20-0713 Monday “Daily Bugle”

20-0713 Monday “Daily Bugle”

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Monday, 13 July 2020

(No items of interest posted) 

  1. Items Scheduled for Future Federal Register Edition
  2. Commerce/BIS:(No new postings)
  3. State/DDTC:(No new postings)
  1. Reuters: “Sweden Joins France, Germany in Weighing Measures Against China Over Hong Kong”
  1. ECS: “New Season, New Controls, New Sanctions: New CCL Chem/Bio Controls, Firearms FAQs & Treasury Implements Caesar Act Sanctions Against Syria”
  2. Husch Blackwell: “USTR Announces New Section 301 Product Exclusions for List 4A”
  3. Mayer Brown: “Key Changes in the July 3rd Draft of China’s Export Control Law”
  4. Thompson Hine: “Commerce Issues Guidance on Transfer of Gun Export Controls to the Commerce Control List”
  1. Monday List of Ex/Im Job Openings: 65 Jobs Available; 4 New Job Openings This Week
  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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The ITAR amendments to the ITAR that took effect on 9 March and 25 March are included in the current edition of the BITAR.  Subscribers receive updated editions every time the regulations are amended (usually within 24 hours) so you will always have the current versions of the regulations. Subscribe to the BITAR now to guarantee you have an up-to-date ITAR!    

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(Source: Federal Register)

* Justice Department: NOTICES; Agency Information Collection Activities; Proposals, Submissions, and Approvals: Federal Firearms License RENEWAL Application [Pub. Date: 14 Jul 2020] (PDF)

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OGS_a22. Commerce/BIS: (No new postings)

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NWS_a14. Reuters: “Sweden Joins France, Germany in Weighing Measures Against China Over Hong Kong”

Reuters, 13 Jul 2020) [Excerpts]
  Sweden said on Monday it supported Franco-German efforts for a robust response to China’s new security law on Hong Kong, joining Denmark and the Netherlands in pushing the European Union to consider countermeasures on Beijing.
  Like much of the West, the European Union has denounced the decision by China’s parliament to pass national security legislation for the former British colony of Hong Kong despite an international outcry.
  “There is a proposal of measures especially proposed by Germany and France that I will support because we need to react to what is happening in Hong Kong,” said Swedish Foreign Minister Anne Linde said before a rare meeting in person with her EU counterparts in Brussels.


COM_a15. ECS: “New Season, New Controls, New Sanctions: New CCL Chem/Bio Controls, Firearms FAQs & Treasury Implements Caesar Act Sanctions Against Syria”

   In our last post, we covered a series of breaking developments in export compliance towards China and Hong Kong.  While those developments have received a lot of attention, summer has brought us even more export compliance updates.
New CCL Chem/Bio Controls
   On June 17, 2020, the Department of Commerce, Bureau of Industry and Security (BIS) published a final rule (85 FR 36483) to amend Commerce Control List (CCL) Export Control Classification Numbers (ECCNs) 1C350, 1C351 and 2B352.  These changes implement decisions by the Australia Group by adding a list of precursor chemicals and mixtures to 1C350, Middle East respiratory syndrome-related coronavirus (MERS-related coronavirus) to 1C351, and a technical note to 2B352 (Equipment capable of use in handling biological materials) that indicates 2B352.b.2.b includes single-use cultivation chambers with rigid walls.  Related technology would be controlled in the relevant ECCNs.
  The Australia Group is a forum of 43 countries which seek to harmonize export controls related to chemical and biological weapons.
BIS Issues Firearms FAQs
   BIS recently posted a series of FAQs on firearms and related items moved from the United States Munitions List (USML) to the CCL in March.  The document, dated January 23, 2020 was published on the BIS website on July 7, 2020 and contains 62 pages of FAQs and other guidance on the transition.
Treasury Implements Caesar Act Sanctions
   Also on June 17, 2020, the U.S. Department of the Treasury, Office of Foreign Assets Control (OFAC) sanctioned the first set of individuals and entities under the Caesar Syria Civilian Protection Act of 2019 (the Caesar Act).  Named for a Syrian photographer who documented torture in the regime of Syrian President Bashar al-Assad, the Caesar Act targets “foreign persons who facilitate the Assad regime’s acquisition of goods, services, or technologies that support the regime’s military activities as well as its aviation and oil and gas production industries.”
Executive Order Establishes ICC Sanctions
   On June 11, 2020, the President issued Executive Order 13928, “Blocking Property of Certain Persons Associated with the International Criminal Court.”  This executive order is a response to assertions of jurisdiction over U.S. and allied personnel by the International Criminal Court (ICC), countries which are “are not parties to the Rome Statute or have not otherwise consented to ICC jurisdiction.”  This is the latest stage of a conflict that dates back the establishment of the ICC and 2002’s American Service-Members’ Protection Act.  The Secretary of State, in consultation with the Secretary of the Treasury and the Attorney General may sanction ICC personnel under this executive order, who would then be included on the Specially Designated Nationals and Blocked Persons List (SDN List) and subject to a series of financial sanctions.  No individuals or entities have yet been sanctioned under this order.
CFIUS Proposes Export License Requirement as Filing Threshold
   On May 21, 2020, the Department of Treasury published a proposed rule (85 FR 30893) which would notably revise the category of business acquisitions subject to mandatory Committee on Foreign Investment in the United States (CFIUS) review.  The proposed revision establishes mandatory review of acquisitions and some non-controlling investments when an export license would be required to release a company’s technology to the relevant foreign parties.  Relevant export licenses are defined under “U.S. regulatory authorization” to include:
   (a) A license or other approval issued by the Department of State under the ITAR;
   (b) A license from the Department of Commerce under the EAR;
   (c) A specific or general authorization from the Department of Energy under the regulations governing assistance to foreign atomic energy activities at 10 CFR part 810 other than the general authorization described in 10 CFR 810.6(a); or
   (d) A specific license from the Nuclear Regulatory Commission under the regulations governing the export or import of nuclear equipment and material at 10 CFR part 110.
   Previously, CFIUS had published a list of North American Industry Classification System (NAICS) codes identifying businesses subject to this requirement.  The proposed revision would replace that list with the export licensing threshold.  Comments were accepted through June 22, 2020 and a final rule has not yet been published.

