20-0313 Friday “Daily Bugle”

20-0313 Friday “Daily Bugle”

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Friday, 13 March 2020

  1. Commerce/Census Bureau Submits Proposal for OMB Review
  1. Items Scheduled for Future Federal Register Edition: (No new postings.) 
  2. Commerce/BIS: (No new postings.)
  3. State/DDTC: (No new postings.)
  4. Treasury/OFAC Issues Amended Venezuela-related General Licenses and Amends FAQs
  5. Treasury Targets Additional Russian Oil Brokerage Firm for Continued Support of Maduro Regime
  6. EU Amends Common Military List
  1. American Shipper: “Commerce Extends Huawei Export License Privilege”
  2. Jane’s: “UK Proposes Loan Fund to Spur Defence Exports” 
  3. WorldECR: “Court Injunction Keeps Gun Printing Software and Technology Under ITAR” 
  1. Akin Gump: “Commerce Offers 15-Day Comment Period on Huawei TGL and Extends Validity Until May 15”
  2. Forbes: “Compliance Is Necessary, Sourcing Is Strategic” 
  1. ECS Presents “Mastering ITAR/EAR Challenges Seminar” on 21-22 Apr in New Orleans, LA 
  2. ECTI Presents United States Export Control (ITAR/EAR/OFAC) Seminar in Singapore: September 14-17 
  3. FCC Academy: “U.S. Export Controls: ITAR, EAR, and FMS on 7-9 April Online” 
  4. List of Approaching Events: 139 Events Posted This Week, Including 2 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 
  4. Submit Your Job Opening and View All Job Openings 
  5. Submit Your Event and View All Approaching Events 

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Commerce/Census Submits Proposal for OMB Review

(Source: Federal Register, 13 Mar 2020) [Excerpts]
85 FR 14631-14632: Submission for OMB Review; Comment Request;
The Department of Commerce will submit to the Office of Management and Budget (OMB) for clearance the following proposal for collection of information under the provisions of the Paperwork Reduction Act.
* Agency: U.S. Census Bureau.
* Title: Automated Export System.
* OMB Control Number: 0607-0152.
* Form Number(s): Automated Export System (AES).
* Type of Request: Revision of a currently approved collection.

. . . .

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Items Scheduled for Future Federal Register Editions
(Source: Federal Register)   

 (No items of interest today.) 

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(Source: Commerce/BIS)
(No items of interest today.) 

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(Source: State/DDTC)
(No items of interest today.) 

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Treasury/OFAC Issues Amended Venezuela-related General Licenses and Amends FAQs
Treasury/OFAC, 12 Mar 2020) [Excerpts]
The Department of the Treasury’s Office of Foreign Assets Control (OFAC) is issuing three amended Venezuela-related General Licenses: General License 15C “Authorizing Transactions Involving Certain Banks for Certain Entities,” General License 16C “Authorizing Maintenance of U.S. Person Accounts and Noncommercial, Personal Remittances involving Certain Banks” and General License 36A  “Authorizing Certain Activities Necessary to the Wind Down of Transactions Involving Rosneft Trading S.A. or TNK Trading International S.A.” In conjunction with General License 36A, OFAC is also publishing two amended Venezuela-related Frequently Asked Questions – FAQ 817 and FAQ 818. …

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Treasury Targets Russian Oil Brokerage Firm for Supporting Maduro Regime

