payments because it had not included in its sanctions screening tool the designated financial institution’s Society for Worldwide Interbank Financial Telecommunication (SWIFT) Business Identifier Code (BIC), and DBTCA’s screening tool was calibrated so that only an exact match to a designated entity would trigger further manual review.  OFAC determined that neither case was voluntarily self-disclosed to OFAC, and that the apparent violations constitute non-egregious cases.

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(Source: Eu Sanctions, 10 Sep)
US Senators Bob Menendez, Ranking Member of the Senate Foreign Relations Committee, and Ben Cardin, author of the Sergei Magnitsky Rule of Law Accountability Act, have written a letter to the US Secretary of the Treasury calling for the release of Russia-related Magnitsky Act designations, which was expected in December 2019.
The Sergei Magnitsky Rule of Law Accountability Act of 2012 requires the President on an annual basis to report on the designation of individuals involved in the detention, abuse or death of whistleblower Sergei Magnitsky, or those responsible for gross violations of human rights against those seeking to promote human rights or expose illegal activity in Russia. Press release here.


Source: Husch Blackwell, 9 Sep 202)
* Principal Author: Robert D. Stang, Esq., 1-202-378-2334, Husch Blackwell
U.S. Customs and Border Protection (“CBP”) is preparing a regulatory change that would eliminate the $800 de minimis exemption for imports subject to Section 301 tariffs, according to a proposed rule submitted by CBP to the Office of Management and Budget (“OMB”) on September 2, 2020.  Reviews of the proposed rule by OMB and an interagency review are the final steps before the publication of a final rule in the Federal Register.
Section 321 of the Tariff Act of 1930 (19 USC § 1321) provides for an exemption from duties for certain shipments imported by one person on one day having an aggregate retail value in the country of shipment of not more than $800. Since the de minimis exemption applies only to low-value shipments of not more than $800, the exemption under Section 321 is most commonly applied to e-commerce scenarios where the seller ships directly to the buyer from a foreign country.

