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20-1214 Monday “Daily Bugle”

20-1214 Monday “Daily Bugle”

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Monday, 14 December 2020

  1. Treasury/OFAC: “Notice of OFAC Sanctions Actions”
  1. Items Scheduled for Future Federal Register Edition
  2. Commerce/BIS: (No new postings)
  3. State/DDTC: 2021 DECCS User Group
  4. EU Commission Amends Council Regulation (EC) No 428/2009 Setting Up a Community Regime for The Control of Exports, Transfer, Brokering and Transit of Dual-Use Items
  1. EUS: “EU Council Agrees to Adopt Additional Sanctions on Turkey”
  2. Reuters: “Trump Administration Moves Forward with $1 Billion Moroccan Arms Deal”
  1. Freshfields: “5 Reasons Why Your Trade Compliance Program Shouldn’t Be on Autopilot”
  2. Steptoe: “Financial Institutions Spared, for Now, from Secondary Sanctions after Treasury Department Issues ‘Null Report’ Under Section 5(b) of the Hong Kong Autonomy Act”
  3. Wilmer Hale: “What a Biden Administration Will Mean for National Security Reviews of Foreign Investments”
  1. Monday List of Ex/Im Job Openings: 74 Jobs Available – 10 New Job Openings This Week
  2. M. Faucette and T. Gronewold Replace J. Reeves at F.A.I.R.
  1. FCC Academy Presents: 2 Feb 2021; “U.S. Export Controls – The ABC of 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 

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EXIM ITEMS FROM TODAY’S FEDERAL REGISTER

(Source: Federal Register) [Excerpts]
 
85 FR 80889: Notice
 
* AGENCY:Office of Foreign Assets Control, Treasury.
* ACTION:Notice.
* SUMMARY:The 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.

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OGS OTHER GOVERNMENT SOURCES

(Source: Federal Register)
 

* Treasury/OFAC; Notices; Blocking or Unblocking of Persons and Properties; [Pub. Date: 15 Dec 2020] (PDF)
 
* State/DDTC; Notices; Sanctions Actions:Reimposing Certain Sanctions with Respect to Iran; [Pub. Date: 15 Dec 2020] (PDF) (PDF)

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OGS_a23. Commerce/BIS: (No new postings)

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DDTC is excited to announce the first DECCS User Group for 2021.
What is it?
  • The mission of the Defense Export Controls and Compliance System (DECCS) User Group is to allow individual industry users to provide feedback on DECCS by establishing and maintaining a forum for active and regular communication between the users of DECCS and the Directorate of Defense Trade Controls (DDTC)
  • A DECCS User Group Member will have the opportunity to:
— Identify functional and technical challenges faced by industry when interacting with DECCS.
— Provide his or her feedback and input for future DECCS enhancements and system support initiatives.

  • The DECCS User Group was approved by OMB under the authority of “Generic Clearance for the Collection of Routine Customer Feedback” (OMB Control Number: 1405-0193).
Who should be involved?
  • DDTC is looking for a diverse group of up to 50 industry volunteers (representatives of companies, government agencies and third-party organizations) enrolled with DECCS who can provide the end-user point-of-view on issues related to the system.
  • Open to U.S.-based and international members.
What is the time commitment?
  • DDTC plans to kick-off the group on Tuesday, January 26, 2021 at 10:30AM EST via a virtual forum such as WebEx.
  • Initial plan is for the User Group to span one calendar year.
How to get involved:

  • To express your interest, email PM_DDTCProjectTeam@state.gov by COB December 23, 2020 and provide your name & company/government affiliation (as applicable).
  • As a reminder, we must cap the group at no more than 50 participants and the selection process is at DDTC’s discretion.
  • DDTC will email all selected participants by January 11, 2021 letting them know the final make-up of the 2021 DECCS User Group.

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OGS_a45. EU Commission Amends Council Regulation (EC) No 428/2009 Setting Up a Community Regime for The Control of Exports, Transfer, Brokering and Transit of Dual-Use Items

 
The European Commission, Having regard to the Treaty on the Functioning of the European Union, Having regard to Council Regulation (EC) No 428/2009 of 5 May 2009 setting up a Community regime for the control of exports, transfer, brokering and transit of dual-use items, and in particular Article 15(3) thereof,
 
Whereas:
 
(1) Regulation (EC) No 428/2009 requires dual-use items to be subject to effective control when they are exported from or in transit through the Union, or are delivered to a third country as a result of brokering services provided by a broker resident or established in the Union.
 