(Source: Treasury/OFAC, 12 Mar 2020) [Excerpts.] 
The U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) today designated TNK Trading International S.A. (TTI) for operating in the oil sector of the Venezuelan economy. TTI, incorporated in Switzerland, is a subsidiary of Russian state-controlled Rosneft Oil Company. Following the February 18, 2020 Treasury designation of Rosneft Trading S.A. (RTSA), cargoes of Venezuelan oil allocated to RTSA were changed to TTI in order to evade U.S. sanctions.
“TNK Trading International S.A. is another Rosneft subsidiary brokering the sale and transport of Venezuelan crude oil, which is subject to sanctions,” said Secretary Steven T. Mnuchin. “The Trump Administration remains committed to targeting those who support the corrupt regime’s exploitation of Venezuela’s oil assets.”
TTI, which Rosneft Oil Company obtained control over in December 2017, is registered in the Canton of Geneva, Switzerland. TTI is involved in the trading, processing, and transport of raw materials, in particular unrefined petroleum and petroleum products. TTI is being designated today pursuant to Executive Order (E.O.) 13850, as amended.
OFAC also designated RTSA in February of this year for operating in the oil sector of the Venezuelan economy as well as its president Didier Casimiro for having acted or purported to act for or on behalf of, directly or indirectly, RTSA. OFAC has previously identified Rosneft Oil Company as operating in the energy sector of the Russian Federation pursuant to Ukraine-/Russia-related E.O. 13662 and as such, it and any entities owned, directly or indirectly, 50 percent or more by Rosneft Oil Company, including RTSA and TTI, are subject to certain restrictions under Ukraine-/Russia-related Directives 2 and 4. 
Together, TTI and RTSA handled a large percentage of Venezuela’s oil exports in 2019. In January 2020, TTI purchased nearly 14 million barrels of crude oil from Petroleos de Venezuela (PdVSA).
As with previous OFAC designations, U.S. sanctions need not be permanent and are intended to change behavior. The United States has made it clear that we will consider lifting sanctions for those who take concrete, meaningful, and verifiable actions to support democratic order in Venezuela. 
Concurrent with this action, OFAC is issuing General License 36A to authorize certain transactions and activities that are ordinarily incident and necessary to the wind down of transactions involving RTSA or TTI through 12:01 a.m. eastern daylight time, May 20, 2020.
As a result of today’s action, all property and interests in property of TTI that are in the United States or in the possession or control of U.S. persons, and of any entities that are owned, directly or indirectly, 50 percent or more by the designated individuals and entity, are blocked and must be reported to OFAC.

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EU Amends Common Military List

Official Journal of the European Union
, 13 Mar 2020) [Excerpts] 

List of equipment covered by Council Common Position 2008/944/CFSP defining common rules governing the control of exports of military technology and equipment.
Updating and replacing the Common Military List of the European Union adopted by the Council on 18 February 2019.

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American Shipper: “Commerce Extends Huawei Export License Privilege”


Trump administration reminds U.S. exporters of semiconductors and other technologies that it views the Chinese telecom equipment manufacturer as a continued security threat.
Since May 16, 2019, Huawei and 114 overseas affiliates have been placed on the Commerce Department’s Entity List, which imposes significant restrictions on U.S. goods and technology exports to the Chinese company and requires any U.S. company or organization to obtain an export license from BIS.
“Huawei was added to the Entity List after the U.S. government concluded the company poses a significant risk of involvement in activities contrary to the national security or foreign policy interests of the United States, including by engaging, among other things, in alleged violations of the International Emergency Economic Powers Act (IEEPA), conspiracy to violate IEEPA by causing the export, reexport, sale and supply of goods, technology, and services to Iran, and obstruction of justice in connection with the investigation of those alleged violations of U.S. sanctions,” the Commerce Department said in a statement.

NWS_a29Jane’s: “UK Proposes Loan Fund to Spur Defence Exports” 

Jane’s, 11 Mar 2020) [Excerpts]
The UK government is proposing to create a GBP1 billion (USD1.3 billion) fund to support British defence and security exports.
The “facility” would be overseen by UK Export Finance, the country’s export credit agency, which gives loans to help foreign countries, especially those with developing economies, buy British goods and services.
The proposed fund is included in the 2020 budget that Chancellor of the Exchequer Rishi Sunak presented to Parliament on 11 March.
The budget also proposes a GBP100 million (USD128 million) increase for defence research and development to “develop capabilities in response to threats facing the UK, including funding for cutting-edge technology in aviation and space propulsion.”


