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UK launches new Trade Enforcement Body

London, England
From October, the Office of Trade Sanctions Implementation (OTSI) will be empowered to investigate breaches of trade sanctions and impose corresponding civil monetary penalties. We examine the powers OTSI will have, how it will interact with other UK sanctions authorities and what impact it may have.

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Sanctions Guidance Updated by G7
The G7 published joint guidance for industry on preventing evasion of the export controls and sanctions imposed on Russia. The guidance document contains items which pose a heightened risk of being diverted to Russia, updated red flag indicators of potential export control and/or sanctions evasion,  Best practices for industry to address these red flags, and screening tools and resources to assist with due diligence.
Connected Vehicle Rule Published
The Commerce Department proposed prohibiting the sale or import of connected vehicles integrating specific pieces of hardware and software, or those components sold separately, with a sufficient nexus to the People’s Republic of China (PRC) or Russia.     Published by the Bureau of Industry and Security, the rule focuses on hardware and software integrated into the Vehicle Connectivity System (VCS) and software integrated into the Automated Driving System (ADS). These are the critical systems that, through specific hardware and software, allow for external connectivity and autonomous driving capabilities in connected vehicles.
Voluntary Self Disclosure Changes Codified
The Commerce Department’s Bureau of Industry and Security (BIS) issued a final rule making changes to the Export Administration Regulations (EAR) related to BIS’s policies and practices regarding voluntary self-disclosures (VSDs) and to the BIS Penalty Guidelines. The rule revises the BIS Penalty Guidelines to change how the Office of Export Enforcement (OEE) calculates the base penalty in administrative cases and how OEE applies various factors to the base penalty to determine the final penalty.
Washington Trade & Tariff Letter
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Welcome to your new Export Practitioner

The Export Practitioner introduces a web-based format for easier review, research and sharing.  

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We seek your input as we make this transition. Please send your suggestions to fruffing@traderegs.com or call 703.283.5220.   

– Frank Ruffing, Editor 

October 2024 Export Practitioner

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Mexico Seeks to Dampen China Import Explosion

Mexico wants to reduce its dependence on imports from China and is asking some of the world’s biggest manufacturers and tech firms operating in the country to identify Chinese products and parts that could be made locally. The country’s deputy trade minister, Luis Rosendo Gutiérrez, told the Wall Street Journal  that Mexico wants U.S. carmakers and semiconductor manufacturers as well as global giants in the aerospace and electronics sectors to substitute some goods and components manufactured in China, Malaysia, Vietnam and Taiwan.

Expanded Export Controls and Sanctions Require Heightened Compliance for All Industries

Companies who think that U.S. export controls and sanctions do not apply to their products and channels of trade should reassess that position. No matter whether the transaction is an acquisition of a U.S. business, sale of products, or the performance of services, companies and foreign investors across all industries need to assess whether exportcontrols or sanctions compliance is necessary. This means more due diligence of business partners and new procedures to ensure that products and services are not used by restricted recipients.

EU adopts first ever Mutual Recognition Agreement for professional qualifications

The EU and Canada adopted this week a Mutual Recognition Agreement (MRA) on the professional qualifications for architects, marking the EU's first such bilateral agreement. "This MRA will streamline the recognition process, making it easier for architects to work across both jurisdictions, allowing them to explore new business opportunities and export their world-class skills," the Commission stated in the announcement.

Review: End-Use Certificate (DLA Form 1822)

The End-Use Certificate (DLA Form 1822) is submitted by individuals prior to releasing export-controlled personal property out of DoD control. Export-controlled personal property are items listed on the United States Munitions Lists or Commerce Control List, and includes articles, items, technical data, technology, or software. Transfers of export- controlled personal property out of DoD control may be in tangible and intangible forms.

Emerging Tech Oct 21 & Sensors Advisory Committees Oct 29

The Emerging Technology Technical Advisory Committee (ETTAC) will meet on October 21, 2024, and The Sensors and Instrumentation Technical Advisory Committee (Committee) will meet on Tuesday, October 29, 2024

Moog fined $1.68 million for Indian bribes

The Securities and Exchange Commission announced that Moog Inc., a New York-based global manufacturer of motion controls systems for aerospace, defense, industrial and medical markets, agreed to pay a civil penalty of $1.1 million to resolve the SEC’s charges that it violated the Foreign Corrupt Practices Act (FCPA) arising out of bribes paid by its wholly owned Indian subsidiary, Moog Motion Controls Private Limited .

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Enforcement
Totonto Dominion Bank will pay over $3 billion in fines and is subject to a cap on US growth after regulators uncovered widespread money laundering failures in the banks Philadelphia and Miami operations. Prosecutors said the bank operated with inadequate guards against money laundering for nearly a decade, failing to act even when staff flagged obvious cases of abuse, such as a customer making daily deposits of $1m in cash.
Saint Basil's Cathedral on Red Square in Moscow, Russia
Two Russian nationals were charged Thursday for export control violations, smuggling, wire fraud, and money laundering in connection with a scheme to procure U.S.-sourced microelectronics subject to U.S. export controls on behalf of a Russia-based supplier of critical electronics components for manufacturers supplying weaponry and other equipment to the Russian military.
Precision Castparts Corp. settled allegations that it violated the International Traffic in Arms Regulations (ITAR) in connection with unauthorized exports of technical data to foreign-person employees from Bhutan, Burundi, El Salvador, Honduras, Mexico, and Peru pertaining to tools (specifically, wax pattern and core dies) and wax patterns consumed in the subsequent production of casting blades used in gas turbine engines

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Sanctions
Complementing HMRC’s trade sanctions enforcement role at the UK border, OTSI has new civil enforcement powers in relation to services as well as movement of goods across third country borders, where there is a UK nexus.

