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20-0410 Friday “Daily Bugle”

20-0410 Friday “Daily Bugle”

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Friday, 10 April 2020

  1. Commerce/BIS: “SITAC to Meet 28 Apr 2020”
  2. Trade Representative/USITC Imposes Additional Duties on Goods of China
  3. Treasury/OFAC Amends North Korea Sanctions Regulations
  1. Items Scheduled for Future Federal Register Edition
  2. Commerce/BIS: (No new postings.)
  3. State/DDTC: (No new postings.)
  4. EU Commission Ensures Transparency Towards its Trade Partners on Coronavirus-Related Actions
  5. Japan METI Sanctions a Person for Violating the Foreign Exchange and Foreign Trade Act
  6. Netherlands TCA Publishes Temporary Measure for Certificates of Origin
  7. Singapore Customs Publishes Notice Regarding Preferential Certificates of Origin in View of Covid-19
  8. UK DIT Publishes Notices to Exporters 2020/09 and 2020/10
  1. EU Sanctions: “Switzerland to Create Statutory Basis for Surveillance Export Controls”
  2. Export Compliance Daily: “EU Director General Says Work on Airbus-Boeing Continues, PPE Export Restrictions to Ease”
  3. Trump and Trade: “USTR Grants Extensions for China Section 301 Exclusions Set to Expire 18 Apr 2020”
  4. WORLDecr: “Did US Breach Its Own Sanctions by Purchasing Ventilators From Russia?”
  1. Baker McKenzie: “European Commission Introduces Additional Retaliatory Tariffs on Certain US-Originating Products”
  2. Hush Blackwell: “EU Prepares Retaliation Against U.S. Over Expansion of Section 232 Tariffs”
  3. Sheppard Mullin: “Refresher: How to Comply With U.S. Export Controls and Anti-Discrimination Laws When Recruiting and Hiring Foreign Nationals”
  4. Wilmer Hale: “US Administration Imposes Export Restrictions on PPE”
  1. ECS Presents “ITAR/EAR Controls for Non-US Companies” on 24-25 Jun in Toronto, CA
  2. ECTI Presents United States Export Control (ITAR/EAR/OFAC) Seminar in Singapore: September 14-17
  3. Friday List of Approaching Events: 133 Events Posted This Week, Including 8 New Events
  1. Bartlett’s Unfamiliar Quotations
  2. Are Your Copies of Regulations Up to Date? Find the Latest Amendments Here.
  3. Weekly Highlights of the Daily Bugle Top Stories
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  5. Submit Your Event and View All Approaching Events

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EXIMITEMS FROM TODAY’S FEDERAL REGISTER

EXIM_a11.
Commerce/BIS: “SITAC to Meet 28 Apr 2020”
(Source: Federal Register, 10 Apr 2020) [Excerpts]
 
85 FR 20240
: Sensors and Instrumentation Technical Advisory Committee; Notice of Partially Closed Meeting; Revised–Time Change
 
The Sensors and Instrumentation Technical Advisory Committee
(SITAC) will meet on April 28, 2020, at 11:30 a.m., Eastern Daylight Time. The meeting is open to the public via teleconference. The Committee advises the Office of the Assistant Secretary for Export Administration on technical questions that affect the level of export controls applicable to sensors and instrumentation equipment and technology.
* AGENDA:
Open Session
(1) Welcome and Introductions.
(2) Remarks from the Bureau of Industry and Security Management.
(3) Industry Presentations.
(4) New Business.
Closed Session
(5) Discussion of matters determined to be exempt from the
provisions relating to public meetings found in 5 U.S.C. app. 2
Sec. Sec. 10(a)(1) and 10(a)(3).
 
*
For more information contact Yvette Springer on (202) 482-2813.

Back to top.

 
* * * * * * * * * * * * * * * * * * * *  

EXIM_a22.
Trade Representative/USITC
Imposes Additional Duties on Goods of China

(Source: Federal Register, 10 Apr 2020) [Excerpts]
 
85 FR 20332
: Notice of product exclusion extensions.
 
* AGENCY: Office of the United States Trade Representative.
* ACTION: Notice of product exclusion extensions.
* SUMMARY: Effective July 6, 2018, the U.S. Trade Representative imposed additional duties on goods of China with an annual trade value of approximately $34 billion as part of the action in the Section 301 investigation of China’s acts, policies, and practices related to technology transfer, intellectual property, and innovation. The U.S. Trade Representative initiated the exclusion process in July 2018 and, to date, has granted ten sets of exclusions under the $34 billion action. The third set of exclusions was published in April 2019 and will expire in April 2020. On February 5, 2020, the U.S. Trade Representative established a process for the public to comment on whether to extend particular exclusions granted in April 2019 for up to
12 months. This notice announces the U.S. Trade Representative’s determination to extend certain exclusions for 12 months.
* DATES: The product exclusion extensions announced in this notice will apply as of April 18, 2020, and extend for one year. U.S. Customs and Border Protection will issue instructions on entry guidance and implementation.

