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20-0817 Monday “Daily Bugle”

20-0817 Monday “Daily Bugle”

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Monday, 17 August 2020

  1. Defense Department: “Prohibition on Contracting with Entities Using Certain Telecommunications and Video Surveillance Services or Equipment”
  1. Items Scheduled for Future Federal Register Edition
  2. Commerce/BIS: “Commerce Department Further Restricts Huawei Access to U.S. Technology and Adds Another 38 Affiliates to the Entity List”
  3. Commerce/Census: “Exports Between the United States and Puerto Rico – When to File Electronic Export Information”
  4. State/DDTC: (No new postings)
  5. DHS/CBP: “Rescheduled Trade Broker Exam Webinar”
  6. EU External Action: “Arms Trade Treaty – Sixth Conference of States Parties – EU Statement”
  1. Export Compliance Daily: “Experts Argue for More Effective, Multilateral US Export Controls”
  1. Kelley Drye: “Goodbye “Made in Hong Kong,” Hello “Made in China”
  2. Steptoe: “Financial Institutions Watch and Wait as OFAC Sanctions Top Hong Kong Officials”
  3. Vinson & Elkins: “FAR Council Releases Interim Rule Prohibiting Contracts with Entities that Use Equipment Made by Huawei, ZTE, and Others”
  1. Mandy Wilcox Joins Alpha Omega
  2. Monday List of Ex/Im Job Openings: 60 Jobs Available – 7 New Job Openings This Week
  1. ECTI Presents: A New World of Export Controls for China: September 29, 2020
  2. FCC Academy Presents 4 Webinars: U.S. Export Controls: ITAR & EAR | FMS | Designing and Implementing an ICP
  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

(Source: Federal Register) [Excerpts]
 
85 FR 50026: Notice
 
* AGENCY:Department of Defense (DOD), General Services Administration (GSA), and National Aeronautics and Space Administration (NASA).
* ACTION:Notice and request for comments.
* SUMMARY:In accordance with the Paperwork Reduction Act of 1995, and the Office of Management and Budget (OMB) regulations, DoD, GSA, and NASA invite the public to comment on an extension of information collection 9000-0201 concerning representations and reporting associated with implementation of Federal Acquisition Regulation (FAR) rule 2019-009, Prohibition on Contracting with Entities Using Certain Telecommunications and Video Surveillance Services or Equipment. OMB authorized information collection 9000-0201 as an emergency collection. DoD, GSA, and NASA propose that OMB extend its approval for use for three additional years beyond the current expiration date.
* DATES:DoD, GSA, and NASA will consider all comments received by October 16, 2020.

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OGS OTHER GOVERNMENT SOURCES

(Source: Federal Register)
 

* USTR; NOTICES; China’s Compliance with World Trade Organization Commitments; [Pub. Date: 18 Aug 2020] (PDF)

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(Source: Commerce/BIS, 17 Aug 2020)
 
The Bureau of Industry and Security (BIS) in the Department of Commerce (Commerce) today further restricted access by Huawei Technologies (Huawei) and its non-U.S. affiliates on the Entity List to items produced domestically and abroad from U.S. technology and software. In addition, BIS added another 38 Huawei affiliates to the Entity List, which imposes a license requirement for all items subject to the Export Administration Regulations (EAR) and modified four existing Huawei Entity List entries. BIS also imposed license requirements on any transaction involving items subject to Commerce export control jurisdiction where a party on the Entity List is involved, such as when Huawei (or other Entity List entities) acts as a purchaser, intermediate, or end user. These actions, effective immediately, prevent Huawei’s attempts to circumvent U.S. export controls to obtain electronic components developed or produced using U.S. technology.  

In May 2020, BIS amended the longstanding foreign-produced direct product (FDP) rule to target Huawei’s acquisition of semiconductors that are the direct product of certain U.S. software and technology. Today’s amendment further refines the FDP rule by applying the control to transactions: 1) where U.S. software or technology is the basis for a foreign-produced item that will be incorporated into, or will be used in the “production” or “development” of any “part,” “component,” or “equipment” produced, purchased, or ordered by any Huawei entity on the Entity List; or 2) when any Huawei entity on the Entity List is a party to such a transaction, such as a “purchaser,” “intermediate consignee,” “ultimate consignee,” or “end-user.”

