On September 30, 2024, the Department of the Treasury’s Office of Foreign Assets Control (OFAC) again extended previous Russia-related General License (GL) 13 by issuing a revised GL 13K, “Authorizing Certain Administrative Transactions Prohibited by Directive 4 under Executive Order 14024,” which states that U.S. persons are authorized to pay taxes, fees, or import duties, and purchase or receive permits, licenses, registrations, certifications, or tax refunds to the extent such transactions are prohibited by Directive 4. Such transactions are allowable provided they are ordinarily incident and necessary to such persons’ day-to-day operations in the Russian Federation. Directive 4 prohibits any transaction involving the Central Bank of the Russian Federation, the National Wealth Fund of the Russian Federation, or the Ministry of Finance of the Russian Federation, including any transfer of assets to such entities or any foreign exchange transaction for or on behalf of such entities.

Previous GL 13J was set to expire on October 9, 2024; the revised GL 13K is set to expire on January 8, 2025. For additional background, please see our prior blog posts on this general license: January 18, 2024, November 7, 2023, May 21, 2023, April 15, 2024, and July 11, 2024.

Key Notes:

  • Proposed rule would prohibit the import and sale of connected vehicles equipped with certain hardware or software developed, manufactured, or supplied by Chinese or Russian-affiliated entities.
  • Proposed rule would also prohibit the sale of connected vehicles manufactured by Chinese or Russian OEMs.
  • Prohibitions would take effect between 2027 and 2030.
  • If implemented, manufacturers and importers would be required to submit annual declarations of conformity.
  • BIS proposes to grant general authorizations for low-volume manufacturers or vehicles for testing, research, or show/display.
  • Public comments on the proposed rule are due by October 28, 2024.

On September 23, 2024, the U.S. Department of Commerce’s Bureau of Industry and Security (BIS) released a notice of proposed rulemaking (NPRM) related to the import and sale of connected vehicles. The NPRM proposes to prohibit the import or sale of connected vehicles that are manufactured by entities owned by, controlled by, or subject to the jurisdiction or direction of the People’s Republic of China (PRC) or Russia. The NPRM also proposed to prohibit the sale or import of connected vehicles that contain “vehicle connectivity systems” or certain related software that are designed, developed, manufactured, or supplied by persons owned by, controlled by, or subject to the jurisdiction or direction of the PRC or Russia.

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On September 20, 2024, the Office of the U.S. Trade Representative (USTR) announced that it is seeking public comments on proposed modifications announced on September 13, 2024 to the tariff actions in the Section 301 investigation of China’s Acts, Policies, and Practices Related to Technology Transfer, Intellectual Property, and Innovation. See Thompson Hine Update of September 16, 2024. Among the actions taken because of the USTR’s four year-review of the China Section 301 tariffs, the USTR has proposed increasing Section 301 duties on Chinese products subject to five additional Harmonized Tariff Schedule of the United States (HTSUS) subheadings — increasing tariffs to 25% for three subheadings covering certain Chinese tungsten products and increasing tariffs to 50% for two subheadings covering Chinese wafers and Chinese polysilicon. The five subheadings proposed for tariff increases are:

  • 8101.94.00 (Tungsten, unwrought (including bars and rods obtained simply by sintering)).
  • 8101.99.10 (Tungsten bars and rods (other than those obtained simply by sintering, profiles, plates, sheets, strip and foil)).
  • 8101.99.80 (Tungsten, other articles nesoi).
  • 2804.61.00 (Silicon containing by weight not less than 99.99% of silicon).
  • 3818.00.00 (Chemical elements doped for use in electronics, in the form of discs, wafers etc., chemical compounds doped for electronic use).

Interested parties are invited to comment on: (i) the extent to which the proposed modification would enhance the effectiveness of the tariff actions in obtaining the elimination of or in counteracting China’s acts, policies, and practices related to technology transfer, intellectual property and innovation; and (ii) the likely effects of the proposed modification on the U.S. economy, including consumers.

The docket will open on September 23, 2024 and close on October 22, 2024. Comments must be submitted using USTR’s electronic portal at: https://comments.ustr.gov under the docket “Request for Comments: Proposed Modifications to the Section 301 Actions,” Docket No. USTR–2024–0016.

