Archive for the ‘China’ Category


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.
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Nov

17

Guilty As Charged


Posted by at 8:59 pm on November 17, 2016
Category: BISChinaNorth Korea Sanctions

Fat Man and Little Boy via KCNA [Fair Use]Oh dear. Apparently His Rotundity, the Dear Leader of North Korea, is annoyed that people that he can’t throw into internment camps and execute are mentioning that his aspirations to become a triathelete have been sabotaged by third and fourth helpings of yangnyeom tongdak. The chief offenders appear to be Internauts in China that refer to Kim Jong Un as Jin San Pang which, apparently, translates as — snicker, snicker — Kim Fatty the Third.

This blog, following the long-standing tradition of ridiculing the appearance of national enemies, has been on the forefront of suggesting that the Nork Dictator might benefit by a few less cigarettes and a few more jogs around the Chosŏn’gŭl: 55호 관저, his main palace. But we haven’t gone quite as far as Jin San Pang. Even with our post titled Fat Man Sanctioned Over Little Boy

Jin San Pang, aka His Obesity Kim Jong Un, has asked China to censor the use of Jin San Pang on Chinese websites. In the grand tradition of the Chinese government, they have both completely censored the offensive, if accurate, nickname Jin San Pang, at the same time that they have denied censoring the name and expressed shock and profound disappointment that anyone would dare to suggest that they would tamper with free speech on the Internet.

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Copyright © 2016 Clif Burns. All Rights Reserved.
(No republication, syndication or use permitted without my consent.)

Nov

15

New White House Cannot Impose China Tariffs Under Trading With The Enemy Act


Posted by at 10:27 pm on November 15, 2016
Category: ChinaTrading with the Enemy Act

Great Wall of China Wide by Nate Merrill [CC-BY-SA-2.0 (http://creativecommons.org/licenses/by-sa/2.0)], via Flickr https://flic.kr/p/dXBy8h [cropped]

We trawl the nether regions of the Internet looking for export stories so that you don’t have to. We saw one today, on a dubious site called ValueWalk by a dubious journalist, reporting that China has threatened to ban sales of iPhone if the new administration imposes a threatened 45% tariff on Chinese imports. Global Times, a PRC-run website, did indeed threaten to halt sales of iPhones, Boeing airplanes and U.S. autos in China if tariffs are imposed on Chinese imports by the United States.

But the reporter for ValueWalk went off the deep end when she said Trump could unilaterally impose tariffs under the Trading with the Enemy Act (“TWEA”):

First of all, Trump could invoke the “Trading with the Enemy Act of 1917” to set big tariffs against other nations. The law states that the President can restrict trade with other countries “during time of war.” But here’s the thing: the U.S. doesn’t necessarily have to be at war with China for Trump to impose his desired 45% tariffs on Chinese imports. The definition is so loose that America can be “at war” in any part of the world, while Trump can impose tariffs on any countries he wants. In fact, some political experts believe that having U.S. special forces deployed in Syria and Libya is already enough to invoke the law.

Er, no, no, no and no again.

Let’s start with a rundown of the history of section 5(b) of the Trading with the Enemies Act, 50 App. USC § 5(b). As initially passed, that section permitted the President, or a delegated agency, “[d]uring time of war or any other period of national emergency declared by the President” to regulate imports of any property in which a foreign national has an interest. The section was amended in 1977 by Public Law 95-223, which struck the language in 5(b) relating to national emergencies declared by the President. The law allowed current regulations passed under the national emergency powers of the TWEA, which included the Cuba regulations and all regulations in effect under the law at the time of the amendment, to remain in force — provided that the President made an annual finding of national emergency justifying their continuation.

So we can’t look at the current regulations on Cuba under the TWEA despite the absence of an existing state of war as proof of a loose definition of a state of war. They are justified under the deketed but grandfathered national emergency language of section 5(b). The definitions in section 2 of the TWEA of “beginning of the war” and “end of the war” make clear that “war” under the TWEA requires a formal declaration of war by Congress. Boots on the ground anywhere outside the United States does not constitute “war” under Section 5(b) justifying the President to impose broad controls on international trade. Indeed, there would have been little purpose to the deletion of the national emergency powers of Section 5(b) if the President could exercise unilateral power of international trade by sending a handful of troops overseas to any zone of conflict or potential conflict.

