Background

The Census Bureau is responsible for collecting, compiling, and publishing import and export trade statistics for the United States. As part of this responsibility, the Census collects Electronic Export Information (EEI) in concert with the export control and enforcement functions of U.S. Customs and Border Protection (CBP) of the Department of Homeland Security (DHS), the Bureau of Industry and Security (BIS), and the Directorate of Defense Trade Controls (DDTC).

Public Law 107-228 directed the Census to publish regulations requiring exporters to file Shippers’ Export Declarations. As a result, the bureau experienced an increase in the number of inquiries regarding in-transit movements. Accordingly, in October of 2024 the Census solicited comments on a proposed rule to clarify its regulations governing in-transit shipments. The bureau received 11 letters and emails commenting on the proposed rule.

Key Changes

In addition to making definitional, grammatical and style changes, the rule: (i) clarifies who is the USPPI; (ii) makes changes to mandatory filing requirements; (iii) makes changes to voluntary self-disclosures.  

Who is the USPPI

The U.S. Principal Party in Interest (USPPI) is the person or legal entity in the United States that receives the primary benefit, monetary or otherwise, from an export transaction. The rule clarifies which party is the USPPI when goods are entered into the United States for consumption or warehousing then stored in a warehouse or storage facility, admitted into an FTZ, or entered into a bonded warehouse before exportation. 

When these movements occur prior to exportation, the USPPI may be one of the following: 

• A customs broker
• An operator of the warehouse, storage facility, FTZ, or bonded warehouse 

When the customs broker is the USPPI and supports the preparation or filing of the EEI, the customs broker must have consent from the importer of record to disclose confidential information to third parties. When a warehouse, storage facility, FTZ or bonded warehouse operator is the USPPI, they are responsible for the EEI based on information they have or have received from other parties to the export transaction.

Changes to Filing Requirements

The Rule makes several changes to the mandatory filing requirements for EEI.

The rule clarifies that an EEI filing is not necessary when goods are moving in-transit through the United States, Puerto Rico, or the U.S. Virgin Islands from one country or area to another where goods do not enter the United States for consumption or warehousing.

It also amends the “General Filer Requirements” to clarify that that the filer must be located physically in the United States when filing the EEI, and that the EEI must be filed completely, accurately, and timely.

Voluntary Self-Disclosure

The rule clarifies that foreign persons may not submit a Voluntary Self-Disclosure (VSD) and states that parties will not be deemed to have made a VSD unless the individual making the disclosure did so with the full knowledge and authorization of senior management. The Bureau will not accept a disclosure from a Foreign Principal Party in Interest (FPPI) or legal counsel or other party representing a FPPI.

The rule also amends the Census Bureau’s actions when responding to a VSD. The Bureau is no longer required to notify CBP, Immigrations and Customs Enforcement (ICE), and the Office of Export Enforcement (OEE) of the receipt of the VSD. In addition, the rule relaxes the requirements for the Bureau when issuing a letter in response to a VSD. Instead of issuing a warning letter or letter setting forth corrective measures required, the Bureau may now simply issue a letter.

All importers and exporters involved in in-transit shipments should review the rule and ensure their internal processes and procedures are updated accordingly. Get in touch with Diaz Trade Law to learn more about how this new rule may impact your business: 305-456-3830 and info@diaztradelaw.com.

Learn more:

• Census Proposes Changes to Foreign Trade Regulations Filing Requirements
• Submitting a Voluntary Self-Disclosure to Census
• Webinar: What is Electronic Export Information (EEI) and Why Does it Matter?
• Webinar: Building and Maintaining an Effective Export Compliance Plan

The guidelines cover basic requirements for applying and renewal and include an application checklist. 

Background on Licenses for Deemed Exports/Reexports 

The obligation to obtain an export license from BIS before releasing controlled technology to a foreign person is informally referred to as a “deemed” export. The release is considered an export to the person’s country or countries of nationality.   

The Export Administration Regulations (EAR), Section 734.13, defines a deemed export as releasing or otherwise transferring “technology” or “source code” to a foreign person in the United States.  

Typical organizations using deemed export licenses include universities, research institutions, bio-chemical firms, medical organizations, and computer companies.    

New Guidance 

 The basic guidance for filling out license applications is set forth in Supplement 1 to part 748 of the EAR. The new guidelines supplement the basic guidance and are intended to assist licensing officers in reviewing license applications more efficiently. 

Basic Requirements 

The guidelines reiterate that applicants must include all the necessary information and documentation required when submitting a license application. BIS will return applications with insufficient information.  

Basic documentation required: 

• Legible copies of passport, visa, and work authorization 
• Letter of Explanation (LOE)  
• Resume  
• Technology Control Plan (TCP) 

SNAP-R Best Practices 

SNAP-R is an electronic portal facilitated by BIS that allows individuals and organizations to process and track license applications. The guidelines provide best practices when submitting an application through this portal including: 

• Do not use acronyms 

• Do not list a P.O. box for required address 

• Include a detailed description of the end-use of the technology 

• Identify the technology by its Export Control Classification Number (ECCN), not by its trade name 

Letter of Explanation 

Applicants must submit a separate letter of explanation (LOE) when submitting an application. According to the guidelines, the LOE should include: 

• Copies of the foreign person’s valid passport 
• The address where the technology will be released 
• A description of all uses and applications for the technology 
• The form in which the technology will be released 
• The availability abroad of comparable foreign technology 

Resume 

The license application must include a complete resume of the foreign person. The resume information is considered in the application process to assess the risk that the technology in question could be diverted to unauthorized uses or users.  

The resume should include: 

• Personal background information 
• Educational and vocational background 
• Employment history  
• Research history  
• Military service  
• Special information (any special considerations that BIS should take into account) 

Review of Deemed Export Applications 

BIS’s policy is to approve deemed export license applications provided that there is no unacceptable risk that the technology will be diverted to unauthorized users and that the applicant agrees to comply with the applicable conditions on the license. 

It is critical that companies have a strong export compliance plan and sufficient processes and procedures to determine when an export license is required and counsel on standby to provide assistance or clarification when necessary. Diaz Trade Law has a strong track record in assisting companies in with export compliance and preparing export license applications when necessary. To learn more about how we can help, contact us at info@diaztradelaw.com or call us at 305-456-3830. 

Learn more: 

• The Importance of Regular Export Compliance Training for your Business 
• Building a Strong Export Compliance Plan 
• Bloomberg Law: BIS Regulatory Updates: 2023 Significant Changes 
• Bloomberg Law: Submitting Voluntary Self-Disclosures to Bureau of Industry & Security 
• Webinar: Building and Maintaining an Effective Export Compliance Plan 

Below we share some of our top 2022 success stories with you.

