The Daily Bugle Weekly Highlights: Week 19 (7-11 May 2018)

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 8,000 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, Alexander P. Bosch, Vincent J.A. Goossen, and John W. Bartlett.

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. State/DDTC Updates Decision Tools; The Daily Bugle; Monday, 7 May 2018, ITEM #6;
  2. Dutch Government Posts FAQs Concerning Export Controls; The Daily Bugle; Monday, 7 May 2018, ITEM #7;
  3. State/DDTC Announces Registration Dates for In-House Seminar on 19 Sep; The Daily Bugle; Tuesday, 8 May 2018, ITEM #7; and,
  4. Hong Kong/TID Posts Circular on Licensing Requirements for the Import and Export of Encryption Products; The Daily Bugle; Tuesday, 8 May 2018, ITEM #11;
  5. Commerce/Census: “The Importance of Export Control Classification Numbers and Administration Regulations”; The Daily Bugle; Wednesday, 9 May 2018, ITEM #3; and
  6. Commerce/BIS Publishes Update Concerning SNAP-R; The Daily Bugle; Friday, 11 May 2018, ITEM #3.

Highlight 1

State/DDTC Updates Decision Tools

(Source: State/DDTC, 7 May 2018.) 

DDTC provides exporters the following updated decision tools:

(1) Specially Designed Decision Tool

(2) Order of Review Decision Tool

(3) ITAR Part 130 Decision Tool

N.B. The first two tools are effective for exports on or after October 15, 2013.

Highlight 2

Highlight 3

State/DDTC Announces Registration Dates for In-House Seminar on 19 Sep

(Source: State/DDTC, 8 May 2018.)

Registration for The Directorate of Defense Trade Controls (DDTC) In-House Seminar for Wednesday, September 19th, 2018 opens August 10th and closes August 31st. Attendees will be identified on a first-come, first-serve basis. Preference will be given to new registrants and small-businesses. A completed registration form must be sent to the DDTC In-House Seminar email, as an attachment,

For more information, please visit the DDTC Outreach Programs page and click the “In-House Seminars” tab.

Highlight 4

Hong Kong/TID Posts Circular on Licensing Requirements for the Import and Export of Encryption Products

(Source: Hong Kong Trade and Industry Department, 8 May 2018.)

(1) This circular reminds traders of the licensing requirements for the import and export of encryption products. Circular No. 7/2009 dated 12 May 2009 of the same subject is hereby superseded.

(I) The Legal Basis

(2) The legal basis for imposing licensing control over strategic commodities in Hong Kong is the Import and Export (Strategic Commodities) Regulations (to be referred as “the Regulations” hereafter) made under the Import and Export Ordinance, Chapter 60, Laws of Hong Kong. Articles contained in the Schedules to the Regulations are regarded as strategic commodities, the import and export of which must be covered by valid licences issued by the Director-General of Trade and Industry. The Regulations contain four Schedules. Schedule 1 is the full list of strategic commodities subject to import and export licensing control. Schedule 2 contains products which, in addition to being subject to import and export control, are controlled even if they are in transit through Hong Kong. Schedules 3 and 4 are items and activities subject to end-use control (also read paragraph 17 below).

(II) Control on Encryption Products

(3) In implementing licensing control on strategic commodities, Hong Kong follows closely the controls adopted by the international control regimes. Encryption products are controlled under the Wassenaar Arrangement, an international control regime overseeing the controls over the transfer of both munition items and dual-use goods and technology. Accordingly, encryption products may fall under “Category 5, Part 2 – Information Security” of the Dual-use Goods List of Schedule 1 to the Regulations. Import and export of the encryption products so specified are subject to licensing control.

(III) Exemptions of Control

(4) While the Regulations impose control over encryption products with a symmetric key length above 56-bits, exemptions are granted for products, of whatever key length provided that they are under either one of the following scenarios:


  1. accompanying the user, for the user’s personal use; or
  2. meeting all of the following conditions:

  (a) Generally available to the public by being sold, without restriction, from stock at retail selling points by means of any of the following :

Over-the-counter transactions;

    – Mail order transaction;

    – Electronic transactions; or

    – Telephone call transactions;

  (b) The cryptographic functionality cannot easily be changed by the user;

  (c) Designed for installation by the user without further substantial support by the supplier; and

  (d) When necessary, details of the items are accessible and will be provided, upon request, to the appropriate authority in the exporter’s country in order to ascertain compliance with conditions described in paragraphs (a) to (c) above.

