16-1222 Thursday “The Daily Bugle”

16-1222 Thursday “Daily Bugle”

Thursday, 22 December 2016

TOPThe Daily Bugle is a free daily newsletter from Full Circle Compliance, containing changes to export/import regulations (ATF, Customs, NISPOM, EAR, FACR/OFAC, FTR/AES, HTSUS, and ITAR), plus news and events. Subscribe 
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[No items of interest noted today.] 

  1. Ex/Im Items Scheduled for Publication in Future Federal Register Editions
  2. Commerce/BIS: (No new postings.) 
  3. Commerce/Census: “Understanding Routed Export Transactions” 
  4. DHS/CBP Posts November 2016 ACE Monthly Trade Update 
  5. DoD/DSS Knowledge Center Personnel Security Inquiries Unavailable 23-27 Dec 
  6. State/DDTC Reschedules 3 PM Drop-Off/Pick-Up on 23 Dec and 30 Dec 
  7. Treasury/OFAC Posts Updated Iranian Transactions and Sanctions Regulations 
  8. EU Amends Restrictive Measures Concerning Iraq 
  1. Defense News: “Israel Claims Suggest Lebanese Violation of US Export Law”
  2. Expeditors News: “Next Customs Broker Exam is Monday, 3 Apr 2017”
  1. D.M. Edelman: “CFIUS’ Global Reach – Users of U.S. Controlled Technology Beware”
  2. FD Associates: “DSP Form Change Effective January 3, 2017”
  3. R.C. Burns: “How the OFAC Gave Back Christmas”
  1. Bartlett’s Unfamiliar Quotations 
  2. Are Your Copies of Regulations Up to Date? Latest Changes: ATF (15 Jan 2016), Customs (20 Dec 2016), DOD/NISPOM (18 May 2016), EAR (16 Dec 2016), FACR/OFAC (4 Nov 2016), FTR (15 May 2015), HTSUS (16 Dec 2016), ITAR (5 Dec 2016) 



[No items of interest noted today.]

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OGS_a11. Ex/Im Items Scheduled for Publication in Future Federal Register Editions
(Source: Federal Register)

* Commerce; PROPOSED RULES; Regulatory Agenda: Semiannual Regulatory Agenda [Publication Date: 23 December 2016.]

* Homeland Security Department; PROPOSED RULES; Regulatory Agenda: Semiannual Regulatory Agenda [Publication Date: 23 December 2016.]

* Treasury; Foreign Assets Control Office; RULES; Iranian Transactions and Sanctions Regulations [Publication Date: 23 December 2016.]

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OGS_a22. Commerce/BIS: (No new postings.)

(Source: Commerce/BIS)
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OGS_a33. Commerce/Census: “Understanding Routed Export Transactions”

(Source: Global Reach Blog)      
Routed export transactions are a much discussed topic.  Therefore, we are revisiting this blog topic to give some helpful tips on remaining compliant if you’re involved in a routed export transaction. We’ll also take a look at an example.  For those not familiar with routed export transactions, it is when the Foreign Principal Party in Interest (FPPI) directs the movement of the goods out of the U.S. and authorizes a U.S. agent to file the Electronic Export Information (EEI) on their behalf.
Below are some helpful tips to keep in mind: 
  – Communication is key!  Having conversations with all parties involved before the transaction occurs will make a difference in understanding roles and responsibilities to prevent filing errors in the Automated Export System (AES);
  – Refer to Sections 30.3(e), (e)(1) and (e)(2) of the Foreign Trade Regulations (FTR) for the definition and more information on the responsibilities of the parties involved in a routed transaction;
  – Utilize the Census Bureau resources; and
  – View sample templates for the power of attorney and written authorization on our website here or here.
Routed Export Transaction Example:
A U.S. Principal Party in Interest (USPPI) sells two paintings to a FPPI located in Italy.  Keep in mind, the USPPI is defined as the person or legal entity in the U.S. that receives the primary benefit, monetary or otherwise, from the transaction. The FPPI instructs the USPPI to send the paintings to an agent located in Florida.  The FPPI authorizes the agent to file the EEI in the AES on their behalf and ship the goods to Italy.  In this example, each party has important responsibilities that are outlined below.
  – Provides the agent, who is authorized to file the EEI, with a power of attorney or written authorization, the authorization comes after the FPPI provides the POA or written authorization.
  – Provides the agent with the data elements, such as Schedule B number, value, quantity, etc., specified in Section 30.3(e)(1) of the FTR.
  – Retains documentation to support the information provided to the authorized agent for five years from the date of export.
  – Requests a copy of the data elements that were filed in the AES and the power of attorney or written authorization.
Authorized Agent
  – Ensures that a power of attorney or written authorization is received from the FPPI.
  – Files the EEI in the AES.
  – Provides the Internal Transaction Number or exemption code if filing is not required to the carrier.
  – Retains documentation pertaining to the shipment for 5 years.
  – If requested, provides the USPPI with a copy of the USPPI data elements that were filed in the AES and the power of attorney or written authorization from the FPPI. For further questions, please contact the Trade Regulations Branch (TRB) at 1-800-549-0595, option 3 or email us at itmd.askregs@census.gov
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OGS_a44. DHS/CBP Posts November 2016 ACE Monthly Trade Update

