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20-0821 Friday ” Daily Bugle “

20-0821 Friday “Daily Bugle”

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Friday, 21 August 2020

(No items of interest posted) 

  1. Items Scheduled for Future Federal Register Edition
  2. Commerce/BIS: (No new postings)
  3. DHS/CBP: “Ace Production Extended Scheduled Maintenance This Weekend”
  4. State/DDTC: “DECCS Outage Notice for Scheduled Maintenance Next Monday”
  1. Reuters: “E3 Say Cannot Support U.S. Move to Restore U.N. Sanctions on Iran”
  2. WORLDecr: “Trump Insists US Will Resort to ‘Snapback’ to Retain Iran Arms Embargo”
  1. Latham & Watkins: “US Trade Controls Against China Reach Supply Chain and End-Use Targets and Activities”
  2. Reed Smith: “U.S. Executive Order on WeChat – implications for your business”
  3. Thompson Hine: “COVID-19 Government Measures Guide”
  1. FCC Academy Presents 4 Webinars: U.S. Export Controls: ITAR & EAR | FMS | Designing and Implementing an ICP
  2. Friday List of Approaching Events: 221 Events Posted This Week, Including 21 New Events
  1. Bartlett’s Unfamiliar Quotations 
  2. How to Publish Your Article in the Daily Bugle 
  3. Are Your Copies of Regulations Up to Date? Find the Latest Amendments Here. 
  4. Weekly Highlights of the Daily Bugle Top Stories 
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EXIM ITEMS FROM TODAY’S FEDERAL REGISTER

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OGS OTHER GOVERNMENT SOURCES

(Source: Federal Register)
 
* Treasury/OFAC: NOTICES; Blocking or Unblocking of Persons and Properties [Pub. Date: 24 Aug 2020] (PDF)
 
* USTR: NOTICES; Product Exclusions: China’s Acts, Policies, and Practices Related to Technology Transfer, Intellectual Property, and Innovation [Pub. Date: 24 Aug 2020] (PDF)

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OGS_a22. Commerce/BIS: (No new postings)

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OGS_a33. DHS/CBP: “Ace Production Extended Scheduled Maintenance This Weekend”

 
  Please be aware that there will be an Extended ACE PRODUCTION Maintenance window this Saturday evening, August 22, 2020, for CBP ACE Infrastructure maintenance that will start ONE hour Earlier than normal — Saturday 2100 ET to Sunday 0400 ET.

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  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, August 24 for scheduled system maintenance. Please ensure work in progress is saved prior to the scheduled downtime.

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COM NEWS

(Source: Reuters, 21 Aug 2020) [Excerpts]
 
   The United Kingdom, France and Germany on Thursday said they cannot support the U.S. move to restore United Nations sanctions on Iran, saying the action is incompatible with efforts to support the Iran nuclear deal.
   “In order to preserve the agreement, we urge Iran to reverse all measures inconsistent with its nuclear commitments and return to full compliance without delay,” the three nations said in a joint statement.

(Source: WORLDecr, 20 Aug 2020) [Excerpts]
 
  President Donald Trump’s administration is likely to resort to the ‘snapback’ clause in the Joint Comprehensive Plan of Action (‘JCPOA’) nuclear agreement with Tehran that it quit in 2018. So said the US president following a crushing defeat at the Security Council where the US fought to retain a UN arms embargo on Iran. 
   Following the setback at the Security Council last Saturday, where the US came seven short of the nine votes it needed to extend the embargo which expires in October, President Trump said the defeat at the UN was expected… but the US will still prevail. ‘Well, we knew what the vote was going to be but we’ll be doing a snapback, you’ll be watching it next week,’ Trump said at a news conference last Saturday.
   ‘Snapback’ is the mechanism contained in the JCPOA, the nuclear deal signed in 2015 with Iran by the five permanent members of the Security Council, Germany and the European Union, under which, in the event of a violation of the terms of the agreement by Iran, UN sanctions against Iran are reinstated.
The Trump administration pulled out of the agreement in 2015 but insists it will still invoke the clause. The European Union and members of the Security Council disagree.
   ‘Given that the US unilaterally withdrew from the JCPOA in May 2018 and has not participated in any JCPOA structures or activities subsequently, the US cannot be considered as a JCPOA participant,’ a spokesperson for EU foreign policy chief Josep Borrell told Germany’s dpa news agency. ‘We therefore consider that the US is not in a position to resort to mechanisms reserved for JCPOA participants.’