(Source: Steptoe, 9 Sep 2020)
* Principal Author: Brittany Prelogar, Esq., 1-202-429-5518, Steptoe
he Trump administration is considering a ban on US imports of Xinjiang-origin cotton and other products due to allegations of widespread forced labor. The scope of the possible restrictions has not been made public but credible reporting suggests that it could include cotton and tomato products from the Xinjiang Uyghur Autonomous Region (XUAR) or wider prohibitions covering cotton products from across China and third-countries relying on XUAR-sourced materials or labor. 
XUAR produces an estimated 20% of the world’s cotton and 85% of China’s cotton. The far western province is also the site of alleged human rights violations, including the detention and internment of ethnic Uyghur and Turkic Muslim minorities, surveillance of local populations, and use of forced and prison labor from the XUAR. 
A ban on Xinjiang-sourced cotton products could radically impact global supply chains and the apparel industry, and further escalate the US-China trade war. The Trump Administration has aggressively employed sanctions and export controls against Chinese officials and entities. In recent months, it has targeted XUAR-based actors and activities, including barring exports to dozens of companies active in XUAR and implementing blocking sanctions on the Xinjiang Production and Construction Corps (XPCC), a massive state-owned enterprise that administers part of the Xinjiang region. 
In a July interagency business advisory, the US Departments of the Treasury, State, Commerce, and Homeland Security warned of the legal, economic, and reputational risk of continuing Xinjiang-related commercial activities. Beyond cotton supply chains, the business advisory also highlighted risks in other sectors (such as agriculture and food processing, automobiles, extractives, footwear, toys, electronics, and construction). The US government alleges that these sectors also 1) rely on forced labor of individuals from XUAR in their supply chains, 2) assist in developing surveillance tools for use in the XUAR, or 3) aid in the construction of detention facilities in XUAR or manufacturing facilities in XUAR that are near camps that accept subsidies from the Chinese government to use XUAR-sourced labor. 
Withhold Release Order 
The reported mechanism for the possible Xinjiang-cotton import ban is an administrative measure known as a “withhold release order” (WRO), which can be implemented by the US Department of Homeland Security’s Customs and Border Protection agency (CBP). CBP is entitled to withhold the release of imported goods when there is information available to “reasonably” indicate that the goods or materials were produced by forced, indentured, or convict labor pursuant to19 C.F.R. § 12.42(e) as authorized under Section 307 of the Tariff Act of 1930 (Section 307). 
Pursuant to a WRO, importers must either export the detained shipments or submit, within three months, a certificate of origin and detailed statement demonstrating the merchandise was not produced with forced labor. If CBP determines the proof submitted is insufficient, it will exclude the shipment. Where CBP finds “probable cause” that goods or materials were produced with forced, indentured, or convict labor, it will publish a formal “finding” to that effect in the Customs Bulletin and in the Federal Register, 19 CFR § 12.42(f). Importers may then submit a certificate of origin or detailed statement to contest the finding. If CBP finds that the proof is insufficient to establish admissibility of the merchandise, it will seize the merchandise for violation of Section 307. 
The reports of a possible WRO covering all Xinjiang cotton products arose after the submission on August 28 of a petition from various labor, human rights and religious freedom organizations to CBP requesting a “regional” WRO covering cotton and cotton-based goods sourced with forced labor from XUAR. Specifically, the petition requests that CBP “urge all importers to identify and map through all credible means its business relationships” to determine whether they have “direct suppliers in the [XUAR]” or “suppliers in China or globally that source inputs produced in the [XUAR],” and require those companies to disclose those suppliers to CBP. Petitioners also propose a “two-pronged approach,” to addressing the concerns they raise in the petition:
  • First, that CBP issue an immediate WRO covering all finished goods that either (a) were assembled by supplier companies in the XUAR or (b) contain inputs (including cotton, yarn, or fabric) produced by companies that own or operate facilities in the XUAR that have accepted Chinese government subsidies or employed workers provided by the government, regardless of whether the finished goods were produced in the XUAR (the petitioners append a “non-exhaustive list of companies” they believe meet these criteria).
  • Second, with respect to importers of cotton-based goods from suppliers outside of Xinjiang (whether elsewhere in China or outside of China) that source any inputs produced in XUAR, that CBP “work with” those importers for a period of no longer than six months, after which CBP would ban imports from importers that fail to establish that their suppliers source inputs exclusively from factories outside XUAR not using Uyghur forced labor. 
The Trump Administration has already issued multiple XUAR-related WROs in the last year, targeting, for example, specific apparel and hair product entities. While a region-wide order would be uncommon, it would not be without precedent. The US government implemented a country-wide ban on “cotton or products produced in whole or in part with Turkmenistan cotton” under Section 307 in 2018. 
Related US Government Actions
The US government has also used its principal sanctions and export control tools to address XUAR-related concerns. 
OFAC Sanctions
On July 31, the Treasury Department’s Office of Foreign Assets Control (OFAC) designated XPCC and two affiliated individuals pursuant to Executive Order 13818, implementing the Global Magnitsky program. The blocking sanctions bar US persons from transacting with XPCC, or any entity 50% or more owned by XPCC. The sanctions effectively cut off the state-owned enterprise, which controls large swathes of Xinjiang and its economy, from the US commercial and financial markets. XPCC is reportedly responsible for 37% of XUAR’s cotton production and the organization reportedly includes thousands of subsidiaries, creating significant compliance hurdles for international firms sourcing from the region. Given the size of the entity, OFAC has authorized “wind down” provisions for certain activities with XPCC subsidiaries until September 30. Earlier in the month, on July 9, OFAC designated the Xinjiang Public Security Bureau (XPSB), and four current or former government officials in connection with serious rights abuses against ethnic minorities in the XUAR, under the Global Magnitsky Act. 
Export Controls
The Commerce Department’s Bureau of Industry and Security (BIS) has also added dozens of companies operating in XUAR to the Entity List. BIS has added companies that it believes rely on forced labor as well as technology firms that the US government has alleged support a state-surveillance apparatus in XUAR. It has also included state agencies alleged to be responsible for repression of Uyghurs and other ethnic minorities. The Entity List prohibits the export, reexport, or transfer of goods – including software and technology – subject to the US Export Administration Regulations to listed companies. 
The impact of the Entity List actions is likely to have a significantly smaller footprint for the apparel industry than the XPCC sanctions or the possible regional WRO, but corporations who share information with suppliers in China, including sample products, specifications, formulas, or other technical information, should be aware of the restrictions. There is also a heightened risk that companies added to the Entity List could, in the future, be subject to more stringent restrictions. 
Additional Risks 
In addition to the other government actions described above, companies relying on forced and prison labor may face the risk of civil and criminal investigations in certain circumstances. For example, in addition to denying entry to goods produced with forced, indentured, or convict labor, CBP may issue civil penalties against the importer and other parties. US Immigration and Customs Enforcement’s Homeland Security Investigations (HIS) may launch criminal investigations related to the importation of goods made with forced labor in violation of US law, which could result in incarceration and fines, seizure and forfeiture of goods, and denial of export privileges. US federal government contractors and their employees, sub-contractors and their employees, and their agents are also prohibited under the Federal Acquisition Regulation, Combating Trafficking in Persons (FAR 52.222-50) from engaging in forced labor, sex trafficking, and other trafficking-related activities, and can be subject to suspension, debarment, or other sanctions. Companies and individuals also may be subject to civil liability or criminal prosecution under the Trafficking Victims Protection Act (18 USC § 1589). 
Apart from these legal risks, companies also face reputational harm from high-profile news reports and pressure campaigns mounted by NGOs and others in the United States and elsewhere encouraging governments to implement measures to restrict imports that potentially could involve forced labor in Xinjiang and elsewhere.
In light of the various legal and reputational risks outlined above, companies are encouraged to take a fresh look at how their existing compliance programs address the risks of forced, indentured, convict, and child labor, labor trafficking, and related labor issues in their supply chains. This review should include related economic sanctions and export controls risks. Following a careful risk assessment, enhancements to policies and procedures, due diligence and auditing processes, training, and reporting and response mechanisms may be warranted. 


