17-0721 Friday “Daily Bugle”

17-0721 Friday “Daily Bugle”

Friday, 21 July 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 here for free subscription. Contact us for advertising inquiries and rates.

  1. Ex/Im Items Scheduled for Publication in Future Federal Register Editions 
  2. Commerce/BIS: (No new postings.) 
  3. DHS/CBP Announces ACE PRODUCTION Outage, 15-16 July
  4. State/DDTC: (No new postings.)
  5. Australia DFAT Seeks Comments on Existing Autonomous Sanctions Listings Concerning Ukraine
  6. EU Publishes Implementing Regulations Concerning the Classification of Certain Goods in the Combined Nomenclature
  7. UK/DIT ECO Publishes Updated Consolidated List, Amends Four OGELs
  1. Reuters: “U.S. Prepares New Sanctions on Chinese Firms Over North Korea Ties”
  2. ST&R Trade Report: “Dates and Deadlines: Import Compliance, Trade Policy, Apparel, Foreign Trade Regulations”
  3. ST&R Trade Report: “Three Port of Export Codes Deleted from AES”
  1. A. Fraser: “Uh Oh. So, You Think You May Have an Export Problem?”
  2. D. Jacobson, G. Kelley and M. Burton: “Sudan Sanctions Suspended for Three More Months”
  3. P. Bulters: “A Tangled Web: Transportation Contract Risks in the European Union”
  4. R.C. Burns: “Boycott of Qatar by Arab Countries Can Implicate U.S. Anti-Boycott Rules”
  1. Friday List of Approaching Events
  1. Bartlett’s Unfamiliar Quotations 
  2. Are Your Copies of Regulations Up to Date? Latest Changes: ATF (15 Jan 2016), Customs (30 Jun 2017), DOD/NISPOM (18 May 2016), EAR (7 Jul 2017), FACR/OFAC (16 Jun 2017), FTR (19 Apr 2017), HTSUS (28 Jun 2017), ITAR (11 Jan 2017)
  3. Weekly Highlights of the Daily Bugle Top Stories 



1. President Postpones Lifting Sudan Sanctions

Federal Register
82 FR 32611-32612: Executive Order 13804 of July 11, 2017
EXECUTIVE ORDER (EO) 13804 of July 11, 2017
 By the authority vested in me as President by the Constitution and the laws of the United States of America, including the International Emergency Economic Powers Act (50 U.S.C. 1701 et seq.), the National Emergencies Act (50 U.S.C. 1601 et seq.), the Trade Sanctions Reform and Export Enhancement Act of 2000 (22 U.S.C. 7201-7211), the Comprehensive Peace in Sudan Act of 2004, as amended (Public Law 108-497), the Darfur Peace and Accountability Act of 2006 (Public Law 109 344), and section 301 of title 3, United States Code,
I, DONALD J. TRUMP, President of the United States of America, in order to take additional steps to address the emergency described in Executive Order 13067 of November 3, 1997, Executive Order 13412 of October 13, 2006, and Executive Order 13761 of January 13, 2017, with respect to the policies and actions of the Government of Sudan, including additional fact-finding and a more comprehensive analysis of the Government of Sudan’s actions, hereby order as follows:
Section 1.  Amendments to Executive Order 13761
  (a)  Section 1 of Executive Order 13761 is hereby amended by striking “July 12, 2017” and inserting in lieu thereof “October 12, 2017”.
  (b)  Section 10 of Executive Order 13761 is hereby amended by striking “July 12, 2017” and inserting in lieu thereof “October 12, 2017”.
  (c)  Subsection (b) of section 12 of Executive Order 13761 is hereby amended by striking “July 12, 2017” and inserting in lieu thereof “October 12, 2017”.
  (d)  Section 11 of Executive Order 13761 is hereby revoked.
Sec. 2.  General Provision
.  This order is not intended to, and does not, create any right or benefit, substantive or procedural, enforceable at law or in equity by any party against the United States, its departments, agencies, or entities, its officers, employees, or agents, or any other person.
  (Presidential Sig.)
July 11, 2017.

Matthew S. Borman, Deputy Assistant Secretary for Export Administration.

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DHS/CBP Extends Comment Period Concerning CBP Forms 3124 and 3124E, CBP Regulations Pertaining to Customs Brokers

Federal Register) [Excerpts.]
82 FR 32562-32563: Agency Information Collection Activities: CBP Regulations Pertaining to Customs Brokers
* AGENCY: U.S. Customs and Border Protection (CBP), Department of Homeland Security.
* ACTION: 30-Day notice and request for comments; extension of an existing collection of information. …
* ADDRESSES: Interested persons are invited to submit written comments on this proposed information collection to the Office of Information and Regulatory Affairs, Office of Management and Budget. Comments should be addressed to the OMB Desk Officer for Customs and Border Protection, Department of Homeland Security, and sent via electronic mail to
dhsdeskofficer@omb.eop.gov. …
  – Title: CBP Regulations Pertaining to Customs Brokers (19 CFR part 111).
  – OMB Number: 1651-0034.
  – Form Numbers: CBP Forms 3124 and 3124E.
  – Current Actions: CBP proposes to extend the expiration date of this information collection. There is an increase to the burden hours due to increased applicants. There is no change to the information collected. …
  – Abstract: Section 641 of the Tariff Act of 1930, as amended (19 U.S.C. 1641), and Part 111 of the CBP regulations govern the licensing and conduct of customs brokers. Specifically, an individual who wishes to take the broker exam must complete CBP Form 3124E, “Application for Customs Broker License Exam,” or to apply for a broker license, CBP Form 3124, “Application for Customs Broker License.” The procedures to request a local or national broker permit can be found in 19 CFR 111.19, and a triennial report is required under 19 CFR 111.30. CBP Forms 3124 and 3124E may be found on the Forms page on
CBP.gov. Further information about the customs broker exam and how to apply for it may be found
here. …
  Dated: July 11, 2017.

