;

20-1125 Wednesday “Daily Bugle”

20-1125 Wednesday “Daily Bugle”

 this copy of the Daily Bugle to others or share this subscription link

(The Daily Bugle will not be published Tomorrow, 26 November 2020, a U.S. Federal holiday.)

Wednesday, 25 November 2020

  1. Commerce/BIS: “Emerging Technology Technical Advisory Committee; Notice of Partially Closed Meeting”
  2. Commerce/BIS: “Regulations and Procedures Technical Advisory Committee; Notice of Partially Closed Meeting”
  1. Items Scheduled for Future Federal Register Edition
  2. Commerce/BIS Issues Affirmative Preliminary Countervailing Duty Determination for Twist Ties from China
  3. State/DDTC: (No new postings)
  4. EU Council: “Alignment of Certain Countries Concerning Restrictive Measures Against the Republic of Guinea”
  5. EU Council: “Alignment of certain Countries Concerning Restrictive Measures against Belarus”
  1. EUS: “US Renews Iraq Waiver for Iranian Energy for 45 Days
  1. Global Trade: “Unpacking Us-China Sanctions and Export Control Regulations: The Us Entity List”
  2. ST&R Trade Report: “Exports to Russian, Chinese Entities Restricted for Illegal Shipments”
  3. Stinson: “DOJ Warns Against Travelling with Sensitive Information in Contravention of Export Controls”
  4. Steptoe: “Sanctions Under the Biden Administration: A Return to Smart?”
  1. ECTI Presents 17 Dec; ITAR Compliance for US Persons Working Outside the United States: What You Need to Know Webinar
  2. FCC Academy Presents: 1 and 3 Dec; “U.S. Export Controls: ITAR/EAR” and “FMS”
  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) [Excerpts]
 
85 FR 75296: Notice
 
The Emerging Technology Technical Advisory Committee (ETTAC) will meet on December 10, 2020, at 1:00 p.m., EST. The meeting will be available via teleconference. The Committee advises the Office of the Assistant Secretary for Export Administration on the identification of emerging and foundational technologies with potential dual-use applications as early as possible in their developmental stages both within the United States and abroad.
 
* Agenda
Open Session
1. Welcome and Introductions.
2. Introduction by the Bureau of Industry and Security Leadership.
3. Presentation: Wassenaar Arrangement Export Control Regime.
4. Presentation: Missile Technology Export Control Regime.
5. Presentation: Nuclear Suppliers Group.
6. Presentation: Australia Group.
7. Open Discussion.
8. Conclusion.
9. (Closed Session) 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 20 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 December 2, 2020.

A limited number of slots will be available for the public session. Reservations are not accepted. To the extent that time permits, members of the public may present oral statements to Start Printed Page 75297the Committee. The public may submit written statements at any time before or after the meeting. However, to facilitate the distribution of public presentation materials to the 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 November 13, 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 the 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. Yvette Springer,
Committee Liaison Officer.

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

 
85 FR 75296: Notice
 
The Regulations and Procedures Technical Advisory Committee (RPTAC) will meet December 8, 2020, at 10:00 a.m., Eastern Standard Time, via remote teleconference. The Committee advises the Office of the Assistant Secretary for Export Administration on implementation of the Export Administration Regulations (EAR) and provides for continuing review to update the EAR as needed.
* Agenda
Public Session
1. Opening remarks by the Chairman.
2. Opening remarks by the Bureau of Industry and Security.
3. Presentation of papers or comments by the Public.
4. Regulations Update.
5. Working Group Reports.
6. Automated Export System Update.
Closed Session:
7. 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 December 1, 2020.
To the extent that 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 the distribution of public presentation materials to the 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 the 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.

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

OGS OTHER GOVERNMENT SOURCES

[No relevant federal items for today]

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

(Source: Commerce/BIS, 24 Nov 2020)
 
Today, U.S. Secretary of Commerce Wilbur Ross announced an affirmative preliminary determination in the countervailing duty (CVD) investigation of twist ties from China. The Commerce Department preliminarily determined that exporters/producers from China received countervailable subsidies at a rate of 122.5 percent. Among the subsidies preliminarily countervailed is China’s undervalued currency – making this the first time Commerce has ever countervailed the Renminbi. This is the second time that Commerce has countervailed a foreign currency with a unitary exchange rate. . . .
As a result of today’s decision, Commerce will instruct U.S. Customs and Border Protection to collect cash deposits from importers of twist ties from China based on the preliminary rate noted above.  . . .

