20-1106 Friday “Daily Bugle”

20-1106 Friday “Daily Bugle”

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Friday, 6 November 2020

  1. Commerce/BIS Requests Comments on Proposed Controls on “Software” for the Operation of Certain Automated Nucleic Acid Assemblers and Synthesizers
  1. Items Scheduled for Future Federal Register Edition
  2. Commerce/BIS: (No new postings)
  3. State/DDTC: (No new postings)
  4. EU Commission: “Civil Society Dialogue with Rupert Schlegelmilch on EU-US Tade Relations after the US Elections”
  5. Hong Kong TID: “Chemical Weapons (Convention) Ordinance, Cap. 578 Permit Requirement for 2021 and Report on Past Activities in 2020”
  1. JD Supra: “Australia and China Slide into Trade War”
  2. Reuters: “Russian Weapons Maker Kalashnikov Acquired by Former Government Official”
  3. SCMP: “China’s Semiconductors — Latest US Export Controls May Hinder Ambitions to Catch Up”
  1. Baker McKenzie: “US Commerce Department Amends National Security License Review Policy for Items Destined to China, Russia, and Venezuela”
  2. Blomstein: “Cybersecurity and Export Control”
  3. Holland & Knight: “Section 301 Litigation — Is It Too Late to Seek Refunds?”
  1. ECS Presents: 16-17 Nov; “ITAR/EAR Controls for Foreign & U.S. Companies”
  2. FCC Academy Presents: 1 and 3 Dec; “U.S. Export Controls: ITAR/EAR” and “FMS”
  3. Friday List of Approaching Events: 191 Events Posted This Week, Including 33 New Events
  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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(Source: Federal Register, 6 Nov 2020) [Excerpts]
85 FR 71012: Proposed Rule
* AGENCY: Bureau of Industry and Security, Commerce.
* ACTION: Proposed rule.
* SUMMARY: The Bureau of Industry and Security (BIS), Department of Commerce, maintains controls on the export, reexport and transfer (in-country) of dual-use items and less sensitive military items through the Export Administration Regulations, including the Commerce Control List (CCL). Certain items that could be of potential concern for export control purposes are not yet listed on the CCL or controlled multilaterally, because they represent emerging technologies. Among these items is “software” for the operation of nucleic acid assemblers and synthesizers controlled under Export Control Classification Number (ECCN) 2B352 that is capable of designing and building functional genetic elements from digital sequence data.
   BIS has determined that this “software” is capable of being used to operate nucleic acid assemblers and synthesizers controlled under ECCN 2B352 for the purpose of generating pathogens and toxins without the need to acquire controlled genetic elements and organisms. Consequently, the absence of export controls on this “software” could be exploited for biological weapons purposes. In an effort to address this concern, this rule proposes to amend the CCL by adding a new ECCN 2D352 to control such “software.” This rule also requests public comments to ensure that the scope of these proposed controls will be effective and appropriate (with respect to their potential impact on legitimate commercial or scientific applications).
* DATES: Comments must be received by BIS no later than December 21, 2020.
* ADDRESSES: You may submit comments, identified by docket number BIS-2020-0024 or RIN 0694-AI08, through any of the following:
Federal eRulemaking Portal: http://www.regulations.gov. Follow the instructions for submitting comments. You can find this proposed rule by searching for its regulations.gov docket number, which is BIS-2020-0024.
Email: PublicComments@bis.doc.gov. Include RIN 0694-AI08 in the subject line of the message.
   All filers using the portal or email should use the name of the person or entity submitting the comments as the name of their files, in accordance with the instructions below. Anyone submitting business confidential information should clearly identify the business confidential portion at the time of submission, file a statement justifying nondisclosure and referring to the specific legal authority claimed, and provide a non-confidential submission.
   For comments submitted electronically containing business confidential information, the file name of the business confidential version should begin with the characters “BC.” Any page containing business confidential information must be clearly marked “BUSINESS CONFIDENTIAL” on the top of that page. The corresponding non-confidential version of those comments must be clearly marked “PUBLIC.” The file name of the non-confidential version should begin with the character “P.” The “BC” and “P” should be followed by the name of the person or entity submitting the comments or rebuttal comments. Any submissions with file names that do not begin with a “P” or “BC” will be assumed to be public and will be made publicly available through http://www.regulations.gov.
* FOR FURTHER INFORMATION CONTACT: For questions on the chemical and biological weapons (CB) controls that would apply to the “software” proposed for control under ECCN 2D352, contact Dr. Wesley Johnson, Chemical and Biological Controls Division, Office of Nonproliferation and Treaty Compliance, Bureau of Industry and Security, Telephone: (202) 482-0091, Email: Wesley.Johnson@bis.doc.gov. For questions on the submission of comments in response to this proposed rule, contact Willard Fisher, Regulatory Policy Division, Office of Exporter Services, Bureau of Industry and Security, U.S. Department of Commerce, Phone: (202) 482-2440.

