17-0321 Tuesday “The Daily Bugle”

17-0321 Tuesday “The Daily Bugle”

Tuesday, 21 March 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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[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. DHS/CBP Sends Out Update on Two EPA Rules, Effective Today 
  4. State/DDTC Announces DTAS System Outage on 24 Mar
  5. State/DDTC Posts Name Change for Wesco Aircraft Europe Ltd. and Haas Group International SCM Ltd.
  6. EU Amends Restrictive Measures Against Syria
  7. EU Parliament Approves Revised EU Gun Law to Close Security Loopholes
  8. BAFA Publishes Latest Export Control Newsletter
  1. Defense News: “Uncertainty at State Department Holding Up New Agreement on Armed Drones” 
  2. ST&R Trade Report: “CBP Sets Interim Electronic Processing Steps for Temporary Importation Bonds” 
  3. ST&R Trade Report: “Improving CBP Ruling Process is Focus of Trade Recommendations” 
  1. A. Baj & E. Krauland: “US Commerce Requirements for Hong Kong Effective in Mid-April” 
  2. R.R. Sanchez & S.W. Ebner: “New Cyber Rules to Safeguard Supply Chain” 
  1. Personal Message to Sue Daniels of Bozeman, Montana 
  2. Bartlett’s Unfamiliar Quotations 
  3. Are Your Copies of Regulations Up to Date? Latest Changes: ATF (15 Jan 2016), Customs (27 Jan 2017), DOD/NISPOM (18 May 2016), EAR (24 Feb 2017), FACR/OFAC (10 Feb 2017), FTR (15 May 2015), HTSUS (7 Mar 2017), ITAR (11 Jan 2017) 


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OGS_a11. Ex/Im Items Scheduled for Publication in Future Federal Register Editions

(Source: Federal Register)

[No items of interest noted today.]
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OGS_a22. Commerce/BIS: (No new postings.)

(Source: Commerce/BIS

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OGS_33DHS/CBP Sends Out Update on Two EPA Rules, Effective Today

CSMS# 17-000155, 21 Mar 2017.)
New ACE Programming
On January 25, 2017, U.S. Customs and Border Protection (CBP) issued CSMS 17-000033 announcing that the Office of the Federal Register placed on its public inspection website two notices delaying the effective dates of two final rules from January 26, 2017, to March 21, 2017. The two final rules amend the CBP regulations relating to:
  (1) The importation into the United States of certain vehicles and engines under the Clean Air Act in order to harmonize the documentation requirements applicable to different classes of vehicles and engines that are subject to the CAA’s emission standards (81 FR 94974); and
  (2) The requirement to file a Toxic Substances Control Act (TSCA) certification when importing into the customs territory of the United States chemicals in bulk form or as part of mixtures and articles containing a chemical or mixture (81 FR 94980).
Both final rules amended the regulations to permit importers to file the required Environmental Protect Act (EPA) documents with CBP electronically.
In accordance with the Federal Register notices published on January 27, 2017,
the two final rules are in effect TODAY, March 21, 2017.
[Editor’s note: the Federal Register notices of the two final rules were included in the Daily Bugle of Friday, 27 January 2017, item #2 and #3 respectively, and are available here and here.] 

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State/DDTC Announces DTAS System Outage on 24 Mar

The DTAS information systems will be unavailable from 6:00-9:00PM March 24, 2017 due to scheduled routine maintenance.

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OGS_55State/DDTC Posts Name Change for Wesco Aircraft Europe Ltd. and Haas Group International SCM Ltd.

