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20-0831 Monday “Daily Bugle”

20-0831 Monday “Daily Bugle”

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Monday, 31 August 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. NYT: “TikTok Deal Is Complicated by New Rules From China Over Tech Exports”
  2. Reuters: “China’s New Tech Export Controls Could Give Beijing a Say in Tiktok Sale”
  1. Kelley Drye: “U.S. Adds 24 Chinese Construction and Communications Companies to the Entity List”
  2. Steptoe: “Export Controls on “Foundational Technologies” – Opportunity for Public Comment”
  3. Thompson Hine: “Department of Commerce Adds 60 Companies to the Entity List, Including 24 Chinese Companies, for Involvement in Militarizing the South China Sea”
  1. Monday List of Ex/Im Job Openings: 53 Available – 10 New Job Openings This Week
  1. 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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load to your laptop to keep you updated on the latest amendments, and contain over 800 footnotes of section history, key cases, practice tips & tricks, and extensive Tables of Contents. 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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EXIM ITEMS FROM TODAY’S FEDERAL REGISTER


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OGS OTHER GOVERNMENT SOURCES

(Source: Federal Register)  
 

* Commerce/BIS; NOTICES; Meetings: Materials and Equipment Technical Advisory Committee; [Pub. Date: 1 Sep 2020] (PDF)
 
* Commerce/BIS; NOTICES; Meetings: Regulations and Procedures Technical Advisory Committee; [Pub. Date: 1 Sep 2020] (PDF)
 
* State/DDTC; NOTICES; Notice of Department of State Sanctions Actions, Blocking Property and Suspending Entry of Certain Persons Contributing to the Situation in Syria; [Pub. Date: 1 Sep 2020] (PDF)

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COM NEWS

(Source: New York Times, 29 Aug 2020) [Excerpts]
 
As the sale of TikTok enters its final stages, Beijing is saying it wants the last word.
In a bureaucratic two-step, China on Friday updated its export control rules to cover a variety of technologies it deemed sensitive, including technology that sounded much like TikTok’s personalized recommendation engine. 
 
Beijing’s last-minute assertion of authority is an unexpected wrinkle for a deal as two groups race to buy TikTok’s U.S. operations before the Trump administration bans the app. …
 
The moves from Beijing ensnare TikTok and potential American buyers including Microsoft and Oracle, wedging them in the middle of a tussle between the United States and China over the future of global technology.
 
TikTok is the most globally successful app ever produced by a Chinese company, and the conflict over its fate could further fracture the internet and plunge the world’s two largest economies into a deeper standoff.

(Source: Reuters, 30 Aug 2020) [Excerpts]
 
China’s new rules around tech exports mean ByteDance’s sale of TikTok’s U.S. operations could need Beijing’s approval, a Chinese trade expert told state media, a requirement that would complicate the forced and politically charged divestment.
 
ByteDance has been ordered by President Donald Trump to divest short video app TikTok in the United States amid security concerns over the personal data it handles.
 
China’s Ministry of Commerce added 23 items – including technologies such as personal information push services based on data analysis and artificial intelligence interactive interface technology – to the restricted list.
It can take up to 30 days to obtain preliminary approval to export the technology.

COM COMMENTARY

(Source: Kelley Drye, 27 Aug 2020)
 
* Principal Author: Robert Slack, Esq., 1-202- 342-8622, Kelley Drye
 
Today the Bureau of Industry and Security (BIS) added 24 Chinese state-owned companies to the Entity List for their role in the construction of artificial islands in the South China Sea.  The Entity List prohibits the export, re-export, and transfer (in-country) of items subject to the Export Administration Regulations (EAR) to these companies without a license from BIS.  Five of the newly designated companies are subsidiaries of China Communications Construction Co. (CCCC), a leading contractor for China’s “Belt and Road Initiative” to develop infrastructure and trade links globally.
This action is the most recent in a series of confrontational U.S. trade control measures targeting China.  An unnamed senior U.S. official described CCCC as “the Huawei of infrastructure.”
BIS added 36 other companies to the list, including parties in France, Hong Kong, Indonesia, Malaysia, Oman, Pakistan, Switzerland, and the UAE for activities deemed contrary to U.S. national security or foreign policy interests.