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OGS_a23. Commerce/BIS: (No new postings)

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Meeting details
  • Date: 26/11/2020, 11:00-13:00 
  • Location: Webex
  • Registration closes on: 23/11/2020 12:00
  The transatlantic trade and investment partnership remains a central artery of the global economy, key to jobs and prosperity on both sides of the Atlantic and with trade in goods and services between the EU and the US worth over USD 1 trillion per year before the COVID-19 pandemic. The investment relationship is also unique, as the EU and the US invest more in each other’s markets than in all other markets combined. The relationship builds on strong fundamentals but has also undergone changes and been subject to important bilateral tensions over the last years.
  It is in this context that the EU will need to engage with the US administration coming out of the elections on 3 November. It will continue to be a relationship marked by its sheer size, current and potential tensions as well as the need to also design a positive bilateral trade agenda.
  Rupert Schlegelmilch, Acting Deputy Director-General in the Directorate General for Trade, responsible for EU-US trade relations, will give an overview on the state of play and prospects of EU-US trade relations and engage in exchanges with civil society organisations.
Lead participant

Rupert Schlegelmilch, Acting Deputy Director-General, Directorate General for Trade, European Commission  
  Deputy Head of Unit, Information, Communication and Civil Society Unit, Directorate General for Trade, European Commission
1. Presentation of the state of play of EU-US trade relations
2. Open discussion with stakeholders

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 This circular reminds and invites facilities that engage / may engage in specified activities involving Scheduled Chemicals and/or Unscheduled Discrete Organic Chemicals (UDOCs)[FN/1]controlled by the Chemical Weapons (Convention) Ordinance (“the Ordinance”):
  1. to lodge permit applications for 2021 by 30 November 2020; and
  2. to report whether they were engaged in the specified activities by completing and returning the reply slip at Annex A to the Trade and Industry Department by 21 December 2020.
 The Government of the Hong Kong Special Administrative Region announced the commencement of the Ordinance by a notice in the Gazette on 20 April 2004.  Subsequently, Strategic Trade Controls Circular No. 17/2004 issued by the Trade and Industry Department on 30 April 2004 informed the industry about the commencement of the Ordinance on 18 June 2004.  The purpose of the Ordinance is to enable the Chemical Weapons Convention (“the Convention”), an international treaty that aims to prohibit the development, production, acquisition, stockpiling, retention, transfer and use of chemical weapons, to be fully implemented in the Hong Kong Special Administrative Region.  Please also refer to Strategic Trade Controls Circular No. 14/2003 of 6 August 2003 for an overview of the requirements under the Ordinance.

Permit and Reporting Requirements for Scheduled Chemicals

  In accordance with the Ordinance, operators of facilities are required to obtain permits from the Director-General of Trade and Industry (“the Director”) if the facilities are engaged in specified activities involving Scheduled Chemicals in quantities over the respective thresholds.  Please refer to Annex B for the list of Scheduled Chemicals and Annex C for the activities and quantity thresholds that trigger the permit requirement.  The Twenty-Fourth Session of the Conference of States Parties to the Chemical Weapons Convention approved certain changes to Schedule 1 of the Annex on Chemicals to the Convention. The changes have entered into force since 7 June 2020.  For details, please see Annex B.   
  Permit Application Form (Form P-1) can be downloaded from the Chemical Weapons (Convention) Ordinance Website.  In order to obtain a timely permit for 2021, facility operators are advised to return the completed permit application form by post or in person to Strategic Trade Controls Branch, Room 1619, Trade and Industry Tower, 3 Concorde Road, Kowloon City on or before 30 November 2020.
  Permit holders are also required under the Ordinance to lodge annual reports with the Director on their anticipated activities involving Scheduled Chemicals for the coming calendar year before the end of the current year, and their past activities during the previous year at the beginning of the current year.  The information so collected will be used to compile annual declarations for submission to the Organisation for the Prohibition of Chemical Weapons (OPCW) which was established to implement the Convention. 