COM COMMENTARY

(Source: Latham & Watkins, 19 Aug 2020)

* Principal Author: Les P. Carnegie, Esq., 1-202-637-1096, Latham & Watkins LLP 

 
Supply chain, end use, and human rights-related sanctions, export controls, and Entity List designations target public and private entities in China.
 
Human rights-related designations
  The US government has increasingly relied on regulatory tools to further US policy and national security objectives with respect to Chinese companies the US has determined to be involved in human rights violations and abuses. Through designations in October 2019, June 2020, and July 2020, the US Department of Commerce has added nearly 50 Chinese state-owned and commercial organizations to the Entity List for being “implicated in human rights violations and abuses in the implementation of China’s campaign of repression, mass arbitrary detention, forced labor and high-technology surveillance against Uyghurs, Kazakhs, and other members of Muslim minority groups in the Xinjiang Uyghur Autonomous Region (XUAR).” Designated entities include companies the US has determined to be using forced labor in the textile, apparel, and hair accessory industries as well as companies the US has determined to be supplying surveillance technology to the Chinese government.
  Parties on the Entity List are generally precluded from receiving exports, re-exports, and in-country transfers from anyone (whether US persons or not) of certain or in some cases all commodities, software, or technology subject to the Export Administration Regulations (EAR). The term “subject to the EAR” generally includes all items exported from the United States, all US-origin items regardless of location, certain foreign-origin items with more than de minimis amounts of controlled US content, and in some cases foreign-origin items developed from US software and technology.
  Through two actions in July 2020 (see here and here), pursuant to Executive Order 13818 and the Global Magnitsky Human Rights Accountability Act, the Treasury Department’s Office of Foreign Assets Control (OFAC) added to its Specially Designated Nationals (SDN) and Blocked Persons List eight Chinese government entities and officials in connection with alleged human rights violations and abuses against Muslim minority groups in the XUAR. As a result of these designations, US persons are prohibited from directly or indirectly engaging in most transactions or dealings with these parties as well as any entities owned 50% or more by one or more SDNs, absent of OFAC authorization.
 
Supply chain exposure
  On July 1, 2020, the US Departments of State, the Treasury, Commerce, and Homeland Security issued a business advisory (Advisory) identifying potential risks for businesses with supply chain links to entities involved in forced labor and human rights abuses in the XUAR and throughout China. The Advisory identifies the primary supply chain exposure as:
  • Assisting in developing surveillance tools for the Chinese government in Xinjiang
  • Relying on labor or goods sourced in Xinjiang, or from factories elsewhere in China implicated in
  • forced labor from Xinjiang in their supply chains
  • Aiding in the construction of internment facilities used to detain Uyghurs and members of other Muslim minority groups, and/or in the construction of manufacturing facilities in close proximity to internment camps operated by businesses accepting subsidies from the Chinese government to subject minority groups to forced labor
  To ensure compliance and mitigate risk, the Advisory recommends that businesses develop protocols for human rights due diligence and close monitoring of their upstream and downstream supply chain exposure. Such diligence should consider, among other factors:
  • Whether a company in the business’s supply chain (Supply Chain) is located or has any operations in the Xinjiang region
  • Whether the Supply Chain relies on labor or goods sourced from Xinjiang or from factories elsewhere in China implicated in the forced labor of individuals from Xinjiang, including satellite factories in Xinjiang
  • Whether the Supply Chain is involved in the development of surveillance or movement-tracking tools for the Chinese government in Xinjiang
  • Whether the Supply Chain aids in the construction of internment facilities and/or manufacturing facilities that are in close proximity to Xinjiang
  • The extent to which the Supply Chain’s activities implicate industries identified as having used forced labor in Xinjiang
Restrictions on exports to China
  The Department of Commerce’s Bureau of Industry and Security (BIS) has undertaken a number of recent actions aimed at further restricting certain EAR-regulated activities relating to China. On April 28, 2020, BIS issued a new rule that expands existing end-use controls that previously required a license for certain exports, re-exports, and transfers of items subject to the EAR for military end uses in China (in addition to Russia and Venezuela).
  The new rule also increases the list of items that require prior BIS licensing to China. There is a presumption of denial on export and re-export license applications for items that now require a license for export or re-export to China. BIS noted that because of the increasing integration of civilian and military functions in China, “this expansion will require increased diligence with respect to the evaluation of end users in China,” to include consideration of whether the end user’s parent or subsidiary is engaged in military end uses or is a military end user.
  Additionally, BIS has made or proposed changes to certain EAR license exceptions, resulting in increased restrictions on exports to China (and other countries in Country Group D:1, which lists countries of national security concern). BIS has eliminated License Exception CIV (relating to certain items controlled for national security reasons), proposed eliminating License Exception APR (relating to certain additional permissible re-exports), and suspended license exceptions previously available for Hong Kong that are not available for China.
 
