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16-1005 Wednesday “The Daily Bugle”

16-1005 Wednesday “Daily Bugle”

Wednesday, 5 October 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 
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  1. Commerce/BIS: Information Systems Technical Advisory Committee to Meet on 19-20 Oct in Wash DC
  2. Commerce/BIS: Materials Processing Equipment Technical Advisory Committee to Meet on 25 Oct in Wash DC
  3. Commerce/BIS: Sensors and Instrumentation Technical Advisory Committee to Meet on 26 Oct in Wash DC
  4. DHS/CBP Seeks Comments on Forms 434, 446, and 447, NAFTA Regulations and Certificate of Origin
  5. DHS/CBP Seeks Comments on Form 450, United States-Caribbean Basin Trade Partnership Act
  1. Ex/Im Items Scheduled for Publication in Future Federal Register Editions 
  2. Commerce/Census: “ACE AESDirect Scheduled Outage, 8-9 Oct” 
  3. Commerce/BIS: Westlake Vinyls Company LP of Houston TX, to Pay $12,000 to Settle Alleged Antiboycott Violations 
  4. State/DDTC: Marc Turi and Turi Defense Group of Las Vegas, NV, to Pay $200,000 to Settle ITAR Violations for Unauthorized Brokering 
  1. Bloomberg: “Armed Drone Export Standards Sought by U.S. and Dozens of Allies” 
  2. Nasdaq: “Turkish Trader Reza Zarrab Set to Fight U.S. Charges of Violating Iran Sanctions” 
  3. ST&R Trade Report: “$450,000 Penalty, Suspension of Export Privileges for Exports to Syria”  
  1. A.E.P. Baj, M. Rathbone, A. Rapa: “Significant Update to US Encryption Export Rules (and Other Commerce Control List Changes)” 
  2. B. Peters: “Q&A: Trends in Export Controls and Sanctions Compliance: A look at China and Latin America” 
  3. R.C. Burns: “Export Control Reform For and By Dummies” 
  1. H. Alan Jones Retires from Northrop Grumman; Jennifer K. Weinel Appointed as Northrop Grumman’s Assistant General Counsel–Export/Import 
  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 (29 Sep 2016) 

EXIMEX/IM ITEMS FROM TODAY’S FEDERAL REGISTER

EXIM_a11. Commerce/BIS: Information Systems Technical Advisory Committee to Meet on 19-20 Oct in Wash DC

(Source: Federal Register) [Excerpts.]
 
81 FR 69040-69041: Information Systems Technical Advisory Committee; Notice of Partially Closed Meeting
   The Information Systems Technical Advisory Committee (ISTAC) will meet on October 19 and 20, 2016, 9:00 a.m., in the Herbert C. Hoover Building, Room 3884, 14th Street between Constitution and Pennsylvania Avenues NW., Washington, DC. The Committee advises the Office of the Assistant Secretary for Export Administration on technical questions that affect the level of export controls applicable to information systems equipment and 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 October 12, 2016.
   A limited number of seats will be available for the public session. Reservations are not accepted. To the extent time permits, members of the public may present oral statements to the Committee. The public may submit written statements at any time before or after the meeting. However, to facilitate distribution of public presentation materials to Committee members, the Committee suggests that public presentation materials or comments be forwarded before the meeting to Ms. Springer. …
   For more information, call Yvette Springer at (202) 482-2813.
   Dated: September 30, 2016.
Yvette Springer, Committee Liaison Officer.
* * * * * * * * * * * * * * * * * * * *

EXIM_a22. Commerce/BIS: Materials Processing Equipment Technical Advisory Committee to Meet on 25 Oct in Wash DC

(Source: Federal Register) [Excerpts.]
 
81 FR 69040: Materials Processing Equipment Technical Advisory Committee; Notice of Partially Closed Meeting
   The Materials Processing Equipment Technical Advisory Committee (MPETAC) will meet on October 25, 2016, 9:00 a.m., Room 3884, in the Herbert C. Hoover Building, 14th Street between Pennsylvania and Constitution 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 processing equipment 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 October 18, 2016.
   A limited number of seats will be available for the public session. Reservations are not accepted. To the extent that time permits, members of the public may present oral statements to the Committee. The public may submit written statements at any time before or after the meeting. However, to facilitate the distribution of public presentation materials to the Committee members, the Committee suggests that presenters forward the public presentation materials prior to the meeting to Ms. Springer via email. …
   For more information, call Yvette Springer at (202) 482-2813.
   Dated: September 30, 2016.
Yvette Springer, Committee Liaison Officer.
* * * * * * * * * * * * * * * * * * * *

EXIM_a33. Commerce/BIS: Sensors and Instrumentation Technical Advisory Committee to Meet on 26 Oct in Wash DC

(Source: Commerce/BIS) [Excerpts.]
 
81 FR 69040: Sensors and Instrumentation Technical Advisory Committee; Notice of Partially Closed Meeting
   The Sensors and Instrumentation Technical Advisory Committee (SITAC) will meet on October 26, 2016, 9:30 a.m., in the Herbert C. Hoover Building, Room 3884, 14th Street between Constitution and Pennsylvania Avenues NW., Washington, DC. The Committee advises the Office of the Assistant Secretary for Export Administration on technical questions that affect the level of export controls applicable to sensors and instrumentation equipment and 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 October 19, 2016.
   A limited number of seats will be available during the public session of the meeting. Reservations are not accepted. To the extent that time permits, members of the public may present oral statements to the Committee. The public may submit written statements at any time before or after the meeting. However, to facilitate distribution of public presentation materials to the Committee members, the Committee suggests that the materials be forwarded before the meeting to Ms. Springer. …
   For more information contact Yvette Springer on (202) 482-2813.
   Dated: September 30, 2016.
Yvette Springer, Committee Liaison Officer.
* * * * * * * * * * * * * * * * * * * *

EXIM_a44. DHS/CBP Seeks Comments on Forms 434, 446, and 447, NAFTA Regulations and Certificate of Origin

(Source: Federal Register) [Excerpts.]
 