Notification Requirement for UDOCs
 The Ordinance also requires operators of facilities that produced UDOCs over the threshold quantity to make annual notifications to the Director at the beginning of each year about the past production of UDOCs in their facilities during the previous year.  The information so collected will be used to compile annual declarations for submission to the OPCW.  Please refer to Annex D for the details of the notification requirement.
Reply Slip and Report on Past Activities in 2020
 In light of the reporting and notification requirements mentioned in paragraphs 5 and 6 above, the Department is sending this circular to individual operators who, according to our knowledge, may be engaged in such activities.  Operators who receive this circular are expected to return the completed reply slip (Annex A) by fax (fax no. 2396 3070), by post or in person to Strategic Trade Controls Branch, Room 1619, Trade and Industry Tower, 3 Concorde Road, Kowloon City on or before 21 December 2020.  
  Operators who do not receive this circular but believe that their facilities might have been engaged in specified activities involving Scheduled Chemicals and/or UDOCs as listed at Annex C and Annex D in 2020 are also welcome to provide details of the activities by completing and returning the reply slip at Annex A in the same way as mentioned in paragraph 7 above.
  After assessing the reply slips, we will contact and assist individual operator to complete and return to us the designated report forms on past activities on or before 11 January 2021.    
Important Note
  Facilities subject to the permit or reporting/notification requirements should comply with checks and inspections by authorised officers of the Customs and Excise Department (C&ED).  These checks are mainly aimed at verifying and ensuring the accuracy of the information related to permits and the material particulars in any reports lodged with the Director.  Facilities are therefore reminded to ensure that the information provided in their returns is accurate.  In addition to checks and inspections by C&ED officers, the inspection teams of the OPCW may also conduct inspection of facilities in order to verify any information passed to it about the facilities.  Operators of the facilities are required to provide all the requisite records for the checks and inspections and to render necessary assistance and cooperation to the officers concerned.
 The Ordinance specifies the acts which contravene the Ordinance and the penalty for such offences.  It is an offence under the Ordinance if a person who is required to obtain a permit to operate his facility operates it without such a permit.  The maximum penalty, on conviction, is a fine of HK$500,000 and imprisonment for 5 years.  The Ordinance also provides that the Director may, by notice in writing, require a person to give information or documents relevant to a declaration required to be given to the OPCW.  Any person who fails to comply with such a notice commits an offence and is liable on conviction to a fine of HK$100,000 and imprisonment for 1 year.    
  In addition to the penalty mentioned above, the Trade and Industry Department may take other administrative actions against parties committing the above offences.  Such administrative actions may involve, but shall not necessarily be confined to, any or all of the following: refusal to grant, suspension or revocation of permits, and refusal to issue licences for imports or exports of chemicals.   
  If you have any questions on the permit requirement and application procedures, completion of the reply slip or the Ordinance itself, please contact Jeff TO of the Department at telephone number 2398 5670 or by email at jeffto@tid.gov.hk.
Strategic Trade Controls Branch
Trade and Industry Department

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(Source: JDSupra, 5 Nov 2020) [Excerpts]

  Relations between China and Australia have slipped in the last year,as Australia has criticized China’s response to COVID-19 and its treatment of the Uighur minority, while siding with the United States on issues such as cybersecurity.
  China has already placed tariffs on Australian beef, barley, and wine, but now the Chinese seem to be targeting cottonand coalas well. Coal is a major export for Australia-China buys a quarter of Australia’s production-and any change in China’s buying habits would have major consequences for Australian producers and downstream companies.
  The biggest issue in this case is uncertainty. China does not always announce its intentions, preferring to send directives through domestic, often informal, channels instead of explicitly placing the state behind any certain action. The Australian government has reached out, but in keeping with this time-honored tradition of obfuscation, the Ministry of Foreign Affairs of the People’s Republic of China has not clarified whether there are any restrictions or informal bans on coal or cotton, or any other products.
  Uncertainty in the supply chain, as well as the threat of regulatory action by China, Australia, or both, will further disrupt already shaken global supply chains.

