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20-0710 Friday ” Daily Bugle “

20-0710 Friday “Daily Bugle”

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Friday, 10 July 2020

  1. USTR: “Extension of Particular Exclusions: China’s Acts, Policies, and Practices Related to Technology Transfer, Intellectual Property, and Innovation”
  1. Items Scheduled for Future Federal Register Edition
  2. Commerce/BIS: (No new postings)
  3. State/DDTC Announces Outage Notice on July 13
  4. Treasury/OFAC Sanctions Chinese Entity and Officials Pursuant to Global Magnitsky Human Rights Accountability Act
  5. Treasury/OFAC: “Somalia Designation Removal”
  6. UK ECJU: “Export Licences and Certificates from 1 January 2021”
  1. KFOR: “Edmond Man Pleads Guilty to Smuggling Firearms to the Middle East”
  1. Arent Fox: “The USMCA: Sealed, Delivered and Now in Play”
  2. BakerMcKenzie: “US – USTR grants Sec. 301 China List 4A Product Exclusions”
  3. Kelley Drye: “Amazon’s Settlement with OFAC Puts E-Commerce Companies on Notice”
  4. Pillsbury: “UK Imposes First Global Human Rights Sanctions”
  1. ECS Presents: 15-16 Oct; Toronto, CA; “ITAR/EAR Controls for Non-US Companies”
  2. Friday List of Approaching Events: 199 Events Posted This Week, Including 2 New Events
  1. Bartlett’s Unfamiliar Quotations 
  2. Are Your Copies of Regulations Up to Date? Find the Latest Amendments Here. 
  3. Weekly Highlights of the Daily Bugle Top Stories 
  4. Submit Your Job Opening and View All Job Openings 
  5. Submit Your Event and View All Approaching Events 

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EXIM ITEMS FROM TODAY’S FEDERAL REGISTER

 
85 FR 41658
: Notice
 
*
AGENCY:
Office of the United States Trade
Representative.
*
ACTION:
Notice of product exclusions.
*
SUMMARY:
On August 20, 2019, at the direction of the President, the U.S. Trade Representative determined to modify the action being taken in the Section 301 investigation of China’s acts, policies, and practices related to technology transfer, intellectual property, and innovation by imposing additional duties of 10 percent ad valorem on goods of China with an annual trade value of approximately $300 billion. The additional duties on products in List 1, which is set out in Annex A of that action, became effective on September 1, 2019. On August 30, 2019, at the direction of the President, the U.S. Trade Representative determined to increase the rate of the additional duty applicable to the tariff subheadings covered by the action announced in the August 20 notice from 10 to 15 percent. On January 22, 2020, the U.S. Trade Representative determined to reduce the rate from 15 to 7.5 percent. The U.S. Trade Representative initiated a product exclusion process in October 2019, and interested persons have submitted requests for the exclusion of specific products. This notice announces the U.S. Trade Representative’s determination to grant certain exclusion requests, as specified in the Annex to this notice, and make certain amendments to previously announced exclusions. The U.S. Trade Representative will continue to issue decisions on pending requests on a periodic basis.
*
DATES:
The product exclusions in this notice apply as of September 1, 2019, the effective date of List 1 of the $300 billion action, and will extend to September 1, 2020.

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

OGS OTHER GOVERNMENT SOURCES

[No relevant federal items for today]

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

OGS_a23. Commerce/BIS: (No new postings)

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

(Source:
State/DDTC
, 9 July 2020)
 
The Defense Export Control and Compliance (DECCS) Registration and Licensing applications will be unavailable to industry from 6:00 AM (EDT) through 8:00 AM (EDT) Monday, July 13 for scheduled system maintenance. Please ensure work in progress is saved prior to the scheduled
downtime.

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

(Source: Treasury/OFAC, 9 Jul 2020) [Excerpts] 
 
Today, the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) sanctioned one Chinese government entity and four current or former government officials in connection with serious rights abuses against ethnic minorities in the Xinjiang Uyghur Autonomous Region (XUAR). 

