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20-1201 Tuesday “Daily Bugle”

20-1201 Tuesday “Daily Bugle”

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Tuesday, 1 December 2020

  1. Commerce/BIS: “Impact of the CVW on Legitimate Commercial Chemical, Biotechnology, and Pharmaceutical Activities Involving “Schedule 1″ Chemicals During Calendar Year 2020”
  2. Commerce/BIS: “Order Renewing Order Temporarily Denying Export Privileges”
  3. Treasury/OFAC: “Notice of Sanctions Actions”
  1. Items Scheduled for Future Federal Register Edition
  2. Commerce/BIS: (No new postings)
  3. State/DDTC: “DECCS Tips and Tricks Webinar”
  4. EU External Action: “JCPOA: Joint Commission of the JCPOA to Meet in Vienna on 16 December”
  5. UK ECJU: “Mali Sanctions: Guidance”
  6. Singapore Customs: “Tradenet Extended Downtime 13 December 2020”
  1. EUS: “UN Special Rapporteur Calls For Submissions on Unilateral Sanctions & Human Rights”
  2. Nikkei Asia: “China’s Export Control Law to Become ‘Key Dynamic’ in US Relations”
  1. Allen & Overy: “Impact of China’s Export Control Law to M&A Transactions”
  2. Baker McKenzie: “BIS Amends Export Administration Regulations to Implement Export Enforcement Provisions of ECRA”
  3. MLT Aikins: “Canadians: Do You Require a Federal Export Permit to Sell Your Software Abroad?”
  4. Thomsen and Burke: “Changes to Export Controls in November 2020”
  1. ECTI Presents 15 Dec; The Export Control Year in Review Webinar (just $99/seat!)
  2. FCC Academy Presents: The ABC of Foreign Military Sales (FMS) (Thur, 3 Dec 2020)
  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?
 

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EXIM ITEMS FROM TODAY’S FEDERAL REGISTER

(Source: Federal Register) [Excerpts]
 
* AGENCY: Bureau of Industry and Security, Commerce.
* ACTION: Notice of inquiry.
* SUMMARY: The Bureau of Industry and Security is seeking public comments on the impact that implementation of the Chemical Weapons Convention, through the Chemical Weapons Convention Implementation Act of 1998 and the Chemical Weapons Convention Regulations, has had on commercial activities involving “Schedule 1” chemicals during calendar year 2020. The purpose of this notice of inquiry is to collect information to assist BIS in its preparation of the annual certification to the Congress on whether the legitimate commercial activities and interests of chemical, biotechnology, and pharmaceutical firms are harmed by such implementation. This certification is required under Condition 9 of Senate Resolution 75 (April 24, 1997), in which the Senate gave its advice and consent to the ratification of the CWC.
* DATES: Comments must be received by December 31, 2020.

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

(Source: Federal Register) [Excerpts]
 
85 FR 77147: Notice
 
* AGENCY: Bureau of Industry and Security, Commerce.
* ACTION: Notice of inquiry.
* SUMMARY: Under the applicable standard set forth in Section 766.24 of the Regulations and my review of the entire record, I find that the evidence presented by BIS convincingly demonstrates that the denied persons have acted in violation of the Regulations and the TDO; that such violations have been significant, deliberate and covert; and that given the foregoing and the nature of the matters under investigation, there is a likelihood of imminent violations. Therefore, renewal of the TDO is necessary in the public interest to prevent imminent violation of the Regulations and to give notice to companies and individuals in the United States and abroad that they should continue to avoid dealing with Mahan Airways and Al Naser Airlines and the other denied persons, in connection with export and reexport transactions involving items subject to the Regulations and in connection with any other activity subject to the Regulations.