 
* * * * * * * * * * * * * * * * * * * *  

EXIM_a33.
Treasury/OFAC Amends North Korea Sanctions Regulations

(Source: Federal Register, 10 Apr 2020) [Excerpts]
 
85 FR 20158
: Final rule.
 
* AGENCY: Office of Foreign Assets Control, Treasury.
* ACTION: Final rule.
* SUMMARY: The Department of the Treasury’s Office of Foreign Assets Control (OFAC) is amending the North Korea Sanctions Regulations to implement the Treasury-administered provisions of the North Korea Sanctions and Policy Enhancement Act of 2016, as amended by the Countering America’s Adversaries Through Sanctions Act and the National Defense Authorization Act for Fiscal Year 2020. Specifically, OFAC is incorporating blocking and correspondent account sanctions provisions,
adding a new prohibition that is applicable for persons that are owned or controlled by a U.S. financial institution and established or maintained outside the United States, adding new statutory exemptions relevant to certain newly added prohibitions, making technical and conforming edits to three definitions, revising an interpretive provision, and updating the authorities and delegation sections of the regulations. OFAC is also amending the definition of luxury goods.
* DATES: This rule is effective April 10, 2020.
* FOR FURTHER INFORMATION …

 
* * * * * * * * * * * * * * * * * * * *  

OGSOTHER GOVERNMENT SOURCES

OGS_a14.
Items Scheduled for Future Federal Register Editions 

* U.S. Trade Representative: NOTICES; Public Hearing: Negotiating Objectives for a United States-Republic of Kenya Trade Agreement; Cancellation, Extension of Comment Period; [Pub. Date: 13 Apr 2020]

 
* * * * * * * * * * * * * * * * * * * *  

OGS_a25. 
Commerce/BIS: (No new postings.)

 
* * * * * * * * * * * * * * * * * * * *  

 
* * * * * * * * * * * * * * * * * * * *  

OGS_a47.
EU Commission Ensures Transparency Towards its Trade Partners on Coronavirus-Related Actions  

(Source:
European Commission
, 7 Apr 2020)

 
On the 7th of April, the EU notified to the World Trade Organization steps it has taken aimed at supporting the fight against coronavirus. This notification follows a recent commitment by G20 members to provide full transparency of all policies that affect international trade.
 
The coronavirus crisis is an unprecedented global health challenge, which also has a serious impact on the global economy. Trade policy has a crucial role to play in addressing both.
 
The number one objective is to address the immediate public health crisis. In order to do that, the EU seeks to ensure the flow of vital medical supplies, critical agricultural products, and other goods and services across borders. To that effect, the EU has taken action at its level to facilitate trade flows, as well as a time-limited requirement to authorise exports for vital personal protective equipment.
 
The WTO has become a focal point of transparency on countries’ trade measures related to coronavirus. To ensure transparency, the EU is both making formal WTO notifications – under the Trade Facilitation and SPS Agreements, as well as the Decision on Notifying Quantitative Restrictions – and submitting additional information to the WTO.
 
In this context, the EU has today informed the WTO about eight steps, either new measures or guidance covering existing legislation, taken in the context of the coronavirus crisis. This includes various fields of action touching upon various aspects of international trade operations, such as:
 
(1) Import duty and VAT relief on products needed to fight coronavirus
(2) Border management, including Green Lanes to ensure availability of essential goods and services
(4) Human, animal and plant health and animal welfare measures to contain risks linked to control system disruptions due to coronavirus
(5) Public procurement guidance relating to emergency provisions in current legislation to allow for quicker purchasing of necessary goods
(6) Export authorisation requirements to support the adequacy of supply and meet vital demand for personal protective equipment in the EU
 
Consistent with its G20 commitments, the EU is also making sure that emergency measures aimed at protecting health will be targeted, proportionate, transparent, and temporary.
 
The EU remains fully committed to an open trade and investment environment. That is the only way we can minimise the economic and social damage from the coronavirus pandemic and ultimately restore global growth.

 
* * * * * * * * * * * * * * * * * * * *  

OGS_a58.
Japan METI Sanctions a Person for Violating the Foreign Exchange and Foreign Trade Act

(Source: METI, 3 Apr 2020)
 
The Ministry of Economy, Trade and Industry (METI) prohibits Matsumoto Susumu, who has violated the Foreign Exchange and Foreign Trade Act, from conducting export or export-related activities for eight months under Article 53 (2) of the Act.
 
Details of the Sanction (Export Ban)
Violator: Matsumoto Susumu
Goods subject to the export ban: all goods
Destinations subject to the export ban: all destinations
Duration of the export ban: From April 10, 2020 to December 9, 2020 (8 months)
*The ban also applies to exports through brokers/intermediators.
 
Details of the Case
On August 18th, 2011, Matsumoto Susumu exported 410 tons of frozen cod, worth 20,520,000 yen, to North Korea without the approval of the Minister of Economy, Trade and Industry.
 
*Japan has prohibited all exports destined for North Korea since June 18, 2009 under the Foreign Exchange and Foreign Trade Act.
 
Division in Charge
Trade Control Policy Division, Trade and Economic Cooperation Bureau.

