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Every month we post the highlights of FCC’s Export/Import Daily Update (“The Daily Bugle”). The Daily Bugle is sent out every business day to approximately 10,000 readers, who keep up to date with changes of defense and high-tech trade laws and regulations. It is a free daily newsletter from Full Circle Compliance, edited by James E. Bartlett III and Elina Tsapouri.
We check the following sources daily: Federal Register, Congressional Record, Commerce/AES, Commerce/BIS, DHS/CBP, DOE/NRC, DOJ/ATF, DoD/DSS, DoD/DTSA, FAR/DFARS, State/DDTC, Treasury/OFAC, White House, and similar websites of European Union, Australia, Canada, U.K., and other countries and international organizations. Due to space limitations, we do not post Arms Sales notifications, Denied Party listings, or Customs AD/CVD items. To subscribe, click here.
Last month’s highlights of The Daily Bugle included in this edition are:
- Commerce/Census: “Automated Export System Updates for No License Required (NLR) Filings”; Monday, 6 Dec 2021; Item #4
- EU: “P9_TA(2021)0101 – Control of Exports, Brokering, Technical Assistance, Transit And Transfer Of Dual-Use Items”; Wednesday, 8 Dec 2021; Item #6
- Commerce/BIS Amends EAR to Revise Controls for Cambodia; Thursday, 9 Dec 2021; Item #1
- State/DDTC Amends ITAR to Add Cambodia to § 126.1 Proscribed Countries; Thursday, 9 Dec 2021; Item #3
- Commerce/BIS Requests Comments on the US-EU Trade & Technology Council (TTC) Export Control Working Group; Thursday, 9 Dec 2021; Item #5
- EU Commission: “2021 Export Control Forum – Links to the Recorded Webstreaming and to the Presentations Are Now Available”; Monday, 13 Dec 2021; Item #5
- Commerce/Census Seeks Comments on New Filing Requirement and Clarifications to Current Requirements in FTR; Wednesday, 15 Dec 2021; Item #1
- Commerce/BIS Amends EAR by Adding an Entity and Revising an Entry the Entity List; Friday, 17 Dec 2021; Item #1
- UK ECJU: “Updates on Licensing to Turkey”; Thursday, 23 Dec 2021; Item #16
- Treasury/OFAC Amends Weapons of Mass Destruction Trade Control Regulations, 31 CFR Part 539; Monday, 27 Dec 2021; Item #1
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Commerce/Census: “Automated Export System Updates for No License Required (NLR) Filings”
(Source: U.S. Census mailing service)
Effective January 13, 2022, the Automated Export System (AES) will deploy a new Response Message for exports filed under the License Type “C33: No License Required (NLR)”. When a filer selects License Type C33, they are subject to the terms, provisions, and conditions described in the Export Administration Regulations (EAR) in 15 CFR Parts 730-774.
Under the EAR, an item may require a BIS export license or license exception and may not be exported under the License Type C33 NLR depending on the reason for control of the ECCN and Country of Destination. If a filer attempts to file Electronic Export Information (EEI) with an ECCN(s) and Country of Destination combination that is prohibited to be shipped under NLR, pursuant to the EAR, they will now receive the following AES generated Response Message:
Response Code: 66Q
Narrative Text: ECCN & CTRY OF DEST NOT ALLOWED FOR C33 (NLR)
Severity: COMPLIANCE ALERT
Response Code 66Q will be set at a severity level of “Compliance Alert” for six months after the effective date in AES. After six months, the severity will be upgraded to “Fatal”.
How to Address this Response Code:
Please review the accuracy of the reported ECCN, Country of Destination, and License Type (15 CFR Parts 730-774). If inaccurate, please correct the appropriate fields and resubmit. If all three fields are reported correctly and this response code is still occurring, please email BIS at ECDOEXS@bis.doc.gov and inquire about the ECCN and additional licensing authorization that may be required.
For questions regarding these AES changes, please contact the Bureau of Industry and Security at: ECDOEXS@bis.doc.gov
For general questions regarding AES and filing the EEI, please contact the Economic Management Division (EMD) at the Bureau of the Census at 1-800-549-0595, option 1.