81 FR 69071-69072: Agency Information Collection Activities: NAFTA Regulations and Certificate of Origin
* AGENCY: U.S. Customs and Border Protection, Department of Homeland Security.
* ACTION: 30-Day notice and request for comments; Extension of an existing collection of information. …
* DATES: Written comments should be received on or before November 4, 2016 to be assured of consideration.
* ADDRESSES: Interested persons are invited to submit written comments on this proposed information collection to the Office of Information and Regulatory Affairs, Office of Management and Budget. Comments should be addressed to the OMB Desk Officer for Customs and Border Protection, Department of Homeland Security, and sent via electronic mail to oira_submission@omb.eop.gov or faxed to (202) 395-5806.
* FOR FURTHER INFORMATION CONTACT: Requests for additional information should be directed to Paperwork Reduction Act Officer, U.S. Customs and Border Protection, Regulations and Rulings, Office of Trade, 90 K Street NE., 10th Floor, Washington, DC 20229-1177, or via email (CBP_PRA@cbp.dhs.gov). Please note contact information provided here is solely for questions regarding this notice. Individuals seeking information about other CBP programs please contact the CBP National Customer Service Center at 877-227-5511, (TTY) 1-800-877-8339, or CBP Web site. For additional help, please go here.
* SUPPLEMENTARY INFORMATION: …
  – Title: NAFTA Regulations and Certificate of Origin.
  – OMB Number: 1651-0098.
  – Form Number: CBP Forms 434, 446, and 447.
  – Abstract: On December 17, 1992, the U.S., Mexico and Canada entered into an agreement, “The North American Free Trade Agreement” (NAFTA). The provisions of NAFTA were adopted by the U.S. with the enactment of the North American Free Trade Agreement Implementation Act of 1993 (PL. 103-182).
   CBP Form 434, North American Free Trade Certificate of Origin, is used to certify that a good being exported either from the United States into Canada or Mexico or from Canada or Mexico into the United States qualifies as an originating good for purposes of preferential tariff treatment under NAFTA. This form is completed by exporters and/or producers and furnished to CBP upon request. CBP Form 434 is provided for by 19 CFR 181.11 and is accessible here.
   CBP Form 446, NAFTA Verification of Origin Questionnaire, is a questionnaire that CBP personnel use to gather sufficient information from exporters and/or producers to determine whether goods imported into the United States qualify as originating goods for the purposes of preferential tariff treatment under NAFTA. CBP Form 446 is provided for by 19 CFR 181.72 and is accessible here.
   CBP Form 447, North American Free Trade Agreement Motor Vehicle Averaging Election, is used to gather information required by 19 CFR 181 Appendix, Section 11, (2) “Information Required When Producer Chooses to Average for Motor Vehicles”. This form is provided to CBP when a manufacturer chooses to average motor vehicles for the purpose of obtaining NAFTA preference. CBP Form 447 is accessible here. …
   Dated: September 29, 2016.
Seth Renkema, Branch Chief, Economic Impact Analysis Branch, U.S. Customs and Border Protection.
* * * * * * * * * * * * * * * * * * * *

EXIM_a55. DHS/CBP Seeks Comments on Form 450, United States-Caribbean Basin Trade Partnership Act

(Source: Federal Register) [Excerpts.]
 
81 FR 69072-69073: Agency Information Collection Activities: United States-Caribbean Basin Trade Partnership Act (CBTPA)
* AGENCY: U.S. Customs and Border Protection, Department of Homeland Security.
* ACTION: 30-Day notice and request for comments; Extension of an existing collection of information. …
* DATES: Written comments should be received on or before November 4, 2016 to be assured of consideration.
* ADDRESSES: Interested persons are invited to submit written comments on this proposed information collection to the Office of Information and Regulatory Affairs, Office of Management and Budget. Comments should be addressed to the OMB Desk Officer for Customs and Border Protection, Department of Homeland Security, and sent via electronic mail to oira_submission@omb.eop.gov or faxed to (202) 395-5806.
* FOR FURTHER INFORMATION CONTACT: Requests for additional information should be directed to Paperwork Reduction Act Clearance Officer, U.S. Customs and Border Protection, Regulations and Rulings, Office of Trade, 90 K Street NE., 10th Floor, Washington, DC 20229-1177, or via email (CBP_PRA@cbp.dhs.gov). Please note contact information provided here is solely for questions regarding this notice. Individuals seeking information about other CBP programs please contact the CBP National Customer Service Center at 877-227-5511, (TTY) 1-800-877-8339, or CBP Web site. For additional help, please go here.
* SUPPLEMENTARY INFORMATION: …
  – Title: United States-Caribbean Basin Trade Partnership Act.
  – OMB Number: 1651-0083.
  – Form Number: CBP Form 450.
  – Abstract: The provisions of the United States-Caribbean Basin Trade Partnership Act (CBTPA) were adopted by the U.S. with the enactment of the Trade and Development Act of 2000 (PL.106-200). The objective of the CBTPA is to expand trade benefits to countries in the Caribbean Basin. For preferential duty treatment under CBTPA, importers are required to have a CBTPA Certification of Origin (CBP Form 450) in their possession at the time of the claim, and to provide it to CBP upon request. CBP Form 450 collects data such as contact information for the exporter, importer and producer, and information about the goods being claimed.
   This collection of information is provided for by 19 CFR 10.224. CBP Form 450 is accessible here. …
   Dated: September 29, 2016.
Seth Renkema, Branch Chief, Economic Impact Analysis Branch, U.S. Customs and Border Protection.
* * * * * * * * * * * * * * * * * * * *