 
* * * * * * * * * * * * * * * * * * * *  

OGS_a69.
Netherlands TCA Publishes Temporary Measure for Certificates of Origin
 
Due to the corona crisis problems may arise regarding the submission of certificates of origin. In normal circumstances an original copy of these certificates is required upon import. On the proposal of the European Commission, the certificates can now be temporarily submitted digitally. Paper copies are also allowed.
 
In practice, certificates can be submitted in the following ways:
  • a paper copy, or a digital variant (i.e. a PDF-scan of a certificate, or an online version).
    A copy or digital variant of an original certificate is required, and it must be signed and stamped by the competent authorities.
  • a paper copy, or a digital variant (i.e. a PDF-scan of a certificate, or an online version).
    A copy or digital version of an original certificate is required. The certificate must include a digital signature of the competent authorities – this is allowed with retroactive effect for certificates issued from 1 March 2020.
In the event of export, make as much possible use of the Approved Exporter authorisation. Read more about this in the Customs Manual (only available in Dutch).
 
Conditions
Customs checks that the documents submitted are correct. The original certificates must present in the records, or should be included in the records later on. We must therefore be able to subsequently inspect the original certificates.
 
The measure applies for: movement certificates EUR.1, movement certificates EUR-MED, certificates of origins FORM A and A.TR certificates.

 
* * * * * * * * * * * * * * * * * * * *  

OGS_a710.
Singapore Customs Publishes Notice Regarding Preferential Certificates of Origin in View of Covid-19
(Source: Singapore Customs, 7 Apr 2020) [Excerpts]
 
Application of preferential certificates of origin in view of the tightening safe-distancing measures implemented to minimise the spread of covid-19.
 
In view of the tightened safe-distancing measures implemented to minimise the spread of COVID-19 and to limit physical interaction, all manufacturers, traders and declaring agents are advised to adopt electronic transmission of Certificates of Origin. This includes electronic transmission of Form D via the ASEAN Single Window (ASW) under the ASEAN Trade in Goods Agreement (ATIGA) and electronic transmission of Preferential Certificates of Origin (PCO) bound for China under the Electronic Origin Data Exchange System (EODES).
For more information on the electronic transmission of Form D via the ASW, please refer to the “Electronic Exchange of Form D via the ASW” section on the Certificates of Origin page.  
 
For more information on electronic transmission of PCO bound for China under the EODES, please refer to Notice No. 18/2019 that could be found under Notices (> News and Media > Notices).

 
* * * * * * * * * * * * * * * * * * * *  

OGS_a811.
UK DIT Publishes Notices to Exporters 2020/09 and 2020/10  

(Source: UK DIT, 9 Apr 2020)
 
Notice to exporters 2020/09: Export Control Joint Unit updates guidance on compliance checks for open licences
 
Notice to exporters 2020/10: processing licence applications during coronavirus (COVID-19)

 
* * * * * * * * * * * * * * * * * * * *  

COMNEWS

NWS_a112.
EU Sanctions: “Switzerland to Create Statutory Basis for Surveillance Export Controls”

(Source: EU Sanctions, 8 Apr 2020) [Excerpts]
 
The Grand Chamber of the Swiss National Council has approved an amendment to the Goods Control Act, which will transpose into statute controls on the export and brokering of goods which could be used for internet or mobile phone surveillance. At present, those export controls are contained in temporary legislation, which must be reviewed and approved every 4 years by the Federal Council. See Report.

NWS_a213.
Export Compliance Daily: “EU Director General Says Work on Airbus-Boeing Continues, PPE Export Restrictions to Ease”

(Source: Export Compliance Daily, 10 Apr 2020) [Excerpts]
 
The European Union director general said the union will be scaling back export restrictions on personal protective gear, and she said that the EU is still trying to convince individual countries to lift restrictions on ventilators. Sabine Weyand was speaking from Brussels on a webcast hosted by the Washington International Trade Association on April 9. Weyand said the temporary EU restrictions will expire April 25, and that officials are reviewing the list, as they have realized not all PPE is scarce.
 
Guidance issued by the European Commission April 7 urges member states to lift export restrictions to ensure equal access to medical goods during the COVID-19 pandemic. This will help increase the availability of “essential medicines” in European Union hospitals and combat “unnecessary” stockpiling and panic buying, the commission said April 8. The guidance includes “proposed actions” for a “more coordinated approach” toward supply availability across the EU. The commission said shortages of medical goods are partly due to “the introduction of protectionist measures within and outside the EU,” including export bans and “transportation barriers” between countries. …
 
World Trade Organization Deputy Director Alan Wolff said the WTO needs to be more responsive in emergencies, and gave examples of guidance on how long temporary export restrictions should last, and on helping to make sure products meet international safety standards. …
 
She said that if the U.S. and the EU resolve their trade irritants, such as the Boeing/Airbus subsidies, that will also help the economy rebound. She said it makes no sense that U.S. Trade Representative Robert Lighthizer chose to hit European cheese and wines when it’s aerospace subsidies at issue. “This crisis urges us to have a fresh look at policy measures that were taken before,” she said, and said there are ongoing discussions between Hogan and Lighthizer.

