20-0707 Tuesday “Daily Bugle”

20-0707 Tuesday “Daily Bugle”

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Tuesday, 7 July 2020

  1. U.S. Customs and Border Protection Requests Comments on Structure of Importation Bonds, CBP Forms 301 and 5297
  1. Items Scheduled for Future Federal Register Edition
  2. Commerce/BIS: (No new postings)
  3. State/DDTC Posts DTAG 17 May 2020 Plenary Minutes and Reports
  4. UK ECJU:”Guidance on How to Request a Variation or Revocation in case of Designation under the Sanctions Act”
  1. The Diplomat: “Where the US-China Trade War Should Go from Here”
  1. Clifford Chance: “U.S. Raises the Stakes for Doing Business in China”
  2. Nicholas Turner: “Sanctions Top-5 for the Week Ending 3 July 2020”
  3. Thompson Hine: “CFIUS 2018 Annual Report Reveals Continued Focus on Mitigation Measures and Offers a First Look at Mandatory Declaration Reviews”
  1. ECS Presents: 15-17 Sep; Annapolis, MD, USA; “3nd Annual ITAR/EAR Symposium and Managing ITAR/EAR Complexities”
  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 
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(Source: Federal Register
, 6 Jun 2020)
FR 8540307: Notice 
AGENCY: U.S. Customs and Border Protection (CBP), Department of Homeland Security.
ACTION: 60-Day notice and request for comments; extension of an existing collection of information.
SUMMARY: … The information collection is published in the Federal Register to obtain comments from the public and affected agencies. Comments are encouraged and must be submitted (no later than September 4, 2020) to be assured of consideration. 
ADDRESSES: Written comments and/or suggestions regarding the item(s) contained in this notice must include the OMB Control Number 1651-0050 in the subject line and the agency name. To avoid duplicate submissions, please use only one of the following methods to submit comments: 
Email. Submit comments to: CBP_PRA@cbp.dhs.gov
Mail. Submit written comments to CBP Paperwork Reduction Act Officer, U.S. Customs and Border Protection, Office of Trade, Regulations and Rulings, Economic Impact Analysis Branch, 90 K Street NE, 10th Floor, Washington, DC 20229-1177. 
FOR FURTHER INFORMATION CONTACT: Requests for additional PRA information should be directed to Seth Renkema, Chief, Economic Impact Analysis Branch, U.S. Customs and Border Protection, Office of Trade, Regulations and Rulings, 90 K Street NE, 10th Floor, Washington, DC 20229-1177, Telephone number 202-325-0056 or via email CBP_PRA@cbp.dhs.gov
SUPPLEMENTARY INFORMATION: CBP invites the general public and other Federal agencies to comment on the proposed and/or continuing information collections pursuant to the Paperwork Reduction Act of 1995 (44 U.S.C. 3501 et seq.). This process is conducted in accordance with 5 CFR 1320.8. Written comments and suggestions from the public and affected agencies should address one or more of the following four points:
whether the proposed collection of information is necessary for the proper performance of the functions of the agency, including whether the information will have practical utility;
the accuracy of the agency’s estimate of the burden of the proposed collection of information, including the validity of the methodology and assumptions used;
suggestions to enhance the quality, utility, and clarity of the information to be collected; and
suggestions to minimize the burden of the collection of information on those who are to respond, including through the use of appropriate automated, electronic, mechanical, or other technological collection techniques or other forms of information technology, e.g., permitting electronic submission of responses.

 Bonds are used to ensure that duties, taxes, charges, penalties, and reimbursable expenses owed to the Government are paid; to facilitate the movement of cargo and conveyances through CBP processing; and to provide legal recourse for the Government for noncompliance with laws and regulations. Bonds are required pursuant to 19 U.S.C.1608, 1623; 22 U.S.C. 463; 19 CFR part 113. Each person who is required by law or regulation to post a bond in order to secure a Customs transaction must submit the bond on CBP Form 301 which is available at: https://www.cbp.gov/newsroom/publications/forms?title=301&=Apply. Surety bonds are usually executed by an agent of the surety. The surety company grants authority to the agent via a Corporate Surety Power of Attorney, CBP Form 5297. This power is vested with CBP so that when a bond is filed, the validity of the authority of the agent executing the bond and the name of the surety can be verified to the surety’s grant. CBP Form 5297 is available at: https://www.cbp.gov/ document/forms/form-5297-corporatesurety-power-attorney.

