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16-1012 Wednesday “The Daily Bugle”

16-1012 Wednesday “Daily Bugle”

Wednesday, 12 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. President Terminates Emergency With Respect to the Actions and Policies of the Government of Burma 
  2. Commerce/BIS Amends EAR, Fire Control, Laser, Imaging, and Guidance Equipment No Longer Warrant Control Under USML 
  3. Justice/ATF Announces International Trade Data System Test–Voluntary Export Pilot Project 
  4. State/DDTC Amends ITAR — USML Cat. XII and Associated Sections of Cats. VI, VIII, XIII, and XV 
  5. USPTO Seeks Comments on Secrecy and License To Export 
  1. Ex/Im Items Scheduled for Publication in Future Federal Register Editions 
  2. Commerce/BIS: (No new postings.) 
  3. Commerce/Census: “ACE AESDirect Enhancements” 
  4. DoD/DSS Opens Resident Office in Charleston SC
  5. DOJ Publishes “Guidance Regarding Voluntary Self-Disclosures, Cooperation, and Remediation in Export Control and Sanctions Investigations Involving Business Organizations” 
  6. State/DDTC: (No new postings.) 
  1. Reuters: “New U.S. Guidance on Iran Sanctions Seeks to Reassure Banks” 
  2. ST&R Trade Report: “Burma Sanctions Program Terminated, Including Ban on Gem and Jewelry Imports”  
  1. J.T. Mackintosh & J.C. Anderson: “United States Lifts Burma Sanctions” 
  2. Gary Stanley’s ECR Tip of the Day 
  1. ECTI Presents Mastering HTSUS and Schedule B Code Classifications Webinar – 18 Oct 
  1. Bartlett’s Unfamiliar Quotations 
  2. Are Your Copies of Regulations Up to Date? Latest Changes: ATF (15 Jan 2016), Customs (26 Aug 2016), DOD/NISPOM (18 May 2016), EAR (12 Oct 2016), FACR/OFAC (18 May 2016), FTR (15 May 2015), HTSUS (30 Aug 2016), ITAR (12 Oct 2016) 

EXIMEX/IM ITEMS FROM TODAY’S FEDERAL REGISTER

EXIM_a11. President Terminates Emergency With Respect to the Actions and Policies of the Government of Burma

 
81 FR 70593-70594: Termination of Emergency With Respect to the Actions and Policies of the Government of Burma
 
By the authority vested in me as President by the Constitution and the laws of the United States of America, including the International Emergency Economic Powers Act (50 U.S.C. 1701 et seq.), the National Emergencies Act (50 U.S.C. 1601 et seq.) (NEA), section 570 of the Foreign Operations, Export Financing, and Related Programs Appropriations Act, 1997 (Public Law 104-208), the Burmese Freedom and Democracy Act of 2003 (Public Law 108-61), the Tom Lantos Block Burmese JADE (Junta’s Anti-Democratic Efforts) Act of 2008 (Public Law 110-286) (the “JADE Act”), section 212(f) of the Immigration and Nationality Act of 1952, as amended (8 U.S.C. 1182(f)) (INA), and section 301 of title 3, United States Code.
 
I, BARACK OBAMA, President of the United States of America, find that the situation that gave rise to the declaration of a national emergency in Executive Order 13047 of May 20, 1997, with respect to the actions and policies of the Government of Burma, in particular a deepening pattern of severe repression by the State Law and Order Restoration Council, the then-governing regime in Burma, as modified in scope by Executive Order 13448 of October 18, 2007, and Executive Order 13619 of July 11, 2012, has been significantly altered by Burma’s substantial advances to promote democracy, including historic elections in November 2015 that resulted in the former opposition party, the National League for Democracy, winning a majority of seats in the national parliament and the formation of a democratically elected, civilian-led government; the release of many political prisoners; and greater enjoyment of human rights and fundamental freedoms, including freedom of expression and freedom of association and peaceful assembly. Accordingly, I hereby terminate the national emergency declared in Executive Order 13047, and revoke that order, Executive Order 13310 of July 28, 2003, Executive Order 13448, Executive Order 13464 of April 30, 2008, Executive Order 13619, and Executive Order 13651 of August 6, 2013, and further order:
 
Section 1. Pursuant to section 202(a) of the NEA (50 U.S.C. 1622(a)), termination of the national emergency declared in Executive Order 13047, as modified in scope by Executive Order 13448, and Executive Order 13619, shall not affect any action taken or proceeding pending not finally concluded or determined as of the effective date of this order, any action or proceeding based on any act committed prior to the effective date of this order, or any rights or duties that matured or penalties that were incurred prior to the effective date of this order.
 
Sec. 2. Pursuant to section 5(i) of the JADE Act, I hereby determine and certify that it is in the national interest of the United States to waive, and hereby waive, the sanctions described in section 5(b) of the JADE Act.
 
