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20-0901 Tuesday “Daily Bugle”

20-0901 Tuesday “Daily Bugle”

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Tuesday, 1 September 2020

  1. State Department: “Sanctions Actions Pursuant to EO 13894 Blocking Property and Suspending Entry of Certain Persons Contributing to the Situation in Syria”
  1. Items Scheduled for Future Federal Register Edition
  2. Commerce/BIS: (No new postings)
  3. State/DDTC: (No new postings)
  4. Treasury/OFAC: “North Korea Ballistic Missile Procurement Advisory”
  5. Singapore Implements the Asean-Wide Self Certification (AWSC) Scheme
  1. Deutsche Welle: “France Arrests Top Military Officer Over Russian-Linked ‘Breach’ at NATO Base”
  2. Reuters: “China Revises List of Technologies Banned, Restricted for Export”
  3. Tech Crunch: “TikTok Parent ByteDance Says it Will ‘Strictly Follow’ China Export Controls”
  1. Arent Fox: “Commerce Launches Rulemaking Process on Foundational Technologies, Hints at Three Potential Areas of Control”
  2. Nicholas Turner: “Sanctions Top-5 for the Week Ending 28 Aug”
  3. T – B: “Changes to Export Controls in August 2020”
  1. ECS Presents: 16-17 Sep; “3rd Annual ITAR/EAR Symposium and Managing ITAR/EAR Complexities”
  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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Bartlett’s Annotated ITAR and Bartlett’s Annotated FTR are Word documents to down-

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

EXIM_a11. State Department: “Sanctions Actions Pursuant to EO 13894 Blocking Property and Suspending Entry of Certain Persons Contributing to the Situation in Syria”

 
85 FR 54481: Notice
*SUMMARY: The Secretary of State has imposed sanctions on three individuals and one entity pursuant to E.O. 13894, Blocking Property and Suspending Entry of Certain Persons Contributing to the Situation in Syria.
* DATES: The Secretary of State’s determination and selection of certain sanctions to be imposed upon the one individual identified in the SUPPLEMENTARY INFORMATION section were effective on July 29, 2020.
* FOR FURTHER INFORMATION CONTACT: Taylor Ruggles, Director, Office of Economic Sanctions Policy and Implementation, Bureau of Economic and Business Affairs, Department of State, Washington, DC 20520, tel.: (202) 647 7677, email: RugglesTV@state.gov.

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

OGS OTHER GOVERNMENT SOURCES

(Source: Federal Register, 1 Sep 2020)
 
* State Department: NOTICES; Agency Information Collection Activities; Proposals, Submissions, and Approvals: Form DS-6004; Request to Change End-User, End-Use and/or Destination of Hardware [Pub. Date: 2 Sep 2020] (PDF)
 
* USTR: NOTICES; Product Exclusions: China’s Acts, Policies, and Practices Related to Technology Transfer, Intellectual Property, and Innovation [Pub. Date: 2 Sep 2020] (PDF)

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

OGS_a23. Commerce/BIS: (No new postings)

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

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

OGS_a45. Treasury/OFAC: “North Korea Ballistic Missile Procurement Advisory”
 

   The United States is issuing an advisory to alert industry worldwide to North Korea’s ballistic missile procurement activities.  This advisory identifies key North Korean procurement entities and deceptive techniques employed by North Korean proliferators and procurement networks, provides an overview of U.S. sanctions authorities related to DPRK proliferation, and lists North Korea-related sanctions enforcement resources.

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

(Source: Singapore Customs, 1 Sep 2020) [Excerpts]
   Entry into force of the first protocol to amend the asean trade in goods agreement (atiga) and implementation of the asean-wide self certification (awsc) scheme.
  The First Protocol to amend the ASEAN Trade in Goods Agreement (ATIGA) to allow ASEAN-wide Self-Certification (AWSC) will enter into force on 20 Sep 2020. Along with this, the AWSC scheme will also be implemented on the same day. AWSC is a unified self-certification scheme under the ATIGA. It allows companies in Singapore who are certified exporters to self-certify and make out origin declaration for their exports under ATIGA in lieu of obtaining a Certificate of Origin from Customs.
  This circular outlines the method in which companies in Singapore can participate in the AWSC scheme and benefit from the preferential tariff. The key to this is having an understanding of the requirements and operational procedures of the AWSC scheme which will simplify export formalities and brings about greater conveniences to businesses. The full text of the amended ATIGA Operational Certification Procedures (OCP) to allow implementation of AWSC can be downloaded at Enterprise Singapore’s website at www.fta.gov.sg

