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20-0430 Thursday “Daily Bugle”

20-0430 Thursday “Daily Bugle”

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Thursday, 30 April 2020

(Today’s Federal Register was not published by the Government by press time.) 

  1. Items Scheduled for Future Federal Register Edition
  2. Commerce/BIS: (No new postings)
  3. State/DDTC: (No new postings)
  4. Treasury/OFAC Issues Violation to American Express Travel Related Services Company
  5. EU Commission Informs WTO on New Set of Coronavirus Measures
  6. EU Publishes Customs Authorities Information Concerning Classification of Goods in Customs Nomenclature
  7. UK DIT Updates Import Controls Guidance
  8. UN: “Export Restrictions: Fighting COVID-19 With Hands Tied”
  1. The New York Times: “China Opposes U.S. Abusing Export Control Measures”
  2. WORLDecr: “China Eases Export Controls on Pandemic-Related Products After US Request”
  1. Arent Fox: “Commerce Takes Aim at China’s Military-Civil Fusion Policy”
  2. Crowell Moring: “BIS Broadens U.S. Government Visibility into Exports to Chinese and Russian Military End Users and End Uses”
  3. EU Sanctions: “US Draft UN Resolution Removes Iran Arms Embargo Expiration Date”
  4. Steptoe: “More Flexible Policies Announced Under the ITAR Due to COVID-19”
  5. Thompson Hine: “DDTC Issues Notice on Additional Changes to Operational Procedures Due to COVID-19”
  6. Wilmer Hale: “New Commerce Department Rules Restrict US Exports to China and Other Countries”
  1. FCC Academy Presents Webinar: “An Introduction to EU/Dutch Dual-use and Military Export Controls”; 12 May 
  2. FCC Academy Presents June Webinars: U.S. Export Controls: ITAR, EAR, and FMS 
  1. Bartlett’s Unfamiliar Quotations
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EXIM ITEMS FROM TODAY’S FEDERAL REGISTER

EXIM_a1Items from Today’s Federal Register
 

(Source: Federal Register, 30 Apr 2020)
 

The Federal Register today posted the following notice: “Today’s issue is currently unavailable; we apologize for any inconvenience.” 

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

OGS OTHER GOVERNMENT SOURCES

* State Department: RULES; International Traffic in Arms Regulations: Temporary Suspension, Modification, or Exception to Regulations [Pub. Date: 1 May 2020] [
PDF]

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

(Source: Commerce/BIS)

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

OGS_a3
3. State/DDTC: (No new postings)

(Source: State/DDTC)  

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

(Source:
Treasury/OFAC
, 30 Apr 2020)
 
The U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) has issued a Finding of Violation to American Express Travel Related Services Company (“Amex”) for violations of the Weapons of Mass Destruction Proliferators Sanctions Regulations, 31 C.F.R. Part 544. OFAC found that Amex issued a prepaid card to, and processed 41 transactions totaling $35,246.82 on behalf of, Gerhard Wisser, a Specially Designated National (SDN). These violations were the result of human error and screening system defects. Amex remediated and disclosed the violations to OFAC. There is no monetary penalty associated with a Finding of Violation.
 
For more information, please visit the following
 
web notice

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

OGS_a55. EU Commission Informs WTO on New Set of Coronavirus Measures

(Source: European Commission
, 27 Apr 2020
)
 
In a continued commitment to transparency, the EU informed the WTO about coronavirus-related EU and Member States initiatives on 24 April. These include measures to address the economic consequences of the pandemic. This follows the notification on a first round of measures on 7 April this year.
 
The WTO has become a focal point for transparency on countries’ trade measures related to the coronavirus. It is tracking WTO Members’ reported measures on a
dedicated webpage
. In addition, the next edition of the WTO Director General’s Trade Monitoring Report, to be issued before the summer break, will include information on coronavirus related measures.
 
The EU will continue to make sure that any coronavirus related trade measures are targeted, proportionate, temporary and transparent – consistent with the commitments made by countries of the G20 group.
 
