20-1203 Thursday “Daily Bugle”

20-1203 Thursday “Daily Bugle”

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Thursday, 3 December 2020

(No items of interest posted) 

  1. Items Scheduled for Future Federal Register Edition
  2. Commerce/BIS: (No new postings)
  3. State/DDTC: (No new postings)
  1. Argus: “China’s Export Control List Not Yet Complete”
  2. EUS: “ECJ Annuls Mubarak Et Al Egypt Misappropriation Sanctions Listings”
  3. Global Trade: “BIS Amends EAR to Implement Export Enforcement Provisions of Export Control Reform Act”
  1. Baker McKenzie: “New Figures Released for Export Controls Fines Against UK Exporters Show Enforcement on The Increase”
  2. Kelley Drye: “Chinese Tech Firm Subject to U.S. Sanctions for Supporting Censorship in Venezuela”
  3. Sidley: “CBP Issues Detention Order on Products Made Using Prison Labor”
  1. FCC Academy Presents: 2 Feb 2021; “U.S. Export Controls – The ABC of FMS”
  1. New BITAR Update Available 
  2. Bartlett’s Unfamiliar Quotations 
  3. Are Your Copies of Regulations Up to Date? Find the Latest Amendments Here. 
  4. Weekly Highlights of the Daily Bugle Top Stories 
  5. Submit Your Job Opening and View All Job Openings 
  6. 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.  The latest edition of the BITAR is dated December 1, 2020.


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* Commerce/BIS; Rules; Wassenaar Arrangement 2018 Plenary Decisions Implementation and Other Revisions Related to National Security Controls; Correction; [Pub. Date: 4 Dec 2020] (PDF)

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OGS_a22. Commerce/BIS: (No new postings)

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(Source: Argus, 3 Dec 2020)
China is still working on the details of its export control law, which took effect on 1 December, and the final list of commodities that could be affected is yet to be completed, the commerce ministry (Mofcom) said.  …
The export control law covers military, nuclear and other goods, as well as technologies, services and other “controlled items” related to safeguarding national security. The law was approved by the national people’s congress on 19 October and took effect on this month.

The law’s focus on controlling exports of military and technological items raises the prospect that it could affect products such as rare earths and other metals used in sensitive technology applications, either in themselves or through finished/semi-finished products.

China’s overseas shipments of rare earths are continuing as normal, according to officials at major exporters, which have received no official notification that rare earths have been included in the control list. China is the world’s dominant supplier of rare earths.

Chinese rare earth exports fell by 28pc from a year earlier during January-October as a result of lower demand during the global Covid-19 pandemic. Exports slumped to a more than five-year low in July but started to rebound in August.

The European Court of Justice (the EU appeals court) has overturned the lower court judgments and has annulled the inclusion of Hosni Mubarak, the former President of Egypt, his wife Suzanne Thabet, their sons Gamal and Alaa Mubarak, and their sons’ wives, Khadiga El Gammal and Heddy Rassekh, on the EU’s Egypt sanctions.  All previous EU judgments on the Egypt regime had upheld listings, but this judgment brings the Court’s case law on the Egypt regime in line with its approach to the Ukraine misappropriation of funds regime (see blog on the Azarov judgment).  Judgment link here – C-72/19 P (3 December 2020).
The Court annulled the listings because, as the Azarov judgment makes clear (applying the principles of Kadi before it), where the EU relies on the fact that  a third (non EU) country is investigating someone for the offence of misappropriation of public funds as the basis for EU sanctions, the Council of the EU must verify that that person’s rights of defence and to judicial protection have been observed by the Egyptian / third country authorities.  Referring to a memorandum from the Egyptian authorities giving reassurances was not enough – the EU has the burden of verifying whether those rights had in fact been observed and had not done so.

The UK has not yet published any post-Brexit UK regulations in relation to the misappropriation regimes (Ukraine, Egypt, Tunisia) so it is not clear yet whether the UK will have similar regimes after 31 December 2020.

(Source: Global Trade, 2 Dec 2020)
The U.S. Department of Commerce’s Bureau of Industry and Security (“BIS”) recently issued a final rule, effective November 18, 2020, which revises certain provisions of the Export Administration Regulations (“EAR”) to implement enforcement provisions pursuant to the Export Control Reform Act of 2018 (“ECRA”), which expanded the export control authorities available to the Secretary of Commerce. BIS also amended the EAR with respect to the issuance of licenses and denial orders and the payment of civil penalties, not directly related to the implementation of ECRA.
The final rule affirms BIS’ authority to conduct investigations, pre-license checks, and post-shipment verifications outside of the United States, as well as the production of books and other information required to be kept as specified in ECRA Section 1761(a)(2) which may be requested of persons located outside the United States.
The enforcement and protective measures in Part 764 of the EAR include violations and sanctions outlined in sections 764.2 and 764.3. Sanctions for violations of the EAR outlined in Section 764.2 include civil monetary penalties, the denial of export privileges, or the exclusion from practice for persons who act as attorneys, accountants, consultants, freight forwarders, or “in any other representative capacity for any license application or other matter before BIS…”  Criminal violations may result in a maximum fine of $1,000,000 and a prison sentence of up to twenty years


(Source: BakerMcKenzie, 2 Dec 2020)
* Author: Sunny Mann, Esq., 44-20-7919-1397, Baker McKenzie
  • The Department for International Trade has revealed in a notice to exporters that HMRC has received settlements totalling £700,368.01 for export control violations between March and September 2020.
  • Fines of up to £211,250 were issued to exporters across 19 settlement actions for unlicensed exports of dual use goods, military goods and related activity controlled by the Export Control Order 2008. This is the highest annual total for export control fines to date.
  • HMRC has a discretionary power to impose civil monetary penalties in lieu of criminal prosecution for violations of the UK’s export control laws. These powers to issue monetary penalties exist alongside prosecutorial enforcement options, which can result in the imposition of criminal fines or imprisonment. Depending on the seriousness of the offence, any intent, compliance steps taken, and other aggravating and mitigating factors, HMRC may decide to issue a compound penalty, for example if the exporter has taken remedial actions to correct compliance issues and has voluntarily made a full and comprehensive disclosure of violations.

