Department of Commerce Renews Temporary General License for 45 Days

Today, the Bureau of Industry and Security (BIS) of the U.S. Department of Commerce announced it was extending a Temporary General License (TGL) for Huawei Technologies Co. Ltd. and its non-U.S. affiliates on the Entity List for an additional 45 days.  The TGL was implemented as a measure to prevent interruption of existing network communication systems in rural U.S. regions and permit global network security measures.  The TGL is intended to allow time for companies and persons to shift to alternative sources of equipment, software and technology (i.e., those not produced by Huawei or one of its listed affiliates).  

The 45-day extension is necessary to allow existing telecommunication providers—particularly those in rural U.S. communities—the ability to continue to temporarily and securely operate existing networks while they identify alternatives to Huawei for future operation.  American technology should not be acquired by Huawei and its foreign affiliates and used in a manner that undermines U.S. national security or foreign policy interests.  During the next 45 days, the Department intends to determine the need for any future extensions of the TGL. 

The TGL amends the Export Administration Regulations (EAR) to authorize specific, limited engagement in transactions involving the export, reexport, and transfer of items subject to the EAR to Huawei Technologies Co. Ltd. and non-U.S. affiliates on the Entity List until April 1, 2020.  

Huawei was added to the Entity List after the U.S. government concluded the company poses a significant risk of involvement in activities contrary to the national security or foreign policy interests of the United States, including, by engaging, among other things, in alleged violations of the International Emergency Economic Powers Act (IEEPA), conspiracy to violate IEEPA by providing prohibited financial services to Iran, and obstruction of justice in connection with the investigation of those alleged violations of U.S. sanctions, among other illicit activities, including charges of conspiracy to commit racketeering activities announced by the Department of Justice today.

The Bureau of Industry and Security’s mission is to advance U.S. national security and foreign policy objectives by ensuring an effective export control and treaty compliance system and promoting continued U.S. strategic technology leadership. BIS is committed to preventing U.S.-origin items from supporting Weapons of Mass Destruction (WMD) projects, terrorism, or destabilizing military modernization programs. 

Measuring the Value of the U.S. Space Economy

According to the Commerce Department’s website,The Space Economy Satellite Account (SESA) is a new, collaborative effort to measure the relative importance of the space sector on the U.S. economy, with a special emphasis on the growing commercial space segment. This new account is part of the economic satellite accounts produced by the Bureau of Economic Analysis (BEA). A satellite account refers to statistics that complement BEA’s official U.S. economic statistics, such as GDP and personal income. These satellite accounts provide additional detail and allow for a more in-depth analysis of key sectors of the U.S. economy, such as health care, travel and tourism, and outdoor recreation.

Using input from industry experts and multiple government agencies, chiefly the U.S. Department of Commerce (DOC) Office of Space Commerce, the forthcoming SESA statistics will show the impact of the U.S. space economy on the overall U.S. economy. Specifically, the SESA statistics will provide an estimate of the space economy’s contribution to current-dollar gross domestic product (GDP) and will illustrate the contributions of individual industries to the U.S. space economy. In addition to GDP, the SESA will include gross output, compensation, and employment by industry statistics for the space economy.

Upcoming Event: Discover Global Markets

Indo-Pacific
Opportunities at the Convergence of Aerospace + Defense + Security
Dec. 10-12, 2018 | Salt Lake City, UT

About Discover Global Markets

Discover Global Markets is the U.S. Department of Commerce’s flagship event series for U.S. exporters.

In just a few days, attendees will uncover new exporting opportunities, learn from seasoned exporters, and connect with hundreds of networking contacts.

Sign up for e-mail updates to learn about upcoming events in the Discover Global Markets series.

