20-1008 Thursday “Daily Bugle”

20-1008 Thursday “Daily Bugle”

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Thursday, 8 October 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. EU Sanctions: “Iranian/US National Imprisoned for Exporting Aircraft Components to Iran”
  2. Reuters: “U.S. Senators Urge Sanctions on Turkey over Russian Missile System”
  1. Freshfields: “UK-Japan Free Trade Deal Announced”
  2. Pillsbury: “World Trade Organization Panel Finds Section 301 Tariffs on Chinese Products Violate WTO Rules, but Decision Unlikely to Have Impact on Tariffs”
  3. Thompson Hine: “Commerce Issues New Export Controls on Emerging and Developing Technologies”
  4. White & Case: “Taking the EU Customs Union to the Next Level – an Ambitious Action Plan”v
  1. ECS Presents: 21-22 Oct; “3rd Annual ITAR/EAR Symposium and Managing ITAR/EAR Complexities”
  1. Bartlett’s Unfamiliar Quotations 
  2. Are Your Copies of Regulations Up to Date? Find the Latest Amendments Here. 
  3. Weekly Highlights of the Daily Bugle Top Stories 
  4. Submit Your Job Opening and View All Job Openings 
  5. Submit Your Event and View All Approaching Events 

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(Source: Federal Register)
* Commerce/BIS: PROPOSED RULES; Identification and Review of Controls for Certain Foundational Technologies: Correction [Pub. Date: 9 Oct 2020] (PDF)
* Commerce/BIS: RULES; Revisions to the Unverified List [Pub. Date: 9 Oct 2020] (PDF)

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OGS_a22. Commerce/BIS: (No new postings)

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(Source: EU Sanctions, 8 Oct 2020) [Excerpts]

  Joyce Eliabachus of Morris County, New Jersey, has been sentenced to 18 months’ imprisonment after pleading guilty to 1 count of violating the International Emergency Economic Powers Act. In her role as principal officer and operator of Edsun Equipments LLC, an aviation parts trading company, Ms Eliabachus participated in a procurement network that acquired, in total, 23,554 controlled aircraft components worth over $2 million from US-based manufacturers and vendors between May 2015 to October 2017. Ms Eliabachus and her co-conspirators facilitated 49 shipments containing the aircraft components to entities in Iran without the required licences using freight-forwarding companies in the UAE and Turkey. The end-users of the components included US-designated Mahan Air.
  The charges against Ms Eliabachus’ alleged co-conspirator, Peyman Amiri Larijani, are still pending.

(Source: Reuters, 7 Oct 2020) [Excerpts]
  A Republican and a Democratic U.S. senator called on Wednesday for President Donald Trump’s administration to impose sanctions on Turkey over its purchase of Russia’s S-400 anti-aircraft system, after a report that Turkey may be planning a comprehensive test.
  Republican James Lankford and Democrat Chris Van Hollen wrote to Secretary of State Mike Pompeo asking about the report and saying that Washington’s failure to act more decisively about the S-400 purchase had “emboldened” Turkey’s government.
  Turkey bought a batch of the missile systems from Russia last year, leading to its suspension by Washington from the U.S. F-35 stealth fighter jet program. The United States has said Turkey risks U.S. sanctions if it deploys the Russian-made S-400s, but has not yet imposed them.
  The State Department did not immediately respond to a request for comment on the letter.
  Bloomberg reported on Tuesday that Turkey was planning to conduct a comprehensive test of the S-400 missile-defense system, citing people familiar with the matter.