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

COM NEWS

(Source: Deutsche Welle, 30 Aug 2020) [Excerpts]
 
  French authorities are investigating a senior military officer for passing “ultra-sensitive” information to Russian intelligence. The officer was reportedly working at a NATO base in Italy.
  French Defense Minister Florence Parly told French media on Sunday that a senior military officer was under investigation for “serious security breaches.”
“What I can confirm is that a senior officer is facing legal proceedings for a security breach,” Parly told Europe 1 radio. She made similar statements to French television network Cnews and Les Echos newspaper.
  The lieutenant-colonel was reportedly based at a NATO facility in Italy and was arrested while holidaying in his native France. He had reportedly passed on “ultra-sensitive” information to Russian intelligence services.
Parly said France’s armed forces have taken “necessary protective measures” following the security breach. … 

(Source: Reuters, 28 Aug 2020) [Excerpts]

 
  China issued on Friday a revised list of technologies that are banned or  restricted for export amid the country’s rapid development in science and technology. 
  The revision on the Commerce Ministry website deletes four items in technologies banned for export, and five items in technologies restricted for export, such as firewall software technology. 
  It adds 23 new items of restricted technologies, including technologies on space material production and laser. It also adjusts the parameters for some other technologies.
  “With the rapid development of science and technology and the continuous improvement of China’s scientific and technological strength and industrial competitiveness, it is imperative to adjust the list in time according to the international practice,” the ministry said on its website. 
  The rise of China’s science and technology industries has been a source of trade frictions with the United States. 
  The last revision of this list was made in 2008.

(Source: Tech Crunch, 31 Aug 2020) [Excerpts]

 
  While Beijing has repeatedly spoken out against Washington’s pressure on Huawei, it has remained relatively quiet amid TikTok’s  recent struggles in the U.S. As the red-hot video app approaches a final sale in the U.S., however, the Chinese authority moved unexpectedly to make the deal more complicated to go through.
  On late Friday, China’s Ministry of Commerce updated its export control categories to cover artificial intelligence technologies. AI is the anchor of ByteDance products, including TikTok, which has thrived on customized content surfaced by machines. The next day, China’s official Xinhua news agency quoted scholar Cui Fan as saying the updated rules could apply to ByteDance. He advised companies with ongoing deals to “halt negotiations and transactions so as to conduct the relevant procedures.”
  On late Sunday, TikTok’s Chinese parent ByteDance issued a statement saying it will “strictly follow” the new technology export rules and handle its “related export businesses.”
  Though the new rule is not explicitly targeted at the TikTok deal, its timing is curious, just weeks before ByteDance is due to divest from its largest overseas market. ByteDance could now face hurdles as it advances to sell TikTok, for the regulation restricts the export of personalized recommendation and AI-powered interface technologies, according to Cui, a professor at China’s University of International Business and Economics.
  A TikTok sale is already complicated on the technical level, even without China’s trade restrictions. As The Information pointed out, ByteDance’s engineers and developers at its headquarters in Beijing provide all the software code deployed in its family of apps, including TikTok. It’s a strategy known as the “central platform” in the Chinese tech sector, one that also undergirds many businesses of Alibaba and Tencent for its purported advantage of increasing productivity and minimizing redundant resources. As such, breaking TikTok off from its Chinese parent would almost certainly disrupt the app’s operations in the short run.
  Many Chinese internet users have chastised ByteDance chief Zhang Yiming for caving in to U.S. pressure, which ordered the TikTok sale over alleged national security threats. Some go as far as labeling the tech boss of the world’s most valuable startup a “traitor.” They compare Zhang to the Huawei boss Ren Zhengfei, whose responses to American sanctions have been thought of as much more aggressive.
  It remains to be seen whether Beijing will further step in TikTok’s negotiations with the U.S. Industry observers have noted that the case is distinct from that of Huawei, whose 5G technology is a focal point of China’s race with the U.S., and who directly and indirectly has created many manufacturing jobs in China. Albeit being unprecedented in its penetration into the Western internet, ByteDance develops software that is considered more replaceable and relies on a narrower range of elitist talents.
  A damaged TikTok app may cause complaints from marketers who live off the app, but it probably won’t set off the same level of corporate resistance as seen with Trump’s proposed WeChat ban, which reportedly had giants (including Apple, Walmart and Disney) move to discuss the issue with the White House.

