30 June 2016
New Restrictions on Exports of EAR-Regulated Goods to Certain Hong Kong and Mainland Chinese Entities
The U.S. Department of Commerce’s Bureau of Industry and Security has issued a final rule adding 28 persons under 31 entries in mainland China, Hong Kong, Afghanistan, Austria, Iran, Israel, Panama, Taiwan and the United Arab Emirates to the list of entities restricted from receiving U.S. exports of goods controlled under the Export Administration Regulations. BIS has determined that 20 of these entities were involved in unlawfully shipping U.S.-origin parts and components to Iran through other countries and that the other eight were involved in procuring and/or re-transferring U.S.-origin items to Israel and Iran without the required licences.
For these 28 entities there will be a licence requirement for all items subject to the EAR and a licence review policy of presumption of denial. The licence requirement applies to any transaction in which items are to be exported, re-exported or transferred (in-country) to any of these entities or in which they act as purchaser, intermediate consignee, ultimate consignee or end-user. In addition, no licence exceptions are available for exports, re-exports or transfers (in-country) to these entities.
Shipments of items removed from eligibility for a licence exception or export or re-export without a licence (NLR) as a result of this rule that were en route aboard a carrier to a port of export or re-export on 21 June pursuant to actual orders for export or re-export to a foreign destination may proceed to that destination under the previous eligibility for a licence exception or NLR.
In other news of potential interest, BIS recently imposed a US$575,000 fine on a Michigan company to settle charges that on 20 occasions over three years the company exported items controlled for missile technology reasons to mainland China without the required licences. However, BIS has suspended US$400,000 of the fine for two years and will waive it thereafter if the company commits no further export violations during that time.
The company has also agreed to complete two audits of its export controls compliance programme, at least one of which must be conducted by an unaffiliated third party consultant with expertise in U.S. export control laws. If these audits identify actual or potential violations of the EAR, the company will be required to promptly provide copies of the pertinent air waybills and other export control documents and supporting documentation to BIS. If the company fails to make full and timely payment of the civil penalty or to complete the audits, BIS may suspend its export privileges for one year.