(Classification advice by the Trade and Industry Department (“TID”) is required to determine if the product meets the criteria in paragraph 4 (ii) above. Details please refer to paragraph 6 (d) below)

For details of the above exemptions as well as further information on other exemptions provided for certain products, traders may refer to Notes 2 or 3 (also known as the Cryptography Note) and the Note for “Category 5, Part 2 – Information Security” of Schedule 1 to the Regulations. This part of legislation can also be found at the Strategic Commodities Control System Website (the “SC Website”).

(IV) Licensing Procedures    

(A) Paper Application Forms

(5) Licence applications should be made on Import Licence (Strategic Commodities) Application Form [TID 501 (Rev 2015)] (Annex A) (fillable pdf format) or Export Licence (Strategic Commodities) Application Form [TID 502 (Rev 2015)] (Annex B) (fillable pdf format)  respectively. These forms are free of charge and available at the Customer Service Center of Strategic Trade Controls Branch at Room 1619, 16/F, Trade and Industry Tower, 3 Concorde Road, Kowloon City, Hong Kong. They can also be downloaded from the SC Website at Licence applications should be submitted to the Customer Service Center of Strategic Trade Controls Branch.  A numbered receipt will be issued for each licence application.

(B) Declaration and Supporting Documents

(6) In addition to basic application particulars, the following information/documents will also be required to support a licence application covering encryption products:

(a) the name and full address of end-user;

(b) the specific end-use of the goods concerned;

(c) if the shipment is supported by an export/re-export authorization issued by the supplier (originating) country/place: essential details of the licence or licence exception and a copy of the export/re-export authorization issued by the supplier (originating) country/place of the goods giving explicit approval to the export/re-export concerned. If the licence/authorization is written in languages other than English or Chinese, a translated version (either in English or Chinese) prepared by a registered translation company in Hong Kong or certified correct by the relevant consulate offices in Hong Kong will be essential to the processing of the case;

(d) the technical specifications and/or the completed Cryptography Questionnaire (Annex C) (fillable pdf format). This questionnaire is for ascertaining whether the products can meet the criteria listed in paragraph 4(ii) and giving the general technical features of the products; and

(e) depending on the circumstances of individual cases, the following documents may also be required for certain applications:


  • the original End-user Statement duly completed by the end-user (Annex D (fillable pdf format) for import licence application or Annex E (fillable pdf format) for export licence application); and/or
  • original of the Importer/End-user Statement for supporting import licence applications covering the goods (for imports from the UK only) (Annex F) (fillable pdf format); and/or
  • a copy of the valid business registration certificate of the applicant or local end-user.

The Director-General of Trade and Industry at all times reserves the right to request additional information and further documentary proof to substantiate the licence applications. Applications that are not properly completed or not accompanied by all the necessary documentation will be deferred/rejected. Blank forms for Annexes A to F can be downloaded from the SC website.

(C) General Electronic Applications

(7) Companies can also apply licences electronically (“E-Applications”). The E-Applications for import and export licences can be made through companies’ E-Accounts in the SC Website at > Login Your E-Account > E-Applications > Import /Export Licence Applications. E-Applicants should provide requisite supporting documents as set out in paragraph 6 above. The forms mentioned in paragraph 6(d) and (e) can be downloaded for completion if necessary. Afterwards, E-applicants should scan, upload and lodge the duly completed forms together with the related E-Import/Export Licence Application.  Upon successfully lodging the application, E-Applicant should follow the instructions to print out by themselves the receipts for future collection of the approved licences. For applications which are subject to the requirement of End-user Statements, and/or Importer/End-user Statements  as set out in paragraph 6 (e) above, the provision of scanned copy will only serve to facilitate TID in processing their applications more expeditiously. Applicants should, after making the E-Applications, make sure to deliver the original signed End-user Statements and/or Importer/End-user Statements to TID as soon as possible. TID will withhold the issuance of licences unless and until the original End-user Statement(s)/ Importer/End-user Statement(s) are received.

(8) To make E-Applications, companies are required to complete a special registration with TID in advance. Details of the special registration and other requirements for the use of E-Applications can be found in the specific sections in the SC Website.

(D) Electronic Applications made under the Approval-in-Principle Arrangement (AIP)

(9) Companies which frequently import encryption products from the same supplier or frequently export encryption products to the same consignee may apply to join the Approval-in-Principle Arrangement (AIP). For further information on AIP for encryption products, please refer to Strategic Trade Controls Circular No. 9/2009.