On September 13, 2024, the United States designated and placed on the Department of the Treasury’s Office of Foreign Assets Control (OFAC) Specially Designated Nationals (SDN) List three entities and two individuals for their connection to Russia’s destabilizing actions abroad, particularly efforts to undermine and manipulate the outcome of the October 2024 Moldovan presidential election. Two of the entities are Russian state-owned and state-funded broadcast agencies that control the RT (formerly “Russia Today”) media channel, and the third Russian entity has been designated for attempting to move money into Moldova in an effort to influence the upcoming election. For additional identifying details on the involved individuals, entities see here.

As a result, all property and interests in property of the designated persons and entities that are in the United States or in the possession or control of U.S. persons are blocked and must be reported to OFAC. In addition, any entities that are owned, directly or indirectly, individually or in the aggregate, 50% or more by one or more blocked persons are also blocked. Unless authorized by a general or specific license issued by OFAC, or exempt, OFAC’s regulations generally prohibit all transactions by U.S. persons or within (or transiting) the United States that involve any property or interests in property of designated or otherwise blocked persons. These prohibitions include the making of any contribution or provision of funds, goods, or services by, to, or for the benefit of any blocked person and the receipt of any contribution or provision of funds, goods, or services from any such person.

Related General Licenses

Related to these designations, OFAC issued Russia-related General License (GL) 109, “Authorizing the Wind Down of Transactions Involving Certain Entities Blocked on September 13, 2024.” This GL is effective as of September 13, 2024, and authorizes all transactions that are ordinarily incident and necessary to the wind down of any transaction involving the following blocked entities:

  • Federal State Unitary Enterprise International Information Agency Rossiya Segodnya.
  • Autonomous Non Profit Organization TV Novosti.
  • Any entity in which one or more of the above persons own, directly or indirectly, individually or in the aggregate, a 50% or greater interest.

These transactions are authorized through 12:01 a.m. Eastern Standard Time, November 13, 2024. Any payment to a blocked person must be made into a blocked account in accordance with the Russian Harmful Foreign Activities Sanctions Regulations, 31 CFR part 587. 

Certain transactions remain unauthorized under this GL and therefore require close analysis.

OFAC also issued an updated GL 25F, “Authorizing Transactions Related to Telecommunications and Certain Internet-Based Communications,” which supersedes GL 25E dated September 4, 2024, making it the current applicable GL. The primary difference between GL 25F and GL 25E is the expansion of the list of entities excluded from the GL to add Federal State Unitary Enterprise International Information Agency Rossiya Segodnya and Autonomous Non-Profit Organization TV Novosti. OFAC also published an updated, Russia-related Frequently Asked Question (FAQ 1040) addressing this GL. See our previous publication regarding GL 25 dated September 6, 2024.

The Department of the Treasury’s Office of Foreign Assets Control (OFAC) issued a final rule on Updating Provisions Related to Blocking and Other Actions Related to Specific Property or Interests in Property. The rule is effective as of September 17, 2024.

The new rule aims to clarify OFAC’s process for issuing orders that block or identify specific blocked property or interests in property. It updates 35 parts of 31 CFR chapter V to improve regulations regarding these actions. This comprehensive update is designed to provide clearer guidance on how OFAC exercises its authority under various statutes, including the International Emergency Economic Powers Act (IEEPA).

Three Forms of Actions

The final rule identifies three primary forms of actions OFAC may take with respect to specific property or interests in property:

  • Identifying Blocked Property: OFAC may identify specific property or interests in property as blocked due to an interest of an already blocked person. This is particularly useful in cases where such interests may not be apparent to the public.
  • Blocking Pending Investigation: OFAC may block specific property or interests in property of a person who is not yet designated but is under investigation for potential designation. This measure ensures that the property is not transferred before a final decision is made.
  • Non-Full Blocking Sanctions: In certain cases, OFAC may impose prohibitions that are less than full blocking sanctions. In such cases, OFAC would determine that a person meets the criteria for designation but would take action less than blocking the entirety of a person’s property and interests in property.