(Source: DHS/CBP)
Here you will find the November 2016 ACE Monthly Trade Update. This month’s update includes
information on:
  – the January 2017 ACE transition;
  – a new ACE tool available on CBP.gov;
  – a status of the Partner Government Agency (PGA) pilots for exports;
  – updated ACE documentation;
  – plus much more.
Please distribute to all users within your ACE account.
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OGS_a55. DoD/DSS Knowledge Center Personnel Security Inquiries Unavailable 23-27 Dec

(Source: DoD/DSS)
Personnel security inquiries to include e-QIP (option #2) of the DSS Knowledge Center will be unavailable on Friday, December 23, 2016 from noon to 5 PM EST, and will also be closed on December 26, 2016, in observance of the Christmas holiday. We will resume normal business hours on Tuesday, December 27, 2016.
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OGS_a66. State/DDTC Reschedules 3 PM Drop-Off/Pick-Up on 23 Dec and 30 Dec

(Source: State/DDTC)
Due to the upcoming holidays, the 3:00 PM drop-off/pick-up in the second floor lobby is re-scheduled for 12:00 PM for both Friday, December 23, 2016 and Friday, December 30, 2016.
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OGS_a77. Treasury/OFAC Posts Updated Iranian Transactions and Sanctions Regulations

(Source: Treasury/OFAC)
The Department of the Treasury’s Office of Foreign Assets Control (OFAC) is amending the Iranian Transactions and Sanctions Regulations, 31 C.F.R. part 560 (ITSR) to expand the scope of medical devices and agricultural commodities generally authorized for export or reexport to Iran pursuant to the Trade Sanctions Reform and Export Enhancement Act of 2000, as amended.  This amendment also includes new or expanded authorizations related to training, replacement parts, software and services for the operation, maintenance, and repair of medical devices, and items that are broken or connected to product recalls or other safety concerns.  Additionally, this amendment revises the definition of the terms “goods of Iranian origin” and “Iranian-origin goods.”
The ITSR amendment will be published in the Federal Register on Friday, December 23, 2016, at which time the changes will take effect.  OFAC is also publishing a number of new and updated Frequently Asked Questions pertaining to this regulatory amendment.
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OGS_a88. EU Amends Restrictive Measures Concerning Iraq

  – Commission Implementing Regulation (EU) 2016/2363 of 21 December 2016 amending Council Regulation (EC) No 1210/2003 concerning certain specific restrictions on economic and financial relations with Iraq
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Defense News) [Excerpts.]
A senior Israeli defense official on Wednesday confirmed what US experts had been questioning for more than a month: that US troop carriers provided by Washington to Beirut are being operated by Hizbollah in Syria in support of the Bashar Assad regime, which experts note as a violation of export controls.
In a briefing to reporters here, the official said he did not know for sure if the M113 armored personnel carriers (APCs) “were given voluntarily or if they were overtaken.” However, he said he believed the transfer was the result of “a kind of a deal” between the Lebanese Armed Forces (LAF) and the designated Shiite terror organization.  . . .
Tony Badran, a research fellow at the Washington-based Foundation for Defense of Democracies, said the assessment by the Israeli official should trigger serious questions in Washington. “The US has invested in the myth that its considerable support for the LAF is to serve as a counterweight to Hizbollah and help establish it as the sole provider for security in the country.
  “But in recent years – against the intent of UN Resolutions 1701 and 1559 – they seem to have redefined the purpose of aid to the LAF mission as protecting Lebanon from Sunni jihadists coming in from Syria, which opens the door to disregarding a partenrship between the LAF and Hizbollah,” Badran said.  . . .
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. Expeditors News: “Next Customs Broker Exam is Monday, 3 Apr 2017”

