;

20-1030 Friday “Daily Bugle”

20-1030 Friday “Daily Bugle”

 this copy of the Daily Bugle to others or share this subscription link
Friday, 30 October 2020

  1. Commerce/BIS: “Transportation and Related Equipment Technical Advisory Committee — Notice of Partially Closed Meeting”
  2. DHS/CBP: “Agency Information Collection Activities — Cargo Manifest/Declaration, Stow Plan, Container Status Messages and Importer Security Filing”
  3. DHS/CBP: “Agency Information Collection Activities — Customs Regulations Pertaining to Customhouse Brokers”
  4. DHS/CBP: “Agency Information Collection Activities — Drawback Process Regulations”
  5. DHS/CBP: “Agency Information Collection Activities — Entry and Manifest of Merchandise Free of Duty, Carrier’s Certificate of Release”
  6. State/DDTC: “Notifications to the Congress of Proposed Commercial Export Licenses”
  1. Items Scheduled for Future Federal Register Edition
  2. Commerce/BIS: (No new postings)
  3. Justice: “U.S. Files Complaint to Forfeit Iranian Missiles and Sells Previously-Transferred Iranian Petroleum”
  4. State/DDTC: (No new postings)
  5. Canada TID Publishes Order Amending the Automatic Firearms Country Control List
  6. Singapore Customs: “Implementation of The Asean Customs Transit System (ACTS)”
  1. CBS: “Alleged International Firearms Trafficker From Alpharetta, GA, Arrested”
  2. EUS: “US Senators Introduce Bill to Restrict Listed Chinese Firms from US Markets”
  3. GIR Updates of International Investigations
  1. Arent Fox: “US Expands Military License Review Factors for National Security Controlled Items to PRC, Venezuela, and Russia”
  2. Bennett Jones: “How Businesses Can Risk Manage the USMCA — Trade and Customs”
  3. BLL: “The Impact of a Person’s OFAC Designation in the UK”
  1. ECS Presents: 16-17 Nov; “ITAR/EAR Controls for Foreign & U.S. Companies”
  2. FCC Academy Presents: 1 and 3 Dec; “U.S. Export Controls: ITAR/EAR” and “FMS”
  3. Friday List of Approaching Events: 168 Events Posted This Week, Including 20 New Events
  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 

Are You Keeping Up to Date with the Latest Regulations?
 

  Bartlett’s Annotated ITAR and Bartlett’s Annotated FTR are Word documents to download to your laptop to keep you updated on the latest amendments. They contain over 800 footnotes of section history, key cases, practice tips & tricks, and extensive Tables of Contents.  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 and BAFTR here to guarantee you have an up-to-date annotated versions of these essential regulations.  

EXIM ITEMS FROM TODAY’S FEDERAL REGISTER

(Source: Federal Register, 30 Oct 2020) [Excerpts]
 
85 FR 68840: Notice
The Transportation and Related Equipment Technical Advisory Committee will meet on November 18, 2020, at 11:30 a.m., Eastern Standard Time, via teleconference. The Committee advises the Office of the Assistant Secretary for Export Administration with respect to technical questions that affect the level of export controls applicable to transportation and related equipment or technology.
* Agenda:
Public Session
1. Welcome and Introductions.
2. Status reports by working group chairs.
3. Public comments and Proposals.
Closed Session
4. Discussion of matters determined to be exempt from the provisions relating to public meetings found in 5 U.S.C. app. 2 10(a)(1) and 10(a)(3).
  The open session will be accessible via teleconference to participants on a first come, first serve basis. To join the conference, submit inquiries to Ms. Yvette Springer at Yvette.Springer@bis.doc.gov no later than November 11, 2020.
  To the extent time permits, members of the public may present oral statements to the Committee. The public may submit written statements at any time before or after the meeting. However, to facilitate distribution of public presentation materials to Committee members, the Committee suggests that presenters forward the public presentation materials prior to the meeting to Ms. Springer via email.

 
  The Assistant Secretary for Administration, with the concurrence of the delegate of the General Counsel, formally determined on August 17, 2020, pursuant to Section 10(d) of the Federal Advisory Committee Act, as amended (5 U.S.C. app. 2 §(10)(d)), that the portion of the meeting dealing with pre-decisional changes to the Commerce Control List and U.S. export control policies shall be exempt from the provisions relating to public meetings found in 5 U.S.C. app. 2 §§10(a)(1) and 10(a)(3). The remaining portions of the meeting will be open to the public.  For more information, call Yvette Springer at (202) 482·2813.