A complete list of all of the AES License Type codes and reporting instructions for these types can be found at https://www.cbp.gov/trade/aes/aestir/appendices
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EU: “P9_TA(2021)0101 – Control of Exports, Brokering, Technical Assistance, Transit And Transfer Of Dual-Use Items”
(Source: Official Journal of the European Union)
The European Parliament, having regard …
(1) Adopts its position at first reading hereinafter set out, taking into account the recommendations of the Consultative Working Party of the legal services of the European Parliament, the Council and the Commission;
(2) Takes note of the statement by the Commission annexed to this resolution;
(3) Calls on the Commission to refer the matter to Parliament again if it replaces, substantially amends or intends to substantially amend its proposal;
(4) Instructs its President to forward its position to the Council, the Commission and the national parliaments.
P9_TC1-COD(2016)0295: Position of the European Parliament adopted at first reading on 25 March 2021 with a view to the adoption of Regulation (EU) 2021/… of the European Parliament and of the Council setting up a Union regime for the control of exports, brokering, technical assistance, transit and transfer of dual-use items (recast)
(As an agreement was reached between Parliament and Council, Parliament’s position corresponds to the final legislative act, Regulation (EU) 2021/821.)
ANNEX TO THE LEGISLATIVE RESOLUTION: Statement by the Commission on a capacity-building programme for the control of dual-use exports
The Commission recognises the importance of a common licensing and enforcement capacity-building and training programme for an effective EU export control system. The Commission, in consultation with the Dual-Use Coordination Group, undertakes to explore the human and financial resource implications that such a programme may entail, with a view to identifying options for the design, modalities and deployment of a capacity-building and training programme.
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Commerce/BIS Amends EAR to Revise Controls for Cambodia
(Source: Federal Register) [Excerpts]
* AGENCY: Bureau of Industry and Security, U.S. Department of Commerce
* ACTION: Final Rule
* DATES: This amendment is effective today, 9 Dec 2021.
* SUMMARY: In response to deepening Chinese military influence in Cambodia, which undermines and threatens regional security, as well as growing corruption and human rights abuses by the Government of Cambodia, in this final rule, the Bureau of Industry and Security (BIS) amends the Export Administration Regulations (EAR) to apply more restrictive treatment to exports and reexports to, and transfers within, Cambodia of items subject to the EAR. BIS is taking this action to address recent actions by the Government of Cambodia that are contrary to the national security and foreign policy interests of the United States. Further, BIS updates a Country Group designation for Cambodia under the EAR to reflect the country’s identification by the State Department as subject to a United States arms embargo.
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State/DDTC Amends ITAR to Add Cambodia to § 126.1 Proscribed Countries
(Source: Federal Register) [Excerpts]
* AGENCY: Department of State,
* ACTION: Final Rule
* DATES: This amendment is effective today, 9 Dec 2021.
* SUMMARY: The Department of State is amending the International Traffic in Arms Regulations (ITAR) to add Cambodia in the list of countries for which it is the policy of the United States to deny licenses and other approvals for exports and imports of defense articles and defense services. This change reflects that it is the policy of the United States to deny all licenses and other approvals to export and import defense articles and defense services destined for or originating in Cambodia, except as otherwise provided herein.
Section 126.1 is amended by revising the table in paragraph (d)(2) and adding paragraph (o) to read as follows:
- 126.1 Prohibited exports, imports, and sales to or from certain countries. * * * * *
(d) * * *
(2) * * * [Add Cambodia to Table 2 to Paragraph (d)(2).]
(o) Cambodia. It is the policy of the United States to deny licenses or other approvals for exports and imports of defense articles and defense services destined for or originating in Cambodia, except that a license or other approval may be issued, on a case-by-case basis, for defense articles and defense services in furtherance of conventional weapons destruction or humanitarian mine action activities. . . . .
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Commerce/BIS Requests Comments on the US-EU Trade & Technology Council (TTC) Export Control Working Group
(Source: Commerce/BIS)
In 86 FR 67904 (26 Nov 2021), the Commerce Department requested comments on the the EU-U.S. Joint Stakeholder Outreach event hosted by the European Commission DG TRADE in an online format, which was attended by more than 200 participants from the EU and US and featured keynote speeches by EU and U.S. government representatives, followed by extensive open sessions with stakeholders’ contributions. The event was therefore an important opportunity for discussing priorities in the agenda of the Working Group on Export Controls with representatives from the industry and civil society. Comments and inputs showcased great interest and support for the Working Group, especially from industry associations and academic experts.