(Source: Reuters, 6 Nov 2020) [Excerpts]

  A former Russian deputy transport minister has acquired a controlling stake in weapons maker Kalashnikov, the company said on Friday.
  Alan Lushnikov, who served as deputy transport between 2017 and 2018, has acquired a 75% stake minus one share in Kalashnikov via a firm called TKH-Invest.
  Lushnikov acquired the stake from Deputy Defence Minister Alexei Krivoruchko, who was among the high-ranking Russian officials hit with European Union sanctions last month over the poisoning of Kremlin critic Alexei Navalny.
  State conglomerate Rostec owns the remaining 25% plus one share in Kalashnikov.
  The arms maker has been under U.S. sanctions since 2014, in the wake of Moscow’s annexation of Crimea from Ukraine and its support for pro-Russian separatists in the country’s east.
  Kalashnikov did not disclose the terms of the deal. … 

(Source: South China Morning Post, 6 Nov 2020) [Excerpts]

  • The move extends controls over dual-use tech under the Wassenaar Arrangement, a multilateral export control regime involving 42 countries, including the US and UK
  • Restricted items include lithography software for the fabrication of EUV masks, a technology needed to achieve the advanced 7-nanometre node in chip making
  Tighter US export controls on emerging technologies will prove a new barrier to China’s goal of catching up to the west in advanced semiconductor manufacturing and a Biden Administration would be unlikely to roll them back, say analysts.
  Last month the Bureau of Industry and Security under the US Department of Commerce designated six emerging technologies as controlled export items deemed “essential to US national security.”
  They include two key technologies in chip making: computational lithography software used in EUV applications and 5-nanometre wafer production. Other areas cover computer numerically controlled tools, digital forensics tools, software that captures and analyses communications and metadata, and suborbital aircraft.
   The latest US move, which comes after the annual update of the Wassenaar list in December 2019, does not target China specifically but it could further hamper China’s efforts to catch up in semiconductor manufacturing.
   “China has been put on the list of the embargoed countries, which hinders [it] from joining the global production system. China has been facing critical challenges for technology development and civil production in many areas, such as computers, aerospace, chip research and manufacturing,”. …
   The new items include “computational lithography software designed for the fabrication of extreme ultraviolet (EUV) masks”, a technology critical to achieve the advanced 7-nanometre node in chip making.
   “China’s self-developed lithography software can only support process nodes of 80 or 90 nm,” according to a research note provided to the Postby Taiwan-based semiconductor industry research firm Isaiah Research.
   The current state-of-the-art 7nm process can only be achieved by TSMC and Samsung Electronics, while US chip giant Intel announced this summer that it was facing a six month delay in its transition to 7nm.
   When it comes to the 5nm production node – also just added to the US export control list – only TSMC has the ability to produce chips at that level.
   “Under current US export controls, TSMC has already been prohibited from making 5nm chips for Huawei,” … “We don’t think China is capable of crossing the hurdles in the short term,” according to Isaiah Research, adding that core technology for lithography and etching are controlled by Dutch company ASML and US peers Applied Materials and Lam Research respectively.
   ASML chief executive Peter Wennink said on an earnings call last month that a US export license was not required to ship deep-ultraviolet (DUV) lithography technology directly from the Netherlands to China, but permission would be required if DUV systems or parts were sent from its US operations.
However, a license from the Dutch government is needed to export more advanced EUV machines, which are needed for 7nm semiconductor production. DUV technology can typically only produce chips down to the 14nm node although TSMC has used it for 7nm.
   In 2018 SMIC ordered an EUV scanner from ASML but it was not delivered because an export license was not granted by the Dutch government.
The chances of getting an export license approved under the Wassenaar Arrangement depends on the type of technology involved, the reason for the export controls in the first place, and the destination country, according to lawyer Duffy.
   Any dual-use technology that has national security implications or military applications – and is destined for China – would be “very unlikely” to receive license approval from the US, she said.
   “Anything having to do with the semiconductor production process is a sensitive area in the US trade relationship with China,” she said. “It would [also] be a violation of US law to circumvent the export controls by purchasing through a middle man without the requisite export authorisations.”