(V) Export Control of Originating/Supplier/Foreign Exporting Country (Place) on Encryption Products

(10) Traders should note that the originating/supplier/exporting country (place) of encryption products, especially if it is a member of the Wassenaar Arrangement*, may impose export control over the products by ways of individual licence, general licences, licence exceptions or other mechanisms. Since it is the policy of Hong Kong to maintain a licensing system complementary to the export control arrangement of our trading partners, TID will only approve licences to cover shipments that are in full compliance with the export control regulations of the originating/supplier/exporting country (place). To ascertain such compliance, licence applicants are required to provide additional supporting documents that may include, but shall not necessarily be confined to: the relevant government authorities’ determination/ classification result indicating that the goods have been reviewed and classified to be eligible for export to the proposed destination(s)/end-user(s), individual export licence, the review request/notification submitted by the product’s manufacturer to the relevant government authorities, manufacturer’s certification letter etc.

(11) For U.S.-origin encryption products, traders should be aware that the U.S. Department of Commerce (DoC) revises their control over encryption products from time to time. In addition to individual licences, U.S. Licence Exception ENC might be applicable to certain products subject to prior authorization from the DoC. Exports of certain type of encryption goods to specific type of end-users or countries (places) might not require prior review. For details of the U.S.’ latest regulations, we would advise traders to consult their U.S. exporters/manufacturers direct or to visit the relevant U.S. Government’s website at:

(VI) Issuance of Licence

(12) For paper and general electronic licence applications, paper licences will be issued upon licence approval. Under normal circumstances, applications duly completed and supported by the documents required will be processed within 2.5 clear working days after the date of receipt of the licence application. They are ready for collection at Room 1619, 16/F of Trade and Industry Tower. For cases with complications or if additional technical details, other documents and information and/or clarifications are necessary, it may take longer time to process the applications. Applicants may check whether their applications have been processed and are ready for collection by visiting the SC website at In any event, applicants are advised to lodge their applications well in advance of shipments. Approved import and export licences are valid for six months and three months respectively.

(VII) Licence Conditions

(13) The Director-General of Trade and Industry may, depending on the circumstances of individual cases, impose special and additional conditions on approved licences. At the time of receiving the licences, companies are advised to read the designated part, “Conditions of Licence”, for the imposition of both the standard and special conditions.

Special Licence Condition and Resale/Transfer Application for U.S.-origin Encryption Products 

(14) For U.S.-origin encryption products, one very common special licence condition is that “This licence only authorises import of the goods for civil end-use by non-government end-users.  Any further re-export, resale or transfer of the goods for the use by government end-user(s) requires prior notice to and approval from the Director-General of Trade and Industry”.

Licensees imposed with this condition should carefully handle any subsequent resale/transfer of the goods covered by the licence.  An Important Note shall be attached to the licences concerned and traders are required to pass on the Note to the new recipient of the goods whenever the goods are transferred in Hong Kong.

(15) If the goods are to be resold/transferred for the use by any government end-user(s), the importer/owner of the products (i.e., the applicant) should lodge applications with the Strategic Trade Controls Branch in paper or electronically:

(a)  Paper application(s) are to be made in the designated form SC054 (Annex G) (fillable pdf format).  To facilitate TID’s consideration of the applications, applicants should enclose in their applications supporting documents like original end-user statement duly completed by the proposed government end-user; technical specification and questionnaire of the products; valid export authorization issued by the U.S. Government giving approval to the proposed resale/transfer, etc.  TID will give due consideration for the application and notify the applicant in writing whether the request can be approved.  Only after TID’s written approval has been obtained should the applicant proceed with the proposed resale/transfer of the goods.

(b)  E-Applications for resale/transfer can be made through companies’ E-Accounts in the SC Website under the program of “Resale / Transfer / Disposal of Products Under Approved Import Licence” provided at the E-Application menu (At > Login Your E-Account > E-Applications > Resale / Transfer / Disposal of Products Under Approved Import Licence). E-Applicants could efficiently know the results of their applications by checking the application status through their E-Accounts.  Once the application is approved, the applicants can simply print out by themselves the approval status of the application as an evidence of TID’s approval for the resale/transfer request. (At > Login Your E-Account > E-Applications > Resale / Transfer / Disposal of Products Under Approved Import Licence) > Check Previously Submitted Applications for Resale / Transfer / Disposal of Products Under Approved Import Licence).