Conclusion
  In light of the US government’s recent actions targeting human rights violations and abuses in the XUAR and restricting the export of items to China, parties engaged in business dealings in China and subject to OFAC jurisdiction or the EAR should consider their current procedures for monitoring their supply chains, end users, and end uses.

(Source: Reed Smith)

* Principal Author: Denise Jong, 852-2507-9735, Reed Smith LLP 

 
What happened?
  On August 5, 2020, the U.S. Secretary of State, Michael R. Pompeo announced the “Clean Network Program” which aims to ban the so-called “untrusted” carriers, applications, mobile application stores, cloud service providers, operators of undersea cables connecting the United States and the global internet. As such, companies that are involved in these businesses, or entities that transact with or rely on vendors that might be impacted are advised to keep abreast of further developments and additional announcements from the U.S. Government regarding the scope of the sanctions in connection with the “Clean Network Program” to assess and plan for contingencies with respect to their business operations and cross-border communication between the United States and other parts of the world.
  On August 6, 2020 and following the expansion of the Clean Network Program, President Trump issued EO 13943 of 2020 “Addressing the Threat Posed by WeChat, and Taking Additional Steps to Address the National Emergency With Respect to the Information and Communications Technology and Services Supply Chain”.
  In the preamble to the EO, President Trump declared that the spread of WeChat, a messaging, social media and electronic payment mobile application of the Chinese company Tencent Holdings Ltd (Tencent), in the United States poses a threat to the national security, foreign policy and economy of the United States. The mobile application is considered to pose threats to U.S. national security interests as it automatically captures significant amounts of information from users which threatens to allow the Chinese Government access to personal and proprietary information of the users in the United States and reportedly censors content deemed to be politically sensitive, and which may be used for disinformation campaigns that benefit the Chinese Communist Party.
  Pursuant to the EO, which goes into effect 45 days after issuance, i.e. on September 20, 2020, any transaction by any person or with respect to any property which is subject to the jurisdiction of the United States. with Tencent or its subsidiaries, as identified by the Secretary of Commerce pursuant to the EO, shall be prohibited except as provided otherwise in statues or pursuant to the EO. The EO specifically refers to any transaction “that is related to WeChat”, but at the moment it is not clear if that would extend to transactions with Tencent.
  The EO does not appear to contemplate prohibiting all dealings with the designated entities but, rather, contemplate sanctions applicable to specific transactions. These sanctions, to be determined by the Secretary of Commerce, may range from prohibiting payment processing or financing involving WeChat to the provision of the application in application stores or the installation or use of the application by U.S. persons. While it is difficult to predict what transactions could become subject to sanctions, considering the preamble to the EO, transactions which contribute to risks of national security or foreign policy are likely to be the focus of restrictions to be imposed on or after September 20, 2020.
  It is noteworthy that the EO delegates the authority to identify prohibited transactions to the Secretary of Commerce instead of the U.S. Secretary of the Treasury or the U.S. Secretary of State, who are typically responsible for administering financial and commercial sanctions based on the International Emergency Economic Powers Act (50 U.S.C. 1701 et seq.). The delegation to the U.S. Department of Commerce – particularly if the Bureau of Industry and Security, which is responsible for administering the Export Administration Registrations (EAR) is involved – gives rise to the possibility that restrictions may take the form of limiting exports of items subject to the EAR (U.S.-origin goods, software and technology, and some foreign-produced items containing or derived from U.S. technology) by adding Tencent and/or its subsidiaries to the Entity List, which identifies foreign parties that are prohibited from receiving some or all items subject to the EAR unless the exporter has obtained a license or there is a waiver or other general license. This is the approach the U.S. Government took with Huawei when Huawei and its overseas-related affiliates were added to the Entity List in 2019.