These designations include Chen Quanguo, the Communist Party Secretary of XUAR, and Zhu Hailun, a former Deputy Party Secretary of the XUAR. Also designated today is the Xinjiang Public Security Bureau (XPSB), as well as the current Director and Communist Party Secretary of the XPSB, Wang Mingshan, and the former Party Secretary of the XPSB, Huo Liujun

The entity and officials are being designated for their connection to serious human rights abuse against ethnic minorities in Xinjiang, which reportedly include mass arbitrary detention and severe physical abuse, among other serious abuses targeting Uyghurs, a Turkic Muslim population indigenous to Xinjiang, and other ethnic minorities in the region.  …

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

(Source: Treasury/OFAC, 10 Jul 2020)
 
On July 10, 2020 OFAC Announced Somalia Designation Removal.
 
Click here to see the complete list.

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

(Source: UK ECJU, 10 Jul 2020) [Excerpts]
 
The UK ECJU releases a Guidance for
Licences, certificates and special rules for taking goods out of the UK from 1 January 2021.
 
Click here to see the complete list.

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

COM NEWS

(Source: KFOR News
, 10 Jul 2020) [Excerpts]
 
A 57-year-old Edmond man entered a guilty plea last month to illegally shipping firearms to the Middle East and two other firearms violations.  Randy Williams, of Edmond, was charged on June 1 with violating the Arms Export Control Act, making a false statement to a firearms dealer, and possession of an unregistered firearm.
 
According to an affidavit filed in support of a criminal complaint filed on March 3, the Federal Bureau of Investigation (FBI) Legal Attaché in Abu Dhabi, United Arab Emirates (UAE) notified the FBI Oklahoma City Field Office that a FedEx shipment had been seized in Dubai, UAE, on December 19, 2018.   The shipment contained multiple Glock pistols and firearms parts, and shipment records indicated the shipment was sent from Williams, at an address in Oklahoma City.  Records also indicated the shipment contained tools and that the intended recipient was located in Sulaymaniyah, Iraq.  . . .
 
Williams did not have a Federal Firearms License from the Bureau of Alcohol, Tobacco, Firearms, and Explosives or authority from the Department of Defense to export defense articles (i.e., weapons) outside the United States.  He was also charged with knowingly making a false and fictitious statement to a firearms dealer in connection to his acquisition of three Glock pistols and two Glock pistol frames and was in possession of a 5.56 caliber rifle that had a barrel of less than 16 inches.
 
He pled guilty to all three counts, and faces up to twenty years in prison for the Arms Export Control Act violation and up to ten years in prison on each of the other two counts.

COM COMMENTARY

(Source: Arent Fox, 10 Jul 2020)
 
* Principal Author:
David R. Hamill
, Esq., 1-202-857-8940, Arent Fox
 
By the time you open this alert, the USMCA will have been formally and officially launched. These are still early days and there remains much to be clarified by pending rulemaking.
 
We know what we know and we know what we don’t know.
Many of you have been following our alerts over past months. Many have joined our recent USMCA webinars. The automotive industry especially has tuned in to hear the significant changes for them in the new agreement.
We won’t replay these here other than to remind you that your 2020 NAFTA Certificates are no longer valid. However, we thought it might be helpful to offer a checklist of recommendations to guide readers through these early first weeks and months of the USMCA.
USMCA Checklist
 
(1)
Seek to be informed on the USMCA certifications issued and the USMCA claims made by your company.
 

Even during these first transitional months, US Customs and Border Protection (CBP) can be expected to issue requests for data and other origin information (CF-28s) during the purported informed compliance period. The transition period is not a “safe harbor” period to issue USMCA certificates without consequence, but simply more time to gather needed data.

(2)
Conduct a comparison of the USMCA origin rules to the legacy NAFTA origin rules on your priority products. 
 

Analyze how these products have qualified under NAFTA and how they will be treated under the new USMCA rules. Some key NAFTA automotive origin rules, such as “deemed originating” no longer apply under the USMCA.
 
(3)
Engage in an “enterprise risk” or “whole of company” approach to the USMCA.
 

Assemble a team from key corporate divisions within the company – from the sales department to logistics personnel to the finance group – to provide important considerations when issuing USMCA certifications and making USMCA claims.
 
(4)
Ensure that any communications from CBP to the company is properly handled by senior managers within the organization to ensure timely and accurate responses.
 

Even with a six-month “informed compliance” period, CBP will be expecting companies to demonstrate “reasonable care” and “due diligence” when issuing USMCA certifications and making USMCA claims.
 