Successfully Mitigated Penalty Actions and Refunds Issued by CBP to our Clients

• Our client wanted to know the status of prior CBP refunds and the status of the return of their collateral paid to their surety. Through our ACE report we were able to confirm over $500,000 in refunds, and our FOIA discovered where the checks were sent to. We were able to assist in ensuring the CBP refunds were properly returned to our client. Similarly, we were able to work with the surety to ensure the collateral posted was properly returned. 
• Our client received 4 penalties totaling $411,641 from CBP. After Diaz Trade Law filed a successful Petition with CBP, the penalties were mitigated with a total savings of $356,803.20!​
• Our client received a penalty of $307, 970 from CBP in accordance with Title 19. After Diaz Trade Law intervened, the penalty was determined to be mitigated in full.
• Our client received a penalty in the amount of $216,867.00 from CBP. After Diaz Trade Law filed a successful Petition with CBP, the penalty was mitigated in full!​
• Our client received a penalty of $118, 237 from CBP in accordance with Title 7 and Title 9. After Diaz Trade Law intervened, the penalty was afforded mitigation in the amount of $11, 823.70.
• Our client received multiple CBP Notices of Penalty. Diaz Trade Law convinced CBP to agree to receive one Petition covering all FP&F cases, and similarly agreed to the mitigation requested in our Petition and the over $43,000+ penalties were mitigated down to just $1,500 (a huge savings to our client).​
• Our client received a penalty of $39,800 for allegedly importing counterfeit merchandise. Diaz Trade Law was successful in getting this penalty CANCELED entirely!
• Our client incurred a penalty from CBP in the amount of $29,386.00. Diaz Trade Law filed a petition with CBP and the penalty was mitigated down to $2,938.60, or 10%. ​
• Our client received a $14,362 penalty from CBP for incorrectly filing Electronic Export Information (EEI). After Diaz Trade Law’s successful petition, CBP mitigated the penalty to $750 (a 95% reduction!).
• Our client was fined for misclassifying their products with CBP. After Diaz Trade Law intervened and claimed prior disclosure treatment, CBP refunded an overpayment of $10,618.56.
• Our client received penalty relief from CBP after Diaz Trade Law filed a successful supplemental petition.​​​

Successfully Mitigated Liquidated Damages Claims 

• Our client received a liquidated damages claim of $50,000 from CBP. After Diaz Trade Law filed a successful supplemental petition, CBP agreed to mitigate the claim down to $10,000 (a savings of $40,000 to our client). 
• Our client received a liquidated damages claim from CBP in the amount of $50,000. Diaz Trade Law filed a successful supplemental petition, and CBP agreed to mitigate the claim down to $204 (a savings of $49,796 to our client). 
• Diaz Trade Law filed a strong petition for a client who received a liquidated damages claim of $23,220, with CBP later granting relief of the liquidated damages to our client upon payment of a mitigated amount of $3,483 (a savings of $19,737 to our client). 
• Our client who received four liquidated damages claims at the same time, totaling $20,000.00. Diaz Trade Law convinced CBP to accept one Petition (instead of 4) and CBP agreed to mitigate the claims down to $4,000.00 (a savings of $16,000.00 to our client).
• Our client received a liquidated damages claim of $15,336 after Diaz Trade Law filed a successful supplemental petition, CBP granted relief  ​
• Our client received a liquidated damages claim from CBP. Diaz Trade Law filed a strong petition, with CBP granting a relief of the liquidated damages penalty upon payment. ​
• Diaz Trade Law submitted a successful petition requesting relief from the Liquidated Damages claim assessed by CBP against our client. CBP agreed the subject liquidated damages case should be closed.​

CBP Detention Assistance 

• Our client’s Cuba-bound humanitarian shipments were detained. After Diaz Trade Law intervened and demonstrated the shipment did not violate U.S. sanctions, CBP released the merchandise.
• Our client’s goods were detained by CBP for an alleged counterfeit violation. After Diaz Trade Law filed a supplemental petition, CBP agreed that the merchandise detained was not actually counterfeit as initially alleged, but was confusingly similar, and authorized the exportation.
• Our client’s goods were detained by CBP for alleged trademark infringement. After Diaz Trade Law successfully obtained the trademark holder’s consent to release the seized goods, and then quickly filed a petition with CBP, within a record of 20 days after receiving our petition, CBP agreed to release our clients’ legitimate goods.
• Our client’s goods were detained by CBP because they did not have the required export license. After Diaz Trade Law’s successful petition, CBP partially released our client’s goods, and proceeded with completing the release when the license was approved. ​
• Diaz Trade Law’s efforts were instrumental in ensuring the importer had a fair chance to prove their goods were not in violation. After a DOT inspection of the goods, in the presence of CBP, it was determined the goods were not in violation and were released.  ​​​​

Successfully Assisted in CBP Corporate Broker Licensing 

• As part of a company’s acquisition of a custom brokerage firm, Diaz Trade Law assisted our client in acquiring their corporate broker license!
• Diaz Trade Law successfully assisted our client in acquiring their broker license.​

United States Patent Trademark Office (USPTO)

• Diaz Trade Law successfully registered numerous brands with USPTO and thereafter recorded those trademarks with U.S. CBP! ​

Food Drug Administration (FDA) Recalls

• Our client’s products were recalled by the FDA. After Diaz Trade Law assisted with the recalls, the FDA terminated the recall.

Antidumping and Countervailing Duty (AD/CVD)

• Our client Diaz Trade Law requested a scope ruling for our client’s solar panel modules/cells. The U.S. Department of Commerce confirmed our client’s products did not fall within the scope of the AD/CVD orders.

Binding Rulings/FOIA

• Our client wanted confirmation on the correct Harmonized Tariff Schedule (HTSUS). After Diaz Trade Law’s persuasive binding ruling request, our client obtained the binding ruling it desired!
• Diaz Trade Law submitted a FOIA on behalf of our client requesting copies of CBP lab reports. The FOIA was processed quickly and effectively with the help of Diaz Trade Law.
• Diaz Trade Law submitted a FOIA on behalf of our client requesting copies of CBP lab reports. Our client’s FOIA was processed swiftly and effectively.

Export Compliance and Enforcement Mitigation Assistance

• Diaz Trade Law actively assisted exporters:
  • Vetting proposed export transactions
  • Providing voluntary self-disclosures to Census and OFAC
  • Developing an effective export compliance plan
  • Developing export compliance training
  • With mitigation and corrective action
  • Presenting export report cards to clients based upon an analysis of ACE data
  • Analyzing export trade data
  • With mitigation of export seizures and penalties

Protests

• Our client received a CF-29 Notice of Action Taken from CBP alleging country of origin and FTA mis declarations. 
  • Diaz Trade Law filed a strong protest demonstrating the validity of our client’s original country of origin and FTA claims, which ultimately resulted in CBP approving the protest and issuing appropriate refunds to our client.​

Assisted Numerous Importers in Filing Prior Disclosures and Voluntary Self-Disclosures Accepted by CBP 

• Diaz Trade Law successfully assisted our client in filing a Prior Disclosure (PD) with CBP. The PD was accepted, resulting in no penalties being assessed to our client.
• On behalf of our client, Diaz Trade Law submitted a perfected prior disclosure for an underlying valuation error, CBP accepted the disclosure and waived the interest penalty. ​. ​