How does the EO affect your business?
  Pursuant to the EO, the Secretary of Commerce may identify and prohibit “any transaction that is related to WeChat by any person, or with respect to any property, subject to the jurisdiction of the United States”:
  • “any transaction that is related to WeChat by any person…” – Transactions subject to the jurisdiction of the United States and identified by the Secretary of Commerce are prohibited under the EO, regardless of whether the contracting party is a U.S. person or entity or not.
  • “with respect to any property, subject to the jurisdiction of the United States” – The authorization to prohibit transactions involving property subject to U.S. jurisdiction enables the Commerce Department to adopt an expansive approach, e.g., by prohibiting transactions by non-U.S. entities that involve U.S.-based services. The Commerce Department may decide to issue general licenses for companies to wind down certain operations as often happens.
    While at the moment it is not clear the types of transactions prohibited and form of restrictions contemplated under the EO, businesses should be aware that the restrictions may apply to transactions by both U.S. entities and foreign branches/subsidiaries of U.S. companies and other non-U.S. entities where such transactions involve the sanctioned entities and U.S.-based technology, banking or other services.
Assess your business risk in light of the EO – Do you have business dealings with the sanctioned entities, especially transactions which may be considered to contribute to risks of national security or foreign policy? Do you have any plans to conduct business dealings with the sanctioned entities, and if yes, how would they be affected if the potential transaction(s) are subsequently identified as prohibited transactions pursuant to the EO?
 
Contractual comfort – Do you have clauses in your contracts where the counterparty represents and warrants that it is not a sanctioned person or engaging in activities which could be the subject of sanctions? Do you have clauses in subsisting contracts with the sanctioned entities which would entitle you to suspend performance of your obligations or terminate the contract without liability in the event the counterparty becomes subject to such sanctions?
 
Seek updated legal advice – As described in the preambles to the EO, countries such as Australia and India have begun to restrict or ban the use of WeChat. It is not clear as of today if Australia and/or India will take further actions in respect of WeChat, and businesses with operations or dealings in those countries should monitor and keep track of any announcements made by the relevant government authorities and seek legal advice as appropriate.
 
Recommendation for businesses whose employees use WeChat – Until further detail is available, it is not obvious if the requirements would be so extreme as to require U.S. persons to uninstall the relevant application. This makes it difficult to plan ahead given that it is also currently unknown if there would be grace periods in respect of any compliance protocols.
 
  In Asia, it is not uncommon for individuals to use two mobile phones, one provided by the employer for business purposes and the other a personal device. Whilst we do not have guidance for individuals at this time, we would suggest that, as a contingency plan for U.S. entities and foreign branches/subsidiaries of U.S. companies, such corporations should consider making preparations to uninstall the application from mobile phones issued by businesses to their employees so that, if required, implementation can be on an expedited basis. It may be that the immediate future will look a little like the past with corporations restricting the use of social messaging platforms on personal devices for business correspondence and requiring their employees to go back to business by email through corporate accounts. There are of course alternative messaging applications but given the rapid escalation of measures between the United States and China, it is difficult to know which Chinese applications would be at risk of sanctions and which U.S. applications may be at risk of a retaliatory measure by China. Global corporations throughout the world would need to continue to monitor this.  

 
  Since April 2020, we have collaborated with our foreign law firm partners to provide a chart of economic, labor and employment, health and safety, and export and import measures taken by governments around the world in response to the COVID-19 pandemic.
 