Seth Renkema, Branch Chief, Economic Impact Analysis Branch U.S. Customs and Border Protection.

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

Federal Register)
  – Port Limits; Extensions; Savannah, GA; Correction; and
  – Procedures to Adjust Customs COBRA User Fees to Reflect Inflation [Publication Dates: 17 July 2017.] 

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CSMS# 17-000402, 13 July 2017.)
There will be an ACE PRODUCTION Outage Saturday evening, 15 July 2017 from 2200 ET to 0400 ET Sunday, 16 July 2017 due to ACE infrastructure maintenance activities.

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Australia DFAT Seeks Comments on Existing Autonomous Sanctions Listings Concerning Ukraine

The Australian Department of Foreign Affairs and Trade (DFAT) invites members of the public to comment on a review of Australia’s autonomous sanctions imposed on 63 individuals and 21 entities in response to Russia’s ongoing threat to the sovereignty and territorial integrity of Ukraine.
These individuals and entities have been designated for the purpose of targeted financial sanctions and these individuals have also been declared for the purpose of travel bans by the Minister for Foreign Affairs.
Designations and declarations made under the Autonomous Sanctions Regulations 2011 expire after three years, unless extended by the Minister. The designations and declarations under review were made by the Minister on 2 September 2014 and will expire on 2 September 2017 unless extended.
Submissions will be accepted until 5pm on Wednesday 2 August 2017.
The full list of individuals and entities designated for targeted financial sanctions under Australian law, including for Australian autonomous sanctions in relation to Ukraine, is on the DFAT Consolidated List.

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8. EU

Publishes Implementing Regulations Concerning the Classification of Certain Goods in the Combined Nomenclature

Commission Implementing Regulation (EU) 2017/1266 of 11 July 2017 repealing Regulation (EC) No 2494/96 concerning the classification of certain goods in the Combined Nomenclature
* Commission Implementing Regulation (EU) 2017/1267 of 11 July 2017 concerning the classification of certain goods in the Combined Nomenclature
* Commission Implementing Regulation (EU) 2017/1268 of 11 July 2017 concerning the classification of certain goods in the Combined Nomenclature

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UK/DIT ECO Publishes Updated Consolidated List, Amends Four OGELs

On 14 July, the Export Control Organisation (ECO) of the UK Department of International Trade (DIT) has published a revised version of the consolidated list of strategic military and dual-use items that require export authorisation.
The revised list takes into account changes to the EU common military list as identified in notice to exporters 2017/13.
  Key Changes
In summary the key changes are:

  – minor typographical changes to the definitions for airship, laser, lighter-than-air vehicles, pyrotechnics and software
  – typographical changes to ML1d, ML8.c.1, ML8.c.5, ML10c, ML10e2, ML10f, ML17.o, minor change of scope to ML10h1, and ML17.p, new entry ML8a40 and inclusion of ‘explosive co-crystals’ in ML8a
In addition, on 13 July, ECO updated and amended four Open General Export Licences (OGELs):
The changes reflect amendments to the Export Control Order 2008 which came into force on 13 July 2017.
  Key changes
The amending order makes a number of changes to schedule 2 to the main order, which lists the military goods, software and technology subject to export controls. These changes reflect amendments made to the EU common military list following agreement to alter the munitions list in the export control regime known as the Wassenaar Arrangement.
Each of these open general export licences has been amended to add to the list of excluded goods, ratings ML8.a.40, and explosive co-crystals under rating entries in ML8.a. The updated OGELs have been published (listed above). The licences are dated 13 July 2017. However, to give exporters time to absorb the changes, these new licences will not come into force until 18 July 2017.
The current versions of OGELs will remain in force until 2359 on 17 July 2017. After this date you will need to refer to the updated licences.

Further information about OGELs is published on GOV.UK.

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Reuters: “U.S. Prepares New Sanctions on Chinese Firms Over North Korea Ties”

Reuters, 14 July 2017.) [Excerpts.]
Frustrated that China has not done more to rein in North Korea, the Trump administration could impose new sanctions on small Chinese banks and other firms doing business with Pyongyang within weeks, two senior U.S. officials said.
The U.S. measures would initially hit Chinese entities considered “low-hanging fruit,” including smaller financial institutions and “shell” companies linked to North Korea’s nuclear and missile programs, said one of the officials, while declining to name the targets.
It would leave larger Chinese banks untouched for now, the official said.
The timing and scope of the U.S. action will depend heavily on how China responds to pressure for tougher steps against North Korea when U.S. and Chinese officials meet for a high-level economic dialogue in Washington on Wednesday, the administration sources told Reuters.
President Donald Trump and his top aides have signaled growing impatience with China over North Korea, especially since it last week test-launched its first intercontinental ballistic missile, which experts say could put all of Alaska in range for the first time.
U.S. officials have also warned that China could face U.S. trade and economic pressure – something Trump has held in abeyance since taking office in January – unless it does more to restrain its neighbor.
The so-called secondary sanctions now being considered are a way for the United States to apply targeted economic pressure on companies in countries with ties to North Korea by denying them access to the U.S. market and financial system.
Word of the sanctions plan comes as U.S. ambassador to the United Nations Nikki Haley seeks to overcome resistance from China and Russia to a U.N. Security Council resolution imposing stiffer international sanctions on Pyongyang.
The targets now being weighed for sanctions would come from a list of firms numbering “substantially more than 10” that Trump shared with Chinese President Xi Jinping at a Florida summit in April and which U.S. experts have continued to compile for review, according to one of the officials.
The administration has yet to see what it considers a sufficient response from China. … 