COM COMMENTARY

(Source: Arent Fox, 27 Aug 2020)

 
* Principal Author: Kay C. Georgi, Esq., 1- 202-857-6293, Arent Fox LLP
  BIS will be looking at items that are controlled only for anti-terrorism, crime control, short supply, United Nations embargoes, or designated as EAR99 in establishing new Foundational Technologies Controls.
  Two years after the Export Control Reform Act of 2018 (ECRA) was signed into law, the Department of Commerce, Bureau of Industry and Security (BIS) finally published the advance notice of proposed rulemaking (ANPRM) on foundational technologies. The ANPRM seeks public comment on criteria for identifying and defining “foundational technologies” essential to US national security. Clocking in at barely five pages double-spaced, the ANPRM explains that BIS will be looking at items that are controlled only for anti-terrorism (AT), crime control (CC), short supply (SS), or United Nations (UN) embargoes or designated as EAR99 in establishing new Foundational Technologies Controls. Comments are due by October 26, 2020.
  BIS published the ANPRM as required by ECRA §1758, which requires BIS to establish appropriate controls on the export, re-export, or transfer (in country) of emerging and foundational technologies. During the 2018 congressional debate on expanding the jurisdiction of the Committee for Foreign Investment in the United States (CFIUS), proponents of the Foreign Investment Risk Review Modernization Act (FIRRMA, which was enacted concurrently) sought to give CFIUS jurisdiction over certain overseas joint ventures that they viewed as de facto acquisitions of industrial capabilities related to foundational technologies. That portion of FIRRMA met with opposition from both industry and BIS, and the foundational technologies mandate of ECRA §1758 was crafted and substituted in as a compromise approach in which BIS would remain in the driver’s seat in regulating these types of transactions, instead of CFIUS. As reported in our previous alert, in November 2018, BIS also published an ANPRM seeking public comment on criteria for identifying and defining “emerging technologies” essential to US national security. On January 6, 2020, BIS issued an interim final rule on the first unilateral “emerging technology,” which imposed export controls on certain artificial intelligence software specially designed to automate the analysis of geospatial imagery. (BIS has imposed other emerging technology controls that were also adopted by multilateral export control groups such as the Wassenaar Arrangement and the Australia Group).
  While this BIS ANPRM has the potential to establish new export controls on “foundational technologies” under the Export Administration Regulations (EAR), any “foundational technologies” identified by BIS will be “critical technologies” for the purposes of the CFIUS. Therefore, CFIUS may assert its jurisdiction over transactions involving US businesses that produce, design, test, manufacture, fabricate, or develop one or more “foundational technologies” identified by BIS. In our previous alert, we provided an analysis of the CFIUS implications of “foundational technologies” that will be controlled by BIS.
 

Foundational Technology Categories Identified by BIS

  BIS clarified that it is not seeking to expand its jurisdiction over technologies that are not currently subject to the EAR, such as “fundamental research” described in EAR §734.8. The ANPRM requests comments from the public that will inform BIS and its interagency partners’ efforts to identify, reevaluate, and control “foundational technologies.” In the ANPRM, BIS hinted  at the following three areas for potential controls:
  • Items controlled for military end uses/users: The ANPRM notes that “foundational technologies could include items that are currently subject to control for military end use or military end user reasons under Supplement No. 2 to part 744 of the EAR. Many of these items, including semiconductor manufacturing equipment and associated software tools, lasers, sensors, and underwater systems, can be tied to indigenous military innovation efforts in China, Russia or Venezuela. Accordingly, they may pose a national security threat.”
  As reported previously, in April 2020 BIS issued a final rule imposing stricter requirements on a wide range of exports, re-exports, and transfers to China, Russia, or Venezuela for “military end uses” or to “military end users.” Because the military end user/end use rules in part 744.21 cover exports of items listed in EAR 744, Supplement 2, it is unclear why it would be necessary to impose additional controls to target military end users or end uses in these countries.

