Every month we post the highlights of FCC’s Export/Import Daily Update (“The Daily Bugle”). The Daily Bugle is sent out every business day to approximately 10,000 readers, who keep up to date with changes in defense and high-tech trade laws and regulations. It is a free daily newsletter from Full Circle Compliance, edited by James E. Bartlett III and Elina Tsapouri.
We check the following sources daily: Federal Register, Congressional Record, Commerce/AES, Commerce/BIS, DHS/CBP, DOE/NRC, DOJ/ATF, DoD/DSS, DoD/DTSA, FAR/DFARS, State/DDTC, Treasury/OFAC, White House, and similar websites of European Union, Australia, Canada, U.K., and other countries and international organizations. Due to space limitations, we do not post Arms Sales notifications, Denied Party listings, or Customs AD/CVD items. To subscribe, click here.
Last month’s highlights of The Daily Bugle included in this edition are:
- Commerce/BIS Restricts Foreign-Made Components to Seven Iranian Entities Supplying Drones Used by Russia to Attack Ukraine; Wednesday, 1 Feb 2023; Item #4
- UK ECJU: “Exporters Issued Compound Settlements Totalling Over £3.6 Million for Unlicensed Strategic Exports”; Wednesday, 15 Feb 2023; Item #5
- Commerce/BIS: “Effectiveness of Licensing Procedures for the Export and Reexport of Agricultural Commodities to Cuba”; Friday, 17 Feb 2023; Item #1
- State/DDTC Posts Congressional Notifications of Proposed Commercial Export Licenses; Tuesday, 21 Feb 2023; Item #5
- Commerce/BIS Implements 2021 Wassenaar Arrangement Decisions; Friday, 24 Feb 2023; Item #1
- Treasury/OFAC Issues Guidance on Authorized Transactions Related to Earthquake Relief Efforts in Syria; Thursday, 23 Feb 2023; Item #5
- Justice: “U.S. Attorneys’ Offices Post New Voluntary Self-Disclosure Policy”; Friday, 24 Feb 2023; Item #7
- Commerce BIS Amends EAR to Address Iranian Unmanned Aerial Vehicles (UAVs) and Their Use by the Russian Federation Against Ukraine; Monday, 27 Feb 2023; Item #2
- Commerce Amends EAR to Implement Additional Sanctions against Russia and Belarus and Refinements to Existing Controls; Monday, 27 Feb 2023; Item #3
- State/DDTC Seeks Comments on Proposed Information Collection for Approvals of Agreements, Recordkeeping, and Brokering Approval and Reports; Tuesday, 28 Feb 2023; Item #2
- State/DDTC Amends ITAR Parts 120 and 121 to Consolidate and Restructure Purposes and Definitions; Tuesday, 28 Feb 2023; Item #8
***************
Commerce/BIS Restricts Foreign-Made Components to Seven Iranian Entities Supplying Drones Used by Russia to Attack Ukraine
(Source: Commerce/BIS Newsroom, 31 Jan 2023) [Excerpts]
On January 31, 2023, the Commerce Department’s Bureau of Industry and Security (BIS) imposed restrictions on seven Iranian drone producers, including on the transfers of foreign-made components to them. These entities are added to the Entity List for contributing to Russia’s military and defense industrial base through the production of Iranian unmanned aerial vehicles (UAVs or “drones”) which are being transferred to Russia for use in its war of aggression against Ukraine. The rule applies some of the Department’s most severe export restrictions on these entities, effectively cutting them off from legally accessing items made subject to U.S. jurisdiction. Today’s action serves to further U.S. efforts to cut the Russian military off from the items and sources of support it needs to sustain its unjust and illegal war against Ukraine. …
***************
UK ECJU: “Exporters Issued Compound Settlements Totalling Over £3.6 Million for Unlicensed Strategic Exports”
(Source: UK Export Control Joint Unit, 14 Feb 2023)
During November and December 2022, HM Revenue and Customs (HMRC) issued compound settlement offers to 4 UK exporters totalling over £3.6 million
These related to unlicensed exports of dual use goods, military goods and related activity controlled by The Export Control Order 2008.