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ST&R Trade Report: “Dates and Deadlines: Import Compliance, Trade Policy, Apparel, Foreign Trade Regulations”

Following are highlights of regulatory effective dates and deadlines and federal agency meetings coming up in the next week.
  – 17 July: deadline for comments to FTZ Board on production, zone reorganization requests
  – 18 July: ST&R webinar: Import Compliance Bootcamp
  – 18 July: deadline for comments to FTZ Board on production requests
  – 18 July: effective date of Census final rule revising Foreign Trade Regulations
  – 18 July: deadline for responses from those wishing to participate in sunset reviews of AD/CV duty orders
  – 19 July: ST&R webinar: Customs Recordkeeping: What You Need to Know
  – 20 July: effective date of USDA final rule allowing imports of pitahaya fruit from Ecuador
  – 21 July: deadline for comments to CITA on apparel rule of origin changes for Bahrain FTA

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ST&R Trade Report: “Three Port of Export Codes Deleted from AES”

The Census Bureau has announced that the following port of export codes were deleted in the Automated Export System as of 12 July.
– 1105: Paulsboro, N.J.
  – 1107: Camden, N.J.

– 3295: UPS, Honolulu, Hawaii 

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A. Fraser: “Uh Oh. So, You Think You May Have an Export Problem?”

* Author: Andrea Fraser, Esq., Torres Law PLLC.
Contact: 214-593-7120, info@torrestradelaw.com.
Perhaps the information came from a colleague or a customer or an anonymous tip left on your company’s “tip line.” Or it could have been a comment made during a presentation at a professional meeting. Something caught your attention and triggered the realization that you may have a U.S. export controls violation. Whether or not you have experienced that sinking feeling, prudent compliance requires that you be prepared to take appropriate action at the first sign of trouble.
So, what to do if you have concluded that there may have been an export control violation? Managing a possible export control violation means taking on the situation directly. A systematic and comprehensive response will enable your company to most effectively deal with the situation. The response actions fall into three parts.
The first part of the response focuses on establishing the scope of the violation(s). If ongoing, the conduct that has given rise to the suspicion of a violation must be stopped at once. The investigation into the possible violation(s) will require the cooperation of all the operationally involved parts of the company. Accordingly, a credible internal investigation is characterized by demonstrable support from senior management, including a commitment to supply the necessary financial and personnel resources to mount the investigation.
There are many factors to consider when shaping the investigation process. Important considerations include: (1) the possible points of contact associated with the violation(s); (2) the nature of the goods, technologies and services; and (3) the recipient countries. 
Evaluating which points of contact may have contributed to the violation will help establish the scope of the problem. To use an extreme illustration: The failure of an individual employee to ascertain the correct product classification suggests a different problem than would a general lack of awareness of applicable EAR or ITAR controls.  Similarly, it is important to know at what point in the customer relationship the violation occurred. For example, was the violation in the context of a sale to a new customer, a transaction with an existing but recently listed/ sanctioned customer, or through technology transfer in the context of post-sale customer support? Uncovering the violations and tying them to operational activities assists in establishing the scope of the violations and may assist in identifying appropriate compliance fixes.
The nature of the company’s activities will also guide the course of the investigation. Companies engaged in manufacturing must consider supply chain exposure as well as exposure created by the exports. Transacting in sensitive technology (whether EAR or ITAR-controlled), which may involve transmitting information without a “box,” creates specific compliance risks. Note also that compliance obligations include not only the shipment or transfer of goods and technology to the customer (such as proper classification, know-your-customer diligence and licensing assessments/ acquisition), but also reporting and recordkeeping requirements.
The structure of the investigation is also influenced by the countries involved. A concentration of business with countries subject to tighter controls or subject to U.S. embargoes increases the likelihood of violations in the absence of a robust compliance effort.
The second part of the response to an export violation focuses on corrective action. As noted, the conduct at issue should be terminated as soon as possible after the potential violation is detected. But corrective action should extend beyond termination of the specific conduct to include taking steps to prevent the recurrence of the violation.
Any corrective action must start with the compliance plan. If the company does not have compliance policies and procedures, a plan must be created and implemented as soon as possible. If a plan is in place, the flaws in the plan that allowed the violations in question must be corrected. The investigation of the scope of the violations may identify appropriate fixes. Going forward, ongoing monitoring may speed up the detection of violations and simplify the compliance program improvement process. In any event, the compliance plan should include regular internal reviews or audits designed to catch plan flaws before violations are committed.
Further, a critical component of any comprehensive compliance strategy, and any response to a violation, is training. A robust compliance plan will respond to changes in compliance obligations as well as changes in the company’s operational and business activities, ideally prior to committing a violation.  Training for new personnel in implicated operational positions as well as ongoing refresher training for current employees will ensure that those with compliance responsibilities are equipped with the current knowledge necessary to properly execute their responsibilities. Further, keeping those directly responsible for compliance fully engaged in the process improves the likelihood that the compliance plan will be properly executed and empower personnel to identify and raise concerns before a violation occurs.
Whether to voluntarily disclose the suspected violation to the appropriate U.S. government agency or agencies is the third part of the response, but the question itself hovers throughout the process. The U.S. government encourages disclosure. Companies may disclose a suspected violation as soon as it is detected and then submit complete reports once the investigation is completed. A company’s decision-making concerning a possible disclosure may change over time (based, for example, on information uncovered during the investigation) but may touch on many factors, including the scope and sensitivity of the violation and the likelihood of ongoing, similar conduct. Other factors may include the company’s appetite for the potential fallout, in terms of negative publicity and penalties, and tolerance for risk, including the likelihood that the relevant government agency would learn of the violation through means other than self-disclosure. A company investigated as a result of a tip from a business competitor, a former employee, or notification from another government agency would be denied self-reporting penalty mitigation and may face an increased risk of criminal penalties.
The complex web of laws and regulations that govern U.S. export controls is rendered more challenging by the volatility of the current regulatory and trade environment. Conducting business in this environment requires a full commitment to compliance, incorporating a comprehensive understanding of developments and current requirements, in order to minimize the risk of potentially expensive and embarrassing violations. Securing the assistance of experienced trade counsel can position your company to detect and manage possible violations and to develop a comprehensive compliance strategy. 

