If Republicans retake control of the House after the midterm elections in November, the chamber’s Foreign Affairs Committee will initiate a review of the Bureau of Industry and Security and its export control procedures, said Rep. Michael McCaul, R-Texas. McCaul said the review would examine BIS’ progress in restricting emerging and foundational technologies under the Export Control Reform Act and study whether U.S. export control authority should be moved to a different agency.
The Office of Foreign Assets Control fined Washington-based Tango Card $116,048.60 for violating U.S. sanctions as a result of its “deficient geolocation identification processes,” the agency said last week. OFAC said Tango Card, an electronic gift and reward services company, violated U.S. sanctions related to the Crimea region of Ukraine and sanctions imposed against Cuba, Iran, Syria and North Korea.
The U.S. last week announced a host of new sanctions and export controls against Russia, targeting Russian defense and technology companies, Russian government officials and various suppliers for supporting the country's military. The measures include hundreds of new designations and 57 additions to the Entity List, most of which will be subject to certain foreign direct product rule restrictions.
More exporters should make use of License Exception STA (Strategic Trade Authorization), which could reduce workload for the government and allow certain exports to move faster, officials from the Commerce and Defense departments said. “Frankly, it's not utilized as much as we would like it to be utilized,” Matt Borman, an official with Commerce’s Bureau of Industry and Security, said during a Sept. 27 defense industry conference hosted by IDEEA. “To anyone who's considering STA-eligible exports, please, please use them as opposed to having your U.S. supplier come in and go through the traditional licensing process.”
The Bureau of Industry and Security was “overwhelmed” with advisory opinion requests after issuing its 2020 rules creating military end-user regulations and an MEU list (see 2004270027), said Matt Borman, deputy assistant secretary for export administration, speaking during a Sept. 27 defense industry conference hosted by IDEEA. He said the agency was “happy” to help companies that had questions about the rule, but the process was time-consuming. “It took us a while,” Borman said. “But I think we're through that backlog” now.
Although the current congressional proposal for a new outbound investment screening mechanism faces some hurdles, it could be incorporated into the upcoming National Defense Authorization Act. Sen. Pat Toomey, R-Pa., said he has concerns with some of the provisions but hopes to work with bill’s sponsors to include some type of outbound screening measure in the fiscal year 2024 defense spending bill, which could be passed this year.
As the Biden administration prepares to issue its long-awaited national security strategy, it’s also hoping to reduce barriers to sharing technology with allies and speed up its foreign military sales program, said Cara Abercrombie, a National Security Council official. Abercrombie, speaking during a Sept. 27 defense industry conference hosted by IDEEA, said she hopes these initiatives lead to more cooperation with allies, particularly as the U.S. and others continue to sanction Russia and send weapons to Ukraine.
The State Department is monitoring whether the U.S. delivery of certain F-35 aircraft -- which were revealed this month to contain certain Chinese components -- violated export controls, senior agency official Mike Miller said. He said the Directorate of Defense Trade Controls is “certainly tracking” the case but declined to say whether the agency will issue any penalties. “As to what compliance actions we may be taking with the company,” Miller said, “I can’t speak to that in specific.”
Although President Joe Biden’s recent executive order on foreign direct investment isn’t expected to significantly change review outcomes, it sends a clear signal to industry about the U.S.’s FDI priorities and could help companies better understand whether they should submit a voluntary filing, law firms said this month. One firm said the Committee on Foreign Investment in the U.S. may use the order as further reason to reach out to businesses about non-notified transactions.
The Office of Foreign Assets Control announced two separate settlement agreements this week, fining a Switzerland- and a Monaco-based wealth management company for violating U.S. sanctions. OFAC said both companies committed violations due to “deficiencies” in their sanctions compliance practices.