Compound settlements
The 4 settlements made by UK companies were:
- in November 2022, £745,620.00 was paid relating to the unlicensed exports of dual-use goods controlled by The Export Control Order 2008
- in December 2022, £994,074.74 was paid relating to the unlicensed exports of military goods controlled by The Export Control Order 2008
- in December 2022, £1,000.00 was paid relating to the unlicensed trade in military goods controlled by The Export Control Order 2008
- in December 2022, £1,883,442.00 was paid relating to the unlicensed exports of military goods controlled by The Export Control Order 2008
HMRC enforcement policy
HMRC has policy responsibility for enforcing export controls on strategic goods and sanctions and investigating breaches of those controls. Where appropriate, HMRC can use their powers to offer a compound penalty in lieu of a file being prepared and sent to the Crown Prosecution Service.
***************
Commerce/BIS: “Effectiveness of Licensing Procedures for the Export and Reexport of Agricultural Commodities to Cuba”
(Source: Today’s Federal Register, 88 FR 10286, 17 Feb 2023) [Excerpts]
* AGENCY: Bureau of Industry and Security, Commerce.
* ACTION: Request for comments.
* SUMMARY: The Bureau of Industry and Security (BIS) is requesting public comments on the effectiveness of its licensing procedures as defined in the Export Administration Regulations (EAR) for the export and reexport of agricultural commodities to Cuba. BIS will include a description of any comments it receives in its biennial report to the Congress, as required by the Trade Sanctions Reform and Export Enhancement Act of 2000, as amended (TSRA).
* DATES: Comments must be received by March 20, 2023.
***************
State/DDTC Posts Congressional Notifications of Proposed Commercial Export Licenses
(Source: State/DDTC, 21 Feb 2023)
Bureau of Political-Military Affairs, Directorate of Defense Trade Controls: Notifications to the Congress of Proposed Commercial Export Licenses. The Directorate of Defense Trade Controls and the Department of State give notice that this [88FR9948 (PDF, 182KB)] attached Notifications of Proposed Commercial Export Licenses were submitted to the Congress on the dates indicated.
***************
Commerce/BIS Implements 2021 Wassenaar Arrangement Decisions
(Source: Today’s Federal Register, 88 FR 12108, 24 Feb 2023) [Excerpts]
* AGENCY: Bureau of Industry and Security, Commerce.
* ACTION: Final rule.
* SUMMARY: The Bureau of Industry and Security (BIS) maintains, as part of its Export Administration Regulations (EAR), the Commerce Control List (CCL), which identifies certain items subject to Department of Commerce jurisdiction. During the December 2021 Wassenaar Arrangement on Export Controls for Conventional Arms and Dual-Use Goods and Technologies (WA) Plenary meeting, Participating States of the WA (Participating State) made certain decisions affecting the WA control lists, which BIS is now implementing via amendments to the CCL. On August 15, 2022, BIS published a final rule that implemented some of these decisions by adding to the CCL four technologies that met the criteria for emerging or foundational technologies under Section 1758 of the Export Control Reform Act of 2018 (ECRA). This final rule implements the remaining controls agreed to during the December 2021 WA Plenary meeting by revising the CCL, as well as certain EAR provisions, including License Exception Adjusted Peak Performance (APP). This final rule also makes corrections to align the scope of Significant Item (SI) license requirements throughout the EAR and makes a revision to License Exception Strategic Trade Authorization (STA).
* DATES: This rule is effective February 24, 2023 except for the amendments to § 740.7(d)(3)(i) and (ii) (instruction 5) and to supplement no. 1 to part 774 ECCNs 4A003, 4D001, and 4D001 (instruction 13), which are effective March 14, 2023.