(Source: Freshfields, 23 Sep 2020)
  On 11 September the UK Government announced that it had reached agreement in principle with Japan on a free trade agreement to replace the EU-Japan Economic Partnership Agreement (“JEEPA”) after the end of the transition period. There is no text of the agreement yet and the UK Government has not released many details. The UK negotiating objectives were published in May 2020 and the UK’s achievements can to some extent be measured against that. JEEPA has been in force since 1 January 2019 and it appears that the UK-Japan agreement largely replicates JEEPA albeit with some specific adaptations.
  As a member of the EU, the UK was already party to some 40 agreements with some 70 “third countries” and post-Brexit the UK has been negotiating continuity or “roll over” agreements with many of these countries. The UK will give effect to the continuity agreements after 31 December 2020 under the Taxation (Cross- Border Trade) Act 2018 and new powers contained in the Trade Bill now before the UK Parliament (see here for our briefing on the Trade Bill). In debate the UK Government acknowledged that the Japan agreement would be an exception in going beyond simple continuity. Rather than agree to a simple continuity agreement, some of the larger of these economies and notably Canada, Korea and Turkey have preferred to wait until the end of the transition period before trying to finalise new agreements with the UK.
  To have reached agreement with Japan before the end of the transition period is rightly being claimed as a major success. However, the UK announcements about the perceived benefits to the UK economy of this new agreement are by reference to the situation before JEEPA was in place. The incremental benefits to be obtained from the new agreement as renegotiated by the UK are quite limited at an estimated 0.07% of UK GDP. Failure to reach agreement with Japan would indeed have been quite damaging. However, this has to be seen in proportion: UK trade with Japan represents only about 2.5% of UK external trade1, versus the nearly 50% represented by trade with the EU until now.
This agreement, like the proposed agreements with New Zealand and Australia, is also being presented as a stepping stone towards the UK joining the new Trans-Pacific Partnership (CPTPP), the successor to the TPP which was rejected by the incoming Trump administration. The UK Government advocates a tilt towards Asia in its trade strategy. However, CPTPP countries represent only about 13% of global trade.
  The UK public negotiating objectives for the free trade agreement with Japan highlighted market access for goods including customs and trade facilitation as well as addressing technical barriers to trade and sanitary and phytosanitary measures (SPS). Negotiating objectives also included transparency provisions and provisions on trade in services including issues related to business mobility, digital and e-commerce, telecommunications and financial services and investment. The objectives also aimed for robust provisions on intellectual property and, as in JEEPA, provisions on competition law, subsidies, procurement and state-owned enterprises. The objectives also aimed for reaffirming commitments to international environment and labour standards. All this was to be underpinned with provisions on trade remedies, dispute settlement and specific provisions for SMEs.
  The UK Government’s announcement indicates that the new agreement will cover all of these areas. On trade in goods, the objective will be continued elimination of tariffs, eventually rising to 99% with the remaining 1% being partly liberalised e.g. through tariff reductions and tariff rate quotas (TRQs). On top of the achievements of JEEPA, the UK Government has indicated that the UK-Japan agreement will have new and more liberal rules of origin for coats, knitwear and biscuits; reduced UK tariffs on car and railway parts from Japan and TRQs for UK agricultural exports which will supposedly be more generous than under the EU regime (although it appears that the mechanism here for 10 out of 25 products covered in JEEPA will be for the UK to be able to access any leftover EU TRQs, which would seem to put UK exporters in a second tier position).
  Regarding services, JEEPA was regarded already as something of a pacesetter with its provisions on a range of sectors including financial services, postal and express delivery services, professional services and telecommunications as well as digital trade. The UK Government has announced greater transparency and streamlined application processes for UK financial firms seeking licenses to operate in Japan as well as an annual financial services dialogue between the two administrations and regulators. Commitments on digital trade and data, including a ban on data localisation, and on improved mobility for business people and family members are also supposed to go beyond JEEPA.
  On intellectual property the UK has obtained important protections for a wide range of additional UK geographical indications of origin and new provisions on online infringement of intellectual property rights such as film and music piracy.
The provisions on government procurement are said to extend the existing commitments under the WTO Government Procurement Agreement to a larger number of public entities and sectors.
Subsidies and the UK-Japan Agreement
  The chapters in the UK-Japan Agreement on competition and subsidies policy and state-owned enterprises appear likely to replicate the provisions in JEEPA.
The main operative provisions of the JEEPA subsidies chapter require subsidies to be notified if they exceed a very low threshold of 450,000 special drawing rights (‘SDR’: currently about UK £491,000 or US $637,000) per beneficiary for a period of three consecutive years; and for consultations on these subsidies which could have “significant negative effects”.
  JEEPA also contains specific prohibitions on unlimited debt guarantees and on subsidies to ailing or insolvent businesses without a restructuring plan (i.e. operating aid); and contains an anti-diversion clause. The UK Government has confirmed that the UK-Japan Agreement will address these two forms of prohibited subsidies in addition to those already prohibited by the WTO.
Some commentators have suggested that these subsidies provisions conflict with the UK’s ambition to have total freedom over state aid after the end of the transition period, a major driver behind the provisions on Northern Ireland in the UK Internal Market Bill recently introduced in parliament (see our briefing on the UK Internal Market Bill).
  Clause 43 of the UK Internal Market Bill purports to give the UK Government power unilaterally to interpret, disapply or modify the effect the state aid article, Article 10, in the Northern Ireland Protocol annexed to the UK EU Withdrawal Agreement; Clause 44 stipulates that the power and responsibility to notify state aid to the EU under the Protocol is reserved to the Secretary of State. These Clauses are said by the EU Commission, and most commentators, to be contrary to the Withdrawal Agreement and international law, as indeed the UK Government recognises (again, see our briefing on the UK Internal Market Bill).
  Under Article 10 of the Northern Ireland Protocol, the EU state aid rules apply to the UK in respect of measures which affect that trade between Northern Ireland and the EU. The EU rules and the Northern Ireland Protocol both feature enforcement mechanisms and are much more constraining than the JEEPA subsidies provisions.
  Under JEEPA the parties can use the machinery of the WTO Subsidies Agreement (ASCM Agreement) but otherwise subsidies are not subject to the dispute settlement provisions of JEEPA under Chapter 21. The sole remedy for disputes in this area is consultations about subsidies which could have a significant negative effect. The culmination of the consultation process is that if the requesting Party, after the consultations, still considers that the subsidy has or could have a significant negative effect on its trade or investment interests, the requested Party shall “accord sympathetic consideration to the concerns of the requesting Party. Any solution shall be considered feasible and acceptable by the requested Party.”
  Certainly, there isn’t anything in the JEEPA subsidies chapter which specifically cuts across Article 10 or Clauses 43 and 44 of the Bill: If the UK hypothetically wished to apply Clause 43 to Japan it would need to extend its scope in order to apply it specifically to the UK-Japan Agreement but it is difficult to see Japan accepting this, in view of Japan’s strong commitment to the rules-based international trading system.