(5)
Understand and prepare company policies governing the issuance of USMCA certifications, particularly if you are issuing a USMCA certification as an importer.
 

Under the USMCA, an importer may issue its own certifications that can be relied on when making USMCA preference claims. Understand the legal risks this choice presents and seek advice on how best to mitigate them.
(6)
Speak to your company’s suppliers to gauge their USMCA understanding and needs.
 

This is especially important if you are a Tier 1 automotive supplier and your Tier 2 suppliers previously provided you only “traced value” for your NAFTA qualification analysis.
 
(7)
If your company is in the automotive sector, understand how the Labor Value Content (LVC) requirements of the USMCA work.
 

The LVC certification requirements apply only to vehicle manufacturers, but vehicle parts suppliers will need to know how these provisions also impact them.
 
(8)
Track and retain records of entries filed without a USMCA preference claim (due to lack of available data at the time of entry).
 

The USMCA exempts the Merchandise Processing Fee (MPF) when USMCA claims are made at entry but the current law does not provide MPF refunds when post-entry USMCA claims are made. Legislative efforts to remediate this difference from the NAFTA, if passed, could provide retroactive refunds.
 
(9)
Keep your NAFTA documents and records. 
While NAFTA certifications and claims are no longer valid, the NAFTA has not entirely disappeared. US CBP retains the authority to conduct NAFTA verifications (audits) retroactively going back to 2015.
 
(10)
Get the best advice. 
 

The best and most effective approach in the long term is getting it right from the beginning. Use this advice to “connect the dots” for your company’s exposure to non-USMCA risks, such as continuing 232 and 301 tariff exposure. 
 

It may take a while to completely transition to the USMCA, but following these suggestions during this process will greatly assist in reducing the risk of making costly mistakes during the early months – and will serve as a foundation for compliance actions in the years ahead. 

(Source:
International Trade Compliance Update
, 9 Jul 2020)
 
* Author:
Stuart P. Seidel
, Esq., 1-202-452-7088, BakerMcKenzie
 
On July 10, 2020, the Office of the United States Trade Representative (USTR) will publish in the Federal Register a notice of product exclusions from the action involving imposition of 15% additional duties (lowered to 7.5% on January 22, 2020) on approximately $300Bn in Chinese products. The USTR initiated a product exclusion process in October 2019, and interested persons have submitted requests for the exclusion of specific products. This notice announces USTR’s determination to grant certain exclusion requests, as specified in the Annex to the notice, and make certain amendments to previously announced exclusions. The USTR will continue to issue decisions on pending requests on a periodic basis. The product exclusions in the notice apply as of September 1, 2019, the effective date of Annex A to List 1  of the $300 billion action (generally referred to as List or Tranche 4A), and will extend to September 1, 2020.

Based on the evaluation of factors set forth in an October 24, 2019 notice (84 FR 57144), USTR has determined to grant 61 specially prepared product descriptions, which together respond to 86 separate exclusion requests. In accordance with the October 24 notice, the exclusions are available for any product that meets the description in the Annex, regardless of whether the importer filed an exclusion request. Further, the scope of each exclusion is governed by the scope of the ten-digit HTSUS subheading as described in the Annex, and not by the product descriptions set out in any particular request for exclusion.
 
(1)
Annex Paragraph A, subparagraphs (1)-(2) create a new HTS 9903.88.51 and insert a new US note 20 (ddd) to subchapter III of chapter 99, HTS.
 
(2)
Annex Paragraph A, subparagraphs (3)-(4) of the Annex contain conforming amendments to the HTSUS reflecting the modifications made by the Annex.
 
(3)
Annex Paragraph B, subparagraphs (1)-(27) of the Annex contain technical corrections to address periodic revisions to the HTSUS subheadings in previously published exclusions.


