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The Daily Bugle Weekly Highlights: Week 52 (21-24 Dec 2020)

Every Monday we post the highlights out of last week’s FCC Export/Import Daily Update (“The Daily Bugle”). Send out every business day to approximately 8,500 readers of changes to defense and high-tech trade laws and regulations, The Daily Bugle is a free daily newsletter from Full Circle Compliance, edited by James E. Bartlett III, Salvatore Di Misa, 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 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 week’s highlights of The Daily Bugle included in this edition are:

  1.  Commerce/BIS: “Statement from Secretary Ross on The Department’s 77 Additions to the Entity List for Human Rights Abuses, Militarization of the South China Sea, and U.S. Trade Secret Theft”; Monday, 21 Dec 2020; Item #3

  2.  Commerce/BIS Publishes the First Military End User List Naming More Than 100 Chinese and Russian Companies; Tuesday, 22 Dec 2020; Item #3

  3. Commerce/BIS Amends EAR by Adding Military End User List; Wednesday, 23 Dec 2020; Item #1

  4. Commerce/BIS Amends EAR by Removing Hong Kong as a Separate Destination; Wednesday, 23 Dec 2020; Item #2

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    Commerce/BIS: “Statement from Secretary Ross on The Department’s 77 Additions to the Entity List for Human Rights Abuses, Militarization of the South China Sea, and U.S. Trade Secret Theft”

    (Source: Commerce/BIS)

    Today, the Commerce Department added 77 entities to the Entity List for actions deemed contrary to the national security or foreign policy interest of the United States. These include entities in China that enable human rights abuses, entities that supported the militarization and unlawful maritime claims in the South China Sea, entities that acquired U.S.-origin items in support of the People’s Liberation Army’s programs, and entities and persons that engaged in the theft of U.S. trade secrets.

    Secretary Ross provided the following statement:
    “China’s corrupt and bullying behavior both inside and outside its borders harms U.S. national security interests, undermines the sovereignty of our allies and partners, and violates the human rights and dignity of ethnic and religious minority groups. Commerce will act to ensure that America’s technology-developed and produced according to open and free-market principles-is not used for malign or abusive purposes.

    China actively promotes the reprehensible practices of forced labor, DNA collection and ubiquitous surveillance to repress its citizens in Xinjiang and elsewhere. Over the last two years this administration has added nearly 50 entities to the Entity List for their support for the Chinese Communist Party’s despicable offensive against vulnerable ethnic minorities. With these new additions, we are applying those principles to the rest of China, including in Tibet, and to the authoritarian regimes to which these practices are being exported.

    The additions also include entities that have contributed to China’s militarization of disputed outposts in the South China Sea, unlawful maritime claims in the South China Sea, and intimidation and coercion of other coastal states lawfully accessing and developing offshore marine resources.
    Commerce added additional persons participating in China’s campaign of malign technology acquisition efforts, including for theft of U.S. trade secrets, and the support of research and development, and production of advanced weapons systems, in support of the People’s Liberation Army’s destabilizing military modernization efforts.”

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    Commerce/BIS Publishes the First Military End User List Naming More Than 100 Chinese and Russian Companies

    (Source: Commerce/BIS, 22 Dec 2020) [Excerpts]

    The Bureau of Industry and Security (BIS) amends the Export Administration Regulations (EAR) by adding a new ‘Military End User’ (MEU) List, as well as the first tranche of 103 entities, which includes 58 Chinese and 45 Russian companies. The U.S. Government has determined that these companies are ‘military end users’ for purposes of the ‘military end user’ control in the EAR that applies to specified items for exports, reexports, or transfers (in-country) to the China, Russia, and Venezuela when such items are destined for a prohibited ‘military end user.’

    “This action establishes a new process to designate military end users on the MEU List to assist exporters in screening their customers for military end users,” said Commerce Secretary Wilbur Ross. “The Department recognizes the importance of leveraging its partnerships with U.S. and global companies to combat efforts by China and Russia to divert U.S. technology for their destabilizing military programs, including by highlighting red flag indicators such as those related to Communist Chinese military companies identified by the Department of Defense.”

    The MEU List informs exporters, reexporters, and transferors that a license will be required to export, reexport, or transfer (in-country) designated items to listed entities. The U.S. Government has determined that these entities represent an unacceptable risk of use in or diversion to a ‘military end use’ or ‘military end user’ in China, Russia, or Venezuela.

    Commerce is taking this action, which is scheduled to go on public display at the Federal Register on December 22, to respond to requests received from the public to identify specific ‘military end users’ by name and address in the regulations. The MEU List supports the export community by identifying military end users known to the U.S. Government, improving the effectiveness of military end-use and military end-user controls.

    Importantly, this is a non-exhaustive list, and does not imply that other parties not included on the list are exempt from regulatory prohibitions. For example, parties not listed on the MEU List but included on the Department of Defense’s Section 1237 list of the National Defense Authorization Act would raise a Red Flag under the EAR and require additional due diligence by exporters, reexporters, or transferors.

    While the initial MEU list includes 103 companies, additional parties may be added or deleted from the MEU List pursuant to a determination made by the End-User Review Committee, the interagency body composed of Commerce, and the Departments of Defense, Energy, State, and, where appropriate, the Treasury.

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    Commerce/BIS Amends EAR by Adding Military End User List

    (Source: Federal Register, 23 Dec 2020) [Excerpts]

    85 FR 83793: Rule
    * AGENCY: Bureau of Industry and Security, Commerce.
    * ACTION: Final rule.
    * SUMMARY: In this final rule, the Bureau of Industry and Security (BIS) amends the Export Administration Regulations (EAR) by adding a new `Military End User’ (MEU) List that includes the first tranche of entities.
    The U.S. Government has determined that these entities are `military end users’ for purposes of the `military end user’ control in the EAR that applies to specified items for exports, reexports, or transfers (in-country) to the People’s Republic of China (China), Russia, and Venezuela when such items are destined for a `military end user.’
    The existing `military end-use’ and `military end user’ controls under the EAR, including BIS’s authority to inform the public of a license requirement for an item due to an unacceptable risk of diversion to a `military end user’ via amendment to the EAR, are essential for protecting U.S. national security interests.
    The addition of the new MEU List via amendment to the EAR and this first tranche of entities is also responsive to requests received from the public. This final rule will add 102 military end users to the MEU List consisting of 57 under China and 45 under Russia. However, the establishment of the MEU List does not imply that other parties, not included on the list, are not subject to the military end-use and military end user controls under the EAR.
    * DATES: This rule is effective December 23, 2020.
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    Commerce/BIS Amends EAR by Removing Hong Kong as a Separate Destination

    (Source: Federal Register, 23 Dec 2020) [Excerpts]

    85 FR 83765: Rule
    * AGENCY: Bureau of Industry and Security, Commerce.
    * ACTION: Final rule.
    * SUMMARY: In this rule the Bureau of Industry and Security (BIS) amends the Export Administration Regulations (EAR) to remove the People’s Republic of China (PRC or China) Special Administrative Region of Hong Kong from the list of destinations in the EAR. The amendments implement Sections 2 and 3 of Executive Order 13936 of July 14, 2020, in response to new security measures imposed on Hong Kong by the government of China. These new measures fundamentally undermine Hong Kong’s autonomy increasing the risk sensitive U.S. technology and items will be diverted to unauthorized end uses and end users in China.
    * DATES: This rule is effective December 23, 2020.

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