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20-1230 Wednesday “Daily Bugle”

20-1230 Wednesday “Daily Bugle”

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Wednesday, 30 December 2020

  1. Treasury/OFAC: “Notice of Sanctions Action”
  1. Items Scheduled for Future Federal Register Edition
  2. Commerce/BIS: (No new postings)
  3. State/DDTC: (No new postings)
  4. DHS/CBP: “Consolidated Appropriations Act 2021 & End of Restrained Enforcement”
  5. DHS/CBP: “Harmonized System Update (HSU) #2009 of 29 Dec 2020”
  1. Reuters: “UAE Emerges as Hub for Companies Helping Venezuela Avoid U.S. Oil Sanctions”
  1. Steptoe: “Hong Kong Removed as a Separate Destination from China Under the EAR”
  2. Thompson Hine: “BIS Amends Country Groups for Ukraine, Mexico and Cyprus Under the Export Administration Regulations”
  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 

EXIM ITEMS FROM TODAY’S FEDERAL REGISTER

(Source: Federal Register) [Excerpts]
 
85 FR 86650: 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 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 effective dates.

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OGS OTHER GOVERNMENT SOURCES

 

* Justice/ATF; Notices; Guidance:Objective Factors for Classifying Weapons with Stabilizing Braces; Withdrawal; [Pub. Date: 31 Dec 2020] (PDF)

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OGS_a23. Commerce/BIS: (No new postings)

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(Source: DHS/CBP, 29 Dec 2020)
 
This message is to inform the Trade Community of the following U.S. – Mexico – Canada Agreement (USMCA) updates:
 
Consolidated Appropriations Act of 2021
On December 27, 2020, the Consolidated Appropriations Act of 2021 [H.R.133 – 116th Congress (2019-2020), Pub. Law No. citation pending, herein after “the Appropriations Act”] became law. It includes updates to the U.S. – Mexico – Canada Agreement’s (USMCA) treatment of goods entered through foreign trade zones (FTZ) and merchandise processing fee (MPF) refunds on post-importation claims (i.e. 520(d) and reconciliation claims). These changes, contained in the Appropriations Act’s Title VI, USMCA Implementation Act Technical Corrections, Sec. 601, are retroactively effective as of July 1, 2020.
 
(1)  Foreign Trade Zones
Under NAFTA, non-originating goods used in production processes in FTZs could not qualify as originating as a result of that processing.  Specifically, the special rule applicable to FTZs prohibited non-originating goods used in production processes within FTZs from ever qualifying as originating goods even if all conditions under the general rules were otherwise satisfied.
Initially, this prohibition was not incorporated into the USMCA Implementation Act [Pub. Law No: 116-113 (January 29, 2020)]. Title VI, Sec. 601(b) of the Appropriations Act now applies this FTZ prohibition to USMCA preferential treatments claims.    
 
(2)  Merchandise Processing Fees
Title VI, Sec. 601(e) of the Appropriations Act authorizes CBP to refund merchandise processing fees (MPF) for post-importation claims (i.e. 520(d) and reconciliation claims) for USMCA preferential treatment.
 
End of Restrained Enforcement
CBP elected to exercise a period of restrained enforcement, from July 1 through December 31, 2020, on USMCA preferential treatment claims. This was done in order to provide the trade sufficient time to adjust to the new requirements of the Agreement, and in consideration of the business process changes necessary to achieve full compliance. Notice of the restrained enforcement period was included on page 3 of CBP’s USMCA Implementation Instructions, which was posted on June 30, 2020 [CBP Pub. No. 1118-0620; https://www.cbp.gov/document/guidance/usmca-implementation-instructions].
This period of restrained enforcement will conclude on December 31, 2020.
 