Sec. 3. In light of the revocation of Executive Order 13310, Executive Order 13448, and Executive Order 13464, the suspension of entry as immigrants and nonimmigrants, pursuant to Presidential Proclamation 8693 of July 24, 2011, and section 212(f) of the INA, of individuals meeting the criteria in said orders will no longer be in effect as of the effective date of this order. In light of the revocation of Executive Order 13619, the suspension of entry as immigrants and nonimmigrants of individuals meeting the criteria in that order will no longer be in effect as of the effective date of this order and such individuals will no longer be treated as persons covered by Presidential Proclamation 8693.
 
Sec. 4. This order is not intended to, and does not, create any right or benefit, substantive or procedural, enforceable at law or in equity by any party against the United States, its departments, agencies, or entities, its officers, employees, or agents, or any other person.
 
Sec. 5. This order is effective at 1:00 p.m. eastern daylight time on October 7, 2016.
              
(Presidential Sig.)
THE WHITE HOUSE,
October 7, 2016.
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EXIM_a22. Commerce/BIS Amends EAR, Fire Control, Laser, Imaging, and Guidance Equipment No Longer Warrant Control Under USML

(Source: Federal Register) [Excerpts.]
 
81 FR 70320-70339: Revisions to the Export Administration Regulations (EAR): Control of Fire Control, Laser, Imaging, and Guidance Equipment the President Determines No Longer Warrant Control Under the United States Munitions List (USML)
* AGENCY: Bureau of Industry and Security, Department of Commerce.
* ACTION: Final rule.
* SUMMARY: This final rule describes how articles the President determines no longer warrant control under Category XII (Fire Control, Laser, Imaging, and Guidance Equipment) of the United States Munitions List (USML) of the International Traffic in Arms Regulations (ITAR) will be controlled under the Commerce Control List (CCL) of the Export Administration Regulations (EAR) by amending Export Control Classification Number (ECCN) 7A611 and creating new “600 series” ECCNs 7B611, 7D611, and 7E611. In addition, for certain dual-use infrared detection items, this final rule expands controls for certain software and technology, eliminates the use of some license exceptions, revises licensing policy, and expands license requirements for certain transactions involving military end users or foreign military commodities. This final rule also harmonizes provisions within the EAR by revising controls related to certain quartz rate sensors.
* DATES: This rule is effective December 31, 2016.
* FOR FURTHER INFORMATION CONTACT: For questions regarding the ECCNs included in this rule, contact Dennis Krepp, Office of National Security and Technology Transfer Controls, Bureau of Industry and Security, Telephone: 202-482-1309, Email: Dennis.Krepp@bis.doc.gov. For general questions regarding the regulatory changes, contact Steven Emme, Office of the Assistant Secretary for Export Administration, Telephone: 202-482-5491, Email: Steven.Emme@bis.doc.gov.
* SUPPLEMENTARY INFORMATION: …
   Following the structure set forth in the final rule entitled “Revisions to the Export Administration Regulations: Initial Implementation of Export Control Reform” (78 FR 22660, April 16, 2013), BIS published a proposed rule entitled “Revisions to the Export Administration Regulations (EAR): Control of Fire Control, Range Finder, Optical, and Guidance and Control Equipment the President Determines No Longer Warrant Control Under the United States Munitions List (USML)” (80 FR 25798, May 5, 2015) (“May 2015 rule”). That proposed rule was published in conjunction with a proposed rule published by the Department of State’s Directorate of Defense Trade Controls (DDTC) to propose controls for the ITAR’s USML Category XII. After reviewing public comments to the May 2015 rule, BIS published a second proposed rule entitled “Revisions to the Export Administration Regulations (EAR): Control of Fire Control, Laser, Imaging, and Guidance and Control Equipment the President Determines No Longer Warrant Control Under the United States Munitions List (USML)” (81 FR 8421) (“February 2016 rule”). This second proposed rule was also published in conjunction with a second proposed rule published by DDTC to propose new controls for USML Category XII.  . . .
   
   In this final rule, all references to the USML are to the list of defense articles that are controlled for the purpose of export or temporary import pursuant to the ITAR, and not to the defense articles on the USML that are controlled by the Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF) for the purpose of permanent import under its regulations (see 27 CFR part 447). Pursuant to Sec. 38(a)(1) of the AECA, all defense articles controlled for export or import are part of the USML under the AECA. For the sake of clarity, the list of defense articles controlled by ATF for the purpose of permanent import is the United States Munitions Import List (USMIL). The transfer of defense articles from the ITAR’s USML to the EAR’s CCL for the purpose of export controls does not affect the list of defense articles controlled on the USMIL under the AECA for the purpose of permanent import. …
 
   Dated: September 15, 2016.
Kevin J. Wolf, Assistant Secretary of Commerce for Export Administration.
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EXIM_a33. Justice/ATF Announces International Trade Data System Test–Voluntary Export Pilot Project

(Source: Federal Register) [Excerpts.]
 
