ACI’s Practical Forum on Advanced EAR Compliance - WEB

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ACI’s Practical Forum on

ADVANCED EAR COMPLIANCE

John Sonderman

Director, Office of Export Enforcement, Bureau of Industry and Security

U.S. Department of Commerce

September 25–26, 2024

Hilton Chicago Magnificent Mile Suites, Chicago, IL

How to Strengthen EAR and Anti-Boycott Compliance Amid Evolving Geopolitics and Economic Sanctions

DISTINGUISHED GOVERNMENT SPEAKERS:

Cathleen Ryan Director, Office of Antiboycott Compliance, Bureau of Industry and Security

U.S. Department of Commerce

Paul Ahern Chief Counselor for Enforcement, Office of Terrorism and Financial Intelligence (TFI)

U.S. Department of Treasury

DON’T MISS OUT ON CRITICAL, NEED-TO-KNOW BEST PRACTICES FOR:

ɖ BIS Part 732 “Know Your Customer” Guidance, Supply Chain Screening and Red Flags

ɖ Preventing Supplier Circumvention and Upgrading Your Screening Program

ɖ Complying with Anti-Boycott and 15 CFR Part 760 of the EAR

Associate Sponsors:

Aaron Tambrini Special Agent in Charge of Export Enforcement, Bureau of Industry and Security

U.S. Department of Commerce

ɖ EAR 734.99 (b), Foreign Direct Product Rule (FDPR) and 734.4/de minimis Thresholds

ɖ EAR Part 734.20/734.18 Requirements and Exceptions: Deemed Exports, Cloud Computing and End-Use Controls

ɖ Russia Sanctions and Export Compliance

Networking Sponsor:

MEET AND BENCHMARK WITH EXPERTS FROM:

y Leonardo DRS

y General Motors

y Google

y Polaris

y W. W. Grainger

y Caterpillar

y Boeing

y Fluor Corporation

y Field Aerospace

y ESAB

y Honeywell

y Northrop Grumman

y Intel

y Albemarle

y TE Connectivity

y L3 Harris Technologies

y Sarcos Robotics

y Navistar

y Dell Technologies

Expert Speaker Faculty

GOVERNMENT FACULTY

John Sonderman

Director, Office of Export Enforcement, Bureau of Industry and Security

U.S. Department of Commerce

Cathleen Ryan

Director, Office of Antiboycott Compliance, Bureau of Industry and Security

U.S. Department of Commerce

Paul Ahern

Chief Counselor for Enforcement, Office of Terrorism and Financial Intelligence (TFI)

U.S. Department of Treasury

Aaron Tambrini

Special Agent in Charge of Export Enforcement, Bureau of Industry and Security

U.S. Department of Commerce

2024 CO-CHAIRS

Lexia B. Krown

Vice President, Global Trade Compliance

ESAB

Todd Willis

Global Trade Advisor

Caterpillar Inc.

Bart M. McMillan

Partner

Baker McKenzie

DISTINGUISHED SPEAKER FACULTY

Christy Areste

Senior Manager, Global Trade Compliance & Anti-Corruption W. W. Grainger

Kathy Canaan

Global Director, Trade Compliance Fluor Corporation

Heather Sroka

Senior Trade Counsel

Intel

Maria Assusa

Director, Export Compliance

Honeywell

Grant Hosea

Director, Global Trade Compliance Albemarle

Lori Romero

Director, Trade Counsel L3 Harris Technologies

Barbara Dudas

Vice President, Compliance

Dexter Magnetic Technologies

Alexandra Landis

Senior Counsel, Director of Compliance and Export Controls

Palladyne AI Corp

Jeff Sammon

Senior Director, Global Trade TE Connectivity

Eric J. Larsen

Trade Compliance Manager

Boeing

Matthew Fogarty

Senior Counsel, Trade General Motors

Marcos Czacki

General Global Counsel & Compliance Officer Navistar México

Joe Schoorl

Export Compliance Counsel Google

Michelle Aragon

Senior Manager Trade Compliance

Leonardo DRS

Ethan Lekate

Legal Director, Compliance

Dell Technologies

Bryce Bittner

Managing Counsel, International Trade McKinsey & Company

Jana del-Cerro Partner Crowell & Moring LLP

Bob Vander Lugt Partner

Little, Rothwell & Vander Lugt, PLLC

Josh Gelula Counsel Hogan Lovells

Jason Silverman

Partner

Dentons

Jeffrey Richardson

Principal

Miller Canfield

Katelyn M. Hilferty

Senior Associate

Morgan Lewis& Bockius LLP

Susan Bridgman

General Counsel and Chief Compliance Officer Field Aerospace

Waqas Shahid

Vice President, Forensic Services

Charles River Associates (CRA)

