The Daily Bugle Weekly Highlights: Week 25 (17 – 21 June 2019)

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 6,500 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, Alexander P. Bosch, Vincent J.A. Goossen, and Alex Witt.

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Last week’s highlights of The Daily Bugle included in this edition are:

  1. Justice: “Lexington Man and Semiconductor Company Indicted for Theft of Trade Secrets”; The Daily Bugle; Monday 17 June 2019, Item #3;
  2. EU Terminates Sanctions Against the Maldives; The Daily Bugle; Monday 17 June 2019, Item #5;
  3. President Continues of the National Emergency with Respect to the Western Balkans; The Daily Bugle; Thursday, 20 June 2019, Item #1;
  4. Treasury/OFAC Amends Reporting, Procedures and Penalties Regulations (RPPR); The Daily Bugle; Thursday, 20 June 2019, Item #5;
  5. EU Extends Sanctions Against Russia Until 2020; The Daily Bugle; Thursday, 20 June 2019, Item #6;
  6. President Continues National Emergency with Respect to North Korea; The Daily Bugle; Friday, 21 June 2019, Item #7.

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1. Justice: “Lexington Man and Semiconductor Company Indicted for Theft of Trade Secrets”

(Source: Justice, 14 June 2019.) [Excerpts.]

A Chinese born naturalized U.S. citizen living in Lexington, and a company he and his wife established, were charged in federal court in Boston in connection with stealing proprietary information from his former employer, Analog Devices, Inc. (ADI), a semiconductor company headquartered in Norwood. Yu is also charged with allegedly selling and illegally exporting integrated circuits that incorporated ADI’s stolen trade secrets. …

According to the charging document, Yu was born in Harbin, China, and first came to the United States in 2002 through the student visa program. He became a lawful permanent resident in June 2009, and a naturalized U.S. citizen in March 2017. In July 2014, Yu started working at ADI as a principal design engineer.

As alleged in the indictment, Yu worked for ADI designing and developing parts of monolithic microwave integrated circuits (MMICs), which are used in radio, cellular, and satellite communications as well as defense and aerospace applications. As a result of his work, Yu had access to data and information relating to the present and future product designs, schematics, manufacturing files and testing procedures. It is alleged that, while working for ADI, Yu downloaded hundreds of highly confidential schematic design files and modeling files that belonged to ADI, and copied portions of those files into spreadsheets which he uploaded to his personal Google drive account. The files Yu allegedly stole from ADI were worth millions of dollars.  

In March 2017, approximately five months before he resigned from ADI, Yu and his wife established Tricon MMIC LLC, which according to its website, “specializes in wide band MMIC amplifiers,” and serves customers in “defense and aerospace, test and instrumentation, [and] satellite communications.”

On July 31, 2017, Yu resigned from ADI and signed an agreement affirming that he had surrendered all proprietary information or data. Nevertheless, in December 2018, Yu allegedly had propriety ADI files in his possession. Furthermore, since creating Tricon in March 2017, Yu marketed and sold approximately 20 ADI designs as his own, and even used the same semiconductor fabrication plant as ADI. Yu used the Tricon website to target ADI customers, claiming that Tricon could better serve customers because ADI “has hit many customers by sudden announcements of obsolete parts.” For each purported obsolete part, Tricon listed a replacement part on its website. These replacement parts contained specifications identical to or substantially similar to ADI.

It is alleged that since leaving ADI, from August 2017 to June 2019, Yu has been working at a cleared defense contractor while simultaneously operating Tricon and selling parts that are identical to, or substantially similar, to ADI products and which incorporate ADI’s stolen trade secrets. Yu has also allegedly used Tricon to illegally export several parts to Spain by concealing both his name and the export control classification number of the parts being exported on the shipping documents.

ADI, the named victim of the Yu’s theft of trade secrets, has been cooperating with the government throughout this investigation. …

The details contained in the charging documents are allegations. The defendant is presumed innocent unless and until proven guilty beyond a reasonable doubt in a court of law.

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2. EU Terminates Sanctions Against the Maldives

(Source: EU Council, 17 June 2019.)

Today, the Council decided to revoke the framework for restrictive measures against the Maldives that it adopted on 16 July 2018.

This framework provided for the possibility of imposing a travel ban and an asset freeze on persons and entities responsible for undermining the rule of law or obstructing an inclusive political solution in the Maldives as well as persons and entities responsible for serious human rights violations. It was adopted following a deterioration of the political situation in the Maldives in the first half of 2018, particularly as institutions such as Parliament and the judiciary were being prevented from functioning properly. No persons or entities were listed under this sanctions regime.

