20-1210 Thursday “Daily Bugle”

20-1210 Thursday “Daily Bugle”

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Thursday, 10 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)
  4. Treasury/OFAC: “Treasury Sanctions Corrupt Actors in Africa and Asia”
  5. EU Council: “Alignment of Certain Countries Concerning Restrictive Measures in View of the Situation in Venezuela”
  1. EUS: “UK Government Letter on Sanctions Post Brexit”
  2. IPWatchdog: “Potential Impact of China’s Export Control Law in Acquisition of Technology Companies”
  1. Covington: “China Publishes Lists and Rules Related to Import and Export of Commercial Encryption”
  2. DLA PIPER “China’s First Measures Under New Export Control Law Target Encryption Products”
  3. Steptoe: “Council of The EU Calls for Due Diligence Rules Along Global Supply Chains”
  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 
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* State/DDTC; Rules; International Traffic in Arms Regulations:
Temporary Suspension, Modification, or Exception to Regulations; [Pub. Date: 11 Dec 2020] (PDF)
* State/DDTC; Notices; Blocking or Unblocking of Persons and Properties; [Pub. Date: 11 Dec 2020] (PDF) (PDF)

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OGS_a22. Commerce/BIS: (No new postings)

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(Source: Treasury/OFAC, 9 Dec 2020) [Excerpts]
Today, on International Anti-Corruption Day, the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) is targeting corrupt actors and their networks across several countries in Africa and Asia. Today’s actions are taken pursuant to Executive Order (E.O.) 13818, which builds upon and implements the Global Magnitsky Human Rights Accountability Act, and targets perpetrators of corruption and serious human rights abuse. “On International Anti-Corruption Day, Treasury remains fully committed to imposing costs on those who facilitate corruption at the expense of the people,” said Deputy Secretary Justin G. Muzinich.   

To raise public awareness for anti-corruption initiatives, International Anti-Corruption Day has been observed annually on December 9 since the United Nations General Assembly adopted the United Nations Convention against Corruption (UNCAC) on October 31, 2003. There are currently 187 States parties to the UNCAC. In addition to sending a message against corrupt behavior, Treasury uses its tools to increase transparency, accountability, and the rule of law. With these designations, Treasury encourages all governments to implement anti-money laundering reforms to address corruption vulnerabilities.  

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(Source: Council of the European Union, 9 Dec 2020)
On 12 November 2020, the Council adopted Decision (CFSP) 2020/1700.
The Council has decided that the restrictive measures should be renewed for a further period of 12 months, until 14 November 2021. The Council also decided to amend the statement of reasons of fourteen persons listed in Annex I to Decision (CFSP) 2017/2074.
The Candidate Countries the Republic of North Macedonia, Montenegro and Albania, and the EFTA countries Iceland and Liechtenstein, members of the European Economic Area, as well as Ukraine, the Republic of Moldova and Georgia 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.

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We reported that the EU Security and Justice Sub-Committee of the House of Lords had written a letter to the Foreign Secretary seeking clarification on UK sanctions policy. He has now responded saying:
1)   The UK and EU will have “independent sanctions policies” from 2021.
2)   The UK will continue to use sanctions for its foreign policy and national security objectives, international cooperation will remain at the heart of sanctions policy, and the UK continue to “coordinate closely with our European and other international partners”.
3)   The UK’s future relationship with the EU “will be based on friendly cooperation between sovereign equals” but they “do not see the need for a Treaty to govern our cooperation”.
4)   The Government will review and report to Parliament every year on the effectiveness of all sanctions regimes, including the new Global Human Rights sanctions, and will review designations every 3 years.
5)   The UK will publish a UK sanctions list including Sanctions Act UK designations at the end of the transitional period (31.12.2020) and work is “underway” to decide which EU listings will be “transitioned into UK law”.
The EU Sub-Committee welcomed this (see response), and will discuss further at its meeting in January 2021 with FCDO Minister Lord Ahmed.

(Source: IPWatchdog, 9 Dec 2020) [Excerpts]
Acquiring intellectual property from China has just become more complicated because of China’s Export Control Law. On October 17, 2020, the Standing Committee of China’s legislature, the National People’s Congress (NPC), passed the Export Control Law of the People’s Republic of China, which went into effect on December 1, 2020. The Export Control Law applies to, among other things, “dual-use items” and “goods, technologies, services and items relating to the maintenance of national security and national interests.”.
These provisions make it likely that cutting-edge technologies China has invested heavily in, such as artificial intelligence and semiconductors, will be subject to China’s export control policy.
It has been less than two months since the Export Control Law passed, but many have speculated how the law will affect U.S. businesses. One of those businesses could be whichever U.S. company ends up acquiring TikTok, if TikTok’s Chinese parent company ByteDance decides to sell


