20-1026 Monday “Daily Bugle”

20-1026 Monday “Daily Bugle”

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Monday, 26 October 2020

(No items of interest posted) 

  1. Items Scheduled for Future Federal Register Edition
  2. Commerce/BIS: (No new postings)
  3. State/DDTC: (No new postings)
  4. EU Council Amends Decision 2010/638/CFSP Concerning Restrictive Measures against the Republic of Guinea”
  1. EU Observer: “German Mayor Now Facing US Sanctions Over Nord Stream”
  1. Baker McKenzie: “PRC Enacts New Export Control Law, which Will Come into Effect on 1 December 2020”
  2. J. Allen: “DoD Instruction 5200.48, Controlled Unclassified Information, Effective 2 Nov 2020”
  3. Sidley: “Recent Import-Related Enforcement Cases”
  4. ST&R Trade Report: “$4.1 Million Penalty for Exports to Iran”
  5. Steptoe: “European Commission proposes Magnitsky-Style Sanctions Framework”
  1. Monday List of Ex/Im Job Openings: 67 Jobs Available – 6 New Job Openings This Week
  1. FCC Academy Presents: 1 and 3 Dec; “U.S. Export Controls: ITAR/EAR” and “FMS”
  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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[No relevant items for today]

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(Source: Federal Register)
* Treasury/OFAC; RULES; Cuban Assets Control Regulations; [Pub. Date: 27 Oct 2020]

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OGS_a22. Commerce/BIS: (No new postings)

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OGS_a44. EU Council Amends Decision 2010/638/CFSP Concerning Restrictive Measures against the Republic of Guinea”

Having regard to the Treaty on European Union, and in particular Article 29 thereof,
Having regard to the proposal from the High Representative of the Union for Foreign Affairs and Security Policy,
On 25 October 2010, the Council adopted Decision 2010/638/CFSP concerning restrictive measures against the Republic of Guinea.
On the basis of a review of Decision 2010/638/CFSP, those restrictive measures should be extended until 27 October 2021.
Decision 2010/638/CFSP should therefore be amended accordingly,
Article 1
Article 8(2) of Decision 2010/638/CFSP is replaced by the following:
‘2.   This Decision shall apply until 27 October 2021. It shall be kept under constant review. It shall be renewed or amended, as appropriate, if the Council deems that its objectives have not been met.’.
Article 2
This Decision shall enter into force on the day following that of its publication in the Official Journal of the European Union.

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(Source: EU Observer, 26 Oct 2020)
Donald Trump or Joe Biden on 3 November, the US will continue to weaponise international trade and economic sanctions to achieve its political goals or advantage American companies – and China is just getting started in using economic blackmail to further its global dominance.
US sanctions, once directed at terrorists or persons from “rogue states”, including Iran and North Korea, now target European businesses and state officials.
Take mayor Frank Kracht for example. He would never have anticipated being treated like a terrorist or dictator. Certainly not for holding political office in the German seaside town of Sassnitz, or for being responsible for the city’s port on the Baltic Sea. He now faces sanctions from a bipartisan coalition in the US Congress, opposed to the deepening economic ties with Russia and European dependence that the project allegedly represents.
So are local companies if they continue to work on the Nord Stream 2 German-Russian pipeline. The port at Sassnitz, heavily dependent on the project, might not survive the economic headwinds.
Many argue that Nord Stream 2 is a flawed project, or oppose its construction outright. They may have good reasons for holding such views. But even for Nord Stream critics, it’s unlikely they’d support extraterritorial threats against state officials or businesses, especially from a country that claims to be a close ally of Europe.
And even Nord Stream critics have to face the fact that this is only one example of Washington’s use of economic blackmailing. In September, the Trump administration imposed measures on the chief prosecutor of the International Criminal Court (ICC), Fatou Bensouda, to deny her access to any bank account or credit card – simply because she was investigating alleged US war crimes.
While a longer-running dispute, on aircraft subsidies, intensified last year when Washington imposed $7bn [€5.9bn] in tariffs on European imports – to the detriment of wine, cheese and olive oil producers, from France, Italy and Spain.
Worryingly, the US is not alone in this behaviour.
First US, then China
China has also used the threat of punitive tariffs on German car exports as a method of strengthening Huawei’s pitch to build the country’s 5G infrastructure.
It also threatened to curb medical supplies to the Netherlands, in April, to force it to reconsider changing the name of its Taiwan office.
Its treatment of countries, including Canada and Australia, which have “misbehaved” in Beijing’s eyes, shows that it might soon take even tougher measures to coerce European policy.
For European businesses, the picture gets worse.
Export controls, from both China and the US, could be used to control Europe’s trade with unrelated third countries. Re-export rules mean that EU-based businesses have to request authorisation from Beijing or Washington to export their goods to specific markets. These constraints on the export of European products can apply because a small number of upstream products in their supply chain originally came from these countries.

