19-0606 Thursday “Daily Bugle”

19-0606 Thursday “Daily Bugle”

Thursday, 6 June 2019

The Daily Bugle is a free daily newsletter from Full Circle Compliance, containing changes to export/import regulations (ATF, DOE/NRC, Customs, NISPOM, EAR, FACR/OFAC, FAR/DFARS, FTR/AES, HTSUS, and ITAR), plus news and events. Subscribe here. Contact us for advertising 

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  1. Commerce/BIS Reminds U.S. Firms of Requirement to Annually Report Defense Offset Agreements 
  2. State Rescinds Statutory Debarment of Twenty-three Individuals for Violating or Conspiring to Violate the Arms Export Control Act 
  1. Items Scheduled for Publication in Future Federal Register Editions 
  2. Commerce/BIS Renews TDO Concerning Mahan Airways
  3. DoD/DSS Announces Knowledge Center PCL Inquiries Closure
  4. State/DDTC: (No new postings.)
  5. Treasury/OFAC Issues Amended Venezuela-related General Licenses and FAQ
  6. Dutch Government Answers Parliamentary Questions Concerning U.S. Sanctions Against Iran
  1. American Shipper: “Nikakhtar Urges Updated Export Controls” 
  2. Hamodia: “Israel Allows ‘Dual-Use’ Goods into Gaza, First Time Since 2006” 
  3. Reuters: “U.S. Cruise Operators Stop Sailing to Cuba, Travelers Vent Anger Online” 
  4. TASS: “EU to Decide on Extending Sanctions Against Russia on June 20”  
  1. B.J. Fleming, P. O’Toole & A.S. Hussain: “Trade Compliance Flash: U.S. Tightens Cuba Embargo, Further Restricts Cuba Travel”
  2. M.M. Hassoun &: “A. Kakar: “Post-Quantum Cryptographic Algorithms! Air Launch Platforms! BIS Adds Five New Technologies to CCL” 
  3. P. Gómez: “A Timeline of US Sanctions on the Venezuelan Regime” 
  4. P. Luengwattanakit, N. Lekfuangfu & T. Pongpanarat: “New Trade Control on Weapons of Mass Destruction Related Items Act to Become Effective on 1 January 2020 in Thailand” 
  5. R. Shapiro, M. Kloeppel & A. Krueger: “What U.S. Businesses Need to Know about New Restrictions on Huawei and The ICT Supply Chain” 
  6. S. Alam, P. Bayz & J. Carlin: “For Russia, Sanctions Are Coming (Part II of II)”
  1. FCC Presents “Designing an ICP for Export Controls & Sanctions”, 1 Oct in Bruchem, the Netherlands 
  2. ECS Presents “2nd Annual ECS ITAR/EAR Symposium and Boot Camp” on 17-19 Sep in Annapolis, MD 
  1. Bartlett’s Unfamiliar Quotations 
  2. Are Your Copies of Regulations Up to Date? Latest Amendments: DHS/Customs (5 Apr 2019), DOC/EAR (23 May 2019), DOC/FTR (24 Apr 2018), DOD/NISPOM (18 May 2016), DOE/AFAEC (23 Feb 2015), DOE/EINEM (20 Nov 2018), DOJ/ATF (14 Mar 2018), DOS/ITAR (19 Apr 2018), DOT/FACR/OFAC (29 Apr 2018), HTSUS (21 May 2019) 
  3. Weekly Highlights of the Daily Bugle Top Stories 


. Commerce/BIS Reminds U.S. Firms of Requirement to Annually Report Defense Offset Agreements

(Source: Federal Register, 6 June 2019.) [Excerpts.]
84 FR: 26399-26400; Reporting for Calendar Year 2018 on Offsets Agreements Related to Sales of Defense Articles or Defense Services to Foreign Countries or Foreign Firms
* AGENCY: Bureau of Industry and Security, Department of Commerce.
* ACTION: Notice; Annual Reporting Requirements.
* SUMMARY: This notice is to remind the public that U.S. firms are required to report annually to the Department of Commerce (Commerce) information on contracts for the sale of defense articles or defense services to foreign countries or foreign firms that are subject to offsets agreements exceeding $5,000,000 in value. U.S. firms are also required to report annually to Commerce information on offsets transactions completed in performance of existing offsets commitments for which offsets credit of $250,000 or more has been claimed from the foreign representative. This year, such reports must include relevant information from calendar year 2018 and must be submitted to Commerce no later than June 15, 2019. …
* SUPPLEMENTARY INFORMATION: … Section 723(a)(1) of the Defense Production Act of 1950, as amended (DPA) (50 U.S.C. 4568 (2018)) requires the President to submit an annual report to Congress on the impact of offsets on the U.S. defense industrial base. Section 723(a)(2) directs the Secretary of Commerce (Secretary) to prepare the President’s report and to develop and administer the regulations necessary to collect offsets data from U.S. defense exporters.
The authorities of the Secretary regarding offsets have been delegated to the Under Secretary of Commerce for Industry and Security. The regulations associated with offsets reporting are set forth in part 701 of title 15 of the Code of Federal Regulations (Offsets Regulation). Offsets are compensation practices required as a condition of purchase in either government-to-government or commercial sales of defense articles and/or defense services, as defined by the Arms Export Control Act (22 U.S.C. 2778) and the International Traffic in Arms Regulations (22 CFR 120-130). Offsets are also applicable to certain items controlled on the Commerce Control list (CCL) and with an Export Control Classification Number (ECCN) including the numeral “6” as its third character. The CCL is found in Supplement No. 1 to part 774 of the Export Administration Regulations.
An example of an offset is as follows: a company that is selling a fleet of military aircraft to a foreign government may agree to offset the cost of the aircraft by providing training assistance to plant managers in the purchasing country. Although this distorts the true price of the aircraft, the foreign government may require this sort of extra compensation as a condition of awarding the contract to purchase the aircraft. As described in the Offsets Regulation, U.S. firms are required to report information on contracts for the sale of defense articles or defense services to foreign countries or foreign firms that are subject to offsets agreements exceeding $5,000,000 in value. U.S. firms are also required to report annually information on offsets transactions completed in performance of existing offsets commitments for which offsets credit of $250,000 or more has been claimed from the foreign representative.
Commerce’s annual report to Congress includes an aggregated summary of the data reported by industry in accordance with the Offsets Regulation and the DPA (50 U.S.C. 4568 (2018)). As provided by section 723(c) of the DPA, BIS will not publicly disclose individual firm information it receives through offsets reporting unless the firm furnishing the information specifically authorizes public disclosure. The information collected is sorted and organized into an aggregate report of national offsets data, and therefore does not identify company-specific information.
To enable BIS to prepare the next annual offset report reflecting calendar year 2018 data, affected U.S. firms must submit required information on offsets agreements and offsets transactions from calendar year 2018 to BIS no later than June 15, 2019.
Dated: May 28, 2019.
Richard E. Ashooh, Assistant Secretary for Export Administration.