Amanda Marshall

Senior Analyst

Sayari

Janet K. Kim

Partner

Baker McKenzie LLP

Michael L. Burton

Partner

Jacobson Burton Kelley PLLC

MEDIA PARTNERS

PRE-CONFERENCE WORKSHOP A TUESDAY, SEPTEMBER 24

9:00 am–12:30 pm (Registration opens at 8:30 am)

The Essentials of the China Advanced Computing and Semiconductor Rule: A Deep Dive into TGLs, Impacted ICs, Gap Analysis and Evolving Requirements

In this closed-door, smaller-group workshop, benefit from a deep-dive analysis of semiconductor rule compliance. This working-group session will be supported by speaker-prepared materials, interactive Q&A and compliance takeaways that you can leverage immediately post-conference. This workshop also sets the stage for the more complex compliance issues covered in the main conference.

• Restrictions on US persons who support the development or production of integrated circuits (IC’s) in China now requires a license

» What kind of ICs are involved?

» What ECCNs are relevant?

» Are any license exceptions available?

• New foreign direct product rules focused on otherwise uncontrolled foreign-origin content for advanced computing and supercomputer-related applications in China

» Expanded “Entity List FDP Rule” (§ 734.9(e)(2)

» New “Supercomputer FDP Rule” (§ 734.9(i)

» New “Advanced Computing FDP Rule” (§ 734.9(h)

• Updating your licensing approach for items controlled under ECCNs 5A002 or 5D002 that meet or exceed the performance parameters of the new ECCNs 3A090 or 4A090

• Licensing mass market encryption hardware and software items controlled under ECCNs 5A992 or 5D992

• Licensing policies and Temporary General Licenses

• The April 4th rule, or “Correction Rules”

• Gap analysis: Updating compliance programs to make sure legal, engineering, and trade compliance are all in the loop with these new controls

Ethan Lekate Legal Director, Compliance Dell Technologies

Josh Gelula Counsel Hogan Lovells

PRE-CONFERENCE WORKSHOP B

TUESDAY, SEPTEMBER 24

1:30–5:00 pm (Registration opens at 1:00 pm)

Securing ITAR/EAR License Approvals and Managing Authorizations and Provisos—From Filling out the Application to Preventing Delays and Beyond

During this in-depth, practical session, the expert speakers will take you through the practical steps and pitfalls to avoid through the use of sample license applications, concrete examples and speaker-prepared reference materials.

I. EAR Licenses: Essential elements of Form BIS-748P and the SNAP-R system

• 600 Series licensing and associated challenges

• Preparing supporting documentation verification of ECCNs

» end-use of items to be exported

» documents supplied by the prospective purchaser

» international import certificate

» statement of ultimate consignee and purchaser

• Using STA and other complex EAR Exceptions

II. ITAR Licenses: A Deep Dive into Requirements for Securing a DSP-5, DSP-73, or DSP-61 and DSP-85

• When a DSP-5, DSP-73, or DSP-61, DSP-85 is required: The approvals process, how to expedite the process, timeframes and how to reduce the risk of delay

• Ensuring you get hardware and tech data included on a single license

• Returns: Special considerations

• Licenses in furtherance of agreements

• Constructing an accurate scope of export in your license application

• Drafting a license application: What to include, how to fill out the forms using DTrade2, and how to submit the application

III. Managing Authorizations, Provisos, and Limitations

• Understanding the distinction between application-based authorizations and regulation-based authorizations: Procedures around both types

• Managing the complexity of authorizations, which likely contain extensive requirements and provisos involving engagement from functions outside of the global trade function

• How do you manage and coordinate authorizations involving engagement from multiple functions around the enterprise?