OGSOTHER GOVERNMENT SOURCES

OGS_a16. Ex/Im Items Scheduled for Publication in Future Federal Register Editions
(Source: Federal Register)

 
* Commerce; Industry and Security Bureau; NOTICES; Orders Denying Export Privileges: Russell Henderson Marshall, McCrae Helena, GA [Publication Date: 6 October 2016.]

* State; NOTICES; Meetings; International Security Advisory Board [Publication Date: 6 October 2016.]

* Treasury; Foreign Assets Control Office; NOTICES; Blocking or Unblocking of Persons and Properties [Publication Date: 6 October 2016.]  

* * * * * * * * * * * * * * * * * * * *

OGS_a47. Commerce/Census: “ACE AESDirect Scheduled Outage, 8-9 Oct”
(Source: census@subscriptions.census.gov, 5 Oct 2016)
 
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, October 8 – 4:00am EST Sunday, October 9.
 
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 10/08/2016
 
Please see the CBP web site for further information on the AES Downtime Policy.  
* * * * * * * * * * * * * * * * * * * *

        
* Respondent: Westlake Vinyls Company LP, Houston TX
* Case No: 14-04
* Charges: Four violations of the Export Administration Regulations:
  – 1 violation of 15 C.FR. §760.2(d) – Furnishing Information about Business Relationships with Boycotted Countries or Blacklisted Persons        
  – 3 violations off5 C.FR. §760.5 -Failing to Report the Receipt of a Request to Engage in a Restrictive Trade Practice or Foreign Boycott Against a Country Friendly to the United States
* Fine or Civil Settlement: Civil Settlement of $12,000
* Debarred or Suspended from Export Transactions: Not if penalty is paid as agreed, otherwise debarred for one year.
* Date of Order: 28 September 2016

* * * * * * * * * * * * * * * * * * * *

 
* Respondent: Marc Turi and Turi Defense Group, 7251 W. Lake Mead Blvd., Las Vegas, NV 89128
* Charges: Two violations of Arms Export Control Act and International Traffic in Arms Regulations (DTCC Case # 16-0000909)
  – Unauthorized brokering and unauthorized proposed sale and transfer of defense articles through Qatar to a prohibited country, Benghazi, Libya, “to be utilized to defend the rights of the people of Libya.”
* Civil Settlement: $200,000, suspended for term of Consent Agreement (4 years).  Statute of Limitations to be tolled for term of C.A.
* Debarred or Suspended from Export Transactions: No, but Respondent agrees in CA to refrain from activities subject to ITAR control for period of C.A.
* Result of Voluntary Self-Disclosure: No
* Date of Order: 5 Oct 2016
* Available documents:
  – Order
* * * * * * * * * * * * * * * * * * * *

NWSNEWS

NWS_a110. Bloomberg: “Armed Drone Export Standards Sought by U.S. and Dozens of Allies”

(Source: Bloomberg)
 
The Obama administration is working with as many as 40 nations to develop principles for the export of armed drones — and unarmed versions configured to carry weapons — in recognition of the booming demand worldwide for pilotless aircraft.
 
A declaration to be made public Wednesday by the State Department sets the stage for a meeting next year to create a standards-setting organization. The statement has been signed by some of the U.S.’s closest allies, including the U.K., Germany, Italy, The Netherlands, Japan, South Korea and Singapore.
While President Barack Obama has called for more transparency in the use of armed drones, human-rights groups have said the U.S. continues to keep most such operations secret and has significantly underestimated civilian deaths from its use of the aircraft against terrorists in Pakistan and other nations.
 
‘Legitimate Interest’
 
  “Recognizing that misuse of armed or strike-enabled” drones “could fuel conflict and instability and facilitate terrorism and organized crime, the international community must take appropriate transparency measures to ensure responsible export and subsequent use,” the U.S.-backed declaration says. But it adds that such concerns shouldn’t be seen as undermining a state’s “legitimate interest” to produce, export or acquire such systems.
 
The declaration is intended to deal with armed aircraft and not the burgeoning interest in using pilotless craft for non-lethal intelligence, surveillance or “delivering pizzas,” according to Brian Nilsson, deputy assistant secretary of state for defense trade controls.
 
Israel and China, two of the world’s largest drone-makers and exporters, haven’t signed the declaration, according to Nilsson.
“We continue our engagement with them,” he said. Russia, whose relations with the U.S. are increasingly strained, also is absent from the joint statement.
 
The declaration “is the beginning of a discussion on a controversial topic that warrants its own stand-alone” evaluation, Nilsson said in a telephone interview. “This is getting people comfortable” that “we need to have a discussion and it commits them to participate.”
 