(Source: Pillsbury, 5 Oct 2020)
* Principal Author: Stephan E. Becker, Esq., 1-202-663-8277, Pillsbury Winthrop Shaw Pittman LLP
  On September 15, 2020, a World Trade Organization (“WTO”) panel found that the Trump Administration’s unilateral tariffs imposed on Chinese products violated WTO rules regarding nondiscrimination and import tariff rates agreed to by the United States.  The dispute concerned China’s challenge to the Trump Administration’s tariffs imposed pursuant to the Trump Administration’s investigation under Section 301 of China’s intellectual property and technology transfer practices.  Specifically, China challenged USTR List 1 and List 3.
  The United States argued that the parties had decided to settle the dispute outside of the WTO by engaging in bilateral negotiations.  Accordingly, the United States argued, the parties had reached a settlement under the WTO rules. The panel found that the negotiations appeared to be parallel to the panel proceedings as opposed to instead of the proceedings, noting China’s contentions that it had not agreed to terminate the dispute and the tariffs at issue remain unresolved.  The United States argued that the tariffs were justified as measures necessary to protect U.S. public morals prevailing in the United States, citing U.S. laws that prohibit misappropriation of U.S. technology, intellectual property, and cyber-enabled theft, among others.  The panel found that the United States had not demonstrated the required link between tariffs on the selected Chinese products and the public morals invoked.
What’s next?
  The panel’s decision is expected to have little, if any, impact on the current U.S. tariffs on Chinese products.  The United States likely will likely file an appeal as doing so will stall the proceedings for the foreseeable future.  This is because, citing procedural and substantive concerns regarding the functioning of the Appellate Body, the United States has been blocking appointments of replacement Appellate Body judges as the terms of the existing judges expired.  As of December 11, 2019, there were insufficient judges remaining to form the minimum quorum required to hear appeals.
  Typically, Panel reports which are not appealed within 60 days are adopted by the Dispute Settlement Body, resulting in the losing member having to take steps to bring its measure(s) into conformity or risk the imposition of retaliatory sanctions authorized by the WTO. In the current scenario, however, an appeal by the United States to an Appellate Body that can no longer hear appeals will effectively block the adoption of the Panel Report indefinitely.  For its part, China has already taken matters into its own hands. Between July and September 2018 China responded to the U.S. action by imposing its own retaliatory tariffs on U.S. imports, well before the ruling from the WTO Panel in its favor.  Consequently, the Panel’s ruling will not compel either the United States to revoke its tariffs or cause China to cease its retaliatory measures.

