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BIS Initiates 232 Investigations of Pharmaceuticals and Semiconductors

The U.S. Department of Commerce Bureau of Industry and Security (BIS) announced the initiation of investigations into the effects on U.S. national security of imports of pharmaceuticals and pharmaceutical ingredients and imports of semiconductors and semiconductor manufacturing equipment.

The basis of the investigations is Section 232 of the Trade Expansion Act of 1962. Under Section 232, the president can restrict imports of products that are found to threaten to impair national security.

On April 16, BIS published two federal register notices (pharmaceuticals, semiconductors) seeking public comment. Comments are due May 7, 2025.

Pharmaceuticals and Pharmaceutical Ingredients

The scope of the pharmaceutical investigation covers pharmaceuticals and pharmaceutical ingredients, including:

Finished drug products
Medical countermeasures
Critical inputs such as active pharmaceutical ingredients
Key starting materials, and derivative products of those items

Among other information, BIS is particularly interested in comments that address:

Demand for pharmaceuticals and pharmaceutical ingredients in the United States
The extent to which domestic production of pharmaceuticals and pharmaceutical ingredients can meet domestic demand
The role of foreign supply chains, particularly of major exporters, in meeting United States demand for pharmaceuticals and pharmaceutical ingredients
The impact of foreign government subsidies and predatory trade practices on United States pharmaceuticals industry competitiveness
Whether additional measures, including tariffs or quotas, are necessary to protect national security

Interested parties may submit a comment in this proceeding on or before May 7, 2025 at Regulations.gov using ID BIS-2025-0022.

Semiconductors and Semiconductor Manufacturing Equipment

The scope of the semiconductor investigation covers semiconductors, semiconductor manufacturing equipment, and their derivative products, […]

By Jennifer Diaz|2025-04-17T16:37:36-04:00April 17, 2025|Tariffs, U.S. Department of Commerce (DOC)|Comments Off

Reporting, Requestor List, Penalties: Antiboycott Laws Explained

The United States enforces antiboycott laws designed to address foreign government’s economic boycotts of countries friendly to the U.S. Antiboycott laws have been on the books since the 1970s and are primarily enforced by the U.S. Department of Commerce’s Bureau of Industry and Security.

What Are the U.S. Antiboycott Laws?

“Anti-boycott” refers to U.S. laws and regulations that discourage and, in certain cases, prohibit U.S. persons from participating in unsanctioned foreign boycotts, particularly those targeting countries friendly to the United States.

BIS is charged with administering and enforcing this policy under the Anti-Boycott Act of 2018, the Export Control Reform Act of 2018, and the Export Administration Regulations.

The antiboycott laws aim to prevent U.S. persons from advancing foreign policies of other nations that run counter to U.S. policy.

Prohibited Antiboycott Activities Under the EAR

Part 760 of the EAR specifies prohibited antiboycott activities including:

Refusals or agreements to refuse to do business with or in a boycotted country or with blacklisted companies.
Discrimination or agreements to discriminate against a U.S. person based on race, religion, sex, or national origin.
Furnishing information or agreements to furnish information about business relationships with or in a boycotted country or with blacklisted companies.
Furnishing information or agreements to furnish information about the race, religion, sex, or national origin of a U.S. person.
Implementation of letters of credit containing prohibited boycott terms or conditions.
Taking actions with the intent to evade Part 760 of the EAR.

Required Reporting

Section 760.5 of the EAR requires […]

By Jennifer Diaz|2025-04-07T18:47:13-04:00April 7, 2025|U.S. Department of Commerce (DOC)|Comments Off

Importing Drones into the U.S.: Key CBP Requirements You Need to Know

Authors:
Jennifer Diaz, President, Diaz Trade Law
Jonathan Rupprecht, Aviation Attorney at Rupprecht Law

Importing goods into the U.S. requires navigating a web of regulations that spans 47 federal agencies. If you are the importer of record, it is your duty to exercise “reasonable care” in meeting these obligations. As part of this duty, importers must take adequate steps to properly classify and determine the value of imported goods, provide information to CBP in properly assessing duties, and determine whether other applicable legal standards and requirements have been met.