(Source: Expeditors News)
U.S. Customs and Border Protection (CBP) has posted a notice to its website announcing the April 2017 Customs Broker License Examination. Customs stated that the exam will be held on Monday, April 3, 2017, at various locations throughout the United States. 
The exam, which will last 4.5 hours, consists of 80 multiple-choice questions, and requires a score of 75 percent in order to receive a passing grade. 
Customs stated that the October 2016 examination was written using the following references:
  – Harmonized Tariff Schedule of the United States (2016 Basic Edition, No Supplements)
  – Title 19, Code of Federal Regulations (2016, Parts 1 to 199)
  – Customs and Trade Automated Interface Requirements (CATAIR) (ACE)
  – Appendix B – Valid Codes
  – Appendix G – Common Errors
  – Appendix H – Census Warning and Override Codes
  – Instructions for Preparation of CBP Form 7501 (July 24, 2012)
  – Right to Make Entry Directive 3530-002A
Guidelines to register for the exam will posted on CBP’s website. Registrations should be open in late January 2017.
The Announcement can be viewed online here.

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11. D.M. Edelman: “CFIUS’ Global Reach – Users of U.S. Controlled Technology Beware”

* Author: Doreen M. Edelman, Esq., Baker Donelson LLP, 202-508-3460, dedelman@bakerdonelson.com
The U.S. government, and we mean the pre-Trump administration at that, has blocked an acquisition of a foreign company by another foreign company. The concern is that the target company has a U.S. presence and has access to high-end technology that is controlled by the International Trafficking in Arms Regulations (ITAR). If you are not aware of the Committee on Foreign Investment in the United States (CFIUS) now is a good time to ensure you at least know when to look it up.
Earlier this month, the President issued an Executive Order effectively blocking Fujian Grand Chip Investment Fund LP’s acquisition of Aixtron SE, a German semiconductor company with a U.S. subsidiary, Aixtron, Inc. The Executive Order was issued after CFIUS had determined that the deal posed national security risks to the U.S. that could not be mitigated. The result was that both companies were forced to walk away from a $752 million transaction.
The Executive Order marked the third time that an acquisition has either been blocked or unwound by the President. The blocking of the Aixtron deal indicates an increased scrutiny of acquisitions involving sensitive technology with potential military application, i.e. ITAR-controlled technology.  Such scrutiny is likely to increase under the incoming Administration as members of political parties in both houses of Congress have expressed a desire to expand CFIUS’s role.
It is important to think about CFIUS in the early stages of a negotiation to acquire/sell any company with any controlled items, services, or technology/technical data. In short, it is important to anticipate any possible CFIUS issues and determine if there is a way to mitigate the government’s concerns.  While this is not a new issue, it is apparent that there is a wide jurisdictional net and broad scrutiny over certain types of deals, particularly those involving Chinese control.

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12. FD Associates: “DSP Form Change Effective January 3, 2017”
(Source: FD Associates, info@fdassociates.net) [Excerpts.]
Due to changes to U.S. Munitions List (“USML”) Categories VIII, XII, XIV, XVIII and XIX that go into effect on December 31, 2016, the Department of State will be issuing updated versions of the DTrade DSP forms, version 9.3. The updated versions of the DTrade DSP forms must be utilized for filing starting January 3, 2017. After 6 P.M. December 30, 2016 DTrade will not accept the old DTrade DSP forms, version 9.2. DTrade will be down between December 31, 2016 and January 2, 2017.

