The Daily Bugle Weekly Highlights: Week 41 (7 – 10 Oct 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 7,500 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, and Alexander Witt.

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 Reports to Congress on Direct Commercial Sales Authorizations to Foreign Countries and International Organizations for Fiscal Year 2018; The Daily Bugle; Monday, 7 October 2019, Item #15;
  2. Hong Kong TID Publishes Strategic Trade Controls Circular No. 8/2019; The Daily Bugle; Tuesday, 8 October 2019, Item #5;
  3. Commerce/BIS Amends EAR, Adds 28 Chinese Entities to Entity List; The Daily Bugle; Wednesday, 9 October 2019, Item #1;
  4. UK ECJU Publishes Guidance on Export Licensing Policy Concerning Senegal, Guinea-Bissau, and Benin; The Daily Bugle; Thursday, 10 October 2019, Item #5;
  5. UK ECJU Updates Guidance on Firearms and Torture Goods; The Daily Bugle; Friday, 4 October 2019, Item #2;
  6. DHS/CBP Publishes Guidance: 3rd Round of Products Excluded from Section 301 Articles of China Specific to Tranche 2 ($16B Action); The Daily Bugle; Friday, 11 October 2019, Item #3;

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1. State/DDTC Reports to Congress on Direct Commercial Sales Authorizations to Foreign Countries and International Organizations for Fiscal Year 2018

(Source: State/DDTC, 7 Oct 2019.)

Overview

This report documents defense articles and defense services licensed for permanent export under section 38 of the Arms Export Control Act (AECA), 22 U.S.C. 2778, to each foreign country government and international organization during FY 2018, in response to the requirements in section 655(b)(3) of the Foreign Assistance Act (FAA) of 1961, as amended. The report specifies the aggregate dollar value and quantity of defense articles, defense services, and international military education and training activities by category, authorized to each foreign country government and international organization during the fiscal year, as well as data on the actual shipments of those licensed transactions. 

The actual shipment data shows the total dollar value of all shipments to each destination. Authorizations in this report are categorized based on the destination country. In accordance with subsection (c) of Section 655, this report is also being made available to the public on the internet through the Department of State, Directorate of Defense Trade Controls (DDTC), at www.pmddtc.state.gov

In addition to reporting information related to exports licensed under section 38 of the AECA, section 655(b)(3) of the FAA also requires the specification of semiautomatic weapons and spare parts for such weapons; such data is provided in the appendix as Category I(a) and I(h), respectively. 

Additionally, authorizations applicable to multiple countries in the appendix are included under the designation “Various.” Since documentation for shipping purposes requires a definitive destination be declared, actual shipments for those articles approved under the designation “Various” are attributed to the country listed on the shipping documentation.

The value of authorizations for defense articles and defense services does not correlate precisely to the value of articles actually transferred during the reporting period. Most licenses issued for defense articles are valid for four years and may be used throughout the four years to execute authorized transactions. Similarly, manufacturing license and technical assistance agreements cover a wide range of programmatic activities for multi-year periods (generally exceeding the four-year validity period of defense article export licenses). Export authorizations furnished in FY 2018 also include certain activities occurring in prior years because the scope of the Department’s regulatory authority over such agreements continues for as long as these multi-year agreements remain in effect.

The categories of the U.S. Munitions List (USML) used throughout this report are as follows; sub-category descriptions are provided for reference only and exports by sub-category, except Categories I(a) and I(h) are not detailed in the appendices.

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2. Hong Kong TID Publishes Strategic Trade Controls Circular No. 8/2019

(Source: Hong Kong Trade and Industry Department, 8 Oct 2019.)

 The Trade and Industry Department (TID) of Hong Kong has released the following document(s) on its website: 

Circulars

Air Transhipment Cargo Exemption Scheme for Specified Strategic Commodities Registration for 2020

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3. Commerce/BIS Amends EAR, Adds 28 Chinese Entities to Entity List

(Source: Federal Register, 9 Oct 2019.) [Excerpts.]