81 FR 70441-70442: International Trade Data System Test–Voluntary Export Pilot Project
* AGENCY: Bureau of Alcohol, Tobacco, Firearms and Explosives, Department of Justice.
* ACTION: Notice.
* SUMMARY: Along with other agencies, the Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF) will participate in a U.S. Customs and Border Protection (CBP) pilot test of the International Trade Data System (ITDS), using electronic processing of export data through the Automated Export System (AES) which is accessed within CBP’s Automated Commercial Environment (ACE). ACE, the primary system through which exporters transmit export data for the clearance of cargo, automates manual processes, eliminates paper, and helps exporters efficiently comply with laws and regulations. Exporters of National Firearms Act (NFA) firearms, which include machineguns, silencers and destructive devices, may use the ACE portal, to submit data via the AESDirect system. Participation in the pilot test is voluntary.
   The pilot test will allow participating exporters to submit forms, such as the ATF Form 9, Application and Permit for Permanent Exportation of Firearms, and information to CBP electronically to obtain CBP certification of exportation. CBP will validate that information, and electronically transmit export information to agencies (including ATF) to satisfy CBP’s certification requirements. The pilot test seeks to streamline this part of the export process. Information on ATF’s rules and regulations, and answers to commonly asked questions, can be found on the agency’s Web site: http://www.atf.gov.
* DATES: Interested exporters of NFA firearms, which include machineguns, silencers and destructive devices, may participate in the pilot test throughout the duration of the pilot. This pilot will begin upon publication of this notice, and will continue until concluded by publication of a notice ending it. Interested parties with ATF questions should contact Gary Schaible, whose contact information is found below.
* FOR FURTHER INFORMATION CONTACT: Gary Schaible, Industry Liaison Analyst, Firearms and Explosives Services Division, Office of Enforcement Programs and Services; Bureau of Alcohol, Tobacco, Firearms and Explosives; U.S. Department of Justice; 99 New York Avenue NE., Room 6N521, Washington, DC 20226; telephone: (202) 648-7165; email Exports-HelpDesk@atf.gov. For technical questions regarding ACE or the AES data transmission, please contact your assigned CBP client representative. Interested parties without an assigned client representative should submit an email to Steven Zaccaro at steven.j.zaccaro@cbp.dhs.gov.
* SUPPLEMENTARY INFORMATION: …
   Exporters who wish to participate in this pilot test must have an ACE Portal Account to be able to file the relevant data electronically via AES Direct. Information regarding an ACE Portal Account can be found here. Additional information is available here. …
 
   Approved: October 5, 2016.
Thomas E. Brandon, Deputy Director.
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EXIM_a44. State/DDTC Amends ITAR — USML Cat. XII and Associated Sections of Cats. VI, VIII, XIII, and XV

(Source: Federal Register)
 
81 FR 70340-70357 (Oct. 12, 2016): Amendment of 22 CFR Part 121.1, USML Cats. VI, VIII, XII, XIII, and XV
Public Notice:  9605, RIN:  1400-AD32
* ACTION:  Final rule (effective Dec. 31, 2016)
* SUMMARY:  As part of the President’s Export Control Reform effort, the Department of State amends the International Traffic in Arms Regulations (ITAR) by revising Category XII (fire control, laser, imaging, and guidance equipment) of the U.S. Munitions List (USML) to remove certain items from control on the USML and to describe more precisely the articles continuing to warrant control on the USML. The Department also amends USML Categories VIII, XIII, and XV to reflect that items previously described in those Categories are now controlled under the revised Category XII or Commerce Control List. Further, the Department revises USML Category
XI to move items to the CCL as a result of changes to related control in USML Category XII.
* DATES:  This rule is effective on December 31, 2016. …
* SUPPLEMENTARY INFORMATION:  The Directorate of Defense Trade Controls (DDTC), U.S. Department of State, administers the International Traffic in Arms Regulations (ITAR) (22 CFR parts 120-130). The items subject to the jurisdiction of the ITAR, i.e., defense articles, are identified on the ITAR’s U.S. Munitions List (USML) (22 CFR 121.1). With few exceptions, items not subject to the export control jurisdiction of the ITAR are subject to the jurisdiction of the Export Administration Regulations (EAR), 15 CFR parts 730-774, which includes the Commerce Control List (CCL) in Supplement No. 1 to Part 774, administered by the Bureau of Industry and Security (BIS), U.S. Department of Commerce. Both the ITAR and the EAR impose license requirements on exports and reexports. Items not subject to the ITAR or to the exclusive licensing jurisdiction of any other set of regulations are subject to the EAR.  The revisions contained in this rule are part of the Department of State’s retrospective plan under E.O. 13563.  All references to the USML in this rule are to the list of defense articles that are controlled for the purpose of export or temporary import pursuant to the ITAR, and not to the defense articles on the USML that are controlled by the Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF) for the purpose of permanent import under its regulations (see 27 CFR Part 447). Pursuant to §38(a)(1) of the Arms Export Control Act (AECA), all defense articles controlled for export or temporary import are part of the USML under the AECA. For the sake of clarity, the list of defense articles controlled by ATF for the purpose of permanent import is the United States Munitions Import List (USMIL). The transfer of defense articles from the ITAR’s USML to the EAR’s CCL for the purpose of export control does not affect the list of defense articles controlled on the USMIL under the AECA for the purpose of permanent import.
* REVISION OF CATEGORY XII
The revision of USML Category XII (RIN 1400-AD32) was first published as a proposed rule on May 5, 2015, for public comment (see 80 FR 25821) (1st proposed rule). The comment period ended July 6, 2015. One hundred twenty parties submitted public comments, which were reviewed and considered by the Department and other agencies.
A second proposed rule was published on February 19, 2016 for public comment (see 81 FR 8438) (2nd proposed rule). The comment period ended on April 4, 2016. Thirty-eight parties submitted public comments, which were reviewed and considered by the Department and other agencies. The discussion below, regarding items added or modified to Category XII, refers to text proposed in one or both of the two proposed rules, unless otherwise stated.
General Comments …[See Source URL for full posting with comments.]
 