(Source: Baker McKenzie, 5 Nov 2020) [Excerpts]

* Principal Author: Sylwia A. Lis, Esq., 1-202-835-6147, Baker McKenzie
   On October 29, 2020, the US Commerce Department’s Bureau of Industry and Security (“BIS”) issued a final rule (the “final rule”) amending the license review policy under the Export Administration Regulations (“EAR”) for items controlled for national security (“NS”) reasons when destined to China, Russia, or Venezuela. The amendments add Venezuela to the list of countries to which the policy applies and modify the policy to replace the reference to military capabilities with a new, more nuanced standard for assessing the contribution an item would make to those countries’ weapons systems.
   Under the amended licensing policy, BIS will review each license application covering an export, reexport, or transfer (in-country) of items controlled for NS reasons to China, Russia, or Venezuela to determine, on a case-by-case basis, whether the proposed transaction will make a material contribution to the weapons systems capability of those countries. BIS will apply a presumption of approval when an export, reexport, or transfer (in-country) is destined for a civil end-user for civil end-uses in China, Russia, or Venezuela. BIS will apply a presumption of denial when the items would make a material contribution to the “development” or “production” (as those terms are defined in the EAR), maintenance, repair, or operation of weapons systems, subsystems, and assemblies in those countries, such as those described in Supplement No. 7 to Part 742 of the EAR.
   The final rule includes an illustrative list of factors BIS will consider in reviewing these license applications. These factors are intended to inform BIS’ assessments and licensing determinations. They also provide helpful guidance to exporters with respect to the information and advocacy they can provide in support of their license applications. The factors are as follows:
  1. The appropriateness of the export, reexport, or transfer for the stated end-use;
  2. The significance of the item for the weapons systems capabilities of the importing country;
  3. Whether any party is a military end-user, as defined in §744.21(g) of the EAR;

  4. The reliability of the parties to the transaction, including whether:
    • An export or reexport license application has previously been denied;
    • Any parties are or have been engaged in unlawful procurement or diversion activities;
    • The parties are capable of securely handling and storing the items; and
    • End-use checks have been and may be conducted by BIS or another U.S. government agency on parties to the transaction;

5. The involvement of any party to the transaction in military activities;
6. Government strategies and policies that support the diversion of exports from their stated civil end use and redirection towards military end use; and
7. The scope and effectiveness of the export control system in the importing country.
   License reviews of items subject to the policy will also include an assessment of the impact of the proposed export on the US defense industrial base. The final rule provides that license applications will be denied if BIS finds that the license would have a “significant negative impact” on the US defense industrial base, which is defined to include reductions in US production of items that are the result of research and development funded or carried out by the Department of Defense, or in the availability of US-produced items likely to be acquired by it, among other criteria. This amendment to the licensing policy for NS items follows an April 2020 expansion of licensing requirements for items intended for military end-use or military end-users in China, Russia, and Venezuela. …

(Source: Blomstein, 5 Nov 2020)