84 FR 54002 – 54009: Addition of Entities to the Entity List 

* AGENCY: Bureau of Industry and Security, Commerce.

* ACTION: Final rule.

* SUMMARY: This final rule amends the Export Administration Regulations (EAR) by adding twenty-eight entities to the Entity List. These twenty-eight entities have been determined by the U.S. Government to be acting contrary to the foreign policy interests of the United States and will be listed on the Entity List under the destination of the People’s Republic of China (China).

* DATES: This rule is effective October 9, 2019.

* FOR FURTHER INFORMATION CONTACT: …

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

SUPPLEMENTARY INFORMATION: …

Additions to the Entity List

This rule implements the decision of the ERC to add twenty-eight entities to the Entity List. The twenty-eight entities are being added based on §744.11 (License requirements that apply to entities acting contrary to the national security or foreign policy interests of the United States) of the EAR. The twenty-eight entries are located in China.

The ERC reviewed and applied §744.11(b) (Criteria for revising the Entity List) in making the determination to add these twenty-eight entities to the Entity List. Under that paragraph, persons for whom there is reasonable cause to believe, based on specific and articulable facts, that they have been involved, are involved, or pose a significant risk of being or becoming involved in activities that are contrary to the national security or foreign policy interests of the United States, along with those acting on behalf of such persons, may be added to the Entity List. Paragraphs (b)(1) through (b)(5) of §744.11 provide an illustrative list of activities that could be contrary to the national security or foreign policy interests of the United States. For each of the twenty-eight entities described below, the ERC made the requisite determination under the standard set forth in §744.11(b).

Pursuant to §744.11(b) of the EAR, the ERC determined that the Xinjiang Uighur Autonomous Region (XUAR) People’s Government Public Security Bureau, eighteen of its subordinate municipal and county public security bureaus and one other subordinate institute are engaging in activities contrary to the foreign policy interests of the United States, and eight additional entities are enabling activities contrary to the foreign policy interests of the United States. Specifically, these entities have been implicated in human rights violations and abuses in the implementation of China’s campaign of repression, mass arbitrary detention, and high-technology surveillance against Uighurs, Kazakhs, and other members of Muslim minority groups in the XUAR.

The entities are as follows: [See Source for names.]   

 The following eight entities are also added to the Entity List as part of this rule: [See Source for names.] 

For the twenty-eight entities described above that are being added to the Entity List, BIS imposes a license requirement for all items subject to the EAR and a license review policy of case-by-case review for Export Control Classification Numbers (ECCNs) 1A004.c, 1A004.d, 1A995, 1A999.a, 1D003, 2A983, 2D983, and 2E983. A policy of case-by-case review also applies to items designated as EAR99 that are described in the Note to ECCN 1A995, specifically, items for protection against chemical or biological agents that are consumer goods, packaged for retail sale or personal use, or medical products. BIS has adopted a license review policy of presumption of denial for all other items subject to the EAR. For all twenty-eight entities, the license requirements apply to any transaction in which items are to be exported, reexported, or transferred (in country) to any of the entities or in which such entities act as purchaser, intermediate consignee, ultimate consignee, or end user. In addition, no license exceptions are available for exports, reexports, or transfers (in-country) to the entities being added to the Entity List in this rule. The acronym “a.k.a.” or also known as is used in entries on the Entity List to identify aliases, thereby assisting exporters, reexporters and transferors in identifying entities on the Entity List.

This final rule adds the following twenty-eight entities to the Entity List and includes, where appropriate, aliases: [See Source for names.] 

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4. UK ECJU Publishes Guidance on Export Licensing Policy Concerning Senegal, Guinea-Bissau, and Benin

(Source: UK ECJU, 10 Oct 2019.)

