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16-1028 Friday “The Daily Bugle”

16-1028 Friday “Daily Bugle”

Friday, 28 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 here for free subscription. Contact us for advertising inquiries and rates.

  1. DHS/CBP Corrects Regulations, New Mailing Address for the National Commodity Specialist Division, Regulations and Rulings, Office of Trade 
  1. Ex/Im Items Scheduled for Publication in Future Federal Register Editions 
  2. Commerce/BIS: (No new postings.) 
  3. Commerce/Census: “ACE AESDirect Scheduled Outage, 29-30 Oct” 
  4. Justice: “Two California Men Among Those Charged in Scheme to Smuggle Military Aircraft Parts and Defense Items to Iran” 
  5. State/DDTC: (No new postings.) 
  6. Treasury/OFAC Posts Guidance on Certain Publishing Activities 
  7. EU Amends Restrictive Measures Concerning Syria 
  1. ST&R Trade Report: “Dates and Deadlines: Classification, Defense Trade, Product Safety, Short Supply”
  2. Wall Street Journal: “How to Make a Gun at Home”
  1. L. Muranovic: “DOJ Publishes Guidance Encouraging Voluntary Self-Disclosures, Full Cooperation and Timely and Appropriate Remediation” 
  2. R.C. Burns: “The Kremlin’s Janitor: New Sanctions on Russia Pose Dilemma for U.S.” 
  1. Friday List of Approaching Events 
  1. Bartlett’s Unfamiliar Quotations 
  2. Are Your Copies of Regulations Up to Date? Latest Changes: ATF (15 Jan 2016), Customs (28 Oct 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. DHS/CBP Corrects Regulations, New Mailing Address for the National Commodity Specialist Division, Regulations and Rulings, Office of Trade
(Source: Federal Register)
 
81 FR 74918: New Mailing Address for the National Commodity Specialist Division, Regulations and Rulings, Office of Trade; Technical Correction
* AGENCY: U.S. Customs and Border Protection, Department of Homeland Security.
* ACTION: Final rule.
* SUMMARY: This document amends the U.S. Customs and Border Protection (CBP) regulations to reflect that the mail room servicing the Director, National Commodity Specialist Division, Regulations and Rulings, in the Office of Trade, has relocated within New York, and a new location has been established to receive non-electronic correspondence. E-rulings procedures will remain the same and are not affected by the change in office location.
* DATES: Final rule effective October 28, 2016.
* FOR FURTHER INFORMATION CONTACT: Steven Mack, Director, National Commodity Specialist Division, Regulations and Rulings, Office of Trade, (646) 733-3001.
* SUPPLEMENTARY INFORMATION: …
 
Sec. 177.2   [Amended]
 
In Sec. 177.2, paragraph (a), the third sentence is amended by removing the words “New York, New York 10119, Attn: Classification Ruling Requests, New York, New York 10048, or to any service port office of the Customs and Border Protection” and adding in its place the words “201 Varick Street, Suite 501, New York, New York 10014”.
 
   Dated: October 25, 2016.
R. Gil Kerlikowske, Commissioner, U.S. Customs and Border Protection.

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OGSOTHER GOVERNMENT SOURCES

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

* Commerce; Industry and Security Bureau; NOTICES; Agency Information Collection Activities; Proposals, Submissions, and Approvals: Report of Requests for Restrictive Trade Practice or Boycott [Publication Date: 31 October 2016.]

* Defense; PROPOSED RULES; Withholding of Unclassified Technical Data and Technology from Public Disclosure [Publication Date: 31 October 2016.]

* Treasury; Foreign Assets Control Office; NOTICES; Blocking or Unblocking of Persons and Properties [Publication Date: 31 October 2016.]

* U.S. Customs and Border Protection; NOTICES; Meetings; Commercial Customs Operations Advisory Committee [Publication Date: 31 October 2016.]

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

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

OGS_a34
. Commerce/Census: “ACE AESDirect Scheduled Outage, 29-30 Oct”

 
This message is intended for ACE AESDirect filers ONLY. If you are not an ACE AESDirect filer, you are not affected by this outage.
 
The outage is effective 10:00pm EST Saturday, October 29 – 4:00am EST Sunday, October 30.
 
ACE AESDirect filers may submit shipments under the AES Downtime Policy. State Department licensable shipments cannot be exported under the AES Downtime Policy and must be held until the connection is restored and an Internal Transaction Number (ITN) is received. Once connection is brought back on-line after the outage, all shipments that were exported under the AES Downtime Policy must be filed along with any new AES transactions.
 
If you use the AES Downtime Policy for export, please contact the port from which you will be exporting. In lieu of the AES Proof of Filing citation, please use the AES Downtime citation, which consists of the phrase AESDOWN, your individual company’s Filer ID, followed by the date.  
 
For example: AESDOWN 123456789 10/29/2016
 
Please see the CBP web site for further information on the AES Downtime Policy.
 
