20-1019 Monday “Daily Bugle”

20-1019 Monday “Daily Bugle”

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Monday, 19 October 2020

  1. Commerce/BIS: “Information Systems Technical Advisory Committee; Notice of Partially Closed Meeting the Information Systems”
  2. USTR: “Applications for Inclusion on the Binational Panels Roster Under the United States-Mexico-Canada Agreement”
  1. Items Scheduled for Future Federal Register Edition
  2. Commerce/BIS: “Provides Relief for Exporters with Six-Month Extension on Licenses”
  3. State/DDTC: “Public is Invited to Virtual DTAG Plenary Meeting on 22 Oct”
  4. EU Commission: EU Council Imposing Certain Specific Restrictive Measures in Violation of the Arms Embargo with regard to The Democratic Republic Of The Congo”
  5. EU Council: “Notice for the Attention of the Persons and Entities Subject to The Restrictive Measures Concerning Restrictive Measures in view of The Situation in Syria”
  1. Nikkei Asia: “China Passes Export Control Law with Potential for Rare-Earths Ban”
  2. NDTV: “US Warns of Sanctions for Any Arms Sales to Iran after Embargo Expires”
  1. Husch Blackwell: “Secretary of State Submits Hong Kong Autonomy Act Report to Congress; OFAC Publishes FAQs”
  2. Sidley Austin: “Report on CBP Reconciliation Program”
  3. Thompson Hine: “BIS Offers Opportunity for Six-Month Extensions of Export Licenses”
  1. Monday List of Ex/Im Job Openings: 67 Jobs Available – 6 New Job Openings This Week
  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 
  4. Submit Your Job Opening and View All Job Openings 
  5. Submit Your Event and View All Approaching Events 

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(Source: Federal Register) [Excerpts]
85 FR 66301: Notice
* AGENCY: Industry and Security Bureau
* ACTION: Notice
* SUMMARY: The Information Systems Technical Advisory Committee (ISTAC) will meet on November 4 and 5, 2020, at 1:00 p.m. (Eastern). The meetings will be available via teleconference. The Committee advises the Office of the Assistant Secretary for Export Administration on technical questions that affect the level of export controls applicable to information systems equipment and technology.
*DATES: Wednesday, November 4:Open Session and Thursday, November 5, Closed Session. …

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(Source: Federal Register) [Excerpts]
85 FR 66301: Notice
* AGENCY: Industry and Security Bureau
* ACTION: Notice
* SUMMARY: The Information Systems Technical Advisory Committee (ISTAC) will meet on November 4 and 5, 2020, at 1:00 p.m., Eastern Stardard Time. The meetings will be available via teleconference. The Committee advises the Office of the Assistant Secretary for Export Administration on technical questions that affect the level of export controls applicable to information systems equipment and technology.
*DATES: Wednesday, November 4:Open Session and Thursday, November 5, Closed Session. …

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(Source: Federal Register)

Treasury/OFAC; NOTICES; Blocking or Unblocking of Persons and Properties; [Pub. Date: 20 Oct 2020]

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(Source: Commerce/BIS, 16 Oct 2020)
Recognizing the importance of exports during this time of economic transition and recovery, the Bureau of Industry and Security (BIS) in the U.S. Department of Commerce is highlighting the opportunity for exporters to request six-month validity period extensions for licenses due to expire on or before December 31, 2020. 

“With the majority of the world’s consumers located outside of the United States, exports are a vital source of growth and revenue for American companies,” said Acting Under Secretary for Industry and Security, Cordell Hull. “President Trump and the Department of Commerce are committed to cutting red tape and making it easier for exporters to drive our Nation’s economic recovery in the wake of the pandemic.” BIS will streamline the extension of the validity process by creating a central electronic mailbox for submission of requests at LicenseExtensionRequest@bis.doc.gov. The original license will be reviewed and, in most cases, the validity extended via the electronic system. 

Depending on the number of requests received, it is estimated that the majority of extension validity requests will be processed and approved within two to three business days. “The streamlined process will help ensure that exporters with licenses due to expire on or before the end of 2020, who may not have been able to ship orders due to resource constraints during the pandemic, have the opportunity to benefit fully from the authorizations granted on their licenses,” said Hull. “The Trump Administration is focused on easing the way for American businesses to export during this crucial time.”

