17-0606 Tuesday “Daily Bugle”

17-0606 Tuesday “Daily Bugle”

Tuesday, 6 June 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. Commerce/Census Updates Census Data API, with 2013 to 2017 Monthly International Trade Statistics 
  4. DoD/DSS Releases Windows Configuration Toolkit GPO 
  5. State/DDTC: (No new postings.) 
  1. Expeditors News: “WTO Releases Annual Report 2017 
  1. Integration Point Blog: “Answering Essential Questions about Brexit 
  2. M. Volkov: “A CCO’s Challenge: How to Convince a CEO to Embrace Compliance” 
  3. Thomsen & Burke: “Several Middle East Countries Cut Diplomatic Ties with Qatar” 
  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 (26 May 2017), FACR/OFAC (10 Feb 2017), FTR (19 Apr 2017), HTSUS (26 Apr 2017), ITAR (11 Jan 2017) 
  3. Weekly Highlights of the Daily Bugle Top Stories 



[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)

* U.S. Customs and Border Protection; NOTICES; Requests for Nominations: Commercial Customs Operations Advisory Committee [Publication Date: 7 June 2017.]

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

(Source: Commerce/BIS)

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. Commerce/Census Updates Census Data API, with 2013 to 2017 Monthly International Trade Statistics

Monthly international trade statistics for the period January 2013 through April 2017, are now available in the Census Application Programming Interface (API). The Census API is a newly available single-point source for the same detailed trade statistics found in USATrade Online and in our merchandise trade, state, and port data products. In addition, the API will be updated with the most current monthly trade statistics each month going forward.  
Statistics are available for the most commonly used trade classification systems; including the Harmonized System (HS), North American Industry Classification System (NAICS), End-use, and Standard International Trade Classification (SITC). Also available are Advanced Technology statistics and USDA-identified agricultural and non-agricultural goods totals. Furthermore, the totals in these classifications are pre-aggregated, meaning it is no longer necessary to go through the cumbersome process of merging HS data with a concordance file.
District, port, and state-level geographic data are available, as are country totals and country grouping totals (e.g. European Union, NAFTA, and OPEC).
Domestic and Foreign totals are available for exports and General and Consumption totals are available for imports. Key metrics include value, quantity by HS unit, and shipping weights by certain modes of transportation (Air, Vessel, and Containerized Vessel).
To find out more information about the API, visit our International Trade Developers page. For detailed instructions on how to use the International Trade data in the Census Data API, see our User Guide.  
Contact us at eid.international.trade.data@census.gov or 1-800-549-0595 Option 4, with any questions.

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. DoD/DSS Releases Windows Configuration Toolkit GPO

The NISP Authorization Office (NAO) has released the Windows Configuration Toolkit GPO to assist industry in the baseline technical configuration of systems using the Windows 10 operating system.
The tool can be accessed and downloaded via OBMS and is located in the Headquarters section of the ODAA Bulletin Board, alongside the SCAP and STIG resources. For more detailed instructions, please reference the Job Aid titled “NAO Configuration Toolkit Job Aid” located on the Risk Management Framework website, under the “Toolkits” section.

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. State/DDTC: (No new postings.)

(Source: State/DDTC)

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NWS_a16. Expeditors News: “WTO Releases Annual Report 2017”

On 31 May 2017 the World Trade Organization (WTO) released its Annual Report for 2017, which covers the activities that took place in 2016 and early 2017 by the WTO. The Annual Report consist of a review of the past year and in-depth descriptions of work completed by the WTO including, trade negotiations, trade monitoring, and dispute settlements.
According to the introduction of the 2017 Annual Report, “A large number of WTO members ratified the Trade Facilitation Agreement in 2016, paving the way for its entry into force in early 2017. Many members also accepted an amendment to the WTO’s intellectual property agreement, which finally came into effect in the first quarter of 2017.”
The report can be accessed here.
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As expected, the United Kingdom gave notice in March that it will be leaving the European Union (EU), invoking Article 50 of the Lisbon Treaty. Article 50 sets a two-year window to renegotiate a new legal basis for Britain’s trade relationship with the EU. Prime Minister Theresa May began the formal steps for Brexit after triggering Article 50, kicking off Britain’s withdrawal from the EU.

During a recent Webcast hosted by Integration Point, John Grayston, Solicitor – England & Wales, Member (EU List) Barreau de Bruxelles shared his thoughts on Brexit.