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

 
85 FR 77338: Notice
 
* AGENCY: Office of Foreign Assets Control, Treasury.
* ACTION: Notice.
* SUMMARY: The U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) is publishing the names of one or more persons that have been placed on OFAC’s Specially Designated Nationals and Blocked Persons List (the SDN List) based on OFAC’s determination that one or more applicable legal criteria were satisfied. All property and interests in property subject to U.S. jurisdiction of these persons are blocked, and U.S. persons are generally prohibited from engaging in transactions with them.
* DATES: See SUPPLEMENTARY INFORMATION section for applicable date(s).
FOR FURTHER INFORMATION CONTACT:
OFAC: Associate Director for Global Targeting, tel.: 202-622-2420; Assistant Director for Sanctions Compliance & Evaluation, tel.: 202-622-2490; Assistant Director for Licensing, tel.: 202-622-2480.

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

OGS OTHER GOVERNMENT SOURCES

(Source: Federal Register
 
* Justice/ATF; Notices; Agency Information Collection Activities; Proposals, Submissions, and Approvals:Application and Permit for Temporary Importation of Firearms and Ammunition By Nonimmigrant Aliens; [Pub. Date: 2 Dec 2020] (PDF)

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

OGS_a25. Commerce/BIS: (No new postings)

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

 
DECCS Tips and Tricks Webinar
Please join DDTC’s CIO Karen Wrege and team to discuss the core topics facing DECCS users today. In this session, we will review how DECCS continues to help DDTC and our users meet mission during these challenging times. We will discuss the road ahead for DECCS and how you can get involved to help guide the next round of updates. We will demonstrate tools you can use to find the answers you need when working in the system. And as always, we will leave plenty of time for Q&A.
Topics to be discussed:
* State of the System: System stats and related outcomes
* DECCS Roadmap: Virtual Agent, DECCS User Group, and One Form
* Self-Service Tools demo
Login Details are below:
Date: December 9th, 2020
Time: 2:00 pm – 3:00 pm EST
URL: here
Important – If password is required when entering WebEx, type ‘Census#01’.
Dial in for audio: 1-888-469-1342
Passcode: 2 1 9 8 4 8 6 #

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

(Source: European Union External Action, 30 Nov 2020)
 
A meeting of the Joint Commission of the Joint Comprehensive Plan of Action (JCPOA) will take place in Vienna on 16 December. The Joint Commission will be chaired on behalf of EU High Representative Josep Borrell by the Secretary General of the European External Action Service Helga Maria Schmid and will be attended by the representatives of E3+2 countries (China, France, Germany, Russia, United Kingdom) and Iran.
Participants will discuss ongoing work to preserve the JCPOA and how to ensure the full and effective implementation of the agreement by all sides, including in preparation of exchanges at Ministerial Level.
 
Peter STANO, Lead Spokesperson for Foreign Affairs and Security Policy, +32 (0)460 75 45 53

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

(Source: UK ECJU, 30 Nov 2020) [Excerpts]
 
As required by section 43 of the Sanctions and Anti-Money Laundering Act 2018 (‘the Sanctions Act’), the Secretary of State for Foreign, Commonwealth and Development Affairs has provided this guidance to assist in the implementation of, and compliance with, the Mali (Sanctions) (EU Exit) Regulations 2020 (the ‘Regulations’).

As required by the Sanctions Act, this document contains guidance on the prohibitions and requirements imposed by the Regulations. It also provides guidance on best practice for complying with the prohibitions and requirements; the enforcement of them; and circumstances where they do not apply.
This document is intended to be read alongside more detailed sanctions guidance published by departments including Home Office and HM Treasury, through the Office of Financial Sanctions Implementation (OFSI). This document contains links to those key sources of sanctions guidance, which will be regularly maintained and updated on GOV.UK. It is designed to give an overview of the prohibitions and requirements in the Regulations and, where appropriate, direct readers to further detailed guidance. This document is current on the date of publication.