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(Source: Federal Register)
* Treasury/OFAC; NOTICES;
Blocking or Unblocking of Persons and Properties
; [Pub. Date: 8 Jul 2020]
* Commerce/BIS; NOTICES;
Order Denying Export Privileges: 
Mahin Mojtahedzadeh
 [Pub. Date: 8 Jul 2020]

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OGS_a23. Commerce/BIS: (No new postings)

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(Source: UK ECJU, 6 Jul 2020) [Excerpts]
Section 23 of the Sanctions and Anti-Money Laundering Act 2018 (c.13) (‘the Sanctions Act’) enables certain persons to request a variation or revocation of a designation that has been applied through regulations made under section 1 of the Sanctions Act.

This guidance sets out how to request a variation or revocation if you have been designated under the Sanctions Act.  
In addition to this guidance, you can also read the Sanctions Review Procedure (EU Exit) Regulations 2018.

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(Source: The Diplomat, 7 Jul 2020) [Excerpts]
With the fallout from the coronavirus further straining U.S.-China relations, the brief détente the two superpowers enjoyed after signing a Phase One trade agreement in January has all but disappeared. When the agreement was signed, it was evident that China’s commitment to purchase an additional $200 billion in U.S. goods and services over the next two years was unrealistic. Amid a potential global depression in the wake of the pandemic, the deal is dead on arrival, but both governments claim they are committed to implementing it. 
When the global economy begins its long and arduous recovery, the United States needs to shift its strategy in the trade war to address the core concerns that prompted the economic conflict, such as Chinese industrial espionage, noncompetitive practices of state-owned enterprises (SOEs), and China’s expansive system of industrial subsidies. It will be tempting for the Trump administration to turn to tariffs once again to increase pressure against China, but this cannot be the policy moving forward. 

During the height of the trade war, tariffs disrupted supply chains, created uncertainty for firms, raised costs for consumers, and caused global growth to slow. A fresh round of tariffs would be even more harmful – they would derail the fragile global recovery and impose additional costs on Americans as unemployment skyrockets and savings are drained by the economic consequences of the coronavirus. It would also threaten the implementation of the Phase One agreement further. Instead, the United States should leverage its alliances to form a coalition to counter unfair Chinese economic practices and cement its economic interests in the Asia-Pacific.

First, the United States Trade Representative (USTR) should expand the U.S.-EU-Japan trilateral trade ministers’ meetings to include Australia, Canada, South Korea, and a post-Brexit United Kingdom. Although the United States has largely taken a unilateral approach to combatting unfair Chinese economic practices under the Trump administration, the trade trilateral offers the blueprint to more robust cooperation with allies. Since December 2017, the three partners have met intermittently to “enhance trilateral cooperation” with the aim of addressing “unfair market distorting and protectionist practices.” In January, the three-member group agreed to World Trade Organization (WTO) reforms on subsidies notification and transparency, addressing a shared concern over China’s system of state subsidies and noncompliance with WTO rules. Together, an expanded coalition would make up 55 percent of the world economy and roughly the same proportion in global trade. The United States should urge the new coalition to endorse these reforms at a future Camp David G-7 meeting before launching a WTO complaint and attempting to reach a G-20-wide consensus on subsidies. 

Second, the United States should establish a multilateral working group including the European Union, Japan, South Korea, and members of the Five Eyes intelligence alliance to align export control and investment screening regimes. In 2018, Trump signed reforms strengthening U.S. safeguards against economic activities that threaten national security. By coordinating these policies with allies, the United States can expand its high standards for investments and export controls to like-minded partners. This coalition would signal to Chinese firms that they risk exclusion from these markets unless China reforms its unfair economic practices.


Clifford Chance, 7 Jul 2020) [Excerpts]

* Principal Author: David DiBari, Esq., Clifford Chance
How companies can avoid getting caught in the middle of the U.S.-China trade war

What a week it has been for the export control world. First, the Bureau of Industry and Security of the U.S. Department of Commerce finalized two major amendments to the Export Administration Regulations that significantly tighten export controls to China. Second, the Commerce Department and the U.S. State Department suspended regulations that provided preferential treatment to Hong Kong concerning export controls, including access to certain export license exceptions. 

These game-changing developments significantly increase the level of expected counterparty due diligence for companies and related risks of non-compliance, particularly those currently doing business in Hong Kong or mainland China. Pending receipt of further guidance on the practical impact of these changes from U.S. authorities, companies should take steps now to assess how these changes impact their compliance risk and overall risk tolerance.

