16-1006 Thursday “The Daily Bugle”

16-1006 Thursday “Daily Bugle”

Thursday, 6 October 2016

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  1. State: International Security Advisory Board to Meet on 30 Nov in Wash DC 
  1. Ex/Im Items Scheduled for Publication in Future Federal Register Editions
  2. Commerce/BIS: Coty Middle East FZCO (UAE), to Pay $238,000 to Settle Alleged Antiboycott Violations 
  3. DoD/DSS Office Closures Due to Hurricane Matthew 
  4. OMB/OIRA Reviews of Proposed Ex/Im Regulations 
  5. State/DDTC: (No new postings.) 
  1. Fox News: “Arms Dealer Who Threatened to Reveal Clinton’s Libya Dealings Rips DOJ for ‘Injustice'”
  2. ST&R Trade Report: “CBP Schedules East Coast Trade Symposium for Dec. 1-2”
  3. The Tennessean: “U.S. Attorney: Fort Campbell Soldiers Sold Stolen Army Gear to Buyers Overseas”
  1. G.R. Tuttle III: “Soup Du Jour: Understanding CBP’s New Antidumping and Countervailing Duty Evasion Law” 
  2. R.C. Burns: “The Strange Case of Marc Turi” 
  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) 



1. State: International Security Advisory Board to Meet on 30 Nov in Wash DC

(Source: Federal Register)
81 FR 69567: International Security Advisory Board (ISAB) Meeting Notice
   In accordance with section 10(a)(2) of the Federal Advisory Committee Act, 5 U.S.C. App 10(a)(2), the Department of State announces a meeting of the International Security Advisory Board (ISAB) to take place on November 30, 2016, at the Department of State, Washington, DC.
   Pursuant to section 10(d) of the Federal Advisory Committee Act, 5 U.S.C. App 10(d), and 5 U.S.C. 552b(c)(1), it has been determined that this Board meeting will be closed to the public because the Board will be reviewing and discussing matters properly classified in accordance with Executive Order 13526. The purpose of the ISAB is to provide the Department with a continuing source of independent advice on all aspects of arms control, disarmament, nonproliferation, political-military affairs, international security, and related aspects of public diplomacy. The agenda for this meeting will include classified discussions related to the Board’s studies on current U.S. policy and issues regarding arms control, international security, nuclear proliferation, and diplomacy.
   For more information, contact Christopher Herrick, Executive Director of the International Security Advisory Board, U.S. Department of State, Washington, DC 20520, telephone: (202) 647-9683.
   Dated: September 23, 2016.
Christopher Herrick, Executive Director, International Security Advisory Board, U.S. Department of State.

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

* Commerce; Industry and Security Bureau; NOTICES; Meetings; Emerging Technology and Research Advisory Committee [Publication Date: 7 October 2016.]

* Treasury; Foreign Assets Control Office; NOTICES; Blocking or Unblocking of Persons and Properties [Publication Date: 7 October 2016.]

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OGS_a23. Commerce/BIS: Coty Middle East FZCO (UAE), to Pay $238,000 to Settle Alleged Antiboycott Violations

(Source: Commerce/BIS)
* Respondent: Coty Middle East FZCO (UAE), JAFZ, Dubai, UAE
* Case No: 15-07
* Charges: Seventy Violations of 15 C.FR. §760.2(d) – Furnishing Information about Business Relationships with Boycotted Countries or Blacklisted Persons:
During the years 2009 through 2013, CME engaged in transactions involving the sale and/or transfer of goods or services (including information) from the United States to Bahrain, Egypt, Iraq, Jordan, Kuwait, Lebanon, Oman, Pakistan, Qatar, Saudi Arabia, Syria, UAE, and Yemen, activities in the interstate or foreign commerce o f the United States, as defined in Section 760.l(d) of the Export Administration Regulations.
* Fine or Civil Settlement: Civil penalty of $238,000
* Debarred or Suspended from Export Transactions: Not if penalty is paid as agreed, otherwise debarred for one year from the date of entry of this Order.
* Date of Order: 29 September 2016
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OGS_a64. DoD/DSS Office Closures Due to Hurricane Matthew

(Source: DoD/DSS)
Given the projected track of Hurricane Matthew, DSS has closed its Melbourne Field Office and its Charleston Resident Office. The offices will reopen once it is safe to do so. Cleared contractors in affected areas who require immediate assistance should contact the Southern Region at 469-276-2321.
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OGS_a35. OMB/OIRA Reviews of Proposed Ex/Im Regulations

* Cuba: Revisions to License Exceptions and Licensing Policy
  – AGENCY: DOC-BIS              
  – STAGE: Final Rule
  – RECEIVED DATE: 10/06/2016        
  – RIN: 0694-AH12
  – Status: Pending Review
* * * * * * * * * * * * * * * * * * * *

OGS_a46. State/DDTC: (No new postings.)