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
  – Online: www.census.gov/trade

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

(Source:
Justice) [Excerpts.] 
 
Zavik Zargarian, of Glendale, California, and Vache Nayirian, of Lakeview Terrace, California, were arrested Wednesday morning on federal charges for their alleged role in a scheme to smuggle millions of dollars’ worth of military aircraft parts and other potential defense items to Iran in violation of the International Emergency Economic Powers Act (IEEPA) and the Iranian Transactions and Sanctions Regulations (ITSR). …
 
The defendants were taken into custody by special agents of U.S. Immigration and Customs Enforcement’s HSI. The men are among five defendants charged in a nine-count federal indictment unsealed Wednesday that alleges a conspiracy to purchase and ship more than $3 million dollars’ worth of jet fighter aircraft parts to Iran. Additionally, several of the defendants are accused of buying and illegally exporting fluorocarbon rubber O-rings to Iran. The O-rings in question have a variety of possible military applications, including use in aircraft hydraulic systems and landing gear. Also named in the indictment are Zargarian’s Glendale-based company, ZNC Engineering, and two Iranian nationals, Hanri Terminassian, 55, and Hormoz Nowrouz, 56, both of whom are believed to be in Iran. …
 
According to the indictment, Terminassian originally contacted Zargarian from Iran for assistance with obtaining military aircraft parts from U.S.-based suppliers. Subsequently, Zargarian negotiated on Terminassian’s behalf to purchase the desired items from an undercover HSI special agent who was posing as a parts supplier. The items included parts used in F-14, F-15, F-16 and F-18 fighter jets. Eventually, Terminassian traveled to the U.S. to meet with Zargarian and the undercover special agent to discuss the transaction. The indictment alleges the two men sought to purchase between 10 and 30 units of each item, with the total cost potentially exceeding $3.6 million. …
 
The indictment also accuses Zargarian and Nayirian of conspiring with Terminassian and Nowrouz to export fluorocarbon rubber O-rings to Iran. The indictment alleges Terminassian contacted Nayirian and Zargarian on behalf of Nowrouz and sought their help to obtain the parts. Terminassian transferred funds for the purchase to Nayirian, who later provided the money to Zargarian. Through his company ZNC Engineering, Zargarian bought the O-rings from a California vendor and provided them to Nayirian. Nayirian then exported the O-rings to addresses in the United Arab Emirates and Kuwait provided by Terminassian, who subsequently arranged for them to be transshipped to Iran. According to the indictment, the defendants exported more than 7,000 O-rings to Iran over the course of the conspiracy.
 
To reduce the likelihood of detection, the defendants falsely claimed on shipping documents that the O-rings were destined for countries other than Iran and substantially undervalued them to avoid having to file export forms that might prompt further inspection by CBP. As part of their probe, investigators obtained evidence that the O-rings were intended for the Iranian Air Force.
 
Zargarian and Nayirian were arraigned on the indictment in federal court on Wednesday afternoon. Both men entered not guilty pleas, and a trial was set for December 20 before U.S. District Judge S. James Otero.
 
Defendant Zargarian faces a statutory maximum sentence of 115 years in federal prison and a $4,770,000 fine. Defendant Nayirian faces a statutory maximum sentence of 95 years in federal prison and a $3,770,000 fine. The statutory maximum sentence is prescribed by Congress and is provided here for informational purposes, as the sentencing of a defendant will be determined by the court based on the advisory Sentencing Guidelines and other statutory factors. An indictment contains allegations that a defendant has committed a crime. Every defendant is presumed to be innocent until and unless proven guilty in court.
 
The U.S. embargo on Iran, which is enforced through the IEEPA and the ITSR, prohibits the export of goods, technology, and services to Iran with very limited exceptions. …

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OGS_a56. State/DDTC: (No new postings.)
(Source: State/DDTC)
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OGS_a67. Treasury/OFAC Posts Guidance on Certain Publishing Activities
(Source: Treasury/OFAC)
 
On October 28, 2016, the Department of the Treasury’s Office of Foreign Assets Control (OFAC) issued interpretive guidance on the publishing of general licenses and certain exemptions found in the Iranian Transactions and Sanctions Regulations (ITSR), 31 C.F.R. §§ 560.210, 560.538, the Cuban Assets Control Regulations (CACR), 31 C.F.R. §§ 515.206, 515.577, the Sudanese Sanctions Regulations (SSR), 31 C.F.R. §§ 538.212, 538.529, the Syrian Sanctions Regulations (SySR), 31 C.F.R. §§ 542.211, 542.532, and the Burmese Sanctions Regulations (BSR), 31 C.F.R. §§ 537.210, 537.526.
* * * * * * * * * * * * * * * * * * * *

OGS_a78. EU Amends Restrictive Measures Concerning Syria
 
Regulations:
  – Council Implementing Regulation (EU) 2016/1893 of 27 October 2016 implementing Regulation (EU) No 36/2012 concerning restrictive measures in view of the situation in Syria
 
Decisions:
  – Council Implementing Decision (CFSP) 2016/1897 of 27 October 2016 implementing Decision 2013/255/CFSP concerning restrictive measures against Syria
* * * * * * * * * * * * * * * * * * * *

NWSNEWS

NWS_a19
. ST&R Trade Report: “Dates and Deadlines: Classification, Defense Trade, Product Safety, Short Supply”

 
Following are highlights of regulatory effective dates and deadlines and federal agency meetings coming up in the next week.
 
