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16-0921 Wednesday “The Daily Bugle”

16-0921 Wednesday “Daily Bugle”

Wednesday, 21 September 2016

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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 
here for free subscription.  Contact us
for advertising inquiries and rates. 
 

[No items of interest noted today.]
  1. Ex/Im Items Scheduled for Publication in Future Federal Register Editions 
  2. Commerce/Census: “ACE AESDirect Scheduled Outage, 24-25 Sep” 
  3. Commerce/BIS Posts List of Updates to EAR Cat.5 Part 2 – Information Security 
  4. State/DDTC: (No new postings.) 
  5. EU Posts Notices Regarding Restrictive Measures Against ISIL, Al-Qaeda, and Libya 
  1. Expeditors News: “CBP Releases Statements Transition Plan in ACE”  
  1. R.C. Burns: “Get in Line” 
  1. ECS Presents ITAR & EAR Critical Compliance: Jurisdiction/Classification Auditing & Recordkeeping Seminar, New Orleans 18-19 Oct 
  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 (20 Sep 2016), FACR/OFAC (18 May 2016), FTR (15 May 2015), HTSUS (30 Aug 2016), ITAR (8 Sep 2016) 

EXIMEX/IM ITEMS FROM TODAY’S FEDERAL REGISTER

EXIM_a1


[No items of interest noted today.]

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OGSOTHER GOVERNMENT SOURCES

OGS_a11. Ex/Im Items Scheduled for Publication in Future Federal Register Editions
(Source: Federal Register)

 
[No items of interest noted today.]  
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This message is intended for ACE AESDirect filers ONLY. If you are not an ACE AESDirect filer, you are not affected by this outage.
 
The outage is effective 10:00pm EST Saturday, September 24 – 4:00am EST Sunday, September 25.
 
ACE AESDirect filers may submit shipments under the AES Downtime Policy. State Department licensable shipments cannot be exported under the AES Downtime Policy and must be held until the connection is restored and an Internal Transaction Number (ITN) is received. Once connection is brought back on-line after the outage, all shipments that were exported under the AES Downtime Policy must be filed along with any new AES transactions.
 
If you use the AES Downtime Policy for export, please contact the port from which you will be exporting. In lieu of the AES Proof of Filing citation, please use the AES Downtime citation, which consists of the phrase AESDOWN, your individual company’s Filer ID, followed by the date.
 
For example: AESDOWN 123456789 09/24/2016
 
Please see the CBP web site for further information on the AES Downtime Policy.
 
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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The recently published Rule (Wassenaar Arrangement 2015 Plenary Agreements Implementation, Removal of Foreign National Review Requirements, and Information Security Updates) has made changes to the EAR including to Category 5 Part 2 (C5P2). The following is a list of updates made to C5P2 and the License Exceptions that apply to C5P2.
 
BIS will also be updating the Encryption web site soon to reflect the changes.
 
For questions call the Information Technology Controls Division at (202) 482-0707.
 
ECCN Changes to Category 5 Part 2
 
*
Separates C5P2 into 3 subsections:
  –
Cryptographic information security
  –
Non-cryptographic information security – 5A003
  –
Defeating, Weakening, or bypassing information security – 5A004
*
Deletes ECCNS 5A992/5D992 a&b, as well as 5E992.a
*
Keeps mass market ECCNs 5A992/5D992.c and 5E992.b
*
Decontrol notes (Note to 5A002.a) moved around to remove previously unused paragraphs
*
Removes previous Note 1 to C5P2 – moved to a General Information Security Note (Supp. No. 2 to Part 774), removed all the pointers in the EAR to C5P2.
*
Adds a sentence to the Note to Note 3 saying that simple price inquiry is not a consultation
*
Deletes 5A002 a.7 control on products above EAL-6.
 
