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The Daily Bugle Weekly Highlights: Week 34 (17 – 21 Aug 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. Defense Department: “Prohibition on Contracting with Entities Using Certain Telecommunications and Video Surveillance Services or Equipment”; Monday, 17 Aug 2020; Item #1
  2. Commerce/BIS: “Commerce Department Further Restricts Huawei Access to U.S. Technology and Adds Another 38 Affiliates to the Entity List”; Monday, 17 Aug 2020; Item #3
  3. Commerce/BIS Adds Huawei Non-U.S. Affiliates to the Entity List, Removes TGL, and Amends General Prohibition Three; Thursday, 20 Aug 2020; Item #1
  4. Commerce/BIS: “Clarification of Entity List Requirements for Listed Entities When Acting as a Party to the Transaction Under the EAR”; Thursday, 20 Aug 2020; Item #2
  5. Netherlands TCA: “From 1 July 2022 – No More GPA and SPA”; Thursday, 20 Aug 2020; Item #8

 

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Defense Department: “Prohibition on Contracting with Entities Using Certain Telecommunications and Video Surveillance Services or Equipment”

(Source: Federal Register) [Excerpts]

 

85 FR 50026: Notice

* AGENCY:Department of Defense (DOD), General Services Administration (GSA), and National Aeronautics and Space Administration (NASA).

* ACTION:Notice and request for comments.

* SUMMARY:In accordance with the Paperwork Reduction Act of 1995, and the Office of Management and Budget (OMB) regulations, DoD, GSA, and NASA invite the public to comment on an extension of information collection 9000-0201 concerning representations and reporting associated with implementation of Federal Acquisition Regulation (FAR) rule 2019-009, Prohibition on Contracting with Entities Using Certain Telecommunications and Video Surveillance Services or Equipment. OMB authorized information collection 9000-0201 as an emergency collection. DoD, GSA, and NASA propose that OMB extend its approval for use for three additional years beyond the current expiration date.

* DATES:DoD, GSA, and NASA will consider all comments received by October 16, 2020.

 

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Commerce/BIS: “Commerce Department Further Restricts Huawei Access to U.S. Technology and Adds Another 38 Affiliates to the Entity List”

(Source: Commerce/BIS, 17 Aug 2020)

 

  The Bureau of Industry and Security (BIS) in the Department of Commerce (Commerce) today further restricted access by Huawei Technologies (Huawei) and its non-U.S. affiliates on the Entity List to items produced domestically and abroad from U.S. technology and software. In addition, BIS added another 38 Huawei affiliates to the Entity List, which imposes a license requirement for all items subject to the Export Administration Regulations (EAR) and modified four existing Huawei Entity List entries. BIS also imposed license requirements on any transaction involving items subject to Commerce export control jurisdiction where a party on the Entity List is involved, such as when Huawei (or other Entity List entities) acts as a purchaser, intermediate, or end user. These actions, effective immediately, prevent Huawei’s attempts to circumvent U.S. export controls to obtain electronic components developed or produced using U.S. technology.  

  In May 2020, BIS amended the longstanding foreign-produced direct product (FDP) rule to target Huawei’s acquisition of semiconductors that are the direct product of certain U.S. software and technology. Today’s amendment further refines the FDP rule by applying the control to transactions: 1) where U.S. software or technology is the basis for a foreign-produced item that will be incorporated into, or will be used in the “production” or “development” of any “part,” “component,” or “equipment” produced, purchased, or ordered by any Huawei entity on the Entity List; or 2) when any Huawei entity on the Entity List is a party to such a transaction, such as a “purchaser,” “intermediate consignee,” “ultimate consignee,” or “end-user.”

  This amendment further restricts Huawei from obtaining foreign made chips developed or produced from U.S. software or technology to the same degree as comparable U.S. chips.

  “Huawei and its foreign affiliates have extended their efforts to obtain advanced semiconductors developed or produced from U.S. software and technology in order to fulfill the policy objectives of the Chinese Communist Party,” said Commerce Secretary Wilbur Ross. “As we have restricted its access to U.S. technology, Huawei and its affiliates have worked through third parties to harness U.S. technology in a manner that undermines U.S. national security and foreign policy interests. This multi-pronged action demonstrates our continuing commitment to impede Huawei’s ability to do so.”

  The following 38 new Huawei affiliates across 21 countries were added to the Entity List because they present a significant risk of acting on Huawei’s behalf contrary to the national security or foreign policy interests of the United States. There is reasonable cause to believe that Huawei otherwise would seek to use them to evade the restrictions imposed by the Entity List.

  • Huawei Cloud Computing Technology; Huawei Cloud Beijing; Huawei Cloud Dalian; Huawei Cloud Guangzhou; Huawei Cloud Guiyang; Huawei Cloud Hong Kong; Huawei Cloud Shanghai; Huawei Cloud Shenzhen; Huawei OpenLab Suzhou; Wulanchabu Huawei Cloud Computing Technology; Huawei Cloud Argentina; Huawei Cloud Brazil; Huawei Cloud Chile; Huawei OpenLab Cairo; Huawei Cloud France; Huawei OpenLab Paris; Huawei Cloud Berlin; Huawei OpenLab Munich; Huawei Technologies Dusseldorf GmbH; Huawei OpenLab Delhi; Toga Networks; Huawei Cloud Mexico; Huawei OpenLab Mexico City; Huawei Technologies Morocco; Huawei Cloud Netherlands; Huawei Cloud Peru; Huawei Cloud Russia; Huawei OpenLab Moscow; Huawei Cloud Singapore; Huawei OpenLab Singapore; Huawei Cloud South Africa; Huawei OpenLab Johannesburg; Huawei Cloud Switzerland; Huawei Cloud Thailand; Huawei OpenLab Bangkok; Huawei OpenLab Istanbul; Huawei OpenLab Dubai; and Huawei Technologies R&D UK

 

  The Temporary General License (TGL) has now expired. This rule further protects U.S. national security and foreign policy interests by making a limited permanent authorization for the Huawei entities on the Entity List. This limited authorization is for the sole purpose of providing ongoing security research critical to maintaining the integrity and reliability of existing and currently “fully operational networks” and equipment.