  – Oct 31: deadline for comments to USDA on proposal to allow imports of persimmons from Japan
  – Oct 31: deadline for comments to FDA on information collection on HACCP procedures for imported juice
  – Oct 31: deadline for comments to FTZ Board on requests from printer, flavor compound facilities
  – Oct 31: deadline for comments to State Department on updated defense trade policy regulations
  – Oct 31: effective date of FWS rule prohibiting imports of 11 fish and crustacean species
  – Oct 31: deadline for comments to CBP on electronic filing of EPA notice of arrival of pesticides
  – Oct 31: deadline for responses with offer to supply cotton shirting fabrics named in Colombia FTA short supply request

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NWS_a210. Wall Street Journal: “How to Make a Gun at Home”
 
Do you have a right to download and use the digital instructions to print out a gun? In September, a three-judge panel of the U.S. Court of Appeals for the Fifth Circuit ruled, 2 to 1, that you don’t. The author of “Come and Take It,” Cody Wilson, runs the nonprofit Defense Distributed, which was the losing plaintiff in that case. Mr. Wilson asserts that the printing instructions are protected by the First Amendment as free speech. In a sense, the court ruling is an answer to the author’s challenge to “come and take it.”
 
Mr. Wilson, while a law student at the University of Texas a few years ago, launched a crowdfunding campaign on the Indiegogo platform seeking $20,000 to buy a 3-D printer and to pay someone to design a printable gun. His book is a rollicking, almost stream-of-consciousness account of how he conceived of the idea of developing a digital blueprint for an actual working firearm.
 
What motivated him? “The system is surely ailing, and likely terminal, but is being a fly on that body worth much?,” pondered political iconoclast Mr. Wilson in 2012. “What was a better way to fight the world itself? To go beyond good and evil?” His answer: “Sure, make the guns with a printer.” Essentially, the goal of Defense Distributed is to enable citizens to manufacture guns in their own homes. And while Mr. Wilson’s minor-league Hunter S. Thompson-style prose (combined with some jejune meditations on political philosophy) can be irritating, his zeal to fuse the First and Second Amendments is fascinating, and he seems to be a genius at publicity.
 
Mr. Wilson started his campaign to “keep power in the hands of the common man” by fax-blasting national gun-control groups with a page stating “IT’S OVER” and a footnote reading “Printablegun.com.” Much of “Come and Take It” details the firestorm of media attention that followed. Wired magazine called him “one of the most dangerous men in the world”; others accused him of peddling “open source terrorism.” Indiegogo canceled his crowdfunding campaign, so he set up a bitcoin account to receive donations. YouTube pulled his promotional video-three times. Upon learning of his plans, Stratasys, the company from which he initially leased a 3-D printer, demanded he give it back. And the alarmed administrators of the Thingiverse website, which publishes user-created design files, pulled all gun-parts designs.
 
In response, Mr. Wilson and his colleagues at Defense Distributed created the Defcad website (a name sending up of the Defense Department’s Defcon defense-readiness alert scale), onto which printable-gun designs could be uploaded. In 2013, Defense Distributed posted the digital files for printing its plastic handgun. Mr. Wilson named his creation “The Liberator” after the single-shot handguns that the Allies dreamed up to arm resistance fighters during World War II.
 
Gun-control proponents in Congress went ballistic. Rep. Steve Israel (D., N.Y.) held a news conference in which he called for banning “wiki weapons” by renewing the Undetectable Firearms Act, which made it illegal to make or sell guns that can’t be detected by walk-through metal detectors. James Burke, the police chief of Suffolk County, warned that 3-D printers could result in the proliferation of guns “in our children’s bedrooms, in basements and in dorm rooms.” In May 2013, Sen. Charles Schumer (D., N.Y.) joined the call for legislation outlawing printable guns, declaring that “a terrorist, someone who’s mentally ill, a spousal abuser, a felon can essentially open a gun factory in their garage.” That same month, Defense Distributed posted a notice on Defcad that the digital files for its “Liberator” plastic handgun design had been “removed from public access at the request of the US Department of Defense Trade Controls.”
 