COM_a26. Husch Blackwell: “USTR Announces New Section 301 Product Exclusions for List 4A”

(Source: International Trade Insights, 10 Jul 2020)
* Principal Author: Nithya Nagarajan, 1-202-378-2409, Husch Blackwell LLP
   The United States Trade Representative (“USTR”) issued new product exclusions pertaining to the Section 301 List 4A tariffs.  The current tariff is 7.5%.  The new exclusions include 61 specific product descriptions that together cover 86 separate exclusion requests.  The full list of excluded products is available
here.  According to the USTR, the product exclusions apply retroactively to September 1, 2019 and remain in effect until September 1, 2020.  The exclusions cover various products, including gasoline-powered engines for drilling/cutting, sewing machines, antique furniture, and certain musical instruments.

Mayer Brown, 9 Jul 2020)
* Principal Author: Jing Zhang, 1-202-263-3385, Mayer Brown
   On July 3, 2020, the National People’s Congress (“NPC”) of China issued its second draft of the Export Control Law of China (the “Law”) for public comment, which must be submitted by August 16, 2020.1 The Ministry of Commerce of China (“MOFCOM”) issued the earliest draft of the Law in 2017, followed by the release of a revised version by the NPC in December 2019. Under Chinese law, the NPC must examine a pending legislation three times before it is passed. Therefore, the Law is ripe to be enacted this year after the current comment period closes.
   The July 2020 draft makes certain substantive changes to the last version, as well as some clarifying adjustments in language and structure. Our summary of the key substantive changes is as follows: 
  (1)  Foreign End User/End Use Verification
  The 2017 MOFCOM draft provided that export administrative authorities may conduct “on-site verifications” of foreign end users and end uses based on the circumstances. The 2019 NPC draft deleted that provision and would only require export administrative authorities to establish a “risk assessment” system for foreign end users and end uses and to “evaluate written proof” related to them. The latest draft strikes a middle ground by providing that the authorities will “evaluate” and “verify” foreign end users and foreign end uses. 
  (2)  Compliance Program/Discretionary “General Licenses”
  The 2019 NPC draft provided that export operators shall have an internal compliance program. This provision has been revised to state that export operators having a well-functioning internal compliance program may receive discretionary “general licenses” as an incentive. Therefore, while failure to maintain an internal compliance program no longer implicates a potential violation of the Law under the latest draft, the general licensing scheme provides a significant practical incentive for exporters. 
  (3)  Third-Party Liability/Knowledge Standard
  The 2019 draft provided that “knowingly” providing services for export operators’ activities in violation of export controls will subject the service provider to penalties. The latest draft clarifies that providing such services will be prohibited under the Law. However, unlike the penalty provision, this new provision does not reference the “knowledge” standard.
 (4)  New Prohibition on “Export Control-Related Information”
  The latest draft provides for a new prohibition that individuals and organizations within China shall not transfer “export control-related information” to outside of China in violation of Chinese law or endangering China’s “national security.” 
  (5)  Time for Dual-Use Licensing Decision
  The latest draft deletes the requirement that the dual-use authority make its decision within 45 days of accepting an export license application, subject to a 15-day extension. 
Other technical changes made in the July 2020 draft include:
  • “Deemed Export” – The “deemed export” provision in Article 2 has been revised to contrast the concept of Chinese citizens, legal persons and non-legal person organizations (all of which are terms of art under Chinese law) with the reference to foreign organizations and individuals. Interested parties should pay attention to the definitions of legal persons and non-legal person organizations as provided in China’s new Civil Code. If these definitions are met, an entity is considered to be Chinese, not foreign, for purposes of the Law. 
  • Dual-Use Exporter Qualification – The latest draft clarifies that there is no intent to establish an elaborate special “permit” system to pre-qualify which parties in China may engage in the export of dual-use items. Currently, exporters of dual-use items, except otherwise required by law, are only required to apply for a registration, which is much less burdensome than a special permit system. By contrast, defense and nuclear articles and certain specially monitored chemical products are subject to special permit systems. Special permits are similar to special business licenses, which may be restricted to state-owned enterprises only and are usually expensive and time-consuming to get. For example, government inspection of a party’s facilities is frequently required before a special permit may be granted. 
  • Temporary Control for National Security – Regarding temporary control for national security reasons, the latest draft newly provides that such temporary control must be published and that a reevaluation would be conducted before the expiration of the temporary control. The reevaluation would decide whether the temporary control should be revoked or extended or the relevant item should be added to an export control list. 

