The Daily Bugle Weekly Highlights: Week 47 (18 – 22 Nov 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 Updates List of Entities and Subentities Associated with Cuba (Cuba Restricted List; The Daily Bugle; Tuesday, 19 November; Item #1
  2. Commerce/BIS Extends Temporary General License to Huawei Technologies until February 16, 2020; The Daily Bugle Wednesday, 20 November 2019; Item #1
  3. DHS/CBP Guidance: “Section 301 $200B – Tranche 3 Fourth Round of Product Exclusions from China”; The Daily Bugle, Wednesday 20 November 2019; Item #5
  4. State/DDTC Concludes $1,000,000 Settlement of Alleged Export Violations by AeroVironment, Inc.; The Daily Bugle, Thursday, 21 November 2019; Item #3
  5. Treasury/OFAC Amends Venezuela Sanctions Regulations; The Daily Bugle, Friday, 22 November 2019; Item #1

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1. State Updates List of Entities and Subentities Associated with Cuba (Cuba Restricted List)

(Source: Federal Register, 19 Nov 2019.) [Excerpts.]

84 FR 63953-63955: Updating the State Department’s List of Entities and Subentities Associated with Cuba (Cuba Restricted List)

 * ACTION: Updated publication of list of entities and subentities;

notice.

* SUMMARY: The Department of State is publishing an update to its List of Restricted Entities and Subentities Associated with Cuba (Cuba Restricted List) with which direct financial transactions are generally prohibited under the Cuban Assets Control Regulations (CACR). This Cuba Restricted List is also considered during review of license applications submitted to the Department of Commerce’s Bureau of Industry and Security (BIS) pursuant to the Export Administration Regulations (EAR).

* DATES: This list of entities and subentities is effective on November 19, 2019.

* FOR FURTHER INFORMATION CONTACT: Taylor Ruggles, Office of Economic Sanctions Policy and Implementation, tel.: 202-647-7677; Robert Haas, Office of the Coordinator for Cuban Affairs, tel.:202-453-8456, Department of State, Washington, DC 20520.

* SUPPLEMENTARY INFORMATION:

Background …

This update includes five additional subentities. This is the fifth update to the Cuba Restricted List since it was published November 9, 2017 (82 FR 52089). Previous updates were published November 15, 2018 (see 83 FR 57523), March 9, 2019 (see 84 FR 8939), April 24, 2019 (see 84 FR 17228), and July 26, 2019 (see 84 FR 36154). The State Department will continue to update the Cuba Restricted List periodically. …

List of Restricted Entities and Subentities Associated With Cuba as of November 15

Below is the U.S. Department of State’s list of entities and subentities under the control of, or acting for or on behalf of, the Cuban military, intelligence, or security services or personnel with which direct financial transactions would disproportionately benefit such services or personnel at the expense of the Cuban people or private enterprise in Cuba. For information regarding the prohibition on direct financial transactions with these entities, please see 31 CFR

515.209. All entities and subentities were listed effective November 9, 2017, unless otherwise indicated.

    * * * Entities or subentities owned or controlled by another entity or subentity on this list are not treated as restricted unless also

specified by name on the list.* * *

….

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 2. Commerce/BIS Extends Temporary General License to Huawei Technologies until February 16, 2020

(Source: Federal Register, 20 Nov 2019.) [Excerpts.]

84 FR 64018-64019: Temporary General License: Extension of Validity

* AGENCY: Bureau of Industry and Security, Commerce.

* ACTION: Final rule.

* SUMMARY: The U.S. Government has decided to extend through February 16, 2020, the temporary general license to Huawei Technologies Co., Ltd.

(Huawei) and one hundred and fourteen of its non-U.S. affiliates on the Entity List. In order to implement this decision, this final rule revises the temporary general license to remove the expiration date of November 18, 2019, and substitute the date of February 16, 2020.