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

EXIM_a22. DHS/CBP: “Agency Information Collection Activities — Cargo Manifest/Declaration, Stow Plan, Container Status Messages and Importer Security Filing”
(Source: Federal Register, 30 Oct 2020) [Excerpts]
 
85 FR 68903: Notice
* AGENCY: U.S. Customs and Border Protection (CBP), Department of Homeland Security.
* ACTION: 60-Day Notice and request for comments; Extension of an existing collection of information.
* SUMMARY: The Department of Homeland Security, U.S. Customs and Border Protection will be submitting the following information collection request to the Office of Management and Budget (OMB) for review and approval in accordance with the Paperwork Reduction Act of 1995 (PRA). The information collection is published in the Federal Register to obtain comments from the public and affected agencies. Comments are encouraged and must be submitted (no later than December 29, 2020) to be assured of consideration.
* ADDRESSES: Written comments and/or suggestions regarding the item(s) contained in this notice must include the OMB Control Number 1651-0001 in the subject line and the agency name. To avoid duplicate submissions, please use only one of the following methods to submit comments:
(1) Email. Submit comments to: CBP_PRA@cbp.dhs.gov.
(2) Mail. Submit written comments to CBP Paperwork Reduction Act Officer, U.S. Customs and Border Protection, Office of Trade, Regulations and Rulings, Economic Impact Analysis Branch, 90 K Street NE, 10th Floor, Washington, DC 20229-1177.
* FOR FURTHER INFORMATION CONTACT: Requests for additional PRA information should be directed to Seth Renkema, Chief, Economic Impact Analysis Branch, U.S. Customs and Border Protection, Office of Trade, Regulations and Rulings, 90 K Street NE, 10th Floor, Washington, DC 20229-1177, Telephone number 202-325-0056 or via email CBP_PRA@cbp.dhs.gov. Please note that the contact information provided here is solely for questions regarding this notice. Individuals seeking information about other CBP programs should contact the CBP National Customer Service Center at 877-227-5511, (TTY) 1-800-877-8339, or CBP website at https://www.cbp.gov  

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

(Source: Federal Register, 30 Oct 2020) [Excerpts]
 
85 FR 68902: Notice
* AGENCY: U.S. Customs and Border Protection (CBP), Department of Homeland Security.
* ACTION: 30-Day Notice and request for comments; extension of an existing collection of information.
* SUMMARY: The Department of Homeland Security, U.S. Customs and Border Protection will be submitting the following information collection request to the Office of Management and Budget (OMB) for review and approval in accordance with the Paperwork Reduction Act of 1995 (PRA). The information collection is published in the Federal Register to obtain comments from the public and affected agencies. Comments are encouraged and must be submitted (no later than November 30, 2020) to be assured of consideration.
* ADDRESSES: Written comments and recommendations for the proposed information collection should be sent within 30 days of publication of this notice to www.reginfo.gov/public/do/PRAMain . Find this particular information collection by selecting “Currently under 30-day Review-Open for Public Comments” or by using the search function.
* FOR FURTHER INFORMATION CONTACT: Requests for additional PRA information should be directed to Seth Renkema, Chief, Economic Impact Analysis Branch, U.S. Customs and Border Protection, Office of Trade, Regulations and Rulings, 90 K Street NE, 10th Floor, Washington, DC 20229-1177, Telephone number 202-325-0056 or via email CBP_PRA@cbp.dhs.gov. Please note that the contact information provided here is solely for questions regarding this notice. Individuals seeking information about other CBP programs should contact the CBP National Customer Service Center at 877-227-5511, (TTY) 1-800-877-8339, or CBP website at https://www.cbp.gov/.

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

(Source: Federal Register, 30 Oct 2020) [Excerpts]
 
85 FR 68905: Notice
* AGENCY: U.S. Customs and Border Protection (CBP), Department of Homeland Security.
* ACTION: 60-Day notice and request for comments; Extension of an existing collection of information.
* SUMMARY: The Department of Homeland Security, U.S. Customs and Border Protection will be submitting the following information collection request to the Office of Management and Budget (OMB) for review and approval in accordance with the Paperwork Reduction Act of 1995 (PRA). The information collection is published in the Federal Register to obtain comments from the public and affected agencies. Comments are encouraged and must be submitted no later than December 29, 2020 to be assured of consideration.
* ADDRESSES: Written comments and/or suggestions regarding the item(s) contained in this notice must include the OMB Control Number 1651-0075 in the subject line and the agency name. To avoid duplicate submissions, please use only one of the following methods to submit comments:
(1) Email. Submit comments to: CBP_PRA@cbp.dhs.gov
(2) Mail. Submit written comments to CBP Paperwork Reduction Act Officer, U.S. Customs and Border Protection, Office of Trade, Regulations and Rulings, Economic Impact Analysis Branch, 90 K Street NE, 10th Floor, Washington, DC 20229-1177.
* FOR FURTHER INFORMATION CONTACT: Requests for additional PRA information should be directed to Seth Renkema, Chief, Economic Impact Analysis Branch, U.S. Customs and Border Protection, Office of Trade, Regulations and Rulings, 90 K Street NE, 10th Floor, Washington, DC 20229-1177, Telephone number 202-325-0056 or via email CBP_PRA@cbp.dhs.gov. Please note that the contact information provided here is solely for questions regarding this notice. Individuals seeking information about other CBP programs should contact the CBP National Customer Service Center at 877-227-5511, (TTY) 1-800-877-8339, or CBP website at https://www.cbp.gov/.

