17-0823 Wednesday “Daily Bugle”

17-0823 Wednesday “Daily Bugle”

Wednesday, 23 August 2017

The Daily Bugle is a free daily newsletter from Full Circle Compliance, containing changes to export/import regulations (ATF, Customs, NISPOM, EAR, FACR/OFAC, FTR/AES, HTSUS, and ITAR), plus news and events.  Subscribe 
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  1. Commerce/BIS: Materials Technical Advisory Committee to Meet on 7 Sep in Wash DC 
  1. Ex/Im Items Scheduled for Publication in Future Federal Register Editions
  2. Commerce/BIS: (No new postings.)
  3. DoD/DSS Posts Reminder on T5 and T3 Investigative Requests
  4. State/DDTC Posts Name Change for Safe Air Limited
  5. Australia DEC Announces New Outreach Program in Brisbane, 21-22 Sep
  6. Hong Kong TID Releases Overview of Officers Authorized to Sign Strategic Commodities Licences and Delivery Verification Certificates for Strategic Commodities
  1. The Loadstar: “Nine Out of Ten U.S.-Bound Containers Are Uninsured”
  1. D. Vinik: “America’s Permanent Export Emergency”
  2. M. Volkov: “Infusing Corporate Culture with Accountability”
  3. Gary Stanley’s ECR Tip of the Day
  1. Export Controls 2-day Workshop 11-12 Sep in Wichita  
  1. Bartlett’s Unfamiliar Quotations 
  2. Are Your Copies of Regulations Up to Date? Latest Changes: ATF (15 Jan 2016), Customs (28 Jul 2017), DOD/NISPOM (18 May 2016), EAR (15 Aug 2017), FACR/OFAC (16 Jun 2017), FTR (19 Apr 2017), HTSUS (25 Jul 2017), ITAR (11 Jan 2017) 
  3. Weekly Highlights of the Daily Bugle Top Stories 


EXIM_a11. Commerce/BIS: Materials Technical Advisory Committee to Meet on 7 Sep in Wash DC

(Source: Federal Register) [Excerpts.]
82 FR 39982: Materials Technical Advisory Committee; Notice of Partially Closed Meeting
  The Materials Technical Advisory Committee will meet on September 7, 2017, 10:00 a.m., Herbert C. Hoover Building, Room 3884, 14th Street between Constitution & Pennsylvania Avenues NW., Washington, DC. The Committee advises the Office of the Assistant Secretary for Export Administration with respect to technical questions that affect the level of export controls applicable to materials and related technology. …
The open session will be accessible via teleconference to 20 participants on a first come, first serve basis. To join the conference, submit inquiries to Ms. Yvette Springer at Yvette.Springer@bis.doc.gov, no later than August 31, 2017.
  A limited number of seats will be available during the public session of the meeting. Reservations are not accepted. To the extent time permits, members of the public may present oral statements to the Committee. Written statements may be submitted at any time before or after the meeting. However, to facilitate distribution of public presentation materials to Committee members, the materials should be forwarded prior to the meeting to Ms. Springer via email.
  For more information, call Yvette Springer at (202) 482-2813.
  Yvette Springer,
Committee Liaison Officer.

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

* Commerce; Industry and Security Bureau; NOTICES; Agency Information Collection Activities; Proposals, Submissions, and Approvals [Publication Date: 23 August 2017.]:
  – Competitive Enhancement Needs Assessment Survey Program
  – Annual Report from Foreign-Trade Zones

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REMINDER: The Personnel Security Management Office for Industry (PSMO-I) is prioritizing the submission of initial T5 (Top Secret) and T3 (Secret) investigative requests to the National Background Investigations Bureau. PSMO-I is continuing to monitor industry periodic reinvestigations to ensure none expire from the system. Industry should continue to submit T3R investigation requests to PSMO-I, in addition to caveat program T5Rs per the April 7, 2017 guidance.

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OGS_a45. State/DDTC Posts Name Change for Safe Air Limited

(Source: State/DDTC) [Excerpts.]
Effective immediately, Safe Air Limited will change as follows: Airbus New Zealand Limited. 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_a56. Australia DEC Announces New Outreach Program in Brisbane, 21-22 Sep

(Source: Australia DEC)
Defense Export Controls is conducting an outreach program to cover the requirements exporters must meet when exporting goods and technology that are controlled, have a potential military end use or could be used in a weapon of mass destruction program. This year’s outreach program includes Melbourne, Brisbane, Sydney and Adelaide.
The next program will be in Brisbane, on 21 and 22 September at QUT Gardens Point Campus.
The program will be delivered over two days, and participants are welcome to register for one or two days, or any elements of those days. There is no fee for attendance.
Day 1:
  (1) Introduction to export controls
  (2) Export controls for defense industry OR Export controls for academia and research organizations
  (3) Presentations from other government agencies in Australia’s   export landscape OR one-on-one sessions with DEC representatives
Day 2:
  (1) International Trade in Arms Regulations (ITAR) training. Due to popularity of this session, we ask that attendees register one participant per organization.
Note: this course is for Australian Small to Medium Enterprises who are involved in, or wish to know more about, managing US export controlled items. The course is suitable for both experienced and inexperienced SMEs and aims to provide an in-depth understanding of the regulations and requirements for companies to ensure compliance.
The program for the day is available for download here. Please click here to register your attendance.