NWS_a314.
Trump and Trade: “USTR Grants Extensions for China Section 301 Exclusions Set to Expire 18 Apr 2020”

(Source: Thompson Hine, 8 Apr 2020) [Excerpts]
 
The Office of the U.S. Trade Representative (USTR), after seeking comments on whether to extend for another year certain product exclusions it granted in April 2019, has granted eight extensions covering the following Harmonized Tariff Schedule (HTS) subheadings and product descriptions:
 
(1) Roller machines designed for cutting, etching or embossing paper, foil or fabric, manually powered (described in statistical reporting number 8420.10.9080);
(2) Ratchet winches designed for use with textile fabric strapping (described in statistical reporting number (8425.39.0100);
(3) Counterweight castings of iron or steel designed for use on fork lift and other work trucks (described in statistical reporting number 8431.20.0000);
(4) Tines, carriages, and other goods handling apparatus and parts designed for use on fork lift and other works trucks (described in statistical reporting number 8431.20.0000);
(5) Reject doors, pin protectors, liners, front walls, grates, hammers, rotor and end disc caps, and anvil and breaker bars, of iron or steel, the foregoing parts of metal shredders (described in statistical reporting number 8479.90.9496);
(6) Steering wheels designed for watercraft, of stainless steel, having a wheel diameter exceeding 27 cm but not exceeding 78 cm (described in statistical reporting number 8479.90.9496);
(7) Pipe brackets of aluminum, each with four ports, the foregoing measuring 27.9 cm x 20.3 cm x 17.8 cm and weighing 11.34 kg, designed for installation into air brake control valves (described in statistical reporting number 8481.90.9040); and
(8) Instruments for measuring or checking voltage or electrical connections; electrical circuit tracers (described in statistical reporting number 9030.33.3800).
 
These HTS subheadings and products are currently subject to the Section 301 25 percent tariff covering Chinese products imported into the United States worth approximately $34 billion (List 1), and their exclusions to the tariff were set to expire on April 18, 2020. With this extension, such products entering the United States for consumption, or withdrawn from warehouse for consumption, on or after July 6, 2018 and before April 18, 2021, will continue to be excluded from the additional duty. All other Section 301 exclusions granted in April 2019 will expire as of midnight, April 18, 2020.

NWS_a415.
WORLDecr: “Did US Breach Its Own Sanctions by Purchasing Ventilators From Russia?”

(Source: WORLDecr, 9 Apr 2020) [Excerpts]
 
In the heat of battle against the coronavirus pandemic, the United States may have violated its own sanctions by purchasing ventilators and other protective gear from Russia, Russian and US media reports have suggested.
 
‘Footage of the controversial cargo during unloading in New York showed boxes of ventilators made by a subsidiary of Russian tech firm KRET, itself a subsidiary of sanctioned state-run conglomerate Rostec,’ the Moscow Times said in its 3 April edition. ‘Western sanctions block KRET and its subsidiaries from U.S. markets unless the U.S. Office for Foreign Assets Control (OFAC) issues a waiver,’ it reported.
 
OFAC can always issue a specific licence for a transaction involving a sanctioned party, the Treasury Department’s former senior sanctions adviser Brian O’Toole told RBC, a Moscow-based Russian media organisation. ‘But the Trump administration might have not issued any license,’ he was quoted as saying. … 
 
The US State Department said it bought the entire planeload of the medical equipment. Russia’s Foreign Ministry later said the US had paid for half the cargo, while Russia donated the other half.
 
Meanwhile, the US State Department said the ventilators and protective gear were purchased following a telephone call between President Trump and his Russian counterpart, Vladimir Putin.
 
‘Both countries have provided humanitarian assistance to each other in times of crisis in the past and will no doubt do so again in the future. This is a time to work together to overcome a common enemy that threatens the lives of all of us,’ the State Department said.
 
Both Rostec and KRET have been sanctioned by the US government since 2014. Rostec’s chief executive officers are also included on the blacklist.

COMCOMMENTARY

COM_a116. Baker McKenzie: “European Commission Introduces Additional Retaliatory Tariffs on Certain US-Originating Products”

(Source: Baker McKenzie Blog, 9 Apr 2020)
 
* Author: Ross L. Denton, 44-20-7919-1978, Baker McKenzie
 
On 6 April 2020, the European Commission adopted Implementing Regulation (EU) 2020/502 (the “Implementing Regulation“) introducing additional tariffs on certain products originating from the US. This was adopted in retaliation to the further safeguard measures in the form of tariff increases, adopted by the United States on 24 January 2020, in relation to imports of certain derivative aluminium and steel products which took effect with unlimited duration on 8 February 2020.
 
Effective May 2020, the following additional duties (in addition to those that already apply) will apply in respect of US-originating goods:
  • of 20% on lighters (CN 9613 80 00); and
  • 7% on plastic fittings for furniture and coachwork (CN 3926 30 00).

Furthermore, additional duties of 4.4% will apply on US-originating imports of playing cards (CN 9504 40 00) from the earlier of:
  • 8 February 2023; or
  • the date of adoption by, or notification to, the WTO Dispute Settlement Body of a ruling that the United States’ safeguard measures are inconsistent with the relevant provisions of the WTO Agreement.