Trade measures shared with the WTO:

  (1) New Commission Regulation on
Exports subject to an export authorisation;
  (2) Temporary Framework for
State aid measures to support the economy in the current COVID-19 outbreak;
  (3) Notice regarding the consequences of the COVID-19 outbreak on
anti-dumping and anti-subsidy investigation;

  (4) Guidance to Member States concerning
foreign direct investment and free movement of capital from third countries, and the protection of Europe’s strategic assets;

  (5) EU Member States measures in reaction to COVID-19 related to exports of essential products; services and investment; and economic support.

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

OGS_a6
6. EU Publishes Customs Authorities Information Concerning Classification of Goods in Customs Nomenclature

(Source:
Official Journal of the European Union
, 30 Apr 2020)
[Excerpts]

 
The customs authorities shall revoke decisions relating to binding information from this day if they become incompatible with the interpretation of the customs nomenclature as a result of the following international tariff measures:
 
Classification Decisions, Classification Opinions or amendments to the Explanatory Notes of the Nomenclature of the Harmonised Commodity Description and Coding System, adopted by the Customs Cooperation Council (CCC document No NC2692 – report of the 64th session of the HS Committee):
 
Amendments to the explanatory notes to be done under an article 8 procedure of the hs convention and classification opinions and decisions edited by the hs committee of the
WCO.
 
Read the full publication here.

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

OGS_a7
7. UK DIT Updates Import Controls Guidance

(Source: UK DIT, 28 Apr 2020) [Excerpts] 
 
UK Department of International Trade has updated its guidance with the addition of new open general import licence, explanatory note and notice to importers (NTI) 2934.
 
Read here the full publication.

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

OGS_a88. UN: “Export Restrictions– Fighting COVID-19 With Hands Tied”

(Source: United Nations Trade and Development, 28 Apr 2020) [Excerpts] 
 
COVID-19 is a harsh test not only to the world’s healthcare systems, but also to our trading relationships.
We are at a point where the world has already lost hundreds of thousands of lives, and stands to lose many more, while countries are facing difficult decisions as they seek to flatten this pandemic’s curve.
However, striking the right balance between national self-interest and global collective survival is posing additional, difficult challenges in the fight against COVID-19.
 
Medical supplies account for 5% of world merchandise trade, totalling $2 trillion, and are concentrated among a small number of exporters.
 
Germany, the United States and Switzerland represent 35% of the global market for medical products, while 40% of the global market for personal protective products is supplied by Germany, the United States and China.
 
Many developing countries, particularly least developed countries, are highly dependent on the steady and consistent availability of products from these producers to respond to their health challenges.
For countries without technological or productive capacities, importing these medical supplies is an absolute necessity. As a result, the world’s main medical exporters are key players in our global response to COVID-19.
 
Rising national self-interest, export restrictions
Unfortunately, as the virus has spread, we have also seen a rising tide of national self-interest. Germany, the United States and India, three of the largest exporters, have at various points indicated that they will cease the export of key medical products.
Although these giants of the market have rowed back to some degree their restrictions in the face of global furore, the beggar-thy-neighbour approach has taken hold. In moves to secure national supplies, nearly 80 countries have imposed some form of restriction on the export of medical supplies.
 
These restrictions not only limit global availability but also jeopardise the affordability of these life-saving products, raising prices and disproportionately hurting the world’s poorest and most vulnerable.
 
This situation is likely to worsen as the importation of affordable and legitimate medical supplies and medicines becomes more difficult. As prices rise for increasingly scarce medical resources, it will leave most developing countries with even fewer options to adequately protect their populations, further propagating the virus and raising mortality rates significantly. … 

 
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COM NEWS

NWS_a19. The New York Times: “China Opposes U.S. Abusing Export Control Measures”

(Source: The New York Times, 30 Apr 2020) [Excerpts]
 
China is strongly opposed to the United States abusing export control measures, which would hurt the interests of U.S. firms more, the Chinese commerce ministry said on Thursday.
 
The comment came after Washington announced new export control rules to keep advanced technology away from China’s military.
 
The United States should stop wrongful actions and rather make tangible efforts to restore its economy, caught in the grip of the coronavirus pandemic, ministry spokesman Gao Feng told a press conference.
 