 
  This update includes new information through the first week of August 2020 for Australia, Belgium, Brazil, Canada, Chile, Costa Rica, El Salvador, Guatemala, Honduras, India, Indonesia, Israel, Italy, Japan, Mexico, Netherlands, Philippines, Poland, Russia, South Korea, Turkey, United Kingdom and United States. The updates are in bold on the chart for ease of reference.
  In the Americas and Europe, July’s changes involve the easing of stricter health and safety measures including curfews, stay-at-home orders and domestic travel restrictions. In Europe, it appears that restrictions on public gatherings are being lifted. However, mandates to wear face masks in public indoor spaces and on public transportation have continued. In the United States, states and counties continue to differ on business closures and reopenings as well as face mask requirements. In Asia, governments continue to lift lockdown measures and to implement technology-based health measures such as temperature checks and contact tracing applications.
  Most governments have used a phased approach to reopening businesses previously closed due to the pandemic and continue to maintain new export controls and import facilitation measures involving COVID-19-related health and medical goods. In recent months, the EU and United States have narrowed their export control measures to more accurately reflect domestic need.

TE EX/IM TRAINING EVENTS & CONFERENCES

ITAR & EAR from a non-US perspective
Tuesday, 8 September 2020 
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The ABC of Foreign Military Sales (FMS)
Tuesday, 29 September 2020
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Wednesday, 7 October
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(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:

Published every Friday or last publication day of the week. Send events to events@fullcirclecompliance.eu, composed in the below format:
 
# * Date: (Location;) “Event Title”; <Weblink>” Event Sponsor;
 

* Now through Dec: “ITAR/EAR Webinar Series“: ECS

 

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EN EDITOR’S NOTES

EN_a112. Bartlett’s Unfamiliar Quotations

(Source: Editor)
 

* Saint Francis de Sales (Francesco di Sales; 21 Aug 1567 – 28 Dec 1622; was a Bishop of Geneva and is honored as a saint in the Catholic Church. He became noted for his deep faith and his gentle approach to the religious divisions in his land resulting from the Protestant Reformation. He is known also for his writings on the topic of spiritual direction and spiritual formation, particularly the Introduction to the Devout Life and the Treatise on the Love of God.)
  – “Never be in a hurry; do everything quietly and in a calm spirit. Do not lose your inner peace for anything whatsoever, even if your whole world seems upset.”
  – “Half an hour’s meditation each day is essential, except when you are busy. Then a full hour is needed.”
 
Friday Funnies.  How about some doctor jokes?
* A man tells his psychiatrist, “Doc, can you help me?  I’m addicted to Twitter!”  The doctor replies, “Sorry, I don’t follow you.” 
* A man tells his doctor, “Doc, you’ve got to help me. I think I’m becoming invisible!”  The doctor replies, “Sorry, I can’t see you right now.”
* A patient bursts into a psychiatrist’s office and says, “Doctor, I think I’ve turned into a deck of cards!”  The doctor replies, “Have a seat in the waiting room, please.  I’ll deal with you later.”
 A doctor gave a man six months to live. The man couldn’t pay his bill, so the doctor gave him another six months.
A woman in labor suddenly screamed, “Shouldn’t! Wouldn’t! Couldn’t! Didn’t! Can’t! Won’t!” The husband gave the doctor a worried look, and the doctor said, “No cause for worry, sir, those are just contractions.”
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(Source: Jim Bartlett, Daily Bugle Editor)
 
  Your analysis and commentary on a current trade issue can generate new clients from among the Daily Bugle’s subscribers (over 10,000 world-wide). We receive far more articles every day from law firms and consultants than we can publish, but if you would like have your article published, please contact Jim Bartlett at 1-202-802-0646 or JEBartlett@JEBartlett.com.
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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. 
20 Aug 2020: 85 FR 51335 and  51596: Additions to the Entity List, removal of Huawei’s temporary general license, and supplemental license requirements for parties listed on the Entity List.
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. 

29 Jul 2020: 85 FR 45513 Extension to Certain Temporary Suspensions, Modifications, and Exceptions due to Corona Virus.  The latest edition of the BITAR is 29 July 2020.  

 
DOT FOREIGN ASSETS CONTROL REGULATIONS (OFAC FACR): 31 CFR, Parts 500-599, Embargoes, Sanctions, Executive Orders

17 Jul 2020: 85 FR 43436: Nicaragua 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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