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OGS_a67. Hong Kong TID Releases Overview of Officers Authorized to Sign Strategic Commodities Licences and Delivery Verification Certificates for Strategic Commodities

(Source: Hong Kong TID)
The Trade and Industry Department (TID) of Hong Kong has released a new overview of officer authorized to sign on strategic commodities licenses and delivery verification certificates under Import and Export Ordinance, Cap 60 Import and Export (Strategic Commodities) Regulations.
The overview is available here.

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The Loadstar, 18 Aug 2017.)
One thing that has shocked me in my 33 years working in international trade is the fact that a large portion (90%+) of import cargo moves to the U.S. without any insurance coverage. While cargo insurance costs about 1/2 of a percent of the shipment’s value, many (most) importers don’t purchase this coverage. I’ve found that there are many reasons given for why this is as it is:

(1) “My business insurance covers my shipments.” Unfortunately this assumption is usually wrong. Most insurance policies do not cover cargo in transit, or if they do they place strict limitations on that coverage.

(2) “My supplier covers the cargo insurance.” Again this answer is usually wrong. The terms of sale for products purchased determine whether or not the supplier provides insurance coverage. Since most products are purchased on an FOB basis the supplier is not required to provide insurance coverage. Even shipments purchased under CIF terms are often only insured to the first U.S. port and any damages or losses incurred after that point are not covered.

(3) “Nothing bad has ever happened to any of my shipments.” Well this one may be true, but what are the odds that this could change? Just because you have not had any past problems do you want to risk losing tens of thousands of dollars just to avoid paying a small insurance premium? Seems risky to me.

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. D. Vinik: “America’s Permanent Export Emergency”