Now, he answers your most pressing questions from the Webcast:
Q: What about England and Wales only? (The Cyprus model?)
There are plenty of reasons why parts of the UK could try to negotiate their way back into the EU, however, for both Northern Ireland and for Scotland, there are real political obstacles in the way, meaning that it is not at all clear whether there is real support.
If there was real support then a whole other set of issues would emerge to make life difficult–e.g. the fact that the UK special deal may not be available in which case the new candidates would have to apply the Euro.
Now, the debate seems to be increasingly focusing on where powers would be repatriated when UK leaves EU–would this be to London or to the regions.
Q: Do you think the two-year period will be extended (existing rules) or will they use the transitional rules option after the two years?
I cannot see anything other than a simple out deal being concluded within the two-year timetable. The issue for me is whether the Article 52 period is extended– in which case UK remains in the EU pending its conclusion;  or do we leave and then move to an initial transitional period outside the EU. We will know more on this once the real negotiations get underway in the coming months.
Q: It is our understanding that the Country of Origin marking & labeling requirements accepts “made in EU.” Do you foresee any changes in this matter?
For the EU I do not see any reason for any change at all. The point is that the UK being no longer in the EU will need to have its own origin rules and requirements – initially a copy across of the EU rules.
Q: What are the chief hurdles for the UK regaining WTO status?
I think that the main obstacle is to agree to specific schedules with each of the members and this would be a huge task. The route to a solution could be linked to an EU UK transitional arrangement. Of course, the UK would be able to apply WTO rules in any event.
Q: What role will the UK now play in regulatory approval for mergers and acquisitions? For instance, in the Bayer acquisition of Monsanto?
The first answer is easy-the UK would not be involved in or covered by any EU review of a merger. UK would have to apply its own rules–with the potential for the UK to conclude differently from the EU. I see this as more of a cost than a substantive threat. Absent any special conditions of competition in the UK, I would expect the EU decisions to remain the most important and potentially the most likely to result in a negative prohibition decision.
Q: What do you think the chances are of EU trade agreements being re-negotiated if the UK is no longer a part?
I can only suggest that this is the very last thing that the EU would ever countenance.
Third countries could try it but I fear they would receive a sharp response. Equally, I would think that the UK would have difficulty negotiating provisions, which differ from those offered by the EU.
Q: What is the greater risk for trade–customs duties or the administration of movements at a hard border?
I see the physical issues being a real concern. Longer term, it is the additional administration burden that will be affected the most–far outweighing the customs duties.
For certain products and sectors, customs duties will become a major issue–especially for those sensitive products for which the EU (and other third countries) may decide are suitable for the adoption of anti-dumping or anti-subsidy measures.
Q: How long will it actually take the UK to leave the EU?
So many ways to answer this….
  – It already has…in political terms
  – Two years from 29 March 2017–in strictly legal terms
  – Five to ten years for a transitional period to unwind those areas in which the UK is still an on-going participant
  – Never (the most cynical answer) in the event that the UK fails to find a way to develop its own position in the world and is constrained to follow religiously all EU rules and measures (for economic and policy bandwidth reasons) but without having any political influence anymore
Q: At what point would it be too late for the UK to change its mind?
It must remain a possibility at any time up to the end of the Article 50 period. However, right now, this looks like a very unlikely outcome indeed.
 Post-Article 50 we lose the deal we currently have with the EU. In addition, this would ensure that we do not bounce back as a new candidate!
Q: Can Northern Ireland remain part of the Customs Union while the rest of the UK leaves?
Yes–and this would make administrative sense. However, politically there are real obstacles to making this happen.  
Q: Should the UK change its rules on Customs and Customs Duties as soon as possible?
The UK will be preparing in function of the on-going negotiations to look at new procedures to mitigate the impact of being outside the Customs Union–specifically for logistics based companies. Long term, the need for change should be tempered with an awareness that as the EU changes UK will need to consider the potential costs of not following the EU lead.

