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Senate Focus on Export Control Enforcement

Senator Maggie Hassan Chairing Hearing Thursday
Wednesday Senators Mitt Romney (R-UT) and Maggie Hassan (D-NH), introduced bipartisan legislation to bolster the Export Enforcement Coordination Center—an interagency hub for information sharing and coordination among the key agencies responsible for export control enforcement. At a hearing Thursday, officials from Commerce, Justice and Homeland Security were unanimous in their call for resources from Congress.

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Thea Kendler talks with reporters at the BIS Update Conference
BIS Export Administration: New Organization
Export Administration is getting a new leadership framework, including the creation of Deputy Assistant Secretary roles for Strategic Trade and Technology Security, under the oversight of the newly elevated Principal Deputy Assistant Secretary Matt Borman. The Changes involve dividing EA’s functions into two primary channels: Strategic Trade, focusing on licensing, outreach, and training, and Technology Security, which encompasses defense industrial base (DIB) responsibilities, analysis, and regulatory work.
Assistant Secretary for Export Enforcement Matthew Axelrod (r) and Under Secretary of Commerce for Industry and Security Alan Estevez (l) at the BIS Update Conference
BIS Enforcement: Four New Initiatives
Assistant Secretary for Export Enforcement Matthew Axelrod announced four new Enforcement Initiatives at the 2024 Update Conference on Export Controls and Policy. In his plenary address, Mr. Axelrod introduced new guidance for the Freight Forwarder community, an updated compendium of enforcement examples, an antiboycott blacklist, and enhanced outreach to manufacturers and distributors of restricted good discovered on the battlefield in Ukraine.
Over 1,500 practitioners attended the 2024 BIS Update Conference
BIS Update Conference Standing Room Only
The Commerce Department's Bureau of Industry and Security 2024 Update Conference kicked off Wednesday to a full house in Washington, with over 1,100 attendees registered and many breakout sessions extended to overflow rooms with video feeds. While Commerce Secretary Gina Raimonda was unable to attend in person, Under Secretary of Commerce for Industry and Security Alan Estevez greeted attendees with a recap of the work undertaken since the last conference in 2022, and insights on where things are headed. 
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April 2024 Export Practitioner

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Our latest news

US, Mexico Disagree on Call Center Resolution

The USTR has requested a Rapid Response Labor Mechanism (RRM) panel under the United States-Mexico-Canada Agreement (USMCA) to resolve a labor dispute at call center operator Atento Servicios, S.A. de C.V. .    At the conclusion of its 45-day review period, Mexico found a denial of rights had existed, but determined that Atento Servicios had taken the necessary actions to remediate the denial of rights during Mexico’s review period. The United States disagrees with this determination and is requesting establishment of an RRM panel to review the situation.

$6.6 Billion for Arizona Chip Plant

U.S. Department of Commerce and TSMC Arizona  a subsidiary of Taiwan Semiconductor Manufacturing Company Limited (TSMC), have signed a non-binding preliminary memorandum of terms (PMT) to provide up to $6.6 billion in direct funding under the CHIPS and Science Act.

PCAOB: Auditor Cheating reflects "inappropriate tone at the top"

Public Company Accounting Oversight Board (PCAOB) Chair Erica Y. Williams announced a record $25 million fine sanctioning KPMG Netherlands for widespread improper answer sharing and the firm's multiple misrepresentations about its knowledge of the misconduct.

Treasury Seeks New Sanctions Tools

The Administration is calling on Congress to give it additional tools to prevent terrorist groups and other malign actors from using crypto-currencies to circumvent US sanctions. Treasury Deputy Secretary Wally Adeyemo told the Senate Banking Committee last week that the Administration needs “additional tools to protect the American people.”

US & UK Institute Joint Metals Trading Ban

In a joint action with UK officials, the Treasury Department issued two new prohibitions to disrupt the revenue that Russia earns from its export of aluminum, copper, and nickel.  This new action prohibits the import of Russian-origin aluminum, copper, and nickel into the US and UK, and limits the use of Russian-origin aluminum, copper, and nickel on global metal exchanges and in over-the-counter derivatives trading.

Entity List: UAE, Russian, Chinese Traders Added

Commerce Department’s Bureau of Industry and Security (BIS) added 11 entities to the Entity List .Five of the eleven entities are Russian and PRC entities were added for actions related to unmanned aerial vehicles (UAVs). Of these, four are part of a procurement network for components for UAV applications. These components are used to develop and produce Shahed-series UAVs which have been used by Iran to attack oil tankers in the Middle East and by Russia in Ukraine.

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Enforcement
Aeroflot Boeing 737-8MC
Two Russian nationals pleaded guilty last week to conspiracy to violate the Export Control Reform Act (ECRA) in connection with a scheme to acquire and unlawfully export controlled aviation technology to Russian end users. Beginning in or about May 2022 through May 2023, the defendants conspired to obtain orders for various aircraft parts and components from Russian buyers – primarily commercial airline companies – and then fulfill those requests by acquiring the parts from the United States suppliers.
Commerce's Bureau of Industry and Security has published an updated version of “Don’t Let This Happen to You ,"  a compendium of case examples highlighting their criminal and administrative enforcement efforts.
A California man was sentanced for attempting to ship firearms and night-vision equipment to the Sultanate of Oman.  He attempted to conceal the firearms by disassembling them, wrapping them in aluminum foil, and then secreting them within automobiles inside the shipping container.