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

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

(Source: Council of the European Union, 24 Nov 2020)
 
On 23 October 2020, the Council adopted Decision 2020/1556[FN/1].
The Council Decision extends the existing restrictive measures until 27 October 2021.  The Candidate Countries the Republic of North Macedonia, Montenegro, Serbia and Albania[FN/2] , the country of the Stabilisation and Association Process and potential candidate Bosnia and Herzegovina, and the EFTA countries Iceland, Liechtenstein and Norway, members of the European Economic Area, as well as Ukraine and the Republic of Moldova align themselves with this Council Decision.  They will ensure that their national policies conform to this Council Decision. The European Union takes note of this commitment and welcomes it.
 
[FN/1] Published on 26.10.2020 in the Official Journal of the European Union no. L 355, p. 3
[FN/2] The Republic of North Macedonia, Montenegro, Serbia and Albania continue to be part of the Stabilisation and Association Process.

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

(Source: Council of the European Union, 24 Nov 2020)
 
On 23 October 2020, the Council adopted Decision 2020/1556[FN/1].
The Council Decision extends the existing restrictive measures until 27 October 2021.  The Candidate Countries the Republic of North Macedonia, Montenegro, Serbia and Albania[FN/2] , the country of the Stabilisation and Association Process and potential candidate Bosnia and Herzegovina, and the EFTA countries Iceland, Liechtenstein and Norway, members of the European Economic Area, as well as Ukraine and the Republic of Moldova align themselves with this Council Decision.  They will ensure that their national policies conform to this Council Decision.  The European Union takes note of this commitment and welcomes it.
 
[FN/1] Published on 26.10.2020 in the Official Journal of the European Union no. L 355, p. 3
[FN/2] The Republic of North Macedonia, Montenegro, Serbia and Albania continue to be part of the Stabilisation and Association Process.

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

COM NEWS

 
The US Department of State has renewed a sanctions waiver allowing Iraq to continue to import Iranian electricity. The waiver will remain in effect for 45 days. A spokesperson said that the renewal was authorized to “ensure that Iraq is able meet its short-term energy needs while it takes steps to reduce its dependence on Iranian energy imports.”

COM COMMENTARY

(Source: Global Trade, 24 Nov 2020)
 
* Principal Author: Ginger T. Faulk, Esq., 1-202-383-0981, Eversheds Sutherland
 
If the first time you ever heard of the US “Entity List” was in March 2016, when subsidiaries of mobile telecommunications equipment manufacturer ZTE Corporation were listed, or in March 2017, when ZTE agreed to an $892,360,064 penalty and settlement agreement in order to secure its removal from the list, you are probably not alone. That 2016 listing had to do with allegations of evasion of US sanctions against North Korea and Iran. More recent Entity List designations have derived not only from US economic sanctions but also cite to various other types of US allegations or policy concerns.

In the first article of this series, we discussed US export controls applicable to Huawei as a result of its designation on the Entity List in May 2019. In this article, we delve into the background and regulatory context of the list itself, as compared to other US sanctions lists, and discuss ways it has been used in the last four years under the Trump Administration.
 
(1) What is the Entity List and What are Its Origins?
The Bureau of Industry and Security (“BIS”) at the US Department of Commerce administers US export controls pursuant to the Export Administration Regulations (“EAR”). The EAR generally controls, and in some cases, requires licenses for, exports on the basis of the type of product, the country of export and the reasons for control, e.g. Anti-Terrorism, Nonproliferation, National Security, etc. In contrast, the Entity List imposes comprehensive export controls applicable to particular foreign entities due to specific policy concerns.

The US Entity List was established in 1997. It initially focused on identifying the public entities at risk of causing the diversion of exported items in support of the proliferation of weapons of mass destruction. Since its initial publication, however, the purpose of the Entity List has been considerably expanded to encompass the identification and designation of foreign entities and other persons “reasonably believed to be involved, or to pose a significant risk of being or becoming involved, in activities contrary to the national security or foreign policy interests of the United States.” 

A committee (known as the “ERC”) composed of the US Departments of Commerce (Chair), State, Defense, Energy, and Treasury adds persons to the Entity List by majority vote.  