Europe’s options, in the face of this extraterritorial pressure, are scant. However, there is scope to bolster its arsenal. Europeans could create a European Export Bank (EEB) to enable trade that US financial sanctions seek to curb. The centrality of the US dollar and the US financial system to trade and project finance means that EU companies and institutions are often vulnerable, even when they are not explicitly involved in EU-US trade. This would give EU member states a comparable source of support and mean that, in any dispute with the US or China, they would be “too big to sanction”. It would also free Europe of its dependence on the dollar, and could facilitate trade with countries, such as Russia, which would hitherto invoke hostility from Beijing and Washington.
Digital currency could give Europe greater freedom in the medium term, too, and reduce dependency on the US financial system. Following the lead of China, which is developing a highly advanced digital currency that will bring transaction partners into its payment network, the European Central Bank (ECB) could establish its own payment infrastructure for a digital euro.
This would reduce the risk of comprehensive disclosure of transaction data and increase Europe’s sovereignty in payment infrastructure.
It’s also time Europeans learned the true financial impacts of economic aggression by China and the United States.
A regular EU report could calculate the cost and disadvantages imposed on European companies and analyse the exact percentage of Europe’s market share that is lost to global competitors, such as China, as a result of a unilateral sanctions policy.  Europe could then levy fees on Chinese or US companies on the European market to correct the market distortion.
The reality is that, in an increasingly divided world, Europe can no longer stand aside as third countries aggressively dictate policy, pursue its member states, and undermine leading figures from international organisations, such as the ICC.
In these circumstances the EU, and its individual members, should be prepared to develop and utilise new, and potentially more confrontational, options for the defence of their market.


(Source: Baker McKenzie, 21 Oct 2020)
* Author: Stuart P. Seidel, Esq., 1-202-452-7088, Baker McKenzie
From 13 to 17 October 2020, the 22nd Session of the Standing Committee of the 13th National People’s Congress (“NPC”) deliberated on the third review draftof China’s Export Control Law (“ECL”) before its final passage into law on 17 October 2020. President Xi Jinping issued Presidential Order 58 on October 17 which provides that the new ECL will come into force on 1 December 1, 2020.
This is the first comprehensive and consolidated export control law in China. Prior to the law’s enactment, export controls were imposed via a series of separate administrative regulations controlling dual-use, military items, nuclear, missile, chemical and biological items, and related technologies, etc. To implement the ECL, existing administrative regulations on export controls may need to be further revised.
The ECL contains 5 chapters and 49 articles, which include rules on export control policies, control lists, control measures, and legal liabilities for non-compliance. The ECL is similar to the second review draft (see our previous post here), though it does depart in a few aspects. Some additions include:
  • Rules specifying that a controlled item would also include the item’s corresponding data, such as technical information.
  • Under special circumstances, export operators may apply to authorities so that they may transact with blacklisted importers and end users on the ECL’s control list. Importers and end-users listed on the control list may also apply to authorities for removal should the circumstances that led to their listing no longer apply.
  • Export control authorities will issue industry-specific guidelines to guide export operators in the establishment and improvement of their internal export control compliance systems and operational effectiveness.
  • Criminal liability (rather than solely administrative liability) may apply to scenarios whereby prohibited or unlicensed items were exported. These actions will be investigated in accordance with criminal laws should they constitute a crime.
  • The new ECL also stipulates that should any country or region abuse export control measures to endanger the national security and interests of the PRC, then the PRC may, based on actual conditions, take reciprocal measures against that country or region.

(Source: Author) [Excerpts.]
* Author: Jamieson Allen,1-530-852-2675
DoD Instruction 5200.48, Controlled Unclassified Information (6 Mar 2020), now introduces a NEW Security Classification of “Controlled Unclassified Information” (CUI) into the traditional classification levels of TOP SECRET, SECRET and CONFIDENTIAL. The requirement will be implemented on Monday, 2 November 2020, the day before the Presidential Election.  Keep in mind that this is not a law.  It implements Executive Order 13556 (https://www.archives.gov/cui/key-elements.html and https://en.wikipedia.org/wiki/Executive_Order_13526).
I predict that this new classification will cause significant confusion in protecting classified information in the United States Government and with US allies and friendly nations–especially those who have agreed with General Security Of Military Information Agreements (GSOMIAs) and other specific bilateral arrangements.  Further, this overturns the Obama administration’s determination that Controlled Unclassified Information (CUI) and For Official Use Only (FOUO) were the same, and although sensitive, neither designation was considered a classification designation.  Additionally, this adds more confusion regarding the use and application of FOUO, and diminishes transparency on DoD practices and activities, including financial, contracting, administration, security, international, domestic, etc.  . . .

(Source: Author) [Excerpts] 
* Author: Ted Murphy, Esq, , +1 202 736 8016,  SIDLEY AUSTIN LLP
There has been a spate of recent import-related enforcement news that we thought you should be aware of – as it is likely a sign that increased enforcement is here to stay.  