* Author: Danny Vinik, Assistant Editor, The Agenda, dvinik@politico.com, 703-842-1788.
In 1994, with trade fights raging over the North American Free Trade Agreement and the World Trade Organization, the White House faced an urgent problem: It was about to lose most of its power to block exports for national security reasons. The decades-old law governing so-called export controls was about to expire, and Congress was making no move to renew it. So the Clinton administration took matters into its own hands: It declared a national emergency, extending its export-control powers without any new legislation.
Twenty-three years and three administrations later, that national emergency still stands.Last week, entirely unremarked in the aftermath of Charlottesville, President Donald Trump extended the emergency yet again, signing a 134-word presidential notice that allows the federal government to control the export of almost every U.S. product.
Though not as high-profile as trade deals, export controls are critical to U.S. national security: They prevent potentially risky technology or products from ending up in the hands of U.S. adversaries. So Trump’s notice, which has been issued by presidents every year for almost a quarter century, is entirely uncontroversial. But the need for such a notice-to control exports via emergency powers rather than regular legislation-is also a glaring example of congressional dysfunction, and the seemingly unchecked expansion of the president’s emergency powers.
  “It is sort of ridiculous,” said Bill Reinsch, a fellow at the Stimson Center who has been involved in the issue for decades, as a congressional staffer and senior official at the Commerce Department.
The authority over what can be exported from the U.S., to where and by whom, is a huge power of the government, fueling an entire legal industry and creating huge political fights between pro-business lawmakers seeking to open up new markets and defense hawks worried about permitting the sale of sensitive technologies. Once, this power was a straightforward matter of law: The Export Administration Act formally granted this power to the federal government. However, except for a 10-month period, the act has been expired since 1994, and Congress has not permanently reauthorized it.
Unwilling to engage in the political fights necessary to forge a new system, Congress basically has abdicated its power here, leaving the federal government potentially unable to control exports.The shortcut has been to declare an essentially permanent state of national trade emergency, whicheffectively reinstates the law without any legislative action.
Year-to-year, the U.S. export control system functions pretty well under the emergency system, experts say, and it has even undergone some updates. The Obama administration downgraded the security level for thousands of products during his presidency, allowing the government to focus its resources on a smaller set of goods and technologies that could most damage the U.S. if they fell into our enemies’ hands.
But larger reforms require Congress to get involved, and so they simply haven’t happened. One plank of the Obama plan called for simplifying the export control process, which has two separate lists governed by different agencies. The plan would have created a single system with a single licensing agency overseeing it; it had wide appeal, especially among exporters who find the current system unnecessarily confusing to navigate, but Congress never took it up. In fact, since the EAA was first passed in 1979, Congress has never undertaken a broad reform of the law. “It’s badly out of date. It refers to the Soviet Union,” Reinsch said. “It’s not designed to deal with current realities.”
Congress first granted the federal government peacetime authority to control exports after World War II when lawmakers passed the Export Control Act of 1949, which was intended to prevent certain strategic items from falling into the hands of the Soviet Union. Those powers eventually would fall to the Commerce Department, which has, over time, developed a complicated list of requirements for what can be exported, to what countries and under what conditions. Notably, the Commerce list does not include defense products like guns, ammunition and bombs, which fall under a separate, more tightly controlled list run by the State Department. Instead, it includes so-called dual use products-ones that have both civilian and military applications like night vision goggles or machine tools.
Over the next 30 years, Congress repeatedly reauthorized the law, culminating in a major rewrite in the 1979 Export Administration Act. But in 1994, Congress failed to reauthorize the EAA, caught between lawmakers who wanted to liberalize export control rules to help businesses and military hawks who wanted to tighten them, leaving the Clinton administration with the unnerving possibility of losing its export-control authority. To prevent that, Bill Clinton issued an executive order on Aug. 19, 1994, declaring a national emergency under the International Emergency Economic Powers Act, or IEEPA. The IEEPA gives the president nearly unlimited authority to control exports during an emergency.
Except for a 10-month reauthorization in late 2001 when Congress hoped to pass a broader, long-term reauthorization, presidents have relied on this emergency authority for the past 24 years. After so many years of failure, Congress has all but given up trying to reauthorize the underlying statute. “Basically, everybody has accepted that this is the way it happens,” said Douglas Jacobson, an export controls attorney in Washington.
The truth is, experts said, the IEEPA is broad enough that a reauthorization of the EAA that allows the president to control exports without declaring a national emergency really hasn’t been necessary. “Like anything else in law and regulation, the law is the broader framework and, ultimately, it’s the regulations that control,” said Jacobson. Congressional leaders deemed that it wasn’t worth the messy political fight, especially among Republicans, that was certain to unfold from any reauthorization.
But the Commerce Department is quickly confronting questions that could never have been envisioned under the 1979 law, which still guides the government’s framework for export control, when the internet barely existed and Steve Jobs was just 24 years old. The law was written during a time when controlling exports meant regulating the sale of physical goods, with U.S. Customs agents inspecting products at ports. “Now, a lot of what is controlled is software or blueprints that have been digitized,” said Reinsch. “It’s downloaded. It doesn’t have any physical manifestation at the dock.” Over the past few years, Commerce officials have been figuring out how to handle cloud storage, raising difficult and somewhat impossible questions, Reinsch said. “Has data in the cloud been exported? Does it depend on where the cloud lives?” he explained. “What if the cloud moves?”
Such questions could undoubtedly use some attention-and direction-from members of Congress. But given the congressional gridlock, that’s unlikely to be forthcoming. Which means next August, Trump is all but certain to issue another presidential notice, extending a national emergency over export control into its 25th year.

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10. M. Volkov: “Infusing Corporate Culture with Accountability”