(Source: State/DDTC)
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An arms dealer who had threatened to reveal potentially damaging information about Hillary Clinton’s alleged role in arming Islamist militants until federal prosecutors abruptly dropped their case against him Tuesday, told Fox News the case has cost him everything.
Federal prosecutors faced a Wednesday deadline to turn over discovery documents to the legal team of American Marc Turi, who had been charged with selling weapons to Libyan rebels. Late Tuesday, an announcement came that the government was dropping the case, which was set to go to trial on Nov. 8 – the day American voters choose between Clinton and GOP nominee Donald Trump. The move may avert a release of potentially explosive documents.
  “I am glad this horrific five-year ordeal is over and I am pleased to be able to move on with my life,” Turi told Fox News in a statement. “The American public has the right to know that an injustice was committed against an innocent American.”
Turi said his legal team advised him to accept the deal and avoid a trial, but insisted that his actions were in furtherance of his ongoing support of U.S. foreign policy. He said defending himself in a case that has now been dropped has cost him everything.
  “The government took away my life, my savings, and my company that I worked so hard to build to serve our nation, and for what?” he said. “I still don’t really know who the unjust actors were who launched this attack against me from the shadows. I just hope that someday there will be someone that will be held accountable.”
Last year, in his only extended television interview, Turi provided Fox News with documents and email exchanges he had with high-level members of Congress as well as military, and State Department employees to back up his claim that the Obama administration authorized in 2011, at the height of the Arab Spring, a covert weapons program that spun out of control.
  “That’s where I came up with this ‘zero footprint’ Arab supply chain, whereby, our foreign ally supplies another, Arab country,” Turi said. In this case, the US would supply conventional weapons to a U.S. ally-Qatar, who would inturn supply them to Libya, as a kind of workaround.
  “If you want to limit the exposure to the US government, what you simply do is outsource it to your allies,” Turi said, describing the practice. “The partners-the Qataris, and the Emiratis did exactly what they were contracted to do.”
Turi told Fox he never supplied any weapons to Qatar, and it was in the hands of the U.S. government and the State Department’s Bureau of Political and Military Affairs which was headed by a key Clinton aide, Andrew Shapiro. Shapiro was responsible to oversee the export control process at the State Department.
  “They don’t want this stuff to come out because it will look really bad for Obama and Clinton just before the election,” an associate of Turi told Politico, claiming that information sought by Turi’s team would show Clinton’s own role in arming Libyan rebels fighting former strongman Col. Muammar Qaddafi while she was secretary of state.
Fox News, citing federal records, reported last year that documents showed U.S. officials supported Turi’s effort to channel weapons to Libyan rebels while Clinton was secretary of state.
Many of the arms destined for Libyan rebels ultimately fell into the hands of Islamist militants, reportedly including those in Syria.
  “When this equipment landed in Libya, half went one way, and the half went the other way,” Turi previously told Fox News, emphasizing that poor oversight, allowed individuals hostile to the United States to get arms. “The half that went the other way is the half that ended up in Syria.”
In their motion for dismissal, federal prosecutors acknowledged that discovery rulings from U.S. District Court for the District of Arizona Judge David Campbell factored into the decision. The motion includes a request that Campbell accept a confidential agreement to settle the case civilly, further fueling claims the deal was struck to keep potentially damaging disclosures under wraps.
Turi adviser Robert Stryk accused prosecutors of bringing the case against Turi in order to cover up Clinton’s mishandling of Libya. Clinton was Secretary of State on Sept. 11, 2012, when jihadists mounted an attack on two American facilities in Benghazi, killing four Americans including Ambassador Christopher Stevens.
The attack came just weeks before President Obama stood for re-election against Mitt Romney, and the administration initially – and falsely – claimed it was a spontaneous event triggered by an obscure anti-Islam video. It later became evident that it was a coordinated terror attack by extremists linked to al Qaeda and Ansar al-Sharia.
Neither the Justice Department nor the White House responded to requests for comment on the case or the settlement.
Turi was indicted in 2014 on charges of arms dealing in violation of the Arms Export Control Act and lying to the State Department in official applications. Prosecutors said he falsely claimed the weapons were destined for Qatar and the United Arab Emirates. His lawyers said the arms shipments were part of a government-authorized effort to arm Libyan rebels.
The claims by Turi’s legal team were supported by documents related to the case and obtained by Fox News last year.
  “It was then, and remains now, my opinion that the United States did participate, directly or indirectly, in the supply of weapons to the Libyan Transitional National Council,” career CIA officer David Manners said in a sworn declaration dated May 5, 2015.
The timing was critical, because in the spring of 2011, the Libyan opposition was not formally recognized, and the direct supply of arms was not authorized. At that time, the CIA director was David Petraeus.
Manners testified before a grand jury investigating Turi prior to his indictment. Manners was an 18-year CIA officer who had previously been posted in Prague and Amman. At the time of his declaration, he said he was “the executive assistant to the deputy director of the National Security Agency.”
Manners’ declaration supported statements made exclusively to Fox News by Turi about what President Obama’s team and members of Congress knew about weapons flowing into the region during the chaotic Arab Spring of 2011.
  “When this equipment landed in Libya, half went one way, and the half went the other way,” Turi said, emphasizing that poor oversight, allowed individuals hostile to the United States to get arms. “The half that went the other way is the half that ended up in Syria.”
As part of Fox’s ongoing investigation of the 2012 terrorist attack that killed Stevens, Foreign Service Officer Sean Smith, as well as former Navy Seals Ty Woods and Glen Doherty, Turi spoke exclusively to Fox News.
Turi was one of several thousand U.S. arms contractors licensed by the State Department to sell and move weapons around the world.
  “I got involved in this business in the 1990s,” Turi said. “I’ve been involved in all type of operations, regarding transportation, logistics, and liaising with those foreign governments.”
Licensed arms contractors require painstaking compliance in order to obtain the necessary approvals set by strict U.S. government regulations. While Clinton served as Secretary of State, American arms dealers were awarded a record number of export licenses to sell sophisticated weapons, military parts and technology internationally.