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

(Source: Federal Register, 30 Oct 2020) [Excerpts]
 

85 FR 68906: Notice
* AGENCY: U.S. Customs and Border Protection (CBP), Department of Homeland Security.
* ACTION: 30-Day notice and request for comments; extension of an existing collection of information.
* SUMMARY: The Department of Homeland Security, U.S. Customs and Border Protection will be submitting the following information collection request to the Office of Management and Budget (OMB) for review and approval in accordance with the Paperwork Reduction Act of 1995 (PRA). The information collection is published in the Federal Register to obtain comments from the public and affected agencies. Comments are encouraged and must be submitted (no later than November 30, 2020) to be assured of consideration.
* ADDRESSES: Written comments and recommendations for the proposed information collection should be sent within 30 days of publication of this notice to www.reginfo.gov/public/do/PRAMain. Find this particular information collection by selecting “Currently under 30-day Review-Open for Public Comments” or by using the search function.
* FOR FURTHER INFORMATION CONTACT: Requests for additional PRA information should be directed to Seth Renkema, Chief, Economic Impact Analysis Branch, U.S. Customs and Border Protection, Office of Trade, Regulations and Rulings, 90 K Street NE, 10th Floor, Washington, DC 20229-1177, Telephone number 202-325-0056 or via email CBP_PRA@cbp.dhs.gov. Please note that the contact information provided here is solely for questions regarding this notice. Individuals seeking information about other CBP programs should contact the CBP National Customer Service Center at 877-227-5511, (TTY) 1-800-877-8339, or CBP website at https://www.cbp.gov/

Back to top

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

(Source: Federal Register, 30 Oct 2020) [Excerpts]
 
85 FR 68942: Notice
* AGENCY: Department of State.
* ACTION: Notice.
* SUMMARY: The Directorate of Defense Trade Controls and the Department of State give notice that the attached Notifications of Proposed Commercial Export Licenses were submitted to the Congress on the dates indicated.
* DATES: As shown on each of the 46 letters.
* FOR FURTHER INFORMATION CONTACT: Ms. Paula C. Harrison, Directorate of Defense Trade Controls (DDTC), Department of State at (202) 663-3310; or access the DDTC website at https://www.pmddtc.state.gov/ddtc_public and select “Contact DDTC,” then scroll down to “Contact the DDTC Response Team” and select “Email.” Please add this subject line to your message, “ATTN: Congressional Notification of Licenses.”

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

OGS OTHER GOVERNMENT SOURCES

(Source: Federal Register)
 
* Treasury/OFAC: NOTICES; Blocking or Unblocking of Persons and Properties [Pub. Date: 2 Nov 2020] (PDF)

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

OGS_a28. Commerce/BIS: (No new postings)

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

(Source: Justice, 29 Oct 2020)
 
  The Justice Department today announced the filing of a complaint to forfeit two shipments of Iranian missiles that the U.S. Navy seized in transit from Iran’s Islamic Revolutionary Guard Corps (IRGC) to militant groups in Yemen, as well as the sale of approximately 1.1 million barrels of Iranian petroleum that the United States previously obtained from four foreign-flagged oil tankers bound for Venezuela. 
  These actions represent the government’s largest-ever forfeitures actions for fuel and weapons shipments from Iran.
   “The two forfeiture complaints allege sophisticated schemes by the IRGC to secretly ship weapons to Yemen and fuel to Venezuela, countries that pose grave threats to the security and stability of their respective regions,” said John Demers, Assistant Attorney General for National Security.  “Iran continues to be a leading state sponsor of terrorism and a worldwide destabilizing force.  It is with great satisfaction that I can announce that our intentions are to take the funds successfully forfeited from the fuel sales and provide them to the United States Victims of State Sponsored Terrorism Fund after the conclusion of the case.”
  “The illegal exportation of sensitive technology to prohibited countries poses a significant threat to our national security,” said Dermot F. O’Reilly, Director, Defense Criminal Investigative Service (DCIS).  “The complaint announced today is the direct result of joint investigative and analytical efforts with close partners in law enforcement and the Department of Defense.  DCIS will continue to identify, disrupt, and bring to justice those who threaten U.S. military technology.”

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

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

(Source: Canada TID, 29 Oct 2020) [Excerpts]
 

Amendments

The Automatic Firearms Country Control List [FN/1] is amended by repealing the following:
  • Czech Republic
  • Republic of Colombia
  • Republic of Korea
The List is amended by adding the following in alphabetical order:
  • Austria
  • Colombia
  • Czechia
  • Ireland
  • Japan
  • Korea, Republic of
  • Switzerland

Coming into Force

This Order comes into force on the day on which it is registered.
 
