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16-0927 Tuesday “The Daily Bugle”

16-0927 Tuesday “Daily Bugle”

Tuesday, 27 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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  1. Ex/Im Items Scheduled for Publication in Future Federal Register Editions
  2. Commerce/BIS: (No new postings.) 
  3. Justice: “Florida Woman Sentenced to Prison for Acting as an Illegal Agent of a Foreign Government and Conspiring to Commit Money Laundering” 
  4. State/DDTC: (No new postings.) 
  5. EU Amends Restrictive Measures Directed against Certain Persons and Entities in Order to Combat Terrorism 
  6. EU Suspends Sanctions against the FARC 
  1. Reuters: “U.S. Sanctions Chinese Firm Tied to North Korea’s Nuclear Program”
  1. CTP: “Preparation for Classification” 
  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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OGS
OTHER GOVERNMENT SOURCES

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

* Treasury; Foreign Assets Control Office; NOTICES; Agency Information Collection Activities; Proposals, Submissions, and Approvals; Hizballah Financial Sanctions Regulations [Publication Date: 28 September 2016.]

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

(Source: Commerce/BIS)
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OGS_a63. Justice: “Florida Woman Sentenced to Prison for Acting as an Illegal Agent of a Foreign Government and Conspiring to Commit Money Laundering”

(Source: Justice) [Excerpts.]
 
Amin Yu, 55, of Orlando, Florida, was sentenced to 21 months in federal prison for acting in the U.S. as an illegal agent of a foreign government without prior notification to the Attorney General and for conspiring to commit international money laundering. …
 
According to the plea agreement, from at least 2002 to February 2014, at the direction of co-conspirators working for Harbin Engineering University (HEU, a PRC-controlled entity) in the People’s Republic of China (PRC), Yu obtained systems and components for marine submersible vehicles from companies in the U.S. She then illegally exported those items to the PRC for use by her co-conspirators in the development of marine submersible vehicles including unmanned underwater vehicles, remotely operated vehicles and autonomous underwater vehicles for HEU and other state-controlled entities. Yu illegally exported items by failing to file Electronic Export Information (EEI), as required by U.S. law and by also filing false EEI. Yu completed and caused the completion of export-related documents in which she significantly undervalued the items that she had exported and provided false end user information for those items. …
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OGS_a34. State/DDTC: (No new postings.)

(Source: State/DDTC)
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OGS_a45. EU Amends Restrictive Measures Directed against Certain Persons and Entities in Order to Combat Terrorism

 
Regulations:
  – Council Regulation (EU) 2016/1710 of 27 September 2016 amending Regulation (EC) No 2580/2001 on specific restrictive measures directed against certain persons and entities with a view to combating terrorism
 
Decisions:
  – Council Decision (CFSP) 2016/1711 of 27 September 2016 amending Common Position 2001/931/CFSP on the application of specific measures to combat terrorism
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OGS_a56. EU Suspends Sanctions against the FARC

 
The Council suspended the application of EU restrictive measures against the ‘Fuerzas armadas revolucionarias de Colombia’ (‘Revolutionary Armed Forces of Colombia’) known as ‘FARC’ on 27 September 2016. This decision follows the official signing on 26 September 2016 of the Colombia peace agreement between the Colombian government and the FARC.
 
The organisation has been listed since June 2002 under the so-called “EU terrorist list”, which established a list of persons, groups and entities involved in terrorist acts and subject to restrictive measures. Set down in common position 2001/931/CFSP, these measures impose an asset freeze on persons, groups and entities considered as involved in terrorist acts. It also prohibits EU persons and entities to make funds and economic resources available to them. 
 
The Colombian government and the FARC reached agreement on a peace deal to end more than 50 years of armed conflict on 25 August 2016. The signature ceremony takes place on 26 September 2016 in Cartagena.
 
The decision to suspend the sanctions against the FARC was adopted by the Council by written procedure. The legal acts are published in the Official Journal of 27 September 2016.
 