  • Items required to develop conventional weapons, used in foreign intelligence gathering and WMD applications: The ANPRM also notes that controls may be warranted “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.” Part 744 of the EAR already requires a license for exports of all items subject to the EAR for certain specified WMD proliferation activities, and Part 744.21 already covers military end use/user issues for three of the countries of concern.

  • Items that have been subject to illicit procurement efforts: The ANPRM states that more controls may be needed for “technologies that have been the subject of illicit procurement attempts which may demonstrate some level of dependency on US technologies to further foreign military or intelligence capabilities in countries of concern or development of weapons of mass destruction.” The fact that items may have been the subject of “illicit” procurement attempts would seem to indicate that it is already illegal for the persons in question to procure them. If this is in fact the case, one wonders why additional controls are warranted.

When and How to File Comments

BIS welcomes comments on:
  1. how to further define foundational technology to assist in the 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 US arms embargo, are essential to US 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 US;
  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 US national security, including the stage of development or maturity level of a foundational technology that would warrant consideration for export control.
  Comments from the general public should be submitted in writing to BIS by October 26, 2020. Comments can be submitted through the Federal eRulemaking Portal under BIS-2020-0029 or by mail or delivery to Regulatory Policy Division, Bureau of Industry and Security, US Department of Commerce, Room 2099B, 14th Street and Pennsylvania Avenue NW, Washington, DC 20230. Refer to RIN 0694-AH80. Comments are public, so you should not include any proprietary or other sensitive data that you do not want to become publicly available or otherwise disseminated.
  Although the ANPRM is a bit vague, the potential for either more strongly controlling items currently controlled as EAR99 or for AT, CC, SS, or UN reasons should prompt companies and universities alike to submit comments. Controls on foundational technologies may have unintended consequences with respect to US innovation and global competitiveness, as well as the ability to collaborate due to non-US person restrictions. Consideration should be given to targeted controls focusing on end-users and end-uses of concern.

(Source: Medium, 1 Sep 2020)

 
* Author: Nicholas Turner, Esq., 852-5998-7559, Steptoe & Johnson HK
 
  Here are five things that happened this week in the world of economic sanctions that I think you should know about.
  1. The US Commerce Department’s Bureau of Industry and Security (BIS) added 24 Chinese companies to the Entity List in relation to construction activities in disputed areas of the South China Sea. Meanwhile, the Department of Defense updated its list of Chinese ‘military companies’ pursuant to Section 1237 of the National Defense Authorization Act for Fiscal Year 1999 (NDAA 1999), including some companies also added to the Entity List.
  2. In related news, the US State Department announced visa bans against unnamed individuals, including executives of some Chinese state-owned enterprises, and their immediate family members, under the Immigration and Nationality Act for “malign activities in the South China Sea.”
  3. EU foreign ministers reached an agreement to move ahead with sanctions against individuals in Belarus following the country’s controversial presidential election on 9 August 2020. The European Union could sanction around 20 individuals, including government officials, according to statements by EU Foreign Minister Josep Borrell.
  4. The US Office of Foreign Assets Control (OFAC) named a Chinese national and a Hong Kong-based company as Specially Designated Nationals (SDNs) pursuant to the Foreign Narcotics Kingpin Designation Act for illegally exporting synthetic opioids to the United States. According to a Treasury Department news release, the individual, a chemist, disguised the shipments and used the Hong Kong company to facilitate financial transactions.
  5. The UN Security Council declined to move forward with a proposal by the United States to trigger the snapback provision of the 2015 Joint Comprehensive Plan of Action (JCPOA). Security Council President Dian Triansyah Djani of Indonesia said he was “not in the position to take further action” given a lack of “consensus in the council” for the move. A few days before, the US State Department announced visa restrictions on 14 Iranian officials pursuant to Section 7031(c) of the Department of State, Foreign Operations, and Related Programs Appropriations Act, including 13 officials involved in the murder of an Iranian opposition figure in Switzerland 30 years ago and the director of Iran’s Evin Prison.