When importing drones into the U.S., importers need to be mindful of several requirements including classification, intellectual property, additional duties, and a changing U.S. trade policy.

Classification

When importing goods into the United States, importers must correctly classify their products. The Harmonized Tariff Schedule of the United States (HTSUS) is the primary resource for classifying goods and determining which tariffs apply.

The HTSUS is issued annually by the International Trade Commission (ITC). It is comprised of a 10-digit import classification system that is specific to the United States. This 10-digit code encompasses the World Customs Organization’s (WCO) six-digit uniform classification system shared among more than 200 countries.

An HTSUS is formatted to list the first 6-digits set forth by the WCO, also known as a heading and subheading and the last four digits assigned by the ITC that are specific to the U.S.

Prior to 2022, the HTSUS has lacked classifications specific to Unmanned Aircraft System (UAS). Importers had to classify under codes applicable to crewed aircraft […]

By Jennifer Diaz|2025-02-28T07:13:31-05:00February 28, 2025|Forced Labor, Import, U.S. Customs and Border Protection (CBP)|Comments Off

BIS Releases New Edition of “Don’t Let This Happen to You”

The Department of Commerce’s Bureau of Industry and Security (BIS) published an updated version of Don’t Let This Happen to You!, a list of case examples highlighting BIS enforcement efforts including criminal cases.

Case highlights:

The publication highlights over 100 cases covering various violations of export control laws.

Military Controls

The owner of BQ Tree Consulting in Jacksonville, Florida, along with the President and Manager of the company were indicted for conspiring to illegally export military-grade combat rubber raiding craft (CCRC) to China.

The scheme involved providing a U.S. company with false end-use and end-user information for a front company in Hong Kong, which was used to complete the transaction ultimately destined for China. The intention was to reverse engineer the CRRC and engines to mass produce them for the Chinese People’s Liberation Army (PLA) Navy.

The company owner was sentenced to 16 months in prison, two years of supervised release, mandatory mental health screening, and a $200 special assessment. The company President was sentenced to 42 months confinement, three years of probation, a $50,000 criminal fine, and a $200 special assessment. The company manager was sentenced to 17 months in prison, one year of supervised release pending deportation, a prohibition on employment with any company that deals with the military, and a $100 special assessment.

National Security Controls

GlobalFoundries U.S. Inc., a semiconductor wafer manufacturing company headquartered in Malta New York violated the Export Administration Regulations (EAR) by sending 74 shipments of semiconductor wafers, valued at approximately $17.1 million, to SJ Semiconductor (SJS), a company […]

By Jennifer Diaz|2024-11-22T07:18:29-05:00November 22, 2024|EAR, Export, U.S. Bureau of Industry and Security (BIS), U.S. Department of Commerce (DOC)|Comments Off

BIS Issues Guidance to Financial Institutions on Best Practices for Compliance with the Export Administration Regulations

The Department of Commerce’s Bureau of Industry and Security (BIS) recently published guidance for financial institutions containing several recommendations for complying with the Export Administration Regulations (EAR).

The guidance provides recommendations on steps financial institutions can take to minimize the likelihood of EAR violations. The recommendations focus on three key areas: due diligence best practices, reviewing transactions for red flags, and real-time screening.

Due Diligence Best Practices

The guidance recommends that financial institutions incorporate EAR related due diligence into their compliance and risk management and compliance processes. Due diligence should be conducted both before onboarding a new customer and as part of regular due diligence thereafter.