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Sanctions

OFAC Sanctions Hamas Cyber & UAV Officials

Treasury’s Office of Foreign Assets Control (OFAC) is taking action against Hamas, targeting Gaza- and Lebanon-based leaders of the terrorist group’s offensive cyber and unmanned aerial vehicle (UAV) operations. Concurrent with this action, the European Union is imposing sanctions targeting Hamas. 

EU-wide minimum rules for the prosecution of EU sanctions violations

Friday the Council of the European Union adopted a law covering EU-wide minimum rules for the prosecution of violation or circumvention of EU sanctions in member states. Certain actions will now be considered criminal offences in all member states, for example helping to bypass a travel ban, trading in sanctioned goods or performing prohibited financial activities. Inciting, aiding and abetting these offences can also be penalised. 
MQ-9B SeaGuardian

China Sanctions more US Defense Firms

Dronemaker General Atomics Aeronautical Systems and General Dynamics Land Systems, have been sanctioned by the Chinese government for their sales to the government of Taiwan.    Last September China sanctioned Northrop Grumman and Lockheed Martin  on the same grounds. Missing from either announcement was Boeing, Taipei’s supplier of Harpoon anti-ship missiles.

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Policy Briefs
Airline industry and labor groups are calling for restrictions on Chinese Airline flights to the US, citing unfair competition. The groups have asked for a "pause" to additional passenger flights between the United States and China "until U.S. workers and businesses are guaranteed equality of access in the marketplace, free from the existing harmful anti-competitive policies of the Chinese government. "
The U.S. and UK Monday signed a Memorandum of Understanding (MOU) which will see them work together to develop tests for the most advanced AI models, following through on commitments made at the AI Safety Summit last November.   Signed by U.S. Commerce Secretary Gina Raimondo and UK Technology Secretary Michelle Donelan, the partnership will see both countries working to align their scientific approaches and working closely to accelerate and rapidly iterate robust suites of evaluations for AI models, systems, and agents.
The leaders of the House Select Committee on China are warning that a Chinese military company, BGI, is attempting to set up a new firm, Innomics, in Massachusetts and Kentucky, to avoid US regulatory scrutiny. In a letter to Defense Secretary Lloyd Austin, Committee Chairman Mike Gallagher (R-Wisc) and ranking Democrat Raja Krishnamoorthi (Ill) urged the Pentagon to label Chinese companies that aid the Chinese Communist Party in military biotech research as “Chinese Military Companies.”

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Supply Chain
U.S. Customs and Border Protection (CBP) personnel at all U.S. ports of entry will detain work gloves manufactured by Shanghai Select Safety Products Company, Limited and its two subsidiaries.. CBP issued a Withhold Release Order (WRO) against Shanghai Select Safety Products Company, Limited and its two subsidiaries Nantong and HK, based on information that reasonably indicates the use of convict labor in violation of 19 U.S.C. § 1307 in the production of that merchandise.
Teklas Hose Assemblies
The United States announced two resolutions of labor disputes initiated under the USMCA facility-specific Rapid Response Labor Mechanism (RRM) in Mexico last year.   The Turkish owners of the Teklas Automotive hose assembly plant and the Mexican owners of the Draxton automotive casting operations, both in central Mexico,   conducted remediation satisfactory to US officials. USTR has directed the Secretary of the Treasury to resume liquidation of unliquidated entries of goods from the facilities.
The EU, the US, and other Minerals Security Partnership (MSP) partners, joined by Kazakhstan, Namibia, Ukraine, and Uzbekistan, announced the launch of the Minerals Security Partnership Forum – or “MSP Forum”. The forum will serve as a new platform for cooperation in the area of critical raw materials (CRMs) vital for the global green and digital transitions.

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Licensing
The Bureau of Industry and Security (BIS), Department of Commerce is announcing its recruitment of candidates to serve on one of its six Technical Advisory Committees (“TACs”). TAC …
A reflecting mask (reticle) contains the blueprint of the chip pattern that will be exposed onto the silicon wafer.
The United States will publish a list of advanced Chinese chipmaking factories barred from receiving key tools, Reuters reported Thursday, citing three separate sources. The list could be released in the next couple of months, according to the report..
BIS has published corrections and amendments to the October 25 2023 Semicinductor and Advanced Computing Rules. This rule corrects inadvertent errors in those rules and makes additional clarifications for the two rules. China has expressed strong opposition to the latest U.S. revised rules on semiconductor export rules, saying that it will disrupt the global semiconductor market as well as cooperation between enterprises.
In this final rule, persons blocked under fourteen OFAC sanctions programs will be subject to stringent export controls under the EAR. Each program is listed below with the corresponding sanctions authority and program code or “identifier,” arranged by thematic program to assist understanding. Related to Russia’s invasion of Ukraine:
For the first time in history, the Chiefs of Navy for the AUKUS countries will convene at a public forum during the Indian Ocean Defense & Security Show (IODS) in Perth, scheduled from July 24 - 26, 2024. This forum will focus on discussions regarding AUKUS Pillars 1 & 2, including but not limited to the Nuclear Submarine program. Moreover, it will serve as a platform for AUKUS experts to delve into the opportunities emerging as these nations progress.

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