Successfully Assisted Numerous Importers in Various Seizure Cases

• Our client’s goods valued at $123,267 were seized by CBP because they did not have the required export license. After Diaz Trade Law’s successful petition, CBP agreed the merchandise should be released!​
• Our client’s goods valued at almost $100k were seized by CBP because they did not have the required export license. After Diaz Trade Law’s successful petition, CBP agreed that the merchandise should be released!​
• CBP seized our client’s goods valued at $34,466 and after Diaz Trade Law’s successful petition, CBP agreed to release our client’s products upon a mitigated penalty of $3,466.  ​
• Our client failed to declare $33,100 when traveling domestically, and their currency was seized by CBP. After Diaz Trade Law’s successful petition, CBP released the currency with a mitigated penalty of $2,500 (returning $30,600 to our client). ​
• CBP seized our client’s goods valued at $23,448 and after Diaz Trade Law’s successful petition, CBP agreed to release our client’s products upon a mitigated penalty of $1,000. ​
• CBP seized our client’s goods and after Diaz Trade Law’s successful petition, CBP agreed to release our client’s products! ​
• Our client’s products were seized for violations of 19 U.S.C. 1526(e) for bearing unauthorized markings. After Diaz Trade Law intervened, CBP granted partial relief for the forfeiture.
• CBP seizures can be difficult to navigate. When our client received the CBP seizure notice for an underlying intellectual property rights counterfeit claim, Diaz Trade Law filed a persuasive petition (including communicating with and receiving a letter of consent from the trademark owner) which led to CBP agreeing to release our client’s products!    ​

Office of Foreign Affairs Control (OFAC)

• Our client’s wire payments of almost $1M from Venezuela were blocked by its U.S. bank for possible violations of U.S. sanctions laws.
  • After Diaz Trade Law filed specific license applications with the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC), OFAC issued specific licenses authorizing the legitimate funds to be unblocked and returned to our client. ​
• Diaz Trade Law submitted a successful specific license request that was granted by OFAC. ​

United States Department of State (DOS)

• Diaz Trade Law filed a successful license application with the Department of State on behalf of a client.

Foreign Trade Zone

• Our client wanted to expand its current Foreign Trade Zone (FTZ). Diaz Trade Law assisted in submitting a request for a Minor Boundary Modification of its FTZ. Diaz Trade Law was successful in having this request approved by U.S. Customs and Border Protection.

Awards 

• In 2022, Diaz Trade Law President Jennifer Diaz received the following awards:
  • Award of Excellence in the Promotion of Board Certification, Board of Legal Specialization & Education.
  • 2022 Florida Super Lawyer.
  • Florida Trend’s Florida Legal Elite™.
  • Award of Exemplary Service, Florida Bar International Law Section.
  • MDBA Legacy Award as a Distinguished Strategic Partner, U.S. Department of Commerce MEDWEEK 2022.
  • Canadian Maple Leaf Award.

Publications

Key publications written by Diaz Trade Law in 2022 were:

• Bloomberg Law, Significant Updates to BIS Enforcement Policies in 2022, November 2022
• Bloomberg Law, Building & Maintaining an Export Compliance Plan, October 2022
• Bloomberg Law, Submitting a Prior Disclosure to Customs and Border Protection, September 2022
• Bloomberg Law, A Comparison of Customs IPR Protection in the U.S. & China, July 2022
• Bloomberg Law, Submitting a Voluntary Disclosure to Directorate of Defense Trade Controls, May 2022
• Bloomberg Law. What is an Importer’s ‘Reasonable Care’ Standard, May 2022
• Bloomberg Law, Tariff Classification Basics, January 2022
• Bloomberg Law, Export Licensing Under EAR, January 2022
• Customs and International Trade Bar Association (CITBA), New CBP Prior Disclosure Requirements, April 2022

Diaz Trade Law Articles

Key articles written in 2022 by our team at Diaz Trade Law:

• Diaz Trade Law, The Beginning of the End of the MID, December 2022
• Diaz Trade Law, Customs Undervaluation- It’s a Crime, October 2022
• Diaz Trade Law, U.S. Customs – Your Personal Policeman at the Border, September 2022
• Diaz Trade Law, Understanding the RPL Export License Exception, August 2022
• Diaz Trade Law, Encryption Controls under the Export Administration Regulations, August 2022
• Diaz Trade Law, Uyghur Forced Labor Prevention Act (UFLPA): What You Need to Know, June 2022
• Diaz Trade Law, UFLPA DHS Forced Labor Guidance – What Importers Need to Know, June 2022
• Diaz Trade Law, Successor Liability & Export Control Liability, April 2022
• Diaz Trade Law, Big News! 352 of 549 Proposed China Tariff Exclusions Reinstated, March 2022
• Diaz Trade Law, Complying with Russia-Related Sanctions?, March, 2022
• Diaz Trade Law, Draft Guidance on Medical Device Transition Period, March 2022
• Diaz Trade Law, Export Controls and Cybersecurity, February 2022
• Diaz Trade Law, Importing into Puerto Rico? Don’t Forget about Paying Use Tax, February 2022

Customized Training Programs & Webinars

Key training programs and webinars taught by Diaz Trade Law in 2022 were:

• Webinar, Diaz Trade Law, “Keeping Your BOL Data Confidential – A Lesson on Manifest Confidentiality“, December 8, 2022
• Doral, FL, World Trade Center, “Importing 101 – Back to the Basics”, November 15, 2022
• Port Miami, Beacon Council, Trade and Logistics Update, November 10, 2022
• Miami Beach Convention Center, Air Cargo Show, “Women in Logistics,” November 9, 2022
• Webinar, ProChile, “Importing Food into the U.S. Complying with CBP and FDA”, November 8, 2022
• North Miami, FL, FIU, “Produce Post-Harvest Handling and Value Chain Development for Costa Rica, Nicaragua, and the Caribbean”, October 31, 2022​
• Aventura, FL, FLN, Chapter Speaker, October 28, 2022
• Webinar, Diaz Trade Law, “Tips on FDA’s Medical Device Registration Process“, October 26, 2022
• Washington DC, MSI International Conference, International Trade Challenges Roundtable, October 23/24
• FITCE, “Importing into the U.S. with CBP, FDA, CPSC, and USDA”, October 19, 2022
• Webinar, FCBF, “Experts Demystify CBP’s FP&F Process as it Relates to IPR”, October 12, 2022
• Webinar, FCBF,”Experts Discuss Complying with CPSC and Getting the Most Out of CTPAT”, October 7, 2022
• Podcast, Share Your Voice, Behind the Scenes of DTL, October 4, 2022
• Miami, Fl, OWIT South Florida, International Business Roundtable Breakfast with Canada and Mexico Consuls, September 20, 2022
• Doral, Florida, World Trade Center, Food and Beverage Show, “Detentions, Warning Letters, and Import Alerts: How to Navigate FDA Enforcement,” September 12, 2022
• Webinar, NCBFAA, Intellectual Property Rights: A View From East Asia, September 8, 2022
• Webinar, Diaz Trade Law, “What is Electronic Export Information (EEI) and Why Does it Matter?“, August 18, 2022
• Chicago, NCBFAA NEI, GTEC, Best Practices for Export Compliance, August 2, 2022
• Podcast, Simply Trade, “Basics of AD/CVD,” July 29, 2022
• Mexico City, World Trade Center, “How to Import/Export to the United States Using Florida as Your Point of Entry”, June 22, 2022
• Webinar, OWIT International, “Stories from The Trenches: Women Who Lead in International Trade”, June 22, 2022
• Webinar, NCBFAA, “Detentions and Seizures: How to Navigate These Enforcement Waters”, June 21, 2022
• Global Chamber Clubhouse, “Women in Global Leadership”, May 24, 2022
• Beacon Council, Trade & Logistics Committee Meeting, “Can Nearshoring Help Build Resilient Supply Chains?”, May 20, 2022
• Webinar, Diaz Trade Law, “Basics on Tariff Classification (Including 2022 Update)“, May 12, 2022
• City of Miramar, Economic Development Week, “Miramar: Import and Export, Trade 101” May 9, 2022
• Florida MBDA Export Academy, “Legal Considerations When Exporting to the U.S.”, May 10, 2022.
• W Hotel Fort Lauderdale, AFI Convention, “Panel Discussion on Today’s Supply Chain/ Logistics Issues”, April 29, 2022
• Webinar, Embassy of Georgia, “Importing Food and Beverages in compliance with U.S. FDA”, April 20, 2022
• Webinar, NCBFAA, “Prior Disclosure: CBP Changes You Should Care About”, April 19, 2022
• U.S. – Caribbean Business Conference 2022, “Exporting Like a Pro”, April 12, 2022.
• FCBF Broker Preparation Course, “19 CFR 133 – Intellectual Property Rights”, March 30, 2022.
• Webinar, Diaz Trade Law, “Gender and Trade”, March 10, 2022
• Webinar, Ocean Freight Forum, February 4, 2022.
• Podcast, Gladys Mizrahi, January 13, 2022.
• Clubhouse, Trailblazers in Trade, “Update on Crypto and Trade”, January 14, 2022.