The UK Export Control Joint Unit (ECJU) within the Department of International Trade (TID) has published the following guidance documents on its website:

Export licensing policy for Senegal

Export licensing policy for Guinea-Bissau

Export licensing policy for Benin

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5. UK ECJU Updates Guidance on Firearms and Torture Goods

(Source: UK ECJU, 10 Oct 2019.)

The UK Export Control Joint Unit (ECJU) within the Department of International Trade (TID) has updates the following guidance documents on its website:

– Guidance: Firearms and export control forms

– Guidance Export controls: torture goods

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6. DHS/CBP Publishes Guidance: 3rd Round of Products Excluded from Section 301 Articles of China Specific to Tranche 2 ($16B Action) 

(Source: CSMS, 11 Oct 2019.) [Excerpt.]

BACKGROUND

On October 2, 2019, the U.S. Trade Representative (USTR) published Federal Register (FR) Notice 84 FR 52553 announcing the decision to grant the third round of certain exclusion requests from the 25 percent duty assessed under the Section 301 investigation related to goods from China ($16B Action – Tranche 2).

These product exclusions relate to the imposed additional duties announced in 83 FR 40823 on Chinese goods with an annual trade value of approximately $16 billion as part of the action in the Section 301 investigation of China’s acts, policies, and practices related to technology transfer, intellectual property, and innovation. The product exclusions announced in this notice will retroactively apply as of the August 23, 2018 effective date of the $16 billion action (Tranche 2), and will extend for one year after the publication of 84 FR 52553.

The exclusions are available for any product that meets the description as set out in the Annex to Federal Register Notice 84 FR 52553, regardless of whether the importer filed an exclusion request. Further, the scope of each exclusion is governed by the scope of the Harmonized Tariff Schedule of the United States (HTSUS) 10-digit headings and product descriptions in the Annex; not by the product descriptions set out in any particular request for exclusion.

The functionality for the acceptance of the third round of product exclusions for articles from China specific to Tranche 2 of Section 301 duties is available in the Automated Commercial Environment (ACE) as of October 8, 2019.

GUIDANCE

Instructions for importers, brokers, and filers on submitting entries to CBP containing products granted exclusions by the USTR from the Section 301 measures as set out in 84 FR 52553 are as follow:

  • In addition to reporting the regular Chapters 39, 70, 73, 84, 85, 86, and 90 classifications of the HTSUS for the imported merchandise, importers shall report the HTSUS classification 9903.88.20 (Articles the product of China, as provided for in U.S. note 20(y) to this subchapter, each covered by an exclusion granted by the U.S. Trade Representative) for imported merchandise subject to the exclusion.

 – Importers shall not submit the corresponding Chapter 99 HTS number for the Section 301 duties when HTS 9903.88.20 is submitted.

 – Please note: Paragraph B and C of the Annex correct errors by removing U.S. notes 20(v)(55) and 20(v)(88) of subchapter III of chapter 99 of the HTSUS, as set out in the Annex to the notice published at 84 FR 49600 (September 20, 2019).

ADDITIONAL INFORMATION

Duty exclusions granted by the USTR are retroactive for imports on or after the initial effective date of August 23, 2018 (83 FR 40823). To request a refund of Section 301 duties paid on previous imports of products granted duty exclusions by the USTR, importers may file a Post Summary Correction (PSC) if within the PSC filing timeframe. If the entry is beyond the PSC filing timeframe, importers may protest the liquidation.

Reminder: when importers, brokers, and/or filers are submitting an entry summary in which a heading or subheading in Chapter 99 is claimed on imported merchandise, they should refer to CSMS 39587858 (Entry Summary Order of Reporting for Multiple HTS in ACE).

Imports which have been granted a product exclusion from the Section 301 measures, and which are not subject to the Section 301 duties, are not covered by the Foreign Trade Zone (FTZ) provisions of the Section 301 Federal Register notices, but instead are subject to the FTZ provisions in 19 CFR part 146.

For ease of reference, a summary of Section 301 actions are provided HERE.

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