Archive for the ‘BIS’ Category


Mar

24

About That Laptop Ban


Posted by at 5:31 pm on March 24, 2017
Category: BISDDTC

Qatar Airways - Airbus A380 by Glynn Lowe Photoworks [CC-BY-SA-2.0 (http://creativecommons.org/licenses/by-sa/2.0)], via Flickr https://flic.kr/p/mDLaXv [cropped and processed]The United States and the United Kingdom just announced that laptops (and other electronic devices larger than a cellphone) would have to be checked as luggage and could not be carried by passengers into cabins when traveling on non-stop flights from certain destinations in the Middle East and North Africa, including Istanbul, Cairo and Doha, among others. I’m sure that some readers wondered how they were going to work on such flights while another (possibly much larger) group wondered how they would watch “Batman v. Superman” or “Bad Santa 2” during their flights home.

Of course, I wondered whether you would be arrested when you landed if you put in the hold a laptop with export controlled technical data, technology or software. That’s because I’m always looking out for my readers.

The issue, at least as far as BIS is concerned, is whether License Exception TMP or BAG still applies if you separate yourself from the laptop with controlled technology or software at check-in. TMP covers company laptops and BAG will cover personal laptops owned by the passenger.

Under section 740.9(a)(1) of License Exception TMP, items that are exported as “tools of the trade,” which includes software and hardware, “must remain under the “effective control” of the exporter or the exporter’s employee.” I would take this to mean that if the laptop or software on it is controlled for the destination from which the employee is returning, it may not be checked. This is somewhat odd since that same provision allows that laptop and software to be shipped “unaccompanied” within one month prior to the employee’s arrival in the foreign country.

On the other hand,  TMP does not impose the “effective control” on technology on a laptop that would require a license for the traveler’s destination. Instead, section 740.9(a)(3) speaks only of access controls such as a password for the device on which the technology is controlled.

License Exception BAG, under section 740.14(c)(1), only applies to items “owned by the individuals (or by members of their immediate families) … on the dates they depart from the United States.” So this exception would only apply to personally-owned laptops and personally-owned software if they are controlled to the traveler’s destination. Oddly, license exception BAG does not have the “effective control” limitation, so personal laptops could be checked consistently with the license exception even with EAR-controlled software. Additionally, BAG permits export of technology on the laptop, in the hold or the cabin, if there are access controls such as a password.

The ITAR deals with this travel issue in section 125.4(b)(9). As with EAR-controlled technical data, a laptop with ITAR-controlled technical data can be checked and stored in the hold as long as the laptop is protected with a password.

So, the only real issue prohibition under the ITAR or EAR against checking a laptop is when the laptop is not the personal property of the traveler and it contains software that is controlled under the EAR to the traveler’s destination. If there is ITAR-controlled technical data or EAR-controlled technology, a password on the device is sufficient.

Pardon me for a little skepticism here but it seems to me that this electronics ban has more to do with limiting foreign carrier competition in the United States than it does security. To begin with, it covers devices such as Kindles and cameras that are not much different from the size of a cellphone and which certainly do not seem to be more efficient threat vectors. More significantly, a person bent on terror using one of these devices merely needs to change his flight plan to include a stopover (where he won’t be screened again) before continuing to the United States — which is exactly what most travelers will do to avoid being separated from their expensive electronics.

Photo Credit: Mojito by Sami Keinänen [CC-BY-SA-2.0 (http://creativecommons.org/licenses/by-sa/2.0)], via Flickr https://flic.kr/p/4GyGSs [cropped]. Copyright 20xx Sami Keinanen

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Copyright © 2017 Clif Burns. All Rights Reserved.
(No republication, syndication or use permitted without my consent.)

