Export Control Regulatory Change Summary, April – June 2021

This final rule revises the Commerce Control List (CCL) and corresponding parts of the EAR, to implement changes to the Wassenaar Arrangement List of Dual-Use Goods and Technologies decided at the December 2019 WA Plenary meeting.

Revises 22 ECCNs: 0A502, 0A503, 0A606, 1A002, 1A005, 1A006, 1A613, 1B002, 1C001, 1C002, 1C006, 1C010, 2A001, 3B001, 3E002, 5A002, 6A004, 6A005, 6A008, 9A011, 9D515, 9E003.

This rule also makes changes to various provisions related to Category 5 – Part 2 of the CCL, including provisions on License Exception ENC. These changes include the elimination of reporting requirements for certain encryption items.

This final rule adds seven supercomputing centers and companies to the Entity List.

Generally speaking, entities are added to this list based on involvement in activities contrary to the national security or foreign policy interests of the United States. The federal register notice provides specific details on the reasons the End-user Review Committee made the decision to add these entries.

China

• the National Supercomputing Center Jinan
• the National Supercomputing Center Shenzhen
• the National Supercomputing Center Wuxi
• the National Supercomputing Center Zhengzhou
• Tianjin Phytium Information Technology
• Shanghai High-Performance Integrated Circuit Design Center
• Sunway Microelectronics

Previously in March 2021 (86 FR 13173) BIS had added Burma to the list of countries subject to the ‘military end use’ and ‘military end user’ restrictions (MEU) in § 744.21 of the EAR, joining China, Russia and Venezuela. This rule adds Burma to the list of countries subject to military-intelligence end use or end user controls.

Specifically it amends § 744.22 to impose a license requirement on the export, reexport, or transfer (in-country) of any item subject to the EAR if an exporter, reexporter, or transferor has knowledge, or is informed by BIS, that the item is destined for a military-intelligence end use or end user in Burma.

In addition, BIS revised 736.2(b)(7)(i)(A)(5) (General Prohibition Seven, on U.S. Person controls) and 744.6(b)(5) (Restrictions on specific activities of “U.S. Persons”)of the EAR to add Burma to the list ofcountries in which U.S. persons areprohibited from supporting military intelligenceend uses or end users, even when such support does not involve anitem subject to the EAR.

See § 744.6(b)(6) of the EAR for the full definition of ‘support,’ which includes ordering, storing, using, selling, loaning, disposing, servicing, financing, transporting, freight forwarding, or conducting negotiations in furtherance of.

Finally, in this rule BIS made technical corrections and conforming changes to certain provisions of the Export Administration Regulations to address inadvertent errors introduced by previous MEU rules in January and March 2021.

The President issued Executive Order EO 14024 “Blocking Property With Respect To Specified Harmful Foreign Activities Of The Government Of The Russian Federation.”

And the following names were added to OFAC’s list of Specially Designated, for operating in the technology sector of the Russian Federation economy:

• ERA Technopolis
• Pasit
• Federal State Autonomous Scientific Establishment Scientific Research Institute Specialized Security Computing Devices and Automation
• Neobit, OOO 
• Advanced System Technology,
• Pozitiv Teknolodzhiz (Positive Technologies)

OFAC issued a new directive related to this executive order prohibiting US financial institutions from participating in the primary market for certain ruble, as well as non-ruble, denominated Russian sovereign bonds and loan. And published new FAQs: 886, 887, 888, 889, 890, 891, and updated FAQs 673, 674, 675, 676. 

In March 2020, the President declared a national emergency as a result of the COVID-19 pandemic. Subsequently, the Department announced a temporary suspension, modification, and exception of the requirement that a regular employee as defined ITAR § 120.39 work at a company’s facilities. In order to make some of these temporary changes permanent, the Department is proposing to amend the definition of “regular employee” in ITAR § 120.39 to allow certain individuals to work remotely and further clarify the contractual relationships that meet the definition of regular employee.

Added regulations to implement Burma sanctions related Executive Order 14014 from February 10, 2021.

This rule revised an existing entry for ‘‘DJI,’’ first added to the Entity List under the destination of China on December 22, 2020. The ERC modified the existing entry under China for DJI by revising the License Requirement column to exclude EAR99-designated technology for the operation, maintenance, or repair of unmanned aerial vehicles (UAV) released to DJI by the operator of the UAV.

This rule added eight entities to the Entity List under the destinations of Pakistan and the United Arab Emirates (UAE). These entities have been determined by the U.S. Government to be acting contrary to the national security or foreign policy interests of the United States.

Executive Order “Addressing the Threat from Securities Investments that Finance Certain Companies of the People’s Republic of China” amends and supersedes EOs 13959 and 13974. 

Impacted companies are listed in OFAC’s Non-SDN Chinese Military-Industrial Complex Companies List.

OFAC has published the following new Frequently Asked Questions: 898, 899, 900, 901, 902, 903, 904, 905, and updated FAQs 857, 859, 860, 861, 863, 865, and 871. 

OFAC issued Syria General License 21, Venezuela General License 39, and Iran General License N, “Authorizing Certain Activities to Respond to the Coronavirus Disease 2019 (COVID-19) Pandemic” and related Frequently Asked Questions (906, 907, 908, 909, 910, and 911).

This rule added five new entities to the Entity List. These companies were added for accepting or utilizing forced labor in the implementation of the People’s Republic of China’s campaign of repression against Muslim minority groups in the Xinjiang Uyghur Autonomous Region (XUAR). The federal register notice provides more details and background on this decision.