At Each Discover Global Markets Conference, you will:

  • Meet one-on-one with U.S. Commercial Diplomats visiting from abroad
  • Participate in panel discussions on the latest industry trends
  • Identify new and emerging markets of opportunity ahead of your competition
  • Learn about U.S. export programs designed to cut your time to market
  • Network with U.S. trade officials, leading private sector experts and like-minded U.S. businesses active in overseas markets

U.S. Department of Commerce Announces Selection of ZTE Special Compliance Coordinator

August 24, Secretary of Commerce Wilbur L. Ross, Jr. announced the selection of Roscoe C. Howard, Jr. to be the Special Compliance Coordinator (SCC) for Zhongxing Telecommunications Equipment Corporation, of Shenzhen, China and ZTE Kangxun Telecommunications Ltd. of Hi-New Shenzhen, China (collectively, ZTE). The Special Compliance Coordinator was selected after a rigorous search by the Bureau of Industry and Security (BIS). This appointment is the result of the historic settlement between the Department of Commerce and ZTE that includes a $1.761 billion fine, a ten-year probationary period, and the installation of the coordinator to conduct regular and comprehensive compliance supervision by a team answerable to BIS.

“Today’s appointment is the continuation of the unprecedented measures imposed on ZTE by the Department of Commerce,” said Secretary Ross. “Mr. Howard is exceptionally well-versed in corporate compliance, having tried more than 100 cases as a federal prosecutor, as well as helping those in the private sector on compliance and ethics issues.”

“I am honored to be selected for this critical role,” said Mr. Howard. “My team and I will be vigilant in efforts to ensure that ZTE complies with all U.S. export control laws and regulations.”

Mr. Howard is a Partner in Barnes & Thornburg’s Litigation Department in Washington, D.C. He is a graduate of Brown University and earned his J.D. from the University of Virginia School of Law. He previously served as the U.S. Attorney for the District of Columbia from 2001-2004. Prior to his appointment, Mr. Howard was a tenured, full professor at the University of Kansas School of Law. He has twice served as an Associate Independent Counsel under both Republican and Democrat Presidents and was an Assistant U.S. Attorney in the District of Columbia and in the Eastern District of Virginia. Howard has served as an Associate Independent Counsel on two occasions. During his first occasion serving as an Associate Independent Counsel, Howard served as a lead prosecutor for the Office of Independent Counsel (OIC) investigating questionable programs, officials and activities at the U.S. Department of Housing and Urban Development under former Secretary Samuel R. Pierce, Jr. During his second occasion serving as an Associate Independent Counsel, Howard was lead trial counsel in the fraud, false statements and gratuities investigation and trial of former Secretary of Agriculture A. Michael Espy.

The Special Compliance Coordinator’s function will be to coordinate, monitor, assess, and report on compliance with U.S. export control laws by ZTE, its subsidiaries, and affiliates worldwide. As stated in the Superseding Agreement and Order, the coordinator will operate with unprecedented access across the company.

In addition to the requirement to retain the coordinator, the Superseding Agreement and Order imposed a $1.761 billion monetary penalty, a ten-year conditionally-suspended denial order, which BIS can activate in the event of additional violations during the ten-year probationary period, and a requirement that ZTE replace the entire board of directors and the senior leadership of the company.

BACKGROUND:

On April 15, 2018, BIS activated the seven-year conditionally-suspended denial order against ZTE in response to ZTE’s admission that it made false statements to the U.S. Government during the probationary period when the company falsely stated that it would or had disciplined numerous employees responsible for the violations that led to the March 2017 settlement agreement. ZTE instead rewarded that illegal activity with bonuses. This action followed the March 2017 settlement agreement, in which ZTE agreed to a then record-high BIS civil penalty of $661 million, after engaging in a multi-year conspiracy to supply, build, and operate telecommunications networks in Iran using U.S.-origin equipment in violation of the U.S. trade embargo, and committing hundreds of U.S. sanctions violations involving the shipment of telecommunications equipment to North Korea. Moreover, ZTE also made false statements and obstructed justice by creating an elaborate scheme to prevent disclosures to and mislead the U.S. Government. In addition to monetary penalties, ZTE had agreed to a seven-year suspended denial of export privileges.

The Department of Commerce’s Bureau of Industry and Security is the principal agency involved in the implementation and enforcement of export controls for commercial technologies and many military items. The BIS Office of Export Enforcement detects, prevents, investigates, and assists in the sanctioning of illegal exports of such items.

