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October was a robust month for compliance with agency actions and guidance concerning anti-boycott, forced labor, section 301 exclusions, outbound investment, and sanctions. The International Trade Commission also voted against imposing more than $2 billion worth of aluminum exclusion imports from China and 13 other countries. And BIS issued key export guidance to financial institutions.
On the enforcement front, the DOJ entered into a $950 million settlement over anti-bribery violations of the FCPA. Another company settled with BIS related to export control violations, and the DOJ filed a civil suit seeking $22 million for a company’s misrepresentations to customs officials to avoid antidumping duties. Full details on these and other matters below.
Compliance Updates
BIS Updates Boycott Requester List
On October 1, the Department of Commerce’s Bureau of Industry and Security (BIS) published its second quarterly update of the boycott Requester List. This list notifies companies, financial institutions, freight forwarders, individuals, and other U.S. persons of potential sources of certain boycott-related requests they may receive during the regular course of business. U.S. persons are not prohibited from dealing with a listed party, but inclusion does provide notice that the listed party is more likely to make reportable boycott-related requests. BIS removed 21 entities and added 36 to the updated list.
DHS Expands UFLPA Entity List
On October 2, the U.S. Department of Homeland Security (DHS) announced the addition of two Chinese entities to the Uyghur Forced Labor Prevention Act (UFLPA) Entity List, bringing the total entities listed to 75. Baowu Group Xinjiang Bayi Iron and Steel Co., Ltd is engaged in iron ore mining and steel manufacturing. Its main products include rebar, hot-rolled coils, and medium and thick steel plates. Changzhou Guanghui Food Ingredients Co., Ltd. produces and sells aspartame, an artificial sweetener and food additive.
The List includes companies that are active in the apparel, agriculture, polysilicon, plastics, chemicals, batteries, household appliances, electronics, and food additives sectors, among others. DHS reminds U.S. importers to conduct due diligence and examine their supply chains for risks of forced labor to ensure compliance with the UFLPA.
BIS Issues Export Guidance to Financial Institutions
On October 9, BIS published guidance for financial institutions on compliance recommendations for Export Administration Regulations (EAR). Under General Prohibition 10 (GP 10), financial institutions are prohibited from financing or otherwise servicing any item subject to the EAR with real or suspected knowledge that a violation of EAR has occurred, is about to occur, or is intended to occur.
To avoid violations, the guidance outlines several best practices on screening customers; customer compliance certification; and detection procedures. The guidance also recommends close review of customers against entity lists for red flags concerning shipment of high priority items to Russia.
USTR Opens Section 301 Machinery Exclusions
On October 15, the Office of the United States Trade Representative opened a process for requesting that certain machinery be temporarily excluded from Section 301 duties. The process covers particular machinery used in domestic manufacturing classified within a subheading under chapters 84 and 85 of the Harmonized Tariff Schedule of the United States. A list of eligible subheadings is available here. The docket for submitting exclusions opened on October 15, 2024, with a submission deadline of March 31, 2025.
Commerce adds 26 Entities to Entity List
On October 22, BIS added 26 entities to the Entity List for activities contrary to U.S. national security and foreign policy under the destinations of the People’s Republic of China (PRC) (6), Egypt (1), Pakistan (16), and the United Arab Emirates (UAE) (3). These additions are related to alleged violations of export controls, involvement in weapons programs of concern, and evasion of U.S. sanctions and export controls on Russia and Iran.
The text of the rule, which includes the list of entities, is available on the Federal Register’s website.
Treasury Finalizes Outbound Investment Rule
On October 28, the U.S. Department of the Treasury issued a Final Rule to implement Executive Order 14105 of August 9, 2023, “Addressing United States Investments in Certain National Security Technologies and Products in Countries of Concern” (the Outbound Order). The Final Rule provides the operative regulations and a detailed explanatory discussion regarding their intent and application.
The rule prohibits U.S. citizens from making investments in “countries of concern” that relate to three categories of national security technologies and products: semiconductors and microelectronics, quantum information technologies, and artificial intelligence. China so far is the sole focus of the program. The rule also requires U.S. persons to notify Treasury of certain other transactions with persons of a country of concern involving a defined set of technologies and products that may contribute to the threat to the national security of the United States.
The program will be administered by the newly created Office of Global Transactions, within Treasury’s Office of Investment Security. The Final Rule will become effective on January 2, 2025.
ITC Votes Down Aluminum Extrusions
On October 30, the U.S. International Trade Commission (ITC) made a negative determination in its final phase of antidumping and countervailing duty investigations concerning Aluminum Extrusions from China, Colombia, Ecuador, India, Indonesia, Italy, Malaysia, Mexico, South Korea, Taiwan, Thailand, Turkey, United Arab Emirates, and Vietnam. The final determination will be released on November 12, after which Petitioners may seek an appeal.