Diaz Trade Law values you and appreciates your trust in us to be your Customs and International Trade Law Expert! Contact us at info@diaztradelaw.com to schedule your consultation or customized training today.

Licensing Exception for “Servicing and Replacement of Parts and Equipment” (RPL)

An export license under the EAR is not necessary if the License Exception for “Servicing and Replacement of Parts and Equipment” (“RPL”) applies. License Exception RPL is described under Part 740.10 of the EAR. RPL is known as a transaction-based exception because the availability/applicability of the exception is based on the terms of the transaction.

According to BIS guidance, the RPL License Exception may be used for the two following scenarios:

• Replacement Parts – This authorizes the export and reexport of replacement parts for the immediate repair of previously exported, reexported or foreign made equipment incorporating U.S. origin parts on a one-for-one replacement basis. It also authorizes the export and reexport of stock spare parts that were authorized to accompany the export of equipment.
• Servicing and Replacement – Replacements for defective or unacceptable U.S.-origin equipment. (a) The commodity or software to be replaced must have been previously exported or reexported in its present form under a license or authorization such as NLR. (b) No commodity or software may be exported or reexported to replace equipment that is worn out from normal use.

However, there are certain limitations which apply to the use of the RPL License Exception:

• Items that improve or change the basic design characteristics of the equipment upon which they are installed are not deemed to be replacement parts; and
• Obsolete parts that are being replaced must either be destroyed abroad or returned to the United States. (If the part was destroyed, it is a best practice to get a signed statement from the end-user confirming that the part was destroyed, ideally with proof of destruction from the scrap yard or recycling facility).

RPL is eligible for all legally exported, reexported, and foreign purchased items, even if the original item was not shipped under a license at the time of exportation. So, if an export license was not previously required for the entire equipment, but an export license is now required for that equipment, the RPL License Exception could result in exporters not needing an export license for the current part shipment. Furthermore, exporters should note that when using the RPL License Exception, stating on the underlying ECCN in EEI filings is mandatory.

What You Can Do

Exporters have significant responsibilities to ensure compliance, to avoid penalties and/or jail time (i.e., your compliance manager deserves a raise!). Proper adherence to EAR requirements ensures that your business contributes to safeguarding U.S. national security and avoiding costly penalties. Many U.S. businesses have paid hefty civil penalties for violating U.S. export control laws. L3Harris Technologies, for example, was fined $13 million for illicitly exporting defense technology and software. For more examples of costly civil and criminal penalties, check out BIS’ latest Don’t Let This Happen to You! Publication.

If you are exporting goods subject to EAR, we propose you should:

• Develop an effective export compliance plan.

A key foundation of proactive and effective export compliance requires the development of an export compliance plan. An export compliance plan establishes a set of procedures for your organization to ensure that everyone is on the same page about how standard processes work, who is responsible for what, how to identify violations, what to do when violations occur, etc. An export compliance plan helps build consciousness in your organization that compliance is critical – both to avoid costly penalties and also to protect national security. Diaz Trade Law helps exporters create export compliance manuals that help prove you have a process in place to classify your merchandise correctly, vet your customers and ensure you can prove you can take compliance seriously and implement all of the important great weight mitigating factors. Diaz Trade Law has significant experience in developing and enhancing export compliance plans for organizations. Additionally, Diaz Trade Law can assist your business in auditing and improving your current plan so that it is in its best shape.

• Engage in regular export compliance training.

A foundation of a strong export compliance program is export compliance training. Training is important because it (1) ensures that all employees understand the export regulations and reinforces internal policies and procedures, (2) demonstrates to federal government agencies that your business is proactive about export compliance, and (3) avoids your business from being subject to costly penalties and even criminal liability. Fortunately, export compliance training can be highly tailored to meet your company’s needs. All of your training events include assessments for comprehension, certificates for successful participation, and ample opportunities for Q&A. For your next export compliance training event, trust Diaz Trade Law to provide highly-effective, engaging training.

• Thoroughly vet your proposed export transactions

Unsure whether a proposed export transaction violates the EAR? Diaz Trade Law has significant experience vetting your potential transaction against U.S. export control laws. Through research and due diligence, Diaz Trade Law ensures that your transaction won’t get you in trouble later down the road.

• Request authorization when necessary

BIS export authorization is required for many export transactions of controlled goods. Diaz Trade Law has significant experience in vetting proposed transactions to determine whether BIS authorization is required. Furthermore, Diaz Trade Law assists clients by filing BIS export license applications on their behalf on BIS’ SNAP-R portal.

• Engage in mitigation and corrective actions.

If your business has violated U.S. export control laws, there is a lot you can do to mitigate penalties and prevent future violations. Diaz Trade Law has significant experience representing businesses in dealing with the U.S. Commerce Department’s Bureau of Industry & Security and the Census Bureau. Specifically, Diaz Trade Law has successfully assisted clients in (1) submitting voluntary self-disclosures to mitigate penalties, (2) negotiated agreements with BIS and Census, and (3) built corrective action systems to help ensure that your business does not make the same violation again.

Contact Us

Diaz Trade Law has significant experience in a broad range of export compliance matters. To learn more about the services we offer, contact us at info@diaztradelaw.com or call us at 305-456-3830.

Background on Export Administration Regulations

Over 95% of the world’s population is outside of the United States. Opportunities abound for U.S. companies that export. However, exporting is a privilege and not a right. U.S. exporters have an important responsibility to adhere to U.S. export control laws, including the Export Administration Regulations (“EAR”).

Administered by the U.S. Commerce Department, the EAR is a set of regulations which governs whether U.S. persons may export or transfer goods, software, and technology outside of the United States or to non-U.S. citizens. U.S. exporters have an important responsibility to adhere to the EAR. Violations of the EAR carry hefty civil and criminal penalties. Exporters can pay hundreds of thousands of dollars in penalties, lose export privileges, and even be imprisoned.

Encryption Controls

According to 15 CFR 742.15:

“Encryption items can be used to maintain the secrecy of information, and thereby may be used by persons abroad to harm U.S. national security, foreign policy and law enforcement interests. The United States has a critical interest in ensuring that important and sensitive information of the public and private sector is protected.”