Issues

  The Automatic Firearms Country Control List (AFCCL), which has existed since 1991, is a positive list of countries to which Canadians may export certain prohibited items as defined in the Criminal Code if they have obtained a permit to export these items. Further to the Export and Import Permits Act (the Act), prohibited firearms, weapons and devices (or components and parts thereof), that are also included on the Export Control List, may only be exported to countries listed on the AFCCL and only to the governments of those countries or to end-users authorized by those governments. Any permit application to export controlled items to AFCCL countries is assessed on a case-by-case basis against considerations laid out in legislation (including the Arms Trade Treaty [ATT] assessment criteria and the substantial risk test) and in policy. The ATT criteria include considerations as to whether the proposed export could be used to commit or facilitate a serious violation of international human rights or humanitarian law, an act of terrorism or transnational organized crime, or a serious act of gender-based violence or violence against women and children. If, after considering any available mitigating measures, the Minister of Foreign Affairs (the Minister) determines that there is a substantial risk that an export would result in any of these negative consequences, then the Minister cannot issue a permit for that export.
  The AFCCL currently comprises 40 countries. These include most NATO allies, as well as Australia, Botswana, Chile, Colombia, Finland, Israel, Kuwait, New Zealand, Peru, Saudi Arabia, South Korea, and Sweden. Ukraine was added most recently in 2017.
  Canada is the only country in the world to legally limit the export of automatic firearms by destination. Canadian defence manufacturers that export automatic firearms and prohibited weapons have often expressed frustration that the AFCCL places them at a competitive disadvantage as compared to their international competitors. The addition of appropriate destinations to the list helps to lessen this competitive disadvantage.
  On September 1, 2019, the Act was amended to remove the requirement that Canada must have concluded an “intergovernmental defence, research, development and production arrangement” with a country prior to its inclusion on the AFCCL. The Act now requires that the Minister consult the Minister of National Defence before recommending to the Governor in Council that amendments be made to the AFCCL. This amendment enables the addition to the AFCCL of traditionally neutral countries, such as Austria, Ireland, Japan, and Switzerland, that cannot enter into such defence arrangements.
  On May 1, 2020, a separate Government of Canada initiative resulted in the reclassification of various firearms as prohibited, thereby barring their export to non-AFCCL destinations. Adding countries that are significant manufacturers of firearms to the AFCCL, such as Switzerland and Austria, allows Canadians who own these newly prohibited firearms to return them to their manufacturer. This is already an option for Canadian owners of models of prohibited firearms that are manufactured in other AFCCL countries, such as the United States.
 
Objective

This Order
  • lessens the competitive disadvantage that Canadian companies face compared to their international competitors;
  • provides Canadians who own one of the 1 500 models and variants of firearms that were reclassified as prohibited on May 1, 2020, with additional options to dispose of them through export; and
  • lists all countries using the official short form of their name so that countries appear in alphabetical order on the AFCCL.
Read the full order here.

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

 
   The ACTS is a regional initiative that facilitates the transit movement of goods via land transport within ASEAN. The ACTS will be implemented in ASEAN Member States (“AMS”) viz. Cambodia, Lao PDR, Malaysia, Singapore, Thailand and Viet Nam on 2 Nov 2020.
   Under the ACTS, traders can take up one guarantee and submit a single ACTS electronic declaration to cover the entire transit journey. Traders can look forward to time savings and cost reduction, as well as better connectivity in moving goods across AMS.
 
Registration of Traders
The ACTS is open to all traders (including importers, exporters, transporters, freight forwarders, and Customs agents) who transport goods across AMS. Traders are required to register as ACTS traders with Singapore Customs before they can use the ACTS to facilitate the transport of goods across borders. Applications may be submitted via email to Customs_Documentation@customs.gov.sg.
  The following registration forms for ACTS are available on the Singapore Customs Website www.customs.gov.sg > E-Services > Customs Forms & Service Links > ASEAN Customs Transit System (ACTS) Forms:
a)    Trader Application Form – For registration as an ACTS trader (also known as Principal). The Principal will be issued with a Trader Identification Number (TIN) for submission of declarations in ACTS;
b)    EmployeeDeclarantDetailsandAuthorisationForm-Forauthorisationof the Principal’s employee(s) for submission of declarations in ACTS; and
c)    Broker or Representative Authorisation Letter – For authorisation of a different legal entity to submit declarations on behalf of the Principal.
 
Lodgement of Guarantee
   Before the commencement of a transit journey, ACTS traders are required to lodge a single journey or multiple journey guarantee in the country of departure where the goods are loaded. You may submit the form for the single journey or multiple journey guarantee to any bank or finance company which is registered with the Monetary Authority of Singapore.
   The following guarantee forms for ACTS are available on the ACTS website at https://acts.asean.org > Trader’s Guide > Guarantee or the Singapore Customs Website www.customs.gov.sg > E-Services > Customs Forms & Service Links > ASEAN Customs Transit System (ACTS) Forms:
a)  Single Journey Guarantee Document – For lodgement of guarantee covering a single transit operation
b)  Multiple Journey Guarantee Document – For lodgement of guarantee covering several transit operations
 
Domestic Procedures
Please note that Singapore’s domestic customs procedures will continue to apply to the movement of goods into and out of Singapore under the ACTS. ACTS traders are therefore required to apply for the relevant customs permit via TradeNet to fulfil existing domestic requirements, in addition to submitting the declaration in ACTS.
 
More Information
For more information on the ACTS, please visit www.customs.gov.sg > Businesses > ASEAN Customs Transit System (ACTS).

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

COM NEWS

(Source: CBS, 29 Oct 2020)

 
  Authorities arrested Ihor Radionov 51, in Alpharetta, Georgia, and charged him with conspiracy and smuggling goods out of the United States in violation of the International Traffic in Arms Regulations according to a statement from the U.S. Attorney’s Office in Tampa.  If convicted on all counts, Radionov faces a maximum penalty of 20 years in federal prison. On October 26, 2020, Radionov made his first appearance in federal court in Atlanta.  According to the indictment, between 2014 and 2020, Radionov, Vladimir Volgaev, and another person residing in Ukraine, allegedly conspired to export defense articles out of the United States, including gun barrels and slides, without a license or prior written approval from the United States Department of State.