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

(Source: Singapore Customs, 1 Dec 2020) [Excerpts]
 
In addition to the usual housekeeping time for TradeNet on Sundays from 4am to 8am, we wish to inform you that Singapore Customs will be performing system maintenance work which will affect TradeNet for the following date and time.
* Date: 13 Dec 2020
* Time Duration: 4am to 5pm 13 hours
You are advised not to submit any applications through TradeNet during the above mentioned period. Please submit your applications through TradeNet after the indicated timing above. Please bring the contents of this Notice to the attention of your staff. Kindly plan in advance and submit applications before the downtime, to minimise disruptions to your business operations. We apologise for any inconvenience caused.

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

COM NEWS

 
The UN Special Rapporteur “on the negative impact of the unilateral coercive measures on human rights” has issued a call for submissions for a study on the “notion, characteristics, legal status and targets of unilateral sanctions” to inform a report to the Human Rights Council and General Assembly in 2021.
The Special Rapporteur has been asked to assess the “negative impact of unilateral coercive measures on the enjoyment of human rights” in light of what she describes as “the accelerating expansion of new and different forms, types and terms used to identify unilateral means of pressure (unilateral coercive measures, sanctions, unilateral sanctions, bilateral sanctions, international sanctions, autonomous sanctions, sectoral or territorial sanctions, etc.), and the need to identify the actors involved (targeting and targeted States, source States, etc.). The current uncertainty and ambiguity in the terminology makes it impossible to identify a legal framework and the applicable standards, which undermines the rule of law, the world order and the authority of the United Nations.”

The Rapporteur is concerned about the lack of certainty and systemisation of existing terminology, the legal grounds for sanctions imposed on “individuals and non-state entities, especially due to the proliferation of Magnitsky-like acts” and the extraterritorial effects of unilateral sanctions.

She has provided a questionnaire asking for input from States, UN agencies, regional and international organisations, national human rights institutions, civil society, scholars and research institutions by 1 February 2021.

(Source: Nikkei Asia, 30 Nov 2020) [Excerpts]
 
China’s new export control law, which took effect Tuesday, aims to consolidate existing mechanisms for safeguarding the national interest in response to foreign trade pressure.

The law will strengthen Beijing’s control over the flow of goods, technology and services. Subject to broad interpretation under national security, it raises concerns over additional trade barriers even as Beijing seeks trade deals with other countries.

Passed by the Standing Committee of the National People’s Congress on Oct. 17, the law comes a year after the U.S. adopted export controls targeted at Chinese tech companies such as Huawei Technologies and ByteDance.
Military products, nuclear materials and items with dual uses in the civil and defense sectors are among the categories controlled under the law, which involves an extensive bureaucracy that cuts across departments under the State Council, or China’s cabinet, and the Central Military Commission.
The upshot of the law is expansive as it involves exporters, intermediary service providers such as freight forwarders, as well as buyers of such goods abroad.

End users are also subject to the law, as is any transaction that re-exports any of the controlled items. Re-exports face potential blacklisting and fines of up to 20 times the amount of the illegal contract, or 5 million yuan ($757,000).
While the government has yet to publish the list of controlled items, businesses are expected to need additional resources in order to meet the new requirements.   . . .

As the law requires businesses to apply for licenses for unlisted items that may be sensitive to national security, it could give Beijing extra leverage in areas such as technology transfers. “The threat of blacklisting under the law may deter foreign companies from commercial activities or public relations positions inimical to Chinese government policies,” said Bush.

With China now on a par with the U.S. in terms of sanctions tools, non-U.S. companies may find themselves in a bind, Bush said. Such groups “risk steep U.S. penalties for continuing to do business with blacklisted Chinese companies, or risk Beijing’s wrath by cutting them off.”

COM COMMENTARY

(Source: Allen & Overy, 30 Nov 2020)
 
* Principal Author: Victor Ho, Esq., 852 2974 7288, Allen & Overy
 
The PRC Export Control Law will come into effect soon on 1st December 2020. This new law makes a number of substantial changes to China’s current export control regulatory regime, indicating that the regulators may take a more active and pragmatic approach to broadly safeguard China’s national security and interests (especially in the area of technology) going forward[FN/1].

Implications of these changes, however, may go far beyond the traditional export control regime and impact the compliance requirements of certain global M&A deals going forward, which the transaction parties should be aware of and prepare properly to deal with the regulatory challenges.
 