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OGS_a35. State/DDTC: “You are Invited to the Virtual DTAG Plenary Meeting on October 22, 2020″
  The Defense Trade Advisory Group (DTAG) will meet in open session from 1:00 p.m. to 5:00 pm EDT this Thursday, October 22.  The membership of DTAG consists of private sector defense trade representatives appointed by the Assistant Secretary of State for Political-Military Affairs, who advise the Department on policies, regulations, and technical issues affecting defense trade.
  The following agenda topics will be discussed and final reports presented:  
   (1) Provide feedback to DDTC as DDTC works to consolidate exemptions into a single part of the ITAR.
   (2) Help develop a comprehensive compliance risk matrix to help prevent ITAR violations and diversions by various business functions involved in ITAR activities.
   (3) Suggest a draft (a) form or attachment that indicates when Part 130 information will be reported (e.g, annually, but in a separate filing, at the same time as the company’s registration), and (b) Part 130 (annual) report form.
  The meeting will be held in WebEx. There will be one WebEx invitation for each attendee, and only the attendee should use the invitation. In addition, each attendee should access the virtual meeting from a private location. Please let us know if you need any of the following accommodations: live captions, digital/text versions of webinar materials, or other (please specify).  
  Members of the public may attend this virtual session and will be permitted to submit written questions before the date of the meeting.  Members of the public may also submit a brief statement (less than three pages) to the committee in writing for inclusion in the public minutes of the meeting. Members of the public who wish to attend this session must provide name and contact information, including an email address and a phone number, and any request for reasonable accommodation to the DTAG Alternate Designated Federal Officer (ADFO), Neal Kringel, via email at DTAG@state.gov by COB Wednesday, October 21, 2020. (The 5 October deadline was waived.)
  FOR FURTHER INFORMATION CONTACT: Ms. Barbara Eisenbeiss, PM/DDTC, SA-1, 12th Floor, Directorate of Defense Trade Controls, Bureau of Political-Military Affairs, U.S. Department of State, Washington, DC 20522-0112; telephone (202) 663-2835 or email DTAG@state.gov.

[Editor’s note: Daily Bugle editor Jim Bartlett will be one of the presenters.]

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The Council of the European Union,
Having regard to the Treaty on the Functioning of the European Union,
Having regard to Council Regulation (EC) No 1183/2005 of 18 July 2005 imposing certain specific restrictive measures directed against persons acting in violation of the arms embargo with regard to the Democratic Republic of the Congo, and in particular Article 9(5) thereof,
Having regard to the proposal from the High Representative of the Union for Foreign Affairs and Security Policy,
On 18 July 2005, the Council adopted Regulation (EC) No 1183/2005.
On 19 August 2020, the United Nations Security Council Committee established pursuant to United Nations Security Council Resolution 1533 (2004) amended the listings for two persons and three entities subject to restrictive measures.
Annex I to Regulation (EC) No 1183/2005 should therefore be amended accordingly,
Article 1
Annex I to Regulation (EC) No 1183/2005 is hereby amended as set out in the Annex to this Regulation.
Article 2
This Regulation shall enter into force on the day following that of its publication in the Official Journal of the European Union.
This Regulation shall be binding in its entirety and directly applicable in all Member States.
Done at Brussels, 16 October 2020.

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(Source: Official Journal of the European Union, 19 Oct 2020) [Excerpts]
     The following information is brought to the attention of the persons and entities designated in Annex I to Council Decision 2013/255/CFSP, as implemented by Council Implementing Decision (CFSP) 2020/1506 , and in Annex II to Council Regulation (EU) No 36/2012, as implemented by Council Implementing Regulation (EU) 2020/1505, concerning restrictive measures in view of the situation in Syria.
     The Council of the European Union has decided that the persons and entities that appear in the abovementioned Annexes should be included in the list of persons and entities in Annex I to Decision 2013/255/CFSP and Annex II to Regulation (EU) No 36/2012. The grounds for designation of those persons and entities appear in the relevant entries in those Annexes.
     The attention of the persons and entities concerned is drawn to the possibility of making an application to the competent authorities of the relevant Member State(s) as indicated on the websites in Annex III to Regulation (EU) No 36/2012, in order to obtain an authorisation to use frozen funds for basic needs or specific payments (cf. Article 16 of the Regulation). …