  “That’s actually been a huge policy position of the Obama administration,” Celina Realuyo, a professor of national security at the Perry Center at the National Defense University, told Fox News in 2012.
Realuyo has served two presidents with expertise in tracking down money and weaponry used in what are called “dark networks” that can channel weapons to criminal and designated foreign terrorist organizations.
More than 86,000 licenses with a value of $44.3 billion were granted in 2011 . . . a surge of more than $10 billion from the previous year.
In the spring of 2011, Turi says his high-level contacts both inside and outside of the U.S. government, encouraged him to explore options to arm the Libyan opposition as they tried to overthrow Qaddafi. He says his associates included Manners, and that the government worked through private contractors to limit its own exposure.
As Fox News first reported, Clinton, in a heavily redacted, April 8, 2011, email released to the Benghazi Committee last year, expressed interest in arming rebels using contractors.  
“FYI. The idea of using private security experts to arm the opposition should be considered,” Clinton wrote, using her private email address. Significantly, the emails released by the State Department blacked out this line, but the version given to the Benghazi Select Committee was complete.
Turi got approval to sell arms to Qatar – which was apparently cover for sending weapons to Libya – in May, 2011. But in July 2011, his Arizona home was raided by federal agents.
  “They came in the full body armor, and weapons and, they take my computers and my cellphones and that was it. That was the last time I saw them. And they’ve been chasing me all over the world for the past three years, speaking to associates of mine all over the United States and looking into my records and my past.”
Turi believes he was being blamed for a program that went off the rails, much as Nakoula Basseley Nakoula, whose Internet film, “The Innocence of Muslims,” was initially blamed for the Benghazi attack.
  “At some point, I may be that Internet video excuse,” Turi told Fox News. “I don’t know. But, it’s really strange that the U.S. government would invest three years, a multi-year investigation, fly all over the world interviewing people, for an application.”
In her only congressional testimony to date on Benghazi in January 2013, Clinton was asked by Sen. Rand Paul, R-Ky., about the flow of weapons.
  “I will see what information is available,” then Secretary Clinton
responded. “I don’t have any information on that.”
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NWS_a28. ST&R Trade Report: “CBP Schedules East Coast Trade Symposium for Dec. 1-2”
U.S. Customs and Border Protection’s 2016 East Coast Trade Symposium, which will focus on the theme “Trade’s Impact on American Health, Safety, and Economic Prosperity,” will be held Dec. 1-2 in Arlington, Va. Registration to attend will open Oct. 6 at 12:00 p.m. EST.
According to CBP, this year’s symposium will include sessions on the following topics.
  – customs leaders’ perspective on economic integration among the U.S., Mexico, and Canada
  – the complexities of the supply chain and how companies can continue to strengthen the compliance and integrity of international trade
  – challenges for trade enforcement and facilitation over the next five years and how institutions are positioning themselves in response
  – how U.S. trade partners are positioning themselves to react to an ever-shifting trade environment
  – aligning single windows among the U.S., Mexico, and Canada to streamline processes and requirements to the greatest extent possible
  – how customs brokers view the future of North American trade and the areas they are focusing on for the next five years
  – coordinated border management among North American government agencies
  – interactive discussions with the Centers of Excellence and Expertise on CBP trade priorities such as enforcement, strategic trade processing, industry collaboration, efficiencies gained, and account-based principles
  – forced labor, e-allegations regarding antidumping and countervailing duty evasion, and other trade enforcement issues
  – the facilitation, flow, and future of e-commerce
  – modernizing the export process to create a more streamlined supply chain and the future of post-departure filing
  – the Automated Commercial Environment
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NWS_a39. The Tennessean: “U.S. Attorney: Fort Campbell Soldiers Sold Stolen Army Gear to Buyers Overseas”
(Source: The Tennessean)
Six soldiers and two civilians were indicted Wednesday on charges they conspired to steal and sell Army equipment, from printer ink to machine gun parts and the sight for a grenade launcher, on eBay.
Soldiers Michael Barlow, Jonathan Wolford, Kyle Heade, Alexander Hollibaugh, Dustin Nelson and Aaron Warner, all stationed at Fort Campbell, were named in the indictment unsealed on Thursday. Also charged are civilians John Roberts and Cory Wilson, both of Clarksville.
U.S. Attorney for the Middle District of Tennessee David Rivera is expected to formally announce the charges at a news conference at the federal courthouse in Nashville Thursday afternoon.  
According to the indictment, the eight charged “sold certain U.S. Army equipment that is never offered for sale by the U.S. Department of Defense as surplus” in 2013.
The men sold “firearm components, advanced communications headsets and laser or optical sights.” The equipment was classified by the Defense Department as “DEMIL D,” meaning that it must be destroyed by the military and cannot be sold elsewhere.
The indictment lists the following equipment that was stolen and sold by the defendants between 2013 and 2016:
  – A sight for an M203 grenade launcher
  – Machine gun parts including magazine adapters, barrel assemblies and at least 30 barrels, heat shields
  – Body armor
  – Sniper telescope with tripod, and rifle mounts
  – Combat and flight helmets
The value of the equipment stolen and sold by the group totaled more than $1 million, according to the indictment. The equipment was stored in warehouses and storage units around Clarksville, and was listed for sale online by Cory Wilson and John Roberts, civilians who live in Clarksville, the indictment says.
In May 2013, Roberts exchanged messages with someone listed in his phone as an E5, a sergeant, to arrange buying helmets and tactical vests, the indictment reads.
  “Where I just got that sh– was craaaaazy risky,” the sergeant texted.
  “I can only imagine,” Roberts replied, according to the indictment. “I wondered about that. I imagine its pretty locked up.”
Even eBay caught on, the indictment says, and went after the sellers for wrongly listing items for sale and trying to sell components of assault weapons.
The items were then sold on eBay to buyers located in the U.S., Russia, China, Hong Kong, Kazakhstan, Ukraine, Lithuania, Moldova, Malaysia, Romania and Mexico, the indictment reads.
Roberts, of Clarksville, was charged with conspiracy, two counts of violating the Arms Export Control Act and 10 counts of wire fraud.
Wilson, aka Jason C. Wilson, of Clarksville, was charged with conspiracy, money laundering, violating the Arms Export Control Act and seven counts of wire fraud.
Michael Barlow, U.S. Army sergeant, was charged with conspiracy, three counts of theft, receipt and unauthorized sale of government property.
Jonathan Wolford, Kyle Heade, Alexander Hollibaugh, Dustin Nelson and Aaron Warner, all U.S. Army specialists, were charged with conspiracy.

