Articles Posted in Exports

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On October 28, 2022, the U.S. Department of Commerce’s Bureau of Industry and Security (BIS) issued guidance on its October 7, 2022 interim final rule (Rule) that imposed new export controls on certain advanced computing integrated circuits (ICs), computer commodities that contain such ICs, and semiconductor manufacturing items exported to the People’s Republic of China (PRC). Comments on the Rule will be accepted until December 12, 2022. Our previous blog post on the Rule may be found here.

The guidance offers several important clarifications, including regarding the definition of a covered “facility,” the impact of the Rule on deemed exports, and the scope of the “activities of U.S. persons” restrictions. An overview may be found below.

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In response to Russia/Ukraine conflict, and Belarus’ ensuing support for Russia, the United States and global allies have imposed sweeping sanctions and export control restrictions on both Russia and Belarus. These actions are discussed extensively in our prior publications.

The sanctions and export controls restrictions especially target Russia and have had a significant impact on the Russian economy. Virtually every industry is impacted, and Russia’s financial institutions, businesses and prominent individuals are being targeted by ever-widening sanctions and export control restrictions imposed by the United States and global allies. As the situation evolves, further restrictions remain possible.

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On August 15, 2022, the Department of Commerce’s Bureau of Industry and Security (BIS) published an interim final rule introducing new controls on four “emerging and foundational technologies” that were identified during the December 2021 plenary meeting of the multilateral Wassenaar Arrangement. These items are two substrates of ultra-wide bandgap semiconductors (gallium oxide and diamond), electronic computer aided design (ECAD) software specially designed for the development of integrated circuits with Gate-All-Around Field-Effect Transistor (GAAFET) structure, and pressure gain combustion (PGC) engine technology for the production and development of gas turbine engines.

The new controls were implemented effective on August 15, 2022, with the exception of the controls for ECAD software, which will be effective on October 14, 2022. BIS has requested public comments only on the new ECAD controls, which are due by September 14, 2022.

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On July 13, 2022, as part of a new pilot program, the Department of State’s Directorate of Defense Trade Controls (DDTC) issued two open general licenses (OGLs) permitting certain reexports and retransfers of unclassified defense articles subject to the International Traffic in Arms Regulations (ITAR) within or between Australia, Canada, and the United Kingdom. The OGLs were published in the Federal Register on July 20, 2022, and will be effective August 1, 2022. The OGLs could significantly reduce licensing burdens for many entities in these close ally countries of the United States.

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On June 12, 2022, a bipartisan group of Senate and House lawmakers announced agreement on a new draft of the National Critical Capabilities Defense Act of 2022 (NCCDA), which would establish an expansive outbound review mechanism for investments and other transactions in specified countries of concern, including China. The draft is based on a bill introduced in the Senate last year that ultimately was not included in the U.S. Innovation and Competition Act (USICA), which passed, while the House included a similar measure in its America COMPETES Act, which also passed, and the two bills are now in conference.

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On February 24, 2022, the U.S. Department of Commerce, Bureau of Industry and Security (BIS) issued a final rule effective immediately imposing sweeping export control restrictions against Russia in response to Russia’s invasion of Ukraine. On March 2, 2022, BIS issued another final rule effective immediately imposing the same export restrictions against Belarus in response to Belarus’s role enabling Russia’s invasion of Ukraine. These actions are part of a larger set of recent sanctions and export control restrictions imposed by the U.S., UK, EU, Japan and other allies. Please see our prior posts available here, here, here, here, here, and here discussing recent sanctions and export control developments against Russia.

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On February 24, 2022, the U.S. Government issued a number of sanctions measures in response to Russia’s attack on Ukraine. These measures include sweeping financial sanctions and stringent export controls, which will have broad impacts on companies and individuals doing business in Russia, Ukraine and Belarus. Today’s announcement came alongside additional measures coordinated with U.S. allies, including the United Kingdom, European Union, Canada and Japan.

A brief overview of today’s U.S. measures is provided below. In following blogs, we will provide more focused looks at (a) U.S. sanctions; and (b) sanctions and export controls issued by a number of other key economies around the world.

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In response to President Putin’s televised recognition of Donetsk and Luhansk People’s Republics (“DNR” and “LNR”) of Ukraine as “independent” nations, and reports of Russian troops being ordered into Ukrainian territory, the United States has imposed Crimea-style comprehensive sanctions on the DNR and LNR prohibiting new U.S. investment as well as imports and exports to and from the regions. The EU and the UK have sanctioned banks and oligarchs, and Germany has suspended certifications on the NordStream2 pipeline project.

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Bureau-of-Industry-and-Security-seal-300x300On October 21, 2021, the U.S. Department of Commerce, Bureau of Industry and Security (BIS) announced an interim final rule (Interim Rule), which will amend the Export Administration Regulations (EAR) to add controls for the export, reexport and transfer of certain cybersecurity exploitation, intrusion and monitoring tools. The Interim Rule also creates a new License Exception “Authorized Cybersecurity Exports (ACE)” that authorizes certain exports, reexports and transfers of cybersecurity items, as described in more detail below. The Interim Rule will be made effective 90 days after publication, on January 19, 2022.

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In response to the recent military coup in Myanmar (also known as Burma) against the democratically elected government, on February 11, 2021 the Biden Administration issued an Executive Order on Blocking Property with Respect to the Situation in Burma (E.O.), which launched a new targeted sanctions regime. That same day, the Treasury Department’s Office of Foreign Assets Control (OFAC) designated former and current officials of Burma’s military or security forces and affiliated entities in the jade and gems sector as Specially Designated Nationals (SDNs). In addition, the Commerce Department’s Bureau of Industry and Security (BIS) announced a series of steps to tighten export controls on certain ministries, armed forces, and security services, and to limit availability of license exceptions. It has been indicated that these are initial steps, and that further sanctions and export control may follow.

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