Nilsson said that being a signatory to the declaration will be a consideration when he weighs whether his office, which issues export licenses to U.S. companies, should approve a sale. Boeing Co., Northrop Grumman Corp. and General Atomics are the biggest U.S. makers of unmanned aerial vehicles. General Atomics makes the armed Predator and Reaper drones used by the U.S. Air Force and the CIA to attack terrorists.
 
Civilian Deaths
 
Coming in Obama’s final months in office, the declaration reflects an evolution of U.S. drone policy that started in 2013 with a White House directive to review the issue. That was followed by the State Department’s establishment last year of an export control policy governing the commercial sale of armed drones.
 
The White House released statistics in July indicating that as many as 116 civilians were killed in 473 clandestine strikes by U.S. drones and piloted aircraft outside the war zones of Afghanistan, Iraq and Syria from the beginning of Obama’s presidency in 2009 to the end of 2015. The strikes killed as many as 2,581 combatants, the White House said.
 
Outside estimates are much higher. The London-based Bureau of Investigative Journalism estimates that 380 to 801 civilians were killed by U.S. drone strikes in Pakistan, Yemen, Somalia and Libya during the same period.

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NWS_a211. Nasdaq: “Turkish Trader Reza Zarrab Set to Fight U.S. Charges of Violating Iran Sanctions”
(Source: Nasdaq)
 
Lawyers for Turkish gold trader Reza Zarrab, whose prosecution in the U.S. for sanctions violations has drawn national attention in Turkey, will argue at a hearing Wednesday that the criminal charges against him are an overreach by the U.S. government and should be dismissed.
 
Mr. Zarrab, who had been living in Turkey with Turkish and Iranian citizenship, was arrested by U.S. authorities in March when he arrived in Miami for a family vacation. Mr. Zarrab, 34 years old, was accused of helping Iranian companies process financial transactions that sidestepped U.S. sanctions against Iran.
 
The outcome of Wednesday’s hearing could help clarify how far American sanctions laws should apply to non-U.S. citizens overseas, a hotly contested issue in this case.
 
In court filings, Mr. Zarrab’s team of 15 defense lawyers say Mr. Zarrab’s money transfers with foreign banks were entirely legal in Turkey and had “non-existent connections” to the U.S. Even though some of the transactions were cleared by U.S. banks, the payments were ultimately directed between foreign countries, such as from Turkey to China, and should not fall under U.S. regulation, according to the defense.
 
  “This is prosecutorial overreach of the first order,” Mr. Zarrab’s lawyers wrote in a July court filing. “It is as unprecedented as it is problematic.”
 
The government says the central purpose of Mr. Zarrab’s suspected scheme was to evade U.S. sanctions. Mr. Zarrab and his co-conspirators allegedly used an international network of companies to intentionally conceal the Iranian origins of certain transactions so that they could pass through U.S. banks. Hundreds of millions of dollars were processed for the Iranian government and other Iranian entities thanks to Mr. Zarrab, prosecutors alleged.
 
Mr. Zarrab’s “charged conduct goes to the heart of what U.S. sanctions laws are intended to prohibit,” according to a government filing.
 
Legal experts say Mr. Zarrab’s prosecution is unusual. Typically, defendants in sanctions cases are based in the U.S. and accused of shipping U.S. technology or other physical objects to sanctioned countries like Iran. In this case, prosecutors accuse Mr. Zarrab, who was based in Turkey, of causing the export of “financial services” from the U.S. His lawyers argue that payments originating overseas that are cleared by a U.S. bank don’t count as a U.S. export.
 
Under the sanctions law used to charge Mr. Zarrab, a criminal violation only occurs when there is an illegal ” export” of something from the U.S.
 
Mr. Zarrab, a businessman with close ties to high-ranking Turkish officials, is a household name in Turkey. He was married to pop star Ebru Gundes, who recently filed for divorce, according to local news reports.
 
He became widely known in 2013, when Turkish prosecutors charged him with bribing three ministers and a bank chief executive. The scandal forced a cabinet shuffle by then Prime Minister Recep Tayyip Erdogan, now the president of Turkey, but the charges against Mr. Zarrab were later dropped.
 
Mr. Zarrab’s defense team has said in court filings that the U.S. case against Mr. Zarrab reflects the U.S. government’s “displeasure” at his exoneration in the Turkish bribery case.
 
The case has become politically charged in the wake of a failed attempt in July by the Turkish military to overthrow the Erdogan administration. About a week ago, Mr. Erdogan said U.S. prosecutors were trying to implicate him in Mr. Zarrab’s case, telling local Turkish press that there are “ulterior motives” driving the prosecution.
 
After the failed coup, Mr. Zarrab’s defense team asked U.S. District Judge Richard Berman to remove himself from the case, raising concerns about bias he may have against Mr. Zarrab. They cited comments Judge Berman made at a 2014 legal symposium where he said rule of law was “under some attack” in Turkey.
 
Last week, Judge Berman declined to recuse himself. He said his remarks at the symposium had nothing to do with Mr. Zarrab.
 
In a recent filing, prosecutors said the Turkish investigation into Mr. Zarrab will likely be used at trial as proof of his criminal intent. The potential link between the Turkish investigation and the U.S. investigation, a source of widespread speculation in Turkey, “can be resolved…when those issues are ripe and properly raised,” the government wrote.
 