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. State Rescinds Statutory Debarment of Twenty-three Individuals for Violating or Conspiring to Violate the Arms Export Control Act
(Source: Federal Register, 6 June 2019.) [Excerpts.]
84 FR: 26500-26501; Bureau of Political-Military Affairs; Statutory Debarment Under the Arms Export Control Act and the International Traffic in Arms Regulations
* AGENCY: Department of State.
* SUMMARY: Notice is hereby given that the Department of State has imposed statutory debarment under the International Traffic in Arms Regulations (“ITAR”) on persons convicted of violating, or conspiracy to violate, section 38 of the Arms Export Control Act (AECA).
* DATES: Debarment imposed as of June 6, 2019.
* FOR FURTHER INFORMATION CONTACT: Jae E. Shin, Director, Office of Defense Trade Controls Compliance, Bureau of Political-Military Affairs, Department of State. (202) 632-2107.
* SUPPLEMENTARY INFORMATION: Section 38(g)(4) of the AECA, 22 U.S.C. 2778(g)(4), restricts the Department of State from issuing licenses for the export of defense articles or defense services where the applicant, or any party to the export, has been convicted of violating certain statutes, including section 38 of the AECA. The Department refers to this restriction as a limitation on “export privileges,” and implements it through section 127.11 of the ITAR. The statute and regulations permit the President to make certain exceptions to the restriction on export privileges on a case-by-case basis. Section 127.7(b) of the ITAR also provides for “statutory debarment” of any person who has been convicted of violating or conspiring to violate the AECA. Under this policy, persons subject to statutory debarment are prohibited from participating directly or indirectly in any activities that are regulated by the ITAR.
Statutory debarment is based solely upon conviction in a criminal proceeding, conducted by a United States court, and as such the administrative debarment procedures outlined in part 128 of the ITAR are not applicable.
It is the policy of the Department of State that statutory debarment as described in section 127.7 of the ITAR lasts for a three year period following the date of conviction. Reinstatement from the policy of statutory debarment is not automatic, and in all cases the debarred person must submit a request to the Department of State and be approved for reinstatement from statutory debarment before engaging in any activities subject to the ITAR.
Department of State policy permits debarred persons to apply to the Director, Office of Defense Trade Controls Compliance, for reinstatement from statutory debarment beginning one year after the date of the debarment. In response to a request for reinstatement from statutory debarment, the Department may determine to rescind the statutory debarment pursuant to section 127.7(b), or rescind the statutory debarment policy pursuant to section 127.7(b) and reinstate export privileges as described in section 127.11 of the ITAR. See 84 FR 7,411 for discussion on the Department’s policy regarding reinstatement of export privileges and rescission of statutory debarment. The reinstatement of export privileges can be made only after the statutory requirements of section 38(g)(4) of the AECA have been satisfied.
Certain exceptions, known as transaction exceptions, may be made to this debarment determination on a case-by-case basis. However, such an exception would be granted only after a full review of all circumstances, paying particular attention to the following factors: Whether an exception is warranted by overriding U.S. foreign policy or national security interests; whether an exception would further law enforcement concerns that are consistent with the foreign policy or national security interests of the United States; or whether other compelling circumstances exist that are consistent with the foreign policy or national security interests of the United States, and that do not conflict with law enforcement concerns. Even if exceptions are granted, the debarment continues until subsequent reinstatement from statutory debarment. …
Debarred persons are generally ineligible to participate in activity regulated under the ITAR (see e.g., sections 120.1(c) and (d), and 127.11(a)). Also, under section 127.1(d) of the ITAR, any person who has knowledge that another person is subject to debarment or is otherwise ineligible may not, without disclosure to and written approval from the Directorate of Defense Trade Controls, participate, directly or indirectly, in any ITAR-controlled transaction where such ineligible person may obtain benefit therefrom or have a direct or indirect interest therein.
This notice is provided for purposes of making the public aware that the persons listed above are prohibited from participating directly or indirectly in activities regulated by the ITAR, including any brokering activities and any export from or temporary import into the United States of defense articles, technical data, or defense services in all situations covered by the ITAR. Specific case information may be obtained from the Office of the Clerk for the U.S. District Courts mentioned above and by citing the court case number where provided.

Stanley L. Brown, Senior Bureau Official, Bureau of Political Military Affairs, U.S. Department of State.


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OGS_a13. Items Scheduled for Publication in Future Federal Register Editions
(Source: Federal Register)

[No items of interest today]

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Commerce/BIS Renews TDO Concerning Mahan Airways
Commerce/BIS, 6 June 2019.)

Pursuant to section 766.24 of the Export Administration Regulations, 15 C.F.R. Parts 730-774 (“EAR” or “The Regulations”), I hereby grant the request of the Office of Export Enforcement (“OEE”) to renew the temporary denial order issued in this matter on December 11, 2018. I find that renewal of this order, as modified, is necessary in the public interest to prevent an imminent violation of the Regulations.
Download the full document here.