Automobiles – Additional Time for Verifications
Please note that while the USMCA’s restrained enforcement period will end on December 31, 2020, CBP also announced in its USMCA Implementing Instructions that from July 1, 2020 to June 30, 2021, for automotive goods, CBP may allow additional time to respond to a verification (CBP Form 28, Request for Information). Automotive goods are defined as all goods under Harmonized Tariff Schedule of the United States headings 87.01 through 87.08, and the following miscellaneous headings40.09; 4009.12; 4009.22; 4009.32; 4009.42; 4010.31; 4010.32; 4010.33; 4010.34; 4010.39; 40.11; 4016.93; 4016.99; 7007.11; 7007.21; 7009.10; 9031.80; 9032.89, per the USMCA Ch. 4 – Rules of Origin – Annex 4B.

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(Source: DHS/CBP, 29 Sep 2020)
 
Harmonized System Update (HSU) #2009 was created on December 29, 2020 and contains 21,982 ABI records and 3,954 harmonized tariff records. Due to the recent HSU, our system is currently up to date and includes the Annual Stage Rate changes and 484(f) changes. Questions or concerns should be directed to Entry Summary, Accounts & Revenue Division (ESAR) at esar@cbp.dhs.gov.

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COM NEWS

(Source: Reuters, 29 Dec 2020) [Excerpts]
 
In June, the United States imposed sanctions on half a dozen oil tankers managed by established shipping firms. It was a major escalation of American attempts to choke off Venezuela’s oil trade.
 
Within weeks, a little-known company based in the United Arab Emirates took over management of several tankers that had been shipping Venezuelan oil. The vessels got new names. And then they resumed transporting Venezuelan crude.
The company, Muhit Maritime FZE, is one of three UAE-based entities identified by Reuters that have shipped Venezuelan crude and fuel during the second half of this year. Their role emerges from an examination of internal shipping documents from Venezuela’s state oil company as well as third-party shipping and vessel tracking data. Tankers managed by the firms have transported millions of barrels of oil produced by state-run Petroleos de Venezuela SA, or PDVSA, since June, according to the internal documents and a publicly available shipping database.

COM COMMENTARY

(Source: Steptoe, 29 Dec 2020)
 
* Principal Author: Wendy Wysong, Esq., 852-37291804, Steptoe & Johnson LLP 
 
In the latest shoe to drop in the escalation of tensions between the United States and China, the Department of Commerce’s Bureau of Industry and Security (BIS) issued a final rule on December 23, 2020, removing Hong Kong as a separate destination under the Export Administration Regulations (EAR). Rather than adding Hong Kong alongside the People’s Republic of China to Country Group D in the Commerce Country Chart, BIS eliminated references to it in all but a few sections of the EAR.
The removal of Hong Kong as a separate destination is a further step toward implementation of Executive Order (EO) 13936, signed July 14, 2020. (85 FR 43413, 7/17/2020). Steptoe’s prior analysis of EO 13936 is available hereEO 13936 directed relevant agencies to amend their regulations to remove differential and preferential treatment for exports, reexports, or transfers (in-country) to or within Hong Kong of all items subject to the EAR when compared to the treatment for such transactions to or within China. The final rule codifies the BIS rule issued July 31, 2020, which required that Hong Kong be treated the same as China in almost all circumstances; that is, Hong Kong would be subject to the same license requirements, license exceptions, and other applicable provisions as China under the EAR (85 FR 45998).
Specifically, in this new rule, BIS removes the entry for Hong Kong from the Commerce Country Chart at Supplement No. 1 to Part 738, since Hong Kong is now to be governed by the entry for China. Most references to Hong Kong in Part 740 of the EAR governing license exceptions were previously removed, consistent with the July 31 final rule. The Hong Kong entities listed separately on the Unverified List, Supplement No. 6 to Part 744, are now merged, alphabetically under the entries for China.
Further, BIS specifically explains, in the new rule, that because Hong Kong is now treated as China in Country Group D:1, Hong Kong will now be subject to a broader application of the end user and end use restrictions in Part 744. Specifically, § 744.17 (controlling the export, reexport, and transfer (in-country) of certain microprocessors and associated software and technology to military end uses and end users) and § 744.21, the Military End Use/End-User Rule (MEU Rule) will apply to Hong Kong. As part of China, Hong Kong will now also be subject to the license requirements under the foreign produced direct product rule for reexports of foreign-produced direct products of US-origin technology and software to Hong Kong pursuant to § 736.2(b)(3), General Prohibition Three. Steptoe has written on changes to the MEU Rule herehere, and here.
The remaining instances where the EAR treat Hong Kong separately do not accord it preferential treatment, but rather are described as supporting US national security and foreign policy objectives, or as recognizing that trade is processed somewhat differently within and through Hong Kong. For example, because Hong Kong has retained its own customs and export control system, certain documents required by the Hong Kong Import and Export Regulations are provided for in the EAR. (§§ 740.2(a)(19)-(20), 748.13).  Further, a People’s Republic of China (PRC) End-User Statement is not required for license applications for exports or reexports to Hong Kong (§ 748.10(a) Note 5). However, the EAR notes that the Electronic Export Information (EEI) filing requirement for China will now apply to Hong Kong, even if the destination filed in EEI is separately listed as Hong Kong. (§ 758.1(b)(10)).