Mr. Zarrab is scheduled to go to trial in January.
* * * * * * * * * * * * * * * * * * * *

NWS_a312. ST&R Trade Report: “$450,000 Penalty, Suspension of Export Privileges for Exports to Syria”

(Source: ST&R Trade Report)
 
The Bureau of Industry and Security has imposed a $450,000 civil penalty against a Lebanese company to settle charges associated with exports or reexports of controlled items to Syria. The items at issue were U.S.-origin mass spectrometers, gas chromatographs and consumables, liquid chromatograph-mass spectrometer systems, and liquid chromatograph modules classified under ECCN 3A999 and controlled for anti-terrorism reasons. According to BIS, the company either falsely identified the ultimate destination of the items as Iraq or Lebanon, destinations for which a BIS license was not required, or failed to disclose that the ultimate destination was Syria and proceeded with the transactions.
 
BIS has also denied the company’s export privileges for two years but is suspending this action, along with $275,000 of the penalty, provided the remaining amount of the penalty is paid and no further export violations are committed during that two-year period.

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COMMCOMMENTARY

COMM_a113. A.E.P. Baj, M. Rathbone, A. Rapa: “Significant Update to US Encryption Export Rules (and Other Commerce Control List Changes)”

* Authors: Alexandra E.P. Baj, Esq., abaj@steptoe.com, 202-429-6478; M. Rathbone, Esq., mrathbone@steptoe.com, 202 429 6437; and Anthony Rapa, Esq., arapa@steptoe.com, 202-429-8120. All of Steptoe & Johnson LLP.
 
On September 20 the US Department of Commerce (DOC) published a final rule revising the Commerce Control List (CCL) and other sections of the Export Administration Regulations (EAR).  The final rule implements changes agreed at the December 2015 Wassenaar Arrangement [FN/1] plenary meeting and incorporates additional updates to the EAR.  The rule makes changes throughout the CCL – revising 58 Export Control Classification Numbers (ECCNs), adding two ECCNs, and revising license exception eligibility for seven ECCNs.  The focus of the changes are on ECCNs controlled for national security reasons, but the most significant changes appear to be to DOC’s encryption rules, which last saw major changes in June 2010.  The DOC rule changes are effective as of the publication date of September 20.
 
Encryption Rule Revisions
 
The DOC made a number of changes to the encryption-related export control rules in the September 20 notice.  These changes include substantive and editorial revisions to Category 5 – Part 2 of the CCL, as well as modifications to registration and reporting requirements, and changes to license exception eligibility and use.  The Encryption Commodities, Software, and Technology (ENC) license exception in Section 740.17 of the EAR continues to be available for most exports of encryption items.
 
Encryption Registrations
 
The DOC is no longer requiring companies to file encryption registrations and to obtain encryption registration numbers (ERNs).  For over five years, the DOC had been requiring those registrations before exporters could use the mass market and ENC license exception provisions – including those involving self-classifications.  As of September 20, that requirement no longer exists.  The DOC will continue to gather information previously required for registrations as it is moving some of the information that was in the encryption registrations to the self-classification report for encryption items described in Supplement 8 to Part 742.
 
Encryption Classification Requests
 
In the September 20 rule change, the DOC also revised the technical questionnaire used to submit classification requests for encryption items.  Found in Supplement 6 to Part 742 of the EAR, the questionnaire is newly titled to include “information security” items along with encryption items.  While much of the information requested, such as descriptions of encryption algorithms and use, remains the same, there are new questions, including whether any of the submitter’s encryption products or its encryption components are manufactured outside the United States, and specifics about Part 740.17(b)(3) criteria (such as, chip, chipset, electronic assembly, digital forensics, and non-standard cryptography).  Exporters submitting classification review requests should ensure that their submissions do not simply copy earlier requests, but take into account the new and reordered questions in Supplement 6 to Part 742.
 
Category 5 – Part 2 Changes
 
In its September 20 final rule, the DOC also revised the part of the CCL containing telecommunications and information security items – commonly known as the encryption section of the CCL.  In particular, the DOC has made changes to ECCNs 5A002, 5B002, 5D002, 5E002, 5A992, 5D992 and 5E992, and the DOC is adding two new ECCNs to Category 5 – Part 2: 5A003 and 5A004. 
 
The DOC is deleting the ECCNs for 5A992.a, 5A992.b, 5D992.a, and 5D992.b – requiring a significant internal re-classification effort for companies who relied on these ECCNs for certain encryption items (such as those using encryption only for authentication).  These items are now controlled elsewhere on the CCL (such as in 5A991) or, in some cases, these items are now are classified as EAR99.  Exporters who previously received a CCATS with ECCNs of 5A992.a, 5A992.b, 5D992.a, and 5D992.b may self-classify these items based on the changed CCL. 
 
The DOC is also adding two new ECCNs to Category 5 – Part 2: 5A003 and 5A004.  5A003 controls “systems,” equipment,” and “components” for non-cryptographic “information security.”  It includes communications cable systems designed or modified using mechanical, electrical, or electronic means to detect surreptitious intrusion (now in 5A003.a; formerly in 5A002.a.8) and items “specially designed” or modified to reduce the compromising emanations of information-bearing signals beyond what is necessary for health, safety, or electromagnetic interference standards (now in 5A003.b; formerly in 5A002.a.4).  ECCN 5A003.a applies only to physical layer security.  Unlike 5A002, which now has “EI,” “NS Column 1,” and “AT Column 1” as its reasons for control for all 5A002 items, 5A003 has “NS Column 2” and “AT Column 1” as its reason for control – maintaining the same controls that previously applied to the 5A003 items when they were part of 5A002. 
 