 
  US Senators Marco Rubio and Mike Braun have introduced the American Financial Markets Integrity and Security Act, which if passed would restrict Chinese companies listed on the Commerce Dept’s Entity List, or by the Dept of Defence from accessing US capital markets. The prohibitions would also apply to company’s parent, subsidiary, affiliate or controlling entities, would be restricted from listing and trading on a US securities exchange. Investments by US companies and insurance companies, the use of federal funds to enter into or continue agreements with, and retirement fund tax exemptions for these entities would also be prohibited. In addition, the addition/removal of firms to the list of companies subject to the Act would require agreement from the Commerce and Defence Secretaries, and the Director of National Intelligence. Press release here.

(Source: Global Investigations Review, 30 Oct 2020) [Excerpts]
 
* Taiwan’s UMC Secures Plea Deal in Major US Trade Secret Theft Case
Taiwanese chip maker United Microelectronics Company has agreed to pay $60 million and to cooperate with prosecutors on their case against a Chinese state-owned company after pleading guilty to stealing US-made technology worth over $8 billion.
 
* Commerce Department closes probe into US electronics components company
The Commerce Department has dropped its investigation into Colorado-based Arrow Electronics over potentially illegal shipments of products to Iran.

COM COMMENTARY

COM_a116. Arent Fox: “US Expands Military License Review Factors for National Security Controlled Items to PRC, Venezuela, and Russia”

(Source: Arent Fox, 29 Oct 2020)
 
* Principal Author: Marwa M. Hassoun, Esq., 1-213-443-7645, Arent Fox LLP

 
The US Department of Commerce, Bureau of Industry and Security (BIS) issued a final rule amending the license review policy for items on the Commerce Control List that are controlled for national security (NS) reasons and are destined to the People’s Republic of China (PRC), Venezuela, or the Russian Federation (Russia).

  The amendment to the Export Administration Regulations (EAR) Section 742.4(b)(7) is effective October 29, 2020. The EAR already specifically called out the PRC and Russia in Section 742.4(b)(7), but the new language:

  • Expands the provision to include Venezuela;
  • Triggers a presumption of denial in a more expansive way; and
  • Specifies new and expansive factors BIS will use in its case-by-case license application assessment.

Background

  Perhaps we should not have been surprised by this amendment to the EAR, given what has been a series of new restrictions related to the PRC, Venezuela, and Russia. As explained in a previous alert, BIS issued a final rule in April 2020 imposing stricter license requirements on a wide range of exports, reexports, and transfers to PRC, Russia, or Venezuela for “military end uses” or to “military end users.”
 

What Does This Mean for Future License Applications?

  All license applications for NS-controlled items to PRC, Venezuela, and Russia will be reviewed to determine the risk of diversion to a military end user or military end use. BIS will maintain a general policy of approval for license applications to export, reexport, or transfer (in-country) items for civil end users or civil end uses. However, it will assess on a case-by-case basis whether the transaction “would make a material contribution to the ‘development,’ ‘production,’ maintenance, repair, or operation of weapons systems, subsystems, and assemblies, such as but not limited to, those described in supplement no. 7 to part 742 of the EAR”. If BIS concludes that the transaction will make a material contribution, BIS’s licensing review policy is a presumption of denial. We note the previous language stated the presumption of denial kicked in when the transaction “would make a direct and significant contribution to the PRC’s or Russia’s military capabilities such as, but not limited to, the major weapons systems” such as those listed in EAR Part 742, Supp. No. 7.
  The amendment adds the following factors that BIS will consider in reviewing license applications for NS-controlled items to the PRC, Venezuela, and Russia. Any party seeking a license to export, reexport, or transfer (in-country) NS-controlled items should attempt to address these concerns in its license application.
  1. The appropriateness of the export, reexport, or transfer for the stated end use;
  2. The significance of the item for the weapons systems capabilities of the importing country;
  3. Whether any party is a “military end user” as defined in § 744.21(g) of the EAR;
  4. The reliability of the parties to the transaction, including whether:
    • An export or reexport license application has previously been denied;
    • Any parties are or have been engaged in unlawful procurement or diversion activities;
    • The parties are capable of securely handling and storing the items; and
    • End-use checks have been and may be conducted by BIS or another U.S. government agency on parties to the transaction;
  5. The involvement of any party to the transaction in military activities, including activities involving the “development,” “production,” maintenance, repair, or operation of weapons systems, subsystems, and assemblies;
  6. Government strategies and policies that support the diversion of exports from their stated civil end use and redirection towards military end use; and
  7. The scope and effectiveness of the export control system in the importing country.
  Of course, most exporters will not have ready access to some of this information, but they should provide as much background as possible in a license application regarding the parties to the transaction and the civil end-use. We anticipate that these criteria may also result in a proliferation of additional non-standard license conditions. Exporters should ensure that any proposed conditions are actually feasible and if not, work with BIS to see if alternative conditions can be agreed to among the reviewing agencies.
  The review will also include an assessment of the impact of the proposed export of an item on the United States defense industrial base and the denial of an application for a license that would have a significant negative impact, on such defense industrial base. Consistent with 50 USC 4815(d)(3), BIS will examine the following criteria to determine whether there is a significant negative impact:
  1. a reduction in the availability of an item produced in the US that is likely to be acquired by the Department of Defense or other agency for the advancement of national security of the U.S., or for the production of an item in the US for DoD or other agencies;
  2. a reduction in the production in the US of an item that is the result of research and development carried out, or funded by, the DOD or other Federal department or agency to advance the national security of the United States;
  3. a reduction in the employment of US persons whose knowledge and skills are necessary for the continued production in the US of an item that is likely to be acquired by the DoD or other Federal department or agency for the advancement of the national security of the US.
  Therefore, in addition to addressing the factors listed in the amended EAR Section 742.4(b)(7), parties should also address the criteria to examine whether a proposed export of an item will have a significant negative impact on the defense industrial base.