(Source: Steptoe, 28 Aug 2020)
 
* Principal Author: Peter Jeydel, Esq., 1-202-429-6291, Steptoe
 
On August 27, 2020, the U.S. Commerce Department’s Bureau of Industry and Security (“BIS”) published an advance notice of proposed rulemaking (“ANPRM”) to solicit comments from industry and other stakeholders about how BIS should approach the establishment of new export controls on “foundational technologies” under the U.S. Export Administration Regulations (“EAR”). Comments must be received by October 26, 2020. This is an important opportunity for both U.S. and non-U.S. companies, industry groups, academic institutions and others to have a role in shaping this new U.S. regulatory process at an early stage.

The U.S. government is required under Section 1758 of the Export Control Reform Act of 2018 (“ECRA”) to “identify emerging and foundational technologies” that are “essential to the national security of the United States” and that are not yet subject to export controls for most countries, and then to “establish appropriate controls” on such technologies, which “at a minimum” are to include restrictions on providing such technologies to China and other U.S. arms-embargoed countries.  Therefore, the end result of this process may be new U.S. export controls on China and other countries that are viewed as more sensitive from the perspective of U.S. national security.  Any controls ultimately established for foundational technologies will be relevant not just for export controls, but also other regulatory areas.  Notably, “emerging and foundational technologies” controlled pursuant to Section 1758 of ECRA will be treated as “critical technologies” for the purpose of foreign investment national security reviews led by the Committee on Foreign Investment in the United States (“CFIUS”), as we previously advised.

BIS initiated a similar process pursuant to Section 1758 of ECRA for “emerging technologies” in late 2018, as we previously discussed.  The main difference with “foundational technologies” is that some of these technologies may already be restricted under the EAR with an Export Control Classification Number (“ECCN”) on the U.S. Commerce Control List (“CCL”).  In contrast, “emerging technologies” are generally viewed as those that have never before been subject to export controls.  Therefore, the “foundational technologies” process may involve some combination of establishing new ECCNs, increasing the restrictions applicable to existing ECCNs, and modifying existing ECCNs in other ways such as with respect to the nature and scope of items controlled.  BIS states in the ANPRM that it is looking at technologies that are currently “controlled only for anti-terrorism (AT), crime control (CC), or short supply (SS) reasons, subject to United Nations (UN) embargoes, or designated as EAR99.”
BIS does not yet appear to have specific technologies in mind for the establishment of controls on “foundational technologies.”  The agency stated in the ANPRM that it is considering the following factors as examples:
  • . . . if the items are being utilized or required for innovation in developing conventional weapons, enabling foreign intelligence collection activities, or weapons of mass destruction applications.
  • . . . technologies that have been the subject of illicit procurement attempts which may demonstrate some level of dependency on U.S. technologies to further foreign military or intelligence capabilities in countries of concern or development of weapons of mass destruction.
BIS warned the semiconductor industry specifically in the ANPRM that it may seek to impose broader controls under this authority on “semiconductor manufacturing equipment and associated software tools.”  It also mentioned “lasers, sensors, and underwater systems,” based on the view that such technologies “can be tied to indigenous military innovation efforts in China, Russia or Venezuela” and may therefore “pose a national security threat.”
The ANPRM does make clear that “BIS does not seek to expand jurisdiction over technologies that are not currently subject to the EAR, such as ”fundamental research” described in § 734.8 of the EAR.”  BIS made an identical statement in the emerging technologies ANPRM.

BIS is seeking comments on the following specific points:

  1. How to further define foundational technology to assist in identification of such items;
  2. Sources to identify such items;
  3. Criteria to determine whether controlled items identified in AT level Export Control Classification Numbers (ECCNs), in whole or in part, or covered by EAR99 categories, for which a license is not required to countries subject to a U.S. arms embargo, are essential to U.S. national security;
  4. The status of development of foundational technologies in the United States and other countries;
  5. The impact specific foundational technology controls may have on the development of such technologies in the U.S.;
  6. Examples of implementing controls based on end-use and/or end-user rather than, or in addition to, technology based controls;
  7. Any enabling technologies, including tooling, testing, and certification equipment, that should be included within the scope of a foundational technology; and
  8. Any other approaches to the issue of identifying foundational technologies important to U.S. national security, including the stage of development or maturity level of an foundational technology that would warrant consideration for export control.

