17-0207 Tuesday “The Daily Bugle”

17-0207 Tuesday “The Daily Bugle”

Tuesday, 7 February 2017

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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  1. State: Advisory Committee on International Economic Policy to Meet on 28 Feb in Wash DC 
  1. Ex/Im Items Scheduled for Publication in Future Federal Register Editions
  2. Commerce/Census Updates Appendix U – HTS/Schedule B Classifications Requiring Used Vehicle Reporting 
  3. Commerce/BIS: (No new postings.) 
  4. State/DDTC: (No new postings.)
  5. EU Implements Certain Specific Restrictive Measures Concerning the Democratic Republic of the Congo
  1. The Des Moines Register: “Lebanese Man Arrested in Iowa-Based Gun Smuggling Scheme”
  2. ST&R Trade Report: “Trade Enforcement Could be Hindered by Hiring Freeze, Senators Say”
  1. D. Vieira, M. Mannino & Weiheng Chen: “Report on U.S. Semiconductor Industry Raises Implications for PRC Investments in U.S. Companies” 
  2. J.C. Poling, W.H. Segall & K.J. Wolf: “OFAC Eases Certain Sanctions Involving Russia’s FSB; BIS Licensing Still Required” 
  3. M. Volkov: “Walking the Walk and Talking the Talk – A CEO’s Commitment to Ethics and Compliance” 
  4. Gary Stanley’s ECR Tip of the Day 
  1. ECTI Presents Faculty or Consultant? Implications for University Export Compliance Webinar – 16 Mar 
  1. Bartlett’s Unfamiliar Quotations 
  2. Are Your Copies of Regulations Up to Date? Latest Changes: ATF (15 Jan 2016), Customs (27 Jan 2017), DOD/NISPOM (18 May 2016), EAR (1 Feb 2017), FACR/OFAC (17 Jan 2017), FTR (15 May 2015), HTSUS (1 Jan 2017), ITAR (11 Jan 2017) 


EXIM_a11. State: Advisory Committee on International Economic Policy to Meet on 28 Feb in Wash DC 

82 FR 9627-9628: Advisory Committee on International Economic Policy; Notice of Open Meeting
   The Advisory Committee on International Economic Policy (ACIEP) will meet from 2:00 until 5:00 p.m., on Tuesday, February 28, in Washington, DC at the State Department, 320 21st St. NW. The meeting will be hosted by the Acting Assistant Secretary of State for Economic and Business Affairs, Patricia M. Haslach, and Committee Chair Paul R. Charron. The ACIEP serves the U.S. government in a solely advisory capacity, and provides advice concerning topics in international economic policy. It is expected that during this meeting, the ACIEP subcommittee on sanctions policy and the Stakeholder Advisory Board will provide updates on their recent work.
   This meeting is open to the public, though seating is limited. Entry to the building is controlled. To obtain pre-clearance for entry, members of the public planning to attend must, no later than Tuesday, February 21, provide their full name and professional affiliation (if any) to Alan Krill by email: KrillA@state.gov. Requests for reasonable accommodation should also be made to Alan Krill before Tuesday, February 21. Requests made after that date will be considered, but might not be possible to fulfill.
   For additional information, contact Alan Krill, Bureau of Economic and Business Affairs, at (202) 647-2231, or KrillA@state.gov.
Alan Krill, Designated Federal Officer, U.S. Department of State.

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OGS_a12. Ex/Im Items Scheduled for Publication in Future Federal Register Editions

(Source: Federal Register)
* Foreign Assets Control Office; NOTICES; Blocking or Unblocking of Persons and Properties [Publication Date: 8 February 2017.]

* U.S. Customs and Border Protection; NOTICES; Agency Information Collection Activities; Proposals, Submissions, and Approvals [Publication Date: 8 February 2017.]:
  – Importation Bond Structure
  – Temporary Scientific or Educational Purposes

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OGS_a53. Commerce/Census Updates Appendix U – HTS/Schedule B Classifications Requiring Used Vehicle Reporting

(Source: census@subscriptions.census.gov, 6 Feb 2017.)
Effective immediately, Appendix U – HTS/Schedule B Classifications Requiring Used Vehicle Reporting Updated of the Automated Export System Trade Interface Requirements (AESTIR) has been updated.
Appendix U – HTS/Schedule B Classifications Requiring Used Vehicle Reporting Updated can be found here.
For further information or questions, contact the U.S. Census Bureau’s Data Collection Branch.
  – Telephone: (800) 549-0595, select option 1 for AES.
  – Email: askaes@census.gov
  – Online: www.census.gov/trade
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OGS_a24. Commerce/BIS: (No new postings.)