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. DoD/DSS Announces Knowledge Center PCL Inquiries Closure
(Source: DoD/DSS, 6 June 2019.)
The DSS Knowledge Center, Personnel Security (PCL) inquiries (option #2), to include e-QIP authentication resets is temporarily unavailable due to technical issues. We apologize for any inconvenience this may cause.

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Treasury/OFAC Issues Amended Venezuela-related General Licenses and FAQ
(Source: Treasury/OFAC, 6 June 2019.)
The Department of the Treasury’s Office of Foreign Assets Control (OFAC) is amending Venezuela-related General License 7A, “Authorizing Certain Activities Involving PDV Holding, Inc. and CITGO Holding, Inc.,” General License 8 “Authorizing Transactions Involving Petroleós de Venezuela, S.A. (PdVSA) Prohibited by Executive Order 13850 for Certain Entities Operating in Venezuela,” and General License 13, “Authorizing Certain Activities Involving Nynas AB” to clarify these general licenses do not authorize transactions or dealings related to the exportation or reexportation of diluents, directly or indirectly, to Venezuela. Additionally, OFAC is issuing corresponding FAQ 672 to provide further guidance with respect to restrictions regarding diluents.

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Dutch Government Answers Parliamentary Questions Concerning U.S. Sanctions Against Iran

(Source: Dutch Government, 5 June 2019.)
The Dutch Government Releases Answers to Questions Asked by Parliament on 20 May 2019 Concerning the U.S. Sanctions Against Iran
Download the file here (In Dutch).

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. American Shipper: “Nikakhtar Urges Updated Export Controls”
(Source: American Shipper, 5 June 2019.) [Excerpts.]
Nazak Nikakhtar, President Donald Trump’s pick to lead the Commerce Department’s Bureau of Industry and Security as undersecretary, told Senate Banking Committee members that “time is of the essence” for the U.S. to update its export control regulations.
“Economic integration has emboldened some foreign nations to behave in ways that undermine our national security, expecting that threats of economic retaliation will weaken our resolve to act,” Nikakhtar said in testimony during her confirmation hearing before the committee Wednesday.
Nikakhtar currently serves as the BIS assistant secretary for industry and analysis. She was confirmed by the Senate for that role on March 19, 2018.

She explained to the committee that foreign actors have stepped up their attempts to illegally acquire U.S.-made technologies to facilitate construction of weapons of mass destruction and supply terrorist groups and rogue regimes. …

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. Hamodia: “Israel Allows ‘Dual-Use’ Goods into Gaza, First Time Since 2006”
Hamodia, 3 June 2019.) [Excerpts.]
Gaza sources reported Monday that Israel had allowed the import of metal wire for use by Gaza fisherman – until now considered “dual use” goods whose import to Gaza was prohibited. The wire is meant to enable fishermen to strengthen their nets. If the report is correct, this would be the first time since 2006 that Israel has authorized the import of such dual-use items into Gaza.
“Dual-use” goods can be used either for their stated purpose, or to construct weapons and, given its experience, Israel tends to ban the import of such goods. The change in policy is seen as one of the conditions that Israel agreed to last month, after reaching understandings with Hamas on the quiet, after Gaza terror groups fired some 700 missiles at Israel in a single weekend. …

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. Reuters: “U.S. Cruise Operators Stop Sailing to Cuba, Travelers Vent Anger Online”
Reuters, 5 June 2019.) [Excerpts.]
Major U.S. cruise operators said on Wednesday they will no longer sail to Cuba following the Trump administration’s ban on travel to the Caribbean island, angering travelers and prompting worries about trip cancellations and company earnings.
The new restrictions are aimed at pressuring Cuba’s Communist government to reform and stop supporting Venezuelan President Nicolas Maduro. …
The U.S. State Department said on Tuesday the country would no longer permit visits to Cuba via passenger and recreational vessels, including cruise ships and yachts, as well as private and corporate aircraft. …

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TASS: “EU to Decide on Extending Sanctions Against Russia on June 20”

(Source: TASS, 6 June 2019.) [Excerpts.]
The leaders of the European Union (EU) member states will make a political decision on extending economic sanctions against Russia at the EU summit on June 20, an EU source in Brussels told TASS on Thursday.
“We expect that Merkel and Macron will once again inform EU leaders if there is progress in the implementation of the Minsk Agreements. And since there have been no significant changes, they are likely to recommend extending sanctions for another six months, and the summit will make a political decision in this regard,” the source said. …

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. B.J. Fleming, P. O’Toole & A.S. Hussain: “Trade Compliance Flash: U.S. Tightens Cuba Embargo, Further Restricts Cuba Travel”
(Source: Miller & Chevalier, 5 June 2019.)
* Authors: Brian J. Fleming, bfleming@milchev.com, 202-626-5871; Timothy P. O’Toole, totoole@milchev.com, 202-626-5552; Aiysha S. Hussain, ahussain@milchev.com, 202-626-1497, all of Miller & Chevalier.
Back in April, the administration previewed coming changes to the Cuba embargo, suggesting that it would further restrict travel between the U.S. and Cuba. Today it did so, taking two major actions.
First, effective June 5, 2019 (today), the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) is amending the Cuban Assets Control Regulations (CACR) to entirely eliminate the general license that previously applied to people-to-people travel. This general license was previously narrowed in June 2017, when the president announced that people-to-people travel to Cuba would be prohibited for individuals and could instead be conducted only under the auspices of an organized group. Today’s change eliminates the general license entirely. This is important because U.S. persons are generally prohibited by the embargo in almost all activities with respect to Cuba and may travel there only when a general or specific license authorizes them to do so. Before today, there were 12 general licenses authorizing such travel, but now there are 11. The general license for people-to-people travel was one of the most, if not the most, widely used Cuba general licenses, making travel to Cuba after today much more restricted. While the changes are effective today, they do not apply to trips for which at least one travel-related transaction – such as the purchase of a ticket – occurred before today.
Second, also effective today, the U.S. Department of Commerce’s Bureau of Industry and Security (BIS) restricted the license exception that allows temporary export of U.S. vessels and aircraft to Cuba. This license exception for Aircraft, Vessels and Spacecraft (AVS) removed from its scope most-non-commercial aircraft and all passenger and recreational vehicles, which had previously been allowed to be “exported” to Cuba temporarily – i.e., as part of a voyage to Cuba, so long as a return voyage occurred relatively quickly. This means that private and corporate aircraft, cruise ships, sailboats, fishing boats, and other similar aircraft and vessels generally will be generally prohibited from going to Cuba. Cargo vessels and commercial airlines remain eligible to travel to Cuba from the U.S. under AVS, so long as all of the terms and conditions of the license exception are met.