Comments

  Is the Defense Department publishing sanctions lists now? Not quite. The list of companies published under Section 1237 of the NDAA 1999 is not a sanctions list. However, Section 1237 does contemplate sanctions being imposed under the International Emergency Economic Powers Act (IEEPA) at the president’s discretion. Unlike some recent legislation, the NDAA 1999 does not specify the type of sanctions or a timeline, so anything (or nothing at all) is possible. What is interesting, I think, is that the latest list was published directly to the Defense Department’s website, instead of via congressional allies. Given Defense Secretary Mark Esper’s recent editorial in The Wall Street Journal (yikes), it’s probably no accident that the department is taking an active role in signaling US policy on the South China Sea.
  Bonus item: Qing Ren and the team at Global Law Office have put together a helpful summary of updated export control rules announced by the PRC Ministry of Commerce (MOFCOM) last week. According to media reports, the new restrictions could require ByteDance to receive MOFCOM’s approval for export of artificial intelligence technology in connection with a sale of its TikTok app.

(Source: Thomsen & Burke, 31 Aug 2020) [Part II will be published tomorrow]

 
* Principal Author: Roszel C. Thomsen II, Esq., 1- 410-539-2596, Thomsen And Burke LLP
 

Regulatory Updates

 

Updates to Huawei, Entity List and Foreign Direct Product Rule
 

  On August 17, 2020, the Commerce Department issued a press release and BIS announced two final rules amending the Foreign Direct Product Rule (FDPR) and the Entity List of the Export Administration Regulations (EAR) related to transactions with Huawei and other Entity List parties. These rules were effective on August 17th, and were published in the Federal Register on August 20th. Collectively, they make several important changes to the EAR, as discussed below:

 
Revisions to the FDPR Related to Huawei Transactions

 

  BIS amended the FDPR described in Section 736.2(b)(3)(vi) of General Prohibition Three. Under the new rule, you may not export from abroad, reexport or transfer any foreign-produced item without a license if: 
1. You “know” that either: 
·    The foreign-produced item 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 listed entity; or 
·    Any Huawei listed entity is a party to any transaction involving the foreign-produced item, e.g., as a “purchaser,” “intermediate consignee,” “ultimate consignee,” or “end-user”; and 
2.  The foreign-produced item is either: 
·    A direct product of “technology” or “software” subject to the EAR and specified in certain listed Export Control Classification Numbers (ECCNs), or 
·    Produced by any plant or major component of a plant that is located outside the United States, when the plant or major component of a plant, whether made in the U.S. or a foreign country, itself is a direct product of U.S.-origin “technology” or “software” subject to the EAR that specified in certain ECCNs. 
 
  The listed ECCNs are 3E001, 3E002, 3E003, 4E001, 5E001, 3D001, 4D001, and 5D001, as well as 3E991, 4E992, 4E993, 5E991, 3D991, 4D993, 4D994, and 5D991.
  The “knowledge” requirement is defined broadly in the EAR to include “reason to know”. Enhanced due diligence on the entire supply chain (beginning with EDA software, including IP, and continuing to and through the capital equipment in the manufacturing facility) will be required in order to ensure that the resulting integrated circuit (or other product) is not subject to the EAR. Many companies will have to pivot to licensing strategies in order to supply technology items to Huawei or for use in Huawei products.
  The FDPR Rule includes a Savings Clause, which notes that items that are subject to the EAR only because they are covered by the new FDPR rule based on being produced by a plant or major component of a plant meeting the requirements in paragraph (b) to Footnote 1, are subject to a special Savings Clause. Shipments of these foreign-produced items that started “production” prior to August 17, 2020 may proceed as not being subject to the EAR, or under the previous license exception eligibility, so long as they have been exported, reexported, or transferred (in-country) on or before September 14, 2020. Any such items not exported from abroad, reexported, or transferred (in-country) before midnight (local time) on September 14, 2020, will be subject to the new requirements.
 