China is gravely concerned that the U.S. Federal Communications Commission’s comments may shut down the U.S. operations of three state-controlled Chinese telecommunications companies, said Gao, while urging Washington to stop abusing the concept of national security to crack down on Chinese companies.

NWS_a210. WORLDecr: “China Eases Export Controls on Pandemic-Related Products After US Request”

(Source: WORLDecr, 30 Apr 2020) [Excerpts] 
 
China has announced it is easing export requirements for some pandemic-related supplies, no longer requiring they receive domestic authorisation if they are already approved for use in the importing countries. The decision in late April came after the United States reportedly asked Beijing to revise its new export quality control rules for protective equipment following complaints that the controls were holding up exports.
 
In a statement, China’s Ministry of Commerce (MOFCOM) said that in order to better support the international community’s joint response at this unusual moment it was taking steps including:
 
Enhancing quality oversight for exported non-surgical face masks. As of April 26, 2020, exported non-medical use face masks shall conform with the quality standards of China or other countries.
 
The Ministry of Commerce shall offer a list of validated non-medical use face mask manufacturers with certification or authorization from other countries. ‘The State Administration for Market Regulation shall provide a list of disqualified non-medical use face masks and manufacturers found on the Chinese market.’ MOFCOM said that it was also ‘stepping up’ export regulation for medical supplies.
 
As of April 26, 2020, exporting companies of SARS-CoV-2 testing reagents, medical face masks, medical protective suits, ventilators and infrared thermometers that have obtained certification or authorization from other countries shall submit a declaration in writing together with customs declarations, as a warranty that the products are compliant with the quality standards and safety requirements of the importing countries (regions). The customs shall inspect and release products according to the list of manufacturers that have obtained certification or authorization from foreign countries offered by the Ministry of Commerce. …

COM COMMENTARY

COM_a111. Arent Fox: “Commerce Takes Aim at China’s Military-Civil Fusion Policy”

(Source:
Arent Fox, 29 Apr 2020)
 
* Principal Author: Kay C. Georgi, Esq., 1-202-857-6293, Arent Fox LLP
 
In recent years, the US Government has grown increasingly concerned by China’s official policy of “military-civil fusion” (MCF), and multiple national security agencies have sounded the alarm bell. The Defense Department referred to MCF in the 2018 National Defense Strategy, concluding that China and Russia have been “deliberately blurring the lines between civil and military goals.”
 
This week, the Commerce Department got into the game, taking significant steps to revise the Export Administration Regulations to address MCF. Specifically, the Bureau of Industry and Security (BIS) issued two final rules, and one proposed rule on April 28. The two final rules will be effective June 29, 2020, and comments to the proposed rule are due by the same date.
 
This rule eliminates License Exception Civil End-Users (CIV) that previously authorized certain exports to China, Russia, and other countries if for civil end-use.
A second proposed rule would eliminate a provision of License Exception Additional Permissive Reexports (APR) that currently authorizes certain reexports to China and other countries if local export authorization requirements are met.
The third rule sets forth the most significant changes to the EAR by expanding military end-use and end-user controls applicable to China, Russia, and Venezuela.

COM_a212. Crowell Moring: “BIS Broadens U.S. Government Visibility into Exports to Chinese and Russian Military End Users and End Uses”
(Source:
Crowell Moring, 28 Apr 2020)
 
* Principal Author: Maria Alejandra (Jana) del-Cerro, Esq., 1-202-624-2843, Crowell & Moring LLP
 
On April 28, 2020, the Department of Commerce’s Bureau of Industry and Security (BIS) published two new final rules and a proposed rule amending the Export Administration Regulations (EAR) to:  
(1) impose export license requirements on an expanded scope of items when destined for “military end use” or to “military end users” in China, Russia, and Venezuela;  
(2) remove license exception Civil End Users (CIV) and impose a license requirement for national security-controlled items on the Commerce Control List (CCL) to countries of national security concern; and  
(3) propose a modification of license exception Additional Permissive Reexports (APR) to remove provisions which currently authorize reexports of certain national security-controlled items. Collectively, the changes reflect increased U.S. concerns about civil and military integration in China, Russia, Venezuela, and elsewhere, and oblige companies dealing with U.S.-origin items to perform “increased diligence with respect to the evaluation of end users in China.”
Highlights of the changes in the three rules follow.