Today’s actions greatly complicate lawful travel to Cuba from the U.S., and the speedy effective date of the changes will create considerable compliance challenges.

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M.M. Hassoun &: “A. Kakar: “Post-Quantum Cryptographic Algorithms! Air Launch Platforms! BIS Adds Five New Technologies to CCL
Arent Fox, 5 June 2019.)
* Authors: Marwa M. Hassoun, Esq., marwa.hassoun@arentfox.com, +1 213 443 7645; and Aman Kakar, Esq., aman.kakar@arentfox.com, +1 202 350 3632, both of Arent Fox.
On May 23, 2019, the Department of Commerce, Bureau of Industry and Security (BIS), issued a final rule that added five recently developed or developing technologies that are essential to the national security of the United States to the Export Administration Regulations’ (EAR) Commerce Control List (CCL).
BIS amended four Export Control Classification Numbers (ECCNs) and added a new one. These changes were effective on May 23, 2019, and therefore have immediate impact for parties exporting the newly controlled goods. The five additions implemented changes made to the Wassenaar Arrangement List of Dual Use Goods and Technologies at the December 2018 Wassenaar Arrangement Plenary meeting. These additions are independent of the December 2018 request for comments by the BIS on criteria for identifying and defining “emerging technologies” essential to US’s national security.
Below is a summary of the additions and the reasoning provided by BIS. Before export, reexporting, or transferring commodities that may fall into these revised and new ECCNs, the full text of the entry should be reviewed.
3A001 Electronic Items
ECCN 3A001 was amended by adding paragraph b.3.f to control discrete microwave transistors ”rated for operation with a peak saturated power output greater than 5 W (37.0 dBm) at all frequencies exceeding 8.5 GHz up to and including 31.8 GHz.” BIS also amended Note 1 that appears after paragraph b.3.f. so that the control status of a transistor in b.3.f. is not determined by the lowest peak saturated power output control threshold.
BIS explained that it added paragraph b.3.f. because “new microwave transistors cover wider frequency bands at higher power levels which open up new possibilities for radar and other transmitting applications.” Among other uses, “wideband semiconductors will likely be a technology used in new electrical grid and alternative energy devices, in which such semiconductors will reduce energy loss and enable longer performance life in solar and wind energy power converters and eliminate bulky grid substation transformers. In addition, these robust and efficient power components are expected to be used in high energy vehicles, including electric trains and plug-in electric vehicles. It has been predicted that wideband semiconductors will facilitate simpler and higher efficiency charging for hybrid and all-electric vehicles.”
3D005 Continuity of Operation Software
ECCN 3D005 was added to the CCL to control software that ensures continuity of operation when electronics are exposed to the Electromagnetic Pulse (EMP) or Electrostatic Discharge (ESD).
BIS explained that “research and development activities related to integrated circuit software that provides electromagnetic pulse (EMP) protective function to electronic devices is currently underway, and it is predicted that these products will be in the commercial marketplace in a few years. Because continuity of operation software would also be beneficial to military applications, it was added to the CCL in this final rule.”
ECCN 5A002 Post-quantum Cryptographic Algorithms
BIS made several changes related to cryptographic algorithms.
First, ECCN 5A002 was amended to add a control on certain types of post-quantum cryptographic algorithms. BIS added paragraph 2.c to the Technical Notes that follow paragraph 5A002.a.4 to include a new paragraph addressing certain post-quantum asymmetric algorithms.
Second, BIS revised paragraphs 5A002.a, a.4, paragraph 2 of the Technical Notes that follow paragraph 5A002.a.4, paragraph a.1.a.1.b in Note 2 to 5A002.a, and paragraph (4)(a) of Related Controls to 5A002, to replace the term “in excess of 56 bits of symmetric key length, or equivalent” with “described security algorithm.” “Described security algorithm” is used for technical accuracy since methods for establishing equivalence between modern classical and postquantum cryptography (PQC) are not settled.
Third, the Nota Bene to Note 3 (the Cryptography Note) was revised to specify that items that include post-quantum asymmetric algorithms described by the new paragraph 2.c. of the Technical Notes are subject to the classification or self-classification reporting requirements for mass market items.
Post-quantum asymmetric algorithms were added to the CCL to address concerns that when large scale quantum computers are built, they will likely undermine the security of the current cryptographic systems (symmetric algorithms based on key-length and asymmetric algorithms based on factorization of integers or on the computation of discrete logarithms). Because such algorithms are becoming increasingly common, this control was added to ensure that there is consistent treatment and a level playing field between modern classical and post-quantum cryptography.
ECCN 6A001 Acoustic Systems, Equipment and “Components”
ECCN 6A001 was amended by moving the Note previously located below Item paragraph a.2.g.4 to below the introductory Item paragraph a.2. for better readability. This Note informs the public that Item paragraph a.2 ”applies to receiving equipment, whether or not related in normal application to separate active equipment, and ”specially designed” components therefor”. This rule also adds a Technical Note 2 after paragraph a.2.a to alert the public that underwater acoustic transducers designed to operate as passive receivers are hydrophones. This rule revises paragraph a.2.a.6 to add the parameter ”and having a ‘hydrophone sensitivity’ better than – 230 dB below 4 kHz”, to remove any transducers or hydrophones that are not of strategic concern.
“An underwater transducer that is designed to operate as a hydrophone, designed for operation below 1000 m and that has a useful sensitivity below 4 kHz, is being controlled because of its utility in Anti-Submarine Warfare (ASW).” BIS explained that “these amendments will bridge the control gap that previously treated underwater acoustic transducers and receivers separately. Newer underwater acoustic devices can more readily operate in both transmit and receive mode. The new control structure resulting from these amendments allows each aspect of these multifunction devices to be evaluated.”
ECCN 9A004 Air-Launch Platforms
ECCN 9A004 was amended by revising the Heading to add air-launch platforms. The rule added new a new Item paragraph 9A004.g, which controls ”aircraft” ”specially designed” or modified to be air-launch platforms for space launch vehicles (SLV). The license requirements table is revised to add 9A004.g to the NS and AT license requirements paragraphs.