(Source: ECS)
* What: 3rd Annual ITAR/EAR Symposium and Managing ITAR/EAR Complexities 2-Day Webinar
* When: 16-17 Sep moved to 21-22 Oct
* Where: Your Computer
* Sponsor: Export Compliance Solutions & Consulting (ECS)
* ECS and Guest Speakers: Suzanne Palmer, Lisa Bencivenga, Phil Kuhn, Debi Davis, Scott Jackson
* Register: here or write to liz@exportcompliancesolutions.com or call 1-866-238-4018

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The ABC of Foreign

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_a111. Bartlett’s Unfamiliar Quotations

(Source: Editor)

* Thomas Sydenham (10 Sep 1624 – 29 Dec 1689; was an English physician. He was the author of Observationes Medicae which became a standard textbook of medicine for two centuries so that he became known as ‘The English Hippocrates’. Among his many achievements was the discovery of a disease, Sydenham’s chorea, also known as St Vitus’ Dance.”
  – “Read Don Quixote; it is a very good book; I still read it frequently.”     
* Elsa Schiaparelli (1890-1973; was an Italian fashion designer. Along with Coco Chanel, her greatest rival, she is regarded as one of the most prominent figures in fashion between the two World Wars.)
  – “A good cook is like a sorceress who dispenses happiness.”
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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. 
27 Aug 2020: 85 FR 52898Additions of Entities to the Entity List and Revisions of entries on the Entity List.

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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