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D. Jacobson, G. Kelley and M. Burton: “
Sudan Sanctions Suspended for Three More Months”

* Authors: Douglas N. Jacobson, Esq.,
, 202-431-2407; Glen N. Kelley, Esq.,
, 212-658-0601; and Michael L. Burton, Esq.,
, 202-957-8009.  All of Jacobson Burton Kelley PLLC.
On July 11, 2017 the Trump administration decided to maintain, for three more months, the current suspension of most US economic sanctions against Sudan.
President Obama had issued an executive order in January 2017, shortly before President Trump took office, to terminate almost all US sanctions against Sudan, effective yesterday, July 12, if the Trump Administration first determined that Sudan had continued to cooperate with the United States in several areas. Specifically, Sudan needed to maintain “the cessation of hostilities in conflict areas in Sudan”, improvement of “humanitarian access throughout Sudan”, and cooperation with the United States on regional conflicts and terrorism.
This week the Trump Administration decided to postpone, for three months, the decision as to whether Sudan has cooperated on these issues sufficiently to warrant the lifting of sanctions. On Tuesday, July 11, President Trump issued a new executive order, setting a new decision date of October 12, 2017, and eliminating the provision for future annual reports relating to Sudan’s progress in the areas noted above.
As a result, the status quo in place since January of this year is expected to remain until mid-October:
  – Under a general license issued in January 2017 by the Office of Foreign Assets Control (OFAC), almost all sanctions on Sudan remain suspended. Sanctions remain on a small number of companies and individuals designated in relation to the Darfur region of Sudan, or in relation to the independent country of South Sudan.
  – A broad range of investments, services transactions and imports from Sudan therefore have been authorized since January. Although many Sudanese entities remain on the SDN list (the primary OFAC sanctions list), almost all of them are no longer subject to blocking (asset freeze) since January 2017.
  – Transactions relating to Sudan and involving US persons are subject to a standard OFAC five year record-keeping requirement.
  – Some US exports to Sudan are possible. For example, the export of agricultural commodities, medicine or medical devices cannot have a term longer than one year.
However, broad US export controls remain on Sudan, administered by the Bureau of Industry and Security in the US Department of Commerce (BIS). These export controls cover a broad range of goods and technologies from the US or containing US content. It is possible to apply to BIS for a license (authorization) to export certain items for certain end-uses in Sudan.

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P. Bulters: “A Tangled Web: Transportation Contract Risks in the European Union” 