* DATES: This rule is effective November 18, 2019, through February 16, 2020. The expiration date of the final rule published on May 22, 2019 (84 FR 23468) and the final rule published on August 21, 2019 (84 FR 43487) is extended until February 16, 2020. …

* SUPPLEMENTARY INFORMATION:

Background

As published on May 22, 2019 (84 FR 23468) and extended and amended through a final rule published on August 21, 2019 (84 FR 43487), this temporary general license authorizes certain activities, including those necessary for the continued operations of existing networks and equipment as well as the support of existing mobile services, including cybersecurity research critical to maintaining the integrity and reliability of existing and fully operational networks and equipment. Exporters, reexporters, and transferors are required to maintain certifications and other records, to be made available when requested by BIS, regarding their use of the temporary general license.

As published on May 22, 2019 (84 FR 22961), and as revised and clarified by a final rule published on August 21, 2019, (84 FR 43493), any exports, reexports, or in-country transfers of items subject to the EAR to any of the listed Huawei entities as of the effective date they were added to the Entity List continue to require a license, with the exception of transactions explicitly authorized by the temporary general license and eligible for export, reexport, or transfer (in-country) prior to May 16, 2019 without a license or under a license exception. License applications will continue to be reviewed under a presumption of denial, as stated in the Entity List entries for the listed Huawei entities.

No persons are relieved of other obligations under the EAR, including but not limited to licensing requirements to the People’s Republic of China (PRC or China) or other destinations and the requirements of part 744 of the EAR. The temporary general license also does not authorize any activities or transactions involving Country Group E countries (i.e., Cuba, Iran, North Korea, Sudan, and Syria) or foreign nationals.

Extension of Validity

At this time, the U.S. Government has decided to extend the temporary general license until February 16, 2020. In order to implement this U.S. Government decision, this final rule revises the temporary general license to remove the date of November 18, 2019 and substitute the date of February 16, 2020 in the introductory text in paragraph (b)(1) of the temporary general license and in the introductory text of paragraph (c) of Supplement No. 7 to part 744. …

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3. State/DDTC Concludes $1,000,000 Settlement of Alleged Export Violations by AeroVironment, Inc.

(Source: State/DDTC, 20 Nov 2019.)

The Department of State has concluded an administrative settlement with AeroVironment, Inc. (AV) of Simi Valley, California, to resolve alleged violations of the Arms Export Control Act (AECA), 22 U.S.C. § 2751 et seq., and the International Traffic in Arms Regulations (ITAR), 22 C.F.R. Parts 120-130. The Department of State and AV have reached this settlement following an extensive compliance review by the Office of Defense Trade Controls Compliance in the Department’s Bureau of Political-Military Affairs.

The Department of State and AV have reached an agreement pursuant to ITAR § 128.11 to address alleged unauthorized exports of defense articles, including technical data; the failure to properly maintain records involving ITAR-controlled transactions; and violations of the provisos, terms, and conditions of export authorizations. The settlement demonstrates the Department’s role in strengthening U.S. industry by protecting U.S.-origin defense articles, including technical data from unauthorized exports. The settlement also highlights the importance of obtaining appropriate authorization from the Department for exporting controlled articles as well as maintaining proper records of such exports.

Under the terms of the twenty-four (24) month Consent Agreement, AV will pay a civil penalty of $1,000,000. The Department has agreed to suspend $500,000 of this amount on the condition that the funds have or will be used for Department-approved Consent Agreement remedial compliance measures. AV must also hire an outside Special Compliance Officer (SCO) for a term of one year and conduct an external audit to assess and improve its compliance program during the Consent Agreement term.

AV voluntarily disclosed to the Department the alleged AECA and ITAR violations, which are resolved under this settlement. AV also acknowledged the serious nature of the alleged violations, cooperated with the Department’s review, and instituted a number of compliance program improvements during the course of the Department’s review. For these reasons, the Department has determined that it is not appropriate to administratively debar AV at this time.

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4. DHS/CBP Guidance: “Section 301 $200B – Tranche 3 Fourth Round of Product Exclusions from China”

(Source: CSMS #40710742, 20 Nov 2019.)

Background

On November 13, 2019, the U.S. Trade Representative (USTR) published Federal Register (FR) Notice 84 FR 61674 announcing the decision to grant the fourth round of certain exclusion requests from the 10 percent duty, and later amended to 25 percent duty, assessed under the Section 301 investigation related to goods from China ($200B Action – Tranche 3).