***************
Treasury/OFAC Issues Guidance on Authorized Transactions Related to Earthquake Relief Efforts in Syria
(Source: Treasury/OFAC, 21 Feb 2023) [Excerpts]
In response to the devastating earthquakes in Syria on February 6, 2023, the Department of the Treasury’s Office of Foreign Assets Control (OFAC) authorized activity supporting emergency earthquake relief efforts in Syria that would otherwise be prohibited by U.S. sanctions in Syria. Specifically, OFAC issued a broad authorization in the form of a general license, General License (GL) 23, to authorize for 180 days certain transactions related to earthquake relief efforts that would otherwise be prohibited by the Syrian Sanctions Regulations. This license supplements broad humanitarian authorizations already in effect under the Syrian Sanctions Regulations for nongovernmental organizations (NGOs), international organizations, and the U.S. government that authorize the provision of disaster relief to Syria.
Specifically, GL 23 expands upon existing humanitarian authorizations to enable foreign governments and private companies to provide support to earthquake relief efforts in Syria and provides additional assurances to financial institutions who process such transactions. This guidance responds to specific questions OFAC received related to earthquake relief efforts in Syria and explains how to provide legitimate humanitarian assistance to the Syrian people in compliance with U.S. sanctions. GL 23 reflects the United States’ commitment to support the people of Syria through their ongoing humanitarian crisis—it is not a change in policy toward the Assad regime. While this authorization alone cannot remedy the many challenges of operating and providing aid in Syria, it can ensure that U.S. sanctions do not inhibit relief following the earthquake disaster.
Important Considerations for Reviewing This Guidance
GL 23 only authorizes certain transactions prohibited by the Syrian Sanctions Regulations through August 8, 2023, 12:01 a.m. eastern daylight time.
Non-U.S. persons do not risk exposure to U.S. sanctions for engaging in activity that is authorized for U.S. persons under GL 23.
GL 23 contains two key conditions: First, GL 23 does not authorize transactions involving any person whose property and interests in property are blocked pursuant to the Syrian Sanctions Regulations other than the Government of Syria, as described in 31 CFR § 542.305(a), unless separately authorized. Second, GL 23 does not authorize transactions prohibited by 31 CFR § 542.208 (prohibiting importation into the United States of petroleum or petroleum products of Syrian origin).
Nothing in GL 23 relieves any person from compliance with any other Federal laws or requirements of other Federal agencies. …
- Donating Money and Raising Funds for Earthquake Relief Efforts in Syria
- Sending Money to the People of Syria
- Sending Goods to Syria
- Providing Services to Syria
- Processing Earthquake Relief Financial Transactions
- Activity Involving the Government of Syria
- NGOs Providing Humanitarian Aid to Syria
- Activity by Foreign Governments in Syria
- Caesar Syria Civilian Protection Act of 2019 (Caesar Act)
Read the full guidance here.
***************
Justice: “U.S. Attorneys’ Offices Post New Voluntary Self-Disclosure Policy”
(Source: Dept of Justice, 22 Feb 2023) [Excerpts – footnotes deleted]
The Deputy Attorney General’s September 15, 2022, memorandum, “Further Revisions to Corporate Criminal Enforcement Policies Following Discussions with Corporate Crime Advisory Group,” instructed that each component of the Department of Justice (the “Department”) that prosecutes corporate crime should review its policies on corporate voluntary self-disclosure and, if there is no formal written policy to incentivize self-disclosure, it must draft and publicly share such a policy.
The Attorney General’s Advisory Committee (AGAC) requested that the White Collar Fraud Subcommittee of the AGAC, under the leadership of U.S. Attorney for the Eastern District of New York Breon Peace (Chair), recommend relevant policies and procedures for consideration. The below policy was prepared by a Corporate Criminal Enforcement Policy Working Group comprised of U.S. Attorneys from geographically diverse districts . … The Office of the Deputy Attorney General has reviewed and approved this policy. The policy shall apply to all United States Attorney’s Offices and is effective immediately. …
Read the full policy HERE.