Photo Credit: Great Wall of China Wide by Nate Merrill [CC-BY-SA-2.0 (http://creativecommons.org/licenses/by-sa/2.0)], via Flickr https://flic.kr/p/dXBy8h [cropped]. Copyright 2013 Nate Merrill

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Copyright © 2016 Clif Burns. All Rights Reserved.
(No republication, syndication or use permitted without my consent.)

Jun

28

ZTE Gets Last Minute Reprieve (Sort Of)


Posted by at 10:33 pm on June 28, 2016
Category: BISChinaEntity ListIran Sanctions

ZTE Stand 6 via http://www.zte.com.cn/cn/events/ces2013/show/201301/t20130110_381605.html [Fair Use]The Bureau of Industry and Security today announced that it was extending the Temporary General License which permitted exports to ZTE from June 30 all the way to August 30. ZTE, as this blog reported here, was placed on the Entity List because of elaborate shenanigans by the company by which it bought U.S. goods and resold them to Iran.

Two weeks after bringing the ban hammer down on ZTE, BIS issued a temporary general license which covered March 24 to June 30, more than three months. The new temporary license expires on August 30, one day short of two months from June 30. Why this temporary license is shorter than the previous one was not disclosed but one can only suspect that ZTE may not be minding its manners in the way that BIS would like to see.

The problem for U.S. exporters is that such a short license, with the real possibility, given its shortened length, that it may not be renewed beyond August 30, opens up the possibility that the exporter will sell items to ZTE that it may not later be able to service even though the warranty on those items is still in force. If the temporary general license is not renewed and ZTE stays on the list, the ability of the U.S. exporter to send replacement parts to ZTE or, alternatively, to repair the item in the United States and return it to ZTE will be in question. It would not surprise me if the temporary general license does not get much use.

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Copyright © 2016 Clif Burns. All Rights Reserved.
(No republication, syndication or use permitted without my consent.)

Jun

21

Package Forwarder Coughs Up $60K For Export Violations


Posted by at 10:18 pm on June 21, 2016
Category: BISChina

Fulfill Your Packages HQ via Google Maps https://goo.gl/maps/gJ8z3G3j2gm [Fair Use]
ABOVE: Fulfill Your Packages HQ

The Bureau of Industry and Security (“BIS”) issued settlement documents last week indicating that a California company called Fulfill Your Packages agreed to pay a $250,000 fine, of which $190,000 was suspended if the company behaves itself for the next two years and commits no further export violations. At least from the facts recited by BIS, it’s a very odd case.

Fulfill Your Packages is apparently a company that agrees to serve as a local address for Chinese companies. Those companies order products from U.S. companies which Fulfill Your Packages dutiful re-packages and ships to China. Frankly, a better name for the company might be Ginormous Export Red Flag, Inc., but I suppose Fulfill Your Packages sounds better.

The violation arose from an unnamed Chinese company ordering an export controlled FLIR thermal imaging camera from an unnamed U.S. company which then shipped the camera to Fulfill Your Packages’ address in Portland, Oregon. The Google Street View of that address reveals a large warehouse. Google itself further reveals that the address is used by several logistics companies and, oddly, a liquor store.

When Fulfill Your Packages received the package, it dutifully repackaged the FLIR system and arranged for the USPS to pick up the package. For reasons that aren’t clear, Fulfill Your Packages described the item on shipping documents as “metal parts” even though its own order system described the item as an “infrared webcam/surveillance installation kit.” It also stated the value as $255 even though the distributor’s invoice for the camera received with the package listed the value at $2,617. It’s not clear at all why the company, for the small fee it was receiving, would falsify the export documents. It didn’t really have a dog in the race. Of course, it could be simple incompetence. Or perhaps it was some conspiracy with the Chinese purchaser for a large sum. There’s no way to tell.

But what about the distributor that shipped a FLIR system to a warehouse in Oregon for a Chinese customer? Don’t they bear some responsibility here? They didn’t ignore red flags, they ignored red banners the size of a skyscraper. Or maybe not. The BIS documents suggest that BIS thwarted the shipment before the USPS arrived to pick up the package. What likely happened here is that the distributor did do its job, did consult the all-knowing wizard of Google while evaluating the order, smelled a rat and called BIS.

The lesson here is that the Internet is your friend and that orders for export controlled items should not be fulfilled without doing the research that is now, literally, at your fingertips.

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Copyright © 2016 Clif Burns. All Rights Reserved.
(No republication, syndication or use permitted without my consent.)