• Storing and managing technical data within companies that operate across borders

Barbara Dudas

Vice President, Compliance

Dexter Magnetic Technologies

Bob Vander Lugt

Partner

Little, Rothwell & Vander Lugt, PLLC

MAIN CONFERENCE DAY ONE

WEDNESDAY, SEPTEMBER 25

8:45 Opening Remarks from the Co-Chairs

Lexia B. Krown Vice President, Global Trade Compliance ESAB

9:00 FIRESIDE CHAT

Todd Willis Global Trade Advisor

BIS Enforcement and Coordination with the Treasury Department

John Sonderman Director, Office of Export Enforcement, Bureau of Industry and Security U.S. Department of Commerce

Paul Ahern Chief Counselor for Enforcement, Office of Terrorism and Financial Intelligence (TFI) U.S. Department of Treasury

9:45

• Identifying Red Flags: Abnormal circumstances in a transaction that indicate that the export may be destined for an inappropriate end-use, end-user, or destination

• BIS efforts to work in partnership with industry

• Concrete examples of clear policies and effective compliance procedures

• Obtaining documentary evidence concerning the transaction, both in the licensing process and in all export control documents

• Instructing the salesforce: Mandating they receive an affirmation from the intermediary around the definition of the actual end-use, end-user and ultimate country of destination

• Reevaluating all the information after the Red Flag inquiry to ensure legitimacy

Aaron Tambrini Special Agent in Charge of Export Enforcement, Bureau of Industry and Security U.S. Department of Commerce

Lori Romero Director, Trade Counsel L3 Harris Technologies

Bart M. McMillan Partner

10:45 Networking Break

11:15 FIRESIDE CHAT

The Office of Anti-Boycott (OAC) Priorities and Expectations

Cathleen Ryan Director, Office of Antiboycott Compliance, Bureau of Industry and Security U.S. Department of Commerce

11:45 ANTI-BOYCOTT COMPLIANCE AND RISK MANAGEMENT (HYPOTHETICAL

Anti-Boycott and 15 CFR Part 760

of the EAR: Clarifying the Six Prohibitions, Required Reports and Compliance Expectations

Part 760 of the EAR, “Restrictive Trade Practices or Boycotts,” has seen increased compliance and enforcement attention over the past 12 months. In March 2024, for the first time, BIS’ Office of Antiboycott Compliance released a public list of companies who have been identified as having made reportable boycott requests. New enforcement actions have seen companies pay penalties due to Part 760 compliance failures.

• How are multinationals keeping up with the growing list of embargoes and what are the best practices around creating anti-boycott programs to remain compliant?

• Training all levels of employees about antiboycott compliance, including senior sales and supply chain, customer service, shipping, and receiving personnel

• Screening your sales: Reviewing all sales for antiboycott related requests, including purchase orders, contracts, request for quotations, and other discussions or terms/conditions being agreed to as part of the sale

• Developing an escalation process for reporting any such requests or questions internally

• Reporting requests: Form BIS 621-P for single transactions or BIS 6051P for multiple transactions involving boycott requests received in the same calendar quarter

12:30 Networking Luncheon

SCENARIOS AND AUDIENCE POLLING)

Heather Sroka Senior Trade Counsel Intel
Susan Bridgman General Counsel and Chief Compliance Officer Field Aerospace

1:45 CHINA THINK TANK #1: TWO TRICKY AREAS (HYPOTHETICALS AND AUDIENCE POLLING)

EAR 734.99 (b), Foreign Direct Product Rule (FDPR) and 734.4/de minimis Thresholds: How to Apply Complex Requirements in Practice and Avoid Key Compliance Traps

What are the emerging barriers to staying up-to-speed on evolving China-related export compliance decision-making? What are the mission-critical points to address and how to resolve intensifying compliance dilemmas?

Using hypothetical scenarios and audience feedback, this session will leave you with the practical tools for effective compliance and monitoring

• Avoiding key pitfalls when applying the FDPR

• de minimis threshold decision-making

» Controlled Content: U.S. origin items that require BIS authorization (a license or license exception)

• Managing the impact of the FDPR rule: How do you tighten compliance oversight around third-party due diligence procedures?

