16-0915 Thursday “The Daily Bugle”

16-0915 Thursday “Daily Bugle”

Thursday, 15 September 2016

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/Census: “Port of Export Codes Deleted in the Automated Export System” 
  3. Commerce/BIS: Francisco Javier Mendoza-Esquivel of Big Spring, TX, Denied Export Privileges for 10 Years 
  4. State/DDTC Posts Notice Concerning Indo-MIM Inc. Reorganization 
  5. Treasury/OFAC Posts 2nd, 3rd and 4th Quarter FY2015 Reports for Licensing Activities Undertaken Pursuant TSRA 
  6. EU Amends Dual-Use Regulation 
  7. EU Prolongs Sanctions over Actions against Ukraine’s Territorial Integrity 
  1. Expeditors News: “White House Restores Myanmar as GSP Beneficiary”
  2. ST&R Trade Report: “Updated Import/Export Rules Proposed for Controlled Substances, Listed Chemicals, Other Goods”
  1. T.B. McVey: “State Department Relaunches Company Visit Program to Assess ITAR Compliance” 
  2. R.C. Burns: “Burma Sanctions Will Sunset (No OFAC Action Necessary)” 
  1. Bartlett’s Unfamiliar Quotations 
  2. Are Your Copies of Regulations Up to Date? Latest Changes: ATF (15 Jan 2016), Customs (26 Aug 2016), DOD/NISPOM (18 May 2016), EAR (7 Sep 2016), FACR/OFAC (18 May 2016), FTR (15 May 2015), HTSUS (30 Aug 2016), ITAR (8 Sep 2016) 



[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)

* Presidential Documents; ADMINISTRATIVE ORDERS; Trading With the Enemy Act; Continuation of Certain Authorities (Presidential Determination No. 2016-11 of September 13, 2016) [Publication Date: 16 September 2016.]

* Presidential Documents;  PROCLAMATIONS; Trade: Generalized System of Preferences Duty-Free Treatment; Modifications (Proc. 9492) [Publication Date: 16 September 2016.]

* Presidential Documents; EXECUTIVE ORDERS; Cote d’Ivoire; Termination of Emergency (EO 13739) [Publication Date: 16 September 2016.]

* State; NOTICES; Agency Information Collection Activities; Proposals, Submissions, and Approvals: Request for Advisory Opinion [Publication Date: 16 September 2016.]

* U.S. Customs and Border Protection; NOTICES; Agency Information Collection Activities; Proposals, Submissions, and Approvals: African Growth and Opportunity Act Certificate of Origin [Publication Date: 16 September 2016.]

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OGS_a22. Commerce/Census: “Port of Export Codes Deleted in the Automated Export System”

(Source: census@subscriptions.census.gov, 15 Sep 2016)
Please note the following Port of Export codes have been DELETED in the Automated Export System (AES) effective immediately.
Port of Export       Description
0181                    Lebanon Airport, NH
0409                    Provincetown, MA
For further information or questions, contact the U.S. Census Bureau’s Data Collection Branch.
  – Telephone: (800) 549-0595, select option 1 for AES
  – Email: askaes@census.gov
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OGS_a33. Commerce/BIS: Francisco Javier Mendoza-Esquivel of Big Spring, TX, Denied Export Privileges for 10 Years

(Source: Commerce/BIS)
* Respondent: Francisco Javier Mendoza-Esquivel of Big Spring, TX
* Charges: On August 11, 2015, in the U.S. District Court for the Southern District of Texas, Francisco Javier Mendoza-Esquivel (“Mendoza-Esquivel”), was convicted of violating Section 38 of the Arms Export Control Act (22 U.S.C. § 2778 (2012)) (“AECA”). Specifically, Mendoza-Esquivel intentionally and knowingly conspired and agreed to knowingly and willfully export, attempt to export, and cause to be exported into Mexico from the United States a defense article, that is, to wit: approximately five thousand eight hundred and sixty (5,860) rounds of 7.62 x 39 mm caliber ammunition which were designated as defense articles on the United States Munitions List, without having first obtained from the Department of State a license for such export or written authorization for such export. Mendoza-Esquivel was sentenced 51 months of imprisonment and a $100 assessment.
* Debarred: Denied export privileges for the period of 10 years from the date of Mendoza-Esquivel conviction, August 11, 2025.
* Date of Order: 14 September 2016
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OGS_a44. State/DDTC Posts Notice Concerning Indo-MIM Inc. Reorganization