COM_a217. Hus
h Blackwell: “EU Prepares Retaliation Against U.S. Over Expansion of Section 232 Tariffs”

(Source: Hush Blackwell, 9 Apr 2020)
 
* Principal Author: Stephen Brophy, Esq., 1-202-3782408, Hush Blackwell LLP
 
In retaliation for the United States’ expansion of Section 232 tariffs in February to cover steel and aluminum derivative articles, the European Union (“EU”) will hit certain U.S.-origin imports with additional tariffs. Duties of 20 percent for lighters and 7 percent for plastic furniture fittings will apply starting May 8, 2020. An additional 4.4 percent tariff will apply to imported U.S.-origin playing cards, which are currently subject to a 10% levy from a related retaliatory action against the Section 232 steel and aluminum tariffs.
 
In June 2018, the EU imposed a 25% duty on 2.8 billion euros of imports of U.S. products, including motorcycles, jeans, and bourbon whiskey as retaliation for the original scope of the U.S. Section 232 tariffs.

COM_a318. S
heppard Mullin: “Refresher: How to Comply With U.S. Export Controls and Anti-Discrimination Laws When Recruiting and Hiring Foreign Nationals”
(Source: National Law Review, 8 Apr 2020) [Excerpts]

 
* Principal Author: Lisa C. Mays, Esq., 1-202-747-2307, Sheppard Mullin LLP
 
The scenario happens all the time: Your engineering department has identified a need for more personnel who will work with export-controlled information. Management has approved the hiring, and your Human Resources manager has drafted the job posting.What could go wrong? Export controls and anti-discrimination laws require employers to navigate an often-overlooked fine line when recruiting and hiring foreign nationals for positions involving export controlled information.
Export Controls Restrictions
The State Department’s International Traffic in Arms Regulations (ITAR) and the Commerce Department’s Export Administration Regulations (EAR) prohibit disclosing controlled technical information* to a foreign person without proper export authorization. Disclosure includes any simple verbal or visual access to that information. A foreign person is defined as anyone who is not a U.S. citizen, a U.S. lawful permanent resident, or a refugee or asylee protected under U.S. law. For that reason, an employer is required to obtain proper export control authorization for foreign persons to access controlled technical information.
Depending on the nature of the technical information, obtaining the right export control authorization can be expensive and time-consuming. Moreover, the State and Commerce Departments might not grant the required authorization. The State Department has a presumption of denial for export licenses to countries listed under 22 C.F.R. §126.1(d)(1). In addition, once the foreign person is onboarded, and before the appropriate export authorization is obtained, the company must implement internal controls to protect against unauthorized electronic or visual disclosure of controlled information to that foreign person. Those controls could include passwords on file sharing sites and employee badge coding to limit access to certain areas of a factory. Those pressures lead some companies to seek out U.S. citizens for positions involving export controls and potentially violate anti-discrimination laws.
*A complete summary of the ITAR and EAR controls on technical information is beyond the scope of this article. ITAR Technical Data is defined in22 C.F.R. §120.10; EAR Technology is defined in 15 C.F.R. §772.1. As with many export control topics, the application of the regulations to the facts is complex, and the export control on any given piece of information varies case-by-case.
Anti-Discrimination Restrictions


