Global Trade Brief – October 2021

Global Trade Briefs

Global Trade Brief – October 2021

This month’s Global Trade Brief Apparent Violations of the Iranian Transactions and Sanctions Regulations, Customs requirements when making one-time transfer pricing adjustments, Generalised Scheme of Preferences to promote sustainable development in low-income countries and more topics.

US: OFAC Settles with NewTek, Inc. for Its Potential Civil Liability for Apparent Violations of the Iranian Transactions and Sanctions Regulations

The company agreed to pay approximately $189,000 to settle its potential civil liability for apparent violations of the Iranian transactions and sanctions regulations.

Headquartered in San Antonio, Texas, the company develops and supplies live production and 3D animation hardware and software systems. They exported goods, technology, and services from the United States to third-country distributors that it knew or had reason to know were specifically intended for companies and individuals in Iran.

The total value of the transactions was approximately $580,00, and the profits associated with the sales of the products that constituted the violations amounted to approximately $61,000.

The company believed that its product sales through third-party distributors to the Iranian reseller were in accordance with applicable sanctions regulations in part because the company did not deal directly with Iran, but rather through a third-country intermediary.

The settlement amount reflects OFAC’s determination that the company’s conduct was non-egregious and voluntarily self-disclosed, and accounts for the company’s remedial response and cooperation with OFAC during the investigation.

Source: https://home.treasury.gov/system/files/126/20210909_newtek.pdf

EU: New export control regulation now effective, trade in “dual-use” items

The Commission adopted its legislative proposal to modernize EU controls on exports of sensitive dual-use items – goods and technology – in September 2016, to replace the Regulation from 2009. The new Export Control Regulation enters into force and will tighten controls on trade in dual-use items – civilian goods and technologies with possible military or security use – while enhancing the EU’s capacity to protect human rights and support secure supply chains for strategic items.

The new Regulation includes many of the Commission proposals for a comprehensive ‘system upgrade’, and will make the existing EU Export control system more effective by:

introducing a novel ‘human security’ dimension, so the EU can respond to the challenges posed by emerging dual-use technologies – especially, cyber-surveillance technologies – that pose a risk to national and international security; including protecting human rights;

updating key notions and definitions (e.g. definition of an ‘exporter’ to apply to natural persons and researchers involved in dual-use technology transfers);

simplifying and harmonizing licensing procedures and allowing the Commission to amend – by ‘simplified’ procedure, i.e. delegated act – the list of items or destinations subject to specific forms of control, thereby making the export control system more agile and able to evolve and adjust to circumstances;

enhancing information exchange between licensing authorities and the Commission with a view to increasing the transparency of licensing decisions;

coordination of, and support for, robust enforcement of controls, including enhancing secure electronic information exchange between licensing and enforcement agencies;

developing an EU capacity-building and training programme for Member States’ licensing and enforcement authorities;

outreach to industry and transparency with stakeholders, developing a structured relationship with the private sector through specific consultations of stakeholders by the relevant Commission group of Member States experts;

enabling stronger dialogues with third countries and seeking a level playing field at the global level.

Source: https://ec.europa.eu/commission/presscorner/detail/en/ip_21_4601

 

Taiwan: Customs requirements when making one-time transfer pricing adjustments

In November 2019, Taiwan Ministry of Finance (MOF) issued Tax Ruling No. 10804629000 (the “TPA Ruling”) that opens a door for the companies who conduct controlled transactions in Taiwan to make one-time TP adjustments prior to closing the accounts of the fiscal year.

Since the TPA Ruling includes Customs compliance requirements for imported goods, Taiwan Customs released the “Guidelines on assessing one-time TP adjustment to determine the dutiable value” (the “Guidelines”), which clarifies the customs requirements for taxpayer who would like to make TP adjustment on the imported goods.

Taiwan Customs Bureau also summarized some frequently asked questions on how to comply with the customs requirements in assisting companies in adopting the TPA ruling.

 

EU: new EU Generalised Scheme of Preferences to promote sustainable development in low-income countries

Today, the Commission has adopted the legislative proposal for the new EU’s Generalised Scheme of Preferences (GSP) for the period 2024-2034. The Commission is proposing to improve some of the key features of the scheme to better respond to the evolving needs and challenges of GSP countries as well as reinforce the scheme’s social, labour environmental and climate dimension.

The new GSP framework strengthens the EU’s possibilities to use trade preferences to create economic opportunities and to advance sustainable development. The modernised framework also expands the grounds for the withdrawal of EU GSP preferences in case of serious and systematic violations. Beyond the core human rights and labour conventions already covered, the proposal incorporates environmental and good governance conventions.

The new proposal further improves the current scheme by:

  • Ensuring a smooth transition for all countries set to graduate from Least Developed Country (LDC) status in the next decade. They will be able to apply for the special incentive arrangement for sustainable development and good governance (GSP+) if they commit to strong sustainability standards and can thus retain generous tariff preferences to access to the EU market;
  • Maximising the opportunities for low-income countries to benefit from the GSP by lowering product graduation thresholds (that is, the temporary suspension of tariff preferences for highly competitive products) by ten percentage points so that the large industrialised producers leave more space in sectors where they are very competitive;
  • Expanding the list of international conventions that need to be complied with by adding two additional human rights instruments on the rights of people with disabilities and the rights of the child, two labour rights conventions on labour inspections and tripartite dialogue, and one governance convention on transnational organised crime;
  • Setting up a well-defined framework for the current GSP+ beneficiaries to adapt to the new requirements, offering an adequate transition period and requiring the presentation of implementation plans.