(Source: State/DDTC) [Excerpts.]
Effective immediately, due to a corporate reorganization, Indo-MIM Inc. (Indo-MIM) has become a party to DSP authorizations (including agreements) to which one or more of its affiliates (Indo-US MIM Tec Pvt. Ltd. LLC and Indo-US MIM Tech Pvt Ltd.) are already a party. 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_a55. Treasury/OFAC Posts 2nd, 3rd and 4th Quarter FY2015 Reports for Licensing Activities Undertaken Pursuant TSRA

(Source: Treasury/OFAC)
Quarterly Reports of Licensing Activities pursuant to Section 906(b) of the Trade Sanctions Reform and Export Enhancement Act of 2000 (TSRA), covering activities undertaken by the Treasury Department’s Office of Foreign Assets Control (OFAC) under Section 906(a)(1) of the TSRA from January through September 2015.  Under the procedures established in its TSRA-related regulations, OFAC processes license applications requesting authorization to export agricultural commodities, medicine, and medical devices to Iran and Sudan under the specific licensing regime set forth in Section 906 of the TSRA.
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OGS_a76. EU Amends Dual-Use Regulation

The current EU dual-use control list was last updated by Commission Delegated Regulation (EU) No 2015/2420 of 12 October 2015, taking account of the control list changes adopted by the international non-proliferation regimes and export control arrangements until the end of 2014. The changes to the control lists adopted by the international non-proliferation regimes and export control arrangements in 2015 now require another amendment of Annex I to Council Regulation (EC) No 428/2009. The delegated act therefore presents a variety of amendments to the Union dual-use control list concerning the control parameters, the technical definitions and descriptions and the removal or addition of dual-use items. The amendments to the Union dual-use control list in Annex I also necessitate consequential amendments to Annexes IIa to IIg and Annex IV.
The amendment can be found here.
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OGS_a67. EU Prolongs Sanctions over Actions against Ukraine’s Territorial Integrity

The Council prolonged by 6 months the application of EU restrictive measures targeting actions against Ukraine’s territorial integrity, sovereignty and independence. These sanctions consist of an asset freeze and a travel ban against 146 persons and 37 entities. They have been extended until 15 March 2017.
The measures had been introduced in March 2014 and were last extended in March 2016.The assessment of the situation did not justify a change in the regime of sanctions nor in the list of persons and entities under restrictive measures. Information and statement of reasons for listing related to these persons and entities were updated as necessary.
The legal acts are available in the EU Official Journal of 16 September 2016. The decision was adopted by written procedure.
Several EU measures are in place in response to the crisis in Ukraine including:
  – economic sanctions targeting specific sectors of the Russian economy, currently in place until 31 January 2017;
  – restrictive measures in response to the illegal annexation of Crimea and Sevastopol, limited to the territory of Crimea and Sevastopol, currently in place until 23 June 2017.

  – List of persons and entities under EU restrictive measures over the territorial integrity of Ukraine(September 2016)

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On September 14, 2016 the White House issued a Presidential Proclamation to Congress that will restore Generalized System of Preferences (GSP) trade benefits to Burma.
In April 1989, Burma was suspended from receiving GSP preferential treatment by Proclamation 5955. President Obama has now determined that the suspension will be lifted and Burma be designated a least-developed beneficiary developing country.
The Harmonized Tariff Schedule will be updated 60 days from the release of this publication and will reflect the changes made.
The full proclamation can be accessed here.
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NWS_a29. ST&R Trade Report: “Updated Import/Export Rules Proposed for Controlled Substances, Listed Chemicals, Other Goods”