(Source: Bennet Jones, 27 Oct 2020)
 
* Principal Author: John M. Weeks, 613-683-2313, Bennett Jones LLP
 

  On July 1, 2020, the successor free trade agreement to NAFTA entered into force in Canada, Mexico and the United States. The agreement is commonly referred to internationally as the USMCA; in Canada, we call it CUSMA and in Mexico it is called T-MEC. The agreement presents new challenges for businesses, especially in trade & customs, labour and anti-corruption standards.
 

Trade and Customs

  Although the USMCA maintains the duty-free market access for most goods enjoyed under the NAFTA, the USMCA does little to mitigate the risk of extraordinary tariffs owing to the broader scope of the national security exemption available to governments.  Canadians have already witnessed this risk, which manifested over the summer in the form of the resumption of a 10-percent U.S. tariff on Canadian aluminum that had previously been in place from June 1, 2018, to May 17, 2019. The tariffs were withdrawn on September 15, 2020, in the face of threatened Canadian retaliation, but with a warning that the U.S. will continue to monitor trade with reference to unilaterally set monthly target volumes.
To mitigate risk, businesses can adopt the following measures.
  • Review Contract Terms
    • Understand how risk is borne between the parties and who ultimately pays the increased costs arising from the tariffs. 
    • Consider termination and/or renegotiation rights and their impact on tariff risk sharing between parties. 
    • Have discussions with customers and suppliers if risk is not appropriately allocated. Consider options for the parties to share risk.
  • Diversify Supply Chains
    • Diversify sources of supply to be less dependent on counterparties who are in a position to pass along tariffs through contract pricing and/or where supply may be constrained by quotas.
    • It is equally important for exporters to diversify their customer base.
  • Monitor Trade Levels
    • Monitoring trade levels of products important to an enterprise’s supply chain can be an early warning indicator of potential action by governments. This is especially true where the products are in politically sensitive sectors or where suppliers are concentrated by electoral jurisdiction(s) and therefore are politically influential. Trade data is available from public sources such as:
  Renewed scrutiny and enforcement of rules of origin pose a material risk for businesses. Rules of origin are the criteria under which a product qualifies for preferential treatment under the USMCA. The rules of origin have changed for many products under the USMCA, with some rules becoming more restrictive while others are simplified. Changes to rules of origin can have the indirect effect of increasing duty rates on products that do not qualify under narrower rules. 

  Although there are changes to rules of origin throughout the tariff schedule, at the roundtable, panelists identified automotive, textiles, electronics, chemicals and plastics as sectors in which rules of origin have notably changed. Enterprises should also be aware that there is no transition period from NAFTA rules so the USMCA rules of origin already apply. To mitigate risk, panelists recommended the following measures.

  • Review tariff classification
    • Identifying the correct rule of origin is contingent on accurate tariff classification of an item, which itself can be a challenging exercise that is not necessarily intuitive.
    • Consider consulting outside experts if there are any doubts about how your products should be classified.
  • Review the new USMCA product specific rules of origin
    • Identify whether there have been any changes to the rules applicable to your products, and if there have, prepare an updated origin analysis to determine if the goods continue to qualify.
    • If goods no longer qualify, consider whether any adjustments can be made to materials sourcing to bring the goods into qualification scope.
  • Check the MFN rates of duty, discuss with customers, and perform a cost/benefit analysis
    • Claiming preferential treatment under free trade agreements is not mandatory; remember that many products are subject to normal duty rates (most favoured nation or MFN) that are already low or zero.
    • Paying the regular tariff rate may in some cases be less costly than the exercise of complying with origin requirements.
    • Another factor is that customers may require their inputs to originate in order to meet qualification targets for their own manufactured goods.
  • Consider the CPTPP
    • Mexico and Canada are both parties to the Comprehensive & Progressive Agreement for Trans-Pacific Partnership (CPTPP). Consider using this agreement if the applicable product-specific rules of origin are more advantageous than under the USMCA.
    • Be aware that there is no “cross-cumulation” of origin between the CPTPP and the USMCA, so if an item enters Canada or Mexico with CPTPP qualification, that item would need to be re-qualified under the USMCA before it can be counted toward USMCA regional value content requirements. (The same applies for the Canada-Europe Comprehensive Economic and Trade Agreement (CETA).) 
  • Update Supply Chain Verification & Compliance
    • Update compliance procedures, forms, manuals and staff training, audit procedures, documentation (including certifications of origin) and recordkeeping to ensure that the new rules of origin and administrative requirements under the USMCA are being met.
    • Rigorous, documented supply chain compliance is essential to avoiding supply disruptions or unexpected financial or legal liabilities.
  The unprecedented economic shock brought by the COVID-19 pandemic coupled with increasing geopolitical tensions have increased the likelihood of rigorous enforcement actions by governments (and in the case of labour measures, potentially by competitors) under the USMCA. Contact Bennett Jones’ International Trade & Investment and Governmental Affairs & Public Policy groups to better understand and mitigate your enterprise’s risks.