Air-launch platforms were added to ECCN 9A004 because of commercial entities that are building space-bound craft that will utilize an air launch rather than traditional ground launch. “Originally, military aircraft were used for air-launched rockets to carry satellites specifically for military applications. Now, air-launch platforms allow the use of specialized commercial aircraft instead of rockets or military aircraft to facilitate the transport and launch of commercial satellites. The increase in commercial space activities has commercial satellite owners and space tourism companies moving toward air-launch platforms to support their endeavors. [sic]” 

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P. Gómez: “A Timeline of US Sanctions on the Venezuelan Regime”
Antigua Report, 3 June 2019.)
* Author: Paz Gómez, Policy Analyst, contact@antiguareport.com, of Antigua Report.
For over a decade, the US government has enacted sanctions against Venezuelan individuals linked to terrorism, drug trafficking, and other criminal activities.
Not until 2015 did a sanction specifically address the Nicolás Maduro regime’s longtime assaults on democracy and human rights, and not until late 2017 did the sanctions go beyond specific individuals.
Backgrounder Content
– How many Venezuelan officials are subject to US sanctions?
– Timeline of key sanctions against the Venezuelan regime
– Why is Nicolás Maduro still in office?
– US Sanctions on Venezuelan versus oil-production losses

Download the PDF here (four pages).

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. P. Luengwattanakit, N. Lekfuangfu & T. Pongpanarat: “New Trade Control on Weapons of Mass Destruction Related Items Act to Become Effective on 1 January 2020 in Thailand”

(Source: Baker McKenzie, 4 June 2019.)
Pornapa Luengwattanakit; Esq., pornapa.thaicharoen@bakermckenzie.com; Nam-Ake Lekfuangfu, Esq., nam-ake.lekfuangfu@bakermckenzie.com; and Theeranit Pongpanarat, Esq., theeranit.pongpanarat@bakermckenzie.com, all of Baker McKenzie Thailand.
Pursuant to our client alert on Dual-Use Items last year, the Ministry of Commerce (“MOC”) has shifted its focus from revising and updating the Notification Regulating the Dual-Use Items, dated 16 October 2015, previously issued under the existing Export and Import of Goods, Act B.E. 2522 (1979) to the enactment of the new Trade Control on Weapons of Mass Destruction Related Items Act (“WMD Act”). On 30 April 2019, the WMD Act was enacted and announced in the Royal Gazette, and its main provisions will become effective on 1 January 2020.
The WMD Act regulates all items that are related to the spread of weapons of mass destruction (“WMDs“). The regulated items include, WMDs themselves, armaments and dual-use items (“DUI“) as well as tangible and intangible items that could have commercial interest, technology or even software. Controlled activities under the WMD Act not only include export, but also re-export, transshipment, transit, being a brokerage and other actions with the purpose of spreading WMDs.
The MOC is the responsible authority under the WMD Act and has the power to issue subsequent rules and regulations under the WMD Act, including a list of specific items that will be regulated under the WMD Act, controlled activities of each items, and requirements in order to engage in the controlled activities.
It is expected the MOC will subsequently issue a list of goods that are considered DUI, which will be based on the latest EU Dual-Use Item List of 2018. Any person who wishes to engage in the controlled activities for the goods falling under this list will require a license from the MOC (e.g. an export license for export of DUI). In addition, the MOC will issue a second list of goods that require certifications that they are not related in any way to the spread of WMDs, which is based on the latest Harmonized System Codes (“HS Codes“). In the case that the goods fall under this second list, no license (e.g. export license) is required. However, a person will have to make a self-certification to the MOC that their goods under the said HS Code are not DUI – before they can engage in the restricted activities (e.g. export them out of Thailand).
Failure to obtain relevant licenses to engage in the controlled activities may subject the offender to a maximum imprisonment of two years and/or a fine of up to THB 200,000. Additionally, if such offense is committed for the purpose of utilizing items related to the spread of WMDs to cause harm to others or to design, develop, manufacture, use, modify, store, transport WMDs, or utilize such items in any way for the purpose of obtaining WMDs, the maximum imprisonment shall be increased to ten years and a fine of up to THB 1 million. All items relating to such offense will also be confiscated.
Relevant regulations and notifications under the WMD Act are also currently being drafted to ensure that the most important regulations and notifications, especially the rules and regulations regarding steps, procedures and requirements for licenses and self-certification (including an Internal Compliance Program conditions and requirements and their relevant benefits), are issued before its effective date of 1 January 2020.

It is also expected that the MOC will subsequently cancel the Notification Regulating the Dual-Use Items, issued on 16 October 2015 under the existing Export and Import of Goods Act, B.E. 2522 (1979). 