(Source: Volkov Law Group Blog. Reprinted by permission.)
* Author: Michael Volkov, Esq., Volkov Law Group, mvolkov@volkovlaw.com, 240-505-1992.
If you are a fan of Simon Sinek, you will understand and probably agree with the thrust of this posting. Sinek is a great motivational and business speaker. Many of his observations are spot-on and I would urge you to review some – here are some samples (here, here, here, and here).
Getting back to the importance of accountability in a corporation, let’s start with some important principles for ethical culture as explained by Sinek and others. A company is successful in the marketplace, not because they sell a terrific product and/or service, but in a much broader sense, because of its actions, beliefs and communication of its set of principles, values and beliefs.
Sinek, for example, points out this basic point in this lecture (here). Apple, for example, does not market itself as a great provider of computers, but has a much broader message – “We challenge the status quo.” Consumers who are attracted to that message, purchase the Apple computer, and are proud of their association with the Apple Company because they believe in the same message about themselves – they challenge the status quo.
A company’s culture reflects its values, principles and beliefs – I now that sounds a little amorphous and touchy-feely, but there is a point here. Employees want to believe in their respective organizations and leaders. They want to believe that their leaders are ethical and worthy of admiration.
When it comes to the relationship between employees and leaders, company leaders, like employees, have to be held accountable for their performance and conduct.
What do we mean by accountability? It is not as simple a concept as being disciplined for misconduct. That is a very limiting approach to the importance of accountability. It is a much broader approach, which encompasses positive and negative consequences.
Accountability is based on a bargain or understanding in an organization. In order to reap the benefits and awards of superior performance, corporate leaders and employees have to agree to accept the responsibility for poor performance or mistakes made in the course of carrying out their duties. When there is a breakdown in this fundamental bargain between an organization and its leaders and employees, a corporate culture is undermined by cynicism.
A corporate leader who reaps the benefit of positive corporate performance, has to acknowledge and be held accountable for poor corporate performance. There cannot be a disconnect between these two important principles.
In the corporate culture world, however, CEOs are treated like superstars – pay has increased dramatically over the last 20 years, and few, if any senior executives have been held accountable in any meaningful way for poor corporate performance. This perception has been exacerbated by the fact that corporate leaders escaped criminal prosecution for their respective roles in the financial crisis of 2008. All of these trends have undermined any consistent application of accountability.
In its place, companies have had to struggle against the perception that senior leaders are never held accountable, while mid-level managers and employees are often disciplined for corporate misconduct. The old adage applies in the compliance world – when senior leaders mess up, mid-level managers and employees receive additional training.
Cynicism can quickly undermine corporate values, principles, and performance. It is a cultural influence that corrodes and ultimately creates an environment in which misconduct risks increase and corporate performance declines. A company can fight this threat by adhering to a simple, but powerful message – we are all accountable for our accomplishments as well as our failures.

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11. Gary Stanley’s ECR Tip of the Day

(Source: Defense and Export-Import Update; available by subscription from
* Author: Gary Stanley, Esq., Global Legal Services, PC, (202) 352-3059,
DDTC strongly encourages applicants who are able to submit D-Trade applications to submit a technical data DSP-5 license application for the marketing of a defense article in lieu of a General Correspondence AO request when the request involves whether DDTC would be likely to grant a license or other approval for the export of a particular defense article or defense service to a particular country. The DSP-5 can be processed more expeditiously because it is electronically received and returned, and does not require additional manual data entry into USXports. In addition, unlike an AO, an approved DSP-5 also includes the authorization to export the technical data. The DSP-5 marketing application must outline in detail the equipment, its proposed usage, the security classification (if any) of the articles or related technical data, and the country or countries involved. Applicants may also include prior related advisory opinions as supporting materials for the application.

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TE_a112. Export Controls 2-day Workshop 11-12 Sep in Wichita

(Source: Holli Schletzbaum, schletzbaum@kansasglobal.org)
* When: September 11-12 in Wichita, KS and September 13-14 in Kansas City, KS
* What: Anthony Dearth, the Managing Director (Acting) for DDTC, is coming to Wichita and KC to give the latest updates regarding export compliance. The 2-day seminar is hosted by Kansas Global, the U.S. Commercial Service and the Mid-America District Export Council. The seminar will cover a wide range of export control and licensing issues affecting U.S. exporters.
* Speakers: Anthony Dearth, Managing Director (Acting) for DDTC; Dan Squires, BIS; Linda Smith, DoD; Brooke Ringel, the law firm of Kelley and Drye.
* Register: Online at www.kansasglobal.org or contact Holli Schletzbaum at schletzbaum@kansasglobal.org or 316-264-5982.

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* Edgar Lee Masters (23 Aug 1868 – 5 Mar 1950; was an American attorney, poet, biographer, and dramatist. He is the author of Spoon River Anthology, The New Star Chamber and Other Essays, Songs and Satires, The Great Valley, The Serpent in the Wilderness an Obscure Tale, The Spleen, and Mark Twain: A Portrait, Lincoln: The Man, and Illinois Poems.)
  – “Those who first oppose a good work, seize it and make it their own when the cornerstone is laid and memorial tablets are erected.”

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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: 28 Jul 2017: 82 FR 35064-35065: Technical Corrections to U.S. Customs and Border Protection Regulations
  – 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.)

: 15 CFR Subtit. B, Ch. VII, Pts. 730-774

  – Last Amendment: 15 Aug 2017: 
82 FR 38764-38819: Wassenaar Arrangement 2016 Plenary Agreements Implementation 

: 31 CFR, Parts 500-599, Embargoes, Sanctions, Executive Orders
  – Last Amendment: 16 Jun 2017: 82 FR 27613-27614: Removal of Burmese Sanctions Regulations 
: 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 (18 July 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, Census/AES guidance, and to many errors contained in the official text. 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: 25 Jul 2017: Harmonized System Update 1706, containing 834 ABI records and 157 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 the Daily Bugle Top Stories” published 

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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 of this newsletter 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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