State/DDTC) [Excerpts.]
Effective April 1, 2017, Wesco Aircraft Europe Ltd. and Haas Group International SCM Ltd. (inclusive of their operating divisions RD Taylor and Fasteq) (collectively Wesco) will change as follows: Wesco Aircraft EMEA, Ltd. (Wesco EMEA). Due to the volume of authorizations requiring amendments to reflect this change, the Deputy Assistant Secretary for Defense Trade Controls is exercising the authority under 22 CFR 126.3 to waive the requirement for amendments to change currently approved license authorizations. The amendment waiver does not apply to approved or pending agreements. …

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OGS_66EU Amends Restrictive Measures Against Syria

Council Implementing Regulation (EU) 2017/480 of 20 March 2017 implementing Regulation (EU) No 36/2012 concerning restrictive measures in view of the situation in Syria.

  – Council Implementing Decision (CFSP) 2017/485 of 20 March 2017 implementing Decision 2013/255/CFSP concerning restrictive measures against Syria.

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OGS_77EU Parliament Approves Revised EU Gun Law to Close Security Loopholes

Tighter controls on blank-firing and inadequately deactivated weapons, like those used in the Paris terror attacks, and an obligation for EU member states to have an appropriate monitoring system in place for the issuance or renewal of licenses and to exchange information, are among the updates approved by MEPs to the 1991 firearms directive on Tuesday.
The provisional deal on the EU firearms directive reached by Parliament and Council negotiators last December was endorsed by the full House by 491 votes to 178, with 28 abstentions.
  “Over the past 18 months I and colleagues across this Parliament have worked with many different stakeholders, as well as law enforcement authorities, proof houses and legal experts, in order to protect the interests of legitimate owners whilst also addressing the security issues. The Parliament text has made many significant improvements. The changes that we have now agreed will close the loophole and be an important contribution to our security, whilst also respecting the rights of legal owners”, said Vicky Ford (ECR, UK), who steered this legislation through Parliament.
Preventing Guns Falling Into the Wrong Hands
EU countries will have to enforce tougher controls on blank-firing “acoustic” firearms, which can be easily converted to fire live ammunition. These firearms were used in the 2015 Charlie Hebdo terrorist attacks.
Today, acoustic firearms can be sold without authorization in some EU countries, but under the updated directive, they will have to remain licensed under the same rules as the original live-firing version.
Irreversible Deactivation
The revised directive also strengthens the rules on marking firearms and clarifies the status of “deactivated” weapons (newly deactivated guns will have to be declared to national authorities). Following pressure from Parliament, the EU Commission pledged to adopt, by the end of May 2017 and in collaboration with national experts,
revised deactivation standards and techniques for ensuring that deactivated firearms are rendered irreversibly inoperable.
There are new, stricter controls on certain semi-automatic firearms when they are fitted with high capacity magazines ((i.e. over 20 rounds in short semi-automatics and over ten in long ones) and on automatic firearms that have been converted into semi-automatics. However, individuals who legally own these today will be able to continue to do so provided their own member state agrees.
Member states will be able to grant “Category A” authorizations to certain types of individuals, e.g. target shooters and reservists, as well as to recognized museums and, in exceptional and duly reasoned cases, to collectors, subject to strict security measures.
The new rules also require that all information needed to trace and identify firearms be recorded in national data-filing systems and that arrangements be made to improve the exchange of information between member states.
You can find more information on the revised directive in this
background note.
Next steps
The draft law still needs to be formally approved by the other co-legislator, the EU Council of Ministers.
Member states will have 15 months from the date of entry into force of the directive to transpose the new rules into national law and 30 months to put in place data-filling systems for registering all information needed in order to trace and identify firearms.

Note: The 1991 EU firearms directive, last updated in 2008, sets out the conditions under which private persons may lawfully acquire and possess guns or transfer them to another EU country. In the
European Agenda on Security for 2015-2020, the EU Commission said it would review the existing firearms legislation to improve information sharing, reinforce traceability, standardize marking, and establish common standards for neutralizing firearms.