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(Source: Nikkei Asia, 19 Oct 2020) [Excerpts]
China’s top legislature on Saturday passed a law on export control, allowing the government to ban exports of strategic materials and advanced technology to specific foreign companies on its equivalent of the U.S. Department of Commerce’s Entity List. …
The inclusion of the phrase “and interests” suggests that the law will give the government more leeway to move against those it wants to punish.
The passage marks another step in the tit-for-tat escalation between China and the U.S., which has been strengthening sanctions on Huawei Technologies.
The new Chinese law goes into effect on Dec. 1, after the U.S. elections. An exporter in China will need to submit the name of the end user and proof of the item’s final application. The documentation will need to come from the end user or from the authorities where the end user is based. …

(Source: NDTV, 19 Oct 2020) [Excerpts]
US Secretary of State Mike Pompeo on Sunday said that arms sales to Iran would breach UN resolutions and result in sanctions, after Tehran said the longstanding UN embargo on arms trade with the Islamic republic had expired.
“The United States is prepared to use its domestic authorities to sanction any individual or entity that materially contributes to the supply, sale, or transfer of conventional arms to or from Iran,” Pompeo said in a statement. …
The embargo on the sale of conventional arms to Iran was due to begin expiring progressively from October 18 under terms of the UN resolution that confirmed the 2015 nuclear deal between Tehran and world powers.
Tehran, which could now purchase weapons from Russia, China and elsewhere, has hailed the expiration as a diplomatic victory over its archenemy the United States, which had tried to maintain an indefinite freeze on arms sales. …


(Source: Husch Blackwell, 16 Oct 2020)
* Principal Author: Camron J. Greer, Assistant Trade Analyst, 1-202-378-2413,  Husch Blackwell
On October 14, 2020, the U.S. Secretary of State, pursuant to section 5(a) of the Hong Kong Autonomy Act (“HKAA”), submitted a report to Congress identifying foreign persons who are “materially contributing to, have materially contributed to, or attempt to materially contribute to the failure of the People’s Republic of China (“PRC”) to meet its obligations under the Sino-British Joint Declaration or Hong Kong’s Basic Law.” The Secretary of State identified ten PRC and Hong Kong officials, which the U.S. Department of the Treasury’s (“the Treasury”) Office of Foreign Assets Control (“OFAC”) added to the Specially Designated Nationals (“SDN”) list.

OFAC also published four new Frequently Asked Questions (“FAQs”) to provide further information on reporting requirements under the HKAA.  FAQ 848 clarifies that any foreign financial institution (“FFI”) that “knowingly conducts a significant transaction” with a foreign person named in the Secretary of State’s section 5(a) report, or any update to that report, is potentially subject to mandatory secondary sanctions under the HKAA.

Section 5(b) of the HKAA requires the Secretary of the Treasury to submit a report to Congress 30-60 days after the Secretary of State’s section 5(a) report is submitted.  In this report, the Secretary of the Treasury will identify any FFI’s that knowingly conduct significant transactions with the foreign persons identified in the section 5(a) report.
FAQ 849 explains that an FFI may be excluded from the Treasury’s section 5(b) report “if the significant transaction or transactions of the FFI that merited inclusion in that report:  (A) does not have a significant and lasting negative effect that contravenes the obligations of China under the Joint Declaration and the Basic Law; (B) is not likely to be repeated in the future; and (C) has been reversed or otherwise mitigated through positive countermeasures taken by that FFI.”
FAQ 850 lists the several factors that the Treasury may use to determine whether a transaction or series of transactions should be considered “significant.”  FAQ 851 defines the term “financial institution” and the term “knowingly” in the context of FAQs 848 and 849.