(Source: Editor)
* Peter Bulters, Managing Director of the
Global CATTS Group
, Amsterdam, the Netherlands.
Much like a spider weaves a web connecting different threads, corporate supply chains will create global web of trade and logistic lanes which are a network of many cooperating entities with the end goal of transporting goods across multiple borders in a cost-effective, timely, efficient and secure manner. From a distance, the supply chain can appear to be functioning like a well-oiled machine – goods are delivered on time and at the right cost. However, it’s important to always view supply chain activity up close. Like the different threads spun by spiders, suppliers, carriers, brokers and freight forwarders each have separate purposes that can impede their ability to support the firm’s end goal or expose the firm to unnecessary or unidentified risk.
  Supply Chain Risk Exposure
Risk is an inevitable facet of business. In the world of cross-border trade and logistics, traditional risk exposures are compounded by ever-changing regulations, currency fluctuations, differing security standards, and language and cultural barriers.
The key is to manage this risk by pinpointing all exposures and mitigating their negative impact. Cross-border trade risks frequently are assessed improperly, especially those involving transportation- and carrier contracts or agreements. These agreements contain standard information such as pick-up and delivery locations, but they also include information as to, when has the buyer the right of possession of the goods, when payment is to be made, when the title of ownership of goods changes hands, when documentation needs to be submitted, and who bears responsibility for damage, losses or theft. The risks can be grouped into the following categories:
  (1) Failure to manage contract liability clauses
  (2) Invoice and Accounting errors
  (3) Satisfying VAT Tax Obligations
  Failure to Manage Contract Liability Clauses
Legal provisions outlined in contracts with transportation carriers or forwarders (carriers) are, for the most part, straight forward. The forwarder is expected to pick up and deliver goods from one location to another in a stated period of time at a pre-determined rate and in the same condition in which the goods were picked up. This is where the liability language comes into play. The contract language should stipulate damage mitigation strategies and who bears responsibility for the damage. If damage occurs, a determination needs to be made to verify if the goods were properly packaged by the shipper and/or the firm prior to pick-up or if the goods were damaged in transit due to forwarder negligence? In addition, the contract will detail how and when cross-border documentation should be shared. Forwarders have the legal obligation to provide all information in relation to the status of an agreed transport without delay. Failure to comply with this legal requirement could be considered a breach of the limited liability clause, a standard in transportation contracts, and grounds for the firm to withhold payment towards the forwarder.
An example, a forwarder signs a contract with a shipper to transport a product from A to B within agreed timeframes. The forwarder has to provide all information in relation to the status of an agreed transport, this without any delay. Part of this information is the correctly signed proof that cargo has been delivered within agreed timeframes in undamaged or unchanged conditions. Not providing this proof of delivery is in contradiction with this legal requirement, the contract, this correctly signed proof of delivery is the mandatory information which should be provided by the forwarder, confirming did the forwarder act as agreed. In principle, the shipper is obliged to pay the agreed fee, after he received the information that the contracted forwarder has completed its activities.
  Invoice and Accounting Errors
Risks that aren’t always easily detectable include invoice and accounting errors. Prior to rendering payment to a forwarder, a firm should closely scrutinize a freight bill for accuracy as well as verify that it is in compliance with the contracted agreement. Obviously, the firm needs written proof of delivery (POD) stating that the forwarder has delivered the agreed goods, in an undamaged state, to the appropriate ‘Ship To’ address. A standard numbered copy of a freight document, the POD should accompany the freight bill. All fields of the freight-contract should be completed and signed with the legal required notifications in accordance with the rules and regulations based on the International Rights of Claim. If there is any deviation from the agreed contract, a firm can withhold payment to the forwarder. As the world increasingly adopts a paperless environment, it will become more challenging for a firm to verify that forwarders are delivering contracted services. In these scenarios, a printed document with the required information and signatures can be replaced by a weekly or monthly status report provided by the forwarder. This should be identified in advance and confirmed in purchase orders, service level agreements or any other contractual document.
A verified POD should trigger the payment to the forwarder and must be archived for at least seven years according to normally accepted business practices, based on legal requirements and company policies. It is recommended to verify these standards in each country in which a supply chain partner is active. Some company rules may require longer storage. A number of companies, which are registered at stock markets, are obligated to calculate and present all revenue details regarding shipments at the end of a certain period such as monthly, quarterly or yearly. After business hours on the last day of a stated period, a company should audit their documents to determine which shipments have left the premises and which are still in possession and then update the books accordingly. Incoterms 2010, the global standard used to spell out responsibilities between the buyer (firm) and seller (suppliers), help with this process. Though used for different purposes, Incoterms stipulate when goods ownership passes from the seller (supplier) to the buyer (firm) and help address risk scenarios. For example, it is not uncommon for physical exchange of goods to occur before the legal exchange and transfer of ownership. In addition, POD and other documentation serve as proof of ownership transfer so that the various finance groups can count it as revenue for the seller/supplier, an inventory asset for the buyer/firm and payable for the buyer/firm.
  Satisfying VAT Tax Obligations
An often-misunderstood risk is determining and meeting tax obligations when conducting business with the European Union (EU). If a company has sold a certain product, it is confronted with a number of options that can be classified accordingly:
  (A) Sales to an individual.
  (B) Sales to an entrepreneur located within the same EU country i.e. domestic.
  (C) Sales to an entrepreneur located within the EU with a valid Value Added Tax (VAT) number
  (D) Sales to an entrepreneur located within the EU without a valid VAT number.
  (E) Sales to an entrepreneur located outside the EU.
Each of these trade transactions will require an invoice, which will identify all the aspects of such a specific transaction. These invoices will be issued for admin purposes but also these invoices are the foundation for VAT reports, and final settlement of this VAT.
Groups A, B and D are straightforward from a VAT or taxation point of view. Groups C and E are much more complicated and can sometimes yield 0% taxation via the Intra-Community Transaction (ICT) exemption or Export.
  Group C: Sales Within the EU
Two EU entrepreneurs, both with a valid VAT registration, not registered in the same Member State are eligible for the 0% VAT assessment. The seller (supplier) is allowed to use this 0% tariff after verifying the validity of the VAT ID number of the buying (firm). Note that verification is a constant process that should be conducted multiple times a year as suppliers can lose their privileges and have their VAT ID number revoked. Claiming 0% VAT, the seller (supplier) can forward the VAT settlement obligation to the next EU buyer of the goods who will then settle the VAT obligations in the final EU country of destination.
An important fact is to understand the difference between “no VAT’ and “zero percentage VAT’. The final result might look alike, but there is a big difference. “No VAT” will indicate that the VAT system is not applicable at all, in contradiction with “zero percentage”, in the last scenario there is an obligation to settle VAT only with a zero percentage. In case a company does not comply with the requirements the zero percentage has been issued incorrectly and standard VAT rates will have to be applied, which can finally result in a non-deductible format.
To take advantage of 0% VAT opportunities, companies need to document eligibility. First, the verified VAT ID number must be printed on the invoice. A business must also provide documentation proving that the goods were delivered as described on the invoice – the POD. Secondly, the documentation must be stored on-site. Periodically, customs authorities will visit companies with a list of shipments they have made within the EU within the past three years and ask for the relevant PODs. It is not acceptable to claim that the PODs are in the possession of the transportation carrier. Failure to present accurate PODs suggests the possibility that the business incorrectly applied the 0% tariff causing customs to assess the appropriate VAT for the past three years. If the authorities are able to prove criminal intent then they can extend the three-year period. As mentioned earlier, the assessed VAT will need to be paid in a non-deductible format. Usually businesses can declare paid VAT in annual corporate tax declarations. In addition, authorities can fine the business up to double the amount of the assessed VAT. For example, a firm assessed $25,000 in VAT charges due to documentation compliance failures can also be subject an additional $25,000 fine resulting in a total cost of $50,000.
  Group E: Sales Outside the EU
The other difficult 0% VAT scenario involves an EU-based company trading with a company registered outside the EU. The seller is eligible for 0% VAT as long they are listed as the “Exporter of Record” on documentation. As expected, the exporter needs to have the POD proof that goods have left the physical boundaries of the EU. This scenario is much more complicated.
What happens if goods are sold to a customer who will collect the consignment at your dock? The seller has very little logistics challenges with this type of ‘ex works’ transaction where the seller makes goods available on its premises for pick up by the buyer. This scenario still requires a POE (Proof of Export) though it is a bit more difficult to enforce. To mitigate lost or missing POEs, the sales team should list signed POEs as a legal obligation for the buyer to sign and return after picking up and moving the goods onto their own premises – a process that could take months depending on the method of transportation the buyer uses.
The Future: Streamlining Proof Collection
In July 2009, the EU is implementing new systems designed to improve the cross-border transaction process by speeding the sharing of documentation. Export declarations will be tagged in the new Export Control System (ECS) of the EU’s electronic tracking and messaging tool aiming to standardize the EU export system, Automated Export System (AES). ECS computerizes and controls indirect exports where an export leaves the EU from a member state. The required proof (i.e. fact that the goods have left the territory of the EU) will now be returned via ECS to the exporter’s system. The exporter no longer has to pester a buyer who may be on the other side of the world. For example, the exporter will, upon export, issue a declaration in the system that they are awaiting the proof from the buyer. Once the buyer acknowledges that they’ve received the goods, the buyer will issue a confirmation using the system. Mind you that the final liability lays with the Exporter of Records, so manual or automated processes needed to be inspected on completeness and integrity of files.