Addition of 38 New Huawei Affiliates to the Entity List
  BIS added 38 new Huawei affiliates to the Entity List found in Supplement No. 4 to Part 744 of the EAR. These entities are located in China, Argentina, Brazil, Chile, Egypt, France, Germany, Hing Kong, India, Israel, Mexico, Morocco, Netherlands, Peru, Russia, Singapore, South Africa, Switzerland, Thailand, Turkey, United Arab Emirates, and United Kingdom. The new entities include:
·    Huawei Cloud
·    Huawei OpenLab
·    Huawei Technologies Dusseldorf 
·    Huawei Technologies R&D UK
·    Toga Networks
 
  BIS also added new affiliates to existing Entity list entries for Huawei affiliates, and made address changes to others. The affiliate updates include:
·    Two new aliases for Huawei Device Co., Ltd: (1) Huawei Device and (2) Songshan Lake Southern Factory
·    One new alias for Huawei Technologies Co., Ltd.: Huawei Technology
 
Clarification for Entity List Entities Acting as Party to the Transaction under the EAR 
  BIS is also clarifying the supplemental license requirements for parties listed on the Entity List. Specifically, this final rule clarifies the Entity List’s supplemental licensing requirements to state that these end-user controls apply to any listed entity when that entity is acting as a purchaser, intermediate or ultimate consignee, or end-user as defined in the EAR. 

  This clarification means that the licensing requirements include situations where an Entity List party acts only as a “purchaser” in a transaction, but does not itself take possession or delivery of the item. “Purchaser” is defined as “the person abroad who has entered into the transaction to purchase an item for delivery to the ultimate consignee.”

  The new rule applies to all Entity List parties, and not just Huawei and its affiliates.
 
Removal of Temporary General License for Huawei Entities
  BIS removed the Temporary General License (TGL) authorizing certain activities involving Huawei, which was originally published on May 29, 2019, extended and amended on August 21, 2019, and most recently extended on May 12, 2020. In order to implement this U.S. Government decision, this final rule removes supplement no. 7 to part 744 and other references in the EAR to the TGL. 
 
Authorizations for Huawei Related to Cybersecurity Research and Vulnerability Disclosure

  The new rules did, however, move one of the TGL’s authorizations for cybersecurity research and vulnerability disclosure to a new Footnote 2 to the Entity List, and made Footnote 2 applicable to listed Huawei entries. Footnote 2 to the Entity List now reads as follows:
·    Cybersecurity research and vulnerability disclosure. The following exports, reexports, and transfers (in-country) to Huawei Technologies Co., Ltd. (Huawei) and its non-U.S. affiliates on the Entity List for cybersecurity research and vulnerability disclosure subject to other provisions of the EAR are excluded from the Entity List license requirements: when the disclosure to Huawei and/or to its listed non-U.S. affiliates is limited to information regarding security vulnerabilities in items owned, possessed, or controlled by Huawei or any of its non-U.S. affiliates when related to the process of providing ongoing security research critical to maintaining the integrity and reliability of existing and currently ‘fully operational network’ and equipment. A ‘fully operational network’ refers to a ‘third party’ network providing services to the ‘third party’s’ customers. The term ‘third party’ refers to a party that is not Huawei, one of its listed non-U.S. affiliates, or the exporter, reexporter, or transferor, but rather an organization such as a telecommunications service provider.
 
Additional Online Resources
 
 
  Pursuant to the Export Control Reform Act of 2018, BIS and its interagency partners are engaged in a process to identify emerging and foundational technologies that are essential to the national security of the United States. Foundational technologies essential to the national security are those that may warrant stricter controls if a present or potential application or capability of that technology poses a national security threat to the United States. In order to determine if technologies are foundational, BIS will evaluate specific items, including items currently subject only to anti-terrorism (AT) controls on the CCL or those designated as EAR99. This Advance Notice of Public Rulemaking (ANPRM) seeks public comment on the definition of, and criteria for, identifying foundational technologies. Comments on this ANPRM will help inform the interagency process to identify and describe such foundational technologies.