Once an entity is added to the list, it generally follows that exports or re-exports of goods, technology or software (“items”) that are “subject to the EAR” require an export license issued by BIS. As a result, the export and re-export of not only military or dual-use items but all categories of items are subject to a licensing requirement (of course, to the extent that they are deemed to be subject to the jurisdiction of US export controls). Notably, the Commerce Department’s policy is generally one of “presumption of denial” for these types of license applications unless indicated otherwise in the company’s listing.

Jurisdictionally, the ban applies also to non-US persons to the extent that those persons deal in subject US items. Significantly, items “subject to the EAR” includes not only US-origin items and items exported from the US but also non-US-origin items that contain more than a minimal (“de minimis”)  level of controlled US-origin content. Since a licensing requirement generally applies to exports or re-exports of any item to an Entity List entity, this means that any type of US content or component whatsoever, provided it is of sufficient value as compared to the overall fair-market value of the finished item (25% for non-embargoed countries, including China), could cause an item manufactured outside of the US item to be “subject to the EAR” and therefore requiring a license for export or re-export to an Entity List entity.
 
(2) The Entity List and China
Until 2012, there were fewer than 30 Chinese entities on the Entity List. Before President Trump’s 2017 Inauguration, fewer than 100 Chinese entities had ever been listed on the Entity List over its 23-year history. Since then, however, more than 200 Chinese companies have been added to the Entity List, making export controls one of many contentious issues in recent US-China relations. Perhaps most notable was the May 2019 listing of Huawei and its 114 non-US affiliates – an enterprise which recently took the place of Samsung as the world’s largest mobile phone manufacturer (as addressed in our earlier article). More recently, the US added a number of Chinese state-owned enterprises to the Entity List on the basis of their alleged support in advancing Beijing’s territorial claims in the South China Sea. Further, over the last year, more than 38 individuals and entities were added for reasons related to their alleged use of forced labor in the Xinjiang province of China.

One might ask why the US Commerce Department would use the same export control list to address so many varied types of issues. And does it make sense to designate under export controls companies that are the producers of raw materials such as cotton and textile producers in Xinjiang?  The answer lies both in the designation process and in the intended impacts of an Entity List designation. 

As noted, the ERC is an interagency committee represented by multiple US government departments. Fundamentally, it affords the ERC, the interagency charged with adding companies to the list, the flexibility to address certain conduct by such entities in a more targeted and flexible fashion – as it did with respect to Huawei. In this regard, an Entity List designation does not impose the same outright ban on all commercial and financial dealings as a designation on the US Treasury Department’s Specially Designated Nationals List. It also is intended to signal to industry to use care when doing business with these entities.

In addition to the Entity List, BIS also maintains a Denied Persons List of persons or entities that are the subject of an export denial order. For example, after deciding that ZTE failed to fulfill its commitments under the 2017 settlement by which it secured its removal from the Entity List, BIS issued a denial order in June 2018 that exceeded the terms of the original Entity Listing by also preventing ZTE from directly or indirectly participating in any way in any transaction involving an item subject to the EAR. That denial order was removed following discussions between the Trump Administration and the Chinese government in July 2018.
 
(3) Can a party seek removal from the Entity List?
The ERC also reviews requests for removal from the Entity List. To be removed, the person or entity must submit a request to the chairman of the ERC. In making a determination, the ERC will look favorably upon an entity’s cooperation with the US government and future compliance assurances. The ERC’s decision is final and cannot be appealed as an administrative matter.
 
(4) Conclusion
Recently, the US has made frequent use of the Entity List to target Chinese companies over varied national security concerns. In response, China has introduced its own “Unreliable Entity List” regime, under which foreign entities or individuals that boycott supplies to Chinese companies for non-commercial reasons may be listed. It remains to be seen whether the US Commerce Department will continue to make such an expansive use of the Entity List under the Biden Administration.

