On September 6, the U.S. Departments of State, Agriculture, Commerce, Homeland Security, and Treasury jointly released an updated warning for U.S. businesses about risks to their operations and activities in Hong Kong. Risk factors that were formerly limited to mainland China are now also a concern in Hong Kong and could affect commerce, trade, and seemingly routine individual commercial activities in Hong Kong. Many of these risks stem from the 2020 Law of the People’s Republic of China on Safeguarding National Security in the Hong Kong SAR (National Security Law, or NSL), as well as the Safeguarding National Security Ordinance (SNS Ordinance), which was enacted in March 2024 under Article 23 of Hong Kong’s Basic Law.
Bureau of Industry and Security (BIS) is implementing export controls on several semiconductor, quantum, and additive manufacturing items with an interim final rule published September 6th. The rule adds and revises Export Control Classification Numbers (ECCNs) in the Commerce Control List, adds a new license exception for countries that have implemented equivalent technical controls, and adds two new worldwide license requirements to the national security and regional stability controls in the Export Administration Regulations (EAR). The new controls include a limited number of deemed export requirements in the sectors of quantum computers, materials, and related electronic assemblies; aerospace technology; and integrated circuit “development” or “production.”
RTX Corporation, the defense contracting roll-up formerly known as Raytheon, has entered into a settlement agreement with the U.S. Department of State following a comprehensive investigation into violations of the Arms Export Control Act (AECA) and the International Traffic in Arms Regulations (ITAR). By paying $100 million in fines and promising to spend another $100 million on compliance programs, the firm avoids debarment and further criminal or civil action.
The Justice Department declined to prosecute the Boston Consulting Group, Inc. (BCG) for a scheme in which the firm paid $4.3 million in "commissions" to obtain consulting contracts with the government of Angola. The Government’s investigation found evidence that from in or about 2011 until in or about 2017, BCG, through its Lisbon, Portugal office, paid its agent in Angola to help BCG obtain business from the Angolan Ministry of Economy (“MINEC”) and the National Bank of Angola (“BNA”).
The Commerce Department’s Bureau of Industry and Security (BIS) is taking action to further restrict the supply of both U.S.-origin and “U.S. branded” (i.e., labeled) items to Russia and Belarus for the Kremlin’s war efforts. BIS has imposed controls on a range of items subject to the Export Administration Regulations (EAR) that did not previously require export licenses when destined for Russia. Also imposed are similarly stringent controls on items subject to the EAR that are destined for Belarus. Notably, both countries have been made subject to broad in-country transfer controls.
In concert with the Commerce Department measures, Treasury and the State Department targeted nearly 400 individuals and entities both in Russia and in Asia, Europe, and the Middle East—whose products and services enable Russia to sustain its war effort and evade sanctions. Treasury targets include ammunition and materiel suppliers, trust and corporate formation entities, cyber and precious metals actors, advanced procurement networks and Russia's metals and mining industry. The measures also target Russian financial technology companies that provide necessary software and IT solutions for Russia’s financial sector.
The Commerce Department's Bureau of Industry and Security (BIS) imposed a $5.8 million civil penalty against a Pennsylvania manufacturer for shipments of "low-level items" to parties tied to the People’s Republic of China’s (PRC) hypersonics, unmanned aerial vehicles (UAV), and military electronics programs. Formerly known as Tyco Electronics, and before that AMP Incorporated, TE Connectivity Corporation is one of the world's leading manufacturers of connectors and other electronic sensors and assemblies.
The Treasury-let interagency Committeee on Foreign Investment in the U.S. (CFIUS) rolled out a revised website, aimed at providing increased transparency and information about enforcement actions. Included in the rollout was disclosure of a record fine related to the telecoms merger between German T-Mobile and Japanese-controlled Sprint.
Senate Finance Committee Chairman Ron Wyden (D-Ore) has introduced much-anticipated bipartisan legislation to tighten imports requirements for low-value packages in order to close the so- called de minimis loophole. The bill would prohibit the use of the $800 de minimis threshold to import certain types of goods, including goods that are import-sensitive or subject to additional trade remedies.
The Commerce Department announced Friday that it has made the decision to continue classifying Vietnam as a non-market economy country for purposes of calculating US antidumping duties on imports from Vietnam.