(Source: ST&R Trade Report)
The Drug Enforcement Administration is proposing to update its regulations for the import and export of tableting and encapsulating machines, controlled substances, and listed chemicals as follows. Comments on this proposed rule are due no later than Oct. 17.
  – mandating the electronic submission of all permit applications and other required filings and reports associated with the importation or exportation of tableting and encapsulating machines, controlled substances, and listed chemicals
  – mandating the electronic submission of all reports associated with the unusual or excessive loss or disappearance of a listed chemical, domestic regulated transactions in tableting or encapsulating machines, and mail order transactions of ephedrine, pseudoephedrine, phenylpropanolamine, or gammahydroxybutyric acid
  – integrating DEA procedures related to the importation and exportation of tableting and encapsulating machines, controlled substances, and listed chemicals with the International Trade Data System
  – specifying that all controlled substance and listed chemical declarations expire in 180 calendar days, consistent with controlled substance import/export permits (if release by a customs officer will occur more than 180 calendar days after the declaration is deemed filed, the declarant would have to submit a new declaration for the transaction)
  – establishing mandatory filing of return information for imports and exports of controlled substances and tableting and encapsulating machines
  – allowing for reexportation of controlled substances among members of the European Economic Area

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* Author: Thomas B. McVey, Esq., Williams Mullen, tmcvey@williamsmullen.com, 202-293-8118.
The Directorate of Defense Trade Controls (“DDTC”) within the State Department has relaunched its “Company Visit Program.” Under the Company Visit Program, DDTC officials come to your office to review your company’s compliance activities under the International Traffic In Arms Regulations (“ITAR”). DDTC has recently resumed conducting company visits and has issued additional information about the program – every company that is regulated under ITAR should be familiar with this.
Under the program, companies are selected for a visit under DDTC’s screening criteria. Two or more officials from DDTC’s Compliance Office will conduct the visit. Visits last 1-2 days. During the visits, the DDTC officials meet with senior executives and company compliance personnel and review the company’s compliance activities.
DDTC has recently issued additional information about the program, including a series of Frequently Asked Questions. [FN/1] The following are a number of these FAQ’s that are instructive:
What is the Company Visit Program?
The Company Visit Program (CVP) entails visits by Directorate of Defense Trade Controls (DDTC) officials to U.S. entities registered with DDTC as manufacturers, exporters, or brokers of defense articles and defense services, as well as others involved in ITAR-regulated activities, to include foreign companies and foreign governments. The CVP is administered by the Office of Defense Trade Controls Compliance (DTCC); however, representatives from DDTC’s Licensing and Policy offices, or other entities in the Department or elsewhere in the U.S. government, may also participate in the visits.
What is the purpose of the Company Visit Program?
The CVP has several purposes. First, the CVP ensures DTCC understands how compliance programs are implemented in accordance with the International Traffic in Arms Regulations (ITAR). Second, the program enables DDTC to gather information to support the Directorate’s development of regulatory policy and practice. Finally, DTCC uses site visits to glean, assess, and disseminate industry best practices, provide feedback to individual companies on their compliance programs, and share information on compliance programs industry-wide. …
How is the DDTC team staffed for each CVP visit?
A CVP team typically consists of two or more staff from DTCC, depending on the size of the individual company/site being visited and number of companies/facilities visited per trip. On some CVP visits, staff members from the Offices of Defense Trade Controls Licensing and Policy, or other relevant agencies, may participate. One DTCC team member serves as team lead and primary point of contact with the company. This primary contact is responsible for coordinating the site visit with the company.