 
* Contact: messages@strtrade.com, 1-305-894-1035
 
The State Department has determined that the following entities have engaged in activities that warrant the imposition of penalties for the transfer to or acquisition from Iran, Syria, or North Korea of goods, services, or technology controlled under multilateral control lists or otherwise having the potential to make a material contribution to the development of weapons of mass destruction or cruise or ballistic missile systems.
– Chengdu Best New Materials Co Ltd. (China)
– Zibo Elim Trade Company Ltd. (China)
– Aviazapchast (Russia)
– Joint Stock Company Elecon (Russia)
– Nilco Group (aka Nil Fam Khazar Company, aka Santers Holding) (Russia)
As a result, effective Nov. 6 and for two years thereafter, the following measures have been imposed against these entities and any successors, sub-units, or subsidiaries thereof.
– no U.S. government department or agency may procure or enter into any contract for the procurement of any goods, technology, or services from these entities
– no U.S. government department or agency may provide any assistance to these entities and they are not eligible to participate in any U.S. government assistance program
– no U.S. government sales to these entities of any item on the U.S. Munitions List are permitted and all sales to these entities of any defense articles, defense services, or design and construction services under the Arms Export Control Act are terminated
– no new individual licenses will be granted for the transfer to these entities of items the export of which is controlled under the Export Administration Act of 1979 or the Export Administration Regulations, and any existing such licenses are suspended.

(Source: Stinson Blog, 20 Nov 2020)
 
* Author: Judith Araujo, Esq., Stinson LLP
 
On November 18, 2020, the Department of Justice (DOJ) announced that a Chinese national and naturalized citizen of the United States was sentenced to 38 months in prison for travelling to China with unclassified military-related technical information. Wei Sun was employed as an electrical engineer with Raytheon Missiles and Defense for ten years. During this time, he had access to defense technical information related to the development and production of missiles, which information was export controlled pursuant to the Arms Export Control Act (AECA) and International Traffic in Arms Regulations (ITAR).

As relevant to this prosecution, Mr. Sun, knowing that he was not legally allowed to do so, travelled from the United States to China on a personal trip with his Raytheon-issued computer, which contained data related to an advanced missile guidance system that was controlled by the AECA and ITAR. This was illegal in that Mr. Sun did not obtain an export license for this travel, essentially delivering controlled technology to China without permission, in violation of the AECA and ITAR. Mr. Sun ultimately pleaded guilty to a felony violation of the AECA and was subsequently sentenced to over three years in prison.

The DOJ’s press release emphasized that this “sentence should stand as a warning to others who might be tempted to similarly put the nation’s security at risk.” Indeed, contractors should take care to know which export controls and information safeguards are applicable to their business and to train their employees on the same in order to avoid a bad outcome such as this one.

TE EX/IM TRAINING EVENTS & CONFERENCES

TE_a113. ECTI Presents 17 Dec; ITAR Compliance for US Persons Working Outside the United States: What You Need to Know Webinar

(Source: Ashleigh Foor)
 
* What: ITAR Compliance for US Persons Working Outside the United States: What You Need to Know
* When: 17 Dec; 1:00 p.m. (EST)
* Where: Webinar
* Sponsor: Export Compliance Training Institute (ECTI)
* ECTI Speaker: Susan Kovarovics and Megan Barnhill
* Register: here or Ashleigh Foor, 1-540-433-3977, ashleigh@learnexportcompliance.com.

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

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

The ABC of Foreign Military Sales (FMS) (Wed, 2 Dec at Noon-2pm EST/ 9am PST/ 1800 CET; and Thurs, 3 Dec at 8-10am EST, 1500 CET)
Presenters: Mike Farrell & Jim Bartlett
Register or find more information here
Note the new presentation of the FMS class on Wednesday, 3 Dec, at 9am Pacific, especially for U.S. West Coast participants!
* Register for both and take advantage of our discounted price!
 * * * * * * * * * * * * * * * * * * * *

EN EDITOR’S NOTES

EN_a115. Bartlett’s Unfamiliar Quotations

(Source: Editor)

 
Charles A. Beard (Charles Austin Beard; 27 Nov 1874 – 1 Sep 1948; was, with Frederick Jackson Turner, one of the most influential American historians of the first half of the 20th century. Beard’s most influential book, An Economic Interpretation of the Constitution of the United States (1913), has been the subject of great controversy ever since its publication.)
  – “When it is dark enough, you can see the stars.”
* * * * * * * * * * * * * * * * * * * *

 

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. 

18 Nov 2020: 
85 FR 73411:  Revisions to Export Enforcement Provisions. 

DOC FOREIGN TRADE REGULATIONS (FTR): 15 CFR Part 30.  
24 Apr 2018: 83 FR 17749: Foreign Trade Regulations (FTR): Kimberley Process Certificates.  The latest edition of the BAFTR is 
9 Nov 2020.
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