Today’s decision was taken in light of the Council’s objectives and of the current situation in the Maldives. Since the inauguration of President Ibrahim Mohamed Solih’ administration in November 2018, the political situation has improved. The holding of peaceful and democratic parliamentary electionson 6 April 2019 was a welcome step. The government confirmed its firm commitment to consolidate democracy, ensure good governance, and promote respect for human rights during the fourth annual policy dialogue between the Maldives and the EU which was held on 11 March 2019.

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3. President Continues of the National Emergency with Respect to the Western Balkans

(Source: Federal Register, 20 June 2019.)

84 FR 28715: Continuation of the National Emergency with Respect to the Western Balkans

On June 26, 2001, by Executive Order 13219, the President declared a national emergency with respect to the Western Balkans, pursuant to the International Emergency Economic Powers Act (50 U.S.C. 1701-1706), to deal with the unusual and extraordinary threat to the national security and foreign policy of the United States constituted by the actions of persons engaged in, or assisting, sponsoring, or supporting (i) extremist violence in the former Republic of Macedonia (what is now the Republic of North Macedonia) and elsewhere in the Western Balkans region, or (ii) acts obstructing implementation of the Dayton Accords in Bosnia or United Nations Security Council Resolution 1244 of June 10, 1999, in Kosovo. The President subsequently amended that order in Executive Order 13304 of May 28, 2003, to take additional steps with respect to acts obstructing implementation of the Ohrid Framework Agreement of 2001 relating to Macedonia.

The actions of persons threatening the peace and international stabilization efforts in the Western Balkans, including acts of extremist violence and obstructionist activity, continue to pose an unusual and extraordinary threat to the national security and foreign policy of the United States. For this reason, the national emergency declared on June 26, 2001, and the measures adopted on that date and thereafter to deal with that emergency, must continue in effect beyond June 26, 2019. Therefore, in accordance with section 202(d) of the National Emergencies Act (50 U.S.C. 1622(d)), I am continuing for 1 year the national emergency with respect to the Western Balkans declared in Executive Order 13219.

This notice shall be published in the Federal Register and transmitted to the Congress.

(Presidential Sig.)

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4. Treasury/OFAC Amends Reporting, Procedures and Penalties Regulations (RPPR)

(Source: Treasury/OFAC, 20 June 2019.)

The Department of the Treasury’s Office of Foreign Assets Control (OFAC) is amending the Reporting, Procedures and Penalties Regulations, 31 CFR part 501 (RPPR).  The RPPR sets forth standard reporting and recordkeeping requirements and license application and other procedures relevant to the economic sanctions programs administered by OFAC. 

This rule provides updated instructions and incorporates new requirements for parties filing reports on blocked property, unblocked property, or rejected transactions; revises the licensing procedures section to include information regarding OFAC’s electronic license application procedures, and to provide additional instructions regarding applications for the release of blocked funds; and clarifies the rules governing the availability of information under federal law, including the Freedom of Information Act (FOIA), for information that is submitted to OFAC in connection with blocking or unblocking reports, reports on rejected transactions, or license applications.

This regulatory amendment is currently available for public inspection with the Federal Register and will take effect upon publication in the Federal Register on Friday, June 21, 2019.

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5. EU Extends Sanctions Against Russia Until 2020

(Source: European Council, 20 June 2019.)

On 20 June 2019, the Council prolonged the restrictive measures introduced in response to the illegal annexation of Crimea and Sevastopol by Russia until 23 June 2020.

The measures apply to EU persons and EU based companies. They are limited to the territory of Crimea and Sevastopol. The sanctions include prohibitions on:

 – imports of productsoriginating in Crimea or Sevastopol into the EU;

  – investmentin Crimea or Sevastopol, meaning that no Europeans or EU-based companies can buy real estate or entities in Crimea, finance Crimean companies or supply related services;

  – tourism servicesin Crimea or Sevastopol, in particular, European cruise ships cannot call at ports in the Crimean peninsula, except in case of emergency;

  – exports of certain goods and technologiesto Crimean companies or for use in Crimea in the transport, telecommunications and energy sectors and related to the prospection, exploration and production of oil, gas and mineral resources. Technical assistance, brokering, construction or engineering services related to infrastructure in these sectors must not be provided either.

As stated in the declaration by the High Representative for Foreign Affairs and Security Policy on behalf of the EU on 17 March 2019, five years on from the illegal annexation of Crimea and Sevastopol by Russia, the EU remains steadfast in its commitment to Ukraine’s sovereignty and territorial integrity. The EU does not recognise and continues to condemn this violation of international law.

Since March 2014, the EU has progressively imposed restrictive measures against Russia in response to this deliberate destabilisation of Ukraine, including the sanctions renewed today. Other EU measures in place in response to the crisis in Ukraine include:   

 – economic sanctionstargeting specific sectors of the Russian economy, currently in place until 31 July 2019;

  – individual restrictive measurescurrently targeting 170 individuals and 44 entities, subject to an asset freeze and a travel ban because their actions undermined Ukraine’s territorial integrity, sovereignty and independence.