Notice and Communication

The rule outlines various forms of notice that OFAC may use to inform affected parties about its actions:

  • Federal Register: For designation actions, OFAC will publish notices in the Federal Register, providing constructive notice to the public.
  • Direct Written Notice: For more tailored actions, when OFAC takes more tailored action with respect to specific property or interests in property, OFAC may provide actual notice directly to affected persons or indirectly through financial institutions or other intermediaries.
  • Transaction Intermediaries: Financial institutions or other intermediaries may be required to notify affected persons with whom they maintain direct commercial relationships.

The rule also updates the note in the subject parts that explains the procedures for seeking release of blocked property or administrative reconsideration of OFAC actions to add information about additional unblocking procedures available to blocked or otherwise affected persons. These procedures are detailed in Subpart E of part 501 of 31 CFR chapter V.

All U.S. persons and persons otherwise subject to U.S. jurisdiction, not only U.S. financial institutions, holding property blocked pursuant to various Department of the Treasury’s Office of Foreign Assets Control (OFAC) sanctions programs must file their Annual Report of Blocked Property (ARBP) by September 30, 2024.

This report is pursuant to 31 C.F.R. §§ 501.603 of the Reporting, Procedures and Penalties Regulations (RPPR). This report must include all blocked property held as of June 30, 2024, and must be filed by September 30, 2024. Persons filing the 2024 report are required to utilize spreadsheet form TD-F 90-22.50. Completed forms should be filed through the OFAC Reporting System (ORS).

Failure to submit a required ARBP by September 30 constitutes a violation of the RPPR.

What Is Blocked Property?

All property and interests in property of any person designated by the Office of Foreign Assets Control (OFAC) to the Specially Designated Nationals and Blocked Entities List (SDN) or any person owned 50% or greater by an SDN entity that is in the United States, comes within the United States or comes within the possession and control of U.S. persons is blocked. Property of persons subject to certain other sanctions may also be blocked under the terms of the sanctions. U.S. persons are prohibited from directly or indirectly dealing in or with blocked property. Blocked property and interests in property is defined broadly to include not only tangible and intangible property but also accounts payable, invoices, contracts and other intangible items in which a blocked person holds an interest.

What Does Not Have to Be Reported?

OFAC notes that the following property should not be reported:

  • Property that has been unblocked by general or specific OFAC license is not blocked property.
  • Property that has been unblocked because the blocked person originally associated with the property was no longer blocked before July 1, 2023.
  • Property that has been unblocked as a result of an OFAC sanctions program being terminated (e.g., 31 C.F.R. part 543 (Côte d’Ivoire)) and is not currently blocked under any active sanctions program administered by OFAC.
  • Restricted “Iranian accounts,” as defined in OFAC’s regulations, should not be reported to OFAC on the annual report unless they are otherwise blocked.

For additional information on preparing this annual report, see OFAC’s Guidance on Filing the ARBP.

On September 13, 2024, the Office of the U.S. Trade Representative (USTR) announced in a Federal Register notice the final modifications to its tariff actions in the Section 301 investigation of the China’s Acts, Policies, and Practices Related to Technology Transfer, Intellectual Property, and Innovation after concluding a statutorily mandated four-year review. (For additional information on the USTR’s Four-Year Review Report, see Thompson Hine Update of May 15, 2024.) The modifications largely followed those proposed in May 2024. (For details on the USTR’s original proposed modifications, see Update of May 28, 2024.) In modifying these tariffs, President Joseph Biden directed the USTR to increase tariffs on imports from China in the following sectors: (i) steel and aluminum, (ii) semiconductors, (iii) electric vehicles, (iv) batteries, battery components, and critical minerals, (v) solar cells, (vi) ship-to-shore cranes, and (vii) medical products. The updates include: (i) new timing and rates for tariffs on face masks, medical gloves, needles, and syringes; (ii) an exclusion for enteral syringes; (iii) a proposal regarding coverage of additional tungsten, wafers, and polysilicon tariff lines; (iv) an exclusion for ship-to-shore cranes ordered prior to May 14, 2024; (v) an expansion of the scope of the machinery exclusions process to include five additional tariff lines; and (vi) modification of the coverage of proposed exclusions for solar manufacturing equipment.