WorldECR: “Court Injunction Keeps Gun Printing Software and Technology Under ITAR”


WorldECR, 13 Mar 2020) [Excerpts]
A federal court in Seattle has issued a preliminary injunction blocking the Trump Administration from handing regulations and export controls over gun printing software and technology to the US Department of Commerce, which a coalition of 21 attorney generals opposes …


Akin Gump, 12 Mar 2020)
Key Points
(1) BIS extended until May 15, 2020, the Temporary General License authorizing certain exports, reexports, and transfers to Huawei and other listed affiliates of specific types of items that are relevant to third parties.
(2) BIS has also requested comments on whether the TGL should be further extended, calling for specific feedback in five areas related to the TGL and its implications for Huawei’s suppliers and customers
(3) The public comment period will be open until March 25, 2020
(4) BIS has previously indicated its intent to eventually allow the Huawei TGL to expire, and some officials had suggested the April 1, 2020 extension could have been the last. Accordingly, it is of critical importance that companies and organizations who currently use the TGL consider submitting comments and engaging with BIS on this issue.
On May 16, 2019, the U.S. Department of Commerce’s Bureau of Industry and Security (BIS) added Huawei and 68 of its non-U.S. affiliates to the Entity List (Supp. No. 4 to 15 CFR Part 744). As a result of this designation, all commodities, software, and technology “subject to the Export Administration Regulations” (EAR) require a license to be exported, reexported, or transferred (in-country) to a listed entity. Additionally, on May 21, 2019, BIS published a Temporary General License (TGL), effective May 20, 2019, authorizing specified actions that were otherwise prohibited by the addition of Huawei and related entities to the Entity List (Supp. No. 7 to 15 CFR Part 744).
TGL Renewals and Revisions
Since it first published the Huawei TGL last May, BIS extended its validity date four times. As we previously reported, BIS first extended and narrowed the scope of the TGL on August 19, 2019, at which time it also created and amended Entity List entries for more than 40 additional Huawei entities. This extension applied through November 18, 2019, but BIS extended it a second time until February 16, 2020, and a third time until April 1, 2020.
May 15 Extension and Request for Comments
On March 12, BIS published a final rule (85 Fed. Reg. 14416) extending the TGL for what could be the final time until May 15, 2020. In a companion notice, however, BIS has also called for comments on further extensions to the TGL (85 Fed. Reg 14428).
In that notice, BIS specifically requests comments on the impact on “companies, organizations, individuals, and other impacted entities” in the following areas:
(1) What would be the impact on your company or organization if the temporary general license is not extended?
(2) Given the TGL was implemented to prevent the interruption of existing network communication systems and equipment, as set forth in paragraphs (c)(1) through (3) of the TGL, and allow time for companies and persons to shift to other sources of equipment, software and technology (i.e., those not produced by Huawei or one of its listed affiliates), what would be required for your organization or industry to achieve such an end-state? For your industry or organization how long would it take until the authorization(s) in the temporary general license would no longer be required? What are costs associated with this shift and are there issues where the prohibited equipment, software and technology are prevalent and alternative solutions may not be available? Are there specific use cases where cessation of use is not feasible?
(3) If the TGL is extended, what potential revisions should BIS consider to enhance effectiveness for both covered transactions and transactions outside of the scope of the temporary general license?
(4) What potential alternatives to either extending the TGL or allowing it to expire will facilitate compliance with the supplemental requirements of the Entity List entries for Huawei and its listed affiliates while reducing complexity for implementation purposes?
(5) There may be further costs associated with the current extension or non-extension of the current TGL (e.g., lost business opportunities) – what are they and what additional guidance should BIS consider?
BIS will accept comments for 15 days from the date of the public inspection notice, i.e., March 25, 2020.
Special Procedures for Business Confidential Information
In an unusual step, BIS issued procedures for submitting business confidential information in public comments. According to the notice:
All filers using the portal should use the name of the person or entity submitting 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 referencing the specific legal authority claimed, and provide a non-confidential version of the 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. All filers should name their files using the name of the person or entity submitting the comments. Any submissions with file names that do not begin with a “BC” or “P” will be assumed to be public and will be made publicly available through http://www.regulations.gov.
Although IS has significantly tightened the already-narrow TGL since its first publication in May 2019, the TGL remains an important exception to the Entity List restrictions for companies that use, supply, and support existing Huawei equipment throughout the world. In light of earlier indications that BIS intends to eventually allow the TGL to expire, it is of critical importance that exporters who currently rely on the TGL engage with BIS through and after the public comment period. The comment period also offers an opportunity for those who have considered engaging Huawei under the auspices of the TGL to recommend revisions or alternatives that might permit and encourage otherwise beneficial transactions that are consistent with BIS’s national security objectives and the policies underlying the TGL. Commenters should also take advantage of BIS’s procedures for submitting business confidential information in their comments, as such information is likely to be highly probative in BIS’s assessment of its next actions ahead of the new May 15 expiration deadline.