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OGS_88. BAFA Publishes Latest Export Control Newsletter

German BAFA)
The Information Service of the German Federal Office for Economic Affairs and Export Control (BAFA) has published the latest issue (March 2017) of its Export Control Newsletter.  The content of the newsletter is included below.
With the Commission Implementing Regulation (EU) 2017/184 of 1 February 2017 (OJ L 29 of 3.2.2017, p. 19) amending Council Regulation (EC) No. 1210/2003 concerning certain specific restrictions on the economic and financial relations with Iraq, one entry was removed from the list of persons and entities to whom the freezing of funds and economic resources applies.
The amendment implements the resolution adopted by the Sanctions Committee of the United Nations Security Council on 26 January 2017.
Democratic Republic of Congo
The Council Implementing Regulation (EU) 2017/199 of 6 February 2017 (OJ L 32 of 7.2.2017, p. 1) amending 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 updated the identifying information related to 21 persons and one entity listed in Annex I to Regulation (EC) No. 1183/2005.
The Council Implementing Regulation (EU) 2017/149 of 27 January 2017 (OJ L 23 of 28.1.2017, p. 1) implementing Regulation (EU) No. 101/2011 concerning restrictive measures directed against certain persons, entities and bodies in view of the situation in Tunisia updated the identifying information related to two persons listed in Annex I to Regulation (EU) No. 101/2011.
Al Qaida and ISIL (Da´esh)
With the Commission Implementing Regulations (EU) 2017/142 of 26 January 2017 (OJ L 22 of 27.1.2017, p. 54) and (EU) 2017/221 of 8 February 2017 (OJ L 34 of 9.2.2017, p. 30) amending for the 258th and 259th times Regulation (EC) No. 881/2002 imposing certain specific restrictive measures directed against certain persons and entities associated with the ISIL (Da´esh) and Al-Qaida organisations, one entry was amended and one entry was removed from the list in Annex I to Regulation (EC) No. 881/2002.
The amendments implement the resolutions adopted by the Sanctions Committee of the United Nations Security Council on 19 January and 3 February 2017.
Measures Directed Against Other Terrorism Suspects
In accordance with the Council Implementing Regulation (EU) 2017/150 of 27 January 2017 (OJ L 23 of 28.1.2017, p. 3) implementing Article 2 (3) of Regulation (EC) No. 2580/2001 on specific restrictive measures directed against certain persons and entities with a view to combating terrorism, and repealing Implementing Regulation (EU) 2016/1127, the list of persons, groups and entities was updated under Article 2 (3) of Regulation (EC) No. 2580/2001.
Extension and amendment of General Licences No. 12 to No. 27
General Licence (in German).
Information Leaflet on Iran Updated
The Information Leaflet on the development of the
Iran embargo was updated.

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NWS_19. Defense News: “Uncertainty at State Department Holding Up New Agreement on Armed Drones”