Risk is inherent when participating in cross-border trade. The challenge is to determine an acceptable risk level, locate risks and enact strategies to mitigate their impact. A full-scale audit will help determine risk exposures and possible penalties, especially those hidden in transportation agreements. The audit should look at the following company groups:
  – Purchasing/Procurement: review and validate the authenticity and accuracy of transportation carrier agreements.
  – Sales: verify the usage of Incoterms and educate on adverse scenarios when EXW and FCA Incoterms are requested.
  – Logistics: verify that transportation carriers are delivering contracted services and that each deviation is properly recorded and reported to management.
  – Finance/Tax: determine that files are complete, include required proofs of delivery, and are archived as long as legally required.
Though the concept of ‘a spider web of logistics’ may not be readily apparent, but if you examine a spider web closely you will see a structure that is organized in a detailed and specific way. The spider in the web knows exactly when an outside obtrusion is hitting its tightly interwoven threads. The spider has structured his web to alert him when risk occurs and action needs to be taken.

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R.C. Burns: “Boycott of Qatar by Arab Countries Can Implicate U.S. Anti-Boycott Rules”

Bryan Cave LLP)
* Author: R. Clifton Burns, Esq., Bryan Cave LLP, Washington DC,
, 202-508-6067).
Saudi Arabia, Bahrain, and the United Arab Emirates have imposed a boycott on Qatar, allegedly because of remarks that appeared on the Qatar News Agency’s website where Qatar emir Sheikh Tamim bin Hamad Al Thani called Iran an “Islamic power” and said Qatar has “good” relations with Israel. Qatar claims that the Sheikh never said this and that the QNA website was hacked. U.S. intelligence officials have said that this was likely the work of Russian hackers, who were hoping to create a rift among the United States and its Middle Eastern allies.
To implement the boycott, the Port of Fujairah, in the United Arab Emirates, has just banned from the port all maritime traffic coming from or headed to Qatar. A natural question is whether Part 760 of the Export Administration Regulations, the so-called Anti-Boycott Rules, will have an impact on whether U.S. persons can comply with this aspect of the boycott against Qatar. Many people think that those rules just cover the Arab League boycott against Israel, but in fact the Anti-Boycott Rules never even mention that boycott or any other specific boycott. By their terms, these rules apply to any “unsanctioned foreign boycott.” The term “unsanctioned foreign boycott,” is, oddly, never defined.  Even so, it can be safely concluded that the boycott against U.S. ally Qatar is one of those “unsanctioned foreign boycotts.”
That being said, consider the following scenario. A customer in Fujairah, UAE, wants to purchase $2 million worth of fidget spinners from a U.S. company. The purchase order contains the following clause:
The shipping terms for the purchased goods are DDP Port of Fujairah (INCOTERMS 2010). The good may not be shipped on a Qatari-flagged vessel or on a vessel that visited, or is destined to visit, Qatar.
Would accepting the order violate the Anti-Boycott Rules?
The Anti-Boycott rules do provide some limited exceptions to permit compliance with shipping instructions of boycotting countries. Section 760.3(b)(1)(i) permits a U.S. person to comply with a prohibition of shipping the goods on a Qatari-flagged vessel. In addition, section 760.3(b)(2)(i) permits a U.S. person to agree not to ship the goods through Qatar. However, the exceptions only apply to requirements for “shipping goods to the boycotting country.” Any restrictions on where the ship calls after that shipment is complete and the goods are delivered to Fujairah would be a violation of the rules.
It is impossible to predict at this point the full implementation of the boycott of Qatar and the extent to which commercial documents will contain provisions that seek to enforce compliance with the boycott. But U.S. companies need to be alert to such requests because the Anti-Boycott Rules are not restricted to the Arab League boycott against Israel.