Just how could the federal agencies actually enforce such a ban? Put firmware locks on the printers? Ban digital file sharing? Require that manufacturers of 3-D printers install some kind of feature that prevents gun-part printing? As digital-rights activist Cory Doctorow, who is no fan of Mr. Wilson’s, has observed: “Every one of those measures is a nonsense and worse: unworkable combinations of authoritarianism, censorship, and wishful thinking. Importantly, none of these would prevent people from manufacturing plastic guns. And all of these measures would grossly interfere with the lawful operation of 3D printers.”
 
Federal cluelessness is highlighted in this book by a reprinted interview with the BBC, in which Mr. Wilson’s explanation of how to print the gun is inkblot redacted at the demand of the U.S. State Department. Why the State Department, you may ask? As it happens, it was State, by challenging the posting of the printable-gun files as an arms-export violation, that initiated the lawsuit that has ended, for now, with the Fifth Circuit Court’s ruling. After the decision, Mr. Wilson tweeted that he would be asking for an en banc hearing by the full Fifth Circuit.
 
Judge Edith Jones, in her powerful dissent, observed that “the denial of a temporary injunction in this case will encourage the State Department to threaten and harass publishers of similar non-classified information.” She further declared that “interference with First Amendment rights for any period of time, even for short periods, constitutes irreparable injury.” During a talk in 2013, Mr. Wilson declared that his digital gun-design project “is working so well because it confuses the stakes for free-speech liberals and command-and-control liberals. The files themselves are a powerful species of political speech. And how do we know they are political speech? Because the’re being fought so strongly.” Sadly, free-speech liberals seem mostly absent in this fight.
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COMMCOMMENTARY

COMM_a1
11. L. Muranovic: “DOJ Publishes Guidance Encouraging Voluntary Self-Disclosures, Full Cooperation and Timely and Appropriate Remediation”

 
* Author: Lana Muranovic, Esq., Baker & Hostetler LLP, lmuranovic@bakerlaw.com, 713-646-1338.
 
On Oct. 2, 2016, the U.S. Department of Justice (DOJ), National Security Division (NSD) published Guidance setting forth its policy of encouraging business organizations to voluntarily self-disclose criminal violations of statutes implementing the U.S. government’s export control and sanctions regimes, as administered by the State and Commerce Departments and the Office of Foreign Assets Control, under the Arms Export Control Act (AECA) [FN/1] and the International Emergency Economic Powers Act (IEEPA). [FN/2] Notably, the Guidance does not reference the Trading With the Enemy Act (TWEA), [FN/3] which provides the statutory authority for the U.S. embargo of Cuba; it is unclear whether this omission was intentional or merely an oversight.
 
According to the NSD, the Guidance seeks to deter individuals and companies from engaging in export control and sanctions violations, encourage companies to implement strong export control and sanctions compliance programs to prevent and detect such violations, and increase the ability of the NSD and U.S. Attorneys’ Offices to prosecute individual wrongdoers. The Guidance also aims to provide greater transparency regarding what is required from companies seeking credit for voluntarily self-disclosing potentially criminal conduct, cooperating with an investigation and engaging in proper remediation efforts. It further sets forth certain aggravating factors that can lead to enhanced penalties.
 
Relevant Definitions
 
As a threshold matter, the Guidance explains what constitutes a voluntary self-disclosure (VSD), full cooperation, and timely and appropriate remediation.
 
VSD. In order for a company’s disclosure to be deemed voluntary, the company must disclose

  (1) the conduct “prior to an imminent threat of disclosure or government investigation;” [FN/4]
  (2) the conduct to the appropriate regulatory agency “within a reasonably prompt time after becoming aware of the offense,” [FN/5] with the burden to demonstrate timeliness on the company; and
  (3) all relevant facts known to the company, including facts about the individuals involved in any export control or sanctions violation.

 
Full Cooperation. A company’s level of cooperation is assessed on a case-by-case basis. Full cooperation requires, however, certain actions, including the following:
 
Disclosure of all facts relevant to the wrongdoing at issue;
 
  – Proactive, rather than reactive, cooperation;
  – Preservation, collection, and disclosure of relevant documents and information;
  – Provision of timely updates regarding the company’s internal investigation;
  – De-confliction of an internal investigation with the government investigation, if relevant;
  – Provision of facts relevant to potential criminal conduct by third parties;
  – Making available for interviews relevant company officers and employees;
  – Disclosure of all relevant facts gathered during the company’s independent investigation;
  – Disclosure of overseas documents and related information;
  – Unless legally prohibited, facilitation of third party production of documents and witnesses from foreign jurisdictions; and
  – Where requested and appropriate, provision of translations of relevant documents in foreign languages.
 
Timely and Appropriate Remediation. If a company is eligible for cooperation credit, it may also receive credit for remediation if the company has implemented an effective compliance program, [FN/6] appropriately disciplined responsible employees, and set up a system that provides for the possibility of disciplining others and overseeing responsible individuals, and taken additional steps necessary to demonstrate recognition of the seriousness of the corporation’s criminal conduct, acceptance of responsibility for it, and implementation of measures to prevent misconduct repetition.
 