Defense News)
In the waning days of the Obama administration, the U.S. State Department teamed with over 40 nations to issue a joint declaration on the use and export of armed drones. But with the election of Donald Trump, movement on the agreement has slowed to a crawl, with signatories onto a joint declaration agreeing to postpone a key meeting until the summer in order to give the Americans time to sort out how – or if – the new administration wants to proceed.
Speaking on background last month, a pair of senior State Department officials told Defense News they remain optimistic that the Trump administration will ultimately support the agreement, but acknowledged that allies are concerned about moving forward without a firm commitment from the new administration.
The one-page “Joint Declaration for the Export and Subsequent Use of Armed or Strike-Enabled Unmanned Aerial Vehicles (UAVs)” lists five general principals, in line with those established in 2015 by the United States, for the import and export of armed drones.
When it was released on Oct. 5, it was met with criticisms from both human-rights groups, who argued the language is too loose and does not do enough to curb the use of armed systems, as well as foreign producers such as Israel, who worried the language is designed to hurt their indigenous drone industry.
At the time, officials expected the declaration to move forward fairly quickly, with the signatories planning to meet in early 2017 to discuss next steps. But that is on hold while State seeks an understanding of how the Trump White House wants to handle the matter.
One major challenge for officials stems from the lack of political appointees. As of March 20, the only confirmed political appointees at the department are Secretary Rex Tillerson and Nikki Haley as the U.N. Ambassador, and there are only six other nominees announced – leaving 113 spots open without a nomination.
Those include relevant spots such as the under secretary for arms control and international security affairs, the under secretary for civilian security, democracy and human rights, and their assistant secretaries.
  “It may be a while before we have all the political leadership in place to be able to help give us a steer on what we’re doing,” the first official said, before noting that staff have had two meetings at the White House where the joint declaration was brought up.
While declining to describe the details of those discussions, the official said the process has “begun” in a “positive” manner, and stressed that those who signed the joint declaration remain enthusiastic about it going forward.  
The State officials acknowledged that major producers of unmanned systems, including Israel and China, have proven reluctant to sign on. And while State remains hopeful such producers may join up in the future, the two officials were realistic that as the only major producer to sign on, the other signees will take a lead from Washington – at a time when Washington doesn’t know if it will continue forward.
  “U.S. leadership on this effort as a practical matter is going to be difficult. We’re still filling key positions, we still don’t have ambassadors abroad. So what we’re looking forward to seeing is a truly international effort to make this happen,” the second official said.
Right now, that international effort has been fairly quiet. The planned early 2017 meeting has been pushed back to June in order to give the U.S. officials time to set policy, but in the meantime lines of communication remain open with key allies. The officials also said that they are keeping channels open for other UAV producers, in hopes of convincing them to join the joint declaration. 
One of the countries signed on to the document has agreed to host the June event, although the State officials declined to identify it. (They confirmed it would not be held at The Hague.)
Michael Horowitz, a former Pentagon official now with the University of Pennsylvania who has studied drone issues, is skeptical that any movement will happen without clear direction from the new administration. 
  “Until the relevant political appointments in the State Department occur, a significant change in UAS export policy is less likely simply for bureaucratic reasons. In the absence of a new political directive, or senior-level intervention on particular cases, the status quo is more likely to persist,” Horowitz said.
Adds Rachel Stohl, an arms control expert with the Stimson Center, “The joint declaration was an admirable step to address the concerns surrounding the continued proliferation in and use of armed drones, but there is tremendous uncertainty about what the follow-on process will look like and accomplish.
  “Unfortunately, as with so many other policy issues, it is unclear where the Trump administration stands on this process,” Stohl said. “Absent clear direction from the White House, no one at the State Department is in place to take ownership of the portfolio and guide the process.”
Since the roll-out, State has emphasized that this is not an agreement aimed at giving U.S. industry a leg over global competition. While that argument has largely fallen on deaf ears in Israel and other nations, American industry is certainly watching the results of the joint declaration closely – while gearing up for a broader push about drone regulations. 
Remy Nathan, vice president of international affairs with the Aerospace Industries Association, encouraged the new administration to take a thorough look at the joint declaration and make sure it’s in line with American interests.
  “The way you identify American interests in this technology and the use of this tech and the export of this tech – It’s all about the words,” he said. “It’s all about what words are first and then what words are second, what’s the phrasing, because we policy wonks start diving into the nuance to figure out the signals.”
In terms of the declaration being good for U.S. industry, Nathan said that the language should make sure “there be a positive consequence when countries sign on.”
Indeed, that appears to be happening. Guidance issued from the State Department notes that strike-enabled unmanned systems require exports to be cleared by the government in the usual manner – but that “it’s reasonable for you to assume that our closest allies, who contribute most to US and multilateral security efforts, and have the strongest records on factors like human rights and nonproliferation, are more likely to be approved for an export.”
Looking more broadly, Nathan reiterated a longstanding push from American industry groups to reform how the government classified unmanned systems, in particular over the way the Missile Technology Control Regime (MTCR) covers such systems.
The MTCR restricts exports of missiles and delivery vehicles capable of carrying 500-kilogram payloads for more than 300 kilometers, which has historically applied to drones; industry figures have pushed for the MTCR to be reformed so that systems such as the Global Hawk are not impacted.
  “There is a broad pattern of activity taking place out there that we’ve been talking about that other countries are doing their best to grow their own market share,” Nathan said. “And if you put some of these trend lines together, it’s a worrisome prospect about US standing when it comes to UAS exports, unless and until the new administration or Congress starts thinking about what do we want to achieve in maximizing U.S. interests when it comes to this technology, while still being respectful of our nonproliferation concerns.”
Adds Horowitz, “In theory, one could imagine the Trump administration loosening regulations on UAS exports in an effort to build partner capacity and promote U.S. exports abroad. But authority for arms exports ultimately lies with Congress, and it is too soon to say precisely how things will develop.” 