China

• Hoshine Silicon Industry (Shanshan) Co., Ltd. 
• Xinjiang Daqo New Energy Co., Ltd. 
• Xinjiang East Hope Nonferrous Metals Co., Ltd. 
• Xinjiang GCL New Energy Material Technology Co., Ltd.
• Xinjiang Production and Construction Corps (XPCC)

May U.S. and non-U.S. persons, including nongovernmental organizations (NGOs) and foreign financial institutions, provide or facilitate certain humanitarian assistance to Syria without the risk of sanctions?

Yes. The export of U.S.-origin food and most medicines to Syria is not prohibited and does not require a Department of Commerce Bureau of Industry and Security (BIS) or OFAC license (see 31 CFR § 542.510, 15 CFR § 746.9, and Syria FAQ 229), and therefore non-U.S. persons would not risk exposure to sanctions under the Caesar Syria Civilian Protection Act of 2019 (Caesar Act) for engaging in such activity.  See FAQ 884.  For questions specific to transactions involving items subject to the Export Administration Regulations destined to Syria, please contact the BIS Foreign Policy Division at Foreign.Policy@bis.doc.gov.  Additionally, U.S. persons providing services ordinarily incident to the export or reexport of certain non-U.S.-origin food and most medicines to Syria is not prohibited and does not require an OFAC specific license (see 31 CFR § 542.525), and therefore non-U.S. persons would not risk exposure to sanctions under the Caesar Act for engaging in such activity.  For more information on the most relevant exemptions, exceptions, and authorizations for humanitarian assistance and trade under the Syria sanctions program, please see OFAC’s April 16, 2020 Fact Sheet: Provision of Humanitarian Assistance and Trade to Combat COVID-19.

OFAC remains committed to ensuring that humanitarian assistance can flow to the people of Syria and maintains a favorable policy supporting the provision of humanitarian assistance.  Treasury continues to support the critical work of governments, certain international organizations, NGOs, and individuals delivering food, medicine, medical supplies, and humanitarian assistance to civilians in Syria.  In an effort to ensure assistance reaches those in need, we encourage individuals, companies, or financial institutions who have questions about engaging in or processing transactions related to these authorizations, to contact OFAC’s Sanctions Compliance and Evaluation Division at (800) 540-6322 or (202) 622-2490.

I am an exporter of agricultural commodities, medicine, or medical devices to Sudan and have previously obtained specific licenses from OFAC for such exports.  Do I still need to apply for a specific license from OFAC for exports or reexports of such items to Sudan?

No. As of December 14, 2020, no license from OFAC is required to export or reexport agricultural commodities, medicines, or medical devices to Sudan. 

What does the Protecting Europe’s Energy Security Act of 2019, 22 U.S.C. 9526 note, as amended (PEESA) General License (GL) 1 authorize?

PEESA GL 1 authorizes U.S. persons to engage in certain transactions and activities otherwise prohibited by PEESA.  Specifically, GL 1 authorizes U.S. persons to engage in transactions and activities involving the Federal State Budgetary Institution Marine Rescue Service (MRS), or any entity in which MRS owns, directly or indirectly, a 50 percent or greater interest, that are not related to the construction of the Nord Stream 2 pipeline project, the TurkStream pipeline project, or any project that is a successor to either such project.  GL 1 does not, however, authorize any transactions or activities with any vessels identified on the Non-SDN Menu-Based Sanctions List as blocked property of MRS or of any entity in which MRS owns, directly or indirectly, a 50 percent or greater interest.

What prohibitions apply to persons designated solely pursuant to the Protecting Europe’s Energy Security Act of 2019, 22 U.S.C. 9526 note, as amended (PEESA)?

Persons sanctioned solely pursuant to PEESA are placed on the Non-SDN Menu-Based Sanctions List with the “[PEESA Information: Property and Interests in Property Blocked, Except Importation of Goods]” identifier, which indicates that such persons’ property and interests in property are blocked, except for the importation of goods, pursuant to section 7503(e)(5) of PEESA.  Any entity owned 50 percent or more, individually or in the aggregate, directly or indirectly, by persons blocked solely pursuant to PEESA is itself blocked, as described in OFAC’s 50 Percent Rule, except for the importation of goods.

Persons designated under both PEESA and another blocking authority that is not subject to an exception relating to the importation of goods will appear on OFAC’s List of Specially Designated Nationals and Blocked Persons (SDN List).  The property and interests in property of persons on the SDN List are blocked and any entity owned 50 percent or more, individually or in the aggregate, directly or indirectly, by one or more blocked persons is itself blocked, as described in OFAC’s 50 Percent Rule (see FAQs 398–402).

Reminder for Exporters and Authorized Forwarding Agents that Ship to Cuba: Proper Filing of Electronic Export Information (EEI) in the Automated Export System (AES)  

All items subject to the Export Administration Regulations (EAR) (15 CFR Parts 730-774) require authorization for export to Cuba either by an individual validated license or license exception.  If your item is eligible for shipment under a license exception, it is incumbent upon the exporter to properly report in the Automated Export System (AES).  In recent months, the Bureau of Industry and Security (BIS) has identified many transactions coded as “No License Required” (NLR) (Code C32/C33) that were not properly filed under the correct AES code corresponding to the appropriate BIS license exception.  Only shipments of informational materials and certain other items that are not subject to the EAR may be designated in AES as NLR.  All other shipments of items require use of the appropriate AES code corresponding to the BIS license exception rather than NLR.  For example, eligible shipments to Naval Station Guantanamo Bay should be made under License Exception GOV (Code C42) and eligible shipments of gift parcels to family members in Cuba should be made under License Exception GFT (Code C43).  In addition, items eligible for License Exception Support for the Cuban People should be made under License Exception SCP (Code C62).