 
 

  Discovering that a prospective client is designated under OFAC sanctions may cause a sharp intake of breath by a professional approached for assistance in the UK. The US is known for its expansive approach to jurisdiction in the sanctions sphere and there may be temptation to refrain from dealings. However, there are limits to the reach of the US when it comes to sanctions enforcement. In some scenarios a person’s OFAC designation will bite outside of the US and prevent persons in the UK from acting but there are also situations when he or she can be assisted effectively in or from the UK.

 

US sanctions abroad 

  Broadly, the effect of a person’s OFAC designation is to freeze their assets anywhere in the world. Title remains with the person but the practical impact is to prohibit dealings of any kind with their property by any person, unless a licence has been obtained.
 
Who must comply?
  US sanctions must be complied with by all persons in the US as well as US citizens (including dual nationals) and permanent residents (green card holders), wherever they are located in the world. The same is true of US companies and their foreign branches. Subject to domestic ‘blocking’ laws which are discussed below, foreign subsidiaries that are majority US owned or controlled are also subject to compliance with certain sanctions.
  In the light of the above, a UK firm or company with no business activities itself in the US could be drawn into compliance with US sanctions. The UK subsidiary of a US company could fall into this category depending on the scope of the sanction. Further, if a UK company has a US citizen as part of its Board or senior management, this may also require the company to turn its mind to US sanctions compliance. Certainly, any employee, senior or junior, who holds US citizenship or a green card must not deal with any person or matter that engages US sanctions in order to stay on the right side of US sanctions laws.
 
‘In’ the US
  Danger can also arise if dealings with the OFAC-designated person in the UK will involve any activity routed through the US. This is because US sanctions apply to persons engaged in activity ‘in’ the US, a term that the authorities seek to construe very widely. Accordingly, a UK firm that seemingly has no connection to the US may find themselves exposed if their dealings with the client subject to US designation will involve any activity conducted in the US. Dealings from the UK with the person’s assets in the US are clearly out of bounds. There will also be a need to avoid US-dollar transactions or any transaction routed through the US financial system.
  A US sanction may also bite abroad in less obvious scenarios. Activity may be considered to engage US jurisdiction where there are communications relating to assets through the US mail system. It has also been suggested that a firm’s use of support services located in the US and even use of US data servers in the supply of services may provide a sufficient jurisdictional nexus for US authorities to take action for sanctions breach.
 

Providing assistance in or from the UK

  It is important to tread carefully but the door is not closed to providing assistance. Advising or representing an OFAC designated person in the UK in relation to matters that have nothing to do with their assets, such as liaising with domestic authorities and institutions, as well as litigation, is a clear example. Advice, representation or other services may also be provided by a UK firm or person with no US link to an OFAC sanctioned person in relation to assets entirely outside of the US. It will be important to consider each case and whether or not a US link arises carefully.
  Separately, in certain cases, including those involving assets, there may be a need to consider the application of US sanctions blocking regulation in the UK. In line with EU requirements, the UK has law in place preventing UK companies and individuals from complying with sanctions imposed by the US on companies and individuals associated with Cuba, Iran and Libya. The blocking regulation, which will remain in place after the Brexit transitional period ends on 31 December 2020, comes as a result of major divergence in sanctions policy in relation to these countries. It pushes back on the US’s expansive approach to jurisdiction and protects companies, including subsidiaries of US companies, organised under UK law and UK individuals from US extraterritorial enforcement action.
 
Don’t forget POCA 2002
  Notwithstanding the above, domestic duties should not be an afterthought. Consideration should turn to the potential engagement of Part 7 of the Proceeds of Crime Act 2002 and the rationale for designation by OFAC. From there, whether the work falls within the regulated sector, whether the business relationship gives rise to a reasonable basis to suspect the handling of criminal property and the operation of the ‘adequate consideration’ exemption to possession of criminal property (viz., fees for professional services) may need to be carefully examined.