(2) Annex I to Regulation (EC) No 428/2009 establishes the common list of dual-use items that are subject to controls in the Union. Decisions on the items subject to controls are taken within the framework of internationally agreed dual-use controls including the Australia Group, the Missile Technology Control Regime, the Nuclear Suppliers Group, the Wassenaar Arrangement and the Chemical Weapons Convention.
 
(3) The list of dual-use items set out in Annex I to Regulation (EC) No 428/2009 needs to be updated regularly in order to ensure full compliance with international security obligations, to guarantee transparency, and to maintain the competitiveness of economic operators. The control lists adopted by the international non-proliferation regimes and export control arrangements has been changed during 2019 and until end of February 2020, and therefore Annex I to Regulation (EC) No 428/2009 should be amended accordingly. In order to facilitate references for export control authorities and economic operators, Annex I to that Regulation should be replaced.
 
(4) Annexes IIa to IIf to Regulation (EC) No 428/2009 establishes Union General Export Authorisations.
 
(5) Annex IIg to Regulation (EC) No 428/2009 establishes a list of dual-use items that are to be excluded from the scope of national general export authorisations and Union General Export Authorisaitions.
(6) Annex IV to Regulation (EC) No 428/2009 establishes authorisation requirements for certain intra-Community transfers.
 
(7) The amendments to the list of dual-use items set out in Annex I necessitate consequential amendments to Annexes IIa to IIg and Annex IV for dual-use items which are also listed in Annexes IIa to IIg and Annex IV.
 
(8) Regulation (EC) No 428/2009 empowers the Commission to update the list of dual-use items set out in Annex I as well as Annexes IIa to IIg and Annex IV by means of delegated acts, in conformity with the relevant obligations and commitments, and any modifications thereto, that Member States have accepted as members of the international non-proliferation regimes and export control arrangements, or by ratification of relevant international treaties.
 
(9) Considering the importance of ensuring full compliance with international security obligations as soon as practically possible, this Regulation should enter into force on the day following that of its publication.
 
(10) Regulation (EC) No 428/2009 should therefore be amended accordingly,
 
HAS ADOPTED THIS REGULATION: Article 1 Council Regulation (EC) No 428/2009 is amended as follows: (1) Annex I is replaced by the text set out in Annex I to this Regulation. (2) Annexes IIa to IIg are replaced by the text set out in Annex II to this Regulation. (3) Annex IV is replaced by the text set out in Annex III to this Regulation. Article 2 This Regulation shall enter into force. …
 
 

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COM NEWS

 
Following a meeting of the EU Council on 10 – 11 December 2020, the EU has adopted conclusions, which say that it has agreed to adopt additional listings within its existing sanctions framework in view of Turkey’s continued unauthorised drilling activities in the Eastern Mediterranean, including in Cyprus’ Exclusive Economic Zone. The Council has invited the High Representative and the Commission to submit a report by March 2021 on the current EU-Turkey political, economic, and trade relations, and on proposals for designations and other instruments at the EU’s disposal.
The EU expressed its regret at Turkey’s “unilateral and provocative activities” and “insists on sustained de-escalation as to allow for the early resumption and smooth continuation of direct exploratory talks between Greece and Turkey”. The conclusions also say that the EU will seek to coordinate with the US on these matters.
2 Turkish executives of the Turkish Petroleum Corporation who are said to be responsible for unauthorised hydrocarbon exploration in the Eastern Mediterranean are currently subject to EU sanctions (see post).

