China General Nuclear Power Group added to BIS entity list.

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This past Wednesday, the U.S. Department of Commerce added China General Nuclear Power Group (CGN) to the BIS entity list. As a result, American companies are now prevented from selling any products to China’s largest state-owned nuclear company. If any American company or person does business with CGN (or any other listed entity), they would be violating the law and subject to persecution.

The U.S. Department of Commerce claims CGN its subsidiaries engaged in activity to acquire advanced U.S. nuclear technology and material for use in the Chinese military.

China claims the real goal of placing CGN on the entity list is to limit China’s growth under China’s “Made in China 2025” initiative. Made in China 2025 is an effort by the Chinese government to increase the high tech capability and manufacturing of China. If successful, the “Made in China 2025” efforts will make China the a superpower in high technology in Asia.

If you have any questions about your company’s operations and want to ensure compliance with the new entity list addition, contact experienced export compliance attorney David Hsu at 832-896-6288 or by email at dh@gjatradelaw.com, attorney.dave@yahoo.com.

Intel has begun selling to Huawei as US loosens restrictions.

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Since the US eased restrictions on supplying components to Huawei, the largest US chimpaker, Intel, said they have begun selling products to Huawei “within the rules of the law”. Additionally, Intel says they are also requesting an export license to sell “general purpose computing” chips to Huawei that do not pose a national security risk.

As you are aware, the Trump administration raised concerns regarding the use of Huawei technology may contain backdoors that would allow the Chinese government to spy on users, posing a national security risk. As a result, the US Department of Commerce added Huawei to their entity list this past May. Inclusion on the entity list precluded Huawei from buying parts and components from American companies without US government approval (an export license).

However, after the Trump met with Chinese President Xi Jinping at the G20 summit last month, President Trump said that US firms can resume selling equipment to Huawei.

Additionally, earlier in July, Commerce Secretary Wilbur Ross announced an easing of restrictions against the Chinese company in line with Trump’s statements after the G20 summit, stating that the US would issue licenses to US companies looking to sell to Huawei as long as the sales do not pose a threat to national security. An export license would still be required as Huawei has not been removed from the entity list.

If you have any questions whether your company can continue to do business with Huawei, contact experienced export compliance attorney David Hsu at 832-896-6288 or by email at attorney.dave@yahoo.com, dh@gjatradelaw.com.

US Mexico tomato dispute – US demands 100% review of all tomatoes within 72 hours of shipment.

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According to publimetro.com.mx, the Secretary of Economy of Mexico, Graciela Marquez claims the US is inflexible in their demand to review 100% of tomato shipments at the border within 72 hours. The Mexican Government claims the US does not have enough man power to process the tomatoes.

The current tomato dispute stems began in 1996, when tomato growers in Florida initiated antidumping investigations against Mexican tomato exports. A deal was reached in November 1996 between Mexican growers and the Department of Commerce that led to the suspending of the investigation. The suspension was renewed in 2002, 2008 and 2013. However, earlier this year, Florida tomato growers complained the Mexican growers were violating their end of the deal. Since May of 2019, Mexican tomato exporters have had to pay a countervailing duty rate of 17.5% before the tomatoes can be exported into the United States.

The final determination will be issued on September 19, 2019 followed by a final determination regarding the damages to the industry due on November 1, 2019.

Mexico is the world’s largest tomato exporter in 2018, with external sales of $2.3 billion dollars of which 99.7% of its exports are to the US.

Huawei files lawsuit against Commerce Department for seizing equipment.

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According to Reuters, Huawei Technologies Company, Inc. filed suit against the U.S. Department of Commerce on Friday the 21st claiming the seizure of telecommunications equipment sent from China to the US and back to China was not covered under the Export Administration Regulations (EAR).

Specifically, Huawei claims the equipment was not subject to a license requirement because it did not fit into a controlled category (ECCN) as the hardware was being returned to China from which it came.

The equipment seized is a computer server and ethernet switch sent to California for testing and then seized on the shipment back to China.

Will post more updates as they become available.

ZTE and Commerce sign escrow agreement – denial ban is one step closer to being lifted.

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Earlier today, the U.S. Department of Commerce announced they had reached an escrow agreement with ZTE. As you are aware, in order to lift the denial ban put in place in April 2018 (and be authorized to purchase goods and services from US companies), ZTE must pay $1 billion dollar fine and place $400 million into an escrow account.