Aggravating Factors
 
Importantly, the Guidance also sets forth NSD’s view of aggravating factors that, if present to a substantial degree, could limit the credit that an organization might otherwise receive after submitting a VSD. Examples of such aggravating factors include the following:
 
  – 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;
  – Repetition of similar administrative or criminal violations;
  – Knowing involvement of upper management in the criminal conduct; and
  – Significant profits from the criminal conduct compared to lawfully exported products and services.
 
Potential Credit to a Business Organization
 
The Guidance explains the possible credit that may be afforded to a business organization that complies with the noted mandates. A VSD, cooperation and appropriate remediation allow a company to be eligible for a significantly reduced penalty, including the possibility of a non-prosecution agreement (NPA), reduced period of supervised compliance, reduced fine and forfeiture and lack of requirement of a monitor. Even if a company does not voluntarily self-disclose a violation but cooperates with the government’s investigation and remediates its practices, the company may still be eligible to receive some credit, including a deferred prosecution agreement (DPA), reduced fine and forfeiture and an outside auditor instead of a monitor.
 
Locus of Filing VSD; Expansion to CES
 
The Guidance makes clear that it does not change the regulatory agency to which a VSD should be filed, or the respective agencies’ procedures for submitting VSDs. 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); [FN/7] to the Department of Commerce, Bureau of Industry Security (BIS) for violations of the Export Administration Regulations (EAR); [FN/8] and to the Department of the Treasury, Office of Foreign Assets Control (OFAC) for violations of U.S. sanctions regulations. [FN/9] However, the Guidance expands the agencies to which a VSD should be filed, to include the Counterintelligence and Export Control Section (CES) of the NSD, if the VSD covers potentially willful (i.e., criminal) violations.

Sample Scenarios
 
The Guidance provides sample scenarios that demonstrate its application to real-world situations.
 
  – In Example 1, a company attempts to ship ITAR-controlled items to an embargoed country. In this instance, the company conduct is serious, the gain to the company is great and cooperation is minimal. The company would likely be required to enter a guilty plea and accept a monitor (or, at a minimum, an outside auditor). Reduction in financial penalty would not be significant.
  – Example 2 builds on Example 1, escalating the seriousness of the crime a step further by indicating that the acts of a foreign subsidiary of a U.S. company create a threat to U.S. national security. In such an instance, while the foreign subsidiary would likely be required to plead guilty, serve a full term of supervision, forfeit its profits and pay a substantial fine, the U.S. parent corporation, which is cooperative in the government’s investigation, would likely be offered an NPA, supervision and a reduced fine.
  – In Example 3, upon discovering wrongdoing by its subsidiary, the European parent corporation files a VSD, fires responsible employees, disciplines other negligent employees, revamps its compliance program, cooperates with the government’s investigation and makes employees available for interviews. In this scenario, the European parent corporation would likely face an NPA, a period of supervision and a reduced monetary payment. A monitor or auditor would be unlikely.
  – Example 4 assumes the facts of Example 3 but extends the violations in volume and over a period of several years. Here, prosecutors would likely require the company to enter into a DPA, but the company would receive a reduced fine and period of supervision, and would not likely be subject to a monitor or auditor.
 
Recommendations
 
The prevailing practice until now has been to disclose export control and sanctions violations to the relevant government agency(ies), with the knowledge that such agency(ies) could refer the matter to the DOJ if they deemed it appropriate. However, this Guidance now encourages companies to submit a VSD to CES when they become aware that a violation may have been willful. Companies should, therefore, update their export compliance procedures to comply with this changing guidance and ensure that, upon discovering potentially willful violations of U.S. export control and sanctions laws and regulations, they receive maximum mitigation and credit from all relevant agencies, henceforth to specifically include the CES.
 
In addition to the above, the Guidance highlights the importance of prompt and complete disclosure, comprehensive internal investigation, accurate assessment of failures, and strong remedial action commitment and follow-through. In some instances, there may actually be a mandatory duty to disclose to regulators, [FN/10] and companies must be aware of, and in compliance with, such requirements. Any disclosure should be considered very carefully and thoroughly, with the advice of experienced counsel.
 