(Source: Reuters, 11 Dec 2020) [Excerpts]
 
President Donald Trump’s administration moved forward with $1 billion in sales of drones and precision-guided weapons to Morocco on Friday, sending a notice to Congress about the potential deals, according to sources familiar with the notification.
The deal includes four MQ-9B SeaGuardian drones made by privately-held General Atomics, and Hellfire, Paveway and JDAM precision-guided munitions made by Lockheed Martin, Raytheon and Boeing, the sources said.
Reuters was first to report on Thursday that Washington was negotiating the sale and would notify Congress shortly. …
 
Congress is notified about major international weapons deals and given the opportunity to review them before they go through. Under U.S. weapons export law, members of Congress can attempt to block such sales by offering resolutions of disapproval, but sources said that was not expected in this case. …

COM COMMENTARY

(Source: Freshfields, 9 Dec 2020)
 
* Principal Author: Nabeel Yousef, Esq., 1-202-777-4563, Freshfields
 
As companies in the aviation industry continue to deal with the commercial challenges posed by COVID-19, it is as important as ever that compliance remains a key priority.  Attention to effective risk-based compliance can go a long way toward avoiding compliance headaches down the line, particularly when compliance controls are tailored to the specialized sanctions and export controls risks facing the aviation industry.  Set out below are five key trade compliance themes to help companies navigate these risks and avoid being the target of a future sanctions or export controls enforcement action.
 
Considered “high risk,” the aviation industry is an enforcement focus for regulators
Commercial aircraft are a particularly valuable commodity for countries and persons targeted by sanctions, both as a lifeline to the outside world, and as an instrument to perpetrate human rights abuses and authoritarian practices.  In a July 2019 advisory directed at the civil aviation industry, OFAC warned of the particularly sophisticated and deceptive schemes used by sanctioned parties to exploit legitimate companies in the aviation industry.  OFAC has made clear that it is not just the manufacturers and distributors of aircraft parts and equipment that are within its enforcement crosshairs – industry players involved in freight booking, reservation and ticketing services, maintenance, airline grounds services, catering, interline transfer or codeshare arrangements, and refueling can also face enforcement if done for or on behalf of a sanctioned person. 
For example, a series of recent enforcement actions against parties found to have provided services to Iran’s Mahan Air – listed as a Specially Designated Global Terrorist organization in 2011 – demonstrate that regulators are using all tools at their disposal to vigorously police sanctions threats in the aviation industry.  The enforcement actions include a February 2020 OFAC settlement with a Switzerland-based civil air transportation technology company for providing commercial telecommunications network and information technology services (including reservation-related services, flight planning and border management services, baggage claim software, cargo movement software, etc.); the May 2020 sanctions designation of a China-based company for acting as a general sales agent; the August 2020 sanctions designations of two UAE-based companies and an individual for acting as freight forwarding agents and suppliers of aviation items; and an August 2020 BIS temporary denial order against six parties in Indonesia for operating an international procurement network of aircraft parts suppliers and repair facilities to acquire and repair US-origin goods.
 
Regulators hold aviation companies to a high compliance standard
OFAC and other regulators expect companies to take the industry risks seriously, which means that basic compliance programs might not satisfy the compliance expectations that regulators have for aviation companies.  A November 2019 OFAC settlement, for example, demonstrates the importance of maintaining effective risk-based compliance controls that are tailored to the elevated sanctions concerns prevalent in the airline industry, as well as the great expectations from regulators that aviation companies will leverage their unique access to data to ensure compliance with applicable rules.
In the November 2019 settlement, the US aviation investment manager involved in acquiring, refurbishing, marketing, and leasing commercial jet aircraft and related components paid a $210,600 penalty to settle 12 violations of the Sudanese Sanctions Regulations.  The conduct at issue concerned three aircraft engines leased by the company to a UAE company under a lease agreement that specifically prohibited the lessee from maintaining, operating, flying, or transferring the engines to any countries subject to US sanctions.  In violation of the agreement, the UAE company subleased the engines to a Ukrainian airline, which then installed the engines on an aircraft that it operated on behalf of Sudan Airways, a sanctioned person at the time the activity took place.  OFAC found that the US investment manager’s compliance efforts were not sufficient – as a large, sophisticated operator in the industry, it should have done more to monitor the lessee and sublessee’s adherence to the lease provision requiring compliance with US sanctions laws, including by obtaining US export compliance certificates from the parties.
 
US export controls and sanctions are as nimble and far reaching as international air travel
A significant proportion of aviation-related goods, software, and technology originate from the United States or contain enough US-origin content to bring them within the ambit of US export controls.  The simple act of flying an aircraft or cargo anywhere outside of the United States, or from the United States to another locale, constitutes an export, re-export, or transfer that could trigger licensing requirements or other export restrictions.  As can be seen from some of the enforcement examples noted above, export controls are closely linked to sanctions and must be addressed as part of a robust risk-based compliance program.
 