» Conducting a gap analysis: Updating your compliance protocols to make sure legal, engineering, and trade compliance are all in the loop

• Employee training and monitoring: Determining the right amount and frequency of training

• Third-party management

» Developing a model that stratifies your risk based on third parties — and how to perform due diligence accordingly

» What to do with information uncovered during the vetting process: How to evaluate red flags

Christy Areste Senior Manager, Global Trade Compliance & Anti-Corruption

W. W. Grainger

Jana del-Cerro Partner

Crowell & Moring LLP

• Identifying critical compliance pain points

• Interpreting and applying:

» Russia/Belarus EAR 734.9(f)

» EAR supplements and restrictions on exports “for use in” Russia

» Availability of exemptions and licenses for encryption activities in Russia

• OFAC developments and General Licenses: Scope and limitations

• Russian countermeasures on withdrawing companies and expropriation decrees

• Alignment with US sanctions and export controls. and key differences

Todd Willis Global Trade Advisor

Caterpillar Inc.

Lexia B. Krown Vice President, Global Trade Compliance ESAB

Waqas Shahid Vice President, Forensic Services

Charles River Associates (CRA)

Jason Silverman Partner

Dentons

3:45 Networking Break

4:00 CASE STUDIES, HYPOTHETICAL SCENARIOS AND AUDIENCE POLLING

EAR Licensing, Jurisdiction and Classification Challenges: 600-Series Classification, CCATS and the Lesser-Known Interplay of the ITAR

Building on the pre-conference licensing workshop, the expert speakers will take you through a series of real-world hypothetical scenarios that will illustrate how to navigate grey areas and put theory into practice.

Jurisdiction and classification considerations for highly complex or novel situations:

• Applying useful sources to perform jurisdictional and classification analysis

• How to leverage the commodity jurisdiction process (CJ, CCATS and Company internal)

• Complex issues in 600-series classification

Licensing strategies:

• Big picture considerations when deciding to apply for a license or utilize an exception/exemption

• Developing data sheets, end-user statements and cover letters

5:00 Close of Day One

Marcos Czacki

General Global Counsel & Compliance Officer

Navistar México

Maria Assusa

Director, Export Compliance

Honeywell

MAIN CONFERENCE DAY TWO

THURSDAY, SEPTEMBER 26

8:45 Opening Remarks from the Co-Chairs

Lexia B. Krown Vice President, Global Trade Compliance ESAB

Todd Willis Global Trade Advisor Caterpillar Inc.

9:00 RUSSIA AND COMPLIANCE SESSION # 2 (HYPOTHETICAL SCENARIOS AND AUDIENCE POLLING)

Part 1 — Supplier Circumvention and Your Screening Program: Monitoring Third-Party Intermediaries to Mitigate the Risk of Export and Sanctions Violations

In light of recent export controls and additional trade restrictions on Russia and Belarus, and changes to historical transshipment routes, the risk of product diversion/circumvention has increased considerably. What can exporters do to better identify the signs of actual or suspected violations?

• Conducting thorough due diligence on partners and suppliers

• Monitoring and auditing transactions and supply chains

• Staying updated on sanctions lists and regulatory changes

• When to seek outside counsel

Kathy Canaan Global Director, Trade Compliance Fluor Corporation

Matthew Fogarty Senior Counsel, Trade General Motors

10:00 Part II — INDUSTRY-SPECIFIC BENCHMARKING ROUNDTABLES

Engage in worthwhile, industry-specific smaller-group discussions, benchmarking and Q&A moderated by seasoned experts:

• AEROSPACE & DEFENSE

• LIFE SCIENCES

• ENERGY • MANUFACTURING

11:00 Networking Break

• TECH & TELECOM

• LOGISTICS & SUPPLY CHAIN

Amanda Marshall Senior Analyst Sayari

11:15 CHINA THINK TANK #2: HYPOTHETICAL SCENARIOS

MEU Part 744 and MIEU 1753 (a) (2): The Biggest Grey Areas and How to Address Them

• MEU Part 744: Expanded new license requirements for exports, reexports, or transfers (in-country) subject to Part 744 involving a person designated as an SDN under one of the eleven OFAC sanctions programs

» Part 744 SDN-related end-user sections and the eleven new SDN-related restrictions