How is a CVP visit conducted and what should a company expect?
  – Once a company is selected for a potential CVP visit, DTCC contacts the company. The company can elect not to participate in the visit. If the company would like to participate, DTCC will propose visit dates and begin planning with the company.
  – Once visit dates are finalized, DTCC sends the company a formal visit notification letter outlining the visit. DTCC may request pre-visit materials from the company for review and preparation purposes. Before the visit, DTCC will work with the company to finalize the agenda.
– At the visit’s opening, DTCC meets with senior management to explain the visit’s purpose and the agenda. The company should provide an overview of its operations and export activity during opening discussions. Visits generally last one to two days, depending on the purpose, and occur on the company’s premises in offices and conference rooms, and through tours of business operations within the facility (e.g., business development, contracts, procurement, design, manufacture, security, IT, personnel, and shipping).
  – At the visit’s conclusion, the DDTC team briefs company senior management and export control staff to share information the team gathered. DDTC invites the company to provide feedback, ask questions, or raise concerns for follow-up.
  – The DDTC team returns to the Department and generates an internal report. The team also follows up on company feedback. DTCC will send a formal close-out letter to the company. Close-out letters summarize the visit, indicate best practices, recommend areas for improvement or suggest best practices, and address feedback, questions, or concerns raised by the company. DTCC also requests feedback on the visit’s quality and usefulness and suggestions for improving the program.
Are Blue Lantern Checks the same as Company Visits for foreign companies?
The Blue Lantern program is not the same as the Company Visit Program. The Office of Defense Trade Controls Policy manages the Blue Lantern program; end-use checks are conducted by embassy personnel overseas and focus on end-user and end-use verifications related to DDTC authorizations.
It is important to be ready if DDTC requests a visit with your company.   Companies are advised not to wait until the last minute but rather have their ITAR compliance house in order in prior to being contacted for a visit.   This includes:
  (1) Having the company’s Compliance Program and policies and procedures implemented and distributed to key employees;
  (2) Having conducted ITAR training for key employees;
  (3) Making sure that the company has the proper licenses, technical assistance agreements (TAA’s), reexport/retransfer authorizations and other authorizations as required for its business;
  (4) Properly decrementing export and import licenses, and proper use of destination control statements;
  (5) Proper TAA administration (including amending TAA’s to reflect changes in programs, having TAA’s properly executed, filing TAA’s with DDTC, etc.);
  (6) Having proper controls in place for ITAR-controlled technical data, including for foreign national employees and controls for the company’s data system;
  (7) Proper compliance with the ITAR recordkeeping requirements;
  (8) Proper ITAR registration, including updating registration statements for changes in information contained in the company’s registration statement and registration for affiliates and brokering activities;
  (9) Compliance with the ITAR brokering requirements, including registration, advanced authorization, reporting and recordkeeping requirements; and
  (10) Filing reports for the payment of sales commissions and payments under ITAR Part 130.
Of course, companies should be in full compliance with ITAR not just to avoid problems with DDTC office visits, but to also otherwise avoid liability for ITAR violations, including civil and criminal penalties of up to $1 million in fines and 20 years imprisonment.
The best defense is a good offense – companies should plan in advance and be prepared to avoid more serious problems later on. And “later on” may now come sooner than you think.

  [FN/1] See DDTC company guidance “Company Visit Program” (CVP), dated July 17, 2016, available on DDTC website.