The regulatory framework is constantly changing
The aviation ecosystem is deeply intertwined with US national security.  As a result, the sanctions and export controls rules regulating this industry are frequently changing to account for shifting US national security priorities and newly identified vulnerabilities.  Some of these developments may require companies to adjust the way they do business, such as the June 2019 BIS rule change that terminated a longstanding allowance for private and corporate general aviation aircraft flying to Cuba on temporary sojourn.  Others may subject lightly-regulated companies to significant new regulatory restrictions overnight, such as the much-anticipated new export controls on emerging technologies that are essential to US national security.  The full list of emerging technologies is still forthcoming, but the small handful of emerging technologies that have been identified so far already includes a category of aircraft.  It is critical for companies in the aviation industry to monitor these changes and ensure that their compliance controls are living instruments that are constantly updated to reflect evolving rules and restrictions.
 
Exporters of civil aviation products and technologies to China face increased compliance burdens
A June 2020 BIS rule change expanded the scope of BIS’s military end use / military end user rule to impose new due diligence obligations and licensing restrictions for exporters of certain US-origin items to China (as well as Russia and Venezuela).  The rule change is intended to target trade with companies involved in China’s Civil-Military Fusion strategy, a great focus of which is aviation.  Exporters of certain export-controlled items – which include covered navigation systems, avionics equipment, aircraft, gas turbine engines, and related parts, equipment, software, and technology – must now exercise due diligence to determine whether the end recipient in China qualifies as a military end user.  A license is required if the exporter has knowledge or reason to know that the item is destined for a military end user, and BIS will review license applications with a presumption of denial.
 
Conclusion

The aviation industry is not a stranger to regulation and high standards, so in this regard the United States’ approach to trade compliance and enforcement should sound familiar. Aviation companies should take the opportunity to assess their trade compliance programs in light of the rapid regulatory changes, increased attention from enforcement agencies, and expanding reach of export control and sanctions rules.

(Source: Steptoe, 13 Dec 2020)
 
* Principal Author: Nicholas Turner, Esq., 852-5998 7559, Steptoe & Johnson HK
 
On December 12, 2020, the US Treasury Department’s Office of Foreign Assets Control (OFAC) issued a much-anticipated report under Section 5(b) of the Hong Kong Autonomy Act (HKAA) that-to the relief of non-US financial institutions, including those in Hong Kong-stated the Treasury Department had not identified any foreign financial institution (FFI) at risk of secondary sanctions under the HKAA at this time.
 
Background
Under Section 5(b) of the HKAA, Congress directed the Treasury Department to identify any FFI that knowingly conducted a significant transaction with a person identified by the State Department in a report under Section 5(a) of the HKAA. The State Department issued its report on October 14, 2020, identifying ten individuals, including Hong Kong’s Chief Executive and other prominent government officials.
(For more information about the HKAA and the State Department’s Section 5(a) report, see our blog post of October 15, 2020, “Update: Hong Kong Financial Institutions Face US Secondary Sanctions after State Department Issues First Report under Hong Kong Autonomy Act.”)
Under the HKAA, FFIs identified in a Section 5(b) report could be subject to a “menu” of ten secondary sanctions described in Section 7 of the HKAA. Those sanctions would become mandatory after one year of the report’s issuance.
 
Ongoing Reporting
Since the issuance of the October 14 report, FFIs in Hong Kong have been assessing their risks and, in some cases, minimizing their exposure to the ten individuals, in anticipation of the Treasury Department’s Section 5(b) report. With the Treasury Department’s “null report,” the risk of secondary sanctions is mooted for the time being.
According to the Section 5(b) report, the Treasury Department, “in consultation with interagency partners, has conducted regular searches of all available sources of information, including classified and unclassified holdings, for any potential significant transactions by FFIs with the foreign persons identified in the Section 5(a) Report.” However, those “efforts have not yielded any information on significant transactions with these foreign persons.”
In accordance with the HKAA, both the Section 5(a) and Section 5(b) reports could be updated at any time based on new findings. In its Section 5(b) report, the Treasury Department stated it “will continue to actively monitor this type of activity” and “will update the Section 5(b) Report in an ongoing manner.”
 