(1) M&A transactions involving listed technologies could be captured.  The current Chinese tech-export regulations apply to “transfer of technologies … from inside of the People’s Republic of China to outside of the People’s Republic of China”. Under the new Export Control Law, export control does not only apply to the transfer of controlled items from the territory of the People’s Republic of China overseas, but also to the “provision of controlled items by citizens, legal persons and non-legal person organizations of the People’s Republic of China to foreign organizations and individuals” (“deemed export”).
The Export Control Law does not set any limitation on the form of “provision”, nor impose any geographical limitation, which is likely intended to prevent evasion of the traditional export control via alternative ways (for instance, one can set up a company, contribute the controlled technology into it and then sell the company to foreign purchaser). So technically such “deemed export” may be broadly interpreted to include the sale of a company by a Chinese seller (which could be a Chinese individual, or an entity either incorporated in China or otherwise controlled by a Chinese investor) so long as the company has the technology captured by the relevant control list or the Export Control Law[FN/2].

Using TikTok as a hypothetical case for illustration purposes, if ByteDance sold TikTok to Microsoft before 1st December 2020, this transaction would not necessarily be subject to the Chinese government’s approval, so long as relevant existing technology licenses between ByteDance and TikTok remained untouched, as the relevant IP for operating TikTok was already licensed by ByteDance to TikTok quite some time ago[FN/3]. Once the Export Control Law takes effect on 1st December 2020, technically this deal will fall under the coverage of the Export Control Law and may require Chinese government approval.
 
(2) M&A transactions involving unlisted technologies could be captured as well
Under the Export Control Law, if the technologies to be exported are not within any export control lists or interim export control measures, the exporter will still be obliged to apply to the export control authorities for export licence, if the exporter “knows, or should know, or has been notified by the export control authorities”, that such export may have the risk of endangering national security and interests[FN/4].

Thus, in case of an M&A transaction between a Chinese seller and a foreign purchaser, even if the technologies of the company may not be on any export control lists, this transaction could still fall under the Export Control Law and would require the Chinese government’s approval, if it were to endanger national security and interests of China.

Again using TikTok for illustration purpose, under the Export Control Law, the Chinese government would not need to update the technology export control lists any more in order to capture the transaction[FN/5]. The Chinese government may simply notify ByteDance that the proposed transaction would endanger national security and interests and therefore should be reviewed by the Chinese government. Even if ByteDance did not receive any notification from regulatory authorities, ByteDance would need to assess whether the transaction would cause any national security concerns and interests and thus trigger the application of the Export Control Law, and consider the necessity to voluntarily submit the transaction to the Chinese government for approval.
(3) Enforcement risk and penalties for violation

The Chinese government may take a series of actions against violations under the Export Control Law. In the event of an M&A transaction which falls under the regime of the Export Control Law and is closed without proper approval, it is theoretically possible that the Chinese government may “order to stop illegal activities”, which could be interpreted as the authority to suspend or unwind the transaction. It may confiscate illegal income (if any) and impose an administrative fine of up to 10 or even 20 times the turnover amount of the violation which technically can be interpreted as the transaction value[FN/6].
In addition, unlike what is commonly possible under other administrative regulations (eg the Anti-Monopoly Law of China), the administrative penalty imposed under the Export Control Law does not appear to be appealable. Instead, the Export Control Law only offers the possibility of initiating administrative review proceedings if one intends to challenge a penalty decision.

There is no doubt that for transactions similar to TikTok, the enforcement risk of non-compliance under the Export Control Law would likely become a top-priority issue that parties would not ignore, given the sensitivity and publicity of the transaction. But for other transactions which are of less public concern, the serious legal consequence under the Export Control Law may still be a factor sufficient for the relevant parties to cautiously consider the enforcement exposure rather than recklessly close the deal without going through the necessary proceedings required under the Export Control Law.
 