This amendment further restricts Huawei from obtaining foreign made chips developed or produced from U.S. software or technology to the same degree as comparable U.S. chips.
“Huawei and its foreign affiliates have extended their efforts to obtain advanced semiconductors developed or produced from U.S. software and technology in order to fulfill the policy objectives of the Chinese Communist Party,” said Commerce Secretary Wilbur Ross. “As we have restricted its access to U.S. technology, Huawei and its affiliates have worked through third parties to harness U.S. technology in a manner that undermines U.S. national security and foreign policy interests. This multi-pronged action demonstrates our continuing commitment to impede Huawei’s ability to do so.”

The following 38 new Huawei affiliates across 21 countries were added to the Entity List because they present a significant risk of acting on Huawei’s behalf contrary to the national security or foreign policy interests of the United States. There is reasonable cause to believe that Huawei otherwise would seek to use them to evade the restrictions imposed by the Entity List.
 
  • Huawei Cloud Computing Technology; Huawei Cloud Beijing; Huawei Cloud Dalian; Huawei Cloud Guangzhou; Huawei Cloud Guiyang; Huawei Cloud Hong Kong; Huawei Cloud Shanghai; Huawei Cloud Shenzhen; Huawei OpenLab Suzhou; Wulanchabu Huawei Cloud Computing Technology; Huawei Cloud Argentina; Huawei Cloud Brazil; Huawei Cloud Chile; Huawei OpenLab Cairo; Huawei Cloud France; Huawei OpenLab Paris; Huawei Cloud Berlin; Huawei OpenLab Munich; Huawei Technologies Dusseldorf GmbH; Huawei OpenLab Delhi; Toga Networks; Huawei Cloud Mexico; Huawei OpenLab Mexico City; Huawei Technologies Morocco; Huawei Cloud Netherlands; Huawei Cloud Peru; Huawei Cloud Russia; Huawei OpenLab Moscow; Huawei Cloud Singapore; Huawei OpenLab Singapore; Huawei Cloud South Africa; Huawei OpenLab Johannesburg; Huawei Cloud Switzerland; Huawei Cloud Thailand; Huawei OpenLab Bangkok; Huawei OpenLab Istanbul; Huawei OpenLab Dubai; and Huawei Technologies R&D UK
 
The Temporary General License (TGL) has now expired. This rule further protects U.S. national security and foreign policy interests by making a limited permanent authorization for the Huawei entities on the Entity List. This limited authorization is for the sole purpose of providing ongoing security research critical to maintaining the integrity and reliability of existing and currently “fully operational networks” and equipment.

In a concurrent rule, BIS revised the Entity List to require a license when a party on the Entity List acts as a purchaser, intermediate consignee, ultimate consignee, or end user to an EAR transaction. This aligns with the additional restrictions imposed in the revisions to the FDP, when any of the Huawei entities on the Entity List are a party to the transaction, such as by acting as purchaser, intermediate consignee, ultimate consignee, or end user.

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(Source: Global Reach Blog, 17 Aug 2020)
 
A routed export transaction is when the Foreign Principal Party in Interest (FPPI), which is generally the buyer located in the foreign country, facilitates the export of the goods from the United States. For example, if the FPPI contracts a U.S. freight forwarder to facilitate the export of the goods out of the United States, then the FPPI is controlling the facilitation of the export of the goods and this is a routed export transaction. (To learn more about routed export transactions, we invite you to read “Clarification Of Routed Export Transactions.”) This definition also applies when a Puerto Rican company is considered the FPPI in a routed export transaction with the United States. Generally, FPPIs are unable to file in the Automated Export System (AES), since only U.S. entities are allowed to file. Therefore, an FPPI must authorize a U.S. agent to file on their behalf.

However, Puerto Rico is a U.S. territory. In this case, unlike other foreign companies, a Puerto Rican company may do the filing. Since the Puerto Rican company itself is the FPPI, it does not require a power of attorney (I mean, why would you need one for yourself?). In the Electronic Export Information (EEI) filing, the “Routed export transaction indicator” must still be marked as “Yes.”
What about transactions in reverse? In part 1 of this series, we explained EEI is also necessary for shipments from Puerto Rico to the United States.

Q. Can a U.S. company or entity file EEI for shipments from Puerto Rico destined to the United States?
A. Yes.

Q. Can the U.S. company or entity be the FPPI?
A. If the company or entity is the buyer or end user, then yes, in this special case, the U.S. company or entity can be the FPPI.