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NWS_a210. ST&R Trade Report: “CBP Sets Interim Electronic Processing Steps for Temporary Importation Bonds”

U.S. Customs and Border Protection recently issued an administrative message stating that with the implementation of Automated Commercial Environment cargo release functionality for all entry types and the subsequent policy decision to no longer require paper CBP forms 3461 or 7501 at the time of entry, a paperless process is needed for temporary importation bond entries to replace the export examination decision and stamp required by CBP regulations. CBP states that while a fully electronic transaction is being planned for this functionality, there is no known date of deployment or development. In the interim, the following steps should be taken for all type 23 TIB entries presented.
  – All entries are deemed to be “export examination not required” at the time of release unless designated otherwise.
  – CBP will review submitted TIBs on a regular basis to determine the need for export examination.
  – To maintain the paperless process, fully electronic entries will be designated for examination using the text message “export examination required” via the SO20 message set. This will most likely be sent to the filer post-release.
  – Any paper entries presented should continue to be stamped if an export examination is required.
  – At the time of export, a completed CBP Form 3495 should be presented at the port of export to identify the shipment to be examined and to record examination completion as per current procedures. In lieu of a stamped CBP Form 3461/7501, the original entry number, date of entry, and port of entry information should be provided as well as invoices, etc., from the original importation.
  – CBP will attempt to utilize system information wherever possible but the full automation of this information has not been completed and filers will still need to provide documentation as required.
  – Trade partners may request an export examination for any shipment where the examination was not required via the same process.
[Editor’s Note: The administrative message was included in the Thursday, 9 March 2017 Daily Bugle, item #4, and can be found

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NWS_a311. ST&R Trade Report: “Improving CBP Ruling Process is Focus of Trade Recommendations”