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. Friday List of Approaching Events

(Sources: Event Sponsors) 
Published every Friday or last publication day of the week. Send events to
, composed in the below format:

* DATE: PLACE; “TITLE;” SPONSOR; WEBLINK; CONTACT (email and phone number)

#” New listing this week:   
Continuously Available Training:
* E-Seminars: “
US Export Controls” / “Defense Trade Controls
;” Export Compliance Training Institute;
* On-Line: “
Simplified Network Application Process Redesign (SNAP-R)
;” Commerce/BIS; 202-482-2227
* E-Seminars: “
Webinars On-Demand Library
;” Sandler, Travis & Rosenberg, P.A.
Training by Date:

* Jul 17-19: Hilton Head Island SC; “
Basics of Government Contracting
;” Federal Publications Seminars
Jul 20: Webinar; ”
Destination Control Statements;” Shipman & Goodwin LLP
* Jul 26: Free Webinar; ”
Discover Value in Your Trade Compliance Data;” Integration Point

* Jul 26-27: Oklahoma City OK; ”
Complying with U.S. Export Controls;” Dept. of Commerce/Bureau of Industry and Security

* Jul 26-27
: Seattle WA; “
2017 Export Controls Conference
;” Dept. of Commerce/U.S. Commercial Service, Dept. of Homeland Security/Homeland Security Investigations, Seattle University, Dorsey & Whitney LLP

Jul 27: Webinar; ”
Site Visits, Enforcement Actions, and Voluntary Disclosures;” Shipman & Goodwin LLP
Aug 1: Webinar; ”
Consideration for Exporting to China;” Shipman & Goodwin LLP
* Aug 2-3: Naperville, IN; “Automated Export System Compliance Seminar and Workshop;” Commerce/Census, Commerce/BIS, DHS/CBP, State/DDTC, Treasury

* Aug 14-16: McLean VA; “
Basics of Government Contracting
;” Federal Publications Seminars

Aug 17: Webinar; ”
Export Controls in the Cloud;” Shipman & Goodwin LLP

* Sep 4-9: Galveston TX;ICPA Conference at Sea;”

International Compliance Professionals Association; wizard@icpainc.org

* Sep 4: Glasgow, UK; ”
Intermediate Seminar;” UK Department for International Trade;

* Sep 5: Glasgow, UK; ”
Beginners Workshop;” UK Department for International Trade;

* Sep 5: Glasgow, UK; ”
Licenses Workshop;” UK Department for International Trade;

* Sep 5: Glasgow, UK; ”
Control List Classification – Combined Dual Use and Military;” UK Department for International Trade;

* Sep 6: Nashville TN; ”
AES Compliance Seminar;” Dept. of Commerce/Census

* Sep 12-13: Annapolis MD; “ITAR/EAR Boot Camp;” spalmer@exportcompliancesolutions.com; 866-238-4018 / 410-757-1919

* Sep 12-13: Louisville KY; ”
Complying with U.S. Export Controls;” Dept. of Commerce/Bureau of Industry and Security

* Sep 12-13: Milpitas CA; ”
Complying with U.S. Export Controls;” Dept. of Commerce/Bureau of Industry and Security

* Sep 12-13: Wash DC; “Interactive Export Controls Workshop;” ECTI; jessica@learnexportcompliance.com; 540-433-3977

* Sep 14: Milpitas CA; “
Encryption Controls;”
Dept. of Commerce/Bureau of Industry and Security

* Sep 18-21: Austin TX; “ITAR Defense Trade Controls / EAR Export Controls Seminar; ECTI; jessica@learnexportcompliance.com; 540-433-3977
* Sep 18-20: Las Vegas NV; “
Basics of Government Contracting;” Federal Publications Seminars

* Sep 21: 
Webinar; “
US Export Administration Regulations
” Foreign Trade Association 

* Sep 20-22: Houston TX; ”
Advanced Topics in Customs Compliance Conference;” Deleon Trade LLC
* Sep 27: Oxford, UK; ”
Intermediate Seminar;” UK Department for International Trade;

* Sep 27-28: Rome, Italy; “Defence Exports 2017;” SMi

* Sep 28: Oxford, UK; ”
Beginners Workshop;” UK Department for International Trade;
* Sep 28: Oxford, UK; ”
Licenses Workshop;” UK Department for International Trade;

* Oct 2-5: Columbus OH; “University Export Controls Seminar;” ECTI; jessica@learnexportcompliance.com; 540-433-3977

* Oct 5-6: London, UK; ”
The World ECR Forum 2017;” World ECR
 10 Oct: Rotterdam, the Netherlands; “
Awareness Training Export Control, Dual-Use, and Sanctions
” day I/3 [in Dutch]; Fenex

* Oct 10-12: Dallas TX; “
‘Partnering for Compliance™’ West Export/Import Control Training and Education Program
;” Partnering for Compliance
* Oct 12-13: Boston, MA; “Automated Export System Compliance Seminar and Workshop;” Commerce/Census, Commerce/BIS, DHS/CBP, State/DDTC, Treasury 

* Oct 13: Dallas TX; “
Customs/Import Boot Camp
;” Partnering for Compliance

 Oct 16-17: Washington, DC; “The World ECR Forum 2017;” World ECR

* Oct 16-19: Amsterdam, Netherlands “
US Export Controls for EU/NL and other Non-US Companies/How US Controls Impact Non-US Companies, Affiliates and Transactions, PLUS Other Country Controls Comparison to US Seminar
;” ECTI;
; 540-433-3977