  BIS welcomes comments on: (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. 

 
Comments are due on or before October 26, 2020.
 
White House Issues Executive Orders Targeting TikTok and WeChat Owners
 
  On August 6, 2020 President Trump signed two new Executive Orders:
  According to the White House, the Executive Orders are in response to the national security, foreign policy, and economic threats posed by mobile applications developed and owned by companies in the People’s Republic of China. The Executive Orders are additional steps taken to deal with the national emergency with respect to the information and communications technology and services supply chain declared in Executive Order 13873 of May 15, 2019 (Securing the Information and Communications Technology and Services Supply Chain).

  Timing: 45 days following the Executive Orders, certain transactions identified by the Secretary of Commerce by any person or with respect to any property that is subject to U.S. jurisdiction will be prohibited to be conducted with TikTok owners ByteDance Ltd. (a.k.a. Zìjié Tiàodòng), or its subsidiaries, and WeChat owners Tencent Holdings Ltd. or any of its subsidiaries.

 
Commerce Adds 11 More Chinese Companies to the Entity List
 
  Effective with their publication in the Federal Register on July 22, 2020, Commerce Department’s Bureau of Industry and Security (BIS) added eleven entities to the Entity List. These eleven entities have been determined by the United States Government to be acting contrary to the foreign policy interests of the United States and will be listed on the Entity List under the destination of the People’s Republic of China (China). In this final rule, BIS amended the EAR by adding the eleven entitites to the thirty-seven existing entries on the Entity List under the destination of China. All items subject to the EAR will require a license from BIS for export, reexport, or in-country transfer to the listed parties. 
  This action supplements BIS’s first tranche of Entity List designations on October 9, 2019 and second tranche of Entitiy List designations on June 5, 2020 involving parties accused of engaging in the Xinjiang Uighur Autonomous Region repression campaign in Xinjiang. The new parties in China include: 
    
·    Beijing Liuhe BGI., including one alias (Beijing Liuhe Huada Gene Technology);
·    Changji Esquel Textile Co. Ltd., including one alias (Changji Yida Textile); 
·    Hefei Bitland Information Technology Co. Ltd., including three aliases (Anhui Hefei Baolongda Information Technology; Hefei Baolongda Information Technology Co., Ltd.; and Hefei Bitland Optoelectronic Technology Co., Ltd); 
·    Hefei Meiling Co. Ltd., including one alias (Hefei Meiling Group Holdings Limited); 
·    Hetian Haolin Hair Accessories Co. Ltd., including two aliases (Hotan Haolin Hair Accessories; and Hollin Hair Accessories); 
·    Hetian Taida Apparel Co., Ltd., including one alias (Hetian TEDA Garment); 
·    KTK Group, including three aliases (Jiangsu Jinchuang Group; Jiangsu Jinchuang Holding Group; and KTK Holding); 
·    Nanchang O-Film Tech, including one alias (Nanchang Oufeiguang Technology); 
·    Nanjing Synergy Textiles Co. Ltd., including two aliases ( Nanjing Xinyi Cotton Textile Printing and Dyeing; and Nanjing Xinyi Cotton Textile); 
·    Tanyuan Technology Co. Ltd., including five aliases (Carbon Yuan Technology; Changzhou Carbon Yuan Technology Development; Carbon Element Technology; Jiangsu Carbon Element Technology; and Tanyuan Technology Development); and 
·    Xinjiang Silk Road BGI, including one alias (Xinjiang Silk Road Huada Gene Technology). 
 
  In addition, this final rule revises two entries for entities on the Entity List under the destination of China. BIS is revising the entity name in the entry for “Xinjiang Uighur Autonomous Region (XUAR) People’s Government Public Security Bureau,” which was added to the Entity List on October 9, 2019 (84 FR 54004), and revising an address in the entry for the entity “Ministry of Public Security’s Institute of Forensic Science of China,” which was added to the Entity List on June 5, 2020 (85 FR 34505). Both revisions replace the term “Uighur” with “Uyghur” consistent with the standardized spelling utilized by the United States Government in official communications and documents. 
 