License Exception Changes
 
*
License Exception TSU – Publicly available source code is no longer subject to the EAR once the email notification is sent. The Notification requirement that was previously under TSU §740.13(e), is moved to §742.15(b).
*
License Exception TMP – 5E002 encryption technology now eligible for tools of the trade provisions under 740.9.
*
§742.15 – Encryption Mass market provisions are moved from §742.15 to §740.17.
*
License Exception ENC – §740.17
  –
Paragraph (a)(1) – Adds an exception for certain related parties transactions for companies headquartered in a Supp. 3 country
  –
§740.17(b)(4) – Deletes paragraph on short-range wireless items, paragraph on foreign made products is moved to paragraph (a).
  –
Encryption Registrations no longer required – some of the information from the registration now goes into the Supp. No. 8 to Part 742 report.
  –
If an exporter submits a CCATS review for an item under §740.17(b)(1), it does NOT have to go on the self-classification report.
  –
§740.17(b)(2) – updates performance parameters
    §
Edited headers to make it clear that there should only be one parameter that applies to a product.
    §
Aggregate encrypted throughput increased from 90 Mbps to 250 Mbps
    §
Delete single channel input data rate
    §
Delete 250 concurrent encrypted data channels
    §
Media parameter raised from 1,000 endpoints to 2,500
    §
Carve out for mass market satellite modems that use end-to-end encryption between the modem and the hub.
    §
5A002.d (channelizing codes) and 5A002.e (spread spectrum) moved to §740.17(b)(2)
    §
New authorization for network infrastructure items to less-sensitive government end-users.
  –
Deleted grandfathering provisions
  –
Croatia added to Supp. No. 3 to Part 740
  –
Supp. No. 6 to Part 742 questions are revised
  –
Definition of government end-user states that government-owned public schools and universities are “government end-users” as defined in Section 772.
  – Adds definition of “More sensitive government end-users” and “Less-sensitive government end-users.”

Note
 
Classifications issued for 5A992/5D992 a&b, and 5E992.a prior to the elimination of these ECCNs may now be classified elsewhere (e.g., 5A991) if applicable or EAR99.
 
Mass market encryption authorizations issued under 742.15(b)(1) or (b)(3) prior to this rule change continue to be authorized under the newly located mass market encryption provisions found in 740.17(b)(1) and (b)(3), respectively. A new classification is NOT required merely because the item moved from 742.15 to 740.17.

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OGS_a55. EU Posts Notices Regarding Restrictive Measures Against ISIL, Al-Qaeda, and Libya
 
Regulations:
  – Council Regulation (EU) 2016/1686 of 20 September 2016 imposing additional restrictive measures directed against ISIL (Da’esh) and Al-Qaeda and natural and legal persons, entities or bodies associated with them
  – Council Implementing Regulation (EU) 2016/1687 of 20 September 2016 implementing Article 21(2) of Regulation (EU) 2016/44 concerning restrictive measures in view of the situation in Libya
 
Decisions:
  – Council Decision (CFSP) 2016/1693 of 20 September 2016 concerning restrictive measures against ISIL (Da’esh) and Al-Qaeda and persons, groups, undertakings and entities associated with them and repealing Common Position 2002/402/CFSP
  – Council Implementing Decision (CFSP) 2016/1694 of 20 September 2016 implementing Decision (CFSP) 2015/1333 concerning restrictive measures in view of the situation in Libya
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NWSNEWS

NWS_a16. Expeditors News: “CBP Releases Statements Transition Plan in ACE”
(Source: Expeditors News)
 
On September 19, 2016 U.S. Customs and Border Protection (CBP) published a page on the CBP website that details the changes that will be made to transition collections and statement capabilities from the legacy system in ACS to ACE.
 
According to the CBP page, “While the movement of collections and statement capabilities from ACS to ACE requires fundamental changes in the way collections are processed, there will be little change in the way payments are received from Trade members.”
A provided table lays out a timeline of events in the ACS to ACE statement and collection transition process will take place from October 28 – 31, 2016.
 
The statements page can be accessed here.
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COMMCOMMENTARY

COMM_a17. R.C. Burns: “Get in Line”

(Source:
Export Law Blog
. Reprinted by permission.)
 
* Author: R. Clifton Burns, Esq., Bryan Cave LLP, Wash DC, 202-624-3949,
Clif.Burns@bryancave.com
)
 
OFAC just released reports for the second, third and fourth quarters of 2015 on its licensing activities under the Trade Sanctions Reform and Export Enhancement Act of 2000 (“TSRA”). These reports are required by TSRA, although they are required in a significantly more timely fashion – namely, within the next calendar quarter.
 
So these are all anywhere from a year to six months late. No explanation is offered for their tardiness. No poor dog lounging in a pile of shredded paper is blamed. No note from a gastroenterologist is offered. Nope, OFAC just walks up, drops these on the assignment pile and saunters back to its desk in the rear of the classroom and stares at the teacher with its legendary you-say-a-word-and-I’ll-block-all-your-stuff look.
 