(Source: Trade and Manufacturing Monitor, 8 Jul 2020)
 
* Author: Robert Slack, Esq., 1-
202

342-8622
, Kelley Drye
 
Today the Office of Foreign Assets Control (OFAC) announced a settlement agreement with Amazon for apparent violations of U.S. sanctions regulations by the company. The 
announcement
 puts e-commerce and online companies on notice to increase their vigilance when it comes to sanctions screening.
According to OFAC, Amazon violated U.S. regulations by conducting retail e-commerce transactions with persons in sanctioned territories, persons on OFAC’s List of Specially Designated Nationals (SDNs), and sanctioned country embassies around the world.  OFAC found particular fault with Amazon’s sanctions screening program, which failed to take into consideration all of the transaction and consumer information that was relevant to sanctions compliance.  For example, OFAC noted that Amazon’s system failed to stop transactions that included the names of sanctioned territories and consumers with exact name matches to parties on the SDN List.  OFAC noted that Amazon also failed to halt transactions involving common alternative spellings of sanctioned locations (“Krimea” instead of “Crimea”) or known cities in sanctioned locations (“Yalta,” which is in the Crimea region).
The announcement reads like a roadmap for what e-commerce and online companies should be doing to ensure compliance with OFAC’s regulations.  Among other measures, companies should consider:
 
(1)
Tailored controls: E-commerce companies should adopt screening programs that are adapted to the fast-paced and often high volume world of e-commerce.  By their nature, e-commerce companies must rely on highly automated systems to screen transactions for sanctions compliance.  The key is to design those programs to capture risky transactions without generating an overwhelming number of “false positives” that require individualized review by human analysts.
 
(2)
Poor data: Companies should take into consideration the limited or poor quality data that is often inherent in online transactions, data that can easily include misspelled or alternatively spelled locations.  Companies handling online transactions, especially those without a stable customer base, need to be able to efficiently screen and hold transactions that raise sanctions compliance concerns, despite these challenges.  Some companies may also benefit from improving the quality of data collected from customers, which will make screening more reliable and reduce false positives over time.
 
(3)
The right data: E-commerce companies must consider all of the data that they collect on customers and transactions and determine which elements contain information relevant to sanctions screening.  That data may exist in different databases or parts of companies’ systems and may need to be stitched together to obtain a full view of potential sanctions risks.
 
(4)
IP blocking: Companies should review their Internet Protocol (IP) blocking controls, which deny access from IP addresses associated with sanctioned territories, to ensure that they are effective.  While OFAC recognized improvements to Amazon’s IP blocking controls in its announcement, e-commerce companies should be wary of overreliance on IP blocking, which can miss customers that access sites through Virtual Private Networks (VPNs) or other tools that anonymize customers’ locations.
 
(5)
Testing:  Testing is the only way to tell if a sanctions compliance program is working as intended.  E-commerce companies should dig into their customer and transaction data, with help from qualified sanctions data analysts and counsel as needed, to periodically review whether their sanctions compliance screening program is capturing the right transactions and dispositioning them appropriately.
 
(6)
Training: OFAC recognized that Amazon took remedial action to ensure that employees received training tailored to their job responsibilities.  This type of targeted process-based training, in addition to broader “awareness” training, is the most effective way to ensure that employees understand their responsibilities and know where to get help on sanctions issues.
 
The Amazon settlement also highlights the benefits of submitting a voluntary self-disclosure (VSD) to OFAC when a company identifies past violations of the law.  OFAC’s VSD provisions allow companies to voluntarily come before the agency and describe past violations in exchange for an often substantial reduction in penalties.  The benefit is most pronounced for violations involving low-value transactions, like the retail sales involved in the Amazon case.  That is because, absent a VSD, OFAC can charge companies with penalties of about $300,000 to $1.5 million per violation.  In Amazon’s case, the base penalty outside of a VSD context was over $1 billion.  In contrast, the base penalty in a VSD context is often dropped to one-half of transaction value, although it can change, sometimes substantially, depending on the exact circumstances of a case.  By taking advantage of the VSD provisions, Amazon received a penalty of only $134,523 for transactions valued at about $269,000.
E-commerce and technology companies are often lucky to have deep benches of data science and programming expertise that can be used to design targeted, risk-based compliance solutions.  But technology companies also tend to capture a lot of relevant data on users that must be considered when adopting sanctions compliance solutions.  Getting a handle on what data is collected, and how to analyze it in light of OFAC’s rules is the first step to ensuring compliance – and avoiding penalties and bad press
.