Citing continued requests from the trade community to improve the timeliness of U.S. Customs and Border Protection’s issuance of rulings and decisions, as well as the possibility that the Trump administration’s emphasis on enforcement and regulatory change could pose greater demands, the Commercial Customs Operations Advisory Committee approved 1 March a number of recommendations designed to improve the CBP ruling submission and issuance process. These recommendations were developed by the Rulings and Decisions Improvement Working Group of COAC’s Trade Modernization Subcommittee, which said the goal is to retain the high quality of existing rulings on issues such as classification, valuation, origin, preference programs, drawback, and other aspects of the entry and duty refund process while substantially improving communication with the trade community and the delivery time of the rulings. Senior CBP officials said that many of these recommendations are consistent with changes they have been considering internally but that further discussion between CBP and COAC is needed to prioritize which should be pursued first given the significant investments that would be required.
Subject matter expertise. In light of “the foreseeable, imminent shifts in U.S. trade and border policy” – ostensibly associated with the priorities expressed by the Trump administration as well as an executive order directing federal agencies to eliminate two regulations for every new one issued – COAC wants CBP to ensure that its Office of Regulations and Rulings has the necessary resources to maintain trade and other critical subject matter priorities.
CBP should also (1) help R&R attorneys take advantage of training programs provided to Centers of Excellence and Expertise and/or port personnel as well as those offered by universities, trade associations, and other institutions, and (2) consider placing R&R attorneys in the Centers and/or ports on a temporary duty basis (virtually, if possible) to enhance and/or facilitate R&R technical expertise and greater exposure to operational matters.
Automation and innovation. CBP should provide funding for R&R to develop a Web-based, end-to-end case management system that, at a minimum, receives the submission of ruling requests, creates records of such inquiries, enables the submitting party to check the status and receive major milestones of case processing, and records and disseminates and publishes the ruling or decision once the ruling or decision is final.
In the meantime R&R should (a) use email to receive ruling requests and send a copy of the final decision or ruling to the inquiring party, (b) provide a template and/or checklist to help ensure that ruling requests and protests include all vital information needed for the office’s deliberation, and (c) conduct outreach at association events and via webinars to clarify the type of information and best practices the trade community should consider when requesting a ruling or decision.
Reasonable care. COAC wants its proposed Mitigation Guidelines Working Group to address with R&R whether the pendency of a response to a prospective ruling request affects a determination as to whether the submitter exercised reasonable care.
Expedited action. To assist in alleviating the backlog of rulings, R&R should consider offering a new option for the protestant to request an expedited 60-day application for further review decision that would not result in a written published decision but would merely instruct the Center to grant or deny the protest. Further, to expedite the issuance of substitution drawback rulings under the Trade Facilitation and Trade Enforcement Act, R&R should leverage the expertise of the National Commodity Specialist Division, as appropriate.
Internal structure and communication. CBP should undertake a review of R&R’s organizational structure to optimize its resources and the supervisor-to-attorney ratio should be a key consideration in the office’s organization. In addition, using electronic means to the extent possible, R&R should take steps to ensure robust internal communication with the Centers to convey significant, pending R&R matters.
CROSS database. COAC and R&R have discussed studying the feasibility of sunsetting older (e.g., three to five years old) classification rulings, the necessary regulatory updates that would be required, whether the sunsetted rulings would still be available for access in CROSS or elsewhere for historical purposes only or deleted automatically when the ruling reaches the three- or five-year time frame, the impact of such sunsetting on parties to whom the rulings have been issued as well as other parties that rely on them, and options for exceptions to sunsetting any particular ruling if it is still being used. However, COAC did not formally submit this recommendation at its 1 March meeting to provide additional time for consideration.
COAC did, however, publicly recommend that R&R work with CBP’s Office of International Trade to research what enhancements could be made to the CROSS search and notification/alert features, as commercially permissible and financially practicable.
Future recommendations. ST&R’s Lenny Feldman, COAC working group and subcommittee lead, noted that a variety of demands are placed on R&R attorneys and staff, including responding to numerous Freedom of Information Act disclosure appeals (often on non-trade related matters) as well as assisting in the negotiation and implementation of U.S. free trade and other agreements. Feldman said there is thus a need to keep the working group active to consider developing additional recommendations designed to optimize R&R’s end-to-end workflow. …

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COMM_a112. A. Baj & E. Krauland: “US Commerce Requirements for Hong Kong Effective in Mid-April”