(4) Compliance Steps for Chinese and International Investors
For M&A transactions with Chinese elements, it is advisable for the transaction parties to consider the following steps in order to comply with the Chinese Export Control Law.
  • make an appropriate assessment as to whether the proposed transaction may structurally fit into the scope of “deemed export” under the Export Control Law;
  • identify if any technologies involved in the target business are on any Chinese export control list, which may cause the proposed transaction to be subject to any necessary Chinese approval under the Export Control Law;
  • where there are no listed technologies involved in the transaction, assess whether the proposed transaction could endanger the national security and interests of China, considering important factors such as the sensitivity of relevant technologies, geopolitical risks, the profile of the transaction, etc.;
  • if it is difficult to conclude whether the transaction involves listed technologies or otherwise may endanger the national security and interests of China, seek a clearance letter from the relevant Chinese authorities through a consultation process[FN/7];
  • in the event that the proposed transaction is determined to require Chinese government approval under the Export Control Law, consider a voluntary submission to the relevant Chinese governmental authorities for formal approval.

Looking Forward
The Export Control Law provides China with a robust regulatory tool to better monitor the flow of controlled items and prevent evasion of the state export control. While this new law may be interpreted to capture certain M&A transactions as described above, it is too early to predict how the Chinese government would utilize it or whether it would eventually turn into a China tech version of CFIUS review. In the meantime, we expect that China’s export control regime will continue to evolve with corresponding detailed implementing rules, as are anticipated to be promulgated as a next step. Transaction parties are advised to stay alert and adapt their compliance strategies and practices to further regulatory changes.
________________________ 
[FN/1] Please refer to “China New Export Control Law: Key Changes and Challenges” for more details of the Chinese Export Control Law.
[FN/2] It is not clear at present and is subject to clarification regarding the scope of the sale, i.e., whether it applies only to 100% sale or sale of majority stake, or otherwise it covers sale of controlling stake as well.
[FN/3] In the contrary, the proposed data security arrangement with Oracle, which requires revisions to the current IP license arrangement between ByteDance and TikTok, is subject to China’s approval under current Chinese tech export regulations.
[FN/4] The Export Control Law, however, does not clearly define the national security and interests. This term is vague and technically may be interpreted in a broad way.
[FN/5] The government announced the amendments to the Catalogue of Technologies Prohibited or Restricted from Export on 28 August 2020. Please refer to “China: Technology Export Control and Beyond” for details.
[FN/6] The administrative fine is up to 10 times of the turnover of the illegal transactions, and up to 20 times of the transaction value if the transaction is with a blacklisted party.
[FN/7] The Export Control Law permits consultation with the export control authorities, and the export control authorities are required to respond in a timely manner.

(Source: Baker McKenzie, 30 Nov 2020)
 
* Principal Author: Paul E. Amberg, Esq., 31-20-551-7913, Baker McKenzie 
 
On November 17, 2020, the US Department of Commerce’s Bureau of Industry and Security (“BIS”) issued a final rule (“Final Rule”) amending and clarifying certain provisions of the Export Administration Regulations (“EAR”) to make them consistent with the Export Control Reform Act of 2018 (“ECRA”). The Final Rule also amends certain provisions of the EAR (not strictly concerning ECRA implementation) regarding the issuance of export licenses and denial orders and the payment of civil penalties. For more information about ECRA, please review our prior blog posts here and here.
 