LIST OF SUBJECTS IN 22 CFR PART 121 ARMS AND MUNITIONS, EXPORTS.
Accordingly, for the reasons set forth above, title 22, chapter I, subchapter M, part 121 is amended as follows:
PART 121 – THE UNITED STATES MUNITIONS LIST …
Section 121.1 is amended by:
  – Removing and reserving paragraph (e) in U.S. Munitions List Category VIII;  
  – Revising paragraphs (a)(3)(ii) and (a)(10) of U.S. Munitions List Category XI;
  – Revising U.S. Munitions List Category XII;
  – Removing and reserving paragraph (a) in U.S. Munitions List Category XIII; and
  – Removing and reserving paragraph (c) in U.S. Munitions List Category XV. …

    Rose E. Gottemoeller, Under Secretary, Arms Control and International Security, Department of State.
 
[Editor’s Note:  The above amendments will be included in a revised edition of Bartlett’s Annotated ITAR (BITAR), to be sent to subscribers later today.  See subscription information at www.FullCircleCompliance.eu.]

 

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EXIM_a55. USPTO Seeks Comments on Secrecy and License To Export

(Source: Federal Register) [Excerpts.]
 
81 FR 70395-70397: Secrecy and License To Export
* ACTION: Proposed collection; comment request. …
* DATES: Written comments must be submitted on or before December 12, 2016.
* ADDRESSES: You may submit comments by any of the following methods:
  – Email: InformationCollection@uspto.gov. Include “0651-0034 comment” in the subject line of the message.
  – Mail: Marcie Lovett, Records Management Division Director, Office of the Chief Information Officer, United States Patent and Trademark Office, P.O. Box 1450, Alexandria, VA 22313-1450.
* FOR FURTHER INFORMATION CONTACT: Raul Tamayo, Senior Legal Advisor, Office of Patent Legal Administration, United States Patent and Trademark Office, P.O. Box 1450, Alexandria, VA 22313-1450; by telephone at 571-272-7728; or by email to Raul.Tamayo@uspto.gov with “Paperwork” in the subject line. Additional information about this collection is also available at
http://www.reginfo.gov under “Information Collection Review.”
* SUPPLEMENTARY INFORMATION: …
  – OMB Number: 0651-0034.
  – Form Number(s): None.
  – Type of Review: Revision of a currently approved collection.
  – Abstract: In the interest of national security, patent laws and rules place certain limitations on the disclosure of information contained in patents and patent applications and on the filing of applications for patents in foreign countries.
   In particular, whenever the publication or disclosure of an invention by the publication of an application or by the granting of a patent is, inthe opinion of the head of an interested Government agency, determined to be detrimental to national security, the Commissioner for Patents at the USPTO must issue a secrecy order and withhold the publication of a patent application and the grant of a patent for such period as the national interest requires. A patent will not be issued on the application, nor will the application be published, as long as the secrecy order is in force. If a secrecy order is applied to an international application, the application will not be forwarded to the International Bureau as long as the secrecy order is in force.
   Three types of secrecy orders, each of a different scope, can be issued. The first type, Secrecy Order and Permit for Foreign Filing in Certain Countries, is intended to permit the widest utilization of the technical data in the patent application while still controlling any publication or disclosure that would result in an unlawful exportation. The second type, the Secrecy Order and Permit for Disclosing Classified Information, is to treat classified technical data presented in a patent application in the same manner as any other classified material. The third type of secrecy order is used where the other types of orders do not apply, including orders issued by direction of agencies other than the Department of Defense.
   Under the provision of 35 U.S.C. 181, a secrecy order remains in effect for a period of one year from its date of issuance. A secrecy order may be renewed for additional periods of not more than one year upon notice by a government agency that the national interest continues to so require. The applicant is notified of such renewal.
   When the USPTO places a secrecy order on a patent application, the rules authorize the applicant to petition the USPTO for permits to allow disclosure, modification, or rescission of the secrecy order, or to obtain a general or group permit. In each of these circumstances, the petition is forwarded to the appropriate defense agency for decision. Also, the Commissioner for Patents at the USPTO may rescind any order upon notification by the heads of the departments and the chief officers of the agencies who caused the order to be issued that the disclosure of the invention is no longer deemed detrimental to the national security.
   Unless expressly ordered otherwise, action on the application and prosecution by the applicant will proceed during the time the application is under secrecy order to a specific point as indicated under 37 CFR 5.3. Applications under secrecy order that come to a final rejection must be appealed or otherwise prosecuted to avoid abandonment. Appeals in such cases must be completed by the applicant, but unless specifically indicated by the Commissioner for Patents at the USPTO, will not be set for hearing until the secrecy order is removed.
   In addition to the issuance of secrecy orders, the USPTO is required to grant foreign filing licenses to applicants. The filing of a patent application is considered a request for a foreign filing license. However, in some instances an applicant may need a license for filing patent application in foreign countries prior to a filing in the USPTO or sooner than the anticipated licensing of a pending patent application.
   To file a patent application in a foreign country, the applicant can petition the USPTO for a foreign filing license either with or without a corresponding United States application. In addition, the applicant can petition to change the scope of a license and, when a patent application is filed through error in a foreign country without the appropriate filing license, an applicant can petition the USPTO for a retroactive license.
   This collection includes the information needed by the USPTO to review the various types of petitions regarding secrecy orders and foreign filing licenses. This collection of information is required by 35 U.S.C. 181-188 and administered through 37 CFR 5.1-5.33. …
 