————-
  [FN/1] 22. U.S.C. § 2751, et seq. (1976). The Arms Export Control Act provides the authority to control the export of defense articles and services.
  [FN/2] 50 U.S.C. §§ 1701-06 (1977). The IEEPA authorizes the president to declare a national emergency and impose economic sanctions in cases of “unusual and extraordinary threats” to the United States.
  [FN/3] 50 U.S.C. App. §§ 1-44 (1917).
  [FN/4] U.S.S.G. § 8C2.5(g)(1).
  [FN/5] Id.
  [FN/6] An effective compliance program should include: the establishment of a culture of compliance; dedication of sufficient resources; assurance that compliance personnel have the necessary qualifications and experience; institution of an independent compliance function; performance of effective risk assessments; implementation of a technology control plan and required regular training of employees; appropriate compensation and promotion of compliance personnel; auditing of the compliance program; and a reporting structure that facilitates the identification of compliance problems to senior officials and maximizes prompt and complete remediation.
  [FN/7] 22 C.F.R. §§ 120-130.
  [FN/8] 15 C.F.R. §§ 730-774.
  [FN/9] 31 C.F.R. §§ 501-598.
  [FN/10] For example, Section 126.1(e) of the ITAR requires that “[a]ny person who knows or has reason to know of … a proposed or actual sale” of ITAR-controlled defense articles, defense services or technical data to an ITAR-proscribed country (e.g., China) “must immediately inform” DDTC.

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COMM_a2
12. R.C. Burns: “The Kremlin’s Janitor: New Sanctions on Russia Pose Dilemma for U.S.”

(Source:
Export Law Blog
. Reprinted by permission.)
 
* Author: R. Clifton Burns, Esq., Bryan Cave LLP, Wash DC, 202-624-3949,
Clif.Burns@bryancave.com
)
 
As the U.S. considers more sanctions on Russia, given its cybershenanigans and its involvement in Syria on behalf of Bashar al-Assad, it is running into some unexpected difficulties. The quote of the week, from this article, explains part of the issue:
 
“While the president has full sanction authority, there’s nobody left to sanction in Russia besides the janitor in the Kremlin,” said Michael Kofman, a global fellow at the Wilson Center’s Kennan Institute in Washington. “In terms of expanding any kind of commercial or financial sanctions, we’re basically maxed out.”
 
While that is probably an exaggeration, it is not far from the truth. What that means is that individually targeted sanctions are becoming less effective, forcing a consideration of sector-based sanctions, which lead to their own problems in terms of collateral consequences. For example, the sanctions on Rosboronexport had to be revised because it prevented Afghanistan from getting parts for the Mi-17 helicopters that it uses.
 
Other possible sanctions would impact our allies as well as Putin and his cronies. Options such as preventing U.S. bank from buying ruble-based bonds, cutting off Russia from the SWIFT transfer system, or an embargo on energy exports, would each hurt Europe as much as Russia. Europe gets almost of one-third of energy from Russia.
 
This illustrates the problem of economic sanctions in a global economy. It’s one thing to whack an economically isolated country. You could cut Granada off from the world economy and the biggest impact would be that your holiday eggnog would have to go nutmeg-less. But for developed or developing economies that are largely integrated into the world economy, economic sanctions will have undesired and unintended effects.

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TrainingEX/IM TRAINING EVENTS & CONFERENCES

TE_a213
. Friday List of Approaching Events

(Sources: Event sponsors.) 
 
Published every Friday or last publication day of the week. Send events to
apbosch@fullcirclecompliance.eu
, composed in the below format:

* DATE: PLACE; “TITLE;” SPONSOR; WEBLINK; CONTACT (email and phone number)
 
Continuously Available Training:
* Executive Masters: “
International Trade Compliance
;” University of Liverpool;
exed@liverpool.ac.uk
;
+44 (0) 20 768 24614
* E-Seminars: “
US Export Controls” / “Defense Trade Controls
;” Export Compliance Training Institute;
danielle@learnexportcompliance.com 
* On-Line: “
Simplified Network Application Process Redesign (SNAP-R)
;” Commerce/BIS; 202-482-2227
* E-Seminars: “
Webinars On-Demand Library
;” Sandler, Travis & Rosenberg, P.A.
 
Training by Date:

* Oct 31-Nov 2: Wash DC; “
Commerce/BIS Update 2016 Conference on Export Controls
;” U.S. Dept. of Commerce/Bureau of Industry and Security;
UpdateConference@bis.doc.gov
; 202-482-6031

* Oct 31-Nov 3: Wash DC; “US Export Controls Seminar;” ECTI; jessica@learnexportcompliance.com; 540-433-3977

* Nov 1: Webinar; “NISP Administration & Policy Analysis (NAPA) Industry Insider Threat Workshop;” Dept. of Defense/Defense Security Service

* Nov 2: Chicago; “AES Compliance Seminar;” Dept. of Commerce/ Census & M-Palm; shawn@m-palm.com 

* Nov 3-4: Amsterdam; International Trade & Compliance Conference; Baker McKenzie; claudia.wehmeijer@bakermckenzie.com; + 31 20 551 7481

* Nov 6-7: Singapore; “
Singapore Conference
;” International Compliance Professionals Association;
wizard@icpainc.org 

* Nov 8: London; “Control List Classification – Military;”
UK/BIS Export Control Organisation;
denise.carter@bis.gsi.gov.uk 