COM_a28. Kelley Drye: “Chinese Tech Firm Subject to U.S. Sanctions for Supporting Censorship in Venezuela”
(Source: Kelley Drye, 2 Dec 2020)
* Principal Author: Robert Slack, Esq., 202342-8622, Kelley Drye
On November 30, the United States sanctioned China National Electronics Import and Export Corporation (CEIEC) by adding the Chinese technology company to the Specially Designated National (SDN) List.  

Treasury’s Office of Foreign Assets Control (OFAC) designated the company under Executive Order 13692 for providing goods and services to the Venezuelan government that were used to undermine democracy in that country, including technology that could be used to monitor political opponents and repress political dissent within Venezuela.  A press release issued by OFAC noted that CEIEC had provided censorship tools to CANTV, the Venezuelan state telecommunications company, which controls a substantial portion of internet service in the country.

As of the date of designation, U.S. persons are prohibited from conducting business with CEIEC and its over 200 subsidiaries without authorization from OFAC and all property and interests in property of the company are blocked (i.e., frozen) under U.S. law.  Because of the wide potential reach of the sanctions, OFAC issued General License 38 to allow U.S. persons to wind-down pre-existing business with the company and its subsidiaries over a 45-day period.

COM_a39. Sidley: “CBP Issues Detention Order on Products Made Using Prison Labor”
(Source: Author)
* Author: Ted Murphy, Esq.,202-736-8016, Sidley Austin LLP
U.S. Customs and Border Protection issued a Withhold Release Order yesterday (2 Dec) on cotton and cotton products produced by XPCC and its subordinate and affiliated entities, as well as on any products that are made in whole or in part with or derived from that cotton, such as apparel, garments, and textiles.  (A copy of the CBP press release is available from the author.)
This WRO is likely to cause importers of cotton apparel from China a number of issues immediately (starting tomorrow)).  Importers of cotton apparel from China should be prepared to have shipments detained by CBP and have to provide evidence that the apparel was not produced with cotton produced by XPCC or one of its hundreds/thousands (?) of affiliates.  We expect that it will be extremely difficult for most U.S. companies to prove this to CBP’s satisfaction.  Longer term, the WRO could be expanded to include cotton from Xinjiang more broadly.
For companies that do not import cotton apparel from China, this is still a development worth noting, as it signifies the direction the U.S.-China trade relationship continues to head.  This is epitomized by DHS Acting Deputy Secretary Ken Cuccinelli’s statement in the press release that “‘Made in China’ is not just a country of origin it is a warning label.”   


Thur, 2 Feb; 15:00 pm – 17:00 pm (CET) /09:00 am – 11:00 am (EST) /06:00 am – 08:00 am (PST)

Presenters: Mike Farrell & Jim Bartlett
Register or find more information for the course here
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EN_a611. New BITAR Update Available

(Source: Editor)

  Bartlett’s Annotated ITAR™ (the “BITAR”) contains the full text of the International Traffic in Arms Regulations, 22 C.F.R. §§ 120-130, with features added by the author, including a Table of Contents, nearly 1,000 footnotes, section histories, appendixes containing government guidance, user aides, and a huge 34-page Index. The text is the same as published in the latest official version, 22 C.F.R. §§ 120-130, with all amendments published in the Federal Register, but the official version contains no footnotes, appendixes, or index.  If you are not yet a BITAR subscriber, go HERE to subscribe.
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EN_a112. Bartlett’s Unfamiliar Quotations

(Source: Editor)

* Joseph Conrad (born Józef Teodor Konrad Korzeniowski; 3 Dec 1857 – 3 Aug 1924; was a Polish-British writer, regarded as one of the greatest novelists to write in the English language, although he did not speak English fluently until his twenties.  His 21 novels included Heart of Darkness, Lord Jim, and Typhoon.)
  – “He who wants to persuade should put his trust not in the right argument, but in the right word. The power of sound has always been greater than the power of sense.” 
  – “Facing it, always facing it, that’s the way to get through. Face it.”
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The official versions of the following regulations are published annually in the U.S. Code of Federal Regulations (C.F.R.), but are updated as amended in the Federal Register.  The latest amendments are listed below.
Latest Update 


5 Apr 2019: 84 FR 13499:

Civil Monetary Penalty Adjustments for Inflation. 

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

24 Apr 2018: 83 FR 17749: Foreign Trade Regulations (FTR): Kimberley Process Certificates.  The latest edition of the BAFTR is 
9 Nov 2020.

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

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

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

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


28 Sep 2020: 85 FR 60874: Temporary Amendment for Republic of Cyprus. The latest edition of the BITAR is 1 Dec 2020. 

DOT FOREIGN ASSETS CONTROL REGULATIONS (OFAC FACR): 31 CFR, Parts 500-599, Embargoes, Sanctions, Executive Orders
Amendment of Cuban Assets Control Regulations.

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

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