   Dated: October 3, 2016.
Rhonda Foltz, Director, Office of Information Management Services, OCIO, United States Patent and Trademark Office.
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OGSOTHER GOVERNMENT SOURCES

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

 
[No items of interest noted today.]  
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In an effort to improve the functionality of the ACE AESDirect and incorporate Partnership Government Agencies (PGA’s) requirements, U.S. Customs and Border Protection (CBP) will be updating the ACE AESDirect application with new enhancements on approximately October 18, 2016. In order to prepare you for the changes, CBP and Census have developed a document to highlight these changes in detail.
 
The new changes and enhancements include:
 
The Shipment Manager will now show the user who created or last took action on each filing, not just the original user who created the filing
All the activity for a specific Shipment Reference Number (SRN) will be shown through a new History View (Count) feature on the Shipment Manager
The design and functionality of the commodity line will be enhanced with the ability to enter required PGA data
 
 
For further questions, contact the U.S. Census Bureau’s Data Collection Branch.
 
  – Telephone: (800) 549-0595, select option 1 for AES
  – Email: askaes@census.gov
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OGS_a49. DoD/DSS Open Resident Office in Charleston SC 
(Source: DoD/DSS)
 
The DSS Resident Office in Charleston, S.C. is now fully operational and open for business.
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OGS_a5
10. DOJ Publishes “Guidance Regarding Voluntary Self-Disclosures, Cooperation, and Remediation in Export Control and Sanctions Investigations Involving Business Organizations” 

(Source: Department of Justice, National Security Division, 7 Oct 2016)

[Editor’s Note:  The subject Guidance document is available for download HERE.  Below is a reprint of the Introduction of the 11-page document.]

 
Introduction
 
Foreign governments and other non-state adversaries of the United States are engaged in an aggressive campaign to acquire superior technologies and commodities that are developed, manufactured, and controlled in, and by, the United States. Such acquisitions – when conducted in contravention of U.S. law and policy – undermine the comparative and competitive advantages of U.S. industries and warfighters and, consequently, the national and economic security of the United States.
 
Thwarting these unlawful efforts is a top priority for the National Security Division (NSD) of the Department of Justice (DOJ). Working in partnership with U.S. Attorneys’ Offices, law enforcement and regulatory agencies, other U.S. government stakeholders, and our foreign government counterparts, NSD utilizes an “all-tools” approach to prevent and combat the unlawful export of commodities, technologies, and services, as well as to block trade and transactions with sanctioned countries and designated individuals and entities.
 
In particular, NSD has made it a priority to pursue willful export control and sanctions violations by corporate entities and their employees. Working with the U.S. Attorneys’ Offices, NSD aggressively directs and supports investigations of corporate criminal misconduct through grand jury subpoenas, search warrants, witness interviews, and other mechanisms to obtain evidence from multinational corporations operating in U.S. markets or utilizing the U.S. financial system. Where appropriate, NSD pursues international assistance to obtain the necessary evidence to build criminal cases. Where such investigations reveal willful violations of U.S. export controls and sanctions, NSD and U.S. Attorneys’ Offices seek to hold corporate entities criminally liable and prosecute culpable employees individually.
Consequently, business organizations and their employees are at the forefront of our enforcement efforts. As the gatekeepers of our export-controlled technologies, business organizations play a vital role in protecting our national security. However, when NSD learns of willful violations of U.S. export controls and sanctions, NSD is committed to using all of its tools to protect our national security and deter similar criminal misconduct.
 
This Guidance memorializes the policy of NSD to encourage business organizations to voluntarily self-disclose criminal violations of the statutes implementing the U.S. government’s primary export control and sanctions regimes – the Arms Export Control Act (AECA), 22 U.S.C. § 2778, and the International Emergency Economic Powers Act (IEEPA), 50 U.S.C. § 1705.
 
This Guidance applies only to export control and sanctions violations. It sets forth the criteria that NSD, through the Counterintelligence and Export Control Section (CES) and in partnership with the U.S. Attorneys’ Offices, uses in exercising its prosecutorial discretion in this area and in determining the possible benefits that could be afforded to an organization that makes a voluntary self-disclosure (VSD), as defined below. This Guidance also implements in export control and sanctions cases the memorandum of the Deputy Attorney General dated September 9, 2015, promoting greater accountability for individual corporate defendants (DAG Memo on Individual Accountability), as well as the November 2015 revisions to the Principles of Federal Prosecution of Business Organizations set forth in the U.S. Attorneys’ Manual (USAM Principles). See USAM 9-28.000 and USAM 9-28.900.
 