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Volkov Law Group Blog. Reprinted by permission.)
* Author: Michael Volkov, Esq., Volkov Law Group, mvolkov@volkovlaw.com, 240-505-1992.
A Chief Compliance Officer faces many challenges in designing and implementing an effective ethics and compliance program. If a CCO conducts appropriate due diligence before joining the company, he will know the challenges he is facing.
All too often, I hear of CCOs who join a company based on numerous promises and representations by the CEO, the board and senior managers about the importance of compliance, the resources available to the CCO, and the support the CCO will receive to accomplish his/her objectives. Later, when these promises turn out to be hollow, the CCO may continue or leave the company out of frustration.
A CCO cannot just decide to leave a company out of frustration without trying to fix the situation. Most CCOs experience serious frustrations during their tenure at a company. No one has an ideal situation. CCOs inevitably run up against uncooperative interests in any company.
A most significant recurring problem occurs when a company CEO claims to support ethics and compliance but fails to live up to his/her promises. CEOs are good at persuading people and they often make promises to CCOs that they do not keep. CCOs can either deal with the issues or turn away from any conflict and leave the company.
CCOs should not give up so easily. In fact, CCOs need to devote time and attention to convince or convert the CEO to embrace the value of ethics and compliance.
To accomplish this conversion, CCOs have to line up support for the ethics and compliance program by enlisting the support of existing stakeholders. In this respect, the CCO should enlist the other senior executives, including business division heads, the chief legal officer, the internal auditor, human resources, and other constituent leaders.   Hopefully, the CCO is the Chair of a Compliance Committee consisting of these senior leaders and others.
The Compliance Committee is an important organization that can inform and bring informal pressure on the CEO to embrace the compliance message. The interaction between the CEO and the Compliance Committee has to be handled delicately so that the CEO does not feel defensive or pressured.
A CCO has to organize a consistent message from the Compliance Committee to the CEO (and other senior leaders) that need convincing as to the merits of compliance and the need for increased investment. The importance of this task should not be underestimated. The CCO needs to communicate and inform the CEO through the Compliance Committee.
The message of compliance should be the value of compliance as an intangible asset to be leveraged in the competitive market, and improve overall employee performance and job satisfaction. A CEO has to be educated on the value of compliance itself as an intangible asset. CCOs have to educate CEOs in this area, communicate a consistent message, and enlist as many allies in the effort.
If a CEO still does not understand the message, the CCO has to redouble his/her efforts to bring the board members to the mission. If there are any board members who understand the importance of compliance, they should be enlisted as well to persuade the CEO. In combination with the Compliance Committee, the board members can leverage their influence to persuade the CEO to embrace ethics and compliance as an important corporate goal.
CCOs have to use every creative approach they can develop to seek to influence the CEO. Without the support of the CEO, a CCO is fighting an uphill battle; with the support of the CEO, a CCO has the potential to design and implement an effective ethics and compliance program – a goal worthy of a significant effort.

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Yesterday (5 June 2017), Bahrain, Saudi Arabia, the United Arab Emirates (UAE), Egypt and Yemen reported that they have cut diplomatic ties with Qatar, citing terrorism-related concerns. The actions being taken by these governments so far are largely limited to travel to/from Qatar and the expulsion of citizens of Qatar. This has caused some airlines to cancel scheduled flights between Qatar and these countries, resulting in delays and shipment holds.
Nothing has changed from a U.S. trade perspective. The U.S. Postal Service continues to deliver to Qatar and the U.S. State Department has not issued a travel advisory. Distribution from points in Asia, such as Singapore and Hong Kong, do not appear to be affected. Flights between Qatar and Europe also appear to be operating normally.
However, companies with a business presence in the Middle East should consider the following:
  – If your company has an office located in one of these countries, are any personnel citizens from Qatar that may be subject to expulsion?
  – If your company has an office in Qatar, are any personnel citizens from one of these countries such that they may be required to leave Qatar?
  – Does your company fulfill any orders to Qatar from one of these countries (including service/support)?
  – Is your company required to provide onsite support/service to a customer in Qatar? If so, will the travel restrictions impact operations?
  – Does your company utilize distributors or other partners that can no longer perform due to the new restrictions?
We suggest that companies address these questions, among others, in order to identify those situations where business may be impacted. For example, some companies may need to temporarily adjust fulfillment operations or service/support activities, until this diplomatic situation is resolved.
  – Online Resources: UAE Announcement

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(Source: Editor)
* Thomas Mann (Paul Thomas Mann, 6 Jun 1875 – 12 Aug 1955, was a German novelist, short story writer, social critic, philanthropist, essayist, and the 1929 Nobel Prize in Literature laureate. Mann is one of the best-known exponents of the so-called Exilliteratur, literature written in German by those who opposed or fled the Hitler regime.)
  – “Order and simplification are the first steps toward the mastery of a subject.”
  – “I never can understand how anyone can not smoke cigars — it deprives a man of the best part of life. With a good cigar in his mouth a man is perfectly safe, nothing can touch him, literally.”
* Pierre Corneille (6 Jun 1606 – 1 Oct 1684, was a French playwright. He is generally considered one of the three great seventeenth-century French dramatists, along with Molière and Jean Racine.)
  – “To win without risk is to triumph without glory.”

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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:
26 May 2017: 82 FR 24242-24248: Addition of Certain Persons and Revisions to Entries on the Entity List

: 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: 19 Apr 2017: 82 FR 18383-18393: Foreign Trade Regulations: Clarification on Filing Requirements 
  – HTS codes that are not valid for AES are available
  – The latest edition (19 Apr 2017) 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: 26 Apr 2017: Harmonized System Update 1703, containing 2,512 ABI records and 395 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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2. Weekly Highlights of the Daily Bugle Top Stories
(Source: Editor)

Review last week’s top Ex/Im stories in “Weekly Highlights of the Daily Bugle Top Stories” published 

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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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