(Source: Thompson Hine, 29 Dec 2020)
 
* Author: Scott E. Diamond, Esq., 1-202-263-4197, Thompson Hine
 
The Department of Commerce’s Bureau of Industry and Security (BIS) issued a final rule on December 28, 2020, in which it amended the Export Administration Regulations (EAR) to revise the Country Group designations for Ukraine, Mexico and Cyprus.  The EAR designates countries in Country Groups (A, B, D and E) which reflect each country’s export control policy, multilateral regime membership, system, and practice.  These Country Groups generally serve as a basis for the availability of certain license exceptions for exports to the listed countries.
In this final rule, BIS moved Ukraine from Country Group D:1 (more restrictive license requirements) to Country Group B (less restrictive). For Ukraine, the final rule notes that the country is a member of the four multilateral export control regimes (Australia Group; Missile Technology Control Regime; Nuclear Suppliers Group; Wassenaar Arrangement), and that it works with the United States on a variety of export control matters.  The change in group allows a less restrictive  licensing policy for the export and reexport to Ukraine of items listed on the Commerce Control List (CCL), which will no longer be subject to the case-by-case licensing policy, but instead will be subject to a licensing policy of approval.
In the final rule, BIS added Mexico and Cyprus in Country Group A:6 (making them available for License Exception Strategic Trade Authorization (STA)) although both also remain on Country Group B as well.
For Mexico, the final rule notes that the country is a member of three multilateral export control regimes (Australia Group; Nuclear Suppliers Group; Wassenaar Arrangement), and that it has national security interests and policies compatible with those of the United States.   For Cyprus, the final rule notes that the country is a member of the European Union (EU) and that the EU’s export control regulations implement the controls of the four multilateral export control regimes and apply to all members.
Importantly, Cyprus also remains listed in Country Group D:5 (U.S. Arms Embargoed Countries), where exports and licensing requirements continue to necessitate a review of and compliance with the restrictions on items in a 9×515 or ”600 series” Export Control Classification Numbers (ECCN).

These Country Group changes were effective as of December 28, 2020  

EN EDITOR’S NOTES

EN_a110. Bartlett’s Unfamiliar Quotations

(Source: Editor)

 
* Rudyard Kipling (Joseph Rudyard Kipling; 30 Dec 1865 – 18 Jan 1936; was an English journalist, short-story writer, poet, and novelist. He was born in India, which inspired much of his work.  Kipling’s works of fiction include The Jungle Book, Kim, and many short stories, including “The Man Who Would Be King.”)
  – “All the people like us are We, and everyone else is They.”
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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. 
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 Bartlett’s Annotated FTR “BAFTR” is 15 Dec 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 Bartlett’s Annotated ITAR (BITAR) is 11 Dec 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 System Update #2009 of 29 Dec 2020.  
  – HTS codes for AES are available here.
  – HTS codes that are not valid for AES are available here.
 

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