The first announcement was by the U.S. Attorney’s Office for the Eastern District of Pennsylvania. [F/N] It involved a $22.28 million settlement entered into by a multinational industrial engineering company to resolve allegations that it violated the False Claims Act (FCA) by knowingly making false statement on its customs entry declarations to avoid paying duties.  More specifically, it was alleged that the company mis-described the articles being imported (to avoid/reduce antidumping/countervailing duties owed) and misidentified the tariff classification, valuation (failing to declare assists) and applicability of free trade agreements on the entry declarations it filed with U.S. Customs and Border Protection (CBP) for materials imported to build chemical and natural gas plants in the United States.  It appears that the company had originally filed a prior disclosure with CBP on these issues, and that the FCA qui tam case was filed thereafter by an employee (the relator) who disagreed with the extent of the disclosure.  According to counsel for the relator, the settlement amount includes $15 million tendered by the company pursuant to the prior disclosure.  A copy of the DOJ press release is attached.

The second announcement [F/N] was by the Environmental Protection Agency (EPA).  It involved a consent agreement where an importer agreed to pay a ~$7 million civil penalty to resolve claims it imported dehumidifiers and air conditioners into the United States from Jan.-May 2020 that violated the Federal Insecticide, Fungicide, and Rodenticide Act (FIFRA).  Specifically, EPA claimed that the imported dehumidifiers and air conditioners contained filters that incorporated an unregistered nanosilver pesticide and were labeled/marketed with pesticidal claims (e.g., “antibacterial filter” and “helps eliminate bacteria in the air that can make breathing difficult”).  Since the products were not registered with EPA, the importation was unlawful.  A copy of the EPA press release is attached.
The last announcement [F/N]  was by CBP earlier this week claiming that it had “prevented importers from evading $287 million in duties” since October 1, 2019 under the Enforce and Protect Act (EAPA).  Under the CBP’s EAPA regulations, interested parties can submit allegations that an importer is evading antidumping and countervailing duties.  According to CBP’s notice, the majority of the EAPA investigations in FY2020 involved Chinese-origin goods subject to AD/CVD orders.  The evasions schemes often involved transshipping the goods through third countries (in an effort to disguise the origin), or misclassifying or undervaluation the goods.  A copy of the CBP press release is attached.
Collectively, these enforcement actions demonstrate that imports are, and are likely to continue to be, under great scrutiny (on a variety of fronts).  The actions also reinforce the importance of having good internal controls over these issues to help ensure that problems do not arise, or, if they do, that they are handled in an efficient and cost-effective manner.
F/N: Copies of all articles are available from the author.


MS_a111. Monday List of Ex/Im Job Openings: 67 Jobs Available – 6 New Job Openings This Week

* Amplifier Research Corporation; Souderton, PA; Logistics and Export Compliance Specialist
* Amplifier Research Corporation; Souderton, PA; Logistics and Export Compliance Specialist
* Bombardier Aerospace; Wichita, KS; Export Control Specialist
* Bruker; San Jose, CA; Export Compliance Manager
* GKN Aerospace; Garden Grove, CA; Export Control Officer
* Schneider Electric; Boston, MA; Senior Manager of Export Controls


Click here for the full list.   

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U.S. Export Controls: ITAR & EAR from a non-U.S. Perspective (Tuesday, 1 Dec 2020)
Register or find more information here.

The ABC of Foreign Military Sales (FMS) (Thursday, 3 Dec 2020)
Register or find more information here.

* Register for both and take advantage of our discounted price!

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EN_a113. Bartlett’s Unfamiliar Quotations

(Source: Editor)

* Pablo Picasso (Pablo Ruiz Picasso; 25 Oct 1881 – 8 Apr 1973; was a Spanish painter, sculptor, printmaker, ceramicist, and theatre designer.  Regarded as one of the most influential artists of the 20th century, he is known for co-founding the Cubist movement.)
“I am always doing that which I cannot do, in order that I may learn how to do it.”
* Leon Trotsky (Lev Davidovich Bronstein; 26 Oct 1879 – 21 Aug 1940; was a Russian revolutionary, political theorist, and politician. Ideologically a communist, he developed a variant of Marxism known as Trotskyism. Trotsky joined the Bolshevik Party a few weeks before the October Revolution and became one of the leaders of the party. After the rise of Joseph Stalin, Trotsky was removed from his positions and eventually expelled from the Soviet Union in February 1929. He spent the rest of his life in exile and was assassinated in 1940 in Mexico City by a Soviet NKVD agent. Trotsky was openly critical of Stalinism, and was written out of the history books under Stalin.)
  – “The end may justify the means as long as there is something that justifies the end.”
  – “Old age is the most unexpected of all things that happen to a man.”
Monday is pun day.
* Why did the kid cross the playground? To get to the other slide. 
* What do you call a droid that takes the long way around?  R2 detour. 
* Statistically, 6 out of 7 of Snow White’s dwarfs were not Happy.
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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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