China’s recent restrictions on Micron products are having broader than expected consequences for U.S. exporters, a trade industry conference heard last week, and may portend how future Chinese retaliatory actions will affect U.S. companies.
Many companies are grappling with how best to comply with the Commerce Department’s foreign direct product rule, “one of the key areas” still “unaddressed” by the agency’s regulations and guidance, said Kim Strosnider, a trade lawyer with Covington. She said Commerce’s compliance expectations for the FDP rule are rising despite due diligence challenges faced by industry, pointing to the agency’s record $300 million penalty against Seagate Technology in April (see 2305080029 and 2304190071).
The EU levied its 11th sanctions package against Russia June 23, imposing a host of new export restrictions, individual designations and "new tools to counter circumvention and information warfare," the European Council announced. The new designations target 71 people and 33 entities involved in military activities, political decision-making, the spread of disinformation, the forced adoption of Ukrainian children to Russia and Russian information technology companies offering technology to Russian intelligence agencies.
CBP is inching closer to mandating electronic export manifest, with rail EEM the farthest along but air EEM still needing work, said David Garcia, program manager of the agency’s outbound enforcement and policy branch. Garcia said the agency is aiming to publish them in the Federal Register “within the next year or two.”
The Bureau of Industry and Security is considering tweaking regulatory language that calls on exporters to conduct a five-year review of activities that preceded their voluntary self-disclosures. The change could make it so the language only applies to more serious disclosures, said the top BIS export enforcement official, Maththew Axelrod, and would represent another step in the agency’s effort to draw more BIS and industry resources toward addressing significant violations as opposed to minor or technical ones.
The EU this week released an economic security strategy, detailing plans to improve export controls over sensitive technologies and study whether it needs better guardrails around inbound investments and new restrictions around outbound investments. The strategy could lead to new proposals surrounding export controls and investment restrictions by the end of the year.
The Department of Defense recently released a new set of recommendations designed to speed up military goods exports under its Foreign Military Sales program, an initiative long requested by defense companies. DOD said the recommendations highlight “key FMS pressure points” and are aimed at “breaking historical inefficiencies in the United States' transfer of defense articles and services to foreign allies and partners.”
A Latvia-based bank reached a $3.4 million settlement with the Office of Foreign Assets Control to resolve allegations it violated U.S. sanctions relating to Crimea, OFAC said June 20. Swedbank Latvia AS, a subsidiary of Sweden-based Swedbank AB, allowed a customer to use its e-banking platform from an internet protocol address in Crimea to send payments to persons in Crimea through U.S. correspondent banks, OFAC said, which resulted in 386 violations of U.S. sanctions.
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The Bureau of Industry and Security is working “day-in and day-out” on a final rule that will make tweaks to its China-related chip export controls released in October (see 2210070049), said BIS Senior Export Policy Analyst Sharron Cook. But a public release of the rule isn’t imminent -- the agency hasn’t yet sent the changes to be reviewed by other agencies, said Hillary Hess, regulatory policy director at BIS.