Under the Immigration and Nationality Act (INA) and Title VII of the Civil Rights Act of 1964, employers generally cannot make hiring, firing, recruitment, or referral decisions based on an employee’s national origin. One exception is that employers are not required to hire foreign nationals who require visa sponsorship (e.g., H-1B, etc.). Outside of that exception, employers can only request documents for the sole purpose of determining that the new employee’s status complies with export control laws to determine whether a license will be needed. That verification process must be separate from the decision to hire the employee.
An I-9 verification form can only be given to an applicant after a job offer has been made. Typically, an employer will only see work authorization documents on the first day of employment.
An Exception No More
The interplay between export controls and anti-discrimination laws was often thought to be addressed by the bona fide occupational qualification (BFOQ) exception under Title VII. That exception permits certain national origin discrimination when necessary for specific, legally-imposed job requirements, such as in the performance of classified government contracts. Moreover, Title VII’s national security exception permits an employer to not hire an individual if the job is subject to any requirements imposed in the interest of the national security of the United States and the individual does not fulfill that requirement. The BFOQ exception, coupled with the national security exception, might lead an employer to believe it could decline to hire foreign national applicants based on the ITAR and EAR. Many companies have understood these exceptions to permit hiring “U.S.-only” to comply with export controls for decades.
Nevertheless, recent DOJ enforcement actions and guidance indicate that DOJ does not share that interpretation. Rather, the Department has rejected the application of the BFOQ and national security exceptions in cases where employers refuse to hire foreign nationals merely to comply with the ITAR and the EAR. In one case, DOJ investigated an employer’s decision to consider only U.S. citizens or permanent residents for positions requiring access to ITAR- or EAR-controlled information. The Department concluded that the company’s practice violated the INA’s anti-discrimination provisions. The employer paid a $44,000 civil penalty to settle the matter. In a statement accompanying the settlement, DOJ stated that the nationality restrictions were based on the employer’s “misunderstanding of the requirements” under the ITAR and the EAR.
Under somewhat similar facts, a 2016 DOJ guidance letter informed a U.S. law firm that it is not permissible to discriminate against foreign persons merely because a job may require compliance with the EAR or ITAR. The Department stated that, although the ITAR and EAR distinguish between U.S. and foreign persons, they do not impose requirements on hiring and employment. Instead, if the foreign person’s job requires access to ITAR-controlled technical data, “ITAR requires that employers obtain export licenses” for such persons.
And in a 2018 settlement with a major international law firm, DOJ found that the firm “unlawfully restricted its staffing” based on citizenship status, in violation of the INA. The firm had excluded otherwise-qualified non-U.S. citizens and dual U.S. citizens from positions involving the review of documents containing ITAR-controlled technical data. In announcing the settlement, the Department stated that the unlawful restrictions were based on the law firm’s misunderstanding of the requirements of the ITAR. The firm paid a $132,000 civil penalty to settle the case.
The Fine Line
These recent cases clearly indicate how DOJ interprets the fine line between anti-discrimination laws and export controls: employers must consider all work-qualified applicants for an ITAR-or EAR- related position. And if the employee is a foreign national, the company must obtain the appropriate export control authorization. Additionally, employers are not required to sponsor foreign nationals for visas.
But what happens in the case where the appropriate authorization or clearance cannot be obtained? Each case is fact-specific, but a solution might be to clearly condition a job offer on obtaining the appropriate work authorization from the applicable agency (and also passing of a background check or any other prerequisites). Regarding the State Department’s presumption of denial for persons from the so-called “126.1” countries, the employer could consider explaining that the position is subject to policies and procedures set forth by the State Department and applicants who do not meet such requirements will not be eligible for the position.
Since ITAR and EAR restrictions are not considered to be a BFOQ requiring U.S. persons only, it is not permissible to restrict hiring based on citizenship or national origin merely because the job requires export authorizations. Nor is it permissible to use the candidate’s immigration documents to make hiring decisions based on citizenship or national origin in such situations. Thus, even when the job requires export control authorization to disclose ITAR or EAR information to foreign nationals, the INA does not allow an employer to include any of the following restrictions in a job posting for a position involving ITAR or EAR data access:
  • Only U.S. Citizens
  • Only U.S. Citizens or Green Card Holders
  • Must present U.S. birth certificate
  • H-1Bs or OPT Candidates Preferred
In fact, posting a job with these types of restrictions risks getting you into all sorts of trouble. First, DOJ’s Immigrant and Employee Rights Section (IER), which enforces the INA, is actively conducting investigations of employers who do so. Moreover, an enforcement action can carry additional organizational risk, such as reputational risk. DOJ is not shy about publicly shaming companies as part of their enforcement actions.
Similarly, if an employer rejects an application (or even restricts the scope of potential assignments based on that individual’s answers on citizenship or national origin), the employer may be engaging in citizenship status discrimination. Even asking questions on citizenship or nationality can lead a disappointed applicant to allege discrimination, even where the applicant was rejected for permissible reasons. Those circumstances can also prompt IER investigations, and cause reputational harm.


Compliance and Risk Management

In summary, we recommend ensuring that personnel involved in recruiting, hiring, and staffing are up to date on the current state of the complex intersection of the U.S. export controls and anti-discrimination laws.
The following checklist may assist your company in ensuring it complies with anti-discrimination laws while hiring for positions involving U.S. controlled exports:
  1. Does the position involve technology or technical data subject to ITAR or EAR?
  2. Does the position involve classified information?
  3. Can the applicant be properly walled off from sensitive data until a license can be obtained?
  4. Has the employment offer been conditioned on obtaining a license?
  5. How long will it take to get a license?
Exporters of technology requiring ITAR and EAR licenses are encouraged to contact counsel when trying to navigate these tricky situations.   

COM_a419.
Wilmer Hale: “US Administration Imposes Export Restrictions on PPE”

(Source: Wilmer Hale, 9 Apr 2020)
 
 
The Trump Administration has imposed new restrictions on exports of personal protective equipment (PPE) pursuant to the Defense Production Act (DPA).
 
On April 10, 2020, the US Federal Emergency Management Agency (FEMA) is due to publish a Temporary Final Rule (TFR) restricting the export of five types of medical products. The TFR states that “all shipments of covered materials … shall be allocated for domestic use, and may not be exported from the United States without explicit approval by FEMA.”
 
Unlike other US export controls regulations, the TFR does not contemplate a new licensing regime administered by FEMA and does not limit exportation based on end-use and end-user. Instead, FEMA’s “explicit approval” will take the form of an opportunity to assess all exports from the United States of covered PPE and reallocate these items to domestic use. The TFR does not impose any new affirmative requirements on exporters, but parties to export transactions involving covered PPE should be prepared for delays and potential diversions of outbound shipments.
 