Q. So you are saying that the U.S. buyer is the foreign party in these shipments exported from Puerto Rico to the United States?
A. Yes and no. It may sound strange to consider the U.S. company or entity as the FPPI in this case. However, the U.S. company or entity fulfills the role as the party abroad who purchases the goods for export or to whom final delivery or end-use of the goods will be made, as defined in FTR 30.1. Essentially, the U.S. company or entity is acting as the FPPI in these routed export transactions involving Puerto Rico. Similarly, just like in the cases where a Puerto Rican company or entity is the FPPI and can still file the EEI, the U.S. company or entity can file the EEI when it is the FPPI.  

We hope this series helped answer questions you may have about shipments involving the United States and Puerto Rico.

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(Source: DHS/CBP, 17 Aug 2020)
 
U.S Customs and Border Protection Trade Customs Broker License Exam Webinar has been rescheduled for Wednesday, August 19, 2020.   The webinar will cover examination details and include a question-and-answer (Q&A) session.  Webinar information will be posted at www.cbp.gov/trade.
Rescheduled Trade Webex Broker Exam Webinar
  •  Date:  August 19, 2020
  •  Time:  2:00 PM – 3:00 PM (EST)
  •  Location:  Online Presentation
 Paste link below to join online:  Join WebEx Meeting :
   OR  
To join by phone:
  •  Phone Number:  1-415-527-5035
  •  Enter Meeting Number:  199 936 2446 (Click #)
  •  Enter Password:  257 823 78
For any questions, contact CBP Headquarters Broker Management Branch (BMB) via email brokermanagement@cbp.dhs.gov.  

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

(Source: European Union External Action, 14 Aug 2020) [Excerpts]
 
Statements on behalf of the EU
 
Mr. President,  I have the honour to speak on behalf of the European Union and its Member States.
The Candidate Countries the Republic of North Macedonia [FN/1], Montenegro*, Serbia* and Albania*, the country of the Stabilisation and Association Process and potential candidate Bosnia and Herzegovina, and the EFTA country Iceland, member of the European Economic Area, as well as the Republic of Moldova and Georgia align themselves with this statement.

We would like to congratulate Argentina on its Presidency of the Sixth Conference of States Parties to the Arms Trade Treaty and commend you, Ambassador, for your substantial efforts enabling us to continue work and to take decisions on modalities and preparations for the Seventh Conference of States Parties in 2021 despite the difficulties and challenges that the COVID-19 pandemic has created over the past months.  . . .

The EU reaffirms its full support to fostering responsible policies with regard to the regulation of the arms trade, and to preventing and countering the proliferation of illicit arms and ammunition. The EU continues to actively implement its outreach and assistance activities in a number of partner countries in Africa, Asia, Europe and Latin America, thus helping to build capacities for effective national implementation worldwide and attracting new States to adhere to the ATT.  . . . 

The EU remains deeply concerned over the financial situation of the Treaty and regrets the many outstanding contributions which put the ATT institutions and activities at risk. Once again, we urge all States to pay their contributions in full and on time and to settle their arrears without further delay. We reaffirm our support for your efforts, Mr. President, to enforce in full the implementation of the ATT Financial Rules. The EU welcomes the work on the proposed procedure that seeks to establish the necessary arrangements for States in arrears to settle their financial obligations. This should lead to increased financial, and subsequently institutional, stability of the Treaty.  . . .
Thank you, Mr. President
 
[FN/1] The Republic of North Macedonia, Montenegro, Serbia and Albania continue to be part of the Stabilisation and Association Process.

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COM NEWS

(Source: Export Compliance Daily, 17 Aug 2020)
 
Export control experts advocated for more effective U.S. controls, saying the U.S. should pursue more multilateral support and may need to rethink its strategy toward China. In a series of short essays published Aug. 13 by the Center for a New American Security, experts and former policymakers dive into how the controls can be more effective, what they should target, and how the controls are viewed by U.S. allies and adversaries.

COM COMMENTARY

(Source: Kelley Drye, 12 Aug 2020)
 
* Principal Author: Robert Slack, Esq., 1-202-342-8622, Kelley Drye
 
Yesterday, U.S. Customs and Border Patrol (CBP) issued a new rule that requires importers to begin marking Hong Kong goods as “made in China” for purposes of 19 U.S.C. § 1304.  Goods that are entered or withdrawn from warehouse for consumption into the United States after September 25, 2020 will be subject to the new requirements.  The rule was issued pursuant to last month’s Executive Order (E.O.) on Hong Kong Normalization, which requires U.S. government agencies to update their regulations to eliminate the differential treatment between China and Hong Kong under U.S. international trade rules.