Forbes, 12 Mar 2020)
* Author: Steve BankerForbes
Compliance is not strategic. Following regulations is, of course, necessary. But it does not put bread on the table.
I’m currently completing a study of the global trade compliance (GTC) solution market. Economic nationalism has brought about growing complexity surrounding trade. Trade laws are changing on an ongoing basis. Further, there is a shortening amount of time for companies to become compliant to these new regulations. All these things are good for the GTC market; All are bad for companies with global supply chains. These developments make a GTC solution increasingly useful. But it does not make these solutions strategic.
But sourcing is strategic. The one thing that elevates a GTC product to strategic necessity – at least for companies with global supply chains – are modules that help these companies optimize their sourcing. Several GTC suppliers have told me their products – or trade content – provide critical input for analyzing component sourcing based on country of origin issues. But things are changing so fast that global companies need more than this. They need a sourcing tool that helps them quickly analyze how changing duties impact the total landed costs of a product.
As Linda McKee, the Director of Solution Management, Global Trade Services at SAP, points out, analysis of “the impacts of future tariffs against forecasts provides clarity around those potential impacts to the bottom line. Such basic visibility helps companies to prepare for tariff increases and understand the financial impacts. More sophisticated capabilities provide visibility to potential options, such as where there are other (component) sources with lower tariff rates, allows decision-makers to better manage amidst the turmoil.” Companies cannot be expected to keep up with change by manually taking data from different sources and doing an analysis on a spreadsheet. Manual solutions are not fast or reliable enough.
ERP solutions have a bill of materials. The bill of materials (BOMs) shows the components and how those components are assembled to make a final product. But to run sourcing scenarios that understand the landed costs of a product, that is not enough. A BOM needs to be augmented with other critical information.
Some of the automotive provisions in the new United States-Mexico-Canada Agreement (USMCA) can help make this easier to understand. In order not to be subject to costly tariffs that make the vehicles too pricey, there are several requirements. These include increasing the North American content from 60%-62.5% to 75%. These requirements stipulate that 40%-45% of North American auto content be made by workers earning at least $16 per hour.
So, to do a tariff analysis on a vehicle, the BOM needs to be heavily augmented. It needs country of origin data, whether the factory the component is produced at pays more or less than $16 per hour, a way of calculating whether enough North American steel and aluminum was used in the finished vehicle, and a way to add up the costs of all the components to insure that at least 70% of the cost of the final product comes from North American parts.
And there needs to be automation. If a vehicle’s North American content is at 68%, 2% below the threshold, the scenario engine should point out the component or components that is causing the costs to come in too high. Then the solution needs to be capable of quickly running scenarios that swap out components from foreign suppliers and replace them with North American suppliers and getting a quick answer on whether the threshold requirement has been met.
So, what would a tariff sourcing analyzer need to do? If a non-domestic supplier is being considered for a component in a product, the process starts by requesting a supplier declaration and bringing that into the GTC solution. Arne Mielken, the Global Trade Management Director at E2open, talked to me about how important it was that this data be accurate. This requires “a robust validation process.”
Next, the solution needs to be able to turn complex trade language into machine readable data. This is accomplished by collecting new attributes (like country of origin) and associating these attributes with different supplier’s components. This information would need to be collected and stored in a way that this information could be easily pulled into the analyzer to run new scenarios.
I asked Ms. McKee from SAP whether their engine was customized, whether a different engine had to be developed for every preferential treaty. “No, it does not require different coding, we don’t do different coding agreement by agreement. There is a rules framework within the determination engine. The rules are based on each agreement, with most agreements leveraging common types of rules.” SAP works with content providers who codify the rules associated with each free trade agreement, allowing the engine to determine whether a product through its bill of material qualifies or not. SAP works with several content providers around the world. For example, in North America Descartes is a leading content partner.
Of the GTC suppliers I talked to few mentioned having these kinds of engines. Bamboo Rose has a solution designed for retailers that design and source apparel from foreign suppliers. E2open has also provided this kind of solution to one of the largest apparel companies in the world. But they say they can do this for complex bills of material like those that exist in the automotive industry. 
The sourcing/tariff analysis does not provide a total solution. Landed cost calculations also need to consider logistics costs. A company might also want to consider soft costs, like cost of quality issues. Cost of quality reflects the idea that purchasing supplies from a provider with lower quality can result in higher costs to assemble and maintain a product. E2open points out that their supply chain collaboration network can provide the logistics cost and transit time data for their customers. SAP points to their HANA analytics environment, which is ideal for doing analysis around more difficult things to analyze like the cost of quality.    
In summary, in the current trade environment, tariff engineering of products is strategic for companies with global supply chains.