These product exclusions relate to the imposed additional duties announced in 83 FR 47974 on Chinese goods with an annual trade value of approximately $200 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 September 24, 2018 effective date of the $200 billion action (Tranche 3), and will extend through August 7, 2020.

The exclusions are available for any product that meets the description as set out in Annex A to Federal Register Notice 84 FR 61674, 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.  For ease of reference, a link to the entire Federal Register Notice is embedded in this message.

The functionality for the acceptance of the fourth round of products of China excluded from Section 301 duties will be available in the Automated Commercial Environment (ACE) as of Noon, November 14, 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 61674 are as follow:

  – In addition to reporting the regular Chapters 39, 42, 44, 48, 50, 54, 60, 73, 82, 83, 84, 85, 87, 90, and 94 classifications of the HTSUS for the imported merchandise, importers shall report the HTSUS classification 9903.88.34 (Articles the product of China, as provided for in U.S. note 20(mm) 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 9903.88.34 is submitted.

Additional Information

Duty exclusions granted by the USTR are retroactive for imports on or after the initial effective date of September 24, 2018.  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, refer them to CSMS 39587858 (Entry Summary Order of Reporting for Multiple HTS when 98 or 99 HTS are Required).

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, Summaries of Section 301 Duties and Product Exclusion Notifications are provided as an attachment.

For more information related to the fourth round of products of China excluded from Section 301 duties, please refer to 84 FR 61674, issued November 13, 2019.

Questions from the importing community concerning ACE entry rejections involving product exclusions should be referred to their CBP Client Representative.  Questions related to Section 301 entry-filing requirements should be emailed to Traderemedy@cbp.dhs.gov.

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5. Treasury/OFAC Amends Venezuela Sanctions Regulations

(Source: Federal Register, 22 Nov 2019.) [Excerpts.]

84 FR 64415-64417: Venezuela Sanctions Regulations

* AGENCY: Office of Foreign Assets Control, Treasury.

* ACTION: Final rule.

* SUMMARY: The Department of the Treasury’s Office of Foreign Assets Control (OFAC) is amending the Venezuela Sanctions Regulations to incorporate additional Executive orders, add a general license authorizing U.S. Government activities, and add an interpretive provision.

* DATES: Effective Date: November 22, 2019.

* FOR FURTHER INFORMATION CONTACT: OFAC: …

* SUPPLEMENTARY INFORMATION: …

Subpart B–Prohibitions

0

  1. Revise Sec. 591.201 to read as follows:

Sec.  591.201   Prohibited transactions.

All transactions prohibited pursuant to Executive Order 13692 of March 8, 2015, or any further Executive orders issued pursuant to the national emergency declared in Executive Order 13692, are prohibited pursuant to this part.

Note 1 to Sec.  591.201:  The names of persons designated pursuant to Executive Order 13692, or pursuant to any further Executive orders issued pursuant to the national emergency declared in Executive Order 13692, whose property and interests in property therefore are blocked pursuant to this section, are published in the Federal Register and incorporated into OFAC’s Specially Designated Nationals and Blocked Persons List (SDN List) using the identifier formulation “[VENEZEULA-E.O. [E.O. number pursuant to which the person’s property and interests in property are blocked]].” The SDN List is accessible through the following page on OFAC’s website: www.treasury.gov/sdn. Additional information pertaining to the SDN List can be found in appendix A to this chapter. See Sec.  591.406 concerning entities that may not be listed on the SDN List but whose property and interests in property are nevertheless blocked pursuant to this section.

Note 2 to Sec.  591.201:  The International Emergency Economic Powers Act (50 U.S.C. 1701-1706), in Section 203 (50 U.S.C. 1702), authorizes the blocking of property and interests in property of a person during the pendency of an investigation. The names of persons whose property and interests in property are blocked pending investigation pursuant to this section also are published in the Federal Register and incorporated into the SDN List using the identifier formulation “[BPI-VENEZEULA-E.O. [E.O. number pursuant to which the person’s property andinterests in property are blocked pending investigation]].”

Note 3 to Sec.  591.201:  Sections 501.806 and 501.807 of this chapter describe the procedures to be followed by persons seeking, respectively, the unblocking of funds that they believe were blocked due to mistaken identity, or administrative reconsideration of their status as persons whose property and interests in property are blocked pursuant to this section. …

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