* Authors: Alexandra Baj, Esq.,
abaj@steptoe.com; and Edward Krauland, Esq.,
ekrauland@steptoe.com.  Both of Steptoe & Johnson LLP, Washington DC.
A little more than one month from today, on April 19, 2017, a US Department of Commerce (DOC) Bureau of Industry and Security (BIS) rule imposing new documentation requirements for certain US exports or reexports to and from Hong Kong will take effect.  The DOC published the
final rule on January 19, 2017.  The rule highlights Hong Kong import and export licensing requirements that affect a variety of products.  It requires companies using a DOC license or license exception pursuant to the US Export Administration Regulations (EAR) to obtain a Hong Kong import license or a written statement that a Hong Kong license is not required when certain items are exported or reexported to Hong Kong.  The rule also imposes a similar requirement for reexports from Hong Kong.
Affected Exports and Reexports
The rule affects certain Hong Kong-related transactions involving any item that is subject to the EAR and that is controlled for National Security (NS), Missile Technology (MT), Nuclear Nonproliferation (NPT) Column 1, or Chemical and Biological Weapons (CB) reasons.  A wide range of products falls under this umbrella, including, for example:
  – Ground vehicles and components classified under ECCN 0A606
  – Protective and detection equipment classified under ECCN 1A004
  – Anti-friction bearings and bearing systems classified under ECCN 2A001
  – Electronics, such as certain integrated circuits and microwave monolithic integrated circuits (MMICs), classified under ECCN 3A001
  – Encryption hardware and software classified under ECCN 5A002 and 5D002, non-cryptographic systems and equipment classified under ECCN 5A003, and systems and equipment for defeating, weakening, or bypassing information security classified under ECCN 5A004
  – Certain inertial measurement equipment classified under ECCN 7A003
  – Military aircraft classified under ECCN 9A610 and military gas turbine engines classified under ECCN 9A619
New Requirement
The new rule, appearing in Parts 740.2(a), 748.9, 748.13, and 762 of the EAR, requires exporters / reexporters who use a BIS license or an EAR license exception to obtain certain documentation – a copy of a valid import license or a copy of a written statement from the Hong Kong government stating that no import license is required – when exporting / reexporting affected items to Hong Kong.  The Hong Kong import license must be issued to the Hong Kong importer by the Hong Kong government, authorizing import of the item to be shipped to Hong Kong.  It must also be valid at the time of export / reexport to Hong Kong.  The written statement by the Hong Kong government may be a written communication directly to a company informing that a particular item does not require an import license or it may be a statement to the general public that a license is not required for a certain item.  Statements contained on a Hong Kong government website meet this requirement.  The DOC rule does not specify that a particular agency of the Hong Kong government must issue the written statements.
Similar rules apply when reexporting from Hong Kong.  Reexporters shipping affected items from Hong Kong must obtain an export license or a written statement that no license is required from the Hong Kong government.  Exports must meet the terms of the Hong Kong export license and be completed during the period of the license.
The exporter / reexporter must maintain copies of the applicable Hong Kong license or written statement in its possession.  Recordkeeping requirements in Part 762 of the EAR – including that certain records be retained for a five-year period – apply to the licenses and written statements.
Where to Obtain Required Documentation
Where relevant to a particular transactions, Hong Kong import and export licenses should be obtained from the Hong Kong importer (for an import license) and from the Hong Kong reexporter (for export licenses).  If a license is required but not yet obtained, the license may be obtained following application procedures set out in the Hong Kong Import and Export (Strategic Commodities) Regulations from the Hong Kong Director General of Trade and Industry.
The government of Hong Kong has already issued written statements indicating that certain items do not require export or import licenses.  Some written statements are available on the Hong Kong government website.  For example, the Hong Kong government has stated in an
FAQ that certain intangible transfers of technology, such as downloads of encryption software controlled by ECCN 5D002 unrelated to weapons of mass destruction do not require an import or export license from Hong Kong.   US export control laws do govern exports by download.  Other written statements are available on the Hong Kong government Strategic Commodities Control System
website.  Such written statements may be maintained and used to meet the US recordkeeping requirement.
A variety of entities who engage in import or export activities in and out of Hong Kong may be affected by this rule change.  The need to obtain – and maintain for five years – import and export authorizations may apply to US companies exporting to or reexporting through Hong Kong, distribution centers operating in Hong Kong, Hong Kong importers and exporters dealing in US products, distributors and resellers, and others.  Companies operating in or through Hong Kong should review their logistics and related procedures in light of the new rule to ensure compliance.  While not required by the DOC rule, it may also be helpful to review transactional documentation, such as contracts with Hong Kong importers or customers, to determine whether such documentation should include references to the new DOC requirement.  Any entity using a BIS license or EAR license exception for transactions to or from Hong Kong will want to update compliance processes and procedures to reflect the new rule, consulting with US and Hong Kong counsel, as needed, to obtain licenses or written statements.