* Roland M. Stein, 49-30-2148027-00, Blomstein
   The digitalisation of global trade is constantly expanding. In the 21st century data will become the most important commodity, according to a report in the German newspaper “Handelsblatt”. The continuing development of 3D printing technology makes it possible to send, instead of the actual goods, data that can then be used to print the goods directly at the receiving end. The more the digitisation of trade develops, the more important cybersecurity products are becoming.
   What many companies do not realise is that actions such as uploading construction plans to the cloud or transferring (cybersecurity) software may already fall within the scope of state export controls. As a result of this, there are companies that are actually subject to export controls, but are unaware of it. This also means that “traditional” export companies now have to expand their export control systems to include the transfer of technology and software. 
   A central aim of export controls is to avoid any threat to Germany or its allies from conventional weapons, weapons of mass destruction and goods that can be used for civil as well as potentially military purposes (dual-use goods). Increasingly, following recent reforms put forward by the EU, export rules are also intended to protect human rights.
   In both cases, the prominence of cybersecurity is contributing to changes to the nature of risks and threats. Software now has the potential to cause as much damage as conventional weapons, or even more. Moreover, surveillance technology might be used by autocratic states to perpetrate human rights violations. For this reason, trade involving cybersecurity software is now becoming a focus of export controls.
   The transforming nature of security threats is leading to changes to the legal framework of state export control. For example, there was an amendment to Annex 1 of the Council Regulation (EC) No 428/2009 (the Dual-use Regulation) which came into force on 31 December 2019. The European legislator adhered to its decision taken in 2018 to exclude both “vulnerability disclosures” and “cyber incident responses” from the legal definition of technology subject to export controls. The determination, notification or exchange of “vulnerability disclosure” to an individual or an organisation as well as the exchange of necessary information about a “cyber incident response” thus continue to be excluded from the scope of export control. 
The General Framework of Export Control
   In general, the export of goods is usually unrestricted. State export controls restrict this freedom and may either prohibit a transaction, require authorisation or impose reporting obligations for an export. An example of a prohibited transaction might be one involving a person or country subject to a trade ban. An exporter would need authorisation especially when the product is listed in Annex I of the Dual-use Regulation which sets out a list of dual-use items, or which is listed in the military export list. The characteristics of the product must match the requirements that are listed.
   Article 4 paragraph 4 of the Dual-use Regulation states an important exception to this. Article 4 requires authorisation for exporting dual-use items based not on the characteristics of the good, but rather on its intended use. This is a catch-all clause that covers the export of any good, software or technology that is not explicitly listed, but which still requires authorisation. It applies when the exporter knows that the products they are exporting may be used in a way that would mean they are subject to export restrictions (e.g. in the development or production of weapons of mass destruction). In this case, the exporter is required to disclose all available information known to them, including information in the public domain, for assessment.
  Exporting without authorisation can be either an administrative or a criminal offence. It carries a prison sentence of up to five years, and/or a fine (section 18, Foreign Trade and Payments Act, FTPA). If the breach was a result of negligent behaviour, the responsible person can be found to have committed an administrative offence and be subject to a fine of EUR 500,000 for each export (section 19 FTPA). The responsible people may be the management of the company, or the person arranging the export. The company itself can also be handed a fine of up to EUR 10 million (section 30, Act on Regulatory Offences).
The Reach of State Export Control Using the Example of Software 
   In basic terms, any export of software will require authorisation if the software is going to be used in the context of goods that would be subject to an authorisation, or the software itself could be considered to be potentially damaging on its own. The latter can, for example, be the case when the software that will be exported has modifiable encryption technology. Self-driving cars rely on such software for their operation. This type of encryption technology, the technical means to produce it, and even self-driving vehicles are all therefore subject to export controls in Canada. Due to the increasing prevalence of cyberwarfare and the resulting threats posed to Germany and its allies, any software could be subject to export control if that software could also be used for military means. For example, software that can force a power plant to shut down could also be used as part of a military attack.
   In contrast to the export of conventional goods, the export of software is not just about physically moving goods abroad. It also includes any intangible transfer through electronic media. According to the authorities, for cloud-based software, this means that each upload of data into the cloud outside the EU or arranging a non-EU third-party access to a cloud-based platform – even when the server is in Germany – could be considered, in principle, as an export transaction that requires authorisation. This also applies to access rights granted within the same company. When considering software exports, the value of the transaction is irrelevant.
The Need for Corporate Export Control Systems
   Because of the very intricate sanction regime set forth in foreign trade law, companies that trade with cybersecurity products should check internally if, and to what extent, they are subject to export controls. It may be that an effective export control system must be set up. How much information must be gathered and evaluated to accurately determine the use of the product abroad depends on each individual case. The reform of the Dual-use Regulation for the enhanced protection of human rights discussed above could lead to extensive investigations and expansive liability for the responsible people. In its current amendment proposal, the Council emphasizes the importance of export control with regard to non-listed dual-use surveillance technology and software (recital 5). In addition, the proposal envisages harmonising the control of the provision of technical assistance for sensitive goods (recital 11), which may go beyond existing licensing requirements. However, it is yet to be seen how the reform of the Dual-use Regulation will play out in practice.
   The expansion of state export controls under the umbrella of cybersecurity is mainly a result of changes to the scope of possible threats now faced. The flipside of this development is that companies that were never previously affected by foreign trade legislation now fall under its scope. These companies are now subject to the legal challenges discussed above. To comply with these rules, they need to implement effective export control systems.

