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16-1018 Tuesday “The Daily Bugle”

16-1018 Tuesday “Daily Bugle”

Tuesday, 18 October 2016

TOPThe Daily Bugle is a free daily newsletter from Full Circle Compliance, containing changes to export/import regulations (ATF, Customs, NISPOM, EAR, FACR/OFAC, FTR/AES, HTSUS, and ITAR), plus news and events. Subscribe 
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  1. Commerce/BIS Ends Information Collection, Triangular Transactions Covered by a U.S. Import Certificate 
  2. DoD/DARS Seeks Comments on Defense Federal Acquisition Regulation Supplement, Administrative Matters 
  1. Ex/Im Items Scheduled for Publication in Future Federal Register Editions
  2. Commerce/BIS: (No new postings.) 
  3. Commerce/Census: “Port of Export Codes Deleted in the Automated Export System” 
  4. DoD/DSS: “Partnership with the Department of Commerce –Defense Industrial Base Assessment Critical Facility Survey” 
  5. State/DDTC: (No new postings.) 
  6. Treasury/OFAC Posts Belarus-Related General License 
  7. European Commission Announces Export Control Forum 2016 
  8. EU Amends Restrictive Measures Concerning North Korea & Guinea 
  1. ST&R Trade Report: “New DOJ Guidance on Self-Disclosing Export Controls Violations Could be Problematic”
  1. Gary Stanley’s ECR Tip of the Day 
  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 (17 Oct 2016), FACR/OFAC (17 Oct 2016), FTR (15 May 2015), HTSUS (30 Aug 2016), ITAR (12 Oct 2016) 

EXIMEX/IM ITEMS FROM TODAY’S FEDERAL REGISTER

EXIM_a1

1. Commerce/BIS Ends Information Collection, Triangular Transactions Covered by a U.S. Import Certificate
(Source: Federal Register)
 
81 FR 71697: Discontinuance of Information Collection 0694-0009: Triangular Transactions “Stamp” Covered by a U.S. Import Certificate
* AGENCY: Bureau of Industry and Security, Commere.
* ACTION: Notice.
* SUMMARY: The Department of Commerce, as part of its continuing effort to reduce paperwork and respondent burden, has discontinued Information Collection 0694-0009, “Triangular Transactions Covered by a U.S. Import Certificate.” Although this collection has been discontinued, the Triangular Transactions “Stamp” is still valid and has been added to collection 0694-0017 as a supplemental document.
* FOR FURTHER INFORMATION CONTACT: Requests for additional information should be directed to Mark Crace, BIS ICB Liaison, (202)482-8093 or Mark.Crace@bis.doc.gov.
 
Sheleen Dumas, Departmental PRA Lead, Office of the Chief Information Officer.

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EXIM_a2

2. DoD/DARS Seeks Comments on Defense Federal Acquisition Regulation Supplement, Administrative Matters

(Source: Federal Register) [Excerpts.]
 
81 FR 71711-71712: Information Collection Requirement; Defense Federal Acquisition Regulation Supplement (DFARS); Administrative Matters
* AGENCY: Defense Acquisition Regulations System, Department of Defense (DoD).
* ACTION: Notice and request for comments regarding a proposed revision
of an approved information collection requirement. …
* DATES: DoD will consider all comments received by December 19, 2016. …
* FOR FURTHER INFORMATION CONTACT: Ms. Carrie Moore, at 571-372-6093. The information collection requirements addressed in this notice are available on the World Wide Web. Paper copies are available from Ms. Carrie Moore, OUSD (AT&L) DPAP (DARS), 3060 Defense Pentagon, Room 3B941, Washington, DC 20301-3060.
* SUPPLEMENTARY INFORMATION:
   – Title and OMB Number: Defense Federal Acquisition Regulation Supplement (DFARS), Part 204, Administrative Matters and Related Clauses at 252.204; OMB Control Number 0704-0225.
   – Needs and Uses: DFARS 204.404-70(a) prescribes the use of the clause at DFARS 252.204-7000, Disclosure of Information, when the contractor will have access to or generate unclassified information that may be sensitive and inappropriate for release to the public. Upon receipt of a contractor’s request, the Government reviews the information provided by the contractor to determine if it is sensitive or otherwise inappropriate for release for the stated purpose. …
 
Summary of Information Collection
 
   DFARS 204.404-70(a) prescribes use of DFARS Clause 252.204-7000, Disclosure of Information, in contracts that require the contractor to access or generate unclassified information that may be sensitive and inappropriate for release to the public. The clause requires the contractor to obtain approval of the contracting officer before release of any unclassified contract-related information outside the contractor’s organization, unless the information is already in the public domain. In requesting this approval, the contractor must identify the specific information to be released, the medium to be used, and the purpose for the release.
 