(Source: Covington, 8 Dec 2020)
* Principal Author: Eric Carlson, Esq., 86-21-6036-2503, Covington
On December 2, 2020, China’s Ministry of Commerce (“MOFCOM“), State Cryptography Agency (“SCA“), and the General Administration of Customs (“Customs“) jointly issued three documents (here) related to import and export of commercial encryption items:
  • List of Commercial Encryption Subject to Import Licensing Requirement (“Import List“);
  • List of Commercial Encryption Subject to Export Control (“Export List“); and
  • Procedural Rules on [Applications for] Licenses for the Import and Export of Commercial Encryption (“Procedural Rules“).
The issuance of these lists and procedural rules marks a key step forward implementing both the commercial encryption import and export framework established under the Encryption Law, which took effect on January 1, 2020, and the export control regime under the new Export Control Law, which took effect on December 1, 2020.  (Our previous client alert on the Encryption Law can be found here, and our alert on the Export Control Law can be found here.)  
 The consolidation of previously separate regulatory frameworks under the commercial encryption rules and export control rules could also show a future trend of implementing a more unified system to control the import and export of sensitive data and technologies to and from China.
Under Article 28 of the Encryption Law, importers must obtain a license if the imported commercial encryption item “may impact national security or the public interest” and “provides an encryption protection function.”  The law itself is silent on which agency issues a license, but the law specifically calls for MOFCOM, SCA, and Customs to publish a list of commercial encryption items that fall within the scope of the abovementioned framework.  The release of the Import List specifically addresses this requirement and clarifies what categories of commercial encryption may be subject to the import licensing requirements.
At the same time, under the new Export Control Law, agencies such as MOFCOM must impose export controls on items that are related to the “maintenance of China’s national security and national interests” or the performance of China’s international obligations.   
This Export List is the first control list ever issued under the new Export Control Law.  Moreover, commercial encryption items listed in the Import List and Export List are designated as “dual-use items and technologies,” and the importer and exporter of any such items must submit an application to MOFCOM in order to obtain a license. We explain below the items included in the Import and Export Lists and the procedural steps to obtain a license.
Import and Export List
The Import List includes only four types of commercial encryption hardware:
  • encrypted phones;
  • encrypted fax machines;
  • crypto machines (including crypto cards) [i.e., machines with main function to perform cryptographic computing]; and
  • encryption VPN hardware devices.
The Export List covers a broader range of commercial encryption items:
  • Systems, devices, and components, including:
    • security chips;
    • crypto cards;
    • encryption VPN hardware devices;
    • products for cryptographic key management;
    • security devices used for special purposes (e.g., devices that are used in sectors such as electricity, tax, public security, and financial services and that satisfying certain technical specifications);
    • quantum encryption devices; and
    • devices used to analyze encryption technologies, products, or systems.
  • Devices specifically designed for testing, inspection, and manufacturing of the seven types of items mentioned in the bullet point above.
  • Software specifically designed or improved for the R&D, manufacturing, and use of the commercial encryption items listed in the two bullet points above.
  • Technologies specifically designed or improved for the R&D, manufacturing, and use of the commercial encryption items listed above.
Procedural Requirements for Obtaining the License
Importers and exporters of the commercial encryption items listed on the Import List and Export List must submit an application to MOFCOM through MOFCOM’s provincial branches and provide the following materials to apply for a license:
  • Dual-Use Items and Technologies Import and Export Application Form;
  • IDs of the legal representative, the person mainly responsible for the management, and the person responsible for the application;
  • explanation of the encryption technologies;
  • descriptions of the end user and purpose; and
  • other materials required by MOFCOM.
Upon receipt of the above application materials, MOFCOM and SCA will review and make a decision based on the procedural requirements described in the Regulations on the Management of Import and Export Licenses for Dual-use Items and Technologies, issued by MOFCOM and Custom issued in 2005.  If the application is approved, MOFCOM will issue the Import License or the Export License to the applicant.  The importer or exporter provides the license to Customs when going through Customs procedures.
Violation of the import and export restrictions may be subject to Chinese administrative penalties or criminal liability, if such violation constitutes a crime.