(Source: HKLaw, 5 Nov 2020) [Excerpts]

* Principal Author: Ronald A. Oleynik, Esq., 1-202-457-7183, Holland & Knight LLP
  • The U.S. Court of International Trade’s docket is brimming these days, all thanks to importers who have initiated more than 3,500 actions to date challenging the Trump Administration’s use of Section 301 of the Trade Act of 1974 (the Act) to impose tariffs on Chinese-origin goods appearing on the so-called Lists 3 and 4A.
  • Plaintiffs challenge the Trump Administration’s use of Section 301 to impose tariffs on Lists 3 and 4A goods as untimely and, as such, not authorized by the Act and otherwise in violation of the Administrative Procedure Act.
  • This Holland & Knight alert details next steps and what’s ahead for importers of Chinese-origin goods covered by Lists 3 and/or 4A.
   The U.S. Court of International Trade’s (CIT) docket is brimming these days, all thanks to importers who have initiated more than 3,500 actions to date challenging the Trump Administration’s use of Section 301 of the Trade Act of 1974 (the Act) to impose tariffs on Chinese-origin goods appearing on the so-called Lists 3 and 4A. As detailed in Holland & Knight’s previous trade alert, plaintiffs argue that the Trump Administration, acting through the U.S. Trade Representative, waited too long to impose tariffs on Lists 3 and 4A goods, thereby taking an action not authorized by the Act and otherwise in violation of the Administrative Procedure Act.
   If you are an importer of Chinese-origin goods covered by Lists 3 and/or 4A, here is what you need to know. 
Background and Timing Constraints 
   Lawsuits challenging the Trump Administration’s use of Section 301 are being filed under the CIT’s residual jurisdiction provision – 28 U.S.C. § 1581(i)(1)(B).[FN/1]Actions filed thereunder must be, per 28 U.S.C. § 2636(i), commenced “within two years after the cause of action first accrues.”[FN/2]An issue on everyone’s mind is – how will the CIT determine the date of “first” accrual? Some may argue that the date of first accrual isimporter-specific and depends on when the importer first entered and had additional Section 301 tariffs assessed on its imported List 3 and/or 4A Chinese-origin goods. Others may point to the U.S. Court of Appeals for the Federal Circuit and Ninth Circuit precedent that differentiates between actions challenging an agency’s rulemaking on substantive versus procedural grounds and, as such, starts the clock at a different point.[FN/3]Notwithstanding the competing interpretations of the relevant legal text, it is recommended that importers preserve their right to a refund of duties paid by commencing an action at the CIT. 
Where Do the 3,500-Plus Cases Stand Today?
  The CIT has yet to designate a “test” case or cases; finalize the form and format of the associated briefing schedule; or determine whether a single judge or a panel of three will hear the designated case(s). The reason – an ongoing battle over whether the U.S. Department of Justice (representing all of the U.S. Government Defendants) deprived the majority of plaintiffs of notice by filing a motion to adopt case management procedures solely on the docket of HMTX Industries LLC v. United States (the grandfather of the Section 301 actions); prematurely selected who among the plaintiffs’ attorneys will represent that group’s interests before the CIT; and proposed an unreasonable briefing schedule.[FN/4]Further, and importantly, the United States has yet to respond to Plaintiffs’ request for a stipulation that all eligible entries, notwithstanding liquidation status, would be eligible for refunds should they prevail. Barring Defendants formally requesting permission to file a reply or the court affirmatively seeking such a filing, Defendants’ motion will be decision-ready on Nov. 10, 2020.[FN/5]The CIT’s Chief Judge is likely to resolve all nondispositive challenges within 30 days thereafter. 
  The bottom line is that the wheels of justice turn slowly, but there is still time to preserve your right to a refund. …


*What: ITAR/EAR Controls for Foreign & U.S. Companies
*When: 16-17 Nov
*Where: Your Computer
*Sponsor: Export Compliance Solutions & Consulting (ECS)
*ECS Speakers: Suzanne Palmer, Marc Binder
*Register: Here or write to phyllis@exportcompliancesolutions.com or call 1-866-238-4018
 * * * * * * * * * * * * * * * * * * * *

U.S. Export Controls: ITAR & EAR from a non-U.S. Perspective (Tuesday, 1 Dec 2020)

Presenters: Jim Bartlett & Marco Crombach

Register or find more information here

The ABC of Foreign Military Sales (FMS) (Thursday, 3 Dec 2020)
Presenters: Mike Farrell & Jim Bartlett
Register or find more information here
* Register for both and take advantage of our discounted price!
 * * * * * * * * * * * * * * * * * * * *

(Sources: Event sponsors)  

Submit your event in the Submission section at the end of this newsletter.  
[Editor’s note:  This Daily Bugle Event List has grown so large that we have run out of space to display it, so we are displaying here only the new events in the Daily Bugle, while maintaining a LINK HERE to the full list.]