Specifically, BIS recommends that financial institutions:

Review customers against lists of persons subject to BIS’s end-user restrictions
Review customers – and, where appropriate, customers’ customers – against lists of entities that have shipped Common High Priority List (CHPL) items to Russia since 2023
Ask a customer to certify that it has controls in place to comply with the EAR if the customer is engaged in the export, reexport or transfer of items subject to the EAR and is on a restricted-party list

Review Transactions for Red Flags

The guidance recommends that financial institutions review transactions on an ongoing basis for red flags:

Purchases under a letter of credit that are consigned to the issuing bank, not to the actual end user.
Transactions involving entities with little to no web presence, such as a website or a domain based email account.
A customer lacks or refuses to […]

By Jennifer Diaz|2024-10-11T15:13:06-04:00October 11, 2024|Export, U.S. Bureau of Industry and Security (BIS)|Comments Off

BIS Issues Final Rule on VSD Policies and Penalty Guidelines

BIS recently issued a final rule to amend the Export Administration Regulations (EAR), making several changes to their Voluntary Self Disclosure (VSD) policies, as well as updates to guidance on penalty determinations.

The rule codifies previously announced policy changes through several Policy Memoranda including an April 2023 memorandum on voluntary-self disclosures, and a June 2022 memorandum on strengthening administrative enforcement.

Revisions to Voluntary Self-Disclosures

The rule makes both substantive and procedural changes to the VSD policies:

Addition of non-disclosure as an aggravating factor – the new rule makes clear that BIS will consider a deliberate decision to not disclose a violation as an aggravated factor when determining what administrative sanctions will be imposed.
New dual track for processing VSDs – one track for minor or technical violations, the other for significant violations.
Authorizes any person (not just the party submitting a VSD) to notify the Director of BIS’s Office of Export Enforcement (OEE) that a violation has occurred and to request permission to engage in corrective activities.

Revisions to Penalty Guidelines

This rule makes several changes to the BIS Penalty Guidelines, including:

Changes the base penalty caps:
1. Non-egregious VSD cases: was $125,000, now one-half of the transaction value.
2. Non-egregious cases that are not initiated by a VSD: was $250,000, now the full transaction value.
Permits BIS to use non-monetary penalties to resolve cases that are not egregious and have not resulted in national security harm, but rise above the level of cases warranting a warning letter.
Removes from the BIS […]

By Jennifer Diaz|2024-09-26T15:59:58-04:00September 26, 2024|EAR, Export, U.S. Bureau of Industry and Security (BIS)|Comments Off

BIS Issues New Guidelines for Preparing Export License Applications Involving Foreign Persons (Deemed Exports/Reexports)

The Bureau of Industry and Security (BIS) issued new guidelines to assist deemed export applicants in obtaining licenses. The guidelines primarily apply to employment situations; however, they also address other situations such as the release of controlled technology to foreign students participating in research.

The guidelines cover basic requirements for applying and renewal and include an application checklist.

Background on Licenses for Deemed Exports/Reexports

The obligation to obtain an export license from BIS before releasing controlled technology to a foreign person is informally referred to as a “deemed” export. The release is considered an export to the person’s country or countries of nationality.

The Export Administration Regulations (EAR), Section 734.13, defines a deemed export as releasing or otherwise transferring “technology” or “source code” to a foreign person in the United States.

Typical organizations using deemed export licenses include universities, research institutions, bio-chemical firms, medical organizations, and computer companies.

New Guidance

The basic guidance for filling out license applications is set forth in Supplement 1 to part 748 of the EAR. The new guidelines supplement the basic guidance and are intended to assist licensing officers in reviewing license applications more efficiently.

Basic Requirements

The guidelines reiterate that applicants must include all the necessary information and documentation required when submitting a license application. BIS will return applications with insufficient information.

Basic documentation required:

By Jennifer Diaz|2024-09-13T11:58:26-04:00September 13, 2024|Export, U.S. Bureau of Industry and Security (BIS)|Comments Off

ICYMI: BIS Updates Boycott Requester List

The Department of Commerce’s Bureau of Industry and Security (BIS) published its first quarterly update of the Boycott Requester List. The list notifies companies, freight forwarders, financial entities, and individuals of potential sources of boycott-related requests that they may receive.