Both the original May 2024 modification proposal and the September 13, 2024 notice include an Annex of 14 product groups covering the 382 Harmonized Tariff Schedule of the United States (HTSUS) subheadings and five statistical reporting numbers of the HTSUS affected by the modified China Section 301 tariffs, their tariff rate increases, and their implementation dates. For those with increases in 2024, the duty rate will apply to products entered for consumption, or withdrawn from warehouse for consumption, on or after September 27, 2024. Tariff increases identified for 2025 and 2026 will apply to products entered for consumption, or withdrawn from warehouse for consumption, on or after January 1 of the corresponding year. The new tariff levels and dates of entry into force by product categories are summarized below:

Product CategoryTariffEntry Into Force
Steel and aluminum products25%2024
Semiconductors50%2025
Electric Buses (vehicles designed to transport more than 10 persons)100%2024
Hybrid and Electric Passenger Vehicles100%2024
Battery Parts (non-lithium-ion batteries)25%2024
Lithium-ion electrical vehicle batteries25%2024
Lithium-ion Non-electrical Vehicle Batteries25%2026
Natural graphite25%2026
Other Critical Minerals25%2024
Permanent Magnets25%2026
Solar cells (whether or not assembled into modules)50%2024
Ship to shore cranes25%2024
Facemasks25%2024
50%2026
Medical Gloves50%2025
100%2026
Syringes and needles100%2024

Upon identifying additional product groups for these China Section 301 tariffs, President Biden directed the USTR to establish a product exclusion process for machinery used in domestic manufacturing and to prioritize exclusions for certain solar manufacturing equipment. In the USTR’s September 13, 2024 press release announcing its final actions on China Section 301 tariffs, the agency noted that an exclusion process will be launched “soon” and that it will also be accepting public comments soon for proposed modifications of tariff rates on certain tungsten, wafers, and polysilicon tariff lines.

On August 20, 2024, the State Department published an Interim Final Rule in the Federal Register amending the International Traffic in Arms Regulations (ITAR) to add a license exemption regime for exports, reexports, transfers, and temporary imports of defense articles and defense services to and between Australia and the United Kingdom. The Interim Final Rule largely adheres to the Department’s May 1, 2024 Proposed Rule to ease ITAR license restrictions imposed on such transactions to and between the two countries, thus entrenching the objective of closer defense trading per the trilateral security partnership known as AUKUS, which was established in 2021 (see Update of May 2, 2024). The Interim Final Rule went into effect September 1, 2024.

Scope of the Interim Final Rule

Like the earlier Proposed Rule, the Interim Final Rule adds a new section to ITAR, § 126.7, which states: “No license or other approval is required for the export, reexport, retransfer, or temporary import of defense articles, the performance of defense services, or engaging in brokering activities” to and between Australia and the United Kingdom subject to certain restrictions and conditions. For example, as initially envisioned by the Proposed Rule, § 126.7 still requires that such activities “be [directed] to or within the physical territory of Australia, the United Kingdom, or the United States.” Additionally, the exporter/transferor and recipient must be “authorized users,” meaning a U.S. person registered with the Department’s Directorate of Defense Trade Controls (DDTC) and not debarred, or an Australian or United Kingdom person approved by DDTC and so “identified through the DDTC website.” As noted in a Department press release, therefore, the Interim Final Rule, like the Proposed Rule, will ensure “[t]he vast majority of defense articles and defense serviced described [i]n the [ITAR] are eligible…via the § 126.7 exemption.”

Still, the Interim Final Rule introduces a few minor changes from the Proposed Rule. The Interim Final Rule most notably removes certain items previously listed in the new Excluded Technology List (Supplement No. 2 to Part 126 of the ITAR) that renders certain defense articles and defense services ineligible for the special treatment conferred by § 126.7.