Revisions to EAR Provisions Related to ECRA Implementation
The Final Rule amends the EAR to reflect the expanded enforcement authorities of the Secretary of Commerce and update certain provisions to make them consistent with ECRA. Such amendments include:
  • Replacing references to the Export Administration Act of 1979 (“EAA”) with references to ECRA and other export laws and regulations
  • Amending the EAR’s Enforcement Provisions: The revisions to the EAR reflect the expanded scope of authority provided to the Secretary of Commerce in ECRA and also implement the following enforcement tools:
    • Pre-license checks (PLCs) and Post-Shipment Verifications (PSVs): The Final Rule clarifies BIS’s authority to conduct PLCs and PSVs outside of the United States. In addition, the results of PLCs, when available, will be communicated to licensing officials within existing timeframes governing the conduct of PLCs and considered in determining the outcome of a license application.
    • Inspection of Books, Records, and Other Information: The amended EAR provisions reflect that ECRA gave BIS clear authority to request production or inspect books, records, and other information kept pursuant to the EAR by both persons located in the United States and outside the United States.
    • Overseas investigative authority; searches, inspections, detentions, and seizures, and related authorities concerning exports, reexports, and transfers (in-country): The Final Rule amends and renames several EAR provisions to address the Secretary of Commerce’s expanded authority to conduct export enforcement investigations both within and outside the United States under ECRA and ability to enforce EAR provisions that restrict the activities of US persons in connection with certain weapons of mass destruction-related end uses described in EAR Section 744.6.
    • Violations and Penalties under ECRA: BIS made multiple amendments to the EAR to align provisions with ECRA while retaining certain EAA provisions that remain in force. In addition, Supplement No. 1 to EAR Part 764 was amended to include a prohibition on transfers (in-country) to, or on behalf of, a denied person in the terms of a standard denial order.
 
Additional Revisions to the EAR’s Enforcement Provisions
The Final Rule also amends and clarifies certain EAR provisions unrelated to ECRA implementation. These amendments include:
  • Clarification that any license obtained based on a false or misleading misrepresentation or the falsification or concealment of a material fact is void as of the date of issuance.
  • Revision to the maximum time period for payment of civil penalties, as a condition of receiving certain privileges under the EAR, from one year to two years.
  • Revision to clarify when the US Department of State’s Directorate of Defense Trade Controls may not issue licenses, or may deny licenses, involving certain parties indicted for, or convicted of, violations of certain statutes specified in the Arms Export Control Act.
  • Clarification that the Director of the Office of Export Administration is the designated BIS official for the issuance of certain orders, notifications, and authorizations.  

(Source: MLT Aikins, 25 Nov 2020)
 
* Principal Author: Kristal Allen, Esq., 403-693-4312, MLT Aikins
 
Is your Canadian software company looking for new markets due to the impact of the COVID-19 pandemic on your existing customers? Are some of the markets you are considering selling to outside of North America? If so, you should ask yourself if you may require a federal export permit before selling your software solution abroad.

As world economies react to COVID-19 related shutdowns, many companies are finding a changed marketplace awaits them. Existing customers who earlier this year were on the verge of purchasing software solutions, may be cancelling or deferring these projects. In order to generate revenue, many software companies may now be considering offering their software solutions outside of their traditional North American markets. In these cases, software companies should investigate whether the sale of their software outside of Canada requires a federal export permit.

Why would I need an export permit to sell commercial software?
For over 70 years, Canada has had export control laws in place geared towards ensuring that military and strategic goods being exported are consistent with Canada’s foreign and defense policies.

Many companies that produce products for the defense industry are fully aware of laws that govern the export of their products. However, software companies whose solutions are geared for business or civilian use may be required to obtain export permits if their software is of “dual use” – that is, their products could also be used or modified for military purposes. An example of where this may apply includes software that incorporates controlled encryption functionality.

Canada regularly maintains and updates its list of products subject to export controls. While most software that is generally available to the public or is in the public domain is not subject to export controls, certain dual-use software is subject to export controls.
 