Published every Friday or last publication day of the week. Send events to events@fullcirclecompliance.eu, composed in the below format:
# * Date: (Location;) “Event Title”; <Weblink>” Event Sponsor;


* 11 Nov 2021: “USMCA the Modernized NAFTA“; Global Training Center
* 17 Nov: “International Trade Post-Election: A Look at What’s Ahead in 2021“; KPMG and King & Spalding LLP
* 3 Dec: “The ABC of Foreign Military Sales (FMS) “; Full Circle Compliance (FCC) Academy
* 8 Dec 2021: “USMCA the Modernized NAFTA“; Global Training Center
* 10 Dec:”ACE AESDirect Export Filings (SPANISH)“; U.S. Census Bureau
* 10 Jan 2021: “Exporting Procedures“; Global Training Center
* 13 -14 Jan: “Foreign Trade Regulations Webinar (SPANISH)“; U.S. Census Bureau
* 14-15 Jan: “Massachusetts Export Center Export Expo“; Massachusetts Export Center
* 21 Jan 2021: “Incoterms 2020 Rules“; Global Training Center
* 25 Jan 2021: “Tariff Classification“; Global Training Center
* 26 Jan 2021: “USMCA the Modernized NAFTA“; Global Training Center
* 26-27 Jan 2021: “U.S. Export & Reexport Compliance For Canadian Operations“; The Canadian Institute (CI)
* 27 Jan 2021: “International Logistics“; Global Training Center
* 10 Feb 2021: “International Letters of Credit“; Global Training Center
* 16 Feb 2021: “Exporting Procedures“; Global Training Center
* 17 Feb 2021: “Incoterms 2020 Rules“; Global Training Center
* 18 Feb: “Advanced ACE Export Reports Webinar (SPANISH)“; U.S. Census Bureau
* 22 Feb 2021: “International Logistics“; Global Training Center
* 23 Feb 2021: “Tariff Classification“; Global Training Center
* 24 Feb 2021: “USMCA the Modernized NAFTA“; Global Training Center
* 3 Mar 2021: “Export to Mexico“; Global Training Center
* 10 Mar 2021: “International Letters of Credit“; Global Training Center
* 17 Mar 2021: “Exporting Procedures“; Global Training Center
* 18 Mar 2021: “Incoterms 2020 Rules“; Global Training Center
* 22 Mar 2021: “International Logistics“; Global Training Center
* 23 Mar 2021: “Tariff Classification“; Global Training Center
*24 Mar 2021: “USMCA the Modernized NAFTA“; Global Training Center
On Location:
* 11-14 Oct 2021: Amsterdam, NL; “United States Export Controls (ITAR/EAR/OFAC) Seminar Series; ECTI

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EN_a116. Bartlett’s Unfamiliar Quotations

(Source: Editor)

* Herbert Samuel (Herbert Louis Samuel; 6 Nov 1870 – 5 Feb 1963; was a British Liberal politician who was the party leader from 1931 to 1935. He was the first practicing Jew to serve as a Cabinet minister and to become the leader of a major British political party.)
  – “The virtue of some people consists wholly in condemning the vices in others.”
  – ” It takes two to make a marriage a success and only one to make it a failure.”
* Marie Curie (Marie Skłodowska Curie; 7 Nov 1867 – 4 Jul 1934; was a Polish and naturalized-French physicist and chemist who conducted pioneering research on radioactivity. As part of the Curie family legacy of five Nobel Prizes, she was the first woman to win a Nobel Prize, the first person and the only woman to win the Nobel Prize twice, and the only person to win the Nobel Prize in two different scientific fields.)
  – “Life is not easy for any of us. But what of that? We must have perseverance and above all confidence in ourselves. We must believe that we are gifted for something and that this thing must be attained.”
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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
Amendment of Cuban Assets Control 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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