Blocking Sanctions
Separately, OFAC has designated a total of 29 PRC and Hong Kong government officials as Specially Designated Nationals (SDNs) under Executive Order 13936, including 14 PRC officials targeted on December 7, 2020. Those individuals continue to be subject to blocking sanctions, and FFIs could face OFAC enforcement risk for transactions subject to US jurisdiction that involve the individuals, their property, or interests in property.

(Source: Wilmer Hale, 10 Dec 2020)
 
The administration of President-elect Joe Biden and Vice President-elect Kamala Harris will break sharply from the policies of the Trump Administration in many ways. But one area where we expect more continuity than change is the recent, steady growth of regulatory scrutiny of foreign investments in the United States.
 
Two current trends make clear that foreign investment scrutiny through the Committee on Foreign Investment in the United States (CFIUS or Committee) will continue to require significant attention by all parties involved with deals resulting in the acquisition by foreign persons of equity interests in US businesses.
 
First, the COVID-19 pandemic, the serious supply chain vulnerabilities it has exposed and widespread agreement in the government that foreign ambitions to control next-generation technologies will disadvantage the United States have cemented a bipartisan consensus around more rigorous government reviews of foreign investments into critical technologies and related fields.[FN/1] While a Biden Administration may seek to lower the temperature and restore regular order to the Sino-American relationship, President-elect Biden has expressed no interest in curtailing the foreign investment review process.
During the campaign, Biden called for new approaches to supply chain security so that neither the United States nor its allies will be dependent on critical supplies from China and Russia.[FN/2] Biden also authored an article for Foreign Affairs magazine laying out his foreign policy vision and calling for the United States “to get tough with China.” He warned:
If China has its way, it will keep robbing the United States and American companies of their technology and intellectual property. It will also keep using subsidies to give its state-owned enterprises an unfair advantage-and a leg up on dominating the technologies and industries of the future.[FN/3]
 
Incoming Biden Administration officials have echoed these positions. For example, intended Secretary of State nominee Anthony Blinken said in September 2020 that the United States must work with allies to set similar policies on investment restrictions, technical standards and export controls to ensure an “ecosystem that protects and promotes liberal democratic values.“[FN/4] And National Security Advisor designate Jake Sullivan wrote last year that the United States needs to “safeguard its technological advantages in the face of China’s intellectual property theft, targeted industrial policies, and commingling of its economic and security sectors.“[FN/5] Doing so will entail “enhanced restrictions” on “technology investment and trade in both directions.” He added, though, that “these efforts should be pursued selectively rather than wholesale, imposing curbs on technologies that are critical to national security and human rights and allowing regular trade and investment to continue for those that are not.“[FN/6]
These are not outlier views in Washington. In December 2020, US Senators from both parties raised the alarm that Chinese state-backed funds are scouring the United States for investments in critical technologies, notwithstanding recent legislation (discussed below) to make such deals harder. [FN/7]
 
Second, with the passage of 2018 CFIUS reforms, Congress started a process through which the bureaucracy focused on national security review of foreign investment in the United States has grown substantially, and CFIUS has been given greater authority to conduct such reviews.
 
With more government officials focused on national security threats arising from foreign investment, more deals will be impacted by CFIUS activity, and the risk of CFIUS attention on any particular deal will generally increase for the foreseeable future. As such, nearly all corporate transactions with foreign acquirors or investors merit some level of CFIUS risk analysis to determine whether a deal triggers a mandatory filing or presents a risk of CFIUS attention. Concerns about Chinese acquirors are not limited to acquirors based in China. CFIUS may review the Chinese involvement of foreign acquirers merely with operations in China but a headquarters elsewhere. Looking ahead, China-related deals, especially those involving the health sector, advanced technology or information about US persons, will remain particularly fraught for the foreseeable future-whether closing occurs before
or after January 20, 2021.
 