  In a concurrent rule, BIS revised the Entity List to require a license when a party on the Entity List acts as a purchaser, intermediate consignee, ultimate consignee, or end user to an EAR transaction. This aligns with the additional restrictions imposed in the revisions to the FDP, when any of the Huawei entities on the Entity List are a party to the transaction, such as by acting as purchaser, intermediate consignee, ultimate consignee, or end user.

 

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Commerce/BIS Adds Huawei Non-U.S. Affiliates to the Entity List, Removes TGL, and Amends General Prohibition Three

(Source: Federal Register, 20 Aug 2020) [Excerpts]

 

85 FR 51596: Rule

* AGENCY: Bureau of Industry and Security, Commerce.

* ACTION: Final rule.

* SUMMARY: Huawei Technologies Co., Ltd. (Huawei) and a number of non-U.S. affiliates have been placed on the Entity List. In order to further address the continuing threat to U.S. national security and foreign policy interests posed by Huawei and its non-U.S. affiliates, the Bureau of Industry and Security (BIS) in this final rule is making three sets of changes to controls for Huawei and its listed non-U.S. affiliates under the Export Administration Regulations (EAR). First, BIS is adding additional non-U.S. affiliates of Huawei to the Entity List because they also pose a significant risk of involvement in activities contrary to the national security or foreign policy interests of the United States. Second, this rule removes a temporary general license for Huawei and its non-U.S. affiliates and replaces those provisions with a more limited authorization that will better protect U.S. national security and foreign policy interests. Third, in response to public comments, this final rule amends General Prohibition Three, also known as the foreign-produced direct product rule, to revise the control over certain foreign-produced items recently implemented by BIS. These revisions are consistent with the authority provided by the Export Control Reform Act of 2018 (ECRA).

* DATES: This rule is effective August 17, 2020.

* FOR FURTHER INFORMATION CONTACT: For questions on the foreign direct product change, contact Sharron Cook, Senior Export Policy Analyst, Regulatory Policy Division, Office of Exporter Services, Bureau of Industry and Security, Department of Commerce, Phone: (202) 714-6685 or email your inquiry to: Sharron.Cook@bis.doc.gov. For other questions on this rule, contact the Director, Office of Exporter Services, Bureau of Industry and Security, Department of Commerce, Phone: (949) 660-0144 or (408) 998-8806 or email your inquiry to: ECDOEXS@bis.doc.gov.

 

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Commerce/BIS: “Clarification of Entity List Requirements for Listed Entities When Acting as a Party to the Transaction Under the EAR”

(Source: Federal Register, 20 Aug 2020) [Excerpts]

 

85 FR 51335: Rule

* AGENCY: Bureau of Industry and Security, Commerce.

* ACTION: Final rule.

* SUMMARY: In this final rule, the Bureau of Industry and Security (BIS) is clarifying the supplemental license requirements for parties listed on the Entity List pursuant to the Export Control Reform Act of 2018 (ECRA). Specifically, this final rule clarifies the Entity List’s supplemental licensing requirements to state that these end-user controls apply to any listed entity when that entity is acting as a purchaser, intermediate or ultimate consignee, or end-user as defined in the Export Administration Regulations (EAR).

* DATES: This rule is effective August 17, 2020.

* FOR FURTHER INFORMATION CONTACT: Chair, End-User Review Committee, Office of the Assistant Secretary for Export Administration, Bureau of Industry and Security, Department of Commerce, Phone: (202) 482-5991, Fax: (202) 482-3911, Email: ERC@bis.doc.gov.

 

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Netherlands TCA: “From 1 July 2022 – No More GPA and SPA”

(Source: Netherlands Tax and Customs Administration, 20 Aug 2020)

 

  With effect from July 2022, the Customs Declarations Management System (DMS) will replace the old declaration system (AGS). This marks the end of the Automated Periodic Declaration (GPA) and the Written Periodic Declaration (SPA).

  In DMS, instead of using the GPA or the SPA, you can make customs declarations as follows:

  • normal declaration procedure, with a simplified (incomplete) variant and prior declaration
  • entry in the declarant’s records, with presentation and periodical supplementary declaration
  • entry in the declarant’s records, with exemption from presentation and periodical supplementary declaration

  The first option, the normal declaration procedure, is exactly the same as you were used to in AGS.

  For the second and third options, your company needs an ‘Authorisation for Entry in the Declarant’s Records’ (IIAA).

What is presentation?

  Presentation means that when you are placed under the arrangement you must send Customs a message that meets pre-defined specifications.

How does the supplementary declaration work?

  You must submit the supplementary declaration within 10 days of the end of the period in which the goods were entered in the records. This period is set at 1 (calendar) day. That means you can no longer make a monthly declaration.

How does the presentation exemption work?

  The presentation exemption is linked to the ‘chain procedure’. Companies with several IIAA authorisations for successive (special) customs procedures can be granted an exemption from presentation of the goods on subsequent release for free circulation or placement under a subsequent special customs procedure. This is however subject to the condition that the goods continue to be entered under successive authorisations in the same company records. 

Why was it decided to replace the GPA and the SPA?

  Customs has looked into which declaration services can be set up on the basis of the Union Customs Code (UCC). We also took account of the input provided by the business community during the information sessions held in the spring of 2020.

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