FEMA’s authority for the TFR derives from several recent executive orders issued pursuant to the DPA. [FN/1] Section 101(a) of the DPA authorizes the President to prioritize certain contracts or orders “which he deems necessary or appropriate to promote the national defense” as well as “to allocate materials, services, and facilities in such manner, upon such conditions, and to such extent as he shall deem necessary or appropriate to promote the national defense.”
 
These export restrictions by the United States are only the most recent restrictions on exports that have been imposed by over 50 countries and governing bodies, including the European Union.
 
This new rule, which will be in effect for a period of 120 days following its publication in the Federal Register, [FN/2] covers five types of PPE but also provides that the FEMA Administrator could later add products that it determines are “scarce and critical materials essential for national defense.” As discussed in a separate WilmerHale client alert, the Secretary of Health & Human Services (HHS) has already identified additional scarce materials subject to the DPA. FEMA may determine that some of these additional products identified by HHS should also be subject to its export review.
 
The PPE currently covered by the TFR include:
  • N95 Filtering Facepiece Respirators, including devices that are disposable half-facepiece non-powered air-purifying particulate respirators intended for use to cover the nose and mouth of the wearer to help reduce wearer exposure to pathogenic biological airborne particulates;
  • Other Filtering Facepiece Respirators (e.g., those designated as N99, N100, R95, R99, R100, or P95, P99, P100), including single-use, disposable half-mask respiratory protective devices that cover the user’s airway (nose and mouth) and offer protection from particulate materials at an N95 filtration efficiency level per 42 CFR 84.181;
  • Elastomeric, air-purifying respirators and appropriate particulate filters/cartridges;
  • PPE surgical masks, including masks that cover the user’s nose and mouth and provide a physical barrier to fluids and particulate materials; and
  • PPE gloves or surgical gloves, including those defined at 21 CFR 880.6250 (exam gloves) and 878.4460 (surgical gloves) and such gloves intended for the same purposes.


Under the TFR, US Customs and Border Protection (CBP) will temporarily detain all shipments of the covered products and will notify FEMA of the intended export. FEMA will then determine, on a case-by-case basis, whether to (1) issue a so-called rated order for all or part of the shipment and return the merchandise for domestic use (i.e., disallow the export and consign the products to FEMA’s own use to allocate and distribute for domestic consumption) and/or (2) allow the export of part or all the shipment. FEMA will make a determination regarding each planned export shipment “within a reasonable period of time of being notified of an intended shipment” by CBP and will “make all decisions consistent with promoting the national defense.” The TFR does not define what will constitute a “reasonable period of time” for the issuance of a decision. It does specify that FEMA will consider the following factors when making its determination, but provides no further guidance regarding what these considerations may entail:
 
(1) The need to ensure that scarce or threatened items are appropriately allocated for domestic use;
(2) Minimization of disruption to the supply chain, both domestically and abroad;
(3) The circumstances surrounding the distribution of the materials and potential hoarding or price-gouging concerns;
(4) The quantity and quality of the materials;
(5) Humanitarian considerations; and
(6) International relations and diplomatic considerations.
 
The TFR includes an exemption for certain US manufacturers (1) with continuous supply agreements with customers in other countries in existence since January 1, 2020, or earlier, and (2) where at least 80 percent of the domestic manufacturer’s product of covered materials was distributed within the United States during the preceding 12 months. Exports of covered PPE pursuant to such agreements can be made without further FEMA review. The TFR also provides that further exemptions may be established, as deemed appropriate by FEMA.
 
The TFR imposes significant penalties for anyone who “willfully engages in violations” of these restrictions, including fines of up to $10,000 and imprisonment of up to one year.
 
Ensuring the supply of medical equipment has been a top priority of President Trump’s approach to dealing with COVID-19. This initiation of FEMA’s export review follows criticism by President Trump of “profiteering” by “unscrupulous brokers, distributors, and other intermediaries,” which he claims have contributed to the medical supply shortages now faced by the US healthcare industry. In particular, the President released a statement on April 3, “Regarding the Defense Production Act,” in which he stated that “wartime profiteering is leading to hoarding and soaring prices for Personal Protective Equipment (PPE) like masks, gloves, and N-95 respirators, all of which are needed to protect American citizens, including our heroic healthcare professionals, battling on the front lines.” He noted that his Administration is engaged in an “ongoing fight to prevent hoarding, price gouging, and profiteering by preventing the harmful export of critically needed PPE.” The Trump Administration may expand the TFR or measures like it in its effort to secure the necessary domestic supply of PPE and medical products. Critics of this approach have suggested that export restrictions such as these can have adverse effects of limiting supplies and impacting supply chains if other countries retaliate by withholding their own exports of materials needed by the United States.
 
[FN/1] See Executive Order 13909, “Prioritizing and Allocating Health and Medical Resources to Respond to the Spread of COVID-19,” 85 Fed. Reg. 16,227 (March 23, 2020); Executive Order 13910, “Preventing Hoarding of Health and Medical Resources To Respond to the Spread of COVID-19,” 85 Fed. Reg. 17,001 (March 26, 2020); Executive Order 13911, “Delegating Additional Authority Under the Defense Production Act With Respect to Health and Medical Resources to Respond to the Spread of COVID-19,” 85 Fed. Reg. 18,403 (April 1, 2020). See also Presidential Memorandum “Allocating Certain Scarce or Threatened Health and Medical Resources to Domestic Use,” White House website (Apr. 3, 2020).
 