Under the EAR, encrypted technology is generally classified under Category 5 Part 2 of the Commerce Control List. To classify encrypted technology of the CCL, like with classifying most articles, data, and services, it is essential to consult experts. Generally, engineers and subject matter experts on the specifications of the technology can serve as valuable resources to export compliance personnel in the classification process. Furthermore, for encrypted technology, resources such as encryption registration numbers, sales reports, marketing materials, technical specifications, and user manuals can be used to classify encrypted technologies.

Encrypted technology is everywhere. Daily household, commercial, and industrial goods are encrypted. Encrypted technology is often controlled for the following reasons:

• Anti-terrorism (AT)
• National Security (NS)
• Encryption Items (EI)

Encryption Licensing Exceptions

However, most encryption items may be exported under the provisions of License Exception ENC set forth in § 740.17 of the EAR. This license exception permits exportations of technology controlled for EI under any of the following circumstances:

• ‘Private sector end-users’ headquartered in a Supp. 3 country (Supplement No. 3 to Part 740) for internal use for the “development” or “production” of new products.
• Certain additional exports to ‘private sector end-users’ headquartered in a Supp. 3 country for uses other than the “development” or “production” of new products. To meet this requirement:
  • The item must not be U.S. origin and must have become subject to the EAR after production.
  • All parties to the transaction must be subsidiaries of the same Supp. 3 company;
  • The end-user must be a ‘private sector end-user’; and
  • The characteristics of the item must not be enhanced unless otherwise authorized
• Exports to “U.S. Subsidiaries”, wherever located, for internal use, including to foreign national employees and individual contractors or intern of the U.S. company
• Exports of foreign made encryption items developed with or incorporating U.S. origin encryption source code, components, or toolkits, provided the U.S. origin encryption item has been classified or reported under license exception ENC and the encryption functionality has not changed

What You Can Do

Exporters have significant responsibilities to ensure compliance, to avoid penalties and/or jail time (i.e., your compliance manager deserves a raise!). Proper adherence to EAR requirements ensures that your business contributes to safeguarding U.S. national security and avoiding costly penalties. Many U.S. businesses have paid hefty civil penalties for violating U.S. export control laws. L3Harris Technologies, for example, was fined $13 million for illicitly exporting defense technology and software. For more examples of costly civil and criminal penalties, check out BIS’ latest Don’t Let This Happen to You! Publication.

If you are exporting goods subject to EAR, we propose you should:

• Develop an effective export compliance plan.

A key foundation of proactive and effective export compliance requires the development of an export compliance plan. An export compliance plan establishes a set of procedures for your organization to ensure that everyone is on the same page about how standard processes work, who is responsible for what, how to identify violations, what to do when violations occur, etc. An export compliance plan helps build consciousness in your organization that compliance is critical – both to avoid costly penalties and also to protect national security. Diaz Trade Law helps exporters create export compliance manuals that help prove you have a process in place to classify your merchandise correctly, vet your customers and ensure you can prove you can take compliance seriously and implement all of the important great weight mitigating factors. Diaz Trade Law has significant experience in developing and enhancing export compliance plans for organizations. Additionally, Diaz Trade Law can assist your business in auditing and improving your current plan so that it is in its best shape.

• Engage in regular export compliance training.

A foundation of a strong export compliance program is export compliance training. Training is important because it (1) ensures that all employees understand the export regulations and reinforces internal policies and procedures, (2) demonstrates to federal government agencies that your business is proactive about export compliance, and (3) avoids your business from being subject to costly penalties and even criminal liability. Fortunately, export compliance training can be highly tailored to meet your company’s needs. All of your training events include assessments for comprehension, certificates for successful participation, and ample opportunities for Q&A. For your next export compliance training event, trust Diaz Trade Law to provide highly-effective, engaging training.

• Thoroughly vet your proposed export transactions

Unsure whether a proposed export transaction violates the EAR? Diaz Trade Law has significant experience vetting your potential transaction against U.S. export control laws. Through research and due diligence, Diaz Trade Law ensures that your transaction won’t get you in trouble later down the road.

• Request authorization when necessary

BIS export authorization is required for many export transactions of controlled goods. Diaz Trade Law has significant experience in vetting proposed transactions to determine whether BIS authorization is required. Furthermore, Diaz Trade Law assists clients by filing BIS export license applications on their behalf on BIS’ SNAP-R portal.

• Engage in mitigation and corrective actions.

If your business has violated U.S. export control laws, there is a lot you can do to mitigate penalties and prevent future violations. Diaz Trade Law has significant experience representing businesses in dealing with the U.S. Commerce Department’s Bureau of Industry & Security and the Census Bureau. Specifically, Diaz Trade Law has successfully assisted clients in (1) submitting voluntary self-disclosures to mitigate penalties, (2) negotiated agreements with BIS and Census, and (3) built corrective action systems to help ensure that your business does not make the same violation again.

Contact Us

Diaz Trade Law has significant experience in a broad range of export compliance matters. To learn more about the services we offer, contact us at info@diaztradelaw.com or call us at 305-456-3830.

Overview – Export Administration Regulations

In order to protect national security interests and promote foreign policy objectives, the United States imposes export controls and participates in various multilateral export control regimes to prevent the proliferation of weapons of mass destruction and prevent destabilizing accumulations of conventional weapons and related materials. To that end, the U.S. Department of Commerce’s Bureau of Industry and Security (BIS) governs the export and reexport of commodities, software, and technology falling under the jurisdiction of Export Administration Regulations. BIS promotes continued U.S. strategic technology leadership and is responsible for enforcing the regulation of export, reexport, and transfer of items with commercial uses that can also be used in conventional arms, weapons of mass destruction, terrorist activities, or human rights abuses, and less sensitive military items.

The Export Administration Regulations (EAR) regulates the export, reexport, and in-country transfer of some military items, commercial items that could be applied both commercially and militarily or with proliferation applications, and commercial items without any obvious military use. When you are sending anything that may be subject to EAR, you may be required to get a license from BIS before the shipment. License requirements depend on the technical characteristics of an item, its destination, the end user, and the end use. In order to determine if the item, whether it be a commodity, software, or technology, being exported needs a license, the sender must consider the following:

• What is being exported: BIS classifies items under Export Control Classification Numbers (ECCNs), which are all listed on the Commerce Control List (CCL) (15 CFR 774, Supplement 1). If the item falls under U.S. Department of Commerce jurisdiction but is not listed on the CCL, it is designated as EAR99. Even low-technology consumer goods may require a license if the proposed export of an EAR99 item is to an embargoed country, to an end user of concern, or in support of a prohibited end use.
• Where it is being exported: Country-specific license requirements are determined by comparing the ECCN with the Commerce Country Chart. The ECCN and the Commerce Country Chart, taken together, define the items subject to export controls based solely on the technical parameters of the item and the country of ultimate destination.
• Who receives the export also affects the requirement for a license. Certain individuals and entities are prohibited from receiving U.S. exports, and others may only receive goods if they have been licensed, even if those items do not normally require a license on the basis of the ECCN and country of destination. Proscribed parties can be found in the U.S. Government’s Consolidated Screening List.
• End use: Some end uses or applications are prohibited while others are restricted and may require a license (see EAR part 744).

What is Successor Liability?

Successor Liability is the assumption of burdens of an acquired entity by the surviving company in a sale, merger, or acquisition transaction. Regarding export controls, successor liability focuses more on which party of parties in the acquisition are liable, after the acquisition deal is closed, for any violations of export control laws committed by the acquired company before the deal was concluded. Successor liability does allow for the possibility of both the seller and buyer to be determined responsible for export violations incurred by the seller.