* Oct 22-24: Grapevine TX; “
Annual ICPA Fall Conference
;” International Compliance Professional Association;

* Oct 23-24: Arlington VA; “
2017 Fall Advanced Conference
;” Society for International Affairs

 24 Oct: Rotterdam, the Netherlands; “
Awareness Training Export Control, Dual-Use, and Sanctions
” day 2/3 [in Dutch]; Fenex

* Oct 30-Nov 2: Phoenix AZ; “
ITAR Defense Trade Controls / EAR Export Controls Seminar
;” ECTI;
; 540-433-3977
* Nov 5-7: Singapore; ”
ICPA Singapore Conference;”
International Compliance Professionals Association;
 6 Nov: Rotterdam, the Netherlands; “
Awareness Training Export Control, Dual-Use, and Sanctions
” day 3/3 [in Dutch]; Fenex

* Nov 6-8: Chicago IL; “Basics of Government Contracting;” Federal Publications Seminars

* Nov 7: Norfolk, VA; “
AES Compliance Seminar
” Dept. of Commerce/Census

* Nov 9-10: Shanghai, China;
ICPA China Conference;”
International Compliance Professionals Association;

* Nov 13-16: Wash DC; “ITAR Defense Trade Controls / EAR Export Controls Seminar;” ECTI; jessica@learnexportcompliance.com; 540-433-3977

* Nov 15: Leeds, UK; ”
Intermediate Seminar;” UK Department for International Trade;

* Nov 16: Leeds, UK; ”
Beginners Workshop;” UK Department for International Trade;

* Nov 16: Leeds, UK; ”
Licenses Workshop;” UK Department for International Trade;

* Nov 16: Leeds, UK; ”
Control List Classification – Combined Dual Use and Military;” UK Department for International Trade;

* Nov 16: Nijkerk, the Netherlands; “Training Export Control” [in Dutch]; Fenedex
* Dec 4-7: Miami FL; “
ITAR Defense Trade Controls / EAR Export Controls Seminar;” ECTI; jessica@learnexportcompliance.com; 540-433-3977

* 5 Dec: Brussels, Belgium; ”
Dual Use For Beginners
” [In Dutch]; Flemish Department of Foreign Affairs

* Dec 5: San Juan PR; “AES Compliance Seminar in Spanish;” Dept. of Commerce/Census Bureau; itmd.outreach@census.gov

* Dec 6: Wood Ridge NJ; “
AES Compliance Seminar
;” Dept. of Commerce/Census Bureau;

* Dec 7: Laredo, TX; “AES Compliance Seminar in Spanish;” Dept. of Commerce/Census Bureau; itmd.outreach@census.gov 

* Dec 11-13: Sterling VA; “
Basics of Government Contracting
;” Federal Publications Seminars

* Mar 11-14: San Diego CA; ”
ICPA Annual Conference;”
International Compliance Professionals Association;
* * * * * * * * * * * * * * * * * * * * 


. Bartlett’s Unfamiliar Quotations

(Source: Editor)

* James Whistler (James Abbott McNeill Whistler, 10 Jul 1834  – 17 Jul 1903, was an American artist, whose best-known painting is Arrangement in Grey and Black No.1, popularly known under its colloquial name, “Whistler’s Mother“.)
  – “I can’t tell you if genius is hereditary, because heaven has granted me no offspring.”
Friday Funnies:

Q: What did George Washington say to his men before crossing the Delaware River?
A: “Get in the boat!”  
  – Mitchell McDonald, Colorado Springs, CO

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EN_a219. 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.

ATF ARMS IMPORT REGULATIONS: 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. 

CUSTOMS REGULATIONS: 19 CFR, Ch. 1, Pts. 0-199
Last Amendment: 13 Jul 2017: 82 FR 32232-32241: Electronic Information for Cargo Exported from the United States; Technical Amendments


  – 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 cancelled Supp. 1 to the NISPOM  (Summary here.)

  – Last Amendment: 7 July 2017: 
82 FR 31442-31449: Revisions to the Export Administration Regulations Based on the 2016 Missile Technology Control Regime Plenary Agreements [Effective Date: 7 July 2017.] 


FOREIGN ASSETS CONTROL REGULATIONS (OFAC FACR): 31 CFR, Parts 500-599, Embargoes, Sanctions, Executive Orders
 – Last Amendment: 16 Jun 2017: 82 FR 27613-27614: Removal of Burmese Sanctions Regulations 

  – 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.

HARMONIZED TARIFF SCHEDULE OF THE UNITED STATES (HTS, HTSA or HTSUSA), 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: 28 Jun 2017: 
Harmonized System Update 1704, containing 
2,564 ABI records and 463 harmonized tariff records. 
  – HTS codes for AES are available 
  – HTS codes that are not valid for AES are available 
  – Last Amendment: 11 Jan 2017: 82 FR 3168-3170: 2017 Civil Monetary Penalties Inflationary Adjustment
  – The only available fully updated copy (latest edition: 10 Jun 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 800 footnotes containing amendment histories, 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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. Weekly Highlights of the Daily Bugle Top Stories

(Source: Editor)

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

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* The Ex/Im Daily Update is a publication of FCC Advisory B.V., compiled by: Editor, James E. Bartlett III; Assistant Editors, Alexander P. Bosch and Vincent J.A. Goossen; and Events & Jobs Editor, John Bartlett. The Ex/Im Daily Update is emailed every business day to approximately 8,000 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.

* SUBSCRIPTIONS: Subscriptions are free.  Subscribe by completing the request form on the Full Circle Compliance website.

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