Jennifer L. Hawes, Editor, Defense Acquisition Regulations System.

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OGS
OTHER GOVERNMENT SOURCES

OGS_a13. Ex/Im Items Scheduled for Publication in Future Federal Register Editions
(Source: Federal Register)

* Commerce; Bureau of Industry and Security; NOTICES; Agency Information Collection Activities; Proposals, Submissions, and Approvals:  Procedure for Parties on the Entity List to Request Removal or Modification of Their Listing [Publication Date: 19 October 2016.]

* State; NOTICES; Meetings: Defense Trade Advisory Group [Publication Date: 19 October 2016.]

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OGS_a24. Commerce/BIS: (No new postings.)

(Source: Commerce/BIS)
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OGS_a65. Commerce/Census: “Port of Export Codes Deleted in the Automated Export System

(Source: census@subscriptions.census.gov, 17 Oct 2016)
 
Please note the following Port of Export codes have been DELETED in the Automated Export System (AES) effective immediately.
 
* Port of Export; Description
 
– 3981; Waukegan Airport, IL
– 3983; Chicago Executive Airport, IL (formally Pal-Waukee Mncpl Airport)
– 3985; Decatur Airport, IL
– 4185; Hulman Regional Airport, OH
– 4506; Spirit of Saint Louis Airport, OH
 
For further information or questions, contact the U.S. Census Bureau’s Data Collection Branch.
 
  – Telephone: (800) 549-0595, select option 1 for AES
  – Email: askaes@census.gov
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OGS_a36. DoD/DSS: “Partnership with the Department of Commerce –Defense Industrial Base Assessment Critical Facility Survey”

(Source: DoD/DSS)
 
DSS is partnering with the U.S. Department of Commerce, Bureau of Industry and Security (BIS), Office of Technology Evaluation (OTE), to conduct a survey and assessment of organizations responsible for the research, development, manufacture, test, and integration of defense and high-technology products, components, and related services.
 
This effort will assist DSS in its mission to provide security oversight and education on behalf of the DOD and other U.S. Government departments and agencies. The data will also provide a baseline understanding of the structure and interdependencies of organizations that participate in DOD acquisition programs and their associated supply chains. The first surveys were sent to industry in November 2015, with the goal of surveying every NISP facility over the next two years. To date, approximately half of all NISP facilities have received and responded to the survey. Surveys are being mailed and emailed to the Facility Security Officer’s attention. A word on email — If your company uses a spam filter, please enter CriticalFacility@bis.doc.gov as a trusted email to avoid issues with receiving the survey email. BIS has created a survey website that provides information, FAQs and guidance about the survey. Additional questions can be directed to CriticalFacility@bis.doc.gov (preferred) or (202) 482-7808. DSS CI POC is Jeffrey Spinnanger, jeffrey.p.spinnanger.civ@mail.mil.
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OGS_a47. State/DDTC: (No new postings.)

(Source: State/DDTC)
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OGS_a58. Treasury/OFAC Posts Belarus-Related General License

(Source: Treasury/OFAC)
 
The Department of the Treasury, in consultation and coordination with the Department of State, is authorizing by general license transactions involving certain Belarusian entities blocked pursuant to Executive Order 13405.  This license does not generally authorize the release of property blocked pursuant to E.O. 13405.  This authorization expires on April 30, 2017, unless extended or revoked.
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OGS_a79. European Commission Announces Export Control Forum 2016

 
On 28 September 2016, the European Commission adopted a proposal for a modernisation of EU dual-use export controls. The proposal aims to upgrade the EU’s export control system to deal with new challenges and generate the modern control capabilities the EU needs for the coming decade and beyond. The Commission proposes introducing a “human security” dimension to allow controls on the export of cyber-surveillance technologies that may be misused for committing serious human right violations or against EU cybersecurity. It also puts forward a number of new well-defined Union General Export Authorisations in order to simplify certain licensing procedures and make them more efficient. The proposal aims to strike a balance between security and trade so as to ensure a high level of security and adequate transparency without impeding competitiveness and legitimate trade in dual-use items.

The European Commission conducted wide-ranging consultations when preparing the proposal, and is keen to pursue active engagement with stakeholders. The Commission, in cooperation with the Slovak Presidency of the Council of the EU, have therefore decided to hold the 2016 Export Control Forum to provide an excellent opportunity to discuss the proposal’s key changes to EU export controls. The Forum will bring together export control officials from EU institutions and Member States with industry associations and exporters, manufacturers and other economic operators involved in production or trade of dual-use items, as well as representatives of civil society and academia.   

Practical details

 

 
– Date
: 12 December 2016.
  – Location: CCAB – Congress Centre Albert Borschette, rue Froissart 36, Brussels, Belgium.
  – Time: 9:30 – 17:30. Registration will be open at 8:30.
  – Languages: the conference will be held in English.
  – Travel/accommodations/lunch: participants are responsible for their own travel and accommodation. Refreshments during the conference and a sandwich lunch will be provided.