The new ECCN 5A004 controls items that defeat, weaken, or bypass information security, including items designed or modified to perform cryptanalytic functions (formerly in 5A002.a.2).  (Cryptoanalytic functions are “functions designed to defeat cryptographic mechanisms in order to derive confidential variables or sensitive data, including clear text, passwords, or cryptographic keys.”)  ECCN 5A004 items have the same controls as 5A002 items and require a license to all locations except for Canada, unless a license exception applies. 
 
Elsewhere in 5A002, some of the items in 5A002.a are now moved to 5A002.c, .d, and .e, while what was 5A002.a.7 has been taken out of the CCL altogether – removing the control on security systems and devices that have been certified to exceed class EAR-6 (evaluation assurance level).  The DOC has also revised Category 5 – Part 2 by removing Note 1 and moving it to a General Information Security Note, which is found in Supplement 2 to Part 774 of the EAR.  Note 1 stated that the control status of information security items was determined in Category 5 – Part 2 even if they are components, software, or functions of other systems or equipment.
 
Mass Market Changes
 
While removing some “992” items from Category 5 – Part 2 and thereby designating them as EAR99 (unless they fall elsewhere on the CCL), the DOC is maintaining the ECCNs for mass market encryption items – 5A992.c, 5D992.c, and 5E992.b.  However, the DOC has moved the mass market encryption provisions from Part 742.15 to the ENC license exception in Part 740.17 of the EAR.  Mass market items are now found in Part 740.17(b)(1) and (b)(3) of the ENC license exception.  Note 3 to Category 5 – Part 2 (known as the “Cryptography Note”), which removes certain mass market items from control under ECCNs 5A002 and 5D002, is also updated.  One of the existing Note 3 requirements for mass market items is that the price and information about the main functionality of the item must be available before purchase without the need to consult the vendor or supplier.  In the September 20 notice, the DOC is adding a clarifying sentence that a simple price inquiry is not considered to be a consultation.
 
ENC License Exception
 
The DOC made a number of changes to the ENC license exception in its September 20 rule change.  As an initial matter, exporters to Cuba will want to note that while ENC previously was not available for exports and services to E:1 countries (or release of source code or technology to any nationals of E:1 countries); the same restriction now applies to E:2 countries (a country group that currently includes only Cuba).  As noted in the September 20 notice, this change corrects an oversight that occurred when the DOC moved Cuba from E:1 to E:2 in July 2015.  Notably, this does not substantively change Cuba’s treatment under ENC, since Part 740.2 notes that exports to Cuba generally are ineligible for license exceptions unless otherwise noted in the text of the license exception itself.
 
Under the September 20 rule changes, the DOC is maintaining the license exception in Part 740.17(a)(1) for internal development or production of new products for certain exports to private sector end users.  It is adding to that section of ENC a license exception for certain exports to related parties not involving development of production of new products.  As in the past, Part 740.17(a)(1), which does not have a classification request or reporting requirement, is tied to a requirement for companies to be headquartered in a Supplement 3 country, a group that includes most countries in Europe, along with Australia, New Zealand, Turkey, and Japan.  The DOC is also adding Croatia to the list of countries in Supplement 3.
 
The DOC is creating a new section 740.17(a)(3) in the ENC license exception to authorize re-exports of foreign made items developed with or incorporating US-origin encryption – as long as the US encryption components have been classified or reported and authorized by the DOC without changes in the encryption functionality.  A similar provision was previously found in section 740.17(b)(4).  As with sections 740.17(a)(1) and (a)(2), section 740.17(a)(3) does not require any classification or self-classification of the exported end items.
 
In a helpful change for products that qualify for self-classification in 740.17(b)(1), if those items receive a CCATS as a 740.17(b)(1) item, the exporter does not have to include reporting for those items when it submits its annual self-classification report to the DOC for (b)(1) items.  The (b)(1) report is a simple annual report, but exporters who do not want to do that reporting may consider obtaining a formal CCATS rather than self-classifying these items.
 
There are a number of changes to items falling within 740.17(b)(2).  In particular, the DOC updated the performance parameters to:  (1) increase aggregate encrypted throughput from 90 Mbps to 250 Mbps; (2) delete the single channel input data rate; (3) delete 250 concurrent encrypted data channels; (4) raise the media parameter from 1,000 endpoints to 2,500; and (5) include a carve out for mass market satellite modems that use end-to-end encryption between the modem and the hub.  The DOC also added items controlled under 5A002.d (channelizing codes) and 5A002.e (spread spectrum) to ENC 740.17(b)(2). 
 
ENC 740.17(b)(2) is also revised to reflect different authorizations under the ENC license exception for different types of users.  For example, it incorporates the DOC’s new definition of “less sensitive government end users” and allows exports of certain (b)(2) items to “less sensitive government end users” in addition to non-government end users.  “Less sensitive government end users” (as applied to encryption items) include, for example, local government police, fire, and rescue, public safety agencies, and federal government civil service agencies, while “more sensitive government end users” include agencies for science and technology, currency and monetary authorities, executive heads of state, legislative bodies, import and export control agencies, intelligence agencies, judiciaries, and airport authorities, among others.  More specifics on these definitions are found in Part 772 of the EAR.  Exporters of (b)(2) items should take note of where their items fall within (b)(2) as they may have new exporting possibilities due to the changes.  (Note that, in addition to adding definitions of “more sensitive government end-users” and “less sensitive government end-users” to Part 772, the DOC also clarified that government-owned public schools and universities are “government end-users” as defined in Part 772.)
 