(VIII) Pre-classification Service

(16) For applicants who frequently import or export the same types of encryption products, they are advised to make use of our pre-classification service. In brief, traders will be advised of the control status of a product through this service. Traders may download the pre-classification application form SC013 (Rev 2015) (Annex H) (fillable pdf format) from the SC website, and make applications attached with corresponding technical specifications and where applicable, questionnaire(s) mentioned in paragraph 6(d) above. After pre-classification, the Department will assign a Pre-Classification Reference Number to the product concerned. By quoting this reference number on future licence applications covering the same goods, the requirement to provide the technical specification/data sheets is waived. For details of the pre-classification procedures, please refer to the relevant information in the SC website.

(IX) End-use Control

(17) In addition to the control imposed on specific items as set out in Schedules 1 and 2 to the Regulations, traders are reminded that end-use control are imposed under Schedules 3 and 4 to the Regulations. The Regulations impose licensing requirement on articles specified in Schedule 3 to the Regulations, or any technological document containing information relating to any such article:

(a)  if the importer/exporter knows that the article or document is intended or likely to be used in any activity related to nuclear, chemical or biological weapons or missiles capable of delivering them as specified in Schedule 4 to the Regulations; or
(b)  if the importer/exporter has grounds for suspecting that the article or document may be used in any activity specified in Schedule 4.

(18) Import and/or export licences are required if the end-use of the goods fall under (a) and/or (b) above.

(X) Reminder

(19) Section 6A of the Import and Export Ordinance stipulates that no person shall import or export any article specified in the Schedules to the Import and Export (Strategic Commodities) Regulations except under and in accordance with a licence issued by the Director-General of Trade and Industry. Any person who contravenes the provision commits an offence and is liable :

(a) on summary conviction to a fine of HK$500,000 and to imprisonment for two years; and
(b) on conviction on indictment to an unlimited fine and to imprisonment for seven years.

(20) In addition to prosecution, the Department may impose administrative actions against these persons. Such administrative actions may involve but shall not necessarily be confined to, suspension of a licence, refusal to issue a licence, debarment of all licensing facilities, etc.

(XI) Enquiry

(21) If you have any enquiry concerning licensing requirements for encryption products, please contact our Licensing Section at 2398 5575. For specific technical questions or matters concerning classification of the goods and the pre-classification service, please contact our Classification Section at 2398 5587. Enquiry could also be sent by fax to 2396 3070 (Liscensing Section) or 3525 1526 (Classification Section) or by email to

Highlight 5

Commerce/Census: “The Importance of Export Control Classification Numbers and Administration Regulations”

(Source: Global Reach Blog, 8 May 2018.) 

One of the fields that the export trade community tends to have questions on is the Export Control Classification Number (ECCN) and how to know if their product has an ECCN. This blog seeks to provide an overview and resources available for these frequently asked questions.

What is an Export Control Classification Number?

An ECCN is an alphanumeric designation (i.e., 1A984 or 4A001) used in the Commerce Control List (CCL) to identify (for export control purposes) commercial or certain military items (i.e., commodities, technology and software) that have, or may have, military, terrorist or proliferation applications. The ECCN is based on the technical characteristics of the item and requires a detailed analysis of the item in order for it to be classified, and is not the same as a Schedule B number.

What is an Export Administration Regulation designation?

EAR99 is the designation for items that are subject to the Export Administration Regulations (EAR), but are not specifically listed in any of the CCL categories. Generally, EAR99 items may be shipped under the designation “NLR” which stands for “No License Required.” However, if your export of an EAR99 item is to an embargoed or sanctioned country, to an end-user of concern or in support of a prohibited end-use, you may be required to obtain an export license.

Determining Your ECCN:

(1) Go to the source: Contact the manufacturer, producer or developer. Keep in mind that ECCNs may change over time, so you still need to review the ECCN to ensure its accuracy.

(2) Self-classify (Part 738): This will require a technical understanding of the item.  Additionally, you need to be familiar with the structure and format of the CCL. For information on the CCL structure, visit the BIS website.

(3) Official request to BIS:You may request an official classification from BIS after obtaining a Company Identification Number (CIN) and using the electronic application processing system, SNAP-R.