This change affects all export transactions including agreements which use DSP-5 forms as the submission vehicle.  . . .
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13. R.C. Burns: “How the OFAC Gave Back Christmas”

Export Law Blog
. Reprinted by permission.)
* Author: R. Clifton Burns, Esq., Bryan Cave LLP, Wash DC,
, 202-508-6067)
Before leaving for the holidays, I thought it would be appropriate to repost the good news that we received earlier this year regarding Santa’s annual toy delivery being finally released from OFAC restrictions on his route.

MEDIA CONTACT: Elf E. McElfface, eemcelfface@gmail.com or (951) 262-3062

Santa’s Village, North Pole
– Santa Claus today, on behalf of himself, Mrs. Claus and the 40,000 elfployees of the Santa Foundation, expressed his gratitude to the Office of Foreign Assets Control for its timely revision of its rules to grant Santa clear authority this year to visit children both in the United States and Cuba. For years, Santa’s efforts to bring holiday cheer to children of both countries has been thwarted by section 515.207 of the Cuba regulations which would prohibit Santa’s sleigh from landing in the United States while toys for Cuban children remained in the sleigh or in landing in the United States if those toys had been delivered to Cuban children first.
Today’s action waives these restrictions if Santa’s sleigh only carries items that would, if they were subject to the EAR, be EAR99 or controlled only for AT reasons. This ends the long struggle over whether teddy bears and other toys – which are not food, medicine, or personal communications devices – could only be delivered to Cuban children in wrapped parcels with the child’s name and address written on the outside and with the statement “GIFT-Export License Not Required” also marked on the parcel package. Notwithstanding the diligence and timely efforts of Santa’s elfployees, compliance with these requirements for each non-naughty child in Cuba has heretofore been impossible.
News of the OFAC announcement led to loud cheers and applause throughout Santa’s Village. Elf E. McElfface, Santa’s spokeself, wiped a tear of joy from his eye as he said to the elves in one of Santa’s workshops that he never believed that this would occur in his lifetime, which was saying a lot given that the average life expectancy of an elf on the North Pole is currently just over 500 years.
As Christmas approaches, Santa said that he was looking forward to this year’s delivery of toys and goodies to the nice children throughout the world more than ever before and reminded children everywhere, both in Cuba and the United States, that they could call his hotline at +1 (951) 262-3062 to leave their Christmas wishes and toy requests.
This press release may include predictions, estimates or other information that might be considered forward-looking. While these forward-looking statements represent the Santa Foundation’s current judgment on what the future holds, they are subject to risks and uncertainties that could cause actual results to differ materially. You are cautioned not to place undue reliance on these forward-looking statements, which reflect our opinions only as of the date of this press release. Please keep in mind that we are not obligating ourselves to revise or publicly release the results of any revision to these forward-looking statements in light of new information or future events.
I hope all Export Law Blog readers are able to take some time off and enjoy the holidays with their family and friends. See you in 2017!

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(Source: Editor)

Abigail Adams (Abigail Adams, née Smith; 22 Nov 1744 – 28 Oct 1818, was the wife and closest advisor of John Adams, as well as the mother of John Quincy Adams. She is sometimes considered to have been a Founder of the United States, and is now designated as the first Second Lady and second First Lady of the United States, although these titles were not in use at the time.)

  – “I’ve always felt that a person’s intelligence is directly reflected by the number of conflicting points of view he can entertain simultaneously on the same topic.”

Jean Racine (22 Dec 1639 – 21 Apr 1699, was a French dramatist, one of the three great playwrights of 17th-century France, along with Molière and Corneille.)

  – “There is nothing so easy but that it becomes difficult when you do it with reluctance.”

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. Are Your Copies of Regulations Up to Date?
(Source: Editor)

The official versions of the following regulations are published annually in the U.S. Code of Federal Regulations (C.F.R.), but are updated as amended in the Federal Register.  Changes to applicable regulations are listed below.
: 27 CFR Part 447-Importation of Arms, Ammunition, and Implements of War
  – Last Amendment: 15 Jan 2016: 81 FR 2657-2723: Machineguns, Destructive Devices and Certain Other Firearms; Background Checks for Responsible Persons of a Trust or Legal Entity With Respect To Making or Transferring a Firearm 
: 19 CFR, Ch. 1, Pts. 0-199
  – Last Amendment: 20 Dec 2016: 81 FR 92978-93027: Regulatory Implementation of the Centers of Excellence and Expertise 

  – Last Amendment: 18 May 2016: Change 2: Implement an insider threat program; reporting requirements for Cleared Defense Contractors; alignment with Federal standards for classified information systems; incorporated and canceled Supp. 1 to the NISPOM  (Summary here.)