(Source: Author)
* Author: Ted Murphy, Esq., 202-736-8016, SIDLEY AUSTIN LLP
We wanted to make sure that you saw a recent Department of Homeland Security, Office of Inspector General (DHS OIG) report on the ACE Reconciliation Program.  The report has potential implications for every company that participates in the Recon Program (particularly for those companies flagging entries for customs valuation issues).
By way of background, the Recon Program is a voluntary program that allows an importer, at the time of entry, to designate certain information, such as value, as provisional, and to then provide the finalized information at a later date.  So, for example, in situations where the value of the goods being imported is subject to potential adjustment post-importation due to transfer price adjustments, the payment of royalties/license fees, assists, etc., the importer can flag the value declared upon entry, and then true it up to the final value by filing a reconciliation entry within 21 months.  It is a good program and is used extensively.
DHS OIG reviewed the program and issued a report to U.S. Customs and Border Protection (CBP) entitled “CBP’s Entry Reconciliation Program Puts Revenue at Risk” (which was an ominous start).  While the report (copy attached) is worth a quick read,  
DHS OIG concluded: 
(1)  CBP did not always properly validate the final values reported by importers because CBP did not always request source/back-up documentation;
(2) CBP’s review of recon entries was inconsistent due to SOPs being implemented differently across different ports/offices;
(3) CBP did not always pursue liquidated damages for late recon filings; and
(4) the revenue is at risk, as a result. 
In response, CBP agreed with 3 of the 4 DHS OIG recommendations, but did not agree with the recommendation that importers be required to submit source/back-up data with the recon entries.  Instead, CBP said that it would continue to use “risk management principles” to review recon entries.
The upshot here is that all companies that participate in the Recon Program should be prepared for more scrutiny of their recon entries.  While CBP may not adopt an across-the-board requirement that importers submit supporting/back-up data automatically, importers should expect that CBP will review a larger percentage of recon entries and more frequently request supporting/back-up data through a CBP Form 28 (most likely).  As a result, it is important that you prepare such documentation before filing the recon entries and have it read to share with CBP upon request.  See the DHS OIG report in full HERE.

(Source: Thompson Hine, 16 Oct 2020)
* Principal Author: Scott E. Diamond, Esq., 1-202-263-4197, Thompson Hine
On October 16, 2020, the Department of Commerce’s Bureau of Industry and Security (BIS) issued a notice announcing that exporters may request six-month validity period extensions for export licenses that are currently due to expire on or before December 31, 2020. Acting Under Secretary for Industry and Security, Cordell Hull stated, “The streamlined process will help ensure that exporters with licenses due to expire on or before the end of 2020, who may not have been able to ship orders due to resource constraints during the pandemic, have the opportunity to benefit fully from the authorizations granted on their licenses.”

The notice states that BIS has established a central electronic mailbox for submission of extension requests: LicenseExtensionRequest@bis.doc.gov. Upon receipt of the request, the original export license will be reviewed and, according to BIS, “in most cases, the validity extended via the electronic system.” BIS estimates that the majority of extension validity requests should be processed and approved within two to three business days.


MS_a113. Monday List of Ex/Im Job Openings: 67 Jobs Available – 6 New Job Openings This Week

* Autodesk; San Francisco, CA; Corporate Counsel, Trade Compliance; Job ID: 20WD43556
* GKN Aerospace; Garden Grove, CA; Export Control Officer
* Honda;  Greensboro, NC; Trade Compliance Specialist; Job ID: HAC0000V9
* Sensate Technologies; Thousand Oaks, CA; Global Trade Compliance Specialist – Export Controls
* Skechers USA Ltd; Bury St Edmunds, UK; UK Customs Compliance Lead; Contact Details: harvey.karlovac@skechers.com


Click here for the full list.   

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EN_a114. Bartlett’s Unfamiliar Quotations

(Source: Editor)

* Leigh Hunt (James Henry Leigh Hunt; 19 Oct 1784 – 28 Aug 1859; best known as Leigh Hunt, was an English critic, essayist and poet.  Hunt introduced John Keats, Percy Bysshe Shelley, Robert Browning and Alfred Lord Tennyson to the public.)
 –  “If you are ever at a loss to support a flagging conversation, introduce the subject of eating.”
John le Carre (David John Moore Cornwell; born 19 Oct 1931; better known by his pen name John le Carré, is a British author of espionage novels. During the 1950s and 1960s, he worked for both the Security Service (MI5) and the Secret Intelligence Service (MI6). His third novel, The Spy Who Came in from the Cold(1963), became an international best-seller and remains one of his best-known works.)
  – “Love is whatever you can still betray. Betrayal can only happen if you love.”
Monday is pun day.
* What animals are always seen at baseball games?  Bats.
* What falls in winter but never gets hurt? Snow.
* What did the Dalmatian say after lunch? “Yum! That hit the spot!”
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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. 

9 Oct 2020: 
85 FR 64014:  Revisions to the Unverified List (UVL)

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.


28 Sep 2020: 85 FR 60874: Temporary Amendment for Republic of Cyprus. The latest edition of the BITAR is 28 Sep 2020. 

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