 

Takeaway points 

In summary, the following questions are worth keeping in mind:
  • Will the client relationship touch on his or her assets anywhere in the world (including funds to be paid for services)? If not, there will be no issue. If so, unless there is a license in place, US citizens, green card holders and UK entities that are a branch of a US company will be prohibited from dealings. UK companies with American Board members or senior management will also need to be careful as it is conceivable that an individual who is a sufficiently senior decision-maker could bind the company.
  • For UK companies with no presence in the US, will the client relationship touch on the designated person’s assets anywhere in the world and involve activity in or routed through the US (including funds to be paid for services)? Remember that activity ‘in’ the US is interpreted broadly and depending on what it is may lead to exposure to US sanctions enforcement.
  • In any event, all persons in the UK should consider the rationale for OFAC designation and whether the work could engage a section 330 money laundering reporting duty.
  • Is there another reason why particular US sanctions should be disregarded by persons in the UK (ie. application of blocking laws)?

TE EX/IM TRAINING EVENTS & CONFERENCES


*What: ITAR/EAR Controls for Foreign & U.S. Companies
*When: 16-17 Nov
*Where: Your Computer
*Sponsor: Export Compliance Solutions & Consulting (ECS)
*ECS Speakers: Suzanne Palmer, Marc Binder
*Register: Here or write to phyllis@exportcompliancesolutions.com or call 1-866-238-4018
 * * * * * * * * * * * * * * * * * * * *

U.S. Export Controls: ITAR & EAR from a non-U.S. Perspective (Tuesday, 1 Dec 2020) Presenters: Jim Bartlett & Marco Crombach
Register or find more information here

 
The ABC of Foreign Military Sales (FMS) (Thursday, 3 Dec 2020) Presenters: Mike Farrell and Jim Bartlett
Register or find more information here
* Register for both and take advantage of our discounted price!
 * * * * * * * * * * * * * * * * * * * *

(Sources: Event sponsors)  
 

Submit your event in the Submission section at the end of this newsletter.  
 
[Editor’s note:  This Daily Bugle Event List has grown so large that we have run out of space to display it, so we are displaying here only the new events in the Daily Bugle, while maintaining a LINK HERE to the full list.]
 

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

On-Line:
 
* 10 Nov: “Tariff Classification“; Global Training Center
* 10 – 12 Nov: “GLOBAL MILSATCOM 2020“; SMi Group
* 11 Nov: “USMCA the Modernized NAFTA“; Global Training Center
* 11 Nov: “Strategies to Limit Supply Chain Disruptions in the Midst of a Cold War“; Women in Trade – Northern California (WIT-NC)
* 17 Nov: “Importing Procedures“; Global Training Center
* 18 Nov: “Advanced Importing 201“; Global Training Center
* 1 – 2 Dec: “Military Airlift and Air-to-Air Refuelling 2020“; SMi Group
* 3 Dec: “The ABC of Foreign Military Sales (FMS) “; Full Circle Compliance (FCC) Academy
* 4 Dec: “Country of Origin“; Global Training Center
* 11 Dec: “CTPAT“; Global Training Center
* 17 Dec: “Export to Mexico“; Global Training Center
* 18 Dec: “Export to Canada“; Global Training Center
* 26-27 Jan 2021: “U.S. Export & Reexport Compliance For Canadian Operations“; The Canadian Institute (CI)
 
On Location:
 
* 11-14 Oct 2021: Amsterdam, NL; “United States Export Controls (ITAR/EAR/OFAC) Seminar Series; ECTI 

Back to top

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

EN EDITOR’S NOTES

EN_a122. Bartlett’s Unfamiliar Quotations

(Source: Editor)

 
* John Adams (30 Oct 1735 – 4 Jul 1826; was an American statesman, attorney, diplomat, writer, and Founding Father who served as the second president of the United States, from 1797 to 1801. Before his presidency, he was a leader of the American Revolution that achieved independence from Great Britain, and he served as the first vice president of the United States.)
 – “Our Constitution was made only for a moral and religious people. It is wholly inadequate to the government of any other.”
  – “Remember, democracy never lasts long. It soon wastes, exhausts, and murders itself. There never was a democracy yet that did not commit suicide.”
 
* William Halsey (William Frederick Halsey Jr.; 30 Oct 1882 – 16 Aug 1959; was a fleet admiral in the United States Navy during World War II. He is one of four individuals to have attained the rank of fleet admiral of the United States Navy, the others being Ernest King, William Leahy, and Chester W. Nimitz.)
 – “I never trust a fighting man who doesn’t smoke or drink.”
 
Friday Funnies

*Why don’t skeletons ever go trick or treating? Because they have no-body to go with.

* What do witches put on to go trick or treating? Mas-scare-a.
* Why is a skeleton always a problem in a bar? The can’t hold their liquor.
* What was the witch’s favorite subject in school?  Spelling. 

* What happens when you can’t keep up payments to your exorcist?  You get repossessed.

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

 

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. 

9 Oct 2020: 
85 FR 64014:  Revisions to the Unverified List (UVL)

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. 

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
Amendment of Cuban Assets Control 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.

* * * * * * * * * * * * * * * * * * * *
The Daily Bugle Archive

Are you searching for updates from the past editions of the Daily Bugle? 

We publish a list of over 100 trade compliance job openings every day.

Submit your job for free.
PermanentJobListView All Job Openings

Are you looking for a new job in trade compliance? Click here to see the current job openings.

We publish a list of over 100 trade compliance events every day. Submit your event for free.

PermanentJobListView All Events

Are you looking for an upcoming event?   Click here to see upcoming events.

Scroll to Top