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COMM_a213. R.R. Sanchez & S.W. Ebner: “New Cyber Rules to Safeguard Supply Chain”

National Defense Magazine) [Excerpts.]
* Authors: Susan Warshaw Ebner, Esq., Fortney Scott LLC (Washington DC),
sebner@fortneyscott.com; and Rolando R. Sanchez, Esq., Law Office of Rolando R. Sanchez (Washington, DC),
The Defense Department supply chain is part of the nation’s critical infrastructure providing the DoD and its contractors with key materiel and services.
Ensuring the integrity and safety of that supply chain is an imperative that every government contractor must address. They must comply with their specific contract’s requirements, as well as applicable laws and regulations.
Increasingly, laws, regulations and contracts are incorporating requirements to comply with industry best practices and emerging standards to ensure supply chain integrity. For many years, the task of ensuring cybersecurity was deemed an individual effort by defense government contractors and there was little direction from the government, or even a baseline requirement, as to how defense contractors and their supply chains should ensure cybersecurity.

Times have changed and contractors now must take steps to ensure the cybersecurity of their systems. … 

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Personal Message to Sue Daniels of Bozeman, Montana

(Source: Editor)
Dear Sue – Thanks for the below pun.  I ran it in yesterday’s Daily Bugle.
Q.  Why did Moses confine all the chickens to a small room in the Ark?
A.  They would not stop using fowl language.
  — Sue Daniels, Bozeman, MT  
I found out that among the thousands of export/import specialists who read the Bugle, we have at least 50 or so Biblical scholars who pointed out an error in your pun.  It was Noah, not Moses, who built the Ark and confined the chickens.  My mother would be disappointed that I didn’t notice that before publishing it.  The story of Noah and the Ark is in Genesis, and Moses doesn’t show up until Exodus.  By the way, did you know that 
Bible tells us that the length of Noah’s Ark was 300 cubits, its width 50 cubits, and its height 30 cubits?  So how big was the ark?  We must first ask, “how long is a cubit?” According to my research, the length of a cubit was based on the distance from the elbow to the fingertips of an adult male.  We don’t know how long Noah’s arm was, but if it was 20 inches long, that would have made the Ark about 500 feet long, 83 feet wide, and 50 feet high (three decks).  I also heard that ancient scrolls were recently found in the Ararat mountains containing an account of a conversation between Noah and his wife after the flood.  She said “Noah, get that Ark off our front lawn — it looks ridiculous up here, and it blocks our view of the mountains!” Noah replied, “It will be gone soon enough, dear.  I left a pair of termites on board.”

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(Source: Editor)

* Jean Paul (21 Mar 1763 – 14 Nov 1825; born Johann Paul Friedrich Richter, was a German Romantic writer, best known for his humorous novels and stories.)
  – “Every man regards his own life as the New Year’s Eve of time.”
  – “Weaklings must lie.”

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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 [New effective date: 21 March 2017.]; and 82 FR 8590: Delay of Effective Date for Toxic Substance Control Act Chemical Substance Import Certification Process Revisions [New effective date: 21 March 2017.]

  – 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: 24 Feb 2017: 82 FR 11505-11506: Temporary General License: Extension of Validity

: 31 CFR, Parts 500-599, Embargoes, Sanctions, Executive Orders
  – Last Amendment: 10 Feb 2017: 82 FR 10434-10440: Inflation Adjustment of Civil Monetary Penalties.  
: 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: 7 Mar 2017: Harmonized System Update 1702, containing 1,754 ABI records and 360 harmonized tariff records. 

  – 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 8 Mar 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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