(Source: Commerce/BIS)
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State/DDTC: (No new postings.)

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OGS_a46. EU Implements Certain Specific Restrictive Measures Concerning the Democratic Republic of the Congo

Council Implementing Regulation (EU) 2017/199
of 6 February 2017 implementing Article 9(5) of Regulation (EC) No 1183/2005 imposing certain specific restrictive measures directed against persons acting in violation of the arms embargo with regard to the Democratic Republic of the Congo

  Council Implementing Decision (CFSP) 2017/203 of 6 February 2017 implementing Decision 2010/788/CFSP concerning restrictive measures against the Democratic Republic of the Congo

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A man from Lebanon has been arrested in connection with a scheme to smuggle guns purchased in Iowa to his country.
Federal authorities arrested 42-year-old Fadi Yassine this week as he got off a flight in New York City.
He made a court appearance Monday in Brooklyn, New York and will be transferred to Cedar Rapids to face charges of conspiring to violate the Arms Export Control act.
Four Cedar Rapids residents with ties to Lebanon were sentenced to prison for their role in the conspiracy last year.
Investigators say that Yassine purchased guns in Lebanon that the Iowa residents had shipped there, and told one of the conspirators which guns to purchase. Yassine is also accused of giving one of the conspirators $30,000 cash to buy more guns.
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Nine senators have asked President Trump to end the federal civilian hiring freeze he announced Jan. 23 as it applies to employees responsible for trade enforcement. The lawmakers argued that the freeze runs contrary to Trump’s campaign vow to make enforcement the center of his trade reform plan, particularly given the additional enforcement responsibilities conferred on federal agencies by the Trade Facilitation and Trade Enforcement Act of 2015.
Specific initiatives the senators warned could be negatively affected by the hiring freeze include the following.
  – the Department of Commerce’s work to combat dumping of steel, softwood lumber, and other commodities
  – U.S. Customs and Border Protection’s identification and investigation of companies that are failing to pay import duties, importing counterfeit merchandise, or otherwise violating U.S. trade laws
  – the Office of the U.S. Trade Representative’s investigation and prosecution of trade barriers in China and other countries that fail to comply with their international obligations
  – the Department of Labor’s Bureau of International Labor Affairs’ identification of cases in which foreign governments are violating labor commitments or foreign companies are producing goods using child or forced labor
  – the U.S. Fish and Wildlife Service’s investigation of illegal trafficking in endangered species and stolen timber
  – the Department of Justice’s defense of U.S. trade remedy actions and prosecution of companies that violate U.S. trade laws
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COMM_a49. D. Vieira, M. Mannino & Weiheng Chen: “Report on U.S. Semiconductor Industry Raises Implications for PRC Investments in U.S. Companies”
(Source: WSGR Alert, 6 Feb 2017) 
* Authors: Donald Vieira, Esq., dvieira@wsgr.com; Melissa Mannino, Esq., mmannino@wsgr.com; and Weiheng Chen, wchen@wsgr.com.  All from Wilson Sonsini Goodrich & Rosati (WSGR). 
In January 2017, the President’s Council of Advisors on Science and Technology (PCAST) issued a report to then President Barack Obama titled “Ensuring Long-Term U.S. Leadership in Semiconductors.”1 The report assesses the state of the U.S. semiconductor industry, concluding that there is an emerging threat to U.S. national security interests posed by the industrial policies of the People’s Republic of China (PRC) and certain other factors. The report also makes recommendations to bolster and protect the U.S. semiconductor industry from the assessed threats. This WSGR Alert focuses on the report’s analysis and recommendations relating to the Committee on Foreign Investment in the United States (CFIUS), the unilateral U.S. national security tool, focusing particularly on how CFIUS review of PRC investments into U.S. businesses can help combat PRC policies that put U.S. national security at risk.  Click HERE to read the full article.
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COMM_a110. J.C. Poling, W.H. Segall & K.J. Wolf: “OFAC Eases Certain Sanctions Involving Russia’s FSB; BIS Licensing Still Required”