The DOC removed Part 740.17(b)(4) from the ENC license exception.  In addition to moving some items to the new Part 740.17(a)(3), the DOC is deleting the paragraph on short-range wireless items as most of these items have been decontrolled due to decontrol notes in ECCN 5A002 and in Note 4 to Category 5 – Part 2 of the CCL
.
Other License Exception Changes for Encryption Items
 
The DOC is also revising the license exception eligibility for some Category 5 – Part 2 ECCNs.  The new 5A003 is eligible for the GOV license exception and 5E002 is now eligible for license exception TMP pursuant to 740.9 of the EAR.
 
The DOC is revising license exception TSU and Part 742.15 of the EAR to state that publicly available encryption source code classified under ECCN 5D002 is no longer subject to the EAR once the TSU email notification is sent to BIS and the ENC Encryption Request Coordinator.  Part 742.15(b) now contains the notification requirement that was previously found within TSU at Part 740.13(e).
 
Encryption Item Licensing
 
The DOC is continuing to utilize Encryption Licensing Arrangements (ELAs) for export authorizations for unlimited quantities of encryption commodities and software over four year periods.  The new version of Part 742.15(a)(2), which describes the ELAs, utilizes the new definition of “more sensitive government end-users.”  Part 742.15(a)(2) states that ELAs may be authorized for items described in Part 740.17(b)(2)(i)(A) that the DOC has classified to “more sensitive government end users” in all destinations except for Country Groups E:1 or E:2 of Supplement 1 to Part 740.  The DOC may also authorize ELAs for “more sensitive government end users” for encryption commodities and software described in Part 740.17(b)(2)(ii) through (iv) under certain circumstances.
 
Other CCL Changes
 
The rule change revises 58 ECCNs in every category of the CCL, and adds two ECCNs (the encryption-related ECCNs).  Outside of the encryption and information security ECCNs, the DOC is removing some items, such as certain hydraulic fluids (ECCN 1C006), from control where the items are no longer viewed as strategic goods.  The DOC is also revising ECCN descriptions to describe the scope of control more accurately and to point to relevant definitions in the EAR. 
 
One significant change outside of the encryption rule changes relates to digital computers:  the DOC is raising the Adjusted Peak Performance (APP) for high performance computers.  Commerce is also amending APP parameters in several places in the EAR, including in the de minimis rules and the APP license exception.  The DOC concurrently is removing The Foreign National Review requirement for deemed exports under the APP license exception (and the CIV license exception).
 
As with other changes to the EAR and CCL through export control reform, exporters are advised to pay close attention to the September 20 modifications to the EAR in order to implement the changes in their export classifications and related processes.  This rule change affects a wide swath of industries due to the changes through the EAR, but the greatest effect relates to the encryption rules.  In some cases, the rules will allow exporters to simplify their processes, including potentially eliminating reporting requirements for some self-classified items.  While new CCATS requests and uses of the ENC and other license exceptions all require attention to the new rule, in some cases (such as the elimination of the encryption registration requirement), the rule changes eliminate what previously were traps for the unwary.  In addition to other guidance provided in this advisory, exporters are advised to review details of the rule changes carefully when applying the new rules to their export operations.
 
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  [FN/1] The Wassenaar Arrangement is also known as the Wassenaar Arrangement on Export Controls for Conventional Arms and Dual-Use Goods and Technologies. The United States is one of 41 members of the Wassenaar Arrangement, which holds annual meetings to discuss proposals for changes to the Wassenaar Arrangement control lists. Members of the Wassenaar Arrangement have committed to implementing changes to the control lists as soon as possible after approval in their own internal regulations.

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COMM_a214. B. Peters: “Q&A: Trends in Export Controls and Sanctions Compliance: A look at China and Latin America”

(Source: Hogan Lovells)
 
* Author: B. Peters, Esq., Hogan Lovells, beth.peters@hoganlovells.com, 202-637-5837.
 
Looking globally, where are you seeing heightened levels of enforcement activity?
 
Peters: Two areas where enforcement is particularly active right now are China and Latin America. We’ve seen numerous recent sanctions designations in Latin America focusing on the intersection between international trade, anti-money laundering (AML), and corruption. This trend will continue because the U.S. government is focused on a more surgical enforcement of international trade commitments. The U.S. government isn’t typically looking to impose broad-based territorial sanctions against a complete country. Instead, they are targeting actors within a country to prohibit conduct that would be inconsistent with U.S. trade laws or with other U.S. obligations under international agreements – like laundering money through U.S. financial institutions.
 
For China and China-related activities, there are two key areas of risk for trade compliance where additional attention is warranted. The first is technology transfer and making sure companies understand that certain technologies – for example, production and development data related to sensitive materials and more sophisticated manufacturing equipment – may not be able to go to China without needed authorizations. The second is understanding whether there could be diversion of goods from China to another country like Iran or other sanctioned countries where U.S. law would prohibit the transfer.
 
With respect to Latin America, the United States has targeted a number of individuals and companies engaged in money laundering under U.S. sanctions laws. In addition, the U.S. government has used imposed targeted export bans or restrictions on certain companies in Asia, and most notably, Russia.
 
How has export control and sanctions compliance evolved and changed over the past 25 years?
 
Peters: Export control and sanctions compliance law has evolved in a wide variety of ways over the last 25 years. General counsels increasingly understand the importance of these laws to doing international business, and the degree to which this area of the law intersects with many companies business. These regulations are not just mandated by the United States – several other governments and jurisdictions increasingly are giving closer scrutiny to trade compliance. Frequently one transaction can trigger review under the laws of multiple countries.
 