Mandatory Notice by Chinese Customs to Exporters
– The 2019 draft provided that if Chinese Customs suspects a shipment of violating Chinese export control rules, Chinese Customs may either notify the exporter or consult with export control authorities, such as MOFCOM, as to whether a violation has occurred or will occur. The latest draft obligates Chinese Customs to notify the exporter of the issue, but consultation with other agencies will remain at Chinese Customs’ discretion. 

Trump and Trade, 10 Jul 2020)
   On July 8, 2020, the U.S. Department of Commerce’s Bureau of Industry and Security (“BIS”) published guidance relating to the U.S. Department of State’s final rule amending the International Traffic in Arms Regulations (“ITAR”) and related BIS final rule, to transfer export controls of certain firearms, armament and ammunition from the U.S. Munitions List (“USML”) to the Commerce Control List (“CCL”).  Through 107 Frequently Asked Questions, the guidance outlines Commerce’s approach to the controls including, recordkeeping, registering and applying for licenses, brokering controls, license exceptions, and clearance requirements.  It also defines certain key terms to distinguish, among other things, additive manufacturing and 3D printing.

   The final rules, which became effective on March 9, 2020, are based on an interagency review and determination by President Trump that certain articles no longer warrant control under USML Category I (Firearms, Close Assault Weapons and Combat Shotguns), Category II (Guns and Armament) and Category III (Ammunition/Ordnance), as they do not provide a “critical military or intelligence advantage to the United States and, in the case of firearms, do not have an inherently military function.”   

Further, since there is a “significant worldwide market for items in connection with civil and recreational activities such as hunting, marksmanship, competitive shooting, and other non-military activities,” the CCL of the Export Administration Regulations (“EAR”) “is the appropriate source of authority to control these firearms, ammunition, and other articles.”


9. Monday List of Ex/Im Job Openings: 65 Jobs Available; 4 New Job Openings This Week

* Accenture Federal Services; Arlington, Virginia; Trade Compliance Manager; Job ID: 00842425
* Cobham Advanced Electronic Solutions; Lansdale, PA; Export Compliance Administrator II; Job ID: 3524
* Oklahoma State University Wes Watkins Center for International Trade Development; Stillwater, Oklahoma; International Trade Specialist

* Siemens Healthineers; Oxford, GB; Export Controls & Customs Specialist

Click here to see all job openings.
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* 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)

* Henry David Thoreau (12 Jul 1817 – 6 May 1862; was an American essayist, poet, and philosopher. A leading transcendentalist, he is best known for his book Walden, a reflection upon simple living in natural surroundings, and his essay “Civil Disobedience” (originally published as “Resistance to Civil Government”), an argument for disobedience to an unjust state.)
  – “If the machine of government is of such a nature that it requires you to be the agent of injustice to another, then, I say, break the law.”
David Storey (David Malcolm Storey; 13 Jul 1933 – 27 Mar 2017; was an English playwright, screenwriter, award-winning novelist and a professional rugby league footballer. He won the Booker Prize in 1976 for his novel Saville. He also won the MacMillan Fiction Award for This Sporting Life in 1960.)
  – “Have confidence that if you have done a little thing well, you can do a bigger thing well too.”
Monday is pun day.
* What did the astronomy student reply when asked what he saw after staying up all night looking through a telescope?  “No comet.”
* How are lawyers trained to sleep? First lie on one side, then lie on the other.
* My ex-wife still misses me. But I’m concerned. Her aim is improving.
* What are the strongest days of the week? Saturday and Sunday. The rest are weekdays.
* What washes up on tiny beaches? Microwaves.

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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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