  – Last Amendment: 16 Dec 2016: 81 FR 90983-90987: Implementation of the February 2016 Australia Group (AG) Intersessional Decisions and the June 2016 AG Plenary Understandings 

: 31 CFR, Parts 500-599, Embargoes, Sanctions, Executive Orders
  – Last Amendment: 4 Nov 2016: 81 FR 76861-76863: Amendments to OFAC Regulations To Remove the Former Liberian Regime of Charles Taylor Sanctions Regulations and References to Fax-on-Demand Service 
: 15 CFR Part 30
  – Last Amendment: 15 May 2015; 80 FR 27853-27854: Foreign Trade Regulations (FTR): Reinstatement of Exemptions Related to Temporary Exports, Carnets, and Shipments Under a Temporary Import Bond 
  – HTS codes that are not valid for AES are available
  – The latest edition (9 Mar 2016) of Bartlett’s Annotated FTR (“BAFTR”), by James E. Bartlett III, is available for downloading in Word format. The BAFTR contains all FTR amendments, FTR Letters and Notices, a large Index, and footnotes containing case annotations, practice tips, and Census/AES guidance.  Subscribers receive revised copies every time the FTR is amended. The BAFTR is available by annual subscription from the Full Circle Compliance website.  BITAR subscribers are entitled to a 25% discount on subscriptions to the BAFTR.
, 1 Jul 2016: 19 USC 1202 Annex.  (“HTS” and “HTSA” are often seen as abbreviations for the Harmonized Tariff Schedule of the United States Annotated, shortened versions of “HTSUSA”.)
  – Last Amendment: 16 Dec 2016; Harmonized System Update (HSU) 1614, containing 27,913 ABI records and 4,820 harmonized tariff records.  
  – HTS codes for AES are available
  – HTS codes that are not valid for AES are available
  – Latest Amendment: 5 Dec 2016 (effective 5 Dec 2016): 81 FR 87427-87430: Corrections & Additions to ITAR Parts 120, 121, 122, 124, 126 and 127
  – The only available fully updated copy (latest edition 9 Dec 2016) of the ITAR with all amendments is contained in Bartlett’s Annotated ITAR (“BITAR”), by James E. Bartlett III.  The BITAR contains all ITAR amendments to date, footnotes to amendments that will take on 31 December 2016, plus a large Index, over 750 footnotes containing case annotations, practice tips, DDTC guidance, and explanations of errors in the official ITAR text.  Subscribers receive updated copies of the BITAR in Word by email, usually revised within 24 hours after every ITAR amendment.  The BITAR is available by annual subscription from the Full Circle Compliance website.  BAFTR subscribers receive a 25% discount on subscriptions to the BITAR, please contact us to receive your discount code.  

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* The Ex/Im Daily Update is a publication of FCC Advisory B.V., edited by James E. Bartlett III and Alexander Bosch, and emailed every business day to approximately 8,000 subscribers to inform readers of changes to defense and high-tech trade laws and regulations. We check the following sources daily: Federal Register, Congressional Record, Commerce/AES, Commerce/BIS, DHS/CBP, DOJ/ATF, DoD/DSS, DoD/DTSA, State/DDTC, Treasury/OFAC, White House, and similar websites of Australia, Canada, U.K., and other countries and international organizations.  Due to space limitations, we do not post Arms Sales notifications, Denied Party listings, or Customs AD/CVD items.

* RIGHTS & RESTRICTIONS: This email contains no proprietary, classified, or export-controlled information. All items are obtained from public sources or are published with permission of private contributors, and may be freely circulated without further permission. Any further use of contributors’ material, however, must comply with applicable copyright laws.

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