CFIUS Has Expansive Authority to Review Foreign Investment
With overwhelming bipartisan support (a vote of 85-10 in the Senate and 400-2 in the House).[FN/8] Congress passed the Foreign Investment Risk Review Modernization Act (FIRRMA) in 2018 and substantially expanded the jurisdiction of CFIUS.[FN/9] CFIUS effectively has three separate jurisdictional regimes: a voluntary regime, a mandatory regime and a new real estate regime.
For the voluntary CFIUS regime, the Committee has the power to review:
  • Any control transaction to determine the effect of a foreign person having control of a US business on the national security of the United States; or
  • Any covered investment, which is any direct or indirect investment by a foreign person in a technology, infrastructure or data US business that does not result in control of the US business but affords the foreign person with:
    • Access to material nonpublic technical information, personal data or critical infrastructure information;
    • Membership or observer rights on the board of the US business; or
    • Any other involvement in the operation of the US business, other than with respect to voting shares.
 
Although CFIUS notice is not mandatory in these circumstances, CFIUS has broad authority to initiate an investigation of any covered transaction over which it has jurisdiction that has not been notified to CFIUS and that may raise national security issues.
The mandatory regime is different. Pursuant to an October 15, 2020 revision of CFIUS regulations, transaction parties must formally notify CFIUS before the closing of two types of transactions. First, a mandatory notice to CFIUS is required for a control or covered investment by a foreign person into a US company that develops, designs, tests, fabricates or produces export-controlled technology if the technology at issue would require a “US regulatory authorization” to share with the country of the foreign investor. The term “US regulatory authorization” means:
  • A license or other approval issued by the US Department of State under the International Traffic in Arms Regulations (ITAR);
  • A license from the Department of Commerce under the Department of Commerce’s Export Administration Regulations (EAR);
  • A specific or general authorization from the Department of Energy relating to regulations governing assistance to foreign atomic energy activities; or
  • A specific license from the Nuclear Regulatory Commission under the regulations governing the export or import of nuclear weapon material. [FN/10]
 
Second, CFIUS regulations currently require the filing of a declaration for certain covered control transactions or covered investments where a foreign government has a “substantial interest” in a foreign person that will, in turn, acquire a substantial interest in US businesses (called Technology, Infrastructure or Data (TID) US Businesses) associated with critical technologies, critical infrastructure in the United States or large data sets of US person information.
 
The real estate regime gives CFIUS special authority to review the foreign acquisition of lease or ownership interests in property in proximity to over 100 specially identified federal installations.
 
Together, these CFIUS rules give the federal government substantial power to scrutinize foreign investment in the United States. There’s no reason to think the rules will be changed in any material way in the Biden Administration and, more likely, the new administration will remain focused on using all the tools available to protect US technological leadership in strategically significant technologies. For example, on 5G cell technology and artificial intelligence in particular, Biden lamented during the campaign that “other nations are devoting national resources to dominating their development and determining how they are used.“[FN/11] In response, Washington “needs to do more to ensure that these technologies are used to promote greater democracy and shared prosperity, not to curb freedom and opportunity at home and abroad,” he wrote, calling for the United States and its democratic allies to develop private-sector-led 5G networks.[FN/12]
 
CFIUS Is Devoting More Resources to Foreign Investment Reviews
In July 2020, the House Appropriations Subcommittee on Financial Services and General Government submitted a report (H. Rept. 116-456) accompanying the Financial Services and General Government Appropriations Act, 2021 (H.R. 7668), which is pending before Congress. The bill would provide roughly $24 billion in new discretionary budget authority for fiscal year 2021 to fund the Department of the Treasury, the judiciary and various independent agencies.
Of note, the Committee recommended that Congress approve a $44 million budget for operations related to FIRRMA, matching the request proffered earlier this year by the Department of the Treasury. The budget would include $20 million for the “CFIUS Fund,” which solely supports CFIUS’s activities, and $24.1 million for “Departmental Offices-Salaries and Expenses.” The $24.1 million will enable CFIUS to hire an “additional” 39 full-time employees by the end of fiscal year 2021. These new personnel will “support the anticipated growth in the CFIUS caseload.“[FN/13]
 
The Committee report adds that “[t]he Committee supports the Department’s efforts to hire and fully staff operations for CFIUS activities, including its critical role in reviewing transactions that may pose a national security threat. The Committee notes the importance of closely monitoring anticompetitive consolidations that hurt small business and often result in artificial price inflation.“[FN/14]
 
Conclusion
Regulatory scrutiny of foreign investment in the United States has been increasing for several years, and that trend is likely to continue in a Biden Administration, which has already called for a reshoring of supply chains and voiced suspicion of Chinese technological theft. CFIUS’s expanded jurisdiction, proposed congressional funding for increased operations and staffing, and new regulations portend increasing regulatory scrutiny of such transactions for national security threats well into the next administration.
 
