The U.S. National Security Council is hoping to better harmonize export controls and foreign investment restrictions across the Five Eyes alliance, an effort that will be a key aspect of President Joe Biden’s future talks with European and other allies, a senior NSC official said. The U.S. is also reviewing how government agencies use those tools to better address a rise in export control evasion tactics, the official said.

The State Department released a proposal May 26 to permanently allow employees involved in International Traffic in Arms Regulations-related activity to work remotely, a long-awaited measure that industry is expected to welcome. The rule proposes to permanently update the ITAR’s definition of a “regular employee,” which will also now include certain “contractual staff.”

Export Compliance Daily is providing readers with the top stories for May 17-21 in case you missed them. You can find any article by searching on the title or by clicking on the hyperlinked reference number.

U.S. Trade Representative Katherine Tai said the U.S. and Canada could not reach an agreement on the administration of Canada's dairy tariff rate quotas, so the dispute will be decided by a panel. At issue is the fact that Canada has reserved the large majority of TRQs for Canadian processors, which means that consumer goods produced in the U.S. like ice cream, cheese or yogurt face higher tariffs in Canada because very little of the TRQ is available to Canadian retailers. Even when it's not restricted to processors, the TRQs are reserved for distributors, which means American producers cannot pitch their goods at lower prices directly to retail chains.

Sanctions compliance is increasingly presenting challenges to companies around the world as more countries turn to sanctions as a foreign policy tool, Baker McKenzie lawyers said. Some recent challenges include the growing emphasis on sanctions enforcement and the due diligence issues presented by countries with little publicly available information on ownership chains, the lawyers said.

A “groundbreaking” settlement agreement between a German software company and three U.S. agencies (see 2104290069 and 2105070042) may signal greater enforcement of sanctions and export violations and present more compliance challenges for industry, law firms said. The more than $8 million settlement between SAP SE and the Justice, Treasury and Commerce departments -- the first non-prosecution agreement under the Justice Department's revised voluntary disclosure policies (see 2008180043) -- also includes several important lessons for businesses and may lay out how monitorships can be avoided, the firms said.

The Directorate of Defense Trade Controls will see a return to “normal order” under the Biden administration, with a stronger emphasis on export control cooperation with allies and collaboration at multilateral control regimes, said Mike Miller, a senior State Department official. Miller said the agency is “busy” implementing President Joe Biden’s foreign policy objectives and has seen “robust management” from administration officials.

The Federal Emergency Management Agency is no longer restricting exports of four categories of personal protective equipment and other items used to combat the COVID-19 pandemic, the agency announced May 19. FEMA said its restrictions -- originally announced in April 2020 (see 2004080018) and extended in December (see 2012300017) -- no longer apply to industrial N95 respirators, certain surgical masks, certain piston syringes and certain hypodermic single lumen needles. Other export restrictions still apply, the agency said, including for surgical, single-use N95 respirators, and certain nitrile gloves and surgical gowns.

The State Department is preparing to amend the U.S. Munitions List to update export controls surrounding weapons, spacecraft and military electronics, according to a senior State Department official. The agency also plans to issue another extension to allow employees involved in International Traffic in Arms Regulations-related activity to work remotely and is inching closer to publishing its first ITAR reorganization rule, said Mike Miller, the State Department’s deputy assistant secretary for defense trade in the Bureau of Political-Military Affairs.

President Joe Biden’s nominee to be the State Department’s assistant secretary for Western hemisphere affairs vowed to aggressively sanction human rights violators and said more can be done to stop sanctions evasion tactics. The nominee, Brian Nichols, also told the Senate Foreign Relations Committee May 19 that the agency should coordinate closely with the Treasury Department and voiced support for some of the agency’s Cuba restrictions.