(Source: DLA PIPER, 7 Dec 2020)
* Principal Author: Nathan Bush, Esq., 65-6512-6065, DLA PIPER
China’s new Export Control Law (ECL) took effect on December 1, 2020. The next day, the Ministry of Commerce (MOFCOM), together with the State Cryptography Administration and the General Administration of Customs (China Customs), released a circular entitled Announcement on the Issuance of Import Approval List, Export Control List and Related Administrative Measures for Commercial Encryption (Circular). The circular includes the first list of products and technologies (Initial List) subject to restrictions under the new ECL, focusing on commercial encryption products and technologies.
MOFCOM has yet to issue general measures implementing the ECL, but the initial list may offer a glimpse into its phased enforcement. MOFCOM, China Customs, and other relevant authorities may periodically announce new trade controls on targeted categories of controlled items, superseding existing measures. responsibility for processing export license applications and approval may be gradually centralized under MOFCOM, the lead authority under the ECL. for companies seeking to establish or localize their china export control compliance systems, MOFCOM’s 2007 Guidance on Establishing Internal Export Control Mechanisms provides a useful foundation.
The initial list is not china’s first restriction on the import and export of commercial encryption products. The PRC encryption law, which became effective on January 1, 2020, specifically provides for import licensing procedures and export control measures on commercial encryption products and calls for relevant authorities to develop control lists of such items.
This Circular includes:
1)   a list of four types of items requiring import approval;
2)   a list of nine types of products/equipment as well as related software and technologies that will be placed under export control; 
3)   procedures for the application of import and export licensing approvals.
The Circular will come into effect on January 1, 2021, and will replace prior circulars issued in 2009, 2012, 2013 and 2019.
Under current practice, exporting commercial encryption products requires an export license from the cryptography administrations at the provincial level (including Shenzhen city) or above. The circular replaces those procedures for items on the initial list:
  • MOFCOM will now be the competent authority to review the applications and issue the requisite export license, though it may consult with the cryptography administrations and other relevant authorities such as china customs.
  • The former commercial cryptographic products export license will be replaced by the requisite import and export license for dual-use items and technologies.
  • The Administrative Measures for the Import and Export Permits of Dual-use Items and Technology shall govern matters relating to the license application and approval for the covered products.
  • For any questions about this new circular and the handling of items under the initial list, or any inquiry relating to PRC export control regime, please contact our export controls and economic sanctions practice professionals across offices in Asia.

COM_a310. Steptoe: “Council of The EU Calls for Due Diligence Rules Along Global Supply Chains”

(Source: Steptoe, 9 Dec 2020)
* Principal Author: Stefan Tsakanakis, Esq., 32-2-626-0517, Steptoe
On December 1, 2020 the Council of the EU adopted Conclusions calling on the Commission to launch an Action Plan by 2021 focusing on shaping global supply chains sustainably, promoting human rights, social and environmental due diligence standards and transparency. In April 2020, the Commission already announced its intention to develop a legislative proposal and published a study on due diligence requirements through the supply chain (see our previous client alert).
The Action Plan should include a call for a proposal from the Commission for an EU legal framework on sustainable corporate governance including cross-sector corporate due diligence obligations along global supply chains. An EU framework is likely to foresee binding due diligence obligations and may include a definition of the risk management processes companies will be required to follow to identify, prevent, mitigate and account for its adverse human and labor rights and environmental impacts. Companies will have to ensure that human rights are respected along their entire supply chain and will have to assume responsibility for more than just their direct contractual partners. Those affected by violations of companies’ human rights due diligence obligations will be able to enforce their rights in the courts of EU Member States. The German Council Presidency recently suggested that EU-wide legislation could also improve the quality of voluntary standards and certification on fair wages and universal access to social protection.
Further, the Council asks the Commission to update its 2006 Communication on ‘Promoting decent work for all – the EU contribution to the implementation of the decent work agenda in the world’, which proposes strategies for ensuring that EU policy and action play a greater part in promoting the decent work agenda.
In addition to these initiatives at EU level, the Council calls on the EU Member States to step up their efforts at national level, including through new or updated National Action Plans. The Council points out that such plans should contain a mix of voluntary and mandatory measures and involve workers and other rights-holders from affected groups and communities as well as social partners.
The EU initiative supports the coherent implementation of the UN Guiding Principles on Business and Human Rights, the ILO Tripartite Declaration of Principles concerning Multinational Enterprises and Social Policy and the OECD Guidelines for Multinational Enterprises. Other jurisdictions, including the UK and Canada, are pursuing similar initiatives to address human rights issues in global supply chains.


EN_a111. Bartlett’s Unfamiliar Quotations

(Source: Editor)

* Emily Dickinson (10 Dec 1830 –  15 May 1886; American poet and author who wrote more than 1,700 poems. In the year 1862 alone, she wrote 366 poems.)
  – “Saying nothing… sometimes says the most.”  
* Thomas Holcroft (10 Dec 1745 – 23 Mar 1809; was an English dramatist, poet, and translator. He was sympathetic to the early ideas of the French Revolution and helped Thomas Paine publish the first part of The Rights of Man.)
  – “Be patient, my soul: thou hath suffered worse than this.”
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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 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.

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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