In addition to compliance with trade regulations, which carry stiff criminal and civil penalties, other U.S. government agencies have supported the enforcement of trade compliance. For example, the U.S. Securities and Exchange Commission (SEC) has reporting requirements for doing business in certain sanctioned countries and with restricted parties. In addition, state and local governments have procurement rules and regulations that address trade compliance. State financial services agencies, such as the New York State Department of Financial Services (NYSDFS), also implement similar requirements.
 
What has been the impact on companies and general counsel?
 
Peters: It is typically no longer possible to have one person or one department handle a company’s compliance with international trade laws. Oversight by both federal and state agencies in the United States and in non-U.S. jurisdictions means that general counsels also need to support proactive risk-based compliance programs to address these expanding global risks.
 
What are the most important aspects of a well-crafted risk-based compliance program?
 
Peters: There are three key elements to a good program. The first is a focus on geography – knowing where you do business, in what countries, and with what kinds of companies. These factors dictate the nature and extent of the trade compliance risks and the scope of the program that the company requires.
 
The second key element of a good program is knowing the export classification of your technology, software, and products – and designing the compliance program accordingly. Is what you’re doing important for national security and the defense industrial base? The U.S. government has assigned controls based on the performance thresholds of various technologies. Elevated export controls apply to technologies in many industries – such as in the chemical, energy, and defense sectors.
 
The third core element is knowing how your customers and your go-to-market strategy affect your compliance program. Are you selling to trading companies or to the end users of your products? Do you understand where your products are going and to whom you are providing services and support? These factors will also affect how much compliance risk you are assuming in both sales and service transactions.
 
What are some of the biggest challenges facing multinational companies regarding international trade and compliance?
 
Peters: First, general counsels need to make sure their trade compliance program is the right size – not too large or too small and tailored to address the company’s greatest risks.
 
Second, one of the biggest challenges is training. Companies are inundated with regulatory and other areas where they need to train their employees. The challenge is how to effectively educate employees in multiple countries and in different languages. My recommendation is to understand the business well enough to filter and train employees on a functional basis; the training curriculum can focus on what they need to do rather than just on what they need to know about international trade compliance.
 
Where do you think companies should place their near-term focus?
 
Peters: The first area is technology transfer. If companies are not securing their technology because it’s controlled for national security reasons, they are actually leaving themselves vulnerable for either diversion of that technology, an export control violation, or a cybersecurity breach.
 
The second area is understanding how trade compliance risks intersect the business. Be thoughtful about the risks and how best to address them, given limited resources.
 
The third area is third-party diligence – whether and to what extent a company puts their distributors or other trusted suppliers through verification. You are only going to be as secure as either your supply chain or your reseller network. Eliminating the weak link is critical.

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COMM_a315. R.C. Burns: “Export Control Reform For and By Dummies”

(Source:
Export Law Blog
. Reprinted by permission.)
 
* Author: R. Clifton Burns, Esq., Bryan Cave LLP, Wash DC, 202-624-3949,
Clif.Burns@bryancave.com
)

Having ignored the export control reforms initiated by the executive branch over the last seven or so years, the geniuses on the Hill have now decided to wade into the field with, as you might imagine, not entirely salubrious results. At the end of September, a bill was introduced in the House (with a companion bill in the Senate) to move most of Category I on the United States Munitions List (“USML”) over to the Commerce Control List (“CCL”). Specifically, it would move every firearm other than combat shotguns and firearms with special military application to the CCL.
 
There appear to be two motivations for this. First, this is an effort to exempt all gun manufacturers from the registration requirement (and associated fees) set forth in Part 122 of the United States Munitions List. Second, this is an apparent response to recent guidance by DDTC that tried to draw a distinction between manufacturing, which requires registration, and gunsmithing, which does not. Some critics claimed that some activities defined as manufacturing should be treated as gunsmithing instead.
 
The proposed legislation simply moves the items to the CCL but allows BIS the discretion to determine where on the CCL these items would go. BIS would be free to designate, and likely would designate, these moved items as 600 series items, which would result in a license requirement for all destinations. BIS would also be free to determine which, if any, license exceptions would be available. This means that it is unlikely, or at least possible, that the proposed legislation would not necessarily make it any easier to export arms; rather, it would only reliably eliminate the registration and fee requirement. Calling this the Export Control Reform Act, as the legislation styles itself, seems inapposite; a better name would be the Gun Manufacturer Financial Relief Act.

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MSEX/IM MOVERS & SHAKERS

(Source: Editor)
 

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ENEDITOR’S NOTES

 
Notable birthdays:

* Chester A. Arthur (Chester Alan Arthur, 5 Oct 1829 – 18 Nov 1886, was the 21st President of the United States (1881-85), succeeding James A. Garfield upon his assassination.)
  – “I may be president of the United States, but my private life is nobody’s damned business.”
 
* Denis Diderot (5 Oct 1713 – 31 July 1784, was a French philosopher, art critic, and writer.)
  – “Pithy sentences are like sharp nails which force truth upon our memory.”

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EN_a218
. 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: 29 Sep 2016: 81 FR 66804-66807: RIN 1400-AD95; Amendment to the International Traffic in Arms Regulations: Tunisia, Eritrea, Somalia, the Democratic Republic of the Congo, Liberia, Cote d’Ivoire, Sri Lanka, Vietnam, and Other Changes
  – The only available fully updated copy (latest edition 29 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, footnotes to amendments that will take effect on 15 November and 31 December, plus a large Index and over 750 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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