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. G.R. Tuttle III: “Soup Du Jour: Understanding CBP’s New
Antidumping and Countervailing Duty Evasion Law”

* Author: George R. Tuttle III, Esq., Law Offices of George R. Tuttle, george.tuttle.iii@tuttlelaw.com, 415-986-8780.
It certainly seems like every time we turn around that there is a new favorite issue of the day that importers have to be concerned about, and certainly the talk of the trade community this year has been the new Antidumping and Countervailing Duty Evasion law that is mandated by section 421 of the Trade Facilitation and Trade Enforcement Act of 2015 (TFTEA). Antidumping and countervailing compliance has been a trade priority item for CBP for quite some time and has been the primary focus CBP’s Importer Audit program for the past several years. This new law, however, goes several steps forward and requires CBP to establish regulations and procedures to investigate claims of evasion of antidumping (AD) and countervailing duty (CVD) orders when there is a reasonable basis to believe that the goods under investigation are subject to an AD or CVD order. CBP has recently released its proposed regulations to implement section 421 of the TFTEA. CBP has also launched a webpage for the Enforce and Protect Act (EAPA) with a timeline for an EAPA Investigation and Administrative Review. An overview of EAPA Investigations is also provided.
What are Antidumping and Countervailing Duty Orders
Antidumping and Countervailing Duty Orders are intended to remedy certain specific types of unfair trade practices by foreign exporters and/or governments for goods exported to the United States.
An AD order provides for increased duties on imported products that the United States Department of Commerce (Commerce) has found to have been exported to the U.S. at prices that are below the fair market value in their home country.
A CVD order provides for an increase in duties on imported products that have been found to have benefitted from an export subsidy from a foreign government or public entity. Export subsidies include items like direct cash payments, credits against taxes, or loans at terms that do not reflect market conditions.
In both situations, there must also be a finding that a domestic industry in the United States is being materially injured, or threatened with material injury, by such conduct.
If there is an affirmative determination of dumping or that there exists a countervailable subsidy, Commerce issues an AD and/or CVD order that establishes deposit rates for additional duties on entries of the type of merchandise subject to the order. These duties are equal to the difference in price or at the value of the subsidy. In some cases, this can be up to 200 or 300 percent or more of the declared value of the imported merchandise. Later, these entries will be liquidated at the cash deposit rate, unless interested parties request an administrative review to establish a revised final dumping or countervailing duty rate for the goods being entered. If there is a final rate that is higher than the deposit rate, the importer will be sent a bill for the additional duties owed.
CBP is responsible for assessing and collecting cash deposits and final duties on imports of subject merchandise at the rates established by Commerce and published in the Antidumping and Countervailing Duty Orders.
Evasion of Antidumping and Countervailing Duty Orders
Evasion refers to the importation of merchandise into the United States by an act or omission that is material and false, and which results in antidumping or countervailing duties being reduced, not applied to, or collected on the merchandise. Examples of evasion include:
  – Misrepresenting the true country of origin of the merchandise (e.g., through fraudulent country of origin markings on the product itself or false sales),
  – Undervaluing the merchandise, or misrepresenting the actual manufacturer or exporter using false or incorrect documentation so as to pay lower amounts, or
  – Misreporting the merchandise’s physical characteristics.
Currently, CBP can take enforcement action against importers who attempt to evade AD/CVD orders, which include the collection of unpaid AD/CVD duties and the assessment of civil penalties of several times the loss of revenue up to the domestic value of the merchandise.
Prior to implementation of the Enforce and Protect Act (
EAPA), however, CBP was not required to investigate allegations of evasion submitted by private parties or afford the parties an opportunity to participate in the investigation. CBP was also not required to notify parties that submitted allegations of evasion as to the outcome of CBP’s review.
The Enforce and Protect Act of 2015
The EAPA creates a framework for CBP to investigate allegations of evasion of AD/CVD orders and then take action to remediate the evasion of AD/CVD orders if such conduct is found to exist.
While CBP currently has many tools to fight evasion of AD/CVD orders by unscrupulous foreign exporters and importers, the EAPA goes a step further and mandates that CBP investigate alleged evasions of AD/CVD orders made by domestic parties and to report back on their findings. The EAPA also allows domestic parties to appeal a negative finding by CBP of evasion.
To facilitate the investigation process, the TFTFA created the Trade Remedy Law Enforcement Directorate (TRLED) in the Office of Trade in CBP.
The EAPA requires CBP to initiate an investigation within 15 business days of receipt of an allegation from an interested party that
reasonably suggests
that merchandise covered by an existing AD/CVD order has entered into the United States through evasion.
If the allegation is found to be credible by CBP, it is required to determine, within 300 calendar days of the initiation of investigation, whether there is
substantial evidence
that merchandise was entered into the customs territory of the United States through evasion.
If any of the parties (including the importer, foreign exporter or producer, or alleging party) to the investigation refuse to cooperate, submit incomplete information, or otherwise do not act to the best of their ability to provide the requested information, CBP may make an
adverse inference
from that failure to adequately respond.
Following the completion of its investigation, CBP has five business days to communicate its decision to the interested party who made an allegation that initiated the evasion investigation. If CBP makes an affirmative determination of evasion, CBP is to:
  – Suspend the liquidation of unliquidated entries of the covered merchandise that is subject to the determination;