In opening remarks, EU representatives signaled a strong sense of engagement and hopes to enhance transatlantic cooperation as well as to reinforce the export control multilateral system.
The EU provided an update on its revised export control regulation 2021/821, with an emphasis on:
– New autonomous controls at the EU level to prevent cyber-surveillance items from contributing to human rights abuses.
– A framework for EU member states to trigger EU-wide controls for emerging technologies.
– Increased opportunities for stakeholder engagement through technical experts groups and dialogue with stakeholders and third countries.
EU representatives highlighted that export controls are just one aspect of a multifaceted security strategy, which must also include investment screening mechanisms and frameworks to prevent cyber exfiltration of controlled data.
US Department of Commerce called stakeholders’ attention to opportunities to comment on recently-published notices and rules, including those involving brain-control interface, License Exception Strategic Trade Authorization, and cybersecurity controls. BIS expressed a desire for increased engagement and information sharing with stakeholders, not only in terms of public comments on proposed regulations, but also on suspicious purchase inquiries and transactions of concern. The Department of State noted that export control regulations should maximize national security benefits while minimizing regulatory burdens by considering both the scope (range of items) and level (expansiveness of license requirements, availability of license exceptions) of controls.
Private sector stakeholders from the following organizations provided verbal input: Orgalim, European Semiconductor Industry Association (ESIA), U.S. Chamber of Commerce, Digital Europe, Intel, BusinessEurope, SIEPS, Danish Industry Association, Semiconductor Industry Association (SIA), Imperial College of London, ELMISystems, and DGAP (German Council on Foreign Relations). Collectively, they expressed views that:
– Export controls should be implemented on a multilateral, rather than unilateral, basis.
– Stakeholders would like to see further alignment of export controls’ policies in the US and the EU, while several participants advocated the adoption of well-balanced export control practices, that preserve security and do not hinder innovation
– The EU should consider lessons learned from the U.S. Export Control Reform initiative and determine whether the continued regulation of “600 series” items under the EU’s military, vice dual-use, export control framework places EU companies at a competitive disadvantage.
– The extraterritorial application of U.S. export controls creates regulatory burdens on European stakeholders and discourages European entities from collaborating with U.S. counterparts, creating incentives to avoid U.S. technology or, in some cases, hire U.S. persons (due to ITAR, EAR, and OFAC controls on certain activities of U.S. persons).
– The need to address the challenges associated with the fast pace of innovation and quickly evolving emerging technologies by developing a holistic approach that will protect and promote these technologies.
– The need for a common approach and understanding of the Wassenaar Arrangement Decontrol Notes.
– U.S. and EU licensing authorities should increase information sharing on license denials to ensure transactions rejected by export control authorities in one jurisdiction are not backfilled under export authorizations issued in another jurisdiction.
– The U.S. and the EU should clarify export control exemptions applicable to public domain information and fundamental research.
In concluding remarks, the U.S. and EU thanked the stakeholders for a productive and informative dialogue. The U.S. and EU expressed a need for continued engagement with stakeholders in order to address the changing landscape on the threats, emerging technologies, and the balance between multilateral export control regimes and bilateral engagements.
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[1] BAFA directed participants to a brochure on its website setting forth the German interpretation of the EU’s new autonomous cyber-surveillance controls: HERE.
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EU Commission: “2021 Export Control Forum – Links to the Recorded Webstreaming and to the Presentations Are Now Available”
(Source: European Commission, 9 Dec 2021)
Click here for the Recording.
Click here for the full document.
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Commerce/Census Seeks Comments on New Filing Requirement and Clarifications to Current Requirements in FTR
(Source: Federal Register) [Excerpts]
ACTION: Notice of proposed rulemaking.
SUMMARY: The Census Bureau is proposing to amend its regulations to reflect new export reporting requirements related to the country of origin. Specifically, the Census Bureau is proposing to add a conditional data element, country of origin, when Foreign origin is selected in the Foreign/Domestic Origin Indicator field in the Automated Export System (AES). In addition to the new export reporting requirement, the proposed rule would make remedial changes to the FTR to improve clarity and to correct errors.
DATES: Written comments must be received on or before February 14, 2022.
ADDRESSES: . . .