New UK Sanctions Office Opens

The UK's Office of Trade Sanctions Implementation (OTSI), within the Department for Business and Trade, opened last week. This new sanctions body has been established to strengthen the enforcement of trade sanctions and support businesses with compliance.. Complementing HMRC’s trade sanctions enforcement role at the UK border, OTSI has new civil enforcement powers in relation to services as well as movement of goods across third country borders, where there is a UK nexus.

The Flying Fox

Superyacht Freed

Previously under sanctions due to its ties to Imperial Yachts, the 136 meter (446 ft) superyacht Flying Fox is likely to be free to operate globally without restrictions. …
The guidance focuses on General Prohibition 10 (GP 10), which prohibits financial institutions (and other persons) from financing or otherwise servicing any item subject to the EAR with knowledge that a violation of EAR has occurred, is about to occur, or is intended to occur.

BIS Issues GP 10 Guidance to Financial Institutions

The Commerce Department's Bureau of Industry and Security (BIS) published guidance for financial institutions containing best practice recommendations for complying with the Export Administration Regulations (EAR).  The guidance focuses on General Prohibition 10 (GP 10), which prohibits financial institutions (and other persons) from financing or otherwise servicing any item subject to the EAR with knowledge that a violation of EAR has occurred, is about to occur, or is intended to occur.

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Policy Briefs
Determinedly beating the drum for steelworker votes and economic populism, two of the leading Senate opponents of the purchase of US Steel by a Japanese rival drew attention to the executive compensation of the Pittsburgh steelmaker. Elizabeth Warren (D-Mass) sent a letter to US Steel CEO David Burritt outlining their concerns. with plans for the firm's current and former top executives to receive payments totaling over $156 million – not including $40.8 million in payments to non-employee board members.
Aerial view land clearing at oil palm estate at Kedah, Malaysia
Developing and developed members applauded the EU decision to postpone the implementation of its new Regulation on Deforestation-Free Products (EUDR) for twelve months.   This regulation, which was set to take effect on 30 December 2024, will require a variety of agricultural products sold in the EU market to be "deforestation-free," meaning they must not result from recent (post-31 December 2020) deforestation, forest degradation, or breaches of local environmental and social laws.
The Financial Crimes Enforcement Network (FinCEN) has updated some of its Beneficial Ownership Information Frequently Asked Questions and issued several additional ones. The topics covered are: …

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Supply Chain
All eight species of pangolins are threatened with extinction primarily due to the ongoing demand for their body parts, including scales, for medicinal purposes and consumption, according to the International Union for Conservation of Nature (IUCN) Red List of Threatened Species.
The White House is considering various import prohibition options on the basis that Chinese nationals are engaging in trade or taking of pangolins that diminishes the effectiveness of the Convention on International Trade in Endangered Species of Wild Fauna and Flora (CITES). China remains the largest destination country for pangolin scales
Democratic Republic of Congo
The Securities and Exchange Commission's  2012 conflict minerals disclosure rule has not reduced violence in the Democratic Republic of the Congo (DRC) and has likely had no effect in adjoining countries, according to a GAO report released October 7th. The SEC rule requires companies to file reports on their use of tantalum, tin, tungsten, and gold, which are mined in the DRC. GAO found no empirical evidence that the rule has decreased the occurrence or level of violence in the eastern DRC, where many mines and armed groups are located
The Board of Directors at the Export-Import Bank of the United States (EXIM) last week voted to approve a Non-Binding Resolution in Support of Critical Minerals and Rare Earths Financings to reaffirm its support for critical minerals transactions. The resolution amplifies EXIM’s current efforts to utilize its lending and underwriting tools to support critical minerals and rare earths projects. 

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Licensing
On September 23, the Inspector General's Office of the Department of Commerce released its audit of the Bureau of Industry and Security’s (BIS’) efforts to "counter China’s Military-Civilian Fusion strategy"   The auditors found the BIS export license approval process "adequate in reducing the risk" of controlled items being inappropriately approved for export to China. However, they found that BIS has "not minimized the risk of unauthorized release of controlled technologies and software to China."
AUKUS - Australia, United Kingdom, United States security alliance pact.
House Republican national security leadership called for the White House to expand license-free defense trade among the U.S., U.K., and Australia to ensure the success of AUKUS Pillar Two and "unleash the combined potential of the three countries’ defense industrial bases to counter the Chinese Communist Party." The lawmakers contend the Excluded Technologies List (ETL) "jeopardizes the viability of Pillar Two."
The Department of Commerce has expanded the Validated End User (VEU) program with additional controls for data center items destined for China and India. Data Center VEU adopts much of the framework of the existing VEU program, with additional requirements. This expansion of eligibility is intended to update the VEU program to recognize the advancement and benefits of artificial intelligence.
In response to requests from the public, The Departments of State and Commerce extended the comment period for their rule changes proposed 29 July impacting ITAR definitions of "defense services," and EAR restrictions on end user and Commerce Control List-based controls. Comments are now due by 15 October.
Richard Marles MP, Deputy Prime Minister and Minister for Defence, Australia; United Kingdom Secretary of State for Defence, John Healey; and Secretary of Defense Lloyd Austin
AUKUS Defense ministers met in London Thursday to review the partnership and "reiterate their shared commitments for the decades to come," according to a readout of the conference.  

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