Mar

17

Chocolate Bunnies, Marshmallow Peeps and an Easter Surprise from BIS


Posted by at 11:12 am on March 17, 2017
Category: BISChinaHong Kong

Hong Kong International Commerce Center by Bernard Spragg [CC-BY-SA-2.0 (http://creativecommons.org/licenses/by-sa/2.0)], via Flickr https://flic.kr/p/q9tJLV [cropped]The Bureau of Industry and Security is playing Easter Bunny and has left a little Easter egg in the Easter baskets of anyone planning to export certain items to Hong Kong beginning April 19, or two days after Easter Sunday. The Easter egg, er, new rule provides that any export to Hong Kong of an item controlled for NS, MT, NP Column 1, or CB reasons needs an import license from Hong Kong or a statement from Hong Kong that a license is not necessary. These items are not required as part of the BIS license application but must be in the U.S. exporter’s possession before the export is made.

The reason that U.S. exporters need to babysit the compliance by Hong Kong authorities with their own import rules is far from clear. The stated reason for this new rule in the Federal Register notice does not make much sense:

BIS is taking this action to provide greater assurance that U.S. origin items that are subject to the multilateral control regimes noted above will be properly authorized by the United States to their final destination, even when those items first pass through Hong Kong.

Okay, that is what the BIS is licensing process is for and these documents are not even required when applying for the license. So that rationale is, well, not very compelling.

BIS has also published FAQs on the new requirement. These make clear that the requisite documents must be obtained from Hong Kong even if the export is being made pursuant to a license exception.

Who says there are never any surprises in their Easter baskets, just the same old dyed eggs and chocolate bunnies?

Photo Credit: Hong Kong International Commerce Center by Bernard Spragg [CC-BY-SA-2.0 (http://creativecommons.org/licenses/by-sa/2.0)], via Flickr https://flic.kr/p/q9tJLV [cropped]. Copyright 2014 Bernard Spragg

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Copyright © 2017 Clif Burns. All Rights Reserved.
(No republication, syndication or use permitted without my consent.)

Mar

1

Assassination In Malaysia Leads To Calls to Redesignate DPRK As A Terrorist State


Posted by at 9:14 pm on March 1, 2017
Category: BISDDTCNorth Korea Sanctions

Kim Jong Un Smoking via KCNA [Fair Use]The assassination by the Norks of Kim Jong Un’s brother in a Malaysian airport with the help of gullible stooges and some VX nerve agent has reignited the debate as to whether the State Department should redesignate the DPRK as a state sponsor of terrorism. The DPRK was first put in the list after it bombed a Korean Air Flight in 1987, killing 115 people. The country was removed in 2008 in return for shutting down its plutonium plant and permitting inspections.

In order to designate a country as a state sponsor of terrorism, a determination must be made that the country “repeatedly provided support for acts of international terrorism.” See, e.g., section 6(j) of the (zombie) Export Administration Act. None of the statutes that invoke that phrase define “acts of international terrorism,” although section 40(d) of the Arms Export Control Act states that the term includes activities that “aid or abet the efforts of an individual or group to use … chemical, biological, or radiological weapons.” I suppose that might cover the murder of an individual with a chemical weapon in an airport, although terrorism seems more readily to mean an act that indiscriminately targets multiple civilians in order to instill fear in a population or community.

Advocates of redesignation have argued that the cyber attack on Sony (in connection with its distribution of the hilarious and decidedly anti-Nork film The Interview) and other assassinations abroad demonstrate repeated acts of terrorism. But again, it’s hard to argue that these acts, while reprehensible, are designed to instill fear in a community.

In any event, the redesignation would be most symbolic. Once designated, U.S. law prohibits arms sales, which are already prohibited. Licenses would be required for certain specified goods, but section 746.4 of the EAR already requires licenses for all items subject to the EAR other than food and medicine. Being designated as a state sponsor of terrorism means that under the Trade Sanctions and Export Reform Act of 2000 a one-year license is required for exports to that country of agricultural commodities, medicine or medical devices, but North Korea is explicitly exempted from this by section 7205(a)(2)

Given that the redesignation of the loathsome Norks would be mostly symbolic, it seems to be a bad idea to torture the definition of “international terrorism” to include computer hacking and individual murders to get there.

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Copyright © 2017 Clif Burns. All Rights Reserved.
(No republication, syndication or use permitted without my consent.)