ECS Presents “Mastering ITAR/EAR Challenges Seminar” on 21-22 Apr in New Orleans, LA


*What:  Mastering ITAR/EAR Challenges Seminar
*When:  April 20-21, 2020
Le Meridian
; New Orleans, LA
*Sponsor:  Export Compliance Solutions & Consulting (ECS)
*ECS Instructors:  Suzanne Palmer, Lisa Bencivenga

 or by calling 866-238-4018 or 

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ECTI Presents
United States Export Control (ITAR/EAR/OFAC) 
Seminar in Singapore: September 14-17

* What: United States Export Controls (ITAR/EAR/OFAC) Seminar Series in Singapore (for Asia-Pacific and other non-US based companies)
* When: ITAR Seminar: September 14-15; EAR/OFAC Seminar: September 16-17
* Where: Singapore, Orchard Hotel Singapore, 442 Orchard Road, Singapore
* Sponsor: Export Compliance Training Institute (ECTI)
* ECTI Speaker Panel: John Black, Scott Gearity, and Timothy O’Toole
* Register
, or 
Jessica Lemon
, 540-433-3977.

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TE_a315. FCC Academy: U.S. Export Controls: ITAR, EAR, and FMS

U.S. Export Controls: ITAR

Tuesday, 7 April 2020, Online
More Info

U.S. Export Controls: EAR

Wednesday, 8 April 2020, Online
More Info

The ABC of Foreign Military Sales (FMS)

Tuesday, 9 April 2020, Online
More Info

List of Approaching Events: 139 Events Posted This Week, Including 2 New Events

(Sources: Editor and 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!  This week we begin a new practice of displaying only the new events in the Daily Bugle, while maintaining a LINK HERE to the full list.] 

On Location:
* 1-2 Apr: Los Angeles, CA; 
District Export Council of Southern California (DECSC)
* 22-24 Jun: Athens, Greece; 
; Ministry of Defense

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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 
: 19 CFR, Ch. 1, Pts. 0-199.
5 Apr 2019:84 FR 13499-13513: Civil Monetary Penalty Adjustments for Inflation.


24 Feb 2020:
85 FR 10274-10278
: Amendments to Country Groups for Russia and Yemen Under the Export Administration Regulations


DOC FOREIGN TRADE REGULATIONS (FTR): 15 CFR Part 30.   Last Amendment: 24 Apr 2018: 83 FR 17749-17751: Foreign Trade Regulations (FTR): Clarification on the Collection and Confidentiality of Kimberley Process Certificates


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.)  

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 9239-9240: Bump-Stock-Type Devices.

DOS INTERNATIONAL TRAFFIC IN ARMS REGULATIONS (ITAR): 22 C.F.R. Ch. I, Subch. M, Pts. 120-130.  23 Jan 2020: 85 FR 3819:

Department of State final rule amending § 121.1, USML Categories I, II, and III, and numerous related sections (effective Mar. 9, 2020).
DOT FOREIGN ASSETS CONTROL REGULATIONS (OFAC FACR): 31 CFR, Parts 500-599, Embargoes, Sanctions, Executive Orders

13 Mar 2020:
85 FR 14572-14573:
General Licenses Issued Pursuant to Venezuela-Related Executive Order 13835


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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