***************
Commerce BIS Amends EAR to Address Iranian Unmanned Aerial Vehicles (UAVs) and Their Use by the Russian Federation Against Ukraine
(Source: 88 FR 12150, 27 Feb 2023) [Excerpts]
* AGENCY: Commerce
* ACTION: Final Rule
* SUMMARY: This rule amends the Export Administrations Regulations (EAR) to impose new export control measures on Iran. These measures address the use of Iranian Unmanned Aerial Vehicles (UAVs) by the Russian Federation (Russia) in its ongoing war against Ukraine, contrary to U.S. national security and foreign policy interests. Although UAVs are also known as Unmanned Aircraft Systems (UASs), for purposes of consistency with the Missile Technology Control Regime (MTCR) they are referred to as UAVs in the EAR.
These amendments to the EAR target Iran’s supply of UAVs to Russia to enhance Russia’s defense industrial base and its military efforts against Ukraine and build on prior EAR amendments, including the addition of Iranian entities to the Entity List as Russian `military end users.’ Specifically, these controls impose license requirements for a subset of EAR99 items that are destined to Iran, regardless of whether a U.S. person is involved in the transaction. Such items are identified by Harmonized Tariff Schedule (HTS)-6 Codes in a new supplement added to the EAR, which will allow BIS and other relevant U.S. Government agencies to track and quantify these exports.
This rule also identifies certain foreign-produced items as subject to the EAR by adding a new foreign direct product (FDP) rule specific to Iran that applies to items in certain categories of the Commerce Control List (CCL) and the EAR99 items identified in this new supplement. This rule similarly revises the EAR’s existing Russia/Belarus FDP rule to reference these EAR99 items.
Together with a separate rule published in the same issue of the Federal Register adding export controls for Russia and Belarus, these changes impose license requirements on additional exports from abroad and reexports to Iran, Russia, and Belarus, with the purpose of degrading the Iranian UAV program and Russia’s use of such UAVs against Ukraine.
* DATES: Effective February 24, 2023.
***************
Commerce Amends EAR to Implement Additional Sanctions against Russia and Belarus and Refinements to Existing Controls
(Source: 88 FR 12175, 27 Feb 2023) [Excerpts]
* AGENCY: Commerce
* ACTION: Final Rule
* SUMMARY: In response to the Russian Federation’s (Russia’s) ongoing aggression against Ukraine, as substantially enabled by Belarus, the Department of Commerce is expanding and strengthening the existing sanctions against Russia and Belarus, including the scope of the Export Administration Regulations (EAR)’s Russian and Belarusian industry sector sanctions and `luxury goods’ sanctions. This rule also refines existing export controls on Russia and Belarus. The Department of Commerce is taking these actions to enhance the effectiveness of its controls on both countries and to better align them with those implemented by U.S. allies and partners.
* DATES: This rule is effective on February 24, 2023.
* AMENDMENTS TO THE EXPORT ADMINISTRATION REGULATIONS (EAR): This rule enhances and strengthens the sanctions that have been implemented on Russia and Belarus under the EAR, as described under Sections A and B below.
The regulatory revisions described under Section A. Imposition of new export controls on Russia and Belarus, including to align the EAR’s controls with those imposed by U.S. allies and partners, include:
- Revisions to the sanctions under supplement no. 2 to part 746 to make conforming changes with other supplements (supplements nos. 4 and 6 to part 746) used under the Russian and Belarusian Industry Sector Sanctions to provide alignment with sanctions imposed by U.S. partners and allies, and make the EAR sanctions stronger, more effective, and easier to understand;
- Expansion of Russian Industry Sector Sanctions under supplement no. 4 to part 746 by adding additional items to align the sanctions with sanctions imposed by U.S. partners and allies and by making other changes to render the EAR’s sanctions stronger, more effective, and easier to understand;
- Expansion of Russian Industry Sector Sanctions under supplement no. 6 to part 746 by adding additional items to align them with sanctions imposed by U.S. partners and allies and by making other changes to render the EAR’s sanctions stronger, more effective, and easier to understand;
- Expansion of `Luxury Goods’ Sanctions by adding additional items to supplement no. 5 to part 746 to align them with sanctions imposed by U.S. allies and partners; and
- Alignment changes to supplement no. 3 to part 746 of the EAR (Countries Excluded from Certain License Requirements of §§ 7 and 746.8) to add Taiwan.