Background on Boycott Requests

BIS is charged with enforcing anti-boycott laws under the Export Administration Regulations (EAR). The laws prohibit U.S. companies from taking actions in furtherance of a boycott maintained by a foreign country against a country friendly to the United States. Common boycott requests include:

Requesting a certification that goods are not from a specific country
Requesting that goods are not shipped to a certain country
Requesting that a business does not engage with a particular country

U.S. persons must report boycott-related requests to BIS’s Office of Anti-boycott Compliance (OAC).

Boycott Requester List

OAC maintains a boycott-requester list to raise awareness and assist U.S. persons in identifying sources of boycott-related requests.

Entities on the list have been reported by a U.S. person to BIS via a request report form. The list is updated quarterly but is not an exhaustive list of entities that may make these requests.

The most recent update to the list includes 57 additions and the removal of 127 entities.

Requesting countries added in the most recent update include:

Afghanistan
Algeria
Bangladesh
Germany
India
Iraq
Japan
Kuwait
Malaysia
Norway
Oman
Pakistan
Saudi Arabia
Singapore
Switzerland
United Arab Emirates
Qatar
Vietnam

Exporters have a duty to remain vigilant in spotting boycott-related requests and reporting them to BIS. Diaz Trade Law can help […]

By Jennifer Diaz|2024-07-02T08:57:03-04:00July 2, 2024|EAR, Export, U.S. Bureau of Industry and Security (BIS)|Comments Off

BIS Regulatory Updates: 2023 Significant Changes

Diaz Trade Law is enthusiastic to announce Bloomberg Law published another one of our articles! Below is the article reproduced, you can also read here.

The two most important categories of export controls are the Export Administration Regulations (EAR) and the International Traffic in Arms Regulations (ITAR). The vast majority of controlled exports fall under EAR, while the ITAR’s scope is limited to only military and defense-related articles, services, information, and technology. The US Department of Commerce’s Bureau of Industry & Security (BIS) is charged with enforcing EAR under 15 C.F.R. parts 730-774.

This article provides an overview of the significant BIS policy and regulatory changes in 2023, including updates to the voluntary disclosure policy, an update on the semiconductor export control rules, expansion of Russia sanctions, and a human rights amendment to the EAR.

Background on EAR

The purpose of EAR is to safeguard US national security interests by ensuring that certain critical technology does not fall into the wrong hands.

The EAR governs whether a person or entity may:

Export an item from the US.
Reexport that item from a foreign country.
Transfer an item from one person to another.

BIS has repeatedly demonstrated its commitment to enforcing EAR and violations can carry heavy penalties. Civil penalties may be up to $300,000 per violation or twice the value of the transaction, whichever is greater. EAR violations can even result in criminal liability, such as a $1 million criminal penalty per violation or up to 20 years in prison. EAR violations […]

By Jennifer Diaz|2024-01-29T12:30:17-05:00January 24, 2024|Bloomberg, Bloomberg Import, Export, U.S. Bureau of Industry and Security (BIS)|Comments Off

Submitting Voluntary Self-Disclosures to Bureau of Industry & Security

Diaz Trade Law is enthusiastic to announce Bloomberg Law published an update to our previous article, “Submitting Voluntary Self-Disclosures to Bureau of Industry & Security.” The udpate discusses new guidance from BIS regarding failure to voluntary disclose significant violations. Below is the article reproduced with permission for your reading pleasure. You can read the article here (where you’ll have the ability to access all of the great hyperlinks). Please note you cannot click on the hyperlinks below.

We’d love to hear your feedback!

By Jennifer Diaz|2023-05-11T12:56:55-04:00May 11, 2023|Bloomberg Export|Comments Off