* Authors: Jonathan C. Poling, Esq., jpoling@akingump.com, 202-887-4029; Wynn H. Segall, Esq., wsegall@akingump.com, 202-887-4573; Kevin J. Wolf, Esq., kwolf@akingump.com, 202-887-4051.
On February 2, 2017, the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) issued Cyber-related General License (GL) 1, a general license that authorizes certain transactions with Russia’s Federal Security Service (Federalnaya Sluzhba Bezopasnosti or FSB). GL 1 authorizes U.S. persons (i.e., individuals and companies) to request, receive, use, pay for or deal in licenses, permits, certifications, or notifications issued or registered by the FSB for information technology (IT) products in Russia, provided that (i) the relevant IT goods or technology are subject to the U.S. Export Administration Regulations (EAR) and are licensed or otherwise authorized by the U.S. Department of Commerce’s Bureau of Industry and Security (BIS); and (ii) payment of fees to the FSB for such licenses and other authorization or notification does not exceed $5,000 in any calendar year. GL 1 also authorizes transactions or activities that are necessary and ordinary incident to complying with law enforcement or administrative actions or investigations involving the FSB or rules and regulations administered by the FSB.
GL 1 is a technical fix to earlier sanctions restrictions imposed by OFAC on the FSB in December 2016 in response to Russia’s alleged cyber-related interference in the 2016 U.S. elections. Please see our previous client alert here. OFAC issued GL 1 in response to complaints from U.S. companies that were unable to import many consumer technology products into Russia without a permit from the FSB, Russia’s principal security agency.
GL 1 does not authorize the exportation, reexportation or provision of goods, technology or services to the Crimea region of Ukraine. GL 1 also does not authorize the export, reexport, or provision of goods or technology to or on behalf of the FSB, except for the limited purposes described above and authorized under GL 1. Moreover, the FSB remains on BIS’s Entity List at this time. Accordingly, until such time as BIS removes the FSB from its Entity List, additional licensing requirements and restrictions apply to any contemplated exports, reexports and transfers of products subject to the EAR to the FSB. BIS has also implemented a presumption-of-denial policy to any license applications for exports, reexports or transfers to the FSB.

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COMM_a211. M. Volkov: “Walking the Walk and Talking the Talk – A CEO’s Commitment to Ethics and Compliance”

* Author: Michael Volkov, Esq., Volkov Law Group, mvolkov@volkovlaw.com, 240-505-1992.
The phrase “tone at the top” is becoming trite. Compliance professionals use it over and over, and few people explain how to apply the concept.   Speakers and webinar presenters always gloss over tone at the top, emphasizing its importance but providing little practical advice. In some sense, it is hard to define in specific actions since the context and the actors can vary with respect to personalities, role in the company, and overall corporate culture.
No two companies share the same culture. By definition, a company’s culture is specific to the company, its history, its roots, its leadership and DNA. So, how should we start to explain helpful principles and practices?
I am skeptical of complex explanations, programs and advice. Compliance professionals and corporate leaders want suggestions, direction and some bottom line advice.
Depending on the range of corporate clients, and the number of clients, there are some common traits that can help to define practical actions that appear to work, or at least advance a company’s ethical tone.
CEO and senior leadership commitment: I know this falls into the category of obvious and general characteristics bear with me as I explain what I mean.
When a CEO and senior executives make video, annual or company meeting statements of commitment to a company’s culture – that is nothing really special. The true test of CEO and senior executive commitment is whether they express these same values in day-to-day activities, internal discussions, meetings, and interactions with outside parties. I know this sounds obvious but if the only time you hear about the company’s ethical principles is at corporate organization-wide or sector-wide meetings, there is more work to be done. To me, the absence of a commitment each day to a company’s ethical principles reflects the lack of a true embrace of the importance of trust and integrity.
Beyond articulating ethical values and principles, there are a number of steps and activities that demonstrate a real commitment. These include:
  – Integration of ethics and compliance at business meetings
  – Specific decision where CEO or senior executives explain that ethical principles transcend short-term financial gain from a business opportunity
  – Commitment to training and certifications by volunteering to complete training before other managers and employees
Speaking before small groups (e.g. new employee orientation) to emphasize importance of ethics and compliance
  – Written newsletters, videos, postings on intranet portal, and updated materials (more than once a year) explaining importance of ethics and compliance and commitment to hearing and responding to employee concerns, questions and comments
  – Symbolic acts of commitment to ethics and compliance such as small group meetings to listen to employee concerns, follow up on issues learned from employees, and communications of efforts to address employee concerns
  – Familiarity with company’s code of conduct, citation of provisions in company meetings and statements of support
  – Sympathetic expressions to managers and employees that reflect empathy and understanding of challenges they face working in the company and validate their desire to advance and improve in the company
  – Specific action steps to improve facilities, quality of life for managers and employees, and overall working conditions as part of commitment to ethics and compliance
  – A personal story of sacrifice of personal benefit to advance a common company goal or improvement of management and employee working conditions and opportunities.
This list is not meant to be exhaustive and can easily be modified to address other opportunities. Whatever actions are taken, a CEO and senior executives who are committed to advance a company’s ethical culture will find plenty of opportunities to demonstrate such commitment.
If the commitment is lacking, there is a little you can do as a compliance professional. After all, you can lead a horse to water, but in the end, you cannot make the horse (CEO and senior executives) drink.