The remaining changes are described under Section B. Corrections and clarifications to existing controls on Russian and Belarus. The changes described under Section B include:
- Clarification that § 7 extends to transfers (in-country), in addition to exports and reexports;
- Clarification that the exclusion for items controlled under ECCN 5A992 or 5D992 under § 8 also applies to `Luxury Goods Sanctions’ license requirements under § 746.10(a)(1); and
- Conforming changes to the licensing policies under §§ 5, 746.8, and 746.10 and addition of a case-by-case license review policy for applications for the disposition of items needed as part of companies curtailing or closing all operations in Russia or Belarus.
***************
Commerce BIS Amends EAR to Address Iranian Unmanned Aerial Vehicles (UAVs) and Their Use by the Russian Federation Against Ukraine
(Source: 88 FR 12150, 27 Feb 2023) [Excerpts]
* AGENCY: Commerce
* ACTION: Final Rule
* SUMMARY: This rule amends the Export Administrations Regulations (EAR) to impose new export control measures on Iran. These measures address the use of Iranian Unmanned Aerial Vehicles (UAVs) by the Russian Federation (Russia) in its ongoing war against Ukraine, contrary to U.S. national security and foreign policy interests. Although UAVs are also known as Unmanned Aircraft Systems (UASs), for purposes of consistency with the Missile Technology Control Regime (MTCR) they are referred to as UAVs in the EAR.
These amendments to the EAR target Iran’s supply of UAVs to Russia to enhance Russia’s defense industrial base and its military efforts against Ukraine and build on prior EAR amendments, including the addition of Iranian entities to the Entity List as Russian `military end users.’ Specifically, these controls impose license requirements for a subset of EAR99 items that are destined to Iran, regardless of whether a U.S. person is involved in the transaction. Such items are identified by Harmonized Tariff Schedule (HTS)-6 Codes in a new supplement added to the EAR, which will allow BIS and other relevant U.S. Government agencies to track and quantify these exports.
This rule also identifies certain foreign-produced items as subject to the EAR by adding a new foreign direct product (FDP) rule specific to Iran that applies to items in certain categories of the Commerce Control List (CCL) and the EAR99 items identified in this new supplement. This rule similarly revises the EAR’s existing Russia/Belarus FDP rule to reference these EAR99 items.
Together with a separate rule published in the same issue of the Federal Register adding export controls for Russia and Belarus, these changes impose license requirements on additional exports from abroad and reexports to Iran, Russia, and Belarus, with the purpose of degrading the Iranian UAV program and Russia’s use of such UAVs against Ukraine.
* DATES: Effective February 24, 2023.
***************
State/DDTC Seeks Comments on Proposed Information Collection for Approvals of Agreements, Recordkeeping, and Brokering Approval and Reports
(Source: 88 FR 12714, 28 Feb 2023)
The Department of State has submitted the information collection described below to the Office of Management and Budget (OMB) for approval. The purpose of this Notice is to allow 30 days for public comment.
In accordance with ITAR § 124.1, any person who intends to furnish defense services or technical data to a foreign person must submit a proposed technical assistance, manufacturing, or distribution license agreement and obtain prior authorization from DDTC for such agreement. Amendments to existing agreements must also be submitted for approval. The electronic mechanism utilized for submitting, reviewing, and approving agreement proposals is the Defense Export Control and Compliance System, DECCS. Specifically, this process utilizes the DSP-5 license application as the primary instrument or “vehicle” for transmitting agreements and their respective amendments from one phase of the adjudication process to the next.