* Nov 8: Webinar; “NISP Administration & Policy Analysis (NAPA) Industry Insider Threat Workshop;” Dept. of Defense/Defense Security Service
* Nov 9: Cerritos CA; “CTPAT Internal Auditor Training Program;” Foreign Trade Association

* Nov 9: London; “Making Better License Applications;”
UK/BIS Export Control Organisation;
denise.carter@bis.gsi.gov.uk 


* Nov 9: Sturbridge MA; “Export School Fast Track Certificate Program” Massachusetts Export Center

* Nov 10-11: Shanghai; “
ICPA China Conference
;” International Compliance Professionals Association;
wizard@icpainc.org 

* Nov 13-15: Miami FL; “
Conference of the Americas
;” Florida Customs Brokers & Freight Forwarders; 
info@fcbfconference.com
; 305-499-9490

* Nov 14: Long Beach CA; “44th Annual Golf Tournament;” Foreign Trade Association

* Nov 14-16: London; “Expert Industry and Regulatory Advice for Solutions to Export Controls’ Global Compliance Risks;” Informa Maritime

* Nov 14-17: Phoenix AZ; “
EAR/ITAR/OFAC Compliance
;” ECTI;
jessica@learnexportcompliance.com
; 540-433-3977

* Nov 15-16: London UK; “Customs Compliance Held in Partnership with HMRC;” C5

* Nov 15-16: Santa Clara CA; “A Year-End Review of Import/Export Developments;” Baker McKenzie; Brendan.Gilmartin@bakermckenzie.com; 415-591-3246

* Nov 15: Westborough MA; “Essentials of Export Logistics & Regulatory Compliance” Massachusetts Export Center

* Nov 15: Webinar; “NISP Administration & Policy Analysis (NAPA) Industry Insider Threat Workshop;” Dept. of Defense/Defense Security Service

* Nov 15: Webinar; “U.S. Export Controls for Academia;” ECTI; danielle@learnexportcompliance.com; 540-433-3977

* Nov 16: Manchester UK; “Intermediate Seminar;”
UK/BIS Export Control Organisation;
denise.carter@bis.gsi.gov.uk 

* Nov 16: Webinar; “
Classification: Advanced Classification, Part 1;”
Sandler, Travis & Rosenberg, P.A.;
webinarorganizers@strtrade.com

* Nov 17: Manchester UK; “Beginners Workshop;”
UK/BIS Export Control Organisation;
denise.carter@bis.gsi.gov.uk 

* Nov 17: Manchester UK; “Making Better License Applications;”
UK/BIS Export Control Organisation;
denise.carter@bis.gsi.gov.uk 
* Nov 17: Manchester UK; “Control List Classification Combined Dual Use and Military;”
UK/BIS Export Control Organisation;
denise.carter@bis.gsi.gov.uk 

* Nov 17: Rotterdam NL; “NIDV Conference & Exhibition 2016;” The Netherlands Industries for Defence & Security

* Nov 24: London; “
Cyber Export Controls 2016
;”
UK/BIS Export Control Organisation;
denise.carter@bis.gsi.gov.uk 

* Nov 30: London; “Control List Classification – Dual Use;”

UK/BIS Export Control Organisation;
denise.carter@bis.gsi.gov.uk

* Nov 29-Dec 2: Washington, D.C.; “
33rd International Conference on the Foreign Corrupt Practices Act
“; American Conference Institute

* Dec 1-2: Arlington VA; “
2016 East Coast Trade Symposium
;” Dept. of Homeland Security/U.S. Customs and Border Protection

* Dec 1: London; “Making Better License Applications;”
UK/BIS Export Control Organisation;
denise.carter@bis.gsi.gov.uk 

* Dec 2: Melbourne FL; “ACE is the Place for EEI/AES Export Declarations;” Space Coast World Trade Council; bcantillon@bellsouth.net
* Dec 2: Long Beach CA; “
FTA Annual Holiday Celebration;” Foreign Trade Association

* Dec 2: Wash DC; “
SIA Holiday Party
;” Society for International Affairs

* Dec 5-8: Miami FL; “
EAR/ITAR/OFAC Compliance Seminar Series
;” ECTI;
jessica@learnexportcompliance.com
; 540-433-3977

* Dec 7: Boston; “
AES Compliance Seminar
;”
Dept. of Commerce/Census
& M-Palm;
shawn@m-palm.com  

* Dec 7: London; “Intermediate Seminar;”
UK/BIS Export Control Organisation;
denise.carter@bis.gsi.gov.uk 
* Dec 8: London; “Beginners Workshop;”
UK/BIS Export Control Organisation;
denise.carter@bis.gsi.gov.uk 
* Dec 8: London; “Making Better License Applications;”
UK/BIS Export Control Organisation;
denise.carter@bis.gsi.gov.uk 
* Dec 9: Boston MA; “Export Expo” Massachusetts Export Center

* Dec 14: Wash DC; “In-House Industry Seminar;” Dept. of State/DDTC; DDTCInHouseSeminars@state.gov