(Source: Linkedin, 7 Jul 202) [Excerpts]
* Principal Author: Nicholas Turner, Esq., 852-3729-1806, Steptoe 
Congress passed the Hong Kong Autonomy Act at light speed following the National People’s Congress Standing Committee’s unanimous adoption on 30 June 2020 of the Law of the People’s Republic of China on Safeguarding National Security in the Hong Kong Special Administrative Region.


The US Departments of State, Treasury, Commerce, and Homeland Security jointly issued a Xinjiang Supply Chain Business Advisory highlighting sanctions and human rights risks involving products manufactured in China’s Xinjiang Uyghur Autonomous Region (XUAR). Meanwhile, US Customs and Border Protection (CBP) announced the detainment of a shipment of hair weaves believed to be produced by prison laborers in the XUAR.    

(3) The European Union added 11 Venezuelan government officials to the EU Sanctions List for “their role in acts and decisions undermining democracy and the rule of law in Venezuela.” The targets include the Secretary-General of the National Defence Council, several members of the National Assembly, and judges involved in politically motivated prosecutions.   

(4) The US Office of Foreign Assets Control (OFAC) lifted sanctions on two shipping companies based in the Marshall Islands and Greece that were sanctioned in June 2020 in connection with a scheme to deliver crude oil from Venezuela. OFAC also revoked General License 37 which had authorized US persons to wind down transactions with the companies and their vessels.   

The US Department of Justice (DOJ) issued a warrant and complaint seeking the seizure of Iranian-origin gasoil on board four vessels en route to Venezuela. According to the complaint, the shipments would fund the Islamic Revolutionary Guard Corps (IRGC), which is designated by the United States as a foreign terrorist organization. As mentioned last week, OFAC named five Iranian nationals as Specially Designated Nationals (SDNs) under Executive Order 13599 for captaining vessels delivering Iranian gasoline to Venezuela.

The Hong Kong Autonomy Act is currently awaiting Donald Trump’s signature and could become law within days. As I said to Reuters: “Financial institutions are concerned about the legislation principally because of uncertainty about how the sanctions will be used.” No word yet on who would be sanctioned or how the Treasury Department would define “significant transactions” for the purposes of the Act. Retail and private banking? Who knows. Adding to the complexity, the sanctions described are not the usual strict SDN or correspondent banking sanctions, meaning companies will need to watch for regulations or directives to be issued by the Treasury Department to understand restrictions, if any, on their customers and counterparties. … 

(Source: Trump and Trade, 7 Jul 2020)
* Principal Author:
Brent Connor
, Esq., 1-


, Thompson Hine
The Committee on Foreign Investment in the United States (CFIUS), an inter-agency committee headed by the Department of the Treasury, has released its annual report for 2018.  CFIUS is authorized to review transactions that could result in the control of U.S. businesses by foreign persons or companies, as well as non-controlling investments by foreign persons or companies in certain U.S. businesses, in in order to determine the effect of such transactions on the national security of the United States. CFIUS has become more widely known in the past decade amid growing concern over foreign investment in the United States and the potential security implications of certain foreign entities owning and controlling U.S. companies and/or technology.  The Defense Production Act of 1950, as amended in August 2018 by the Foreign Investment Risk Review Modernization Act (FIRRMA), requires CFIUS to provide an annual report to Congress containing various cumulative and summary information related to transaction filings.

The report notes that for 2018, CFIUS conducted a first-stage review of 229 notices of covered transactions, and that more formal second-stage investigations were undertaken with respect to 158 of those 229 notices. CFIUS concluded action on 29 of the 229 notices (approximately 13% of the notices filed) after adopting mitigation measures in order to resolve national security concerns.  This equals the number of mitigation measures implemented in 2017, and continues to show a significant uptick in CFIUS agencies’ interest in assuring national security provisions are implemented when necessary as the 2017-2018 mitigation actions total all of those taken from 2013 to 2016.
Ultimately, the parties to 66 of the 229 transactions withdrew their notices, with 34 parties later refiling a new notice in 2019.  The report notes that for 18 of the withdrawn notices, the parties either abandoned the transaction after either CFIUS informed them that it was unable to identify mitigation measures that would resolve its national security concerns or it proposed mitigation measures that the parties chose not to accept.  For 2018, CFIUS referred one transaction to President Donald Trump, in which the president issued an order prohibiting the acquisition of Qualcomm Incorporated by Broadcom Limited.