Importers should act now to ensure that subject imports are properly marked.  As CBP notes in the rule notice, failure to comply with marking requirements will result in the imposition of a 10 percent ad valorem duty.

(Source: Steptoe, 14 Aug 2020)
 
* Principal Author: Brian Egan, Esq., 1-202-429-8009, Steptoe
 
On August 7, 2020, the US Department of the Treasury’s Office of Foreign Assets Control (OFAC) announced the imposition of sanctions on 11 prominent Hong Kong and People’s Republic of China (PRC) officials for taking actions that, in the view of the US government, undermined Hong Kong’s autonomy and restricted fundamental freedoms of people in Hong Kong. The officials include Hong Kong’s Chief Executive Carrie Lam, Hong Kong’s Secretary for Justice, the Secretary for Security, the Commissioner of the Hong Kong Police Force, and Chinese officials responsible for Hong Kong affairs, among others.

OFAC named the officials as Specially Designated Nationals (SDNs) pursuant to Executive Order (EO) 13936, entitled The President’s Executive Order on Hong Kong Normalization. Section 4 of the EO authorizes sanctions called for by Congress in the Hong Kong Human Rights and Democracy Act of 2019 and the Hong Kong Autonomy Act (HKAA).

As a result of the designations, all property and interest in property of the SDNs must be blocked (frozen) when in the United States or within the possession or control of a US person. US citizens and green card holders and US-domiciled companies are generally prohibited from transactions or dealings, directly or indirectly, with SDNs as well as entities owned 50% or more by one or more SDNs. This includes financial transactions processed through US banks. Note that the general prohibitions and blocking requirements under EO 13936 do not apply to foreign subsidiaries of US companies, but would apply to foreign branches of such companies.

(For a detailed summary of the sanctions provisions of EO 13936 please see our recent client advisory here.)

Consequences for Financial Institutions
In particular, the designations could have implications for foreign financial institutions (FFIs) with relationships with the newly designated SDNs. Section 5(a) of the HKAA requires the Secretary of State, in consultation with the Secretary of the Treasury, to submit a report to Congress within 90 days of the law’s enactment if they identify any foreign person who “is materially contributing to, has materially contributed to, or attempts to materially contribute to the failure” of the Government of China to meet its obligations with respect to Hong Kong under the Joint Declaration or the Basic Law.
Section 5(b) of the HKAA gives the Secretary of the Treasury, in consultation with the Secretary of State between 30 and 60 days to submit a second report to Congress identifying any FFI that knowingly conducts a “significant transaction” with a foreign person identified in a report under Section 5(a) of the HKAA.

FFIs identified in a report under Section 5(b) of the HKAA could face five out of a menu of 10 sanctions described in Section 7(b) of the HKAA within one year of the report. After one year, the President must impose five of the 10 sanctions, and must impose all 10 sanctions within two years.

Waiting for Treasury Guidance
While the Treasury Department has not yet issued guidance on its interpretation of the HKAA, the eleven officials designated as SDNs on August 7 are presumably likely candidates for inclusion in the first report to Congress under Section 5(a).

With that said, the administration has considerable discretion in the implementation of the HKAA. First, the Secretary of State may omit from either report to Congress a foreign person or FFI upon a determination that such person’s activities (i) do not “have a significant and lasting negative effect that contravenes the obligations of China under the Joint Declaration and the Basic Law;” (ii) are not likely to be repeated; and (iii) have been “reversed or otherwise mitigated through positive countermeasures.”

Second, the Treasury Department could provide an interpretation of the term “significant transaction” with respect to FFIs, including whether basic services such as deposit accounts, credit cards, mortgages, and lending, life insurance, among others, would be considered significant transactions. While OFAC has published guidance on the term “significant” in other sanctions contexts, listing seven factors that it could consider, the agency could adopt a different interpretation for the purposes of the HKAA.

As with many sanctions-related EOs, EO 13936 authorizes blocking sanctions on foreign persons determined to “have materially assisted, sponsored, or provided financial, material, or technological support for, or goods or services to or in support of, any person whose property and interests in property are blocked” under Section 4 of the EO. This provision does not contain a “significant” qualifier.