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. R. Shapiro, M. Kloeppel & A. Krueger: “What U.S. Businesses Need to Know About New Restrictions on Huawei and the ICT Supply Chain” 

(Source: Thomson Coburn LLP, 4 June 2019.)
Authors: Robert Shapiro, Esq., rshapiro@thompsoncoburn.com, +1 202 585 6926; Michele Kloeppel, Esq., mkloeppel@thompsoncoburn.com, +1 314 552 6170; Adam Krueger, Esq., akrueger@thompsoncoburn.com, +1 314 552 6556, all of Thomson Coburn.
On May 15, 2019, President Trump issued an executive order (“E.O.”) under the National Emergencies Act to prohibit U.S. companies from engaging in information and communications technology or service transactions with designated foreign countries or nationals that the U.S. determines to pose an undue risk to national security. The E.O. does not specifically name foreign adversaries. Instead, the E.O. adopts a “whole government” approach to implement its provisions and provides 150 days for the publication of rules and regulations.
Shortly after the issuance of the E.O., the U.S. Department of Commerce, Bureau of Industry and Security (“BIS”) designated Huawei Technologies Co., Ltd. and 68 of its non-U.S. affiliates (collectively, “Huawei”) on the Entity List. This designation and its effects may shed light on how the E.O. will be further implemented.
Designation of Huawei on the Entity List
The Export Administration Regulations (“EAR”) directs BIS to designate persons on the Entity List if there is a reasonable cause to believe that the person or entity poses a significant risk to the national security of the United States. On May 16, 2019, BIS exercised its authority under this regulation and the Export Control Reform Act of 2018 to designate Huawei on the Entity List (the “Designation”). The Designation was supported by the fact that Huawei was indicted on 13 counts of violating U.S. law, including knowingly and willfully supplying, directly or indirectly, U.S. goods, technology and services to Iran in violation of U.S. sanctions. The Designation includes non-U.S. subsidiaries of Huawei in the following countries: Belgium, Bolivia, Brazil, Burma, Canada, Chile, China, Egypt, Germany, Hong Kong, Jamaica, Japan, Jordan, Lebanon, Madagascar, Netherlands, Oman, Pakistan, Paraguay, Qatar, Singapore, Sri Lanka, Switzerland, Taiwan, United Kingdom and Vietnam.
You can find a listing of the specific entities in the Designation here.
In designating Huawei and its subsidiaries, BIS prohibits all exports, re-exports, and transfers of items subject to the EAR to the designated entities. Any request for authorization to export, re-export or transfer items subject to the EAR is subject to a policy of denial. Accordingly, the Designation attaches to both the activities of U.S. persons and U.S. goods and technology, and serves to block U.S. persons from dealing with Huawei and any person, wherever they are located, from sharing U.S. goods and technology with Huawei.
BIS has issued a 90-day general license (effective May 20, 2019) to allow the continued operation of existing networks and equipment; support existing handsets; allow for cybersecurity research and vulnerability disclosure; and to engage in the development of 5g standards by a duly recognized standards body. In light of the foregoing, companies such as Intel Corporation, Qualcomm Incorporated and Google have suspended certain operations with Huawei. The administration has suggested that it may designate additional Chinese technology companies.
Threat of further action pursuant to the E.O.
As mentioned above, the E.O. provides for additional restrictions on transactions dealing with information and communication technology. The E.O. prohibits any (i) acquisition, (ii) importation, (iii) transfer, (iv) installation, (v) dealing in, or (vi) use of any foreign information and communications technology or service (transaction) by any person, or with respect to any property, subject to the jurisdiction of the United States and dealing with certain foreign adversaries. The United States will further define these restrictions in regulations to be issued in the next 150 days. Therefore, companies dealing with information and communications technology are well served to continue to monitor regulatory developments for further restrictions.

Civil violations associated with violations of the Designations or the E.O. could reach $295,141 (or twice the amount of the underlying transaction for each violation) and could result in the assertion of criminal penalties. As a result, and in light of Huawei’s status as the world’s largest provider of networking gear and second largest smartphone vendor, the Designation, and the threat of further action pursuant to the E.O. present substantial economic, compliance and legal issues for U.S. companies (and possibly their foreign subsidiaries) doing business with (or contemplating doing business with) Huawei.