The ITAR requires persons registered with DDTC to maintain records pertaining to defense trade-related transactions. This information collection approves the record-keeping requirements imposed on registrants by the ITAR. . . .
In accordance with part 129 of the ITAR, U.S. and foreign persons required to register as a broker shall provide annually a report to DDTC enumerating and describing brokering activities by quantity, type, U.S. dollar value, purchaser/recipient, and license number for approved activities and any exemptions utilized for other covered activities. This information is currently used in the review of munitions export and brokering license applications and to ensure compliance with defense trade statutes and regulations. As appropriate, such information may be shared with other U.S. Government entities.
In accordance with part 129 of the International Traffic in Arms Regulations (ITAR), U.S. and foreign persons who wish to engage in ITAR-controlled brokering activity of defense articles and defense services must first register with DDTC. Brokers must then submit a written request for approval to DDTC and must receive DDTC’s consent prior to engaging in such activities unless exempted. This information is currently used in the review of the brokering request submitted for approval and to ensure compliance with defense trade statutes and regulations. It is also used to monitor and control the transfer of sensitive U.S. technology. … Brokering Reports are submitted annually with Statement of Registration renewals. Applicants are referred to ITAR part 129 for guidance on information to submit regarding proposed brokering activity. Applicants may submit a Brokering Prior Approval Request electronically via DDTC’s Defense Export Control and Compliance System (DECCS), using the DS-4294.
***************
State/DDTC Amends ITAR Parts 120 and 121 to Consolidate and Restructure Purposes and Definitions
(Source: 88 FR 12210, 27 Feb 2023) [Excerpts]
* AGENCY: State
* ACTION: Final Rule
* SUMMARY: The Department of State published an interim final rule on March 23, 2022, effective September 6, 2022, amending the International Traffic in Arms Regulations (ITAR) to better organize the purposes and definitions of the regulations. After reviewing the comments received in response to that interim final rule, the Department is now responding to public comments and finalizing the interim final rule, including making minor amendments.
* DATES: This rule is effective February 27, 2023.
* AMENDMENTS: In § 120.13, for the reasons described above, the Department adds a new paragraph (c) to provided notice of the availability of exemptions to registration.
In § 120.40(g) (formerly found at § 120.45(f)), the Department amends the final clause of the second sentence to revise reference from “a technical data license” to “a license.” This revision is in accordance with a future rulemaking, RIN 1400-AE26, to revise descriptions of licenses in order to bring usage into better conformity with the definition of license at § 120.57(a) (formerly found at § 120.20) and the approved information collections from which licenses are issued, and which was not included in that rulemaking.
In § 121.1, the Department amends Category XIII(l), by correcting the closing parenthetical to the paragraph by removing an errant close parenthesis within the parenthetical.
Accordingly, for the reasons set forth in the preamble and under the authority of 22 U.S.C. 2778, the interim final rule amending title 22, chapter I, subchapter M, which was published at 87 FR 16396 on March 23, 2022, is adopted as final with the following changes:
PART 120—PURPOSE AND DEFINITIONS
Amend § 120.13 by adding paragraph (c) to read:
- 120.13 Registration.
* * * * *
(c) The registration requirements as set forth in parts 122 and 129 of this subchapter include limited exemptions.
- 120.40 [Amended]
In § 120.40 paragraph (g), remove the phrase “a technical data license” and add in its place “a license”.
PART 121—THE UNITED STATES MUNITIONS LIST
- 121.1 [Amended]
In § 121.1, Category XIII, paragraph (l), remove the phrase “(see § 120.32) of this subchapter)” and add in its place “(see § 120.32 of this subchapter)”.
[Editor’s Note: A new edition of Bartlett’s Annotated ITAR (BITAR) contains the amendments. The BITAR is available HERE.]