The potential dual-use software noted in the Guide to Canada’s Export Control List includes the following:
 
  • Software for digital computers. One of many examples is software designed or modified for the development or production of equipment of digital computers having and adjusted peak performance exceeding 15 Weighted TeraFlops (WT);
  • Computer-Aided-Design software. One such example is certain software specially designed for the development of active flight control systems, helicopter multi-axis fly-bywire or fly-by-light controllers or helicopter circulation controlled anti-torque or circulation-controlled direction control systems;
  • Intrusion software. One of many examples is as software specially designed or modified to avoid detection by monitoring tools or to defeat protective countermeasures of a computer or network-capable device, or the modification of system or user data;
  • Cryptographic information security software including:
    • software applications that do not contain encryption but call up cryptographic libraries;
    • general purpose processing cards which happen to use a processing chip that has hardware crypto accelerators even if the processing card does not make any use of the encryption functionality embedded in one of the chips;
    • custom secure data storage applications for corporate clients that do not contain any cryptographic functionality, but rather call up cryptographic libraries located on the operating system that the application is designed to run on;
  • software for certain numerical control systems used by manufacturers; and
  • software to restore microprocessors after an electro-magnetic pulse.

If your company develops dual-use software that appears on Canada’s Export Control List, an export permit is needed before transferring or selling that software to customers in certain countries.

Do I really need an export permit to send an email?
For most people, exporting conjures up a picture of goods loaded onto a plane, train, truck or ship. However, Canada’s export control laws apply to any method of delivery.  
 
According to Canada’s Export and Brokering Control Handbook, exporting can include:
  • providing services or training,
  • sending software via email,
  • allowing software to be downloaded or through an electronic file transfer,
  • file sharing,
  • cloud access, and
  • communicating via fax, telephone conversation, teleconference or face-to-face meetings.

Therefore, if your software solution is a dual use product that is the subject of export controls, you could be in violation of the law if the software is emailed or otherwise transferred abroad without first getting an export permit.
What are the penalties for violating Canada’s export control laws?

Violating Canada’s export controls laws can result in fines of $25,000 or more, and a prison sentence of almost ten years. If your company has inadvertently violated Canada’s export control laws, there is a process of disclosure that can allow a company to avoid liability. However, before disclosing, a careful review of the violation may take place. Depending on the gravity of the offence, investigations can be conducted into alleged non-complying conduct.
If we are a software company that is unsure if our products are the subject of export controls, what do we do?
 
If you are unsure whether your product is a dual use, there are three options.
1)   First, you can self-assess against Canada’s Export Control List to determine if your software is subject to export control;
2)   Second, you can request an Advisory Opinion from the Export Controls Division of Global Affairs Canada on whether your products are subject to export controls; or
3)   Third, you can apply for an Export Permit before the software is transferred.
 
Of the three options, only a decision on an application for an Export Permit is binding.  

If our software is subject to export controls, what should we do?
If you produce dual-use software and wish to sell or transfer it abroad, you may find that an export permit is not needed based on the country of destination.  
 
However, if an export permit is needed, the following needs to be completed before you transfer your product abroad:
 
  • Ensure that you have conducted due diligence verifications on the actual and potential foreign customers who are in your export permit application.
  • Apply for an export permit. Until an export permit is granted, the software should not be transferred.
  • Make sure you set up a system that maintains all necessary documents needed for each export in case of a government audit.
  • Where necessary, develop and put in place a policy or standard operating procedure to ensure your employees know what sort of action requires an export permit.

TE EX/IM TRAINING EVENTS & CONFERENCES

TE_a116. ECTI Presents 15 Dec; The Export Control Year in Review Webinar (just $99/seat!)

(Source: Ashleigh Foor)
 
* What: The Export Control Year in Review 
* When: 15 Dec; 1:00 p.m. (EST)
* Where: Webinar
* Sponsor: Export Compliance Training Institute (ECTI)
* ECTI Speaker: Scott Gearity
* Register: here or contact Ashleigh Foor, 1-540-433-3977, ashleigh@learnexportcompliance.com.

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

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

EN EDITOR’S NOTES

EN_a118. Bartlett’s Unfamiliar Quotations

(Source: Editor)

 
* Woody Allen (Born Allen Stewart Königsberg; 1 Dec 1935; is an American comedian, writer, actor, film director, and jazz musician.)
  – “Eighty percent of success in life is just showing up.”        
  – “If you’re not failing every now and again, it’s a sign you’re not doing anything innovative.”
* * * * * * * * * * * * * * * * * * * *

 

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.

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