  – Statement by the High Representative Federica Mogherini on the occasion of the signing of the Peace Agreement between the government of Colombia and the FARC in Cartagena de Indias
  – Video message by the High Representative Federica Mogherini on the signing of the peace agreement in Colombia
  – Statement by the High Representative Federica Mogherini on the announcement of an agreement between the Government of Colombia and the FARC-EP on a definitive and final peace agreement of 25 August 2016

 

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NWSNEWS

 
The United States said on Monday it had sanctioned a Chinese industrial machinery and equipment wholesaler, a new step in tightening the financial noose around North Korea’s nuclear program after its fifth nuclear test this month.
 
The U.S. Treasury said it was sanctioning Dandong Hongxiang Industrial Development Co (DHID) and four of its executives, including the firm’s founder, Ma Xiaohong, under U.S. regulations targeting proliferators of weapons of mass destruction.
 
It accused the firm of acting on behalf of North Korea’s Korea Kwangson Banking Corp (KKBC), which has been under U.S. and U.N. sanctions for supporting proliferation of such weapons.
 
The U.S. Department of Justice said it had filed criminal charges against the Chinese firm and the executives for using front companies to evade sanctions on North Korea’s nuclear weapons and ballistic missile programs.
 
The charges accuse the firm and the individuals of conspiring to violate sanctions rules and engaging in international money laundering. The Justice Department said bank accounts associated with the firm and front companies received hundreds of millions of dollars that transited through the United States.
 
  “Today’s action exposes a key illicit network supporting North Korea’s weapons proliferation,” Adam Szubin, the Treasury Department’s acting under secretary for terrorism and financial intelligence, said in a statement.
 
  “DHID and its employees sought to evade U.S. and U.N. sanctions, facilitating access to the U.S. financial system by a designated entity.”
 
The announcement came after the White House said last week that President Barack Obama and Chinese Premier Li Keqiang agreed in New York on Sept. 20 to step up cooperation in the U.N. Security Council and in law-enforcement channels after North Korea’s latest and largest nuclear test on Sept. 9.
 
CHINESE INVESTIGATION
 
China’s Foreign Ministry said last week Hongxiang was under investigation following the provisions of U.N. resolution 2270, which imposed tighter sanctions on North Korea in March.
 
Chinese embassy spokeswoman Fang Hong said Hongxiang Industrial Development Co was being investigated for “illegal behavior” and “economic crimes.”
 
She said China had a “clear and consistent” position of opposing North Korea’s development of nuclear weapons.
 
  “We have been earnestly and faithfully implementing Security Council resolutions related to (North Korea) in their entirety and fulfilling our international obligations in non-proliferation export controls,” she said.
 
On Monday, South Korea’s JoongAng Daily newspaper reported that China was investigating a top official of the KKBC at its branch in the Chinese border city of Dandong.
 
South Korea said on Tuesday it “highly valued” Washington’s action against the Chinese firm.
 
  “By exposing the risks of trade with North Korea, we expect this measure to raise the alarm for individuals and entities in third countries as well as China that are trading with North Korea,” South Korea’s foreign ministry said in a statement.
 
While China is North Korea’s sole major ally, it disapproves of its nuclear and missile programs and was angered by its latest nuclear test.
 
Beijing has said it will work within the U.N. to formulate a necessary response, but questions remain as to whether it is willing to agree tough enough steps to force North Korea to abandon nuclear weapons.
 
Discussions are under way on a possible new U.N. sanctions resolution and the senior U.S. diplomat for Asia said on Friday he was confident an agreement would be reached before long, imposing further sanctions and tightening existing ones.
 
Daniel Russel, the U.S. assistant secretary of state for East Asia, said the aims would include preventing North Korea’s abuse of international infrastructure, including banking and shipping, to further its nuclear program.
 
In announcing Monday’s sanctions, the Justice Department said it was seeking forfeiture of all funds held in 25 bank accounts associated with DHID and its front companies located in various banks in China.
 
  “The charges and forfeiture action announced today allege that defendants in China established and used shell companies around the world, surreptitiously moved money through the United States and violated the sanctions imposed on North Korea in response to, among other things, its nuclear weapons program,” U.S. Assistant Attorney General Leslie Caldwell said.
 