[FN/2] The rule was issued as a temporary, final rule by FEMA. This means there is no opportunity for public comment at that time. The notice does indicate that it will provide opportunity to comment if a final rule is necessary.

TEEX/IM TRAINING EVENTS & CONFERENCES

TE_a1
20.
ECS Presents “
ITAR/EAR Controls for Non-US Companies
” on 24-25 Jun in Toronto, CA

(Source: ECS)
 
*What:  ITAR/EAR Controls for Non-U.S. Companies
*When: June 24-25, 2020
*Where:  Toronto, Canada
*Sponsor: Export Compliance Solutions & Consulting
*Presenter: Suzanne Palmer, Mal Zerden
*Register 

here
 or by calling 866-238-4018 or email 
liz@exportcompliancesolutions.com
* Remote attendance available
Check your calendar for event ads.

* * * * * * * * * * * * * * * * * * * *

TE_a2
21.
ECTI Presents
United States Export Control (ITAR/EAR/OFAC) 
Seminar in Singapore: September 14-17
(Source:
ECTI
)
 
* 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
here
, or contact 
Jessica Lemon
, 1-540-433-3977.

* * * * * * * * * * * * * * * * * * * *

TE_a3
22. Friday List of Approaching Events: 133 Events Posted This Week, Including 8 New Events

(Sources: Event sponsors) 
 
Submit your event in the Submission section at the end of this newsletter.  
 
[Editor’s note:  This Daily Bugle Event List has grown so large that we have run out of space to display it!  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-Line:
 

* 14 Apr:
CTPAT Validation Tools
; Masters Method
* 16 Apr:
DECCS
; DDTC

* 22 Apr: Grantee FTZ Marketing; NAFTA
* 22 Apr:
Customs Valuation
; Masters Method
* 23 Apr
:
Customs Valuation
; Masters Method
* 12-14 May:
2020 SPRING VIRTUAL CONFERENCE
; NAFTZ
* 13 May:
Free Trade Agreements
; Masters Method
* 14 May:
Free Trade Agreements
; Masters Method
* 20-22 May:
2020 SPRING VIRTUAL CONFERENCE
; NAFTZ

* * * * * * * * * * * * * * * * * * * *

ENEDITOR’S NOTES

* * * * * * * * * * * * * * * * * * * *

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.
 
Agency 
Regulations 
Latest Update 
DHS CUSTOMS REGULATIONS
: 19 CFR, Ch. 1, Pts. 0-199.
 
 
 
5 Apr 2019:84 FR 13499: Civil Monetary Penalty Adjustments for Inflation.

DOC EXPORT ADMINISTRATION REGULATIONS (EAR): 15 CFR Subtit. B, Ch. VII, Pts. 730-774.

24 Feb 2020:
85 FR 10274
: 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: Foreign Trade Regulations (FTR): Clarification on the Collection and Confidentiality of Kimberley Process Certificates.

DOD NATIONAL INDUSTRIAL SECURITY PROGRAM OPERATING MANUAL (NISPOM): DoD 5220.22-M. Implemented by Dep’t of Defense.

18 May 2016: Change 2: Implement an insider threat program; reporting requirements for Cleared Defense Contractors; alignment with Federal standards for classified information systems; incorporated and cancelled Supp. 1 to the NISPOM (Summary here.)  
DOE ASSISTANCE TO FOREIGN ATOMIC ENERGY ACTIVITIES: 10 CFR Part 810. 

23 Feb 2015: 80 FR 9359, comprehensive updating of regulations, updates the activities and technologies subject to specific authorization and DOE reporting requirements. 
DOE EXPORT AND IMPORT OF NUCLEAR EQUIPMENT AND MATERIAL; 10 CFR Part 110.

15 Nov 2017, 82 FR 52823: miscellaneous corrections include correcting references, an address and a misspelling.

 

DOJ ATF ARMS IMPORT REGULATIONS: 27 CFR Part 447-Importation of Arms, Ammunition, and Implements of War.

14 Mar 2019: 84 FR 9239: Bump-Stock-Type Devices.

DOS INTERNATIONAL TRAFFIC IN ARMS REGULATIONS (ITAR): 22 C.F.R. Ch. I, Subch. M, Pts. 120-130.  26 Dec 2019: 84 FR 70887; 23 Jan 2020: 85 FR 3819: Encryption rule and USML Categories I, II, III, and related sections regarding guns & ammo. 
 
DOT FOREIGN ASSETS CONTROL REGULATIONS (OFAC FACR): 31 CFR, Parts 500-599, Embargoes, Sanctions, Executive Orders

10 Apr 2020:
85 FR 20158:

North Korea Sanctions Regulations. 

 
 
 
 
USITC HARMONIZED TARIFF SCHEDULE OF THE UNITED STATES (HTS, HTSA or HTSUSA),

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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