Given the US government’s limited use of secondary sanctions on financial institutions under other congressionally mandated sanctions programs, it is possible that no FFIs will be identified under the HKAA in the immediate future.
Last, given that a number of the newly sanctioned officials play key roles in the Hong Kong government, US persons are advised to exercise caution to avoid transactions or dealings, directly or indirectly, with the SDN individuals, as highlighted in OFAC FAQ 505 concerning Venezuela sanctions.

(Source: Vinson & Elkins, 14 Aug 2020)
 
* Principal Author: David R. Johnson, Esq., 1-202-639-6706, Vinson & Elkins
 
On July 10, 2020, the Federal Acquisition Regulatory (“FAR”) Council released a prepublication version of an interim rule, FAR Case 2019-009 (the “Interim Rule”), amending the FAR to prohibit federal agencies from contracting with companies that use in their systems telecommunications equipment produced by Huawei Technologies Company, ZTE Corporation, or their affiliates; video surveillance and telecommunications equipment produced by Hytera Communications Corporation, Hangzhou Hikvision Digital Technology Company, Dahua Technology Company, or their affiliates; or telecommunications or video surveillance services provided by such entities or using such equipment (“Covered Equipment and Services”). The Interim Rule takes effect August 13, 2020, and implements the statutory requirement set forth in Section 889(a)(1)(B) of the John S. McCain National Defense Authorization Act for Fiscal Year 2019,1 which is designed to protect against foreign intelligence threats. The Interim Rule ends speculation that the Government might give contractors more time to comply with Congress’s mandate, and poses substantial business and legal risks to contractors that use, or have incorporated, Covered Equipment and Services in their own internal systems and operations. At a high level, the release of the Interim Rule means that contractors have approximately one month to purge all such Covered Equipment and Services from their systems in order to remain eligible for federal contracts, including new task and delivery orders on existing indefinite delivery, indefinite quantity (“IDIQ”) contracts.

The statutory basis for the Interim Rule was enacted in August 2018 and sets forth a two-staged prohibition requiring agencies: (1) to stop procuring Covered Equipment and Services (for their own use) within one year; and (2) to stop contracting with entities that use Covered Equipment and Services in their own systems within two years. In August 2019, the FAR Council implemented the first prohibition with new regulations at FAR subpart 4.21, solicitation provisions at FAR 52.204-24 and 52.204-26, and a solicitation/contract clause at FAR 52.204-25. The Interim Rule now implements the second prohibition by amending several of these provisions and clauses, as well as related provisions in FAR Parts 1, 13, and 39 and certain commercial item and simplified acquisition clauses in Part 52.

First, the Interim Rule revises the prohibition at FAR 4.2102 to add subsection (a)(2) as follows:
On or after August 13, 2020, agencies are prohibited from entering into a contract, or extending or renewing a contract, with an entity that uses any equipment, system, or service that uses covered telecommunications equipment or services as a substantial or essential component of any system, or as critical technology as part of any system . . . This prohibition applies to the use of covered telecommunications equipment or services, regardless of whether that use is in performance of work under a Federal contract.
The Interim Rule adds similar language to the clause at FAR 52.204-25. The terms “substantial or essential component” and “critical technology” had been defined by the FAR Council last year when it implemented the first agency-focused prohibition, and the Interim Rule does not change these definitions. “Substantial or essential component” means “any component necessary for the proper function or performance of a piece of equipment, system, or service,” while “critical technology” is a broad concept that includes items on the United States Munitions List, certain items on the Commerce Control List, as well as nuclear equipment and other emerging and foundational technologies. Notably, the Interim Rule does not define the term “use,” but emphasizes that the prohibition applies even if the use of the Covered Equipment and Services is unrelated to the performance of the contract.

Second, the Interim Rule revises the solicitation provision at FAR 52.204-24. Specifically, new paragraph (d)(2) will require an offeror submitting a proposal to represent, after conducting a “reasonable inquiry,” whether it does or does not use Covered Equipment and Services. If the offeror answers “does,” it will be required to provide additional information in the “disclosure” paragraph at (e)(2). Thus, at present, it appears that the Government will perform a case-by-case determination of whether each specific use of Covered Equipment and Services is prohibited because the use is “as a substantial or essential component of any system, or as critical technology as part of any system.” As a result, even if the offeror believes its use of the Covered Equipment and Services is permissible, it still must disclose such use, and it could be excluded from the competition if the Government disagrees with the offeror’s assessment. The FAR Council stated in the Interim Rule that it is currently working on updating the System for Award Management to allow for an annual representation, after which only offerors responding in the affirmative would be required to provide offer-by-offer representations.