  – Extend the period for liquidating the unliquidated entries of covered merchandise that entered before the initiation of the investigation;
  – When necessary, notify Commerce of the determination and request that Commerce determine the appropriate duty rates for such covered merchandise;
  – Require importers of covered merchandise to post cash deposits and assess duties on the covered merchandise; and/or
  – Take any additional enforcement measures as CBP deems appropriate, including (but not limited to) modifying CBP’s procedures for identifying future evasion, reliquidating entries as provided by law, and referring the matter to ICE for a possible civil or criminal investigation.
In order to ensure that appropriate duties can be collected on entries of covered merchandise made during the pendency of an EAPA investigation, the act provides for what is referred to as “interim measures.”
Establishing Interim Measures
Under the “interim measures” mechanism, CBP must determine within 90 calendar days of initiation of an EAPA investigation whether there
exists reasonable suspicion
that the merchandise subject to an allegation was entered through evasion.
If CBP determines that reasonable suspicion exists that covered merchandise subject to an allegation was entered through evasion, it is required, within 90 days of initiation, to:
  – Suspend the liquidation of unliquidated entries of the covered merchandise entered after the date of initiation;
  – Extend the period for liquidating the unliquidated entries of covered merchandise that entered before the initiation of the investigation; and
  – Take any additional measures necessary to protect the ability to collect appropriate duties, which may include requiring a single transaction bond or posting cash deposits or reliquidating entries as provided by law with respect to entries of the covered merchandise.
If, during the course of an EAPA investigation, CBP determines that the merchandise poses a health or safety risk, CBP can notify the appropriate Federal agencies of that risk and will exercise its administrative powers, as appropriate, including possible seizure and forfeiture under 19 USC 1595a(c).
Administrative and Judicial Review of EAPA Decisions
The EAPA provides a period of
30 business days
after a determination for the interested party who made the allegation of evasion
the person determined to have entered the merchandise subject to the evasion determination to request
a de novo administrative review
CBP will then have
60 business days
to complete the review and issue a final administrative determination.
Parties that are dissatisfied with the administrative decision may then request judicial review of the final administrative determination and the original determination as to evasion. A request for judicial review must be made not later than 30 business days after completion of the final administrative determination. The request for judicial review must be made to the U.S. Court of International Trade (CIT).
Publication of Interim Regulations for EAPA Investigations
In August, CBP released its
Interim regulations for EAPA Investigations and created Part 165 of the Customs Regulations (Title 19 CFR). While the regulations and procedures are in effect as of August 22, 2016; CBP is soliciting comments through October 21, 2016.
Who Can Bring an Allegation of Evasion?
Section 165.1 defines an interested party for the purpose of filing an allegation of evasion as:
  (1) A manufacturer, producer, or wholesaler in the United States of a domestic like product;
  (2) A certified union or recognized union or group of workers that is representative of an industry engaged in the manufacture, production, or wholesale in the United States of a domestic like product;
  (3) A trade or business association a majority of the members of which manufacture, produce, or wholesale a domestic like product in the United States;
  (4) An association a majority of the members of which is composed of interested parties described above with respect to a domestic like product; or,
  (5) If the merchandise is a processed agricultural product, a coalition or trade association that is representative of processors; processors and producers; or processors and growers.
Initiating an Allegation of Evasion
The following information must be included in a request for an investigation of an alleged evader:
  (1) Name of importer against whom the allegation is brought;
  (2) Description of the covered merchandise;
  (3) Applicable AD/CVD orders;
  (4) Information that reasonably suggests that an importer has entered covered merchandise into the customs territory of the United States through evasion;
  (5) Identification of a point of contact at the agency; and
  (6) Notification of any knowledge of or reason to suspect that the covered merchandise poses any health or safety risk to U.S. consumers.
Criteria for Initiation
CBP is to initiate an investigation if the following criteria are satisfied:
  (1) The merchandise described in the allegation is properly within the scope of an AD/CVD order. If CBP lacks sufficient information to make such determination as to the scope of the order, then it may refer the matter to Commerce for a determination, and,
  (2) The information provided in the allegation
reasonably suggests
that the merchandise has been entered for consumption into the customs territory of the United States through evasion as it is defined in § 165.1.
The terms “evade” and “evasion” refer to the entry of merchandise by means of:
any document or electronically transmitted data or information, written or oral statement, or act that is material and false, or any omission that is material and that results in any cash deposit or other security or any amount of applicable antidumping or countervailing duties being reduced or not being applied with respect to the covered merchandise.
CBP will not initiate an investigation if there was clerical error. The term “clerical error” is not defined in the proposed regulations or by the statute with any particularity. However, the Court of International Trade has, in the context of 19 USC 1520(c), defined clerical error as “a mistake made by a clerk or other subordinate, upon whom devolves no duty to exercise judgment, in writing or copying the figures or in exercising his intention.” Chrysler Corp. v. United States, 24 C.I.T. 75 (Ct. Int’l Trade 2000).  It is unclear if it will also include a mistake of fact or by reason of inadvertence.  So, for instance, if the importer has made a mistake of fact with regard to the origin the goods or the manufacturer, or the goods or relied on information provided by a foreign suppler, it may not be able avoid an investigation.