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COMM_a211. R.C. Burns: “Burma Sanctions Will Sunset (No OFAC Action Necessary)”
Export Law Blog
. Reprinted by permission.)
* Author: R. Clifton Burns, Esq., Bryan Cave LLP, Wash DC, 202-624-3949,
President Obama announced yesterday, after meeting with the newly elected President of Burma, that he intends to lift all remaining sanctions on Burma. With unusual alacrity, at least for the Office of Foreign Assets Control (“OFAC”), that agency issued FAQ #480 stating that its sanctions against Burma would disappear the moment that the President issues an executive order terminating the national emergency with respect to Burma. In other words, the Burmese Sanctions Regulations will immediately become ineffective even if it takes, as it probably will, months for OFAC to get around to pulling them down or issue a rule repealing them.
Of course, and not surprisingly, that FAQ may not be true. The restrictions on the import of jade and rubies from Burma were imposed by the infelicitously named “Tom Lantos Block Burmese JADE (Junta’s Anti-Democratic Efforts) Act of 2008” and cannot be removed until the White House makes certain notifications to Congress.
There is also the question of the status of blocked individuals after the President declares that the national emergency with respect to Burma is over. Section 5(b)(1) automatically blocked the property of certain persons in Burma and section 5(h) requires congressional notification before waiving that sanction. In 2009, the President issued a waiver as to all such persons not listed on the SDN List and that waiver has been congressionally notified.
But is President Obama really intending to remove everyone on the SDN List designated under the Burma sanctions including Steven Law and his companies such as Asia World? Law is on the list for narcotics trafficking, and there seems little reason to rehabilitate him simply because Burma has a democratically elected government. But if Law and his companies remain on the SDN list and the regulations go away, what happens to General License No. 20, which permits goods to be exported to Burma through Asia World ports? Without that license, exports to Burma from the United States will effectively be halted again.
Perhaps we need a few more FAQs.
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(Source: Editor)


Today’s notable birthdays:

Francois de La Rochefoucauld (François VI, Duc de La Rochefoucauld, Prince de Marcillac, 15 Sep 1613 – 17 Mar 1680, was a noted French author of maxims and memoirs.)

  – “Decency is the least of all laws, but yet it is the law which is most strictly observed.”


Marco Polo (15 Sep 1254 – 8 Jan 1324, was a Venetian merchant traveler whose travels are recorded in The Travels of Marco Polo, a book that introduced Europeans to Central Asia and China.)

  – “Without stones there is no arch.”

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13. 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: 26 Aug 2016: 81 FR 58831-58834: Administrative Exemption on Value Increased for Certain Articles  

  – 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: 7 Sep 2016: 81 FR 61595-61612: Russian Sanctions: Addition of Certain Entities to the Entity List  

: 31 CFR, Parts 500-599, Embargoes, Sanctions, Executive Orders
  – Last Amendment: 18 May 2016: 81 FR 31169-31171: Burmese Sanctions Regulations 
: 15 CFR Part 30
  – Last Amendment: 15 May 2015; 80 FR 27853-27854: Foreign Trade Regulations (FTR): Reinstatement of Exemptions Related to Temporary Exports, Carnets, and Shipments Under a Temporary Import Bond 
  – HTS codes that are not valid for AES are available
  – The latest edition (9 May 2016) of Bartlett’s Annotated FTR (“BAFTR”), by James E. Bartlett III, is available for downloading in Word format. The BAFTR contains all FTR amendments, FTR Letters and Notices, a large Index, and footnotes containing case annotations, practice tips, and Census/AES guidance.  Subscribers receive revised copies every time the FTR is amended.  The BAFTR is available by annual subscription from the Full Circle Compliance website.  BITAR subscribers are entitled to a 25% discount on subscriptions to the BAFTR, please contact us to receive your discount code. 
, 1 Jul 2016: 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: 30 Aug 2016; Harmonized System Update (HSU) 1612, containing 4,692 ABI records and 935 harmonized tariff records.   
  – HTS codes for AES are available
  – HTS codes that are not valid for AES are available

22 C.F.R. Ch. I, Subch. M, Pts. 120-130 (Caution — The ITAR as posted on GPO’s eCFR website and linked on the DDTC often takes several weeks to update the latest amendments.)

  – Latest Amendment: 8 Sep 2016;
81 FR 62004-62008
: 22 CFR Parts 120, 125, 126, and 130; Public Notice: 9672; RIN: 1400-AD70; International Traffic in Arms: Revisions to Definition of Export and Related Definitions 

  – The only available fully updated copy (latest edition 8 Sep 2016) 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 and over 700 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
the essential tool of the ITAR professional.  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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* 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 7,500 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.

* INTERNET ACCESS AND BACK ISSUES: The National Defense Industrial Association (“NDIA”) posts the Daily Update on line, and maintains back issues since August, 2009 here.

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