Ross Announces Activation of ZTE Denial Order in Response to Repeated False Statements

April 16th, Secretary of Commerce Wilbur L. Ross, Jr. announced that the U.S. Department of Commerce’s Bureau of Industry and Security (BIS) has imposed a denial of export privileges against Zhongxing Telecommunications Equipment Corporation, of Shenzhen, China (“ZTE Corporation”) and ZTE Kangxun Telecommunications Ltd. of Hi-New Shenzhen, China (“ZTE Kangxun”) (collectively, “ZTE”).

In March 2017, ZTE agreed to a combined civil and criminal penalty and forfeiture of $1.19 billion after illegally shipping telecommunications equipment to Iran and North Korea, making false statements, and obstructing justice including through preventing disclosure to and affirmatively misleading the U.S. Government.  In addition to these monetary penalties, ZTE also agreed a seven-year suspended denial of export privileges, which could be activated if any aspect of the agreement was not met and/or if the company committed additional violations of the Export Administration Regulations (EAR).

The Department of Commerce has now determined ZTE made false statements to BIS in 2016, during settlement negotiations, and 2017, during the probationary period, related to senior employee disciplinary actions the company said it was taking or had already taken.  ZTE’s false statements only were reported to the U.S. Government after BIS requested information and documentation showing that employee discipline had occurred.

“ZTE made false statements to the U.S. Government when they were originally caught and put on the Entity List, made false statements during the reprieve it was given, and made false statements again during its probation.” said Secretary of Commerce Ross.

These false statements covered up the fact that ZTE paid full bonuses to employees that had engaged in illegal conduct, and failed to issue letters of reprimand.

“ZTE misled the Department of Commerce.  Instead of reprimanding ZTE staff and senior management, ZTE rewarded them.  This egregious behavior cannot be ignored,” Secretary Ross said.

BACKGROUND:

Denial Orders are issued by the Assistant Secretary for Export Enforcement of the Bureau of Industry and Security, denying the export privileges of a company or individual. A denial of export privileges prohibits a person from participating in any way in any transaction subject to the EAR. Furthermore, it is unlawful for other businesses and individuals to participate in any way in an export transaction subject to the EAR with a denied person.

This is a regulatory action and is unrelated to any ongoing trade-related actions.

BIS is the principal agency involved in the implementation and enforcement of export controls for commercial technologies and many military items. The BIS Office of Export Enforcement detects, prevents, investigates and assists in the sanctioning of illegal exports of such items.

For more information, please visit us at www.bis.doc.gov.

Commerce Pledges Support for Commercial Space Industry

Coming on the heels of Secretary Ross’s announcement of a new initiative to support space commerce, space-focused professionals filled the Walter E. Washington Convention Center in Washington, D.C., on March 12th – 15th for the satellite industry’s annual meeting.

On Monday, the industry heard from Secretary Ross about his plans for elevating space commerce functions within the department, a key objective in the Department of Commerce’s recently released strategic plan for 2018-2022.

NTIA Assistant Secretary David Redl addressed the convention on Wednesday, pledging his commitment to collaborating with the U.S. satellite industry – highlighting the importance of maintaining global leadership for satellite-based services and manufacturing. He told attendees that the United States needs a vibrant satellite sector, which directly supports tens of thousands of family-sustaining jobs and indirectly enables millions more in the larger economy.

Fast-paced innovation in the satellite sector is paving the way for a new era in satellite coverage that will strengthen our nation’s broadband infrastructure and power advanced services to improve people’s lives. “The Commerce Department is invested in the health and success of all aspects of the satellite sector, from spacecraft design and manufacturing to earth-station equipment standards and manufacturing,” said Assistant Secretary Redl.

Secretary Ross Outlines Commerce-Led Initiatives to Advance Space Leadership

Secretary Wilbur Ross addressed the second meeting of the reconstituted National Space Council today, where he outlined Commerce-led initiatives to advance American leadership in space commerce.

Read more of Secretary Ross’s remarks at the National Space Council meeting.

Expanding commercial space activities is a key objective in the Department’s recently released strategic plan for 2018-2022.

The scientific discoveries resulting from space exploration have created new industries and technologies that improve our lives, our economy, and our national security. While the technological advancement of commercial space activities has created profitable opportunities, current government regulations are an impediment to the commercial space sector.

As Secretary Ross outlined earlier today, Commerce will be leading efforts to cut red tape that hinders the American commercial space sector.