It is not then, I suppose, what we in the blog business call a “stupendous shocker” that these reports reveal that processing time for TSRA applications has gotten slower and slower and slower. In the second quarter the average processing time for licenses was 71 business days; 77 business days for the third; and 88 business days for the fourth. These are all in “business days” because 71, 77 and 88 don’t sound as bad as 14 weeks, 15 and 18 weeks or 2, 2.5 and 3 months.
 
But actually it looks like these numbers are, shall we say, fudged a bit to make them, as bad as they are, look better than the real numbers. In the second quarter, there were 246 applications filed and only 59 applications acted on. In the third quarter, there were 191 applications filed, of which 79 were acted on. Finally in the fourth quarter, only 156 of the 185 application filed were acted on. That leaves 328 applications, or more than half of the applications filed during the relevant time period, still languishing at the bottom of a drawer somewhere at OFAC.
 
So claiming an average processing time in the last three quarters of 71, 77 and 88 business days is, well, baloney. It’s like saying that you won the marathon because you had the shortest time even though you ran only half the course. That explains why all of you out there with TSRA applications which disappeared into the regulatory maw several years ago and haven’t been seen since, snorted your coffee out your nose when you saw 75 or so days as the average processing time claimed by OFAC.

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MSEX/IM TRAINING EVENTS & CONFERENCES

 
* What: ITAR & EAR Critical Compliance: Jurisdiction/Classification Auditing & Recordkeeping
* When: October 18-19, 2016
* Where: Renaissance New Orleans Arts Hotel
* Sponsor: Export Compliance Solutions (ECS)
* ECS Speaker Panel:  Suzanne Palmer, Lisa Bencivenga
* Register 
Here
 
or by calling 866-238-4018 or e-mail spalmer@exportcompliancesolutions.com

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ENEDITOR’S NOTES

 
Notable birthdays:

* Stephen King (Stephen Edwin King, born 21 Sep 1947, is an American author of contemporary horror, supernatural fiction, suspense, science fiction, and fantasy. King has published 54 novels, which have sold more than 350 million copies.
  – “Talent is cheaper than table salt. What separates the talented individual from the successful one is a lot of hard work.”
 
* H.G. Wells (Herbert George Wells, 21 Sep 1866 – 13 Aug 1946, was a prolific English writer in many genres, best remembered for his science fiction novels, including The Island of Doctor Moreau (1896), The Invisible Man (1897), and The War of the Worlds (1898).Wells was nominated for the Nobel Prize in Literature four times.)
  – “The path of least resistance is the path of the loser.”

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EN_a210
. 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: 26 Aug 2016: 81 FR 58831-58834: Administrative Exemption on Value Increased for Certain Articles 

* DOD NATIONAL INDUSTRIAL SECURITY PROGRAM OPERATING MANUAL (NISPOM): DoD 5220.22-M
  – 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.)

* EXPORT ADMINISTRATION REGULATIONS (EAR): 15 CFR Subtit. B, Ch. VII, Pts. 730-774 
  – Last Amendment: 20 Sep 2016: 81 FR 64693-64698: Revisions to the Entity List; and 81 FR 64655-64692: Wassenaar Arrangement 2015 Plenary Agreements Implementation, Removal of Foreign National Review Requirements, and Information Security Updates 

  
*
FOREIGN ASSETS CONTROL REGULATIONS (OFAC FACR)
: 31 CFR, Parts 500-599, Embargoes, Sanctions, Executive Orders
  – Last Amendment: 18 May 2016: 81 FR 31169-31171: Burmese Sanctions Regulations   
 
*
FOREIGN TRADE REGULATIONS (FTR)
: 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
here.
  – The latest edition (9 Mar 2016) of Bartlett’s Annotated FTR (“BAFTR”), by James E. Bartlett III, is available for downloading in Word format. The BAFTR contains all FTR amendments, FTR Letters and Notices, a large Index, and footnotes containing case annotations, practice tips, and Census/AES guidance.  Subscribers receive revised copies every time the FTR is amended. The BAFTR is available by annual subscription from the Full Circle Compliance website.  BITAR subscribers are entitled to a 25% discount on subscriptions to the BAFTR.
 
*
HARMONIZED TARIFF SCHEDULE OF THE UNITED STATES (HTS, HTSA or HTSUSA)
, 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
here
.
  – HTS codes that are not valid for AES are available
here.
 
INTERNATIONAL TRAFFIC IN ARMS REGULATIONS (ITAR): 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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EPEDITORIAL POLICY

* 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 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.

* 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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