* Dec 14: Webinar; “
Classification: Advanced Classification, Part 2;”
Sandler, Travis & Rosenberg, P.A.;
webinarorganizers@strtrade.com

* Dec 16: Webinar; “Navigating the Intersection of HR and Trade Compliance” Massachusetts Export Center

* Jan 13: Shanghai; “
5th Advanced China Forum on Import Compliance;” American Conference Institute

* Jan 23-26: San Diego, CA; “
EAR/ITAR/OFAC Compliance Seminar Series
;” ECTI;
jessica@learnexportcompliance.com
; 540-433-3977

* Jan 31-Feb 1: Toronto; “
6th Forum on US Export & Re-Export for Canadian Operations;” American Conference Institute
* Feb 1: Wash DC; “
3rd National Forum on CFIUS & Team Telecom;” American Conference Institute
* Feb 8-9: Wash DC; “7th Annual Advanced ITAR & EAR Compliance;” marcus evans

* Feb 20-23: Orlando; “
United States Export Control (EAR/OFAC/ITAR) Seminar
;” ECTI;
jessica@learnexportcompliance.com
; 540-433-3977

* Mar 5-6: Dubai UAE; “Trade Compliance in the Middle East;” C5

* Mar 7-10: Orlando; “
‘Partnering for Compliance™’ East Export/Import Control Training and Education Program
;” Partnering for Compliance East;
Ailish@PartneringForCompliance.org
; 321-952-2978

* Mar 12-15: Miami; “ICPA Miami Conference;”
International Compliance Professionals Association;
wizard@icpainc.org 

* Mar 13-15: Newport Beach CA; “2017 Winter Back to Basics Conference;” Society for International Affairs

* Mar 20-23: Singapore;
United States Export Control (EAR/OFAC/ITAR) (for Asia-Pacific and other non-US Companies)
;” ECTI;
jessica@learnexportcompliance.com
; 540-433-3977

* May 1-2: Tucson AZ; “2017 Spring Conference;” Society for International Affairs
* May 7-9: Toronto; “ICPA Toronto Conference;”
International Compliance Professionals Association;
wizard@icpainc.org 

* May 15-18: London UK; “

United States Export Control (EAR/OFAC/ITAR) Seminar in London (for EU and other non-US Companies)
;” ECTI;
jessica@learnexportcompliance.com
; 540-433-3977

* Jun 11-13: Dublin IRL; “ICPA Dublin Conference;”
International Compliance Professionals Association;
wizard@icpainc.org 

* Jun 12-15: San Francisco; “

United States Export Control (EAR/OFAC/ITAR) Seminar
;” ECTI;
jessica@learnexportcompliance.com
; 540-433-3977

* Sep 4-9: Galveston TX; “ICPA Conference at Sea;”
International Compliance Professionals Association;
wizard@icpainc.org 

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

ENEDITOR’S NOTES

EN_a114. Bartlett’s Unfamiliar Quotations

(Source: Editor)
 

* Evelyn Waugh (Arthur Evelyn St. John Waugh, 28 Oct 1903 – 10 Apr 1966, was an English writer of novels, biographies and travel books.  Waugh is considered one of the great prose stylists of the English language in the 20th century.)
  – “One forgets words as one forgets names. One’s vocabulary needs constant fertilizing or it will die.”
  – “We cherish our friends not for their ability to amuse us, but for our ability to amuse them.”
 
Friday funnies:
 
   A convict has served 15 years of his 20-year prison term, refusing to reveal any information about the other members of his gang, but he is going stir crazy and can’t take it anymore, so he says to the parole board, “Okay, look. Here’s what I propose.  I’ll tell you everything about my gang — names, dates, and where we hid the loot — just let me outta here!” The parole board takes a vote, and the only vote against letting the convict out early is from a former English teacher who says, “You should not end a sentence with a proposition.”
  — Jonathan Kemmerer-Scovner, Glenside, PA

And for readers who are begging for another blonde joke:
   The flight attendant on flight bound for Los Angeles tells a young blonde that her seat is row 37, but she immediately sits down in 1-A in First Class.  The attendant says, “Excuse me, but your seat is in Economy Class, row 37. The blonde replies, “Look — I’m blonde and I’m beautiful, and I’m going to L.A., so I belong in First Class!” and refuses to move.  The flight attendant informs the captain, who comes out, bends down and whispers something in the blonde’s ear.  She say, “Oh! I didn’t know that!” and gets up and moves back to her seat in Economy.  The flight attendant says to the captain, “That was fast! What did you say to her?” The captain say, “I told her First Class wasn’t going to Los Angeles.”

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

EN_a215. 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:
28 Oct 2016: 81 FR 74918: New Mailing Address for the National Commodity Specialist Division, Regulations and Rulings, Office of Trade; Technical Correction

* 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 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.  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
  – 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 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.  

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

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.

* 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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