Expansion of License Requirements on the Export, Reexport, and Transfer (In-Country) of Items Intended for Military End Use or End Users in China, Russia, and Venezuela

This rule broadens the requirements under EAR Part 744.21 to require an export license for exports, reexports, or transfers of items listed in 
EAR Part 744, Supplement No. 2 
to “military end users” in China, in addition to exports, reexports, or transfers for “military end use.”  
 
As previously defined, “military end use” refers to both direct use (for parts, components or subsystems of weapons and other defense articles) and indirect use (weapon design and development, testing, repair and maintenance). The new rule broadens the definition of “military end use” to include any item that supports or contributes to the operation, installation, maintenance, repair, overhaul, refurbishing, development, or production, of military items.
 
These changes adopt a license review policy of presumption of denial and any single element of this new definition of “use,” standing alone, is now sufficient for license denial.
 
I
n addition, a number of new Export Control Classification Numbers (ECCN) have been added to the list of items in 
EAR Part 744, Supplement No. 2,
which require a license subject to the requirements in § 744.21. The new ECCNs include:

   (a)
2A290, 2A291, 2B999, 2D290, 3A991, 3A992, 3A999, 3B991, 3B992, 3C992, 3D991, 5B991, 5A992, 5D992, 6A991, 6A996, and 9B990.

 

  (b) Additionally, this rule expands the range of items under ECCNs 3A992, 8A992, and 9A991.
 
The rule also revises EAR § 758.1 to require filing of Electronic Export Information for all exports of items on the CCL to China, Russia, or Venezuela, regardless of the value of the shipment, unless the shipment is eligible for Export License Government (GOV).This final rule will become effective June 29, 2020.
 
License exception Civil End Users (CIV) currently authorizes the export, reexport or transfer (in-country) of certain national security-controlled items, without prior review by BIS, to most civil end users for civil end uses in Country Group D:1.
 

BIS is removing this exception due to the increasing integration of civilian and military technology development in these countries.
As a result, national security-controlled items now require BIS review prior to export, reexport, or transfer (in-country) for civil end uses and to civil end users in Country Group D:1. This final rule will become effective June 29, 2020.
 
Modification of License Exception Additional Permissive Reexports (APR)

C
urrently, License Exception APR authorizes the reexport of certain items from countries in Country Group A:1 or Hong Kong to certain destinations, provided that the reexport is consistent with an export authorization from the country of reexport, and that the item is not subject to controls contained in § 740.16(a)(2), which includes missile technology and nuclear nonproliferation controls.
 

This proposed rule will remove countries in Country Group D:1 from the list of eligible destinations for national security-controlled items and require a license for reexport to these destinations.

 

BIS is requesting comments on the volume of transactions affected by this proposed change, how it would affect the amount of time necessary to complete such transactions in the future, and how it would otherwise affect current business.

 

Comments must be received by BIS no later than June 29, 2020.

(Source:
EU Sanctions, 29 Apr 2020)
 
* Principal Author: Michael O’Kane, 44-20-7822-7777, EU Sanctions
 
The US has circulated a draft UN resolution to members of the UN Security Council, which, if approved, would strike out the expiration date, 18 October 2020, of the UN arms embargo against Iran. Under 
UNSC Resolution 2231, UN member states may export major conventional arms, related components and services to Iran provided that the UN Security Council approves the exports in advance, which are considered on a case-by-case basis.

(Source:
Steptoe, 29 Apr 2020) [Excerpts]
 
* Principal Author: Peter Jeydel, Esq., 1-202-429-6291, Steptoe & Johnson LLP
 
On April 23, 2020, the U.S. Department of State’s Directorate of Defense Trade Controls (“DDTC”) announced on the
 
DDTC home page
 that, because of the COVID-19 epidemic, it would provide limited relief with respect to certain deadlines and fees for registration, licensing and disclosures under the International Traffic in Arms Regulations (“ITAR”). DDTC is also providing limited additional flexibility to account for remote work by employees and contractors and communication with DDTC by email.
To be clear, many deadlines and other obligations under the ITAR remain in full force. For example, expiration dates for ITAR agreements (e.g., TAAs and MLAs) have not been changed.
DDTC had issued a notice on March 19, 2020 that “industry is advised of the likelihood of longer than normal processing times due to a reduction in the availability of staff in multiple organizations to review applications.” ITAR registrants and other parties should continue to pay close attention to deadlines and other obligations under the ITAR, and provide plenty of time for DDTC review, to be sure there is no gap in authorization or compliance during this period.

