Monthly Archives: May 2019

The CCL Keeps Changing: Wassenaar and Venezuela Updates

Commerce Revises CCL to Reflect Wassenaar Plenary

On May 23, 2019, the Department of Commerce, Bureau of Industry and Security (BIS) published a rule (84 FR 23886) which amends the Commerce Control List (CCL) to reflect changes made to the Wassenaar Arrangement List of Dual-Use Goods and Technologies at the December 2018 Plenary meeting.

The Wassenaar Arrangement on Export Controls for Conventional Arms and Dual-Use Goods and Technologies is a global multilateral export control regime, covering both conventional weapons and sensitive dual-use goods and technologies.  Participants agree to control exports and retransfers of items on a control list of dual-use goods and technologies and munitions.  Its Plenary meeting normally occurs once a year in December in Vienna, Austria.  CCL revisions take effect when officially amended through a Federal Register notice.  (Click here for last year’s updates.)

The new rule revises four Export Control Classification Numbers (ECCNs) and adds one new ECCN as follows:

  • 3A001 Electronic Items – Adds paragraph b.3.f. to control discrete microwave transistors “rated for operation with a peak saturated power output greater than 5 W (37.0 dBm) at all frequencies exceeding 8.5 GHz up to and including 31.8 GHz”.
  • 3D005 Continuity of Operation Software – Creates a new ECCN for software that ensures continuity of operation when electronics are exposed to Electromagnetic Pulse (EMP) or Electrostatic Discharge (ESD).
  • 5A002 Information Security Systems, Equipment, and Components – Revises Technical Notes following 5A002.a.4 to address certain post-quantum asymmetric algorithms.
  • 6A001 Acoustic Systems, Equipment and Components – Revises paragraph a.2.a.6 to add “and having a ‘hydrophone sensitivity’ better than -230 dB below 4 kHz” to remove transducers or hydrophones that are not of strategic concern, moves and revises two notes, and corrects availability of the License Exception Low Value Shipment (LVS)
  • 9A004 Space Launch Vehicles and Spacecraft – Adds paragraph .g to control aircraft specially designed or modified to be air-launch platforms for space launch vehicles.

Venezuela

The following day, May 24, 2019, BIS published a rule (84 FR 24018) removing Venezuela from Country Group B and moving it to Country Group D:1, as well as D:2, D:3, and D:4.

Country Group B provides favorable treatment for exports of some National Security-controlled items through the GBS license exception (EAR §740.4), while Country Group D identifies countries of concern:

D:1      National security
D:2      Nuclear
D:3      Chemical & Biological
D:4      Missile Technology
D:5      U.S. Arms Embargoed Countries

The move from Group B to Group D makes some exports, reexports, and transfers ineligible for license exceptions and updates the published BIS licensing policy towards Venezuela to a more restrictive position.

Before this change, Venezuela was already listed as a D:5 U.S. arms embargo country based on its status as a prohibited destination under the International Traffic in Arms Regulations (ITAR) §126.1.  Venezuela was also already subject to EAR restrictions for military end users under §744.21 and significant financial sanctions through the Department of the Treasury, Office of Foreign Assets Control (OFAC).

Export compliance is always changing.  Subscribe to Our “EAR”… to the ITAR to keep up!

(None of the information is intended to be authoritative official or professional legal advice. Consult your own legal counsel or compliance specialists before taking actions based upon this blog or other unofficial sources.)

Chinese Telecom Giant Huawei added to Entity List: What You Need to Know Now

On Wednesday, May 15, 2019, the Department of Commerce, Bureau of Industry and Security (BIS) announced the addition of Huawei Technologies Co. Ltd., a Chinese telecommunications and electronics manufacturing giant, to the Entity List.  A Federal Register Notice (84 FR 22961) followed on Tuesday, May 21, 2019.

What is the Entity List?

The Entity List is one of many U.S. Government lists that restricts business dealings with individuals, companies, and other entities worldwide.

As described by BIS:

Additions to the Entity List are decided by the End-User Review Committee which is comprised of officials from the Department of Commerce, Department of Defense, State Department, and Department of Energy. Under § 744.11(b) of the Export Administration Regulations, persons or organizations for whom there is reasonable cause to believe that they are involved, were involved, or pose a significant risk of becoming involved in activities that are contrary to the national security or foreign policy interests of the United States, and those acting on behalf of such persons, may be added to the Entity List.

Why was Huawei Listed?

Huawei’s listing was based on BIS’s conclusion that “Huawei is engaged in activities that are contrary to U.S. national security or foreign policy interest” and includes 68 non-US affiliates in 26 countries (Belgium, Bolivia, Brazil, Burma, Canada, Chile, China, Egypt, Germany, Hong Kong, Jamaica, Japan, Jordan, Lebanon, Madagascar, Netherlands, Oman, Pakistan, Paraguay, Qatar, Singapore, Sri Lanka, Switzerland, Taiwan, United Kingdom, and Vietnam).

What does the Listing Establish?

The listing creates a license requirement with a presumption of denial for items subject to the EAR (including EAR99 or other items that would otherwise be shipped No License Required, or NLR).

The listing was followed by the announcement of a temporary General License that creates a limited 90-day reprieve from May 20, 2019 to August 19, 2019.  During this time, some transactions are authorized when relating to supporting existing networks, supporting existing handsets, and cybersecurity research and vulnerability disclosure, and 5G standards development.

The General License and any subsequent publications should be reviewed closely for their applicability to any transaction.  Use of the General License also requires a certification statement.

Best Practice – Screen Your Customers and Suppliers

The Entity List as well as other government lists are continuously updated.  To ensure compliance, all parties should be screened regularly, using software such as ECS’s own ECScreening.

(None of the information is intended to be authoritative official or professional legal advice. Consult your own legal counsel or compliance specialists before taking actions based upon this blog or other unofficial sources.)