As mentioned above, the offeror’s representation is to be made after conducting a “reasonable inquiry” into whether it uses Covered Equipment and Services. Under the Interim Rule, a “reasonable inquiry” is “an inquiry designed to uncover any information in the entity’s possession about the identity of the producer or provider of covered telecommunications equipment or services used by the entity.” The Interim Rule explains that a “reasonable inquiry need not include an internal or third-party audit.” Even so, the FAR Council clearly intends that contractors will stand up a robust compliance program to implement the usage prohibition. The Interim Rule sets forth six steps that the FAR Council “assumes” will “most likely be part of the compliance plan developed by any entity”: Regulatory Familiarization; Corporate Enterprise Tracking (i.e., the reasonable inquiry process); Education (of purchasing/procurement and materials management professionals); Removal (of Covered Equipment and Services); Representation; and Development a Phase-out Plan and Submission of Waiver Information (if a waiver will be requested).

The Interim Rule has broad application. It applies to solicitations for new contracts, new orders under existing IDIQ contracts, and options and extensions of existing contracts and orders.  Because the national security risks the Interim Rule aims to address exist regardless of contract type and size, it applies to all contracts, including contracts below the simplified acquisition threshold and contracts for commercial items (including commercially available off-the-shelf (COTS) items). Furthermore, while the Interim Rule states that the prohibition on using Covered Equipment and Services will not “flow down” to subcontractors, it warns contractors that the required “reasonable inquiry” must include an examination of the contractor’s relationships with subcontractors and suppliers to determine whether the contractor uses the supplier or subcontractor’s Covered Equipment and Services. In addition, the FAR Council announced in the Interim Rule that it is considering a potential expansion of the prohibition to all of an offeror’s affiliates, parents, and subsidiaries that are domestic concerns, with an effective date no later than August 13, 2021. If implemented, this would be a significant expansion of the usage prohibition that will require contractors to either remove all Covered Equipment and Services from the systems of their affiliates (to include entities not engaged in government contracting), or to decline to seek new business with the U.S. Government.

The Interim Rule provides a discretionary process for agencies to issue waivers for entities that are not in compliance after the August 13, 2020 effective date. With that said, the prospect of obtaining a waiver appears bleak, as the waiver process is onerous for both contractors and agencies. Under the process outlined in the Interim Rule (and added to FAR 4.2104), the head of an executive agency may grant a one-time waiver on a case-by-case basis, and waivers will expire no later than August 13, 2022. To request a waiver, an offeror must provide (1) a compelling justification for additional time to implement the usage prohibition, (2) a full and complete laydown of the presences of Covered Equipment and Services in its supply chain, and (3) a phase-out plan to eliminate the Covered Equipment and Services from the offeror’s systems. Moreover, before granting a waiver, agencies must undertake several steps, including appointing a senior official responsible for overseeing supply chain risk, establishing and participating in interagency sharing of relevant supply chain risk information, and notifying and consulting with the Office of the Director of National Intelligence (“ODNI”) on the issue of the waiver request. Agencies may only grant waiver requests after confirming – either via direct inquiry or consultation of existing guidance or briefings – that ODNI does not have existing information suggesting that the waiver would present a material increase in risk to U.S. national security. A waiver granted by one agency will not necessarily improve a contractor’s chances of being granted a waiver by a second agency on an unrelated procurement, and agencies may reasonably choose not to initiate the waiver process in the first place where mission needs do not permit time to undertake the process. Separately, the Director of National Intelligence may grant a non-time-limited waiver if the Director determines it is in the interest of U.S. national security.

