The Bureau of Industry and Security again renewed the temporary denial order for Moscow-based air cargo carrier Aviastar. BIS first suspended the export privileges of the Russian cargo charter airline in April 2022 (see 2204210043) and renewed the order in October (see 2210190009), barring it from participating in transactions with items subject to the Export Administration Regulations. The agency renewed the denial order for another 180 days April 14 after finding Aviastar continued to illegally operate aircraft subject to the EAR, including for flights within Russia.
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The Bureau of Industry and Security issued a new set of policy "clarifications" this week that it hopes will increase the number of voluntary self-disclosures (VSDs) it receives for serious export violations. One clarification says the agency could increase penalties on companies that fail to disclose a “significant” potential violation, while another clarification could reward companies that tip off BIS about their competitors’ wrongdoings.
The Bureau of Industry and Security fined U.S.-based Seagate Technology $300 million for allegedly violating U.S. export controls against Huawei, the “largest standalone administrative penalty in BIS history,” the agency said. The agency fined the company and its branch in Singapore for selling millions of export-controlled hard disk drives to Huawei in violation of BIS’ foreign direct product rule. As part of a settlement agreement, Seagate agreed to a “mandatory multi-year audit requirement,” BIS said, and could face a five-year export denial order if it violates the terms of the agreement. The settlement comes about 18 months after Senate Republicans urged BIS to penalize Seagate for “likely” violating U.S. export controls against Huawei. Seagate said it received a proposed charging letter from BIS in August.
The Bureau of Industry and Security recently suspended the export privileges of four people, including two for making false statements to the government and two others for illegally exporting guns or ammunition to Mexico.
The U.S. needs to pour more funding and resources into the Bureau of Industry and Security to allow it to better address China-related national security risks, said Gregory Allen, a technology policy expert with the Center for Strategic and International Studies and a former Defense Department official. Although BIS is charged with implementing some of the U.S.’s most sensitive trade restrictions, its export control functions have “had a flat budget for the better part of a decade,” Allen said during a U.S.-China Economic and Security Review Commission hearing last week. “It has been profoundly neglected” and subject to an “appalling mismanagement of resources.”
The Bureau of Industry and Security should reform its Entity List process and its licensing procedures to more effectively prevent China from acquiring sensitive U.S. technologies, said Cordell Hull, former acting BIS undersecretary. Hull also suggested that BIS increase its penalties for export violations, and said he isn’t convinced creating a new multilateral export control regime is the best way to counter China.
The U.S. this week announced new Russia-related trade restrictions, adding 28 entities to the Commerce Department’s Entity List and more than 100 entries to the Treasury Department’s Specially Designated Nationals List. The measures target people and companies either operating in Russia, aiding the country’s war against Ukraine or helping Moscow evade sanctions.
The Bureau of Industry and Security this week renewed the temporary denial order for Russian airline Ural Airlines, whose export privileges were suspended for 180 days in October after BIS said it violated U.S. export controls by flying multiple aircraft to Russia without required licenses (see 2210170009). BIS said Ural continues to fly planes in violation of the Export Administration Regulations, including flights within Russia and to and from Kyrgyzstan and Tajikistan. The agency renewed the order for another 180 days from April 10.
The upcoming expiration of the Bureau of Industry and Security's temporary general license outlined in the China-related chip controls from October presents “good opportunities to see” how the agency will “interpret and enforce the new restrictions,” Lee, Tsai & Partners said in a recent client alert. The TGL expires April 7, when BIS has said it will begin reviewing license applications for activities that were covered by the TGL on a case-by-case basis (see 2301270026).