(Source:
Trump and Trade
, 27 Apr 2020)
 
* Principal Author: Scott E. Diamond, Esq., 1-202
263
4197
, Thompson Hine
 
On April 23, 2020, the Department of State’s Directorate of Defense Trade Controls (DDTC) announced certain measures to mitigate the impact of the pandemic on U.S. companies and supply chains overseas. Key measures from
the
announcement
 are summarized below.
Compliance/Registration

Effective for registrations originally expiring between February 29 and June 30, 2020, registrations as a manufacturer, exporter, and/or broker of defense articles are extended for two months from the original date of expiration.
DDTC Compliance is now granting an additional 30 days for responses to its request for information letters related to voluntary and directed disclosure matters. Extensions for the submission of full voluntary disclosures continue to be on a case-by-case basis. Extension requests should be sent via email to
DTCC-CaseStatus@state.gov on company letterhead in PDF format.
 
Licensing

Any licenses under ITAR Parts 120-130 originally expiring between March 13 and May 31, 2020, are extended for six months from the original date of expiration so long as there is no change to the scope or value of the authorization and no name/address changes are required.
A temporary change until July 31, 2020, to the definition of “regular employee” under ITAR § 120.39(a)(2) to include long-term contract workers who work at a remote work location, so long as the individual is not located in Russia or a country listed in ITAR § 126.1. Absent this temporary change, the definition requires that contract workers work at a company facility in order to be considered a “regular employee.”
A temporary authorization until July 31, 2020, that allows regular employees of licensed entities who are working remotely in a country not currently authorized by a TAA, MLA or exemption to send, receive or access any technical data authorized for export, reexport or retransfer to their employer via a TAA, MLA or exemption so long as the regular employee is not located in Russia or a country listed in ITAR § 126.1.
Procedures

DDTC is implementing new procedures for the provision of final action letters for General Correspondence requests and DSP-85s. These will be sent by email if unclassified.
DDTC is re-issuing guidance for the expedited authorization of requests submitted in support of U.S. Operations (USOP) at
 
DTCL SOP – USOPS Guidance.
DDTC is now also accepting electronic submissions of disclosures via email at
DTCC-CaseStatus@state.gov, as well as FMS Part 130 reports via email at
DDTC-Part130Notices@state.gov.

COM_a6
16. Wilmer Hale: “New Commerce Department Rules Restrict US Exports to China and Other Countries” 
(Source:
Wilmer Hale, 29 Apr 2020)

 
* Principal Author:
Barry J. Hurewitz, Esq., 1-202-663-6089,
Wilmer Cutler Pickering Hale and Dorr LLP 
 
Yesterday, the US Department of Commerce Bureau of Industry and Security (BIS) promulgated two new rules and issued a new proposed rule:

(1) A new 
final rule
 that will restrict previously permissible exports to China, Russia and Venezuela. In particular, the Final Rule amends Part 744 of the Export Administration Regulations (EAR), which imposes export licensing restrictions based on the exported item’s end use and end user. Among other changes, it significantly expands the licensing requirements under Part 744.21 of the EAR for exports, reexports and transfers of certain goods, equipment, materials and software to Chinese, Russian and/or Venezuelan military end users, and it broadens the definition of military end uses.

(2) A second new
 
final rule
 that amends the EAR to remove License Exception Civil End Users and to require licensing for national security-controlled items to countries of national security concern, including Russia and China, even if intended for exclusively civil end use.

(3)
proposed rule
 that would modify License Exception Additional Permissible Reexports by removing provisions that authorize reexports of certain national security-controlled items. Comments are due June 26, 2020.
Each of these three developments can be seen within the context of the Trump Administration’s broader confrontation with China on trade and national security issues, and its overall focus-as reflected in the 2017 National Security Strategy of the United States (NSS)-on challenges to national security and geopolitical challenges to American power, influence and interests. This week’s developments may have significant practical implications for companies exporting, reexporting or transferring affected goods, equipment, materials or software to countries subject to export controls for national security reasons, especially China, Russia and Venezuela.  
 