Public Comment

Although the Interim Final Rule went into effect September 1, 2024, the State Department seeks public comments to further clarify and refine the ITAR exemption for AUKUS. Comments must be received by DDTC no later than November 18, 2024, and should be filed using the federal rulemaking portal (www.regulations.gov) under Docket DOS-2024-0024. Alternatively, comments can be sent to the State Department via email to DDTCPublicComments@state.gov with the subject line: “Australia, the United Kingdom, and the United States ITAR Exemption.”

On September 11, 2024, the Department of the Treasury’s Office of Foreign Assets Control (OFAC) published an Interim Final Rule to amend its Reporting, Procedures and Penalties Regulations under 31 C.F.R. Part 501, which extends recordkeeping requirements for certain transactions from 5 years to 10 years.  This Interim Final Rule takes effect on March 12, 2025.

OFAC’s recordkeeping amendment aligns with the extension of the statute of limitations for violations of certain sanctions administered by OFAC that were implemented on April 24, 2024, when President Joseph Biden signed into law the 21st Century Peace through Strength Act (Public Law No. 118-50).  A section of this law extended from 5 years to 10 years the statute of limitations for civil and criminal violations under the International Emergency Economic Powers Act, 50 U.S.C. 1701 et seq. (IEEPA) and the Trading with the Enemy Act, 50 U.S.C. 4301 et seq. (TWEA).  See Thompson Hine’s Legal Update of May 8, 2024 for additional background.  Notably, that expanded 10-year statute of limitations provision applies to any violation that was not time-barred at the time of its enactment, meaning OFAC may now commence an enforcement action for any transaction completed subject to IEEPA or TWEA if the transaction occurred after April 24, 2019.

Because the recordkeeping amendment is an Interim Final Rule, OFAC is accepting public comment on the provisional change.  Interested parties may file written comments (i) via the Federal eRulemaking Portal at www.regulations.gov under Docket No. OFAC-2024-0004; or (ii) via mail to: Office of Foreign Assets Control, U.S. Department of the Treasury, Treasury Annex/Freedman’s Bank Building, 1500 Pennsylvania Avenue NW, Washington, DC 20220, and referencing the above docket number.  Any comments must be filed no later than October 15, 2024.

On September 5, 2024, the Department of Labor (DOL) released a revised version of its List of Goods Produced by Child Labor or Forced Labor. This 2024 report identifies the types of goods, the industries involved and the countries that the DOL has reason to believe are produced by child labor or forced labor in violation of international standards. The report is intended to assist foreign governments in developing effective policy responses, and to support U.S. businesses’ due diligence and risk management efforts in their supply chains. 

The 2024 report includes 204 goods from 82 countries identified as likely produced by child labor or forced labor. This revised edition includes 72 new additions, including a “record” of 37 goods not previously included on the list. The report also includes several studies “tracing goods tainted with forced or child labor through complex global supply chains” and adds to the list 43 goods made with inputs that are produced with child labor or forced labor. DOL highlights that these goods include “cotton textile products from China and Vietnam produced with Chinese cotton, food and beverage products linked to child labor in cocoa industries in Ghana and Côte d’Ivoire and sugar products tied to forced labor in the sugarcane industry in the Dominican Republic.” 

This edition of the report removes four items—blueberries from Argentina, salt from Cambodia, shrimp from Thailand, and fluorspar from Mongolia—as the DOL has determined that “child labor in these sectors and countries has been reduced to no more than isolated incidents.” As noted, however, 37 new goods have been added that have not been previously identified as having labor exploitation—including jujubes, lead, nickel, polyvinyl chloride, and squid—and identifies four new countries of concern: Belarus, the Netherlands, Mauritius, and South Korea. The DOL notes that the 2024 update “reveals the unsettling geographic span of labor exploitation, highlighting new additions from every region in the world, including 21 from African countries, 10 from the Western Hemisphere, and 8 from Europe.” Asia, particularly China, continues to have the most goods on the list.

In light of the fact that the Department of Homeland Security and U.S. Customs and Border Protection (CBP) are now fully enforcing the Uyghur Forced Labor Prevention Act (UFLPA) and detaining an increasing number of goods upon importation into the United States for review and possible enforcement actions, DOL’s 2024 report is a significant resource that U.S. importers should be referencing for conducting diligence into their suppliers and supply chains.