Almost all criminal violations of U.S. export controls and sanctions harm the national security or have the potential to cause such harm.  This threat to national security informs how NSD and U.S. Attorneys’ Offices arrive at an appropriate resolution with a business organization and distinguishes these cases from other types of corporate wrongdoing. In determining what credit to give an organization that voluntarily self-discloses illegal export control or sanctions conduct, fully cooperates, and remediates flaws in its controls and compliance program, federal prosecutors must balance the goal of encouraging such disclosures and cooperation with the goal of deterring these very serious offenses. If successful, this Guidance will serve to further deter individuals and companies from engaging in export control and sanctions violations in the first place, encourage companies to implement strong export control and sanctions compliance programs to prevent and detect such violations, and, consistent with the DAG Memo on Individual Accountability, increase the ability of NSD and U.S. Attorneys’ Offices to prosecute individual wrongdoers whose conduct might otherwise have gone undiscovered or been impossible to prove.
 
This Guidance aims to provide greater transparency about what is required from companies seeking credit for voluntarily self-disclosing potential criminal conduct, fully cooperating with an investigation, and remediating. Accordingly, the Guidance first explains what constitutes a VSD, full cooperation, and timely and appropriate remediation. Second, the Guidance provides examples of aggravating factors that, if present to a substantial degree, could limit the credit an organization might otherwise receive, though the company would still find itself in a better position than if it had not submitted a VSD, cooperated, and remediated. Third, the Guidance explains the possible credit that may be afforded to a business organization that complies with the mandates set out below, including the disclosure of all relevant facts about the individuals involved in the wrongdoing. Finally, the Guidance provides sample scenarios that demonstrate the application of this policy.
 
Ordinarily, when an organization voluntarily self-discloses violations of U.S. export controls and sanctions, it presents its VSD to the appropriate regulatory agency under the procedures set forth in the agency’s regulations. It is not the purpose of this Guidance to alter that practice. Business entities should continue to submit VSDs to the Department of State, Directorate of Defense Trade Controls (DDTC) for violations of the International Traffic in Arms Regulations (ITAR); to the Department of Commerce, Bureau of Industry Security (BIS) for violations of the Export Administration Regulations (EAR); and to the Department of the Treasury, Office of Foreign Assets Control (OFAC), for violations of U.S. sanctions regulations. However, as discussed further below, when an organization, including its counsel, becomes aware that the violations may have been willful, it should within a reasonably prompt time also submit a VSD to CES.
 
This Guidance does not supplant the USAM Principles. Prosecutors must consider the ten factors set forth in the USAM when determining how to resolve criminal investigations of organizations. However, this Guidance does set forth the way that NSD and U.S. Attorneys’ Offices will evaluate credit for companies that voluntary self-disclose, fully cooperate, and remediate in export control and sanctions cases.
 
Nothing in this Guidance is intended to suggest that the government can require business organizations to voluntarily self-disclose, cooperate, or remediate. Companies remain free to reject these options.  …
 
[For remainder of letter, click here.]
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OGS_a611. State/DDTC: (No new postings.)
(Source: State/DDTC)
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NWSNEWS

NWS_a112. Reuters: “New U.S. Guidance on Iran Sanctions Seeks to Reassure Banks”

(Source: Reuters)
 
New guidance from the Obama administration offers reassurance to foreign banks which have been skittish about doing U.S. dollar transactions with Iran, lawyers and former sanctions officials said on Monday.
 
The guidance comes after months of complaints from Tehran, which says that remaining U.S. sanctions have frightened away trade partners and robbed Iran of the benefits it was promised under the nuclear deal it concluded with world powers last year.
 
The guidelines, issued by the U.S. Treasury Department’s Office of Foreign Assets Control on Friday, clarify that non-U.S. banks can do dollar trades with Iran, provided those transactions don’t pass through financial institutions in the United States.
 
Although last year’s deal technically allowed a raft of new international business deals with Iran, including U.S. dollar transactions, in practice many banks have stayed away, fearing that they would inadvertently break remaining sanctions.
 
For instance, many executives believe that dollar transactions will at some point transit through a U.S. bank, thus breaking sanctions, said Melvin Schwechter, a Washington, D.C.-based sanctions attorney at Baker & Hostetler LLP.
 
  “I’ve generally advised people to stay away from dollar transactions in Iran,” Schwechter said. “But here they are giving banks a green light to go forward as long as they make sure the dollar-denominated transactions don’t affect the U.S. It’s a signal to blunt the criticism of the Iranian government that they aren’t getting any benefit from the nuclear deal.”
 
David Mortlock, a former White House sanctions official, said the guidelines were likely meant to clear up confusion that had arisen this year over whether dollar transactions with Iran were allowed at all under the terms of the nuclear deal.
 
  “Do I think the administration wants to create as much clarity as possible to sustain the deal? Yes, absolutely,” said Mortlock, now a partner at Willkie Farr & Gallagher LLP. “It is a signal from OFAC and the administration that they do want to be helpful.”
 