A clerical error, is not evasion, although CBP will take appropriate actions to ensure that AD/CVD duties are assessed and collected.
Initiation of Investigations
CBP is to make a determination as to whether to initiate an investigation on or before the 15th business day after the date on which a properly filed allegation is received. 
If CBP determines that it will not initiate an investigation, it will notify the interested party who filed the allegation within five business days of that determination. Otherwise, the parties to the investigation will be notified
no later than 95 calendar days
after the decision has been made, and the actual date of initiation will be specified therein. However, notification to all parties to the investigation will occur no later than five business days
interim measures are taken.
To carry out the investigative process, CBP will establish questionnaires for allegers of AD/CVD violations, alleged evaders of AD/CVD orders, and other interested parties, such as the foreign producer, exporter or a foreign government. CBP estimates that it will take 25 hours to complete a questionnaire by an alleged evader of an AD/CVD order.
The parties will have 200 calendar days after the date of initiation in which to submit factual information and respond to CBP questionnaires, and 230 calendar days from initiation in which to submit written comments. Parties will then have ten calendar days from the date of service of any factual information or from the date of placement of any factual information on the record to provide rebuttal information to that factual information.
Confidentiality of Information Issues
The TFTFA does not include a provision for the protection of sensitive business or financial information by an Administrative Protective Order. Rather, all information submitted, regardless of whether submitted by an alleger or by an alleged evader or other interested party, will be accessible as a part of the administrative record. Parties, can, however, request confidential treatment for the protection of sensitive business information. 
Section 165.4 addresses how an interested party may make a claim for business confidential treatment in a submission to CBP for an EAPA proceeding. Any interested party that makes a submission to CBP in connection with an investigation may request that CBP treat any part of the submission as business confidential information except for the following information:
  (1) Name of the party to the investigation providing the information and identification of the agent filing on its behalf, if any, and e-mail address for communication and service purposes;
  (2) Specification as to the basis upon which the party making the allegation qualifies as an interested party;
  (3) Name and address of importer against whom the allegation is brought;
  (4) Description of covered merchandise; and
  (5) Applicable AD/CVD orders.
Business confidential treatment will be granted if the requirements are satisfied and the information for which protection is sought consists of trade secrets and commercial or financial information obtained from any person, which is privileged or confidential in accordance with 5 U.S.C. 552(b)(4). 
An interested party filing a submission containing claimed business confidential information must
also file a public version
of the submission. The public version must be filed on the same date as the business confidential version and contain a summary of the bracketed information in sufficient detail to permit a reasonable understanding of the substance of the information.
Meaning and Effect of Adverse Inferences
If the party to the investigation that filed an allegation, the importer, or the foreign producer or exporter of the covered merchandise fails to cooperate and comply to the best of its ability with a request for information made by CBP, CBP may apply an inference adverse to the interests of that party in selecting from among the facts otherwise available to make the determination as to evasion.
An adverse inference described in this section may be used with respect to the importer of the covered merchandise, or the foreign producer or exporter of the covered merchandise without regard to whether another party involved in the same transaction or transactions under examination has provided the information sought by CBP, such as import or export documentation.
Concluding Thoughts
For now, the new regulations present more questions than they answer. For instance, what constitutes a reasonable suspicion that evasion is taking place such that CBP will take action to initiate an investigation? If CBP initiates an investigation of evasion, how soon will it notify the importing party of the investigation, or will it wait until it implements “interim measures” before notifying the importer of the investigation? Will CBP wait the full 95 days before informing the importer of the investigation and, thus, allowing the importer to perhaps unknowingly import goods that may otherwise be subject to an AD/CVD order? Will importers have sufficient time and cooperation from foreign suppliers, exporters, and manufacturers to adequately respond to questionnaires and submit factual information? How will CBP deal with the issue of “clerical error” verses “mistake of fact” with regard to the origin or manufacturer of the goods?
Determining country of origin can be difficult, and it certainly seems likely that in many cases of alleged “evasion,” the importer will be the party that is lied to or deceived with respect to the true origin or manufacturer of the goods.
Whatever else can be said about the EAPA, it will place importers at a significant disadvantage. Importers and their brokers will need to be more vigilant than ever with regard to determining the origin of their goods, particularly if the class or type of goods that are being imported are subject to an AD and or CVD order. Important steps to take include proper classification of imported merchandise, and screening HTS classifications against CBP’s database of HTS numbers subject to AD and CVD orders and scope descriptions. If there are questions about whether a particular good falls within the scope of an AD and or CVD order, it may be prudent to obtain a scope ruling from Commerce or take additional steps to verify the country of manufacture and whether any downstream process that might have occurred in a third country is sufficient to take the article out of the scope of the order.