(Source: Pillsbury, 9 Jul 2020)
 
* Principal Author:
Henrietta Worthington
, Esq., 44-20-7847-9542, Pillsbury
 
As we’ve discussed previously, in 2018, the UK enacted the Sanctions and Anti-Money Laundering Act (the Act), allowing it to impose its own post-Brexit autonomous sanctions regime. On July 6, 2020, the UK imposed its first sanctions under the Act: the Global Human Rights Sanctions Regulations 2020 (the Regulations).
Under the Regulations, the UK can impose asset freezes and travel bans on individuals and entities “responsible for or involved in a serious violation” of the following human rights:
 
(1)
the right to life;
 
(2)
the right not to be subjected to torture or cruel, inhuman or degrading treatment or punishment; and
 
(3)
the right to be free from slavery, not to be held in servitude or required to perform forced or compulsory labour[
FN/
1]
.
 
47 individuals and two entities have been added to the Consolidated List under the Regulations, consisting of:
 
(a)
25 Russian officials who were reportedly involved in the mistreatment and death of Sergei Magnitsky;
 
(b)
20 Saudi Arabian officials linked to the unlawful killing of Jamal Khashoggi at the Saudi Consulate in Istanbul on 2 October 2018;
 
(c)
2 high-ranking commanders of the Myanmar Armed Forces alleged to be responsible for atrocities and serious human rights violations against the Rohingya population; and
 
(d)
2 North Korean entities involved in running prison camps and serious human rights violations against the prisoners.
 
The UK government has also issued accompanying guidance and an explanatory memorandum.
UK businesses will need to ensure compliance with the Regulations, including updating their policies and procedures as necessary. The government also made clear in its press release that these listings are the first wave, “with further sanctions expected in the coming months.” Companies will therefore also need to closely monitor further updates.
 
[
FN/
1]
 
Article 4(2) of the Regulations


TE EX/IM TRAINING EVENTS & CONFERENCES

(Source: ECS)
 
*What:  ITAR/EAR Controls for Non-U.S. Companies
*When:  15-16 Oct
*Where:  Toronto, CA
*Sponsor: Export Compliance Solutions & Consulting (ECS)
*ECS Speakers:  Suzanne Palmer, Mal Zerden
*Register: here or write to liz@exportcompliancesolutions.com or call 1-866-238-4018

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

(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, so we are displaying here only the new events in the Daily Bugle, while maintaining a 
LINK HERE to the full list.]
 

On-Line:
 
* Jul 14:
Antidumping 101: Minimizing Risk, Maximizing Compliance
; Sandler, Travis & Rosenberg
 
* Jul 27:
Virtual Customs Broker Exam Prep Course – October 2020 Exam
; Sandler, Travis & Rosenberg

Back to top

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

EN EDITOR’S NOTES

EN_a115. Bartlett’s Unfamiliar Quotations

(Source: Editor)
 

*  John Calvin
 (born Jehan Cauvin; 10 Jul 1509 – 27 May 1564; was a French theologian, pastor, and reformer in Geneva during the Protestant Reformation. He was a principal figure in the development of the system of Christian theology later called Calvinism, aspects of which include the doctrines of predestination and of the absolute sovereignty of God in salvation of the human soul from death and eternal damnation.)
  – “I consider looseness with words no less of a defect than looseness of the bowels.”
 
* Laurel Thatcher Ulrich
(born 11 Jul 1938; is a Pulitzer Prize-winning American historian specializing in early America and the history of women, and a professor at Harvard University. Her most famous book, “A Midwife’s Tale,” was later the basis for a PBS documentary film.)
  – “Well-behaved women seldom make history.”
 
Friday funnies
A guy spots a sign outside a house that reads “Talking Dog for Sale.” Intrigued, he walks in, and asks the dog, “Can you really talk?” “Yes, I can,” says the dog.  “Okay, tell me about yourself,” says the man.  The dog replies, “I’ve led a full and exciting life. In the Alps I was a rescue dog, saving avalanche victims. Then I served my country in as a bomb detection dog in Iraq.  Now I spend my days reading to the residents of a retirement home.”  The visitor is flabbergasted! He asks the dog’s owner, “Why on earth would you want to sell an incredible talking dog like this?”  The owner says, “Because he’s a liar! He never did any of that!”  

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

 

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. 
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 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. 
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. 

 
 
 
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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