The ANPRM states that BIS will use the public comments provided to inform an interagency process aimed at developing new controls on foundational technologies, and that the next step following that interagency process will be the issuance of “rules and comment periods” for any such new controls.  In other words, as we saw with the “emerging technologies” process, the ANPRM should only be the first out of at least two steps in developing these new controls, and there will be another opportunity for industry comment prior to the implementation of specific new controls.  That said, it is possible that BIS could decide to issue “interim final” rules that go directly into effect at some point after this comment period, rather than “proposed rules” that have no effect until finalized in another rulemaking.

BIS has taken a deliberative and case-by-case approach to emerging technologies.  To date, the agency has been following its pre-existing process to establish new controls on emerging technologies under the 0Y521 series of classifications, such as the January 2020 controls on geospatial imagery analysis automation software.  The U.S. government also continues to pursue new controls through the multilateral export control regimes, such as the annual Wassenaar Arrangement process.

This ANPRM on foundational technologies, and the parallel process for emerging technologies, come in the context of other initiatives at BIS to expand the scope of U.S. export controls into new areas of technology, with a focus on China in particular.  For example, on July 17, 2020, BIS published a notice of inquiry seeking input on the development of new controls on “surveillance systems and other items of human rights concern,” such as “facial recognition software and other biometric systems for surveillance, nonlethal visual disruption lasers, and long-range acoustic devices and their components, software, and technologies.”

We recommend that industry, academia and other stakeholders watch these developments carefully, as new U.S. export controls can impact a variety of concerns, including investment, hiring, IT infrastructure, R&D, partnerships/collaborations, and sales.

(Source: Trump and Trade, 27 Aug 2020)
 
* Principal Author: Scott E. Diamond, Esq., 1-202-263-4197, Thompson Hine
 
On August 26, 2020, the Department of Commerce’s Bureau of Industry and Security (BIS) announced that it was adding 24 Chinese companies to the Entity List for their role in helping the Chinese military construct and militarize the internationally condemned artificial islands in the South China Sea. “The United States, China’s neighbors, and the international community have rebuked the [China’s] sovereignty claims to the South China Sea and have condemned the building of artificial islands for the Chinese military,” said Commerce Secretary Wilbur Ross while noting that the newly listed companies “have played a significant role in China’s provocative construction of these artificial islands and must be held accountable.”

The notice also identifies and designates another 36 entities in France, Hong Kong, Indonesia, Malaysia, Oman, Pakistan, Russia, Switzerland and the United Arab Emirates (U.A.E.) for a range of activities, including: (1) attempted diversion of controlled U.S.-origin aircraft parts to Iran; (2) contributions to unsafeguarded nuclear activities; (3) involvement in a scheme to falsify information submitted in support of BIS license applications in order to divert U.S.-origin items to Iran; (4) representing an unacceptable risk that U.S.-origin items exported, reexported, or transferred (in-country) to certain listed entities will be used in military end-use activities in China and/or in support of programs for the People’s Liberation Army; (5) involvement with the Russian military and/or with Russia’s biological weapons program; and (6) engaging in activities contrary to U.S. national security or foreign policy interests.
The Entity List is used by BIS to restrict the export, re-export and transfer (in-country) of items subject to the Export Administration Regulations (EAR) to persons (individuals, organizations, companies) reasonably believed to be involved, or to pose a significant risk of becoming involved, in activities contrary to the national security or foreign policy interests of the United States. When placed on the list, additional license requirements apply to any business transactions involving such entities, and the licensing policy of BIS is often a policy of denial. The list of all companies is available in a Federal Register notice published on, and effective as of, August 27. 2020.

