In our last post, we covered a series of breaking developments in export compliance towards China and Hong Kong. While those developments have received a lot of attention, summer has brought us even more export compliance updates.
New CCL Chem/Bio Controls
On June 17, 2020, the Department of Commerce, Bureau of Industry and Security (BIS) published a final rule (85 FR 36483) to amend Commerce Control List (CCL) Export Control Classification Numbers (ECCNs) 1C350, 1C351 and 2B352. These changes implement decisions by the Australia Group by adding a list of precursor chemicals and mixtures to 1C350, Middle East respiratory syndrome-related coronavirus (MERS-related coronavirus) to 1C351, and a technical note to 2B352 (Equipment capable of use in handling biological materials) that indicates 2B352.b.2.b includes single-use cultivation chambers with rigid walls. Related technology would be controlled in the relevant ECCNs.
The Australia Group is a forum of 43 countries which seek to harmonize export controls related to chemical and biological weapons.
BIS Issues Firearms FAQs
BIS recently posted a series of FAQs on firearms and related items moved from the United States Munitions List (USML) to the CCL in March. The document, dated January 23, 2020 was published on the BIS website on July 7, 2020 and contains 62 pages of FAQs and other guidance on the transition.
Treasury Implements Caesar Act Sanctions
Also on June 17, 2020, the U.S. Department of the Treasury, Office of Foreign Assets Control (OFAC) sanctioned the first set of individuals and entities under the Caesar Syria Civilian Protection Act of 2019 (the Caesar Act). Named for a Syrian photographer who documented torture in the regime of Syrian President Bashar al-Assad, the Caesar Act targets “foreign persons who facilitate the Assad regime’s acquisition of goods, services, or technologies that support the regime’s military activities as well as its aviation and oil and gas production industries.”
Executive Order Establishes ICC Sanctions
On June 11, 2020, the President issued Executive Order 13928, “Blocking Property of Certain Persons Associated with the International Criminal Court.” This executive order is a response to assertions of jurisdiction over U.S. and allied personnel by the International Criminal Court (ICC), countries which are “are not parties to the Rome Statute or have not otherwise consented to ICC jurisdiction.” This is the latest stage of a conflict that dates back the establishment of the ICC and 2002’s American Service-Members’ Protection Act. The Secretary of State, in consultation with the Secretary of the Treasury and the Attorney General may sanction ICC personnel under this executive order, who would then be included on the Specially Designated Nationals and Blocked Persons List (SDN List) and subject to a series of financial sanctions. No individuals or entities have yet been sanctioned under this order.
CFIUS Proposes Export License Requirement as Filing Threshold
On May 21, 2020, the Department of Treasury published a proposed rule (85 FR 30893) which would notably revise the category of business acquisitions subject to mandatory Committee on Foreign Investment in the United States (CFIUS) review. The proposed revision establish mandatory review of acquisitions and some non-controlling investments when an export license would be required to release a company’s technology to the relevant foreign parties. Relevant export licenses are defined under “U.S. regulatory authorization” to include:
(a) A license or other approval issued by the Department of State under the ITAR;
(b) A license from the Department of Commerce under the EAR;
(c) A specific or general authorization from the Department of Energy under the regulations governing assistance to foreign atomic energy activities at 10 CFR part 810 other than the general authorization described in 10 CFR 810.6(a); or
(d) A specific license from the Nuclear Regulatory Commission under the regulations governing the export or import of nuclear equipment and material at 10 CFR part 110.
Previously, CFIUS had published a list of North American Industry Classification System (NAICS) codes identifying businesses subject to this requirement. The proposed revision would replace that list with the export licensing threshold. Comments were accepted through June 22, 2020 and a final rule has not yet been published.