  – EU restrictive measures in response to the crisis in Ukraine

  – Factsheet EU-Ukraine relations (EEAS)

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6. President Continues National Emergency with Respect to North Korea

(Source: The White House, 21 June 2019.)

Text of a Notice to the Congress on the Continuation of the National Emergency with Respect to North Korea

On June 26, 2008, by Executive Order 13466, the President declared a national emergency with respect to North Korea pursuant to the International Emergency Economic Powers Act (50 U.S.C. 1701-1706) to deal with the unusual and extraordinary threat to the national security and foreign policy of the United States constituted by the existence and risk of proliferation of weapons-usable fissile material on the Korean Peninsula. The President also found that it was necessary to maintain certain restrictions with respect to North Korea that would otherwise have been lifted pursuant to Proclamation 8271 of June 26, 2008, which terminated the exercise of authorities under the Trading With the Enemy Act (50 U.S.C. App. 1-44) with respect to North Korea.

On August 30, 2010, the President signed Executive Order 13551, which expanded the scope of the national emergency declared in Executive Order 13466 to deal with the unusual and extraordinary threat to the national security, foreign policy, and economy of the United States posed by the continued actions and policies of the Government of North Korea, manifested by its unprovoked attack that resulted in the sinking of the Republic of Korea Navy ship Cheonan and the deaths of 46 sailors in March 2010; its announced test of a nuclear device and its missile launches in 2009; its actions in violation of United Nations Security Council Resolutions 1718 and 1874, including the procurement of luxury goods; and its illicit and deceptive activities in international markets through which it obtains financial and other support, including money laundering, the counterfeiting of goods and currency, bulk cash smuggling, and narcotics trafficking, which destabilize the Korean Peninsula and imperil United States Armed Forces, allies, and trading partners in the region.

On April 18, 2011, the President signed Executive Order 13570 to take additional steps to address the national emergency declared in Executive Order 13466 and expanded in Executive Order 13551 that would ensure the implementation of the import restrictions contained in United Nations Security Council Resolutions 1718 and 1874 and complement the import restrictions provided for in the Arms Export Control Act (22 U.S.C. 2751 et seq.).

On January 2, 2015, the President signed Executive Order 13687 to take further steps with respect to the national emergency declared in Executive Order 13466, as expanded in Executive Order 13551, and addressed further in Executive Order 13570, to address the threat to the national security, foreign policy, and economy of the United States constituted by the provocative, destabilizing, and repressive actions and policies of the Government of North Korea, including its destructive, coercive cyber-related actions during November and December 2014, actions in violation of United Nations Security Council Resolutions 1718, 1874, 2087, and 2094, and commission of serious human rights abuses.

On March 15, 2016, the President signed Executive Order 13722 to take additional steps with respect to the national emergency declared in Executive Order 13466, as modified in scope and relied upon for additional steps in subsequent Executive Orders, to address the Government of North Korea’s continuing pursuit of its nuclear and missile programs, as evidenced by its February 7, 2016 launch using ballistic missile technology and its January 6, 2016 nuclear test in violation of its obligations pursuant to numerous United Nations Security Council resolutions and in contravention of its commitments under the September 19, 2005 Joint Statement of the Six-Party Talks, that increasingly imperils the United States and its allies.

On September 20, 2017, the President signed Executive Order 13810 to take further steps with respect to the national emergency declared in Executive Order 13466, as modified in scope and relied upon for additional steps in subsequent Executive Orders, to address the provocative, destabilizing, and repressive actions and policies of the Government of North Korea, including its intercontinental ballistic missile launches of July 3 and July 28, 2017, and its nuclear test of September 2, 2017; its commission of serious human rights abuses; and its use of funds generated through international trade to support its nuclear and missile programs and weapons proliferation.

The existence and risk of proliferation of weapons-usable fissile material on the Korean Peninsula and the actions and policies of the Government of North Korea continue to pose an unusual and extraordinary threat to the national security, foreign policy, and economy of the United States.  For this reason, the national emergency declared in Executive Order 13466, expanded in scope in Executive Order 13551, addressed further in Executive Order 13570, further expanded in scope in Executive Order 13687, and under which additional steps were taken in Executive Order 13722, and Executive Order 13810, and the measures taken to deal with that national emergency, must continue in effect beyond June 26, 2019.  Therefore, in accordance with section 202(d) of the National Emergencies Act (50 U.S.C. 1622(d)), I am continuing for 1 year the national emergency with respect to North Korea declared in Executive Order 13466.

This notice shall be published in the Federal Register and transmitted to the Congress.

DONALD J. TRUMP

June 21, 2019.

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