Treasury and State Release New Round of Sanctions
On October 30, the Treasury Department sanctioned 275 individuals and entities involved in supplying Russia with advanced technology and equipment that support its war machine. The sanctions target both individual actors and sanctions evasion networks across 17 jurisdictions, including India, the People’s Republic of China (PRC), Switzerland, Thailand, and Turkey. In addition, the action also targets domestic Russian importers and producers of key inputs and other materiel for Russia’s military-industrial base.
Concurrently, the State Department imposed sanctions on more than 120 individuals and entities. The designations aim to disrupt sanctions evasion and target entities in multiple third countries, including the People’s Republic of China (PRC), India, Malaysia, Thailand, Turkey, and the United Arab Emirates. The designations target producers and exporters of items critical to Russia’s military-industrial base, and having operated in key Russian sectors.
Also related, Commerce added 40 foreign entities to the Entity List in connection with their support for the Kremlin’s illegal war in Ukraine and tightening restrictions on 49 foreign entities that were already on the Entity List to address their procurement of high-priority U.S.-branded microelectronics and other items on behalf of Russia. These entities are located in the People’s Republic of China (PRC), as well as India, Malaysia, Russia, Singapore, Turkey, Estonia, Finland, the United Arab Emirates (UAE), and the United Kingdom (UK).
Enforcement Actions
FCPA Violations
The SEC imposed a $1.1 million civil penalty on Moog Inc., a New York-based global manufacturer of motion controls systems for aerospace, defense, industrial and medical markets, to resolve the SEC’s charges that it violated the Foreign Corrupt Practices Act (FCPA) arising out of bribes paid by its wholly owned Indian subsidiary. The SEC’s order found that Moog violated the recordkeeping and internal accounting controls provisions of the FCPA.
From 2020 through 2022, subsidiary employees bribed a variety of Indian officials to win business and also used a variety of schemes to make the improper payments, including by funneling them through third-party agents and distributors. These same employees also offered cash bribes to Indian officials in an attempt to cause public tenders in India to favor Moog’s products and exclude competitors.
Raytheon Company (Raytheon), a subsidiary of RTX, will pay over $950 million in a DOJ deal following charges for conspiracy to violate the anti-bribery provision of the FCPA for a scheme to bribe a government official in Qatar and conspiracy to violate the Arms Export Control Act (AECA) for willfully failing to disclose the bribes in export licensing applications with the Department of State as required by part 130 of ITAR. Additionally, Raytheon is required to retain an independent compliance monitor for three years, enhance its internal compliance program, report evidence of additional misconduct to the Justice Department, and cooperate in any ongoing or future criminal investigations.
Export Control Violations
BIS imposed a civil penalty of $151,875 against Quantum Corporation, a data storage, management, and protection company based in San Jose, California, to resolve 45 alleged violations of the antiboycott provisions of the Export Administration Regulations (EAR).
Specifically, between July 2018 and December 2019, Quantum received 45 requests from its customer, a distributor located in the United Arab Emirates (UAE), to refrain from importing goods of Israeli origin into the UAE in fulfillment of purchase orders from that customer. Quantum failed to report to BIS the receipt of these requests.
Quantum voluntarily self-disclosed the conduct to BIS, cooperated with the investigation by BIS’s Office of Antiboycott Compliance (OAC), and implemented remedial measures after discovering the conduct at issue, all of which resulted in a significant reduction in penalty.
Import Violations
The Department of Justice filed a civil lawsuit against a U.S. importer of Chinese-manufactured children’s bedroom furniture, alleging that the company made false statements to customs officials to avoid antidumping duties. The complaint contends that company misrepresented the identity of the manufacturers of the children’s furniture imported from China. Particularly, that the furniture was manufactured by Chinese entities subject to duty rates of approximately 7% or less, and failed to disclose that the furniture was actually manufactured by entities subject to duty rates of 216%. The complaint seeks the recovery of over $7 million in import duties and over $15 million in civil penalties.
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About Our Author
Cole Callihan is a Partner in the Adams and Reese Intersection of Business and Government Practice. He focuses primarily on regulatory affairs, with an emphasis on customs and international trade. He regularly counsels and represents clients on matters before the Department of Commerce (DOC), U.S. Customs and Border Protection (CBP), U.S. Trade Representative (USTR), Department of Transportation (DOT), Maritime Administration (MARAD), Federal Maritime Commission (FMC), the Federal Motor Carrier Safety Administration (FMCSA), and the U.S. Coast Guard (USCG).