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20-1231 Thursday ” Daily Bugle “

20-1231 Thursday “Daily Bugle”

[The Daily Bugle will not be published tomorrow, New Year’s day]
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Thursday, 31 December 2020

  1. Justice/ATF: “Objective Factors for Classifying Weapons With ‘Stabilizing Braces’; Withdrawal of Guidance”
  1. Items Scheduled for Future Federal Register Edition
  2. Commerce/BIS: (No new postings)
  3. State/DDTC: (No new postings)
  4. Commerce/Census: “Schedule B and Harmonized Tariff Schedule (HTS) Updated in the Automated Export System (AES)”
  5. Treasury/OFAC: BitGo to Pay $98,830 to Settle Allegations of OFAC Sanctions Violations
  6. Treasury/OFAC: “Treasury Designates Venezuelan Officials Involved in Unjust Trial of the Citgo 6”
  7. Singapore Customs: “Claiming of Preferential Tariff Treatment for Imports from The United Kingdom to Singapore Under the United Kingdomsingapore Free Trade Agreement (UKSFTA)”
  1. EUS: “US Guidance on Communist Chinese Military Company Sanctions”
  1. Holland & Knight: “BIS Amended the EAR to Treat Hong Kong the Same as China”
  2. Steptoe: “BIS Amends Country Group Designations for Ukraine, Mexico, and Cyprus Under the EAR”
  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]
 
* AGENCY: Bureau of Alcohol, Tobacco, Firearms, and Explosives, Department of Justice.
* ACTION: Notice; withdrawal.
* SUMMARY: The Bureau of Alcohol, Tobacco, Firearms, and Explosives (“ATF”) is announcing the withdrawal of a notice and request for comments entitled “Objective Factors for Classifying Weapons with `Stabilizing Braces’,” that was published on December 18, 2020.
* DATES:The withdrawal is effective December 31, 2020.
* ADDRESSES:This Notice also will be made available on the ATF website (www.atf.gov).

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OGS OTHER GOVERNMENT SOURCES

 

* Treasury/OFAC; Notices; Blocking or Unblocking of Persons and Properties; [Pub. Date: 4 Jan 2021] (PDF)
 
* Dep of State; Notices; Global Magnitsky Human Rights Accountability Act Annual Report; [Pub. Date: 4 Jan 2021] (PDF)

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OGS_a23. Commerce/BIS: (No new postings)

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(Source: Global Reach Blog, 30 Dec 2020) [Excerpts]
 
Effective immediately, the Schedule B and Harmonized Tariff Schedule (HTS) tables have been updated to accept the changes to the January 1, 2021 codes.
AES will accept shipments with outdated codes during a grace period for 30 days beyond the expiration date of December 31st, 2020. Reporting an outdated code after the 30-day grace period will result in a fatal error.
The ACE AESDirect program has been updated with the 2021 codes and will accept shipments with outdated codes during the grace period.
 
The 2021 Schedule B and HTS tables are available for downloading at:

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(Source: Treasury/OFAC, 30 Dec 2020)
 
The U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) today announced a settlement with BitGo, Inc. (“BitGo”), a technology company based in Palo Alto, California, that implements security and scalability platforms for digital assets and offers non-custodial secure digital wallet management services. BitGo agreed to remit $98,830 to settle its potential civil liability for 183 apparent violations of multiple sanctions programs. The apparent violations were processed between March 10, 2015 and December 11, 2019 on behalf of persons located in the Crimea region of Ukraine, Cuba, Iran, Sudan, or Syria that were using BitGo’s non-custodial secure digital wallet management service.  New information on OFAC Civil Penalties and Informal Settlements is now available.

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(Source: Treasury/OFAC, 30 Dec 2020) [Excerpts]
 
Today, the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) designated Venezuelan judge Lorena Carolina Cornielles Ruiz and Venezuelan prosecutor Ramon Antonio Torres Espinoza, the Venezuelan government officials who presided over and prosecuted the November 2020 trial and sentencing of six U.S. persons in Venezuela. The six U.S. persons, known as the “Citgo 6,” are Citgo executives who were unjustly imprisoned in Venezuela in November 2017 after being lured to Caracas under false pretenses. The trials of each of the executives were based on politically motivated charges and marred by a lack of fair trial guarantees. Media and human rights groups denounced the treatment of the executives and were denied access to the trials.
 