SUPPLEMENTARY INFORMATION:
The Census Bureau is responsible for collecting, compiling, and publishing export trade statistics for the United States under the provisions of Title 13, United States Code (U.S.C.), Chapter 9, Section 301. While the Census Bureau is the official source for U.S. international trade statistics, the Census Bureau works in partnership with U.S. Customs and Border Protection (CBP) to collect data regarding both exports and imports. Additionally, the Census Bureau is responsible for publishing the Foreign Trade Regulations (FTR) that set the export reporting requirements for Electronic Export Information (EEI). The EEI is made up of mandatory, conditional, and optional data elements. The purpose of this rulemaking is to add a conditional data element, country of origin, when Foreign origin is selected in the Foreign/Domestic Origin Indicator field in the EEI. The FTR defines foreign goods as goods that were originally grown, produced, or manufactured in a foreign country, then subsequently entered into the United States, admitted to a U.S. Foreign Trade Zone (FTZ), or entered into a CBP bonded warehouse, but not substantially transformed in form or condition by further processing or manufacturing in the United States, U.S. FTZs, Puerto Rico, or the U.S. Virgin Islands. . . .
The current Foreign/Domestic Origin Indicator field in the Automated Export System (AES) creates significant data challenges and limitations in using the trade statistics produced by the Census Bureau and other Federal agencies because the Indicator does not capture the country of origin. Currently, U.S. agencies rely on foreign trade partners to share the data they collect on the foreign and domestic origin of goods. This reliance limits U.S. agencies’ ability to identify asymmetry in imports and exports of goods, as any asymmetry must be inferred by evaluating the data acquired from foreign trading partners with the data collected on U.S. imports by CBP.
The collection of the Country of Origin field in AES for reexports would eliminate the reliance on information provided by foreign partners, thereby increase the accuracy and timeliness of the foreign trade statistics used to monitor trade agreements and policy to assist in assessing U.S. supply chain issues. The collection also would assist U.S. Government agencies that use these statistics to reconcile trade imbalances between the United States and our partner countries. The U.S. Statistical Agencies collaborate globally to identify and understand data asymmetries between one country’s imports and the other country’s exports statistics. . . . .
The Census Bureau understands that the addition of country of origin for reexports may have implications for the trade in filing in the AES and complying with the FTR. The Census Bureau is seeking public comments from data users, businesses and others to assess this proposed change on foreign trade statistics. Below are questions to consider when providing feedback to this proposed rule; however, any pertinent feedback not captured by these questions is welcome. . . . .
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Commerce/BIS Amends EAR by Adding an Entity and Revising an Entry the Entity List
(Source: Federal Register, 17 Dec 2021) [Excerpts]
86 FR 71557: Rule
* AGENCY: Bureau of Industry and Security, Commerce
* ACTION: Final rule.
* SUMMARY: This final rule amends the Export Administration Regulations (EAR) by adding thirty-seven entities under forty entries to the Entity List. These thirty-seven entities have been determined by the U.S. Government to be acting contrary to the foreign policy or national security interests of the United States and will be listed on the Entity List under the destinations of the People’s Republic of China (China), Georgia, Malaysia, and Turkey. This final rule also modifies one existing entry on the Entity List under the destination of China.
* DATES: Effective December 17, 2021.
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UK ECJU: “Updates on Licensing to Turkey”
(Source: UK Export Control Joint Unit, Dec 2021)
Having considered the factual position and the information available, the government is now satisfied that decisions on all licence applications to Turkey can be taken following a careful assessment against the Strategic Export Licensing Criteria on a case-by-case basis.
All existing and new export and trade licence applications for Turkey will now be assessed on a case-by-case basis against the Strategic Export Licensing Criteria.
The Export Control Joint Unit (ECJU) is working with advisory government departments to clear through the backlog of existing applications as quickly as possible. We expect it will take around 8 weeks to clear the backlog of existing applications for Turkey. Exporters will be informed of the decision on their applications as soon as possible.
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Treasury/OFAC Amends Weapons of Mass Destruction Trade Control Regulations, 31 CFR Part 539
(Source: 86 FR 73105, 27 Dec 2021)
* AGENCY: Office of Foreign Assets Control, Treasury.
* ACTION: Final rule.
* SUMMARY: The Department of the Treasury’s Office of Foreign Assets Control (OFAC) is amending the Weapons of Mass Destruction Trade Control Regulations to add a June 28, 2005 Executive order as an authority, remove the appendix to the part, and modify three definitions referencing the appendix.
* DATES: This rule is effective 27 Dec 2021.