Feb

28

ZTE License Extended; Iranian News Outlet Gets It Wrong


Posted by at 7:24 pm on February 28, 2017
Category: BISIran Sanctions

ZTE Stand 6 via http://www.zte.com.cn/cn/events/ces2013/show/201301/t20130110_381605.html [Fair Use]Last Friday, the Bureau of Industry and Security extended the duration of the temporary general license which permits exports to ZTE notwithstanding it’s inclusion on the Entity List. Without the temporary general license, unlicensed exports to ZTE of items subject to the EAR would be prohibited.

It is notable that this extension — from February 27, 2017, to March 29, 2017 — is the shortest period of duration for the ZTE temporary general license granted so far, the others having been March 24, 2016, to June 30, 2016; June 30, 2016 to August 30, 2016; August 30, 2016, to November 28, 2016; and November 28, 2016, to February 27, 2017. It’s not quite clear why this duration is so much shorter than has been granted before.

The Financial Tribune, which bills itself as the “First Iranian English Daily” and which is owned by the Iranian newspaper Donya-e-Eqtesad has a rather entertaining, if incorrect, take on the meaning of the extension of the ZTE temporary general license:

ZTE has been granted an exceptional reprieve from the US Department of Commerce to continue exporting its telecoms equipment to Iran.

Er, not so much. After all, it was ZTE’s exports of telecom equipment from the United States to Iran which got ZTE in the snert in the first place. ZTE can export items not subject to the EAR to Iran without need of the temporary general license; and the temporary general license would not authorize ZTE, or anyone else for that matter, to export items subject to the EAR to Iran. All the temporary general license permits is the exports of items subject to the EAR to ZTE.

So, file the Financial Tribune‘s story under “Fake News” or “Wishful Thinking” depending upon your individual inclination.

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(No republication, syndication or use permitted without my consent.)

Feb

21

Unhelpful Suggestion of the Day


Posted by at 6:36 pm on February 21, 2017
Category: BISCCLCustomsDDTCHTSUSUSML

Jardins Tuliere [sic] Statue by Eksley [CC-BY-SA-2.0 (http://creativecommons.org/licenses/by-sa/2.0)], via Flickr https://flic.kr/p/dRYGik [cropped]

An interesting article [subscription required] in the Journal of Commerce reports survey results indicating that one-third of all U.S. e-commerce merchants report that they have incurred fines and delays from regulatory agencies in connection with their imports and exports.  Within that group, 29 percent of the companies surveyed stated that they had been subject to fines in connection with cross-border shipments. With respect to delays, they cited the Bureau of Industry and Security, and the Directorate of Defense Trade Controls, at 32 percent and 30 percent, respectively. That’s a surprising figure by any measure, if true and representative.

But more astonishing and surprising is the suggestion that the JoC article author proposes to fix this:

The task of ensuring trade compliance is also becoming more difficult, as 48 percent said they now do business in more than 50 countries.Trade regulations are constantly increasing and growing, necessitating agile and adept global trade management platforms, empowered by a combination of technology, trade compliance intelligence, and automation.

These systems can help properly classify goods based on descriptions from product catalogs, country of export, and country of import. Strong and reliable classification can help avoid hang-ups at Customs agencies. … In addition to helping avoid run-ins with these agencies, automation is helpful because it allows shippers to track the costs and length of these delays, allowing for better forecasting and business planning.

Don’t get me wrong, automation is often a good idea. But to suggest that the HTSUS, USML Categories or ECCN numbers can be assigned to a product through automation is, well, preposterous. It is something that can only be suggested by someone who has never looked at the USML, the CCL or the HTSUS. Maybe this will be possible sometime in the future when cars fly and robots are butlers. But right now, it’s not a feasible solution.

Photo Credit: Jardins Tuliere [sic] Statue by Eksley [CC-BY-SA-2.0 (http://creativecommons.org/licenses/by-sa/2.0)], via Flickr https://flic.kr/p/dRYGik [cropped]. Copyright 2009 Eksley

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Copyright © 2017 Clif Burns. All Rights Reserved.
(No republication, syndication or use permitted without my consent.)