• MIEU 1753 (a): Classification, screening, and approvals

» Classification decisions: Creating documentation supporting how you classified your items under the CCL

» Screening results: Maintaining records of all screenings performed for customers, intermediaries, and end-users

» Licenses and approvals: Keeping copies of all licenses obtained, and communications with BIS

» End-use statements: Documentation from customers regarding the intended use of the products

12:00 GENERATIVE AI AND EMERGING TECHNOLOGY

Alexandra Landis

Senior Counsel, Director of Compliance and Export Controls Palladyne AI Corp

Michael L. Burton Partner

Jacobson Burton Kelley PLLC

Managing the Intersection of Cloud Computing, AI Regulation and EAR Compliance: What the AI EO and Recent EAR Changes Mean for Your Program in Practice

The rapid pace of AI development has created novel questions for governments and export control practitioners. We are in the early stages of what could represent a major shift in how export controls operate, and it is worth taking time to consider what steps have already been taken and what may be considered in the future.

• Overview of generative AI

• How existing export controls apply to AI

• The AI EO: Clarifying key terms and requirements, including cloud ”Infrastructure as a Service” provisions

• Ongoing debates and open questions

12:45 DATA ANALYTICS CASE STUDY

Joe Schoorl Export Compliance Counsel Google

Janet K. Kim Partner Baker McKenzie LLP

Using Data Analytics and Metrics to Enhance Your International Trade Compliance Program

• KPIs to measure broker effectiveness: On time document submission, post entry audits, weighting average compliance efforts to specific data elements

• Ways to keep up to date with product classifications: Using open PO reports to prioritize, focus on unclassified material, and to review previous classifications

• Management of potential deemed exports: Employee/manager locations, SOW, license reviews and what to do if there is a change in the SOW

• Metrics for denied party screening to help detect screening errors and other due diligence pitfalls

» Utilize screening data to see release times and minimize false positives

Grant Hosea Director, Global Trade Compliance Albemarle

CASE STUDIES: 734.20/734.18 (HYPOTHETICALS AND AUDIENCE POLLING)

to Apply EAR Part 734.20/734.18 Requirements and Exceptions: Deemed Exports, Cloud Computing and End-Use Controls

The definition of “export” in the EAR includes the concept of releasing technical data or technology to a foreign person in the U.S. as part of the definition of a “deemed export”, or the transfer of ownership or control of a technology to a foreign person. Interesting changes are proposed — EAR §734.18 and 734.20 — which would deal with transfers of technology and use of encryption. What’s behind these rules, what are the limitations, and how is industry is managing these exceptions?

Michelle Aragon

Senior Manager

Trade Compliance

Leonardo DRS

Bryce Bittner

Managing Counsel, International Trade

McKinsey & Company

Jeffrey Richardson

Principal

Miller Canfield

• Identifying the tools to best identify multilateral compliance risks

• Managing the intersection of U.S., UK and EU regulatory frameworks-and adjusting your compliance protocols accordingly

• Determining the appropriate classification under each jurisdiction’s control list: EAR’s Commerce Control List (CCL), the USML for ITAR items, and the EU Dual-Use List

• Identifying licensing requirements for each jurisdiction based on the item, destination, end-user, and end-use

• Verifying and screening the end-use to ensure it does not involve prohibited activities or destinations, such as WMD proliferation or military end-uses in restricted countries

Eric J. Larsen

Trade Compliance Manager

Boeing

Jeff Sammon

Senior Director, Global Trade Services Program

Management Office

TE Connectivity

4:30

CYBERSECURITY

FOCUS: EAR CATEGORY 5, PART 2

Navigating the Finer Points of Category 5, Part Two, the Final Cyber Rule

The “cyber rule” and debated export controls on intrusion software have balanced U.S. foreign policy and national security concerns with the need for maintaining a regulatory framework that allows for legitimate cybersecurity transactions. How should industry be applying this complex rule? What questions should be asked and what steps should be taken to ensure compliance?

5:15

Close of Conference
Heather Sroka Senior Trade Counsel Intel
Katelyn M. Hilferty Senior Associate Morgan Lewis& Bockius LLP

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Please note that the guest room block cut-off date is August 26, 2024. After that date OR when the room block fills, guestroom availability and rate can no longer be guaranteed.

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