“The unjust detention and sentencing of these six U.S. persons further demonstrates how corruption and abuse of power are deeply embedded in Venezuela’s institutions,” said Secretary Steven T. Mnuchin. “The United States remains committed to protecting its citizens and targeting those who contribute to the illegitimate Maduro regime’s usurpation of power in Venezuela.”
These individuals were designated pursuant to Executive Order (E.O.) 13692, as amended.

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(Source: Singapore Customs, 31 Dec 2020) [Excerpts]
 
The UKSFTA will take effect from 1 Jan 2021, 7.00am Singapore Standard Time (SST)via provisional application. The EU-Singapore Free Trade Agreement (EUSFTA) will then cease to apply to UK-Singapore Trade. The UKSFTA continues to allow Singapore and UK companies to enjoy the same EUSFTA benefits when trading between the two countries, which includes preferential tariff treatment for exports of Singapore-originating goods to the UK as well as for imports of UKoriginating goods entering into Singapore. This circular outlines the procedures for claiming preferential tariff treatment on originating goods imported from the UK into Singapore under the UKSFTA.

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COM NEWS

(Source: EU Sanctions Law Practice and Guidance, 31 Dec 2020 ) [Excerpts]
 
On 28 December 2020 OFAC published FAQs relating to Executive Order (E.O.) 13959, “Addressing the Threat from Securities Investments that Finance Communist Chinese Military Companies”:  857858859860861.  OFAC has also published a list (PDFCSV) containing the names of entities identified in or pursuant to E.O. 13959 as Communist Chinese military companies.
The guidance clarifies that prohibitions in E.O. 13959 apply to subsidiaries of CCMCs only after OFAC publicly lists a company. FAQ 857 says OFAC will list any entity that issues publicly traded securities and is 50 % or more owned by or controlled by one or more CCMCs. US persons are not prohibited from dealing in the securities companies that are not listed by OFAC on the CCMC list. The prohibitions against a listed subsidiary go into effect 60 days after it is listed.

COM COMMENTARY

(Source: Holland & Knight, 30 Dec 2020)
 
* Principal Author: Ronald A. Oleynik, Esq., 1-202-457-7183, Holland & Knight
 
The U.S. Department of Commerce Bureau of Industry and Security (BIS) on Dec. 23, 2020, amended the Export Administration Regulations (EAR) to remove Hong Kong as a separate destination listed in the EAR.[FN/1]
All provisions in the EAR that provide differential and preferential treatment for exports to Hong Kong, reexports to Hong Kong and transfers (in-country) within Hong Kong of any item subject to the EAR have been removed from the EAR. From here on, Hong Kong is treated the same as China under the EAR except in a small number of exceptional cases.
 
This move follows a June 30, 2020, BIS announcement on its website that any license exceptions for Hong Kong under the EAR were suspended,[FN/2] and a July 14, 2020, Executive Order (E.O.) 13936, in which President Donald Trump directed relevant agencies to amend regulations implementing statutes that provide different treatment for Hong Kong as compared to China.[FN/3]
Subsequently, on July 31, 2020, BIS published a notice in the Federal Register suspending the availability of all license exceptions for Hong Kong that provide differential treatment as compared to those available to China.[FN/4]
For any questions about the implications of the above rules and effects on your business, please feel free to reach out to the authors.
 
Notes:
[FN/2] See “Suspension of License Exceptions for Hong Kong,” BIS announcement, June 30, 2020.
[FN/3] Executive Order 13936, 85 Fed. Reg. 43,413 (July 17, 2020).

(Source: Steptoe, 30 Dec 2020)
 
* Principal Author: Meredith Rathbone, Esq., 1-202-429-6437, Steptoe
 
On December 23, 2020, the US Department of Commerce, Bureau of Industrial Security (BIS) published a rule (https://www.federalregister.gov/documents/2020/12/28/2020-26552/amendment-to-country-groups-for-ukraine-mexico-and-cyprus-under-the-export-administration) which amended its EAR Country Group designations for Ukraine, Mexico, and Cyprus in order to bring them more in line with current national security and foreign policy priorities. As we noted in a February 26, 2020 post, this is part of a “larger effort to re-structure and re-align the Country Groups.” (https://www.steptoe.com/en/news-publications/commerce-expands-us-export-controls-on-russia-and-yemen.html). The rule moves Ukraine from Country Group D (countries of national security concern to the United States) to Country Group B (countries eligible for favorable treatment for certain exports of national security-controlled items) while adding both Mexico and Cyprus to Country Group A:6. The rule will have the effect of making more license exceptions available for each country.
 