 
  BIS added 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. Despite protests from the United States and other countries, the government of the People’s Republic of China (PRC) has been rapidly building the artificial islands since 2013, enabling the Communist Chinese Party’s (CCP) militarization of disputed outposts in the South China Sea to undermine the sovereign rights of U.S. partners in the region.

  Since 2013, the CCP has dredged and constructed more than 3,000 acres across seven features in the South China Sea, which include air defense and anti-ship missile features. In addition, the PRC’s dredging and construction of certain outposts violates the sovereign rights of the Republic of the Philippines, as determined by the Permanent Court of Arbitration in its July 2016 award in a case brought by the Philippines against the PRC. In the Entity List additions, Commerce determined these entities enabled China to construct and militarize disputed outposts in the South China Sea.

  The Entity List is a tool utilized 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.  Additional license requirements apply to exports, re-exports, and transfers (in-country) of items subject to the EAR to listed entities, and the availability of most license exceptions is limited.

  These companies were placed on the Entity List for enabling the People’s Republic of China to reclaim and militarize disputed outposts in the South China Sea:

·    China Communications Construction Company Dredging Group Co., Ltd.
·    China Communications Construction Company Tianjin Waterway Bureau
·    China Communications Construction Company Shanghai Waterway Bureau
·    China Communications Construction Company Guangzhou Waterway Bureau
·    China Communications Construction Company Second Navigation Engineering Bureau
·    Beijing Huanjia Telecommunication Co., Ltd.
·    Changzhou Guoguang Data Communications Co., Ltd.
·    China Electronics Technology Group Corporation, 7th Research Institute (CETC-7)
·    Guangzhou Hongyu Technology Co., Ltd., (a subordinate institute of CETC-7)
·    Guangzhou Tongguang Communication Technology Co., Ltd. (a subordinate institute of
·    CETC-7)
·    China Electronics Technology Group Corporation, 30th Research Institute (CETC-30)
·    China Shipbuilding Group, 722nd Research Institute
·    Chongxin Bada Technology Development Co., Ltd.
·    Guangzhou Guangyou Communications Equipment Co., Ltd.
·    Guangzhou Haige Communication Group Co., Ltd.
·    Guilin Changhai Development Co., Ltd.
·    Hubei Guangxing Communications Technology Co., Ltd.
·    Shaanxi Changling Electronic Technology Co., Ltd.
·    Shanghai Cable Offshore Engineering Co., Ltd.
·    Telixin Electronics Technology Co., Ltd.
·    Tianjin Broadcasting Equipment Co., Ltd.
·    Tianjin 764 Avionics Technology Co., Ltd.
·    Tianjin 764 Communication and Navigation Technology Co., Ltd.
·    Wuhan Mailite Communication Co., Ltd.

TE EX/IM TRAINING EVENTS & CONFERENCES

  
* What: 3rd Annual ITAR/EAR Symposium and Managing ITAR/EAR Complexities 2-Day Webinar
* When: 16-17 Sep
* Where: Your Computer
* Sponsor: Export Compliance Solutions & Consulting (ECS)
* ECS and Guest Speakers: Suzanne Palmer, Mal Zerden, Lisa Bencivenga, Debi Davis, Scott Jackson
*Register: here or write to liz@exportcompliancesolutions.com or call 1-866-238-4018
* * * * * * * * * * * * * * * * * * * *

ITAR & EAR from a non-US perspective
Tuesday, 8 September 2020
More Info
Special Offer: $199
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. 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, one week from today, 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 these and many other questions:
(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 or EAR, and how do I get authorization for those actions?
(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, 1-202-802-0646 or JEBartlett@JEBartlett.com.
* * * * * * * * * * * * * * * * * * * *

EN EDITOR’S NOTES

EN_a115. Bartlett’s Unfamiliar Quotations

(Source: Editor)
 

* William Cartwright (1 Sep 1611 – 29 Nov 1643; was an English poet, dramatist and churchman.)
   – “Love makes those young whom age doth chill, and whom he finds young keeps young still.” 
* * * * * * * * * * * * * * * * * * * *

 

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. 
27 Aug 2020: 85 FR 52898Additions of Entities to the Entity List and Revisions of entries 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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