Register to the Forum
(deadline for registration: 12 November 2016).

Please note that participation will be limited to 260 persons.
 

Related documents

 

 
– Press release “Commission proposes to modernise and strengthen controls on exports of dual-use items“.
  – Draft agenda (speakers will be announced at the later stage).

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OGS_a810. EU Amends Restrictive Measures Concerning North Korea & Guinea

 
Regulations:
  – Commission Implementing Regulation (EU) 2016/1831 of 14 October 2016 amending Council Regulation (EC) No 329/2007 concerning restrictive measures against the Democratic People’s Republic of Korea
 
Decisions:
  – Council Decision (CFSP) 2016/1839 of 17 October 2016 amending Decision 2010/638/CFSP concerning restrictive measures against the Republic of Guinea
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NWSNEWS

 
The Department of Justice’s National Security Division released earlier this month a new guidance document that aims to provide greater transparency about what is required from companies seeking credit for voluntarily self-disclosing potential criminal conduct involving export controls and sanctions violations, fully cooperating with investigations, and remediating. This guidance could present challenges to affected companies and could ultimately result in a drop in the number of self-disclosures, which is precisely the opposite effect sought by DOJ.
 
The NSD characterizes this guidance as part of a broader approach to prevent and combat the unlawful export of commodities, technologies, and services and to block trade and transactions with sanctioned countries and designated individuals and entities. The NSD states that pursuing willful export controls and sanctions violations by corporate entities and their employees is a particular priority and that it is committed to using all of its tools to deter such criminal misconduct. If successful, the NSD states, this guidance will serve to further deter violations, encourage companies to implement strong compliance programs to prevent and detect violations, and increase the government’s ability to prosecute individual wrongdoers whose conduct might otherwise have gone undiscovered or been impossible to prove.
 
However, there are several problematic elements of the guidance. For the first time it directs companies to disclose violations not only to the appropriate regulatory agency (i.e., the Directorate of Defense Trade Controls, the Bureau of Industry and Security, or the Office of Foreign Assets Control) but to DOJ as well if they believe the violations were willful. Making this determination could create a more defensive environment within companies and result in employees being more reluctant to share information during the course of internal investigations. This requirement could also signal a more adversarial relationship between DOJ and the regulatory agencies, which have previously held responsibility for determining whether there was criminal intent associated with a violation and referring such cases to DOJ.
 
Further, DOJ does not administer U.S. export controls and sanctions regulations and therefore does not have the same experience with related violations as the regulatory agencies. It can thus take several months to educate DOJ on basic export control rules in a criminal case, leading to a longer and more expensive review process, a more confrontational relationship between DOJ and the company under investigation, and confusion on the appropriate resolution. These problems could be magnified if the new guidance results in in a greater number of VSDs submitted to DOJ, as seems likely.
 
Benefits. The guidance states that when a company voluntarily self-discloses criminal violations of export controls and sanctions, fully cooperates, and appropriately remediates in accordance with the specified standards it may be eligible for a significantly reduced penalty; e.g., a non-prosecution agreement, a reduced period of supervised compliance, a reduced fine and forfeiture, and no requirement for a monitor. The ultimate resolution will depend on an evaluation of the totality of the circumstances in a particular case, including the presence of one or more aggravating circumstances. When a company does not voluntarily self-disclose but cooperates fully and appropriately remediates the practices at issue after learning of violations from the government’s investigation it still may be eligible to receive some credit; e.g., a deferred prosecution agreement, a reduced fine and forfeiture, and an outside auditor as opposed to a monitor. A company that does not voluntarily disclose will rarely qualify for an NPA.
 
VSDs. The guidance states that business entities should continue to submit VSDs to DDTC, BIS, or OFAC, as appropriate. However, DOJ now wants VSDs to also be submitted to its Counterintelligence and Export Control Section when a business becomes aware that a violation may have been willful (i.e., may have been done with the knowledge that it is illegal). For those inclined to submit a VSD to DDTC, BIS, or OFAC, this low standard will likely result in a higher number of VSDs submitted to DOJ as well, even where there is no criminal conduct.
 
While companies will remain free not to voluntarily self-disclose, cooperate, or remediate, under this guidance the following actions are required for a self-disclosure to DOJ to be deemed voluntary: (1) the company discloses the conduct prior to an imminent threat of disclosure or government investigation; (2) the company discloses the conduct to CES and the appropriate regulatory agency within a reasonably prompt time after becoming aware of the offense, with the burden on the company to demonstrate timeliness; and (3) the company discloses all relevant facts known to it, including about the individuals involved in any export control or sanctions violation.
 