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R.C. Burns: “The Strange Case of Marc Turi”

Export Law Blog
. Reprinted by permission.)
* Author: R. Clifton Burns, Esq., Bryan Cave LLP, Wash DC, 202-624-3949,
Two days ago, on October 4, a federal district court in Arizona dismissed a criminal indictment brought in 2014 against Marc Turi that accused him of lying in two brokering applications that Turi had submitted to the Directorate of Defense Trade Controls (“DDTC”) in 2011. The dismissal was based on a motion to dismiss filed the day before by the prosecution noting that a consent agreement had been reached between Turi and DDTC.  Under that consent agreement, released by DDTC yesterday,  Turi agreed that for four years he will not engage in any “activities subject to the ITAR.”
The Turi case is, to say the least, an odd case, not the least because it involves an arms deal with the Libyan rebels which everyone – DDTC, the prosecutors, and Turi – concede never took place.
The story begins with the revolt in Libya that broke out in February 2011. Near the end of that month, the rebels attempted to establish an interim government under the banner of organization known as the Libyan National Transitional Council (“NTC”). On February 26, 2011, the UN imposed an arms embargo on Libya, which DDTC finally got around to implementing some three months later on May 24, 2011, when it amended Part 126 to include Libya. The NTC was ultimately recognized as the government of Libya by the United Nations on September 16, 2011.
According to the indictment, on March 11, 2011 and before the US imposed the arms embargo on Libya in May, Marc Turi filed an application seeking to broker the sale of certain arms from Eastern Europe to the NTC. This application was denied by DDTC on March 22, 2011, by DDTC.
A week later, on March 29, 2011, Turi filed another application with DDTC requesting permission to broker to the government of Qatar a list of arms which the indictment, in paragraph 24(ee), described as “nearly identical” to the arms detailed in the previous application relating to the NTC. That application was granted by DDTC on May 5, 2011. On June 11, 2011, Turi filed an application to broker the same arms listed in the Qatar application to the U.A.E. government instead.
On June 29, 2011, Turi sent a letter, apparently never signed, to Mustafa Abdul Jalil, the Chairman of the NTC, by which the NTC agreed to reimburse the government of UAE for the arms described in the brokering applications filed by Turi with respect to Qatar and UAE. That letter was never signed, the arms never went to the NTC and the U.S. government indicted Turi for lying in the UAE and Qatar brokering applications by failing to reveal that the arms were destined ultimately to the NTC.
Turi’s defense, as revealed in his Motion to Compel Discovery, was that he was, in fact, acting on behalf of the CIA, which sought to arm the NTC notwithstanding the UN embargo. Turi and the government then wrangled over these discovery requests, which the government claimed sought classified information, until the DDTC deal was reached and the government requested the dismissal of the indictment.
With these facts in mind, let’s look at the documents released by DDTC relating to the settlement.  These documents are, to say the least, odd. To begin with DDTC does not charge Turi with lying in the brokering applications he made with respect to Qatar and the UAE.
Instead, DDTC in its proposed charging letter first accuses Turi of making an unapproved proposal to the NTC in violation of section 126.1(e) of the International Traffic in Arms Regulations, citing the June 29 letter to Chairman of the NTC. Apparently no one at DDTC actually read section 126.1(e) because there is no way that this letter violated that section. That section only prohibits proposals “made to any country referred to in this section (including the embassies or consulates of such a country), or to any person acting on its behalf.” Given that the NTC was not recognized as the legitimate government of Libya until September 2011, the letter to the NTC in June, when NTC was simply a rebel organization, was not made to Libya or anyone acting on its behalf and so could not violate section 126(e).
The second violation in the DDTC charging letter is that Turi acted as a broker for Libya without authorization. This is problematic on two counts. The first is that if Qatar hires Turi to send arms to Libya the Turi is brokering for Qatar and not for Libya. Perhaps there’s a problem that Qatar’s intentions with respect to Libya weren’t revealed in the application, but DDTC isn’t charging Turi with violating the prohibition on false statements in applications. Besides, that was the charge DOJ made, and they dropped that.
But the second, and larger, problem with the brokering charge is this: DDTC had to know when it approved the Qatar brokering application where the arms were headed. That application was filed exactly one week after the Libya application was denied and covered a list of arms nearly identical to the ones in the Libya application. DDTC isn’t that stupid, nor is everyone else as stupid as DDTC must imagine.
Consider this: say you’re a compliance officer and an employee asks to ship some flowers to Iran. You, of course, say no. Five minutes later he’s back in your office saying he decided to send the exact same flowers to the UAE instead. No problem, you say. Does anyone honestly think that DDTC or BIS or OFAC would look the other way? Or would they have your head on a platter?
DDTC and that State Department almost certainly were fine with letting Qatar arm the rebels in Libya; they just could not admit that in writing.