Once you have determined your ECCN – Next Steps:

Once you have classified the item, turn to the information below your ECCN entry on the CCL to determine whether a license is required. You do this by cross-referencing the “Reasons for Control” of the item and the country of ultimate destination in the “Commerce Country Chart” (Supp.1 to part 738). Some controls apply only to certain subparagraphs, so note carefully which apply to your item. Also, an item may have more than one control associated with it.

If there is an “X” in the intersection of the column based on the reason(s) for control of your item and the line for your destination in the “Commerce Country Chart” (Supp.1 to part 738), you have a licensing requirement, unless a license exception is available. If there is no “X” at the intersection of the control column(s) specified under your ECCN and your ultimate destination, you will not need an export license unless you are exporting to an end-user or end-use of concern or any other General Prohibition applies. For additional information on license exceptions (part 740), General Prohibitions (part 736), or end-users or end-uses of concern (part 744), refer to “Introduction to the Commerce Department’s Export Controls.”

Need Further Assistance?

Visit the BIS website for more information regarding SNAP-R and CINs.

For assistance with self-classification or submitting a request for classification, the Office of Exporter Services has counselors available in Washington, D.C., at 202-482-4811, and in the Western Regional Office in California at 949-660-0144 or 408-998-8806.

Highlight 6

Commerce/BIS Publishes Update Concerning SNAP-R

(Source: Commerce/BIS, 11 May 2018.)

As part of our ongoing efforts to improve electronic submissions on the Simplified Network Application Process – Redesign (SNAP-R), BIS is implementing more of your suggestions. SNAP-R is BIS’s electronic system to submit license applications, commodity classification requests, and other requests. This latest round of updates is designed to make the SNAP-R system more user-friendly and to limit the time and effort that applicants spend using SNAP-R.

The new updates to SNAP-R that are taking effect May 14, 2018 are the following:

Login Help

You told us you sometimes needed SNAP-R help before logging into the SNAP-R system. DONE!

– We added a new “Login Help” option to the SNAP-R login screen, to provide assistance for the login process.

New “Contact Person” field in the “List Work Items” Page

You asked to see who submitted your company’s work items. DONE!

– We added a “Contact Person” field to the “Work Item List” to allow you to see the contact person for each work item owned by your company (once the owner has shared the work item with you).

Telephone and Fax Number Formats (Blocks 2, 15, 16, 17, 18, 19, and 20)

You told us you need to enter international telephone numbers and extensions into your SNAP-R contacts and work items. DONE!

– We changed the telephone number field format in all blocks to accommodate international telephone numbers and telephone extension numbers. For the SNAP-R Contact field, this change now allows 18 characters; for other SNAP-R parties (Blocks 15, 16, 17, 18, 19, and 20), the Phone and Fax text fields now allow 30 characters.

Increased Character Limits

You asked us to increase the amount of information you could enter into export data fields and information sub-fields. DONE!

  (1) Party/Entity Names and Addresses (Blocks 14 – 20): We increased the character fields for purchaser, intermediate consignee, ultimate consignee, original ultimate consignee, and end users from 35 to 80.

  (2) Specific End User (Block 21): We increased the character limit from 250 to 1440, and added a character counter to show how many characters have been used.

  (3) Technical Description (Block 22.j): We increased the character limit from 250 to 1440, and added a character counter to show how many characters have been used.

  (4) Additional Information (Block 24): We increased the character limit from 250 to 1440, and added a character counter to show how many characters have been used.


The SNAP-R system cannot accept foreign characters in party names and addresses or in the filenames of uploaded files. Acceptable characters are Aa to Zz; 0 to 9; space, underscore (_); and hyphen (-).

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About the Author

Alexander Bosch

Alexander P. Bosch, Program Manager. Alexander Bosch has, due to his multidisciplinary academic background, a good overview of how the world of trade compliance is constructed. He is responsible for the drafting of engagement proposals, writing policies and procedures and designing an Internal Compliance Program, performing compliance assessments, audits, investigations related to (potential) export control violations, and is assistant editor of FCC’s daily newsletter, The Export/Import Daily Update (“The Daily Bugle”). In addition, Alexander plays a key role in the development and teaching of FCC’s training programs, and the Executive Masters in International Trade Compliance (EMITC) program, which FCC has set up in cooperation with the University of Liverpool London Campus. Alexander previously was responsible for a project for the Dutch government in which he assessed the effects of the U.S. Export Control Reform (ECR) upon the Dutch government and industry. He has earned his Master’s degree in International Relations from the University of Groningen and has written his master-thesis on the subject of European defense cooperation.

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