The consequences of non-compliance with the Interim Rule are serious. For example, if an offeror is unable to represent that it does not use the Covered Equipment and Services in the manner prohibited by the statute and Interim Rule, it will be excluded from competitions for new contracts and task/delivery orders (in the absence of a waiver). As a contractual matter, engaging in a prohibited use of Covered Equipment and Services while performing a contract that includes the newly revised FAR 52.204-25 can cause an agency to decline to exercise options to extend the contract or, in the case of an IDIQ contract, decline to issue new task or delivery orders. Moreover, if the contractor makes an inaccurate representation to the Government regarding its use of the Covered Equipment and Services, it could face liability under the False Claims Act, as well as suspension or debarment from government contracting.
Given these risks, contractors should act now to educate their personnel, conduct the “reasonable inquiry” required by the Interim Rule, and work to remove Covered Equipment and Services from their systems as soon as practicable. While it is possible that certain provisions of the Interim Rule could change when the FAR Council issues a final rule, the Interim Rule is effective on August 13, 2020, and contractors can expect to see the new versions of FAR 52.204-24 and 52.204-25 in solicitations and contract modifications even before that date.

Finally, contractors interested in providing input for consideration in the formation of the final rule should submit comments in response to the Interim Rule, which will be due 60 days after its publication in the Federal Register. The Interim Rule identifies several specific issues about which the FAR Council seeks public input, although comments need not be limited to those issues.

TE EX/IM MOVERS & SHAKERS

MS_a112.  Mandy Wilcox Joins Alpha Omega

(Source: Christine McGinn, christine.mcginn@alphaocg.com)  
 
Mandy Wilcox has announced that she has joined Alpha Omega Consulting Group LLC, https://alphaocg.com/ as Senior Advisor, Contracts & Security.  Mandy can be reached at mandy.wilcox@alphaocg.com

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MS_a213. Monday List of Ex/Im Job Openings: 60 Jobs Available –  7 New Job Openings This Week 

 
* Boeing; Springfield, VA; Procurement Agent 2
 
* Bruker; Madison, WI; Export Compliance Manager
 
* Ingram Micro; Irvine, CA; Export Compliance Specialist
 
* L3Harris; Melbourne, FL; Procurement Associate
 
* Microsoft; Redmond, WA; Sr. Manager Export Control
 
* Sable Systems; North Las Vegas, NV; Import Export Manager
 

Click here to see the full list.

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TE EX/IM TRAINING EVENTS & CONFERENCES

TE_a114. ECTI Presents: A New World of Export Controls for China: September 29, 2020

(Source: Ashleigh Foor, ashleigh@learnexportcompliance.com)
 
* What: A New World of Export Controls for China
* When: September 29, 2020; 1:00 p.m. (EDT)
* Where: Webinar
* Sponsor: Export Compliance Training Institute (ECTI)
* ECTI Speaker: Scott Gearity
* Register: bit.ly/ECTIChinaExports / or Ashleigh Foor, 540-433-3977, ashleigh@learnexportcompliance.com.

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

ITAR & EAR from a non-US perspective
Tuesday, 8 September 2020
More Info
The ABC of Foreign Military Sales (FMS)
Tuesday, 29 September 2020
Designing and Implementing an ICP
Tuesday, 6 October 2020 More Info
Wednesday, 7 October
More Info
* * * * * * * * * * * * * * * * * * * *

EN EDITOR’S NOTES

EN_a116. Bartlett’s Unfamiliar Quotations

(Source: Editor)
 

* Davy Crockett (17 Aug 1786 – 6 Mar 1836; was an American folk hero, frontiersman, soldier, and politician. He is commonly referred to in popular culture by the epithet “King of the Wild Frontier”. He represented Tennessee in the U.S. House of Representatives and served in the Texas Revolution.)
  – “For the information of young hunters, I will just say, in this place, that whenever a fellow gets bad lost, the way home is just the way he don’t think it is. This rule will hit nine times out of ten.”
 
* Lucretius (Titus Lucretius Carus; c. 99 BC – c. 55 BC; was a Roman poet and philosopher. His only known work is the philosophical poem De rerum natura,(On the Nature of Things). 
  – “The drops of rain make a hole in the stone, not by violence, but by oft falling.”
  – ” ‘Tis sweet, when the sea is high and the winds are driving, to watch from shore another’s anguished striving.”
 

Monday is pun day.

* Did you hear about the actor who fell through the floorboards?  He was just going through a stage.
* When life gives you melons, you’re dyslexic.
* The other day I tried to make a chemistry joke, but got no reaction.
* German sausage jokes are just the wurst!
* Sleeping comes so naturally to me, I can do it with my eyes closed.
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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. 
31 Jul 2020: 85 FR 45998: Revision of the Export Administration Regulations and Suspension of License Exceptions for Hong Kong. 
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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