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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 |2025-04-17T16:35:06-04:00April 17, 2025|Investigation, tariffs, U.S. Department of Commerce|0 Comments
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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 |2025-04-07T18:45:32-04:00April 7, 2025|EAR, Export, U.S. Bureau of Industry and Security (BIS)|0 Comments
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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 |2024-11-22T07:13:34-05:00November 22, 2024|EAR, Export, U.S. Department of Commerce|0 Comments
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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 |2024-10-11T15:11:38-04:00October 11, 2024|Export, U.S. Bureau of Industry and Security (BIS), U.S. Department of Commerce (DOC)|0 Comments
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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:

  1. 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.
  2. New dual track for processing VSDs – one track for minor or technical violations, the other for significant violations.
  3. 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:

  1. 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.
  2. 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.
  3. Removes from the BIS […]
By |2024-09-26T16:04:14-04:00September 26, 2024|EAR, Export, U.S. Bureau of Industry and Security (BIS)|0 Comments
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