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* Authors: Saqib Alam, Esq., saqibalam@mofo.com, +44 20 79204177; Panagiotis Bays, Esq., akibayz@mofo.com, +1 202 887 8796; and John Carlin, Esq., jcarlin@mofo.com, +1 202 463 1000, all of Morrison & Foerster LLP.
The bill would provide the President with limited power to waive or suspend sanctions. The President may waive sanctions (except with respect to senior political figures and oligarchs) by certifying that (1) the waiver is in the vital national security interest of the United States; and (2) failing to use the waiver will cause significant adverse harm to the vital national security interests of the United States. The President may suspend sanctions if the DNI certifies that the Russian government has not engaged in interference in U.S. elections for at least one Federal election cycle. Should Russia, after any suspension of sanctions, fail to show there is improved government oversight of and prosecutions relating to interference in U.S. elections and credibly demonstrate a significant change in behavior and credibly commit to not engaging in such interference in the future, the President must reimpose sanctions.
The Defending American Security from Kremlin Aggression Act (DASKA) – introduced on February 13, 2019 by Senators Graham, Menendez, Gardner, Cardin, and Shaheen – would, as we previously reported, confront the Kremlin on a range of issues, including Russia’s continued interference in democratic processes in the United States and abroad, malign influence in Syria, continued aggression toward Ukraine, and support of criminal organizations and other malicious actors in cyberspace. The bill runs for 119 pages, contains provisions dealing with all sorts of Russian (and non-Russian) policy measures, and would require:
– Sanctions on any person that knowingly makes a new large investment in a liquefied natural gas (LNG) export facility outside Russia or any energy project outside Russia “supported by” a Russian parastatal entity or an entity owned or controlled by the Russian Government;
– Sanctions against the sale, lease, or provision of high-value goods, services, technology, financing, or other support, including infrastructure repair or modernization, which significantly contributes to the Russian Government’s development and production of crude oil resources in Russia (but would not apply to efforts to maintain projects ongoing on the date of DASKA’s enactment);
– Sanctions on Russian oligarchs linked to President Putin who facilitate bad acts on his behalf;
– Prohibitions on U.S. persons from dealing in new Russian sovereign debt – including bonds issued by, and foreign exchange swap agreements with, the Russian Central Bank, National Wealth Fund, or Federal Treasury – exceeding 14 days’ maturity;
– Sanctions on Russian financial institutions that provide financial or other support for Russian government interference in democratic processes outside Russia; and
– Mandatory quarterly determinations by the Secretary of State on whether the Russian Government was interfering with freedom of navigation anywhere in the world, and if so, would require sanctions against all entities operating in the Russian shipbuilding sector.
DASKA also would require the Secretary of State to determine, within three months, whether Russia is a state sponsor of terrorism, which – in the event of an affirmative determination – would result in additional sanctions and export restrictions. It also would incorporate the International Cybercrime Prevention Act (ICPA), which has been introduced in Congress in various forms since 2015 and seeks to raise the costs on malicious cyber activity. The bill would create additional authorities to seize botnets and prohibit cyber criminals from selling access to botnets to carry out cyber attacks – seeking to build on the U.S. government’s successful disruption of the Coreflood botnet in 2011 and the Gameover Zeus botnet in 2014, both of which emanated from Russia.
The bill also contains long-discussed beneficial ownership provisions to require domestic title insurance companies to obtain, maintain, and report information on beneficial owners of entities that purchase high-value residential real estate in the United States. This requirement is similar to FinCEN’s temporary geographic targeting orders that require companies to collect and report beneficial ownership and other ownership information for all cash transactions exceeding $300,000 by legal entities for real estate located in specific metropolitan areas in Texas, Florida, New York, California, Hawaii, Nevada, Washington, Massachusetts, and Illinois.
A Bill To Respond to and Deter Russian Attacks on the Integrity of United States Elections – discussed at a House hearing on May 15, 2019 but not yet introduced – would require:
– Within 90 days of enactment, blocking sanctions against any energy project located outside Russia, where the Russian Government or a Russian parastatal invests more than $5 million after a 90-day period after enactment;
– Within 90 of enactment, blocking sanctions against any Russian financial institution or Russian person that assisted with election interference by the Russian Government in the 2016 or 2018 U.S. elections;
– Within 60 days of enactment, prohibitions on U.S. persons from transacting with, financing, or otherwise dealing in Russian sovereign debt issued at least 90 days after enactment;
– Within 90 days of enactment, requirements on U.S. persons to disclose equity interests in large Russian banks (Vnesheconombank (VEB), Sberbank, VTB Bank, Gazprombank, Rosselkhozbank, and Promsyvabank)
For future elections, the DNI would be required, within 60 days of a U.S. election, to report to Congress with a high level of confidence whether the Russian government or a Russian agent knowingly interfered in an election. If so, the following sanctions would be required:
– New sanctions on one or more of the six Russian financial institutions listed above or on the Russian Direct Investment Fund;
– Prohibitions on new U.S. investments in the energy sector of Russia or Russian energy companies;
– Sanctions on any foreign person that makes a new investment in Russia’s energy sector or energy companies owned by Russia;
– Blocking sanctions on all defense firms owned by Russia, including Rostec.

As noted above, these bills are the latest word in the ongoing conversation in Congress about how to deal with Russia and an Administration oft-criticized for not taking a harder line against the Kremlin.


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TE_a019. FCC Presents “Designing an ICP for Export Controls & Sanctions”, 1 Oct in Bruchem, the Netherlands

* What: Designing an Internal Compliance Program (ICP) for Export Controls & Sanctions
* Date: Tuesday, 1 Oct 2019
* Location: Full Circle Compliance, Landgoed Groenhoven, Dorpsstraat 6, Bruchem, The Netherlands
* Times:
  – Registration and welcome: 9.00 am – 9.30 am
  – Training course hours: 9.30 am – 4.30 pm
* Level: Intermediate
* Target Audience:  the course provides valuable insights for both compliance professionals, employees and (senior / middle) management working in any industry subject to U.S. and/or EU (member state) export control laws and sanctions regulations.
* Instructors: Drs. Ghislaine C.Y. Gillessen RA and Marco M. Crombach MSc.

* Information & Registration: click here or contact us at events@fullcirclecompliance.eu or 31 (0)23 – 844 – 9046. 

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TE_a120. ECS Presents “2nd Annual ECS ITAR/EAR Symposium and Boot Camp” on 17-19 Sep in Annapolis, MD

(Source: ECS)
* What: The 2nd Annual ECS ITAR/EAR Symposium and Boot Camp, Annapolis, MD
* When:  September 17-19, 2019
* Where:  Chart House
* Sponsor:  Export Compliance Solutions & Consulting (ECS)
* ECS Speaker Panel: Suzanne Palmer, Mal Zerden, Lisa Bencivenga, Timothy Mooney, Matthew McGrath, Matt Doyle
* Register here or by calling 866-238-4018 or email

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* Pierre Corneille (6 June 1606 – Paris, 1 October 1684; was a French tragedian. He is generally considered one of the three great 17th-century French dramatists, along with Molière and Racine.)

 – “A liar is always lavish of oaths.”

 – “Treachery is noble when aimed at tyranny.”

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. Are Your Copies of Regulations Up to Date?
(Source: Editor)


DHS CUSTOMS REGULATIONS: 19 CFR, Ch. 1, Pts. 0-199.  Implemented by Dep’t of Homeland Security, U.S. Customs & Border Protection.