For publicly held companies, the Securities and Exchange Commission regulations on disclosures to DOJ may require public notification similar to that required for Foreign Corrupt Practices Act disclosures.
 
Full Cooperation. The guidance directs prosecutors to assess the scope, quantity, quality, and timing of cooperation based on the circumstances of each case when determining how much credit to give a company. The guidance sets forth a number of actions required for a determination of full cooperation, including timely disclosure of all relevant facts, proactive (rather than reactive) cooperation, timely updates on the company’s internal investigation, and the provision of all facts relevant to potential criminal conduct by all third-party companies and individuals. The guidance notes that not all companies will satisfy all components but that credit commensurate with the level of cooperation should generally be given.
 
Timely and Appropriate Remediation. Noting that a company cannot fail to cooperate and then expect to receive credit for remediation, the guidance sets forth several items that will generally be required for a company to receive credit for timely and appropriate remediation. These include implementation of an effective compliance program, appropriate discipline of employees, and any additional steps that demonstrate recognition of the seriousness of the criminal conduct, acceptance of responsibility for it, and implementation of measures to prevent recurrences.
 

Aggravating Circumstances. The guidance lists the following examples of circumstances that, if present to a substantial degree, could result in a more stringent resolution for a company that has engaged in criminal export controls and sanctions violations: exports of items controlled for nuclear nonproliferation or missile technology reasons to a proliferator country; exports of items known to be used in the construction of weapons of mass destruction; exports to a terrorist organization; exports of military items to a hostile foreign power; repeated violations, including similar administrative or criminal violations in the past; knowing involvement of upper management in the criminal conduct; and significant profits from the criminal conduct, including disproportionate profits or margins, whether intended or realized. 

   

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COMMCOMMENTARY

COMM_a112. 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
 
A DDTC DTrade Super User is an individual assigned to administer user roles for all company users. At least one Super User must be designated by an organization. If there is only one user, then that person must become the Super User. Super Users must be a direct employee of the organization.

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ENEDITOR’S NOTES

(Source: Editor)

 

Notable birthdays:

 

* Pierre Trudeau (Joseph Philippe Pierre Yves Elliott Trudeau, 18 Oct 1919 – 28 Sep 2000, was a Canadian politician who served as the 15th Prime Minister of Canada from April 20, 1968, to June 4, 1979, and again from March 3, 1980, to June 30, 1984.)

  – “Luck — that’s when preparation and opportunity meet.”

 

* Henry Taylor (Sir Henry Taylor KCMG, 18 Oct 1800 – 27 Mar 1886, was an English dramatist and poet, official, and man of letters.)

  – “He who gives what he would as readily throw away, gives without generosity; for the essence of generosity is in self-sacrifice.”

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EN_a2
14. 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: 17 Oct 2016: 81 FR 71365-71367: Cuba: Revisions to License Exceptions 

  
*
FOREIGN ASSETS CONTROL REGULATIONS (OFAC FACR)
: 31 CFR, Parts 500-599, Embargoes, Sanctions, Executive Orders
  – Last Amendment: 17 Oct 2016: 81 FR 71372-71378: Cuban Assets Control Regulations  
 
*
FOREIGN TRADE REGULATIONS (FTR)
: 15 CFR Part 30
  – Last Amendment: 15 May 2015; 80 FR 27853-27854: Foreign Trade Regulations (FTR): Reinstatement of Exemptions Related to Temporary Exports, Carnets, and Shipments Under a Temporary Import Bond 
  – HTS codes that are not valid for AES are available
here.
  – The latest edition (9 May 2016) of Bartlett’s Annotated FTR (“BAFTR”), by James E. Bartlett III, is available for downloading in Word format. The BAFTR contains all FTR amendments, FTR Letters and Notices, a large Index, and footnotes containing case annotations, practice tips, and Census/AES guidance.  Subscribers receive revised copies every time the FTR is amended.  The BAFTR is available by annual subscription from the Full Circle Compliance website.  BITAR subscribers are entitled to a 25% discount on subscriptions to the BAFTR, please contact us to receive your discount code. 
 
*
HARMONIZED TARIFF SCHEDULE OF THE UNITED STATES (HTS, HTSA or HTSUSA)
, 1 Jul 2016: 19 USC 1202 Annex.  (“HTS” and “HTSA” are often seen as abbreviations for the Harmonized Tariff Schedule of the United States Annotated, shortened versions of “HTSUSA”.)
  – Last Amendment: 30 Aug 2016; Harmonized System Update (HSU) 1612, containing 4,692 ABI records and 935 harmonized tariff records.   
  – HTS codes for AES are available
here
.
  – HTS codes that are not valid for AES are available
here.
 
*
INTERNATIONAL TRAFFIC IN ARMS REGULATIONS (ITAR)

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

  – Latest Amendment:
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 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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