A U.S. Treasury spokeswoman said on Monday the changes were “intended to clarify the scope of sanctions lifting” under the nuclear deal, and do not amount to additional sanctions relief for Iran.
 
But Iran may not see the new guidance as enough to address the hurdles to doing business. Hossein Ghazavi, a vice-minister in Iran’s economy ministry, said on Monday the changes still left doubts for banks.
 
  “The problems that existed before are still there,” Ghazavi said, according to the Iranian Students News Agency. “Previously … non-American financial institutions could not have 100 percent confidence that while providing brokerage services, creating accounts or maintaining U.S. dollars for Iranian banks and customers, they wouldn’t face unpredictable risk. This ambiguity has still not been resolved.”
 
Eric Lorber, a senior associate at the Financial Integrity Network, which advises banks on sanctions, said that despite the new guidance, major European banks are unlikely to enter Iran soon.
 
  “Among the largest banks there’s still a serious reluctance to do any of that business,” Lorber said.

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NWS_a213. ST&R Trade Report: “Burma Sanctions Program Terminated, Including Ban on Gem and Jewelry Imports”
 
The economic and financial sanctions against Burma administered by the Treasury Department’s Office of Foreign Assets Control are no longer in effect as of Oct. 7 after President Obama signed that day an executive order terminating the national emergency with respect to Burma. OFAC states that this action includes the following impacts.
 
  – The ban on the importation of Burmese-origin jadeite and rubies, and any jewelry containing them, has been waived.
  – All OFAC-administered restrictions and authorizations under the Burma sanctions program pertaining to banking with Burma have been terminated, including the OFAC general licenses issued in 2012 and 2013 that authorized certain correspondent account activity with Burmese banks. (The Financial Crimes Enforcement Network’s 2003 finding that Burma is a jurisdiction of primary money laundering concern remains in place but FinCEN is issuing an administrative exception to suspend the resulting prohibition on U.S. financial institutions maintaining correspondent accounts for Burmese banks based on Burma’s progress in improving its anti-money laundering regime and its commitment to continue making progress to address money laundering, corruption, and narcotics-related activities.)
  – All individuals and entities blocked pursuant to the Burmese Sanctions Regulations have been removed from OFAC’s Specially Designated Nationals and Blocked Persons List.
  – All property and interests in property blocked pursuant to the BSR are unblocked.
  – All OFAC-administered restrictions under the Burma sanctions program regarding banking or financial transactions with Burma are no longer in effect.
  – OFAC will remove the BSR from the Code of Federal Regulations.
  – Compliance with the State Department’s Responsible Investment Reporting Requirements is no longer required by OFAC’s regulations and is now voluntary.
 
Burmese individuals or entities blocked pursuant to other OFAC sanctions authorities, such as counter-narcotics sanctions, remain on the SDN List and their property and interests in property remain blocked. Further, pending or future OFAC enforcement investigations or actions related to apparent violations of the BSR when in effect may still be carried out.
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COMMCOMMENTARY

COMM_a114. J.T. Mackintosh & J.C. Anderson: “United States Lifts Burma Sanctions”
(Source: Holland & Hart LLP)
 
* Authors: J. Triplett Mackintosh, Esq., tmackintosh@hollandhart.com, 202-654-6930; and John C. Anderson, Esq., jcanderson@hollandhart.com, 505-954-7295. Both of Holland & Hart LLP.
 
On October 7, 2016, President Obama signed an Executive Order lifting virtually all economic sanctions previously in effect against Burma (aka, Myanmar). This executive action signals an opening of economic activity between the United States and Burma. Perhaps more importantly for Burmese business interests, it removes an impediment to banking and financial services that had slowed non-U.S. investment into Myanmar. The action contrasts with remaining unilateral U.S. embargos that continue to impact non-U.S. interests, notably the sanctions on Iran.
 
Burma had been subject to targeted sanctions that were directed at members of the State Peace and Development Counsel (the “SPDC”) that governed Burma until 2011. This sanctions regime, implemented by Executive Orders issued per authority of the International Emergency Economic Powers Act (“IEEPA”) and the Tom Lantos Block Burmese JADE Act, and administered by the Office of Foreign Assets Control (“OFAC”), broadly prohibited all financial transactions involving members of the SPDC and/or entities they controlled. Given their prominence in the Burmese market, SPDC and the companies they owned or controlled created material compliance challenges for investors looking at the Burmese economy. Banks, predictably conservative in these circumstances, were reluctant to process payments and engage in services otherwise required for non-Burmese investors.
 
The lifting of the U.S. sanctions will open global financial markets for support of Burmese development. A Treasury Department press release quotes Adam J. Szubin, Acting Under Secretary for Terrorism and Financial Intelligence as noting that “[l]ifting economic and financial sanctions will further support trade and economic growth.” Treasury summarized the broad scope of the Executive action, noting:
 
  – All individuals and entities blocked pursuant to the Burmese Sanctions Regulations (BSR) have been removed from OFAC’s Specially Designated Nationals and Blocked Persons (SDN) List.
  – All property and interests in property blocked pursuant to the BSR are unblocked.
  – The ban on the importation into the United States of Burmese-origin jadeite and rubies, and any jewelry containing them, has been revoked.
  – All OFAC-administered restrictions under the Burma sanctions program regarding banking or financial transactions with Burma are no longer in effect.
  – OFAC will remove the BSR from the Code of Federal Regulations.
  – Compliance with the State Department’s Responsible Investment Reporting Requirements is no longer required by OFAC’s regulations and is now voluntary.
 