Currently, successor liability could be imposed for failure to comply with U.S. export laws and regulations, including the Export Administration Regulations that are implemented by the U.S. Commerce Department, BIS.

Some of the main threats that can negatively affect an organization include export items, operations, customers, and acquisitions, specifically successor liability. In terms of successor liability, one should have a Due Diligence Checklist and consider if it is the same employees, the same company name, and if it is a continuation of the same old company. Successor liability is not imposed on a purchase of assets unless the following exceptions are applied:

• The purchasing corporation expressly or impliedly agrees to assume the liability;
• The transaction amounts to a de facto consolidation or merger;
• The buyer is merely a continuation of the seller; or
• The transaction was fraudulently entered into to escape liability.

To determine whether the buyer is “merely a continuation of the seller” certain factors are examined to determine whether or not successor liability is applied, which is also known as “substantial continuity.” The factors considered are:

• Retention of the same personnel
• Continued operations at the same location under the same business name
• Production of the same products
• Maintenance of the same assets and general business operations
• Holding the company out to the public as a continuation of the previous corporation

In considering these factors, regulators are ensuring that past illegal practices will not continue and that the violators are held accountable for their actions. If the seller is dissolved and devoid of significant assets, the seller would generally not be pursued as a viable responsible target for violation penalties for legal and policy reasons and the buying company may be considered for liability.

Case Study

An example of export control violation liability falling on a buyer because of successor liability is the case of Sigma-Aldrich Holdings Inc. This case holds that an acquirer of a company can be liable for the export violations of the target company for violations which occurred prior to the acquisition despite how the acquisition is structured. This case provided an expansion of the principle of successor liability to the international business compliance area and increased corporate risk.

The case entailed an enforcement action initiated by the BIS for violations of the EAR, alleging that the Research Biochemicals Limited Partnership (RBLP) exported tetrodotoxin citrate without obtaining the required export licenses. RBLP had sold its business to Sigma Aldrich Corporation after the alleged illegal action occurred. This transaction was structured as a sale of assets rather than a sale of stock. BIS then initiated an enforcement action against Sigma Aldrich after they concluded the acquisition. This enforcement action alleged violations of EAR for: exporting goods without obtaining required export licenses, making false or misleading statement, and violating export recordkeeping requirements. BIS claimed that Sigma Aldrich was liable for the RBLP’s export control violations as the successor in interest to RBLP in addition to violations which it had committed on their own.

The judge ruled that Sigma Aldrich was indeed liable for illegal actions previously committed by RBLP based on the principle of successor liability because under this principle the acquiring company is responsible for the liabilities of the target due to the “substantial continuity” of the target company’s people, products, and business. This case then shows how successor liability can be applied under export control regulations no matter the structure of the acquisition.

Implications for Companies Conducting Acquisitions

A target company involved in international business activities is subject to a broad range of federal laws that regulate the international business transactions. When an acquirer purchases a company, it is often stepping into the shoes of the target and is then subject to these laws. If this target has violated these laws, it is possible that the acquirer will take on these liabilities even when the structure is as a purchase of assets rather than stock. BIS has announced that they will prosecute companies for the export control violations of companies they acquire regardless of how a transaction is structured.

As a result of the case of Sigma-Aldrich Holdings Inc, buyers need to conduct a highly specialized due diligence review that focuses on past compliance of the selling company. This due diligence should be conducted by a member of the deal team that has specific expertise in export control law. In case the acquirer sees a pattern of sloppy compliance, the acquirer should consider having the seller file a voluntary disclosures PRIOR to the closing. Lastly, it is highly recommended that a buyer consider using strong warranties, representations, and indemnification clauses focused on violations of international business statues in their acquisition agreements.

What Should You Do

If you are either exporting goods or looking to purchase a company that is, it is essential to:

• Ensure an effective export compliance plan is in place
  • A key foundation of proactive and effective export compliance requires the development of an export compliance plan. An export compliance plan establishes a set of procedures for your organization to ensure that everyone is on the same page about how standard processes work, who is responsible for what, how to identify violations, what to do when violations occur, etc. An export compliance plan helps build consciousness in your organization that compliance is critical – both to avoid costly penalties and to protect national security. Diaz Trade Law helps exporters create export compliance manuals that help prove you have a process in place to classify your merchandise correctly, vet your customers and ensure you can prove you can take compliance seriously and implement all the important great weight mitigating factors. Diaz Trade Law has significant experience in developing and enhancing export compliance plans for organizations. Additionally, Diaz Trade Law can assist your business in auditing and improving your current plan so that it is in its best shape.
• Engage in regular export compliance training
  • A foundation of a strong export compliance program is export compliance training. Training is important because it (1) ensures that all employees understand the export regulations and reinforces internal policies and procedures, (2) demonstrates to federal government agencies that your business is proactive about export compliance, and (3) avoids your business from being subject to costly penalties and even criminal liability. Fortunately, export compliance training can be highly tailored to meet your company’s needs. All your training events include assessments for comprehension, certificates for successful participation, and ample opportunities for Q&A. For your next export compliance training event, trust Diaz Trade Law to provide highly-effective, engaging training.
• Thoroughly vet your proposed export transaction (Due Diligence is key!)
  • Unsure whether a proposed export transaction violates the Foreign Trade Regulations or other export control laws? Diaz Trade Law has significant experience vetting your potential transaction against U.S. export control laws and in assisting clients to properly file their EEI. Through research and due diligence, Diaz Trade Law ensures that your transaction won’t get you in trouble later down the road.
• Request authorization when necessary
  • BIS or DDTC export authorization is required for many export transactions of controlled goods. Diaz Trade Law has significant experience in vetting proposed transactions to determine whether BIS or DDTC authorization is required. Furthermore, Diaz Trade Law assists clients by filing export license applications on their behalf.
• Engage in mitigation and corrective actions
  • If your business has violated U.S. export control laws, there is a lot you can do to mitigate penalties and prevent future violations. Diaz Trade Law has significant experience representing businesses in dealing with the U.S. Commerce Department’s Bureau of Industry & Security and the Census Bureau. Specifically, Diaz Trade Law has successfully assisted clients in (1) submitting voluntary self-disclosures to mitigate penalties, (2) negotiated agreements with BIS and Census, and (3) built corrective action systems to help ensure that your business does not make the same violation again.

Check out our Bloomberg Law article on Submitting a Voluntary Self-Disclosure to the U.S. Census Bureau, Submitting a Voluntary Self-Disclosure to the BIS, and Export Licensing Under the EAR.

Contact us

Diaz Trade Law has significant experience in a broad range of export compliance matters. To learn more about the services we offer, contact us at info@diaztradelaw.com or call us at 305-456-3830.

CBP 

• As the first two weeks of February are one of the busiest periods of the year for agriculture specialists, U.S. Customs and Border Protection agriculture specialists working at El Paso area ports of entry are busy tapping and shaking cut flower shipments to make sure that personal and commercial importations of Valentine’s Day flowers are free from insects, pests and diseases that could harm the agricultural and floral industries of the United States.

Census Bureau 

• On February 4, 2022, the Census Bureau announced it would continue the current EEI filing requirement for Puerto Rico and the U.S. Virgin Islands and continue to publish the U.S. Trade with Puerto Rico and U.S. Possessions (FT-895) Publication Series.