I. Expansion of Export, Reexport, and Transfer (in-Country) Controls for Military End Use or Military End Users in the People’s Republic of China, Russia, or Venezuela

In the final rule on “Expansion of Export, Reexport, and Transfer (in-Country) Controls for Military End Use or Military End Users in the People’s Republic of China, Russia, or Venezuela,” BIS aims to support US national security and foreign policy objectives reflected in the NSS, which asserted that “China and Russia challenge American power, influence, and interests, attempting to erode American security,” and that each country “support[s] the dictatorship in Venezuela and [is] seeking to expand military linkages and arms sales across the region.”
 

In an effort to address these threats, the new rule (“744 Rule”)-which will take effect on June 26, 2020-expands export licensing requirements for exports, reexports and transfers of certain goods, equipment, materials and software when an exporter has knowledge or has reason to know the items will be for Chinese, Russian and/or Venezuelan military end users or military end uses.  
 

In particular:

(a)
New Requirements for Exports to Chinese Military End Users. The 744 Rule will extend licensing requirements for exports, reexports and transfers of certain items for Chinese military end uses-as is currently required-to also include Chinese military end users. BIS notes in the 744 Rule that this amendment “will require increased diligence with respect to the evaluation of end users in China, particularly in view of China’s widespread civil-military integration.” Notably, a military end user includes not only the national armed services but also the national guard, national police, government intelligence and “any person or entity whose actions or functions are intended to support” military end uses. Thus, Chinese companies with diverse commercial and military businesses may be “military end users” subject to increased export licensing requirements. Since it may be difficult to discern whether a company is a “military end user,” exporters may need to reassess their customer diligence measures and their tolerance for regulatory risk.

(b)
Expanded Scope of Items Subject to Review. The 744 Rule will also broaden the scope of items subject to licensing for military end uses and military end users. The 744 Rule will expand the enhanced licensing requirements to additional categories of commodities, equipment, materials and software under Export Control Classification Numbers (ECCNs) 2A290, 2A291, 2B999, 2D290, 3A991, 3A992, 3A999, 3B991, 3B992, 3C992, 3D991, 5B991, 5A992, 5D992, 6A991, 6A996 and 9B990, and additional items classified under ECCNs 3A992, 8A992 and 9A991.
 

This expanded list of covered items is notable because it includes categories of common electronics, telecommunications equipment, navigational equipment, certain aircraft and aircraft parts, and information security products that are not otherwise subject to stringent export controls.
 

(c)
Expanded Definition of “Military End Use.” The 744 Rule will broaden the definition of the term “military end use” in China, Russia and Venezuela so that it includes not only items for the use, development or production of a military item, but also the operation, installation, maintenance, repair, overhaul or refurbishing of such an item. This change is notable because under the existing rule, the term “use” was defined narrowly to mean all of “[o]peration, installation (including on-site installation), maintenance (checking), repair, overhaul and refurbishing” (emphasis added). The broadened definition “identif[ies] each element of the definition of ‘use’ so that any one of the six elements, standing alone, is sufficient.”
 

(d)
Licensing Standard: Presumption of Denial. The 744 Rule will heighten the license review standard that BIS applies, from the current “case-by-case” review to presumption of denial. To improve navigation within the regulations, the 744 Rule relocates the licensing provisions for 9×515 and “600” series export classifications so that the licensing requirements for military end users and military end uses in China, Russia and Venezuela appear directly in the entry for the affected ECCNs. The 744 Rule also expands the Electronic Export Information (EEI) filing requirement for exports to China, Russia and Venezuela so that all exports to those destinations-regardless of the value of the shipment-must generally be accompanied by a mandatory EEI filing.
 