The overall data provided in this annual report shows a continuing upward trend in the number of notifications filed with CFIUS from 2010 to 2018.  The number of notices subject to CFIUS jurisdiction increased from 93 in 2010 to 229 in 2018; however, the filings in 2018 represent a slight decrease from the 237 notices filed in 2017.  Since CFIUS notices are highly confidential, the report provides only cumulative data on various industry sectors (and based upon NAICS codes) and notes that for 2018: 35% of the filings involved manufacturing; 38% related to finance, information and services; 21% involved mining, utilities and construction; and, 7% involved entities in the wholesale trade, retail trade or transportation.

Unsurprisingly, acquisitions involving Chinese investors accounted for the largest proportion of CFIUS notices filed in 2018, accounting for 55 of the 229 notices filed. Investments from Japan (31), Canada (29), France (21) and  Germany (12) rounded out the top five foreign investor countries.  For the 29 notices in which mitigation measures were put in place and agreed to by the involved parties in 2018, a wide variety of specific and verifiable mitigating actions were taken.  These actions range from prohibiting or limiting the transfer or sharing of certain intellectual property and ensuring that only U.S. citizens handle certain products and services, to excluding certain sensitive assets from a transaction or even requiring the divestiture of all or part of the involved U.S. business.

The pilot program implemented pursuant to FIRRMA requiring declarations for certain transactions involving critical technologies was in place only in November and December of 2018.  A declaration is a short form filing, for which CFIUS is not required to make a definitive determination. Parties facing a mandatory declaration may choose to submit a full notice.  During this time, the annual report notes that CFIUS conducted an assessment on 21 declarations that were filed.  CFIUS cleared two transactions, requested the parties to five transaction declarations to file a full written notice, determined that it could not conclude action on 11 transaction declarations, and found that one declaration was not subject to the jurisdiction of the pilot program.  The parties withdrew one declaration for business reasons.  Investors will continue to watch the treatment of declarations in the coming year in order to determine whether this is a viable alternative to submitting a full notice.


(Source: ECS)
* What: 3nd Annual ITAR/EAR Symposium and Managing ITAR/EAR Complexities
* When: 15-17 Sep
* Where: Annapolis, MD
* Sponsor: Export Compliance Solutions & Consulting (ECS)
* ECS and Guest Speakers: Suzanne Palmer, Mal Zerden, Lisa Bencivenga, Debi Davis, Scott Jackson, Matt McGrath, Matt Doyle
* Register: here or write to liz@exportcompliancesolutions.com or call 1-866-238-4018

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EN_a111. Bartlett’s Unfamiliar Quotations

(Source: Editor)

* Satchel Paige
(Leroy Robert “Satchel” Paige; 7 Jul 1906 – 8 Jun 1982; was an American Negro League Baseball and Major League Baseball pitcher who is notable for his longevity in the game, and for attracting record crowds wherever he pitched. On town tours across the United States, Paige would sometimes have his infielders sit down behind him and then routinely strike out the side.  At age 42 in 1948, Paige was the oldest major league rookie while playing for the Cleveland Indians. He played with the St. Louis Browns until age 47.)
  – “How old would you be if you didn’t know how old you are?”
  – “If a man can beat you, walk him.”

Robert A. Heinlein 
(Robert Anson Heinlein; 7 Jul 1907 – 8 May 1988; was an American science-fiction author, aeronautical engineer, and retired Naval officer.  He was one of the best-selling science-fiction novelists for many decades, and he, Isaac Asimov, and Arthur C. Clarke are often considered the “Big Three” of English-language science fiction authors.)

  – “An armed society is a polite society. Manners are good when one may have to back up his acts with his life.”
  – “Political tags – such as royalist, communist, democrat, populist, fascist, liberal, conservative, and so forth – are never basic criteria. The human race divides politically into those who want people to be controlled and those who have no such desire.”

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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:

Civil Monetary Penalty Adjustments for Inflation. 
DOC FOREIGN TRADE REGULATIONS (FTR): 15 CFR Part 30.   24 Apr 2018: 83 FR 17749: Foreign Trade Regulations (FTR): Clarification on the Collection and Confidentiality of Kimberley Process Certificates.  

: 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. 

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.

6 May 2020: 85 FR 26847: Notice (not an amendment) temporarily reducing the registration fee schedule in ITAR 122.3 until April 30, 2021. 
DOT FOREIGN ASSETS CONTROL REGULATIONS (OFAC FACR): 31 CFR, Parts 500-599, Embargoes, Sanctions, Executive Orders

5 Jun 2020:
85 FR 84510:

Syria Sanctions Regulations. 


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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