CPSC 

• On January 31, 2022, the U.S. Consumer Product Safety Commission (CPSC) announced that Core Health & Fitness LLC agreed to pay the civil penalty of $6.5 million, resolving CPSC’s charges that Core failed to immediately report to CPSC that its Cable Cross Over Machines and Dual Adjustable Pulley Machines contained a defect or created unreasonable risk of injury.

DOJ

• On February 8, 2022, the U.S. Department of Justice seized a record of more than $4 billion worth of stolen bitcoin. Officials also charged two people on Tuesday with attempting to launder the money which was stolen by a hacker who breached a cryptocurrency platform in 2016 and allegedly made off with nearly 120,000 Bitcoin, then valued at about $71m, but now exceeding $5bn.

OFAC 

• On February 8, 2022, The Department of the Treasury’s Office of Foreign Assets Control (OFAC) issued the Ethiopia Sanctions Regulations to implement Executive Order 14046 of September 17, 2021, “Imposing Sanctions on Certain Persons with Respect to the Humanitarian and Human Rights Crisis in Ethiopia.” OFAC intends to supplement these regulations with a more comprehensive set of regulations, which may include additional interpretive guidance and definitions, general licenses, and other regulatory provisions.
• On February 8, 2022, OFAC is amended its regulations to implement for 2022 the Federal Civil Penalties Inflation Adjustment Act of 1990, as amended by the Federal Civil Penalties Inflation Adjustment Act Improvements Act of 2015. This regulatory amendment adjusts for inflation the maximum amount of the civil monetary penalties that may be assessed under relevant OFAC regulations.
• On February 10, 2022, the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) designated Wilder Emilio Sanchez Farfan and Miguel Angel Valdez Ruiz pursuant to Executive Order (E.O.) 14059 for materially contributing to the illicit activities of major Mexican cartels to traffic cocaine into the United States.

Section 232

• On February 10, 2022 the Bureau of Industry and Security (BIS) announced it was seeking public comments regarding the Section 232 exclusions process and the responsiveness of the exclusions process to market demand and enhanced consultation with U.S. firms and labor organizations.
  • Comments are due March 28, 2022.
• On February 7, 2022, United States Trade Representative Katherine C. Tai and United States Secretary of Commerce Gina M. Raimondo announced a new 232 tariff agreement with Japan to allow historically-based sustainable volumes of Japanese steel products to enter the U.S. market without the application of Section 232 tariffs. This deal will help ensure the long-term viability of U.S. steel industry and protect American jobs.

USTR

• Since February 7, 2022, Senator Tom Carper and Rob Portman have been leading a group of 41 senators in their call for U.S. Trade Representative Katherine Tai to make more companies eligible for exclusions from tariffs from the Trump era on goods imported from China.

If you have questions about these updates, contact our Customs and International trade law attorneys at info@diaztradelaw.com or call us at 305-456-3830.

To receive an email notification whenever a new post is published, please subscribe to our weekly blog here.

Foreign Trade Regulations

The U.S. Census Bureau’s mission is to serve as the nation’s leading provider of quality data about its people and economy. The Census Bureau’s Trade Regulations Branch in the Economic Management Division is chiefly responsible for enforcing the Foreign Trade Regulations. The Foreign Trade Regulations (15 CFR. Part 30) require certain exporters to file export information with the U.S. Census Bureau. They detail requirements for filing export information, explain filing procedures, and establish penalties for noncompliance. The regulations require export information to be filed on the Automated Export System (“AES”). The information submitted by exporters on to AES is known as EEI.

EEI filings are required for a wide variety of circumstances, including:

• Exports valued at more than $2,500 to any destination except Canada
• Exports that require an export license under the Export Administration Regulations (“EAR”)
• Exports on the EAR’s Commerce Control List (“CCL”) and destined for China, Russia, or Venezuela
• Exports subject to the EAR and destined for a country in Country Group E:1 or E:2 (currently, Cuba, Iran, North Korea, and Syria)
• Exports subject to the International Traffic in Arms Regulations (“ITAR”)
• Exports containing rough diamonds

Export Filing Requirements for Shipments to Puerto Rico & the U.S. Virgin Islands

The U.S. Foreign Trade Regulations include filing requirements for shipments from any of the 50 U.S. states to the “extended United States,” a region that comprises Puerto Rico and the U.S. Virgin Islands. Although you do not have to file EEI when sending products state to state, you do have to do so when shipping goods from the United to Puerto Rico and the U.S. Virgin Islands if the shipment at issue meets the $2,500 per Schedule B / HS code threshold or other Census Bureau filing requirement.

However, for shipments from the extended United States (United States, Puerto Rico, and U.S. Virgin Islands) to other U.S. territories, filings are not required. The following are the U.S. territories to which export filings are not required when shipped from the extended United States:

• American Samoa
• Baker Island
• Guam
• Howland Island
• Jarvis Island
• Johnston Atoll
• Kingman Reef
• Midway Islands
• Navassa Island
• Northern Mariana Islands
• Palmyra Atoll
• Wake Island

The policy reasons for requiring EEI filing requirements for shipments to Puerto Rico and the U.S. Virgin Islands include:

• Demand for data to analyze those economies
• Use data to compile Gross Domestic Product (“GDP”)

It should be noted that despite the requirement for EEI filing requirements for shipments from the United States’ 50 states to Puerto Rico and the U.S. Virgin Islands, these shipments are still classified as domestic shipments.

Below is a diagram that demonstrates the differing EEI filing requirements for shipments from the United States’ 50 states to 1) the extended United States, 2) other U.S. territories, 3) Canada, and 4) foreign countries. Shipments from the United States’ 50 states to the extended United States (Puerto Rico and the U.S. Virgin Islands) do require EEI filings; shipments from the United States’ 50 states to other U.S. territories do not require EEI filings; shipments from the United States’ 50 states to Canada generally do not require EEI filings; and, finally, shipments to foreign countries do require EEI filings.

EEI filings are generally required for the following shipments:

EEI filings are generally not required for the following shipments:

What You Can Do

If you are exporting goods subject to filing requirements under the Foreign Trade Regulations, we propose you should:

• Develop an effective export compliance plan
  • A key foundation of proactive and effective export compliance requires the development of an export compliance plan. An export compliance plan establishes a set of procedures for your organization to ensure that everyone is on the same page about how standard processes work, who is responsible for what, how to identify violations, what to do when violations occur, etc. An export compliance plan helps build consciousness in your organization that compliance is critical – both to avoid costly penalties and to protect national security. Diaz Trade Law helps exporters create export compliance manuals that help prove you have a process in place to classify your merchandise correctly, vet your customers and ensure you can prove you can take compliance seriously and implement all the important great weight mitigating factors. Diaz Trade Law has significant experience in developing and enhancing export compliance plans for organizations. Additionally, Diaz Trade Law can assist your business in auditing and improving your current plan so that it is in its best shape.
• Engage in regular export compliance training
  • A foundation of a strong export compliance program is export compliance training. Training is important because it (1) ensures that all employees understand the export regulations and reinforces internal policies and procedures, (2) demonstrates to federal government agencies that your business is proactive about export compliance, and (3) avoids your business from being subject to costly penalties and even criminal liability. Fortunately, export compliance training can be highly tailored to meet your company’s needs. All your training events include assessments for comprehension, certificates for successful participation, and ample opportunities for Q&A. For your next export compliance training event, trust Diaz Trade Law to provide highly-effective, engaging training.
• Thoroughly vet your proposed export transaction
  • Unsure whether a proposed export transaction violates the Foreign Trade Regulations or other export control laws? Diaz Trade Law has significant experience vetting your potential transaction against U.S. export control laws and in assisting clients to properly file their EEI. Through research and due diligence, Diaz Trade Law ensures that your transaction won’t get you in trouble later down the road.
• Request authorization when necessary
  • BIS or DDTC export authorization is required for many export transactions of controlled goods. Diaz Trade Law has significant experience in vetting proposed transactions to determine whether BIS or DDTC authorization is required. Furthermore, Diaz Trade Law assists clients by filing export license applications on their behalf.
• Engage in mitigation and corrective actions
  • If your business has violated U.S. export control laws, there is a lot you can do to mitigate penalties and prevent future violations. Diaz Trade Law has significant experience representing businesses in dealing with the U.S. Commerce Department’s Bureau of Industry & Security and the Census Bureau. Specifically, Diaz Trade Law has successfully assisted clients in (1) submitting voluntary self-disclosures to mitigate penalties, (2) negotiated agreements with BIS and Census, and (3) built corrective action systems to help ensure that your business does not make the same violation again.

Check out our Bloomberg Law article on Submitting a Voluntary Self-Disclosure to the U.S. Census Bureau.

 Contact Us

Diaz Trade Law has significant experience in a broad range of export compliance matters. To learn more about the services we offer, contact us at info@diaztradelaw.com or call us at 305-456-3830.

Diaz Trade Law is enthusiastic to announce Bloomberg Law published another one of our articles, “Introduction to US Export Controls Part 2“! Below is the article reproduced with permission for your reading pleasure. You can read the article here (where you’ll have the ability to access all of the great hyperlinks). Please note you cannot click on the hyperlinks below.

We’d love to hear your feedback!

CBP 

• In Fiscal Year 2021, CBP at the LA/Long Beach Seaport seized More Than $760 Million in Counterfeit and Prohibited Products, a 652% increase over the previous year.
• CBP issues guidance regarding the extension of product exclusions from additional Section 301 China duties on certain medical-care products to address COVID-19.
• With changes to the HTSUS classification systems possibly coming as early as January 1, 2021, U.S. importers should review their classifications and ensure compliance with U.S. regulations

BIS

• The Bureau of Industry and Security (BIS) requests public comment regarding areas and priorities for U.S. and EU export control cooperation under the Trade and Technology Council.
  • Comments are due by January 14, 2022
• On November 26, 2021, the Department of Commerce’s Bureau of Industry and Security (BIS) published a final rule adding 27 foreign entities and individuals to the Entity List for engaging in activities that are contrary to the national security or foreign policy interests of the United States.

China

• In their most substantial talk since President Biden took office, Chinese President Xi Jinping has warned that encouraging Taiwanese independence would be “playing with fire”.
• On November 12, 2020, the President declared a national emergency to deal with the extraordinary threat to the national security, foreign policy, and economy of the United States constituted by certain companies of the People’s Republic of China.
• Airbnb subject to regulatory risk under U.S. law with more than a dozen homes available for rent in China’s Xinjiang region on land owned by an organization sanctioned by the U.S. government for complicity in genocide and forced labor.
• On December 6, 2021, President Biden announced a U.S. diplomatic boycott of the 2022 Beijing Winter Olympic Games over concerns about China’s human rights record.

Commerce Department

• The Department of Commerce invites the general public to comment on proposed, and continuing information collections to allow for submission of exclusions requests from the remedies adjusting imports of steel and aluminum into the United States.
• Comments are due by January 24, 2022.
• On December 1, 2021, the Department of Commerce announced the opportunity to request an annual administrative review for products that are currently subject to antidumping and countervailing duties.

FDA

• The FDA is sharing a grant opportunity to cover COVID-19-related expenses for eligible FDA-regulated food producers, processors and growers.
  • Applications are due November 22
    • How to Apply – USDA’s Pandemic Response and Safety Grant Program – YouTube
    • Eligibility – USDA’s Pandemic Response and Safety Grant Program – YouTube
    • DUNS Number Registration – USDA’s Pandemic Response and Safety Grant Program – YouTube

Export Controls/Sanctions

• On November 18, 2021, the U.S. Department of the Treasury’s Office of Foreign Assets Control sanctioned senior Houthi military officer Saleh Mesfer Alshaer, for the seizure of property in Yemen valued at greater than 100 million dollars, using a variety of unlawful tactics, including extortion.
• On November 18, 2021, the U.S. Department of the Treasury’s Office of Foreign Assets Control sanctioned six Iranian individuals and one Iranian entity for attempting to influence the 2020 U.S. presidential election.
• On November 24, 2021, the Department of the Treasury’s Office of Foreign Assets Control (OFAC) amended the Syrian Sanctions Regulations to expand the authorizations for nongovernmental organizations (NGO) to engage in certain transactions and activities that ensure the continued provision of humanitarian assistance, including certain early-recovery activities, that benefit the Syrian people.
• On November 24, 2021, the Department of the Treasury’s Office of Foreign Assets Control (OFAC) issued Venezuela-related General License 8I, authorizing  limited transactions with Petróleos de Venezuela, S.A. or the wind down of operations in Venezuela for certain entities.
• On December 2, 2021, the Department of the Treasury’s Office of Foreign Assets Control (OFAC) announced the expansion of sanctions against Belarus to include 35 new designations to the Specially Designated Nationals and Blocked Entities List and the issuance of a related wind-down license, General License 5.
• On November 8, 2021, the Department of the Treasury’s Office of Foreign Assets Control (OFAC) sanctioned 57 cryptocurrency addresses and one exchange for facilitating ransomware and money laundering

DST and Section 301 Investigations

• As part of the to address tax challenges arising from the digitalization of the world economy, the U.S. Trade Representative has determined to terminate the Section 301 Digital Services Tax Investigations of Austria, France, Italy, Spain, and the United Kingdom.
• U.S. and India reach agreement regarding the treatment of Digital Services Taxes prior to full implementation of Pillar 1 of the Organization for Economic Co-operation and Development (OECD) agreement.  As part of the agreement the United States will terminate the currently suspended additional duties on goods of India that had been adopted in the DST Section 301 investigation.
• On November 22, 2021, the U.S. Department of the Treasury (Treasury) issued a joint statement with Turkey regarding a transitional approach to Turkey’s Digital Service Tax (DST) prior to entry into force of Pillar 1. The joint statement reflects a political agreement in which the U.S. Trade Representative has determined to terminate the section 301 action taken in the investigation of Turkey’s DST.

USTR/Trade Policy

• On November 17, 2021, the United States and Japan announced the formation of the “U.S.-Japan Partnership on Trade” to deepen cooperation between the two countries and reaffirm their alliance through regular engagement on trade-related matters.
• United States Trade Representative Katherine Tai and United States Secretary of Commerce Gina Raimondo published an op-ed touting the agreement reached with the European Union that preserves the long-term viability of our steel and aluminum industries by tackling global excess capacity and creates a framework for reducing the carbon intensity of those sectors.

To receive an email notification whenever a new post is published, please subscribe to our weekly blog here.