  – Last Amendment: 5 Apr 2019:
84 FR 13499-13513: Civil Monetary Penalty Adjustments for Inflation

DOC EXPORT ADMINISTRATION REGULATIONS (EAR): 15 CFR Subtit. B, Ch. VII, Pts. 730-774. Implemented by Dep’t of Commerce, Bureau of Industry & Security.
  – Last Amendment: 24 May 2019: 84 FR 24018-24021: Implementation of Certain New Controls on Emerging Technologies Agreed at Wassenaar Arrangement 2018 Plenary  
* DOC FOREIGN TRADE REGULATIONS (FTR): 15 CFR Part 30.  Implemented by Dep’t of Commerce, U.S. Census Bureau.
  – Last Amendment: 24 Apr 2018: 83 FR 17749-17751: Foreign Trade Regulations (FTR): Clarification on the Collection and Confidentiality of Kimberley Process Certificates
  – HTS codes that are not valid for AES are available here.
  – The latest edition (1 Jan 2019) of Bartlett’s Annotated FTR (“BAFTR”), by James E. Bartlett III, is available for downloading in Word format. The BAFTR contains all FTR amendments, FTR Letters and Notices, a large Index, and approximately 250 footnotes containing case annotations, practice tips, Census/AES guidance, and explanations of the numerous errors contained in the official text. Subscribers receive revised copies in Microsoft Word every time the FTR is amended. The BAFTR is available by annual subscription from the Full Circle Compliance website.  BITAR subscribers are entitled to a 25% discount on subscriptions to the BAFTR. Government employees (including military) and employees of universities are eligible for a 50% discount on both publications at www.FullCircleCompiance.eu.   


  – Last Amendment: 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; Implemented by Dep’t of Energy, National Nuclear Security Administration, under Atomic Energy Act of 1954.
  – Last Amendment: 23 Feb 2015: 80 FR 9359, comprehensive updating of regulations, updates the activities and technologies subject to specific authorization and DOE reporting requirements. This rule also identifies destinations with respect to which most assistance would be generally authorized and destinations that would require a specific authorization by the Secretary of Energy.
DOE EXPORT AND IMPORT OF NUCLEAR EQUIPMENT AND MATERIAL; 10 CFR Part 110; Implemented by Dep’t of Energy, U.S. Nuclear Regulatory Commission, under Atomic Energy Act of 1954.
  – Last Amendment: 20 Nov 2018, 10 CFR 110.6, Re-transfers.

* DOJ ATF ARMS IMPORT REGULATIONS: 27 CFR Part 447-Importation of Arms, Ammunition, and Implements of War.  Implemented by Dep’t of Justice, Bureau of Alcohol, Tobacco, Firearms & Explosives.
  – Last Amendment: 14 Mar 2019: 84 FR 9239-9240: Bump-Stock-Type Devices 


DOS INTERNATIONAL TRAFFIC IN ARMS REGULATIONS (ITAR): 22 C.F.R. Ch. I, Subch. M, Pts. 120-130. Implemented by Dep’t of State, Directorate of Defense Trade Controls.
  – Last Amendment: 19 Apr 2019: 84 FR 16398-16402: International Traffic in Arms Regulations: Transfers Made by or for a Department or Agency of the U.S. Government   
  – The only available fully updated copy (latest edition: 19 Apr 2019) of the ITAR with all amendments is contained in Bartlett’s Annotated ITAR (“BITAR”), by James E. Bartlett III. The BITAR contains all ITAR amendments to date, plus a large Index, over 800 footnotes containing amendment histories, case annotations, practice tips, DDTC guidance, and explanations of errors in the official ITAR text. Subscribers receive updated copies of the BITAR in Word by email, usually revised within 24 hours after every ITAR amendment. The BITAR is available by annual subscription from the Full Circle Compliance website. BAFTR subscribers receive a $25 discount on subscriptions to the BITAR, please contact us to receive your discount code.
* DOT FOREIGN ASSETS CONTROL REGULATIONS (OFAC FACR): 31 CFR, Parts 500-599, Embargoes, Sanctions, Executive Orders. 

Implemented by Dep’t of Treasury, Office of Foreign Assets Control.

  – Last Amendment: 29 Apr 2019: 84 FR 17950-17958: Foreign Interference in U.S. Elections Sanctions Regulations [amendment of 31 CFR Part 579 to implement EO 13848] 
* USITC HARMONIZED TARIFF SCHEDULE OF THE UNITED STATES (HTS, HTSA or HTSUSA), 1 Jan 2019: 19 USC 1202 Annex. Implemented by U.S. International Trade Commission. (“HTS” and “HTSA” are often seen as abbreviations for the Harmonized Tariff Schedule of the United States Annotated, shortened versions of “HTSUSA”.)

Last Amendment: 21 May 2019: Harmonized System Update (HSU) 1908

  – HTS codes for AES are available here.

  – HTS codes that are not valid for AES are available here.

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Weekly Highlights of the Daily Bugle Top Stories

(Source: Editor) 

Review last week’s top Ex/Im stories in “Weekly Highlights of the Daily Bugle Top Stories” published  

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* The Ex/Im Daily Update is a publication of FCC Advisory B.V., compiled by: Editor, James E. Bartlett III; and Assistant Editors, Alexander Witt and Sven Goor. The Ex/Im Daily Update is emailed every business day to approximately 7,500 readers of changes to defense and high-tech trade laws and regulations. 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 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.

* RIGHTS & RESTRICTIONS: This email contains no proprietary, classified, or export-controlled information. All items are obtained from public sources or are published with permission of private contributors, and may be freely circulated without further permission, provided attribution is given to “The Export/Import Daily Bugle of (date)”. Any further use of contributors’ material, however, must comply with applicable copyright laws.  If you would to submit material for inclusion in the The Export/Import Daily Update (“Daily Bugle”), please find instructions here.

* CAVEAT: The contents of this newsletter cannot be relied upon as legal or expert advice.  Consult your own legal counsel or compliance specialists before taking actions based upon news items or opinions from this or other unofficial sources.  If any U.S. federal tax issue is discussed in this communication, it was not intended or written by the author or sender for tax or legal advice, and cannot be used for the purpose of avoiding penalties under the Internal Revenue Code or promoting, marketing, or recommending to another party any transaction or tax-related matter.

* SUBSCRIPTIONS: Subscriptions are free.  Subscribe by completing the request form on the Full Circle Compliance website

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