New Export Controls on Ukraine
The key change made by BIS is the change of Ukraine from Country Group D to Country Group B. This makes various license exceptions available to Ukraine, thereby allowing more exports, reexports and in-country transfers to Ukraine without specific licenses, when certain conditions are met and the general restrictions in § 740.2 (Restrictions on All License Exceptions) do not apply.  The newly-available license exceptions are:
  • 740.3 – Shipments of limited value (LVS)
  • 740.9 – Temporary imports, exports, reexports, and transfers (in-country) (TMP)
  • 740.10 – Servicing and replacement of parts and equipment (RPL)
  • 740.12 – Gift parcels and humanitarian donations (GFT)
  • 740.14 – Baggage (BAG)
  • 740.15 – Aircraft and vessels (AVS)
  • 740.16 – Additional permissive reexports (APR)
  • 740.17 – Encryption, commodities, software, and technology (ENC)
Notably, despite Ukraine’s new Country Group placement, License Exceptions Shipments to Country Group B Countries (GBS) (§ 740.4) and Technology and Software Under Restriction (TSR) (§ 740.6) remain unavailable for exports, reexports and in-country transfers for Ukraine.
In addition to the above changes, there is now a less restrictive licensing policy for Ukraine of items controlled for national security reasons. Such items will no longer be subject to a case-by-case licensing policy in § 742.4(b)(2), and will now be subject to a licensing policy of approval in accordance with § 742.4(b)(1)(i). Finally, §744.17 (restrictions on certain exports, reexports, and transfers (in-country) of microprocessors and associated software and technology for military end users), § 744.7 (restrictions on certain exports to and for the use of certain foreign vessels or aircraft), and § 736.2(b)(3) (licensing requirements for reexports of the foreign-produced direct product of US-origin technology and software) no longer apply to Ukraine.
BIS stated that these rule changes were undertaken due to “the Government of Ukraine’s continuing engagement with regional and international export control authorities,” and in order to serve US national security and foreign policy interests toward Ukraine. BIS noted that this rule does not change the status of the Crimea Region of Ukraine under the EAR.  The Crimea region also remains subject to stringent sanctions administered by the US Department of the Treasury’s Office of Foreign Assets Control (“OFAC”).
 
New Export Controls on Mexico
Now that Mexico is listed as Country Group A:6, License Exception Strategic Trade Authorization (STA) is available for exports, reexports and in-country transfers of lesser sensitivity items controlled for national security reasons only as set forth in § 740.20(c)(2). This new change is in addition to Mexico’s existing Country Group B status, which allows the use of License Exemptions GBS and TSR.
As justification for the rule change, BIS cited Mexico’s multilateral export control regime memberships and national security approaches and interests compatible with the United States.
New Export Controls on Cyprus
Cyprus’s existing Country Group B status and recent addition to Country Group A:6 means that License Exceptions STA, GBS, and TSR are available just as with Mexico. The main difference is that Cyprus is also in Country Group D:5 (US Arms Embargoed Countries), which means consideration of license exceptions includes extra scrutiny, with restrictions on items in a 9×515 or “600 series” ECCNs as described in § 740.2(a)(12)-(13). This includes items with a potential “military end use.”
BIS noted Cyprus’s European Union membership and like-minded export controls as motivation for making the rule change.
Conclusion

BIS has stated specifically that more changes to the EAR’s country groups are to be expected, and we predict that US export controls will continue to evolve and change in the new Administration. Companies that conduct cross-border business with Ukraine, Mexico and Cyprus should consider changes to their internal export compliance procedures and order processing/export licensing requirements to take into account the additional license free opportunities brought about by these changes. 

EN EDITOR’S NOTES

EN_a112. Bartlett’s Unfamiliar Quotations

(Source: Editor)

 
* Alexander Smith (31 Dec 1829 – 5 Jan 1867; was a Scottish poet, labelled as one of the Spasmodic School. Spasmodic poetry frequently took the form of verse drama, the protagonist of which was often a poet. It was characterized by features including lengthy introspective soliloquies by the protagonist, which led to the charge that Spasmodic poetry was egotistical.)
  – “Everything is sweetened by risk.”
  – “To be occasionally quoted is the only fame I care for.”
 
Friday funnies (a day early)


“I go to the gym religiously. About twice a year around the holidays.”   
   – Demetri Martin
* A New Year’s resolution is something that goes in one year and out the other.
* My New Year’s resolution is 1080p.
* Dear God, my prayer for next year is to have a fat bank account and a thin body. Please don’t mix it up like you did this year.
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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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