  “The actions reflect our efforts to protect the integrity of the U.S. banking system and hold accountable those who seek to evade U.S. sanctions laws,” she said in a statement.
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COMMCOMMENTARY

 
You’ve worked out your classification strategy and your budget. Now it’s time to prepare. What does that entail? What information is required to conduct a comprehensive, efficient and accurate export classification project? How should the data be organized? These are important questions that will affect the success and timeliness of this critical compliance initiative.
 
The first task is seemingly simple: You have to identify ALL the items that need classification. If you have more than a few, it is helpful to list them in an Excel spreadsheet that can be sorted and filtered initially, then used eventually to store the completed classifications. In some situations it might be two or more spreadsheets since different sheets may be useful when presenting the information-more on that below. When preparing your list(s), remember to include products, components, parts and technologies; they are all relevant. (Note: chances are you had to work with your IT department to generate the list(s). Stay on good terms with these folks since their assistance will be critical in all phases.)
 
The second task is to identify and organize information regarding the relevant characteristics of your products and technologies. Why is this important? For each item, a classification expert needs to compare its key technical parameters against the control list criteria of the various USML Categories and ECCNs. For example, if your inventory consists of pumps and valves, their materials are a key consideration; if you have navigation and avionics equipment, then parameters such as “bias stability” and “space-qualification” come into play. Besides the tech specs, other key questions should be asked at this point, since positive answers will justify additional scrutiny:
 
  (1) Do you have any developmental items that were funded by the Department of Defense?
  (2) Were any of your items designed for military application?
  (3) Does any of your equipment utilize encryption?
 
Once you have your list of items and have identified the key characteristics, you have to efficiently transfer that information to the classification experts. There are a few ways to do this, depending on your good friends in IT. The most common method is an Excel workbook, often called the Classification Matrix, listing one item in each row, with details provided in various columns such as part number, product/technology description, and key characteristics. If the items can be grouped in logical categories, it is useful to separate them on different tabs where the data can be requested/arrayed more specifically.
 
If this information can be parsed out of your company’s data system into an Excel matrix, that is ideal. The classification expert will have everything he/she needs. Alternatively, hyperlinks to client data sheets and other technical specifications are sometimes available off the client’s website. Other companies provide OEM part numbers and/or National Stock Numbers (NSNs) which yield additional data through web research. As a last resort, since it is time consuming, the classification expert can make queries by phone or email to OEMs or client sources. In general, from a time/cost standpoint, the more available and relevant the information provided, the more efficiently (read: cheaper) a classification project will proceed.
 
The final task is obvious but often ignored. Once they are completed, the classifications should be welded to the item (product, component, part or technology) in the information system. This is critical so that any time the item is about to be sold, incorporated into a design, or the subject of any discussion with foreign nationals, the export control classification is immediately evident and proper authorizations are obtained. Furthermore, the existing classifications should be monitored and kept current during times of regulatory change, and all new items should be classified as they enter the inventory.

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ENEDITOR’S NOTES

(Source: Editor)

 

Notable birthdays:

 

* Henri Frederic Amiel (27 Sep 1821 – 11 May 1881) was a Swiss moral philosopher, poet, and critic.)
  – “Everything you need for better future and success has already been written. And guess what? All you have to do is go to the library.”
 
* Samuel Adams (27 Sep 1722 – 2 Oct 1803, was an American statesman, political philosopher, and one of the Founding Fathers of the United States.)
  – “It does not require a majority to prevail, but rather an irate, tireless minority keen to set brush fires in people’s minds.”

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EN_a2
10. 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 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. 
 
*
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 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.

* RIGHTS & RESTRICTIONS: This email contains no proprietary, classified, or export-controlled information. All items are obtained from public sources or are published with permission of private contributors, and may be freely circulated without further permission. Any further use of contributors’ material, however, must comply with applicable copyright laws.

* CAVEAT: The contents cannot be relied upon as legal or expert advice.  Consult your own legal counsel or compliance specialists before taking actions based upon news items or opinions from this or other unofficial sources.  If any U.S. federal tax issue is discussed in this communication, it was not intended or written by the author or sender for tax or legal advice, and cannot be used for the purpose of avoiding penalties under the Internal Revenue Code or promoting, marketing, or recommending to another party any transaction or tax-related matter.

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