II. Final Rule Removing the License Exception Civil End Users (CIV)

In another final rule also effective on June 26, BIS is amending the EAR to eliminate License Exception CIV, which authorized exports and reexports of certain items controlled for national security reasons to “D:1” countries such as China, Russia and Venezuela if they were “destined to civil end-users for civil end-uses.” BIS stated that “the increasing integration of civilian and military technology development in these countries of concern” made it infeasible to retain such a clear distinction between military and civil end users and end uses. BIS acknowledged the rationale for countries to align their civil and defense technology development, but identified the “difficult[y] for industry to know or determine whether the end use and end users of items proposed for export, reexport or transfer (in-country) will not be or are not intended for military uses or military end users.” Without License Exception CIV, exporters of items controlled for national security reasons will face increased licensing requirements for items that could previously be exported pursuant to the exception.
 
III. Proposed Rule to Modify License Exception Additional Permissible Reexports (APR)

Finally, BIS issued a proposed rule that, if adopted, would modify License Exception APR by removing provisions that authorize reexports of certain national security-controlled items. License Exception APR currently authorizes the reexport of certain items from low-risk countries or Hong Kong to certain destinations, provided the reexport is consistent with the export rules of the reexporting country. The current rule allows friendly, low-risk countries to apply their own export laws for eligible reexports of US-controlled items. The proposed rule would eliminate that provision because the export policies of the US and its allies are no longer consistent enough to ensure that the foreign export rules will implement US export control policies.
 
BIS justified the proposed rule, in part, by noting that “based on discussions with partner governments and U.S. companies, BIS has evidence of differences in licensing review standards ….” If these partner governments become less willing to adopt export control standards sought by the United States, then they may implement changes to their own export control regulations that further diverge from the U.S. rules.
 
BIS is requesting comment on the proposed change, which would make more reexports subject to US regulations in addition to locally applicable export control requirements. BIS seeks comments on “the volume of transactions affected by this proposed change” and how the change would impact business, acknowledging that it “does not have a way to readily account for how many items are being authorized” pursuant to the current License Exception APR. Comments on this proposal are due on June 26, 2020. The changes would take effect only after BIS issues a final rule in a future publication.  
 

Each of the measures taken this week can be understood within the context of the Trump Administration’s broader confrontation with China on trade policy, technology competition and, in particular, China’s “military-civil fusion” that the State Department has
 
recently described
 as “an attempt to deliberately erase the line” between the country’s military and civilian sectors, as well as a broader focus on national security and related geopolitical threats posed by countries around the world. These actions also highlight a breakdown of the

export control policy consensus in which the US and allied countries implemented consistent export policies in furtherance of common objectives.  
 
These new and proposed rules illustrate the importance of compliance with evolving regulatory requirements by exporters, financial institutions and others involved in global trade, especially in transactions involving controlled goods and technologies destined for China, Russia and Venezuela.

TE EX/IM TRAINING EVENTS & CONFERENCES

TE_a1
17. FCC Academy Presents Webinar: “An Introduction to EU/Dutch Dual-use and Military Export Controls”; 12 May

 
* What: Introduction to EU / Dutch Dual-Use and Military Export Controls
* When: 12 May 2020
* Where:  Online
* Sponsor: FCC Academy 
* Presenter: Marco F.N. Crombach MSc (Director)
* Register: 

here
, and email
 events@fullcirclecompliance.eu

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

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

EN EDITOR’S NOTES

EN_a119. Bartlett’s Unfamiliar Quotations

(Source: Editor)
 

Carl Friedrich Gauss (30 Apr 1777 – 23 Feb 1855; was a German mathematician and physicist who made significant contributions to many fields in mathematics and science. Gauss had an exceptional influence in many fields of mathematics and science, and is ranked among history’s most influential mathematicians.)
  – “It is not knowledge, but the act of learning, not possession but the act of getting there, which grants the greatest enjoyment.”
 
Lil Tjay (Tione Jayden Merritt; born 30 Apr 2001; known professionally as Lil Tjay, is an American rapper best known for collaboration with Polo G, “Pop Out”.)

  – “Going to jail is one of the best things that happened to me. It helped me get my mind right.”

  – “Basketball sneakers are for people who want to be comfortable. I rather be uncomfortable and just look nice.”

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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.
 
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.

28 Apr 2020:
85 FR 23470
: Elimination of License Exception Civil End Users (CIV).
 

 

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), Revision 8.

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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