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COMM_a312. Gary Stanley’s ECR Tip of the Day

(Source: Defense and Export-Import Update; available by subscription from
* Author: Gary Stanley, Esq., Global Legal Services, PC, (202) 352-3059,
EAR Part 772 defines the term “accessories” as associated items for any “component,” “end item,” or “system,” and which are not necessary for their operation, but which enhance their usefulness or effectiveness. For example, for a riding lawnmower, “accessories” and “attachments” will include the bag to capture the cut grass, and a canopy to protect the operator from the sun and rain. For purposes of this definition, “accessories” and “attachments” are the same.

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TE_a113. ECTI Presents Faculty or Consultant? Implications for University Export Compliance Webinar – 16 Mar

(Source: Danielle McClellan, danielle@learnexportcompliance.com)

* What: The Fundamentals of Product Classification
* When: March 16, 2017; 1:00 p.m. (EDT)
* Where: Webinar
* Sponsor: Export Compliance Training Institute (ECTI)
* ECTI Speaker: Jennifer Saak
* Register: Here or Danielle McClellan, 540-433-3977, danielle@learnexportcompliance.com.

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(Source: Editor)

* Sir Thomas More (7 Feb 1478 – 6 Jul 1535, venerated by Roman Catholics as Saint Thomas More, was an English lawyer, social philosopher, author, statesman and noted Renaissance humanist. He was also a councilor to Henry VIII, and Lord High Chancellor of England from October 1529 to 16 May 1532. He also wrote Utopia, published in 1516, about the political system of an imaginary ideal island nation.)

  – “If honor were profitable, everybody would be honorable.”

  – “Love me, love my hound.” 

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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: 27 Jan 2017: 82 FR 8589-8590: Delay of Effective Date for Importations of Certain Vehicles and Engines Subject to Federal Antipollution Emission Standards; and 82 FR 8590: Delay of Effective Date for Toxic Substance Control Act Chemical Substance Import Certification Process Revisions 

  – 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: 1 Feb 2017: 82 FR 8893-8894: Commerce Control List: Removal of Certain Nuclear Nonproliferation (NP) Column 2 Controls

: 31 CFR, Parts 500-599, Embargoes, Sanctions, Executive Orders
  – Last Amendment: 17 Jan 2017: 82 FR 4793-4794: Sudanese Sanctions Regulations 
: 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 Jan 2017: 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: 1 Jan 2017: 2017 Basic HTS  
  – HTS codes for AES are available
  – HTS codes that are not valid for AES are available
  – Latest Amendment: 11 Jan 2017: 82 FR 3168-3170: 2017 Civil Monetary Penalties Inflationary Adjustment
 – The only available fully updated copy (latest edition 24 Jan 2017) 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, 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
.  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.

* CAVEAT: The contents cannot be relied upon as legal or expert advice.  Consult your own legal counsel or compliance specialists before taking actions based upon news items or opinions from this or other unofficial sources.  If any U.S. federal tax issue is discussed in this communication, it was not intended or written by the author or sender for tax or legal advice, and cannot be used for the purpose of avoiding penalties under the Internal Revenue Code or promoting, marketing, or recommending to another party any transaction or tax-related matter.

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