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The Daily Bugle Weekly Highlights: Week 8 (17-21 February 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 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, Alexander Witt, 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. Commerce/BIS Extends Temporary General License to Huawei Technologies for 45 Days; The Daily Bugle; Tuesday, 18 February 2020; Item #1.
  2. Treasury/OFAC Issues Venezuela-related General License and FAQs; The Daily Bugle; Tuesday, 18 February 2020; Item #7.
  3. State/DDTC: “New Supplemental FAQs on Defense Services and U.S. Persons Abroad; The Daily Bugle; Thursday, 20 February 2020; Item #6.
  4. State/DDTC Publishes Summary of Upcoming Changes to ITAR: Encryption Rule; The Daily Bugle; Friday, 21 February 2020; Item #4.
  5. Treasury/OFAC Publishes Frequently Asked Questions for Issuance of Reporting, Procedures and Penalties Regulations (RPPR)​; The Daily Bugle; Friday, 21 February 2020; Item #5.

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1. Commerce/BIS Extends Temporary General License to Huawei Technologies for 45 Days

(Source: Federal Register, 18 Feb 2020) [Excerpts.]

* AGENCY: Bureau of Industry and Security, Commerce.

* ACTION: Final rule.

* SUMMARY: The U.S. Government has decided to extend through April 1, 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 February 16, 2020, and substitute the date of April 1, 2020.

* DATES: This rule is effective February 13, 2020, through April 1, 2020, except for amendatory instructions 1 and 3, which are effective February 13, 2020.

FOR FURTHER INFORMATION CONTACT:

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.

* SUPPLEMENTARY INFORMATION: …

Extension of validity

At this time, the U.S. Government has decided to extend the temporary general license until April 1, 2020. In order to implement this U.S. Government decision, this final rule revises the temporary general license to remove the date of February 16, 2020 and substitute the date of April 1, 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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2. Treasury/OFAC Issues Venezuela-related General License and FAQs

(Source: Treasury/OFAC, 18 Feb 2020) [Excerpts]

The Department of the Treasury’s Office of Foreign Assets Control (OFAC) is issuing Venezuela-related General License 36  “Authorizing Certain Activities Necessary to the Wind Down of Transactions Involving Rosneft Trading S.A.”  OFAC is also issuing new Venezuela-related frequently asked questions.

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3. State/DDTC: “New Supplemental FAQs on Defense Services and U.S. Persons Abroad”

(Source: State/DDTC, 20 Feb 2020)

Q: Will DDTC provide a “safe harbor” period for U.S. persons who request authorization for defense services they are currently performing without a license?A: DDTC encourages regulated persons to obtain all required authorizations for their activities, given the U.S. national security and foreign policy reasons for which defense services are regulated. U.S. persons who believe they may have been furnishing defense services without authorization, and who request authorization for current or future defense services, may disclose their activities in conjunction with their request for authorization. Such disclosures will be treated as an initial notification in accordance with ITAR § 127.12(c) and should contain the information requested in that section. To the extent that DDTC learns of the prior unauthorized furnishing of defense services in a disclosure, the facts will be reviewed subject to the totality of the facts and circumstances. DTCC will consider the non-adoption of the 2015 proposed rule, as well as the recent promulgation of this FAQ guidance and good faith efforts by an applicant to comply with the ITAR.

Q:  If I request authorization for defense services that describe my current employment, do I need to cease the activities that constitute defense services until I receive authorization from DDTC? 
A:  U.S. persons who believe they may have been furnishing defense services without authorization and request authorization for current or future defense services may disclose their activities in conjunction with their request for authorization. Such disclosures will be treated as an initial notification in accordance with ITAR § 127.12(c) and should contain the information requested in that section. In such cases, the applicant may proceed with the described activities on a provisional basis unless otherwise notified by DDTC.

Click here to see the complete list of 16 FAQs on “Defense Services and U.S. Persons Abroad.”

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4. State/DDTC Publishes Summary of Upcoming Changes to ITAR: Encryption Rule

(Source: State/DDTC, 20 Feb 2020)

DDTC is providing a summary handout of the changes to the ITAR that are coming March 25, 2020, via the recently published Encryption Rule and what they mean to the regulated community.

OVERVIEW: On December 26, 2019, the Directorate of Defense Trade Controls (DDTC) published an ITAR interim final rule (84 FR 70887, effective March 25, 2020) creating a new definition of activities that are not exports, reexports, retransfers, or temporary imports. It consolidates in one location several previously existing but disassociated activities that are not considered exports and adds a new entry for properly secured unclassified technical data in an encrypted state. This rule is compatible with, but not identical to, the analogous provision in the Export Administration Regulations (EAR) 15 CFR parts 730 through 774. It also provides the regulatory framework for control of properly secured encrypted technical data and its means of decryption.

The rule does the following:

(1) Adds new ITAR § 120.54 to describe “activities that are not exports, reexports, retransfers, or temporary imports” (an otherwise “controlled event”) and do not require authorization from DDTC. The first four activities not considered to be controlled events are:

(a) launching items into space (formerly § 120.17(a)(6))

(b) transmitting or transferring technical data to U.S. persons within the United States

(c) transmitting or transferring technical data between or among U.S. persons within a single foreign country

(d) moving a defense article between the states, possessions, and territories of the United States

(2) The fifth activity, and the reason this is referred to as the “Encryption Rule,” is the sending, taking, or storing of technical data that is:

(a) unclassified;

(b) secured using end-to-end encryption as prescribed;

(c) not intentionally sent to a person in or stored in countries subject to restrictions under ITAR § 126.1 or the Russian Federation; and,

(d) not sent from a § 126.1 country or the Russian Federation.

(3) Revises the definitions of export, reexport, retransfer, and temporary import to accommodate the new definition.\

(4) Adds ITAR § 120.55 to define “access information” and revises the definition of “release” at § 120.50 to manage the method by which properly secured encrypted information may be decrypted. The revisions to § 120.50 also clarify when such decryption results in a controlled event; meaning that an export, reexport, retransfer, or temporary import has occurred.

(a) Access information is defined as information that allows access to encrypted technical data in an unencrypted form (e.g., decryption keys, network access codes, and pass codes).

(b) The definition of release is expanded to include the use of access information to:

(1) cause or enable a foreign person to access, view, or possess technical data; or,

(2) cause technical data outside of the United States to be in an unencrypted form.

(5) Adds a new paragraph (b) to the definition of release at § 120.50 to clarify that a U.S. person does not need to obtain a specific authorization from DDTC to provide access information to a foreign person in order for that foreign person to access technical data in an unencrypted form, provided the foreign person is otherwise authorized to receive the technical data. If no other authorization exists for the foreign person to access the technical data, the provision of the access information by the U.S. person is a violation of the terms of § 120.50.

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5. Treasury/OFAC Publishes Frequently Asked Questions for Issuance of Reporting, Procedures and Penalties Regulations (RPPR)​

(Source: Treasury/OFAC, 20 Feb 2020)

Today, the Department of the Treasury’s Office of Foreign Assets Control (OFAC) is publishing two new Reporting, Procedures and Penalties Regulations (RPPR)-related Frequently Asked Questions (FAQs)​. The FAQs provide updated instructions and incorporate new requirements for parties filing reports on blocked property, unblocked property, or rejected transactions​ with OFAC. These FAQs are related to the 06/21/2019 Amendment to the RPPR​.

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