[FN/1] See Jamie Gorelick, Stephen W. Preston and Matthew F. Ferraro, Decoupling From China: Part 1, LAW 360 (Oct. 28, 2020).
[FN/2] The Biden Plan to Rebuild U.S. Supply Chains and Ensure the U.S. Does Not Face Future Shortages of Critical Equipment.
[FN/3] Joseph R. Biden, Jr., Why America Must Lead Again: Rescuing U.S. Foreign Policy After Trump, 99 FOREIGN AFFAIRS 64, 70 (March/April 2020).
[FN/4] Jeanne Whalen, Biden Likely to Remain Tough on Chinese Tech Like Huawei, But With More Help From Allies, WASHINGTON POST (Nov. 16, 2020).
[FN/5] Kurt M. Campbell and Jake Sullivan, Competition Without Catastrophe, 98 FOREIGN AFFAIRS 96, 106 (September/October 2019).
[FN/6] Id.
[FN/7] Mercedes Ruehl, James Kynge and Kiran Stacey, Chinese State-backed Funds Invest in US Tech Despite Washington Curbs, FINANCIAL TIMES (Dec. 2, 2020).
[FN/8] See H.R. 5841 (2018); H.R. 5515 (2018).
[FN/9] This section is adapted from Gorelick, et al., Decoupling from China: Part 1.
[FN/10] 31 C.F.R. § 800.254 (as amended (citations removed)).
[FN/11] Biden, Why America Must Lead Again, at 71.
[FN/12] Id.
[FN/13] H.R. Rep. No. 116-456, at 14 (2020) (to accompany H.R. 7668).
[FN/14] Id.; see also Budget Provides Insights on CFIUS Plans, Strategy, Staffing and More, FOREIGN INVESTMENT WATCH (Sept. 10, 2020).

TE EX/IM MOVERS & SHAKERS:

MS_a111. Monday List of Ex/Im Job Openings: 84 Jobs Available – 10 New Job Openings This Week

* ABB; Greenville, SC; Trade Compliance Manager; Job ID: US76035798_E1
* AccruePartners; Corning, NY; Transportation Analyst
* Autodesk; San Francisco, CA; Corporate Counsel, Trade Compliance; Job ID: 20WD43556
* Bruker; Billerica, MA; Commercial Contracts Manager
* Infineon; San Jose, CA; Staff Specialist Export Control; Job ID: 310632
* Infineon; El Segundo, CA; Senior Specialist – Import/Export Analysis; Job ID: 310341
* Infineon; Singapore, SI; Specialist – Export Control; Job ID: 310747
* Infineon; Beijing, China; Senior Specialist-Export Control (Trade Compliance); Job ID: 310466
* Infineon; Shenzhen, China; Senior Specialist-Export Control(Trade Compliance); Job ID: 310467
* Kuehne-Nagel; Memphis, TN; Sea Export Coordinator – IP Team; Job ID; req59688

   

Click here for the full list.   

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MS_a212. M. Faucette and T. Gronewold Replace J. Reeves at F.A.I.R.

(Source: Tracy Gronewold)
 
After 10 years as Executive Director at the F.A.I.R. Trade Group, Johanna Reeves, of Reeves & Dola LLP, departs F.A.I.R. and is replaced by Michael Faucette of Wiley Rein, LLP, as Executive Director and Tracy Gronewold of MLM International as Deputy Executive Director.
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TE EX/IM TRAINING EVENTS & CONFERENCES

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 EDITOR’S NOTES

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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.
 
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): Clarification on Kimberley Process. Latest update of Bartlett’s Annotated FTR (BAFTR): 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. 

 11 Dec 2020: 85 FR 79836: Extension of temporary suspensions, modifications and exceptions. The latest edition of the BITAR

 is 11 Dec 2020.  

 

 
DOT FOREIGN ASSETS CONTROL REGULATIONS (OFAC FACR): 31 CFR, Parts 500-599, Embargoes, Sanctions, Executive Orders
International Criminal Court-Related Sanctions 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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