The lifting of the Burma sanctions is notable for its relative breadth and speed. While there was an iterative process involved (as there always is), the Administration moved fairly quickly. The timeline stands in contrast to more prolonged processes that have marked the relaxation of other unilateral sanctions regimes. The length of time required to lift sanctions depends on multiple factors. As experienced with Burma, Iran and Cuba the draw-down process can result in reluctance on the part of conservative actors, such as international banks, to provide services that may be lawful. A gradual lifting of restrictions invariably results in international banks taking a risk-based approach that errs on the side of not risking violations where the lines are unclear. Burma will no longer face that added cost to development and investment.
 
Illustrative of the difficulties presented by ambiguities in modified sanctions regimes, coincident with the Burmese action OFAC issued clarification as to Iranian sanctions and the impact of those sanctions on U.S.-dollar denominated transactions. On October 7, 2016, OFAC clarified its responses to “Frequently Asked Questions” (“FAQ”) relating to the Iranian Joint Comprehensive Plan of Action (“JCPOA”). OFAC revised FAQ C.17 that addresses whether non-US. financial institutions can conduct dollar-denominated transactions with Iran. The updated response from OFAC provides that “[f]oreign financial institutions, including foreign-incorporated subsidiaries of U.S. financial institutions, may process transactions denominated in U.S. dollars or maintain U.S. dollar-denominated accounts that involve Iran or persons ordinarily resident in Iran….”
 
It may be that this guidance gives non-U.S. financial institutions confidence to engage in U.S. dollar-denominated financial transactions with Iran, removing a compliance related impediment to development and investment in Iran by non-U.S. companies. Burmese development, on the other hand, will not be encumbered by the same compliance concerns due to the breadth and clarity of the Executive action lifting Burmese sanctions.
 
In terms of compliance for companies considering the Burmese market, FinCEN has noted that money-laundering concerns remain and Burmese banks overall have not instituted adequate controls. FinCEN, accordingly, employed a discretionary exception to allow correspondent accounts from U.S. financial institutions, but the concerns remain. Also remaining are the material corruption risks that have marked the Burmese economy.
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COMM_a215. Gary Stanley’s ECR Tip of the Day
(Source: Defense and Export-Import Update; available by subscription from
gstanley@glstrade.com
)
 
* Author: Gary Stanley, Esq., Global Legal Services, PC, (202) 352-3059,
gstanley@glstrade.com
 
Section 3.2(d) of DDTC’s Guidelines for Preparing Agreements (Rev. 4.4) provides for the following new U.S. sublicensing clause that incorporates the new ITAR definitions of “reexport” and “retransfer”:
 
“This agreement authorizes sublicensing to U.S. Persons. Exports, reexports, retransfers or temporary imports by the U.S. sublicensee must be conducted as part of a separate authorization initiated by the U.S. Person.”
 
Applicants are not required to submit an amendment for the sole purpose of updating the U.S. Sublicensing statement. However, the statement must be updated at the next major amendment. All agreement/amendment applications submitted after September 1, 2016, must include the new U.S. Sublicensing statement, if applicable. If the old statement is used, a proviso will be added instructing the applicant to change it prior to execution. Applicants may begin using the new clause prior to September 1.
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MSEX/IM TRAINING EVENTS & CONFERENCES

* What: Mastering HTSUS and Schedule B Code Classifications
* When: October 18, 2016; 1:00 p.m. (EDT)
* Where: Webinar
* Sponsor: Export Compliance Training Institute (ECTI)
* ECTI Speaker: Melissa Proctor
* Register: Here, or Danielle McClellan, 540-433-3977, danielle@learnexportcompliance.com.

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ENEDITOR’S NOTES

 
Notable birthdays:

* Lyman Beecher (12 Oct 1775 – 10 Jan 1863, was a Presbyterian minister, American Temperance Society co-founder and leader, and the father of 13 children, many of whom became noted figures, including Harriet Beecher Stowe, Henry Ward Beecher, Charles Beecher, Edward Beecher, Isabella Beecher Hooker, Catharine Beecher and Thomas K. Beecher.)

  – “No great advance has been made in science, politics, or religion without controversy.”

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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: 12 Oct 2016: 81 FR 70320-70339: Revisions to the Export Administration Regulations (EAR): Control of Fire Control, Laser, Imaging, and Guidance Equipment the President Determines No Longer Warrant Control Under the United States Munitions List (USML) 

  
*
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: 12 Oct 2016: 81 FR 70340-70357: Amendment to the International Traffic in Arms Regulations: Revision of U.S. Munitions List Category XII and associated sections.
  – The only available fully updated copy (latest edition 12 Oct 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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