Commerce announced today an agreement was reached with ZTE. The next step is for ZTE to deposit the $400 million into the escrow account. Upon deposit, the Department of Commerce, Bureau of Industry and Security will lift the denial ban. According to the June 8, 2018 superseding order, ZTE has until September 8, 2018 to deposit the funds – based on today’s news it appears ZTE is on its way to lifting the denial ban.

If you are a supplier or ZTE vendor and have any questions about the denial ban, feel free to contact export compliance attorney, David Hsu at 832-896-6288 or by email at dhsu@givensjohnston.com.

Check out my other ZTE posts:

ZTE Open for US Business – sort of and only until August 1, 2018.

ZTE deal is good to go – House bill does not include Senate language “undoing” ZTE deal.

ZTE pays $1 billion fine, $400k into escrow soon.

In-depth details of the ZTE deal.

Senate passes amendment to undo Trump’s ZTE deal.

Deal reached between the US and ZTE

ZTE facing $1.7 billion penalty?

The real reason Trump is working to reverse the 7 year ZTE ban? To help U.S. companies!

CNBC reports the US and ZTE are working on alternatives to the denial order issued against ZTE back in April of this year.

ZTE estimated to lose $3.1 billion due to US sanctions (Bloomberg).

Deal reached to allow ZTE to purchase U.S. hardware and software?

 

CNBC reports the US and ZTE are working on alternatives to the denial order issued against ZTE back in April of this year.

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Current Commerce Secretary Wilbur Ross told CNBC today that the US may consider other measures, such as placing compliance officers at ZTE. The compliance officers would report back to the Department of Commerce.

Background:
The Department of Commerce banned ZTE from purchasing hardware and software from U.S. manufacturers because ZTE was found to sell American parts to Iran and North Korea. The Commerce department prohibits the sale of US goods to North Korea, Sudan, Syria, Iran and Cuba. ZTE is most commonly known in the US for their smart phones but ZTE also manufactures telecomunications equipment.

Check back here for the latest news as they develop.

And if you have any export controls or export compliance issues – contact David Hsu at 832-896-6288 or by email at attorney.dave@yahoo.com.

ZTE estimated to lose $3.1 billion due to US sanctions (Bloomberg).

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Bloomberg news reported that China’s ZTE Corp is estimated to lose at least 20 billion yuan ($3.1 billion) due to Washington’s ban on U.S. firms hardware and software. The Bloomberg article cited unnamed sources.

Bloomberg also reports that ZTE is hopeful that the United States and China will be able to reach a deal that would remove the ban and has a plan in place allowing the telecoms firm to “swing idled factories into action within hours” of the ban being officially lifted.

Deal reached to allow ZTE to purchase U.S. hardware and software?

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ZTE Campus in Shenzhen, Guangdong Province, People’s Republic of China; By Brücke-Osteuropa – Own work, Public Domain

According to a Wall Street Journal article dated May 22nd, the US and China have reached a tentative deal on what steps ZTE could take in order for the Trump administration to remove the ban preventing U.S. companies from selling hardware and software to ZTE.

As previously mentioned on this blog, U.S. companies were barred for selling components and software to ZTE for a period of 7 years due to ZTE not complying with the terms of a 2017 plea deal for violations related to shipping US equipment to Iran and North Korea.

Citing sources close to the negotiation, the WSJ reported ZTE would need to make management changes, changes in the board and payment of additional fines.

Check back for more updates to the ongoing ZTE issue as they become available.

For any questions about denial orders, ZTE, customs or trade law, contact David Hsu at 832-896-6288 or by email at attorney.dave@yahoo.com.

US and China agree to end trade war.

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According to aMay 19th article from the Agence France-Presse (AFP), China’s Vice-Premier Liu He announced the US and China “reached a consensus, will not fight a trade war, and will stop increasing tariffs on each other”. The AFP article cited Chinese state media for their article and here is the Cliffs Notes version:

1. Both the US and China will stop increasing tariffs against each other.
2. China agreed to increase purchases of US goods and services.
3. Joint statement did not address reducing the trade deficit with China.
4. New trade cooperation to medical care, high tech products and finance.
5. Each part will cooperate on protecting intellectual property rights

Will update as more news becomes available.