Shipments of items to any of these listed entities that were en route aboard a carrier to a port of export or reexport as of August 27, 2020 pursuant to actual orders for export or reexport to a foreign destination, may proceed to that destination under the previous eligibility for a License Exception or export or reexport without a license (NLR).

TE EX/IM MOVERS & SHAKERS

MS_a19. Monday List of Ex/Im Job Openings: 53 Jobs Available –  11 New Job Openings This Week 

* Allegion; Remote (USA); Trade Compliance Analyst; Contact Details: David.Crull@allegion.com 

 
* Bruker; Madison, WI; Export Compliance Manager; Job ID: 2019-8208
 
* Celestica; Portland, OR; Shipping Import/Export Lead; Job ID: 62136 
 
* Cybereason; Boston, MA; Senior Compliance Counsel
 
* EOS Defense Systems USA; Huntsville, AL; Sr. International Trade Compliance Officer; Contact Details: jchapman@eosdsusa.com
 
 
* SAIC; Reston, VA; International Trade Compliance Principal; Job ID: 2012729; Contact Details: Elizabeth.M.Parker@saic.com
 
* SalesForce; Reston, VA; Corporate Counsel, Global Trade Programs; Contact Details: debra.cheng@salesforce.com

* Treasury/OFAC; Washington D.C.; Attorney-Advisor; Job ID #:576538700

* USF; Tampa, FL; Export Control Officer 
 
* Volvo Group; Greensboro, NC; Import Trade Compliance Intern
 

Click here to see the full list.

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TE EX/IM TRAINING EVENTS & CONFERENCES

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
Q. Why should non-U.S. persons study U.S. export regulations?
A. Because when U.S. goods and services move, money moves.
 
Q. Do you work at a company or a government agency that works with the US-origin defense articles and US technology?
A. If you answer Yes, you need to understand the ITAR and EAR.
 
On Tuesday, 8 Sep, from 3 pm to 5:15 pm CET (9 am to 11:15 am EDT) FCC presents a 2-hour Zoom webinar, “Intro to ITAR and EAR.” 

This Webinar will answer the “Top 5 Questions” from Non-US Persons:

     (1) How can the US lawfully enforce US export laws outside the US?

(2)How can I tell which U.S. regulations apply to me: ITAR, EAR, or none?
(3)What actions and products of mine are subject to the ITAR? Which are subject to the EAR?
(4)What should I do if I violate the ITAR or EAR?
(5)How can my company avoid all U.S. export controls?
 
Register Here or contact Jim Bartlett, JEBartlett@JEBartlett.com or 1-202-802-0646.
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EN EDITOR’S NOTES

EN_a111. Bartlett’s Unfamiliar Quotations

(Source: Editor)
 

* Huey Long (Huey Pierce Long Jr.; 30 Aug 1893 – 10 Sep 1935; nicknamed “The Kingfish”, was an American politician who served as the 40th governor of Louisiana from 1928 to 1932 and as a member of the United States Senate from 1932 until his assassination in 1935. A populist member of the Democratic Party, he rose to national prominence during the Great Depression for his vocal criticism of President Franklin D. Roosevelt and his New Deal from the left.)
  – “One of these days the people of Louisiana are going to get good government – and they aren’t going to like it.”
 
* Buddy Hackett (born Leonard Hacker; 31 Aug 1924 – 30 Jun 2003; was an American actor and comedian. His best remembered roles include Marcellus Washburn in The Music Man (1962); Benjy Benjamin in It’s a Mad, Mad, Mad, Mad World (1963); Tennessee Steinmetz in The Love Bug (1968); and the voice of Scuttle in ‘The Little Mermaid’ (1989).
  – “As a child my family’s menu consisted of two choices: take it or leave it.”
 
Monday is pun day.
– Why do seagulls fly over the sea? Because if they flew over the bay they’d be bagels!
– Did you hear about that guy who fell into one of those infinity pools? Yeah… it took him forever to get out.
– Police have arrested the World Tongue-Twister Champion. I imagine he’ll be given a tough sentence. 
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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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