Thursday, August 1st, the Justice Department rolled out its corporate whisatleblower awards program, launching justice.gov/CorporateWhistleblower for the reporting of information about certain types of corporate crime. If the Justice Department brings a prosecution that results in the forfeiture of criminal proceeds, the whistleblower may be eligible to receive a portion of that forfeiture as a monetary award. The Pilot Program covers four areas of corporate crime not covered by existing whistleblower regimes: foreign corruption, foreign corrupt conduct, financial institutions and fraud against private insurers.
The Departments of State and Commerce are each issuing separate but complementary proposed rules regarding personal services to foreign defense and intelligence activities. State's review of "defense service" in the ITAR focused on identifying activities of U.S. persons that provide a critical military or intelligence advantage such that they warrant control under the ITAR and are activities that are not currently subject to the ITAR; or are controlled under the ITAR, but the current control language would benefit from additional clarity..
Commerce released two new proposed rules governing military and intelligence end uses and end users, including activities by U.S. persons, as well as amendments to the EAR controls on Foreign-Security End Users (FSEUs) and expanding controls on activities of “U.S. persons.” BIS is proposing amendments to control “support” furnished by “U.S. persons” to identified foreign- security end users. These rules propose to implement the broadest expansion of presidential export control authority since the Export Control Reform Act (ECRA) was signed in August 2018.
July 24 the Bureau of Industy and Security published a Final Rule formalizing the changes to the Export Administration Regulations imposed by Congress in the emergency supplemental appropriation [HR 815] signed into law April 24th. As a result of this new FDP Rule, exporters require a U.S. Government authorization for transfer of these items when produced outside the United States with certain U.S. technology, software, or production equipment when exports are destined to Iran or for use in connection with certain equipment destined to Iran, even when such items were never exported from the United States.
The long-awaited Standards Rule has been published by the Commerce Department, revising Export Administration Regulations to facilitate US industry participation in international standards setting bodies. In this rule, the Bureau of Industry and Security (BIS) amends the Export Administration Regulations (EAR) to revise the scope and the terms used in the EAR to describe “standards-related activities” that are subject to the EAR. As we reported last month [12385] lack of clear guidance from Commerce has chilled come companies' participation for fear of running afoul of export controls.
A proposed 25 percent tariff on Chinese-made port cranes has been met with strong opposition from U.S. port authorities and terminal operators, who warn of unintended negative consequences such as reduced port efficiency, higher consumer prices, and a weakened national economy. The tariffis set to take effect on August 1st, At least 35 STS cranes are currently on order across the country, with an average cost of $15 million each, leading to unanticipated costs to port operators of at least $131.5 million, according to the operators.
The USTR's office Monday released the second Report on the Operation of the United States-Mexico-Canada Agreement (USMCA) with Respect to Trade in Automotive Goods . The conclusion of the report is that there is no conclusion. The automotive industry continues preparing for full implementation of the USMCA rules of origin (ROOs) when special flexibilities afforded under alternative staging regimes begin to expire in 2025.
The European Council adopted Monday a 14th package of economic and individual restrictive measures on Russia. The package includes restrictive measures on additional 116 individuals and entities , as well as sectoral measures on Energy, Third-Country Subsidiaries and other Anti-Circumvention measures, Financial Communications Systems and Defense Industrial Base, Political Activities, Port Access for specific vessels, dual-use and commodity trade controls, as well as legal protections for sanctions compliance and intellectual property.
The Treasury Department Friday issued a Notice of Proposed Rulemaking to implement Executive Order 14105 of August 9, 2023, “Addressing United States Investments in Certain National Security Technologies and Products in Countries of Concern”. The NPRM builds on the Advance Notice of Proposed Rulemaking issued by Treasury last August and provides the full draft regulations and explanatory discussion regarding the intent of the proposal, and solicits comment from the public
Just in case you're still depending on a Russian vendor for your cybersecurity, the Commerce Department has banned Kaspersky Labs from directly or indirectly providing anti-virus software and cybersecurity products or services in the United States or to U.S. persons. The Final Determination by the Bureau of Industry and Security (BIS) is the first of its kind and is the first Final Determination issued by BIS’s Office of Information and Communications Technology and Services (OICTS).