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(Source: Editor)


Notable birthdays:


* Tony Dungy (Anthony Kevin “Tony” Dungy, born 6 Oct 1955, is a former professional American football player and coach. Dungy was head coach of the Tampa Bay Buccaneers from 1996 to 2001, and head coach of the Indianapolis Colts from 2002 to 2008.)
  – “You may not win the Super Bowl. Your kids may not go on to be doctors and lawyers, and everything may not go perfectly. That doesn’t mean it was a bad plan or the wrong thing. It’s just like a football season. Everything’s not going to go perfect.”

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13. Are Your Copies of Regulations Up to Date? 

(Source: Editor)

The official versions of the following regulations are published annually in the U.S. Code of Federal Regulations (C.F.R.), but are updated as amended in the Federal Register.  Changes to applicable regulations are listed below.
: 27 CFR Part 447-Importation of Arms, Ammunition, and Implements of War
  – Last Amendment: 15 Jan 2016: 81 FR 2657-2723: Machineguns, Destructive Devices and Certain Other Firearms; Background Checks for Responsible Persons of a Trust or Legal Entity With Respect To Making or Transferring a Firearm  
: 19 CFR, Ch. 1, Pts. 0-199
  – Last Amendment: 26 Aug 2016: 81 FR 58831-58834: Administrative Exemption on Value Increased for Certain Articles  

  – Last Amendment: 18 May 2016: Change 2: Implement an insider threat program; reporting requirements for Cleared Defense Contractors; alignment with Federal standards for classified information systems; incorporated and canceled Supp. 1 to the NISPOM  (Summary here.)

  – Last Amendment: 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  

: 31 CFR, Parts 500-599, Embargoes, Sanctions, Executive Orders
  – Last Amendment: 18 May 2016: 81 FR 31169-31171: Burmese Sanctions Regulations 
: 15 CFR Part 30
  – Last Amendment: 15 May 2015; 80 FR 27853-27854: Foreign Trade Regulations (FTR): Reinstatement of Exemptions Related to Temporary Exports, Carnets, and Shipments Under a Temporary Import Bond 
  – HTS codes that are not valid for AES are available
  – The latest edition (9 May 2016) of Bartlett’s Annotated FTR (“BAFTR”), by James E. Bartlett III, is available for downloading in Word format. The BAFTR contains all FTR amendments, FTR Letters and Notices, a large Index, and footnotes containing case annotations, practice tips, and Census/AES guidance.  Subscribers receive revised copies every time the FTR is amended.  The BAFTR is available by annual subscription from the Full Circle Compliance website.  BITAR subscribers are entitled to a 25% discount on subscriptions to the BAFTR, please contact us to receive your discount code. 
, 1 Jul 2016: 19 USC 1202 Annex.  (“HTS” and “HTSA” are often seen as abbreviations for the Harmonized Tariff Schedule of the United States Annotated, shortened versions of “HTSUSA”.)
  – Last Amendment: 30 Aug 2016; Harmonized System Update (HSU) 1612, containing 4,692 ABI records and 935 harmonized tariff records.   
  – HTS codes for AES are available
  – HTS codes that are not valid for AES are available

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

  – Latest Amendment: 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, plus a large Index and over 700 footnotes with case annotations, practice tips, DDTC guidance, and explanations of errors in the official ITAR text.  Subscribers receive updated copies of the BITAR in Word by email, usually revised within 24 hours after every ITAR amendment.  The BITAR is
the essential tool of the ITAR professional.  The BITAR is available by annual subscription from the Full Circle Compliance
website.  BAFTR subscribers receive a 25% discount on subscriptions to the BITAR — please
contact us to receive your discount code.  

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* The Ex/Im Daily Update is a publication of FCC Advisory B.V., edited by James E. Bartlett III and Alexander Bosch, and emailed every business day to approximately 7,500 subscribers to inform readers of changes to defense and high-tech trade laws and regulations. We check the following sources daily: Federal Register, Congressional Record, Commerce/AES, Commerce/BIS, DHS/CBP, DOJ/ATF, DoD/DSS, DoD/DTSA, State/DDTC, Treasury/OFAC, White House, and similar websites of Australia, Canada, U.K., and other countries and international organizations.  Due to space limitations, we do not post Arms Sales notifications, Denied Party listings, or Customs AD/CVD items.

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

* 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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