(Source: SmarTrade, 5 Oct 2020)
  On October 5, 2020, the Department of the Commerce’s Bureau of Industry and Security (BIS) issued a Federal Register notice in which it finalized export controls on six recently developed or developing technologies that are essential to the national security of the United States. The changes were made in accordance with the United States and other countries participation in the Wassenaar Arrangement on Export Controls for Conventional Arms and Dual-Use Goods and Technologies; an agreement under which the parties seek to control items that may contribute to the development or enhancement of military capabilities. For U.S. export control purposes, these six technologies fall under the Export Administration Regulations (EAR) and this final rule is effective on October 5, 2020.

  The final rule adds controls to the following six recently developed or developing technologies:

  1. Hybrid additive manufacturing (AM)/computer numerically controlled (CNC) tools;
  2. Computational lithography software designed for the fabrication of extreme ultraviolet (EUV) masks;
  3. Technology for finishing wafers for 5nm production;
  4. Digital forensics tools that circumvent authentication or authorization controls on a computer (or communications device) and extract raw data;
  5. Software for monitoring and analysis of communications and metadata acquired from a telecommunications service provider via a handover interface; and
  6. Sub-orbital craft.
  Shipments of items subject to the final rule that were already en route to a foreign destination as of October 5, 2020, pursuant to actual orders for export, may proceed to that destination under the previous license exception eligibility or without a license so long as they have been exported, reexported or transferred (in-country) before December 4, 2020.


* What: 3rd Annual ITAR/EAR Symposium and Managing ITAR/EAR Complexities 2-Day Webinar
* When: 21-22 Oct
* Where: Your Computer
* Sponsor: Export Compliance Solutions & Consulting (ECS)
* ECS and Guest Speakers: Phil Kuhn-Commerce/BIS Office of Export Enforcement; Debi Davis-TransDigm, Scott Jackson-Curtiss-Wright: Suzanne Palmer & Lisa Bencivenga-ECS
* Register: here or write to phyllis@exportcompliancesolutions.com or call 1-866-238-4018
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EN_a111. Bartlett’s Unfamiliar Quotations

(Source: Editor)

Edmund Clarence Stedman (8 Oct 1833 – 18 Jan 1908; was an American poet, critic, essayist, banker, and scientist.)
  – “Yes, there’s a luck in most things; and in none more than being born at the right time.”
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The official versions of the following regulations are published annually in the U.S. Code of Federal Regulations (C.F.R.), but are updated as amended in the Federal Register.  The latest amendments are listed below.
Latest Update 


5 Apr 2019: 84 FR 13499:

Civil Monetary Penalty Adjustments for Inflation. 
6 Oct 2020: 85 FR 63011:  Information Sharing for Purposes of Judicial Review.

DOC FOREIGN TRADE REGULATIONS (FTR): 15 CFR Part 30.   24 Apr 2018: 83 FR 17749: Foreign Trade Regulations (FTR): Clarification on the Collection and Confidentiality of Kimberley Process Certificates.  

: DoD 5220.22-M. Implemented by Dep’t of Defense. 

18 May 2016: Change 2: Implement an insider threat program; reporting requirements for Cleared Defense Contractors; alignment with Federal standards for classified information systems; incorporated and cancelled Supp. 1 to the NISPOM (Summary here.)  
DOE ASSISTANCE TO FOREIGN ATOMIC ENERGY ACTIVITIES: 10 CFR Part 810.    23 Feb 2015: 80 FR 9359: comprehensive updating of regulations, updates the activities and technologies subject to specific authorization and DOE reporting requirements. 

15 Nov 2017, 82 FR 52823: miscellaneous corrections include correcting references, an address and a misspelling.

DOJ ATF ARMS IMPORT REGULATIONS: 27 CFR Part 447-Importation of Arms, Ammunition, and Implements of War. 
14 Mar 2019: 84 FR 9239: Bump-Stock-Type Devices.


28 Sep 2020: 85 FR 60874: Temporary Amendment for Republic of Cyprus. The latest edition of the BITAR is 28 Sep 2020. 

DOT FOREIGN ASSETS CONTROL REGULATIONS (OFAC FACR): 31 CFR, Parts 500-599, Embargoes, Sanctions, Executive Orders
International Criminal Court-Related Sanctions Regulations.

1 Jan 2019: 19 USC 1202 Annex.
  – HTS codes for AES are available here.
  – HTS codes that are not valid for AES are available here.

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