Source: https://ec.europa.eu/commission/presscorner/detail/en/ip_21_4801

 

OFAC Settles with Cameron International Corporation for Its Potential Civil Liability for Apparent Violations of Ukraine-Related Sanctions Regulations

Cameron International Corporation (“Cameron”), a Houston, Texas-based supplier of goods and services for the oil and gas industries, and a subsidiary of Schlumberger Limited (“Schlumberger”) of Curaçao, Netherlands, has agreed to pay $1,423,766 to settle its potential civil liability for apparent violations arising from its provision of services to the Russian energy firm Gazprom-Neft Shelf for an Arctic offshore oil project. Cameron provided these services when U.S.-person senior managers at Cameron approved five contracts for its foreign subsidiary, Cameron Romania S.R.L. (“Cameron Romania”), to supply goods to Gazprom-Neft Shelf’s Prirazlomnaya offshore oil production and exploration platform, located in the Russian Arctic. The settlement amount reflects OFAC’s determination that Cameron’s conduct was non-egregious and not voluntarily selfdisclosed, and further reflects OFAC’s consideration of aggravating and mitigating factors.

Source: https://home.treasury.gov/system/files/126/20210927_Cameron.pdf

 

OFAC Settles with Schlumberger Rod Lift, Inc. for Its Potential Civil Liability for an Apparent Violation of the Sudanese Sanctions Regulations

Schlumberger Rod Lift, Inc. (“SRL”) (now d/b/a Lufkin Rod Lift, Inc.1 ) — a Frisco, Texas-based company that was formerly a subsidiary of Schlumberger Lift Solutions LLC (“SLS”), itself a U.S. subsidiary of Schlumberger Limited (“Schlumberger”) of Curaçao, Netherlands — has agreed to pay $160,000 to settle its potential civil liability for an apparent violation involving its facilitation of one shipment of goods from a Schlumberger subsidiary in Canada, to a Schlumberger joint venture in China, for ultimate delivery to Sudan. The settlement amount reflects OFAC’s determinations that SRL’s conduct was non-egregious and was not voluntarily self-disclosed, and further reflects OFAC’s consideration of aggravating and mitigating factors.

Source: https://home.treasury.gov/system/files/126/20210927_SRL.pdf

 

Thailand: Control of “dual-use” items, weapons of mass destruction

 The Ministry of Commerce announced a draft notification under the “Trade Controls on Weapons of Mass Destruction Act” to control goods related to weapons of mass destruction. The draft notification is to be effective from the end of 2021.

 Under the draft notification, the Department of Foreign Trade will be authorized to employ a “catch-all control” that can be applied to exports, re-exports, transit, transshipments and technology and software transfer of “dual-use” items (items that can be used for both civilian and military applications and/or that can contribute to an increase in weapons of mass destruction) that may constitute a risk to peace and security.

If there is a considerable risk that the “dual-use” items in question may be used for the development, manufacturing, usage or storage of weapons of mass destruction, then the Department of Foreign Trade will be authorized to investigate the case and apply the catch-all control measures. The Department of Foreign Trade will have the authority to block any shipment of dual-use items that will be delivered to a high-risk end-user if the shipment of dual-use items is classified as risky and requiring control, and it will be able to block all activities in relation to such dual-use items.

 

Final rule amends the Export Administration Regulations (EAR) to implement a decision made at the Australia Group (AG) virtual implementation meeting

 The final rule amends the Export Administration Regulations (EAR) to implement a decision made at the Australia Group (AG)* virtual implementation meeting session held in May 2021, and later adopted pursuant to the AG’s silence procedure. This action updated the AG Common Control List for dual-use biological equipment by adding controls on nucleic acid assembler and synthesizer “software” that is capable of designing and building functional genetic elements from digital sequence data.

Prior to the AG decision, BIS—consistent with the interagency process described in the Export Control Reform Act of 2018 (ECRA)—identified this “software” as a technology to be evaluated as an emerging technology.

The decision by BIS to amend the CCL to include this “software” complies with the requirements of ECRA and also reflects the decision of the AG to add it to that regime’s Common Control List, thereby making exports of this “software” subject to multilateral control through the implementation of these changes by individual AG participating countries (including the United States).

Source: https://public-inspection.federalregister.gov/2021-21493.pdf

 

Licensing of exports of deuterium for non-nuclear end-use is being transferred to BIS

The Bureau of Industry and Security (BIS) of the U.S. Department of Commerce released for publication in the Federal Register a final rule—in conjunction with a U.S. Nuclear Regulatory Commission (NRC) final rule—to revise the regulations to remove the NRC’s licensing authority for exports of deuterium for non-nuclear end-use. The responsibility for the licensing of exports of deuterium for non-nuclear end-use is being transferred to BIS.

Source: https://public-inspection.federalregister.gov/2021-21509.pdf

 

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