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16-1128 Monday “The Daily Bugle”

16-1128 Monday “Daily Bugle”

Monday, 28 November 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 Announces Eligibility of the Multinational Force and Observers To Receive Defense Articles and Defense Services Under the FAA and AECA 
  2. State/DDTC Seeks Comments on Form DS-7787, Disclosure of Violations of the Arms Export Control Act 
  1. Ex/Im Items Scheduled for Publication in Future Federal Register Editions 
  2. Commerce/BIS: (No new postings.) 
  3. State/DDTC: (No new postings.) 
  4. UK BIS: “The Other End of End-User Undertakings” 
  1. Defense News: “Mixed Signs for Foreign Military Sales Under Trump” 
  1. D.M. Edelman: “New Format for Filing CJ Requests via New Defense Export Control and Compliance System (DECCS)” 
  1. Monday List of Ex/Im Job Openings: 116 Jobs Posted 
  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 (25 Nov 2016), FACR/OFAC (4 Nov 2016), FTR (15 May 2015), HTSUS (30 Aug 2016), ITAR (21 Nov 2016) 

EXIMEX/IM ITEMS FROM TODAY’S FEDERAL REGISTER

EXIM_a11. President Announces Eligibility of the Multinational Force and Observers To Receive Defense Articles and Defense Services Under the FAA and AECA

 
81 FR 85835: Eligibility of the Multinational Force and Observers To Receive Defense Articles and Defense Services Under the Foreign Assistance Act of 1961 and the Arms Export Control Act
 
Memorandum for the Secretary of State
 
By the authority vested in me as President by the Constitution and the laws of the United States, including section 503(a) of the Foreign Assistance Act of 1961 and section 3(a)(1) of the Arms Export Control Act, I hereby find that the furnishing of defense articles and defense services to the Multinational Force and Observers will strengthen the security of the United States and promote world peace. …
 
(Presidential Sig.)
THE WHITE HOUSE,
Washington, November 16, 2016
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EXIM_a22. State/DDTC Seeks Comments on Form DS-7787, Disclosure of Violations of the Arms Export Control Act

(Source: Federal Register) [Excerpts.]
 
81 FR 85668-85670: 30-Day Notice of Proposed Information Collection: Disclosure of Violations of the Arms Export Control Act
* ACTION: Notice of request for public comment. …
* DATES: The Department will accept comments from the public up to December 28, 2016. …
* FOR FURTHER INFORMATION CONTACT: Direct requests for additional information regarding the collection listed in this notice, including requests for copies of the proposed collection instrument and supporting documents, to Danielle Canfield, Directorate of Defense Trade Controls, Department of State, who may be reached at CanfieldDP@state.gov.
* SUPPLEMENTARY INFORMATION:
  – Title of Information Collection: Disclosure of Information Related to Potential Violations of the Arms Export Control Act.
  – OMB Control Number: 1405-0179.
  – Originating Office: T/PM/DDTC.
  – Form Number: DS-7787. …
  – Abstract: In accordance with ITAR Part 127, DDTC maintains a robust program to ensure compliance with the AECA and ITAR. As a part of this program, DDTC encourages the voluntary disclosure of potential violations of the AECA, ITAR, and any regulation, order, or authorization issued thereunder. The information disclosed is analyzed to determine whether administrative action concerning any violation is warranted; the voluntary nature of such a disclosure may be considered a mitigating factor in determining the administrative penalties, if any, which may be imposed. Failure to report a violation may result in circumstances detrimental to U.S. national security and foreign policy interests and will be considered as an adverse factor in determining the appropriate disposition of such violations. Also, the activity in question might merit referral to the Department of Justice for consideration of whether criminal prosecution is warranted. In such cases, DDTC will notify the Department of Justice of the voluntary nature of the disclosure, but the Department of Justice is not required to give that fact any weight.
   The ITAR also imposes a duty to notify DDTC of potential violations of the AECA and ITAR in certain instances. In accordance with ITAR Sec. Sec. 123.17(j), 126.1(e)(2), 126.16(h)(8) and (n), and 127.17(h)(8) and (n), any person involved in or with knowledge of activities identified or prohibited by these sections must notify DDTC of the violations or produce documents and information, respectively.
   In certain circumstances, DDTC may also request or direct a registrant or another party to disclose details about a particular transaction or program based on information it receives from partner federal agencies or other sources. The information required for a directed disclosure is largely the same as that requested in a voluntary disclosure and must be sufficient for DDTC to determine the precise nature of the violation, the circumstances surrounding it, and any remediation efforts that have been put in place.
   ITAR Sec. 127.12 enunciates the information which should accompany a disclosure. Historically, respondents to this information collection submitted their disclosures to DDTC in writing via hard copy documentation. However, as part of an IT modernization project designed to streamline the collection and use of information by DDTC, a form has been developed for the submission of disclosures. This will allow both DDTC and respondents submitting a disclosure to more easily track and analyze submissions. This method of submission is discussed in detail below. …
 
   Dated: November 21, 2016.
Anthony M. Dearth, Managing Director, Acting Directorate of Defense Trade Controls, Department of State.
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OGSOTHER GOVERNMENT SOURCES

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


* Justice; Bureau of Alcohol, Tobacco, Firearms and Explosives; NOTICES; Agency Information Collection Activities; Proposals, Submissions, and Approvals: Application for Alternate Means of Identification of Firearm(s); Marking Variance [Publication Date: 29 November 2016.]

* U.S. Customs and Border Protection; NOTICES; Agency Information Collection Activities; Proposals, Submissions, and Approvals [Publication Date: 29 November 2016.]:
  – Application and Approval to Manipulate, Examine, Sample or Transfer Goods
  – Foreign Assembler’s Declaration
  – Customs Brokers User Fee Payment for 2017 

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OGS_a46. UK BIS: “The Other End of End-User Undertakings”

 
As we strive to move end-user undertakings from a paper-based system to a digital one, we’ve come into contact with numerous exporters with excellent ideas about how we can improve and speed up the process. The amount of information required, the methods by which the end users can complete their sections, carrying over data from one form to another to reduce duplication – these are all things we’re looking to tighten up based on user feedback.
 
But there’s a key set of users we haven’t had a lot of contact with yet: the end users themselves.
 
The Customer’s Perspective
 
It can sometimes come as a surprise to end users of exported goods, software and technology that their end of the deal can include completing forms for the UK Government. What might seem like a simple transaction between two companies can suddenly become far less straightforward when they’re confronted by demands for information from the Export Control Organisation.
 
It’s on us to try to make this less of a hold-up for you and your potential customers. While it’s vital that all parties understand their obligations – there are obvious and necessary reasons for end-user undertakings for controlled items to exist – it’s in nobody’s interests to make the process onerous, or to put contracts at risk.
 
So we need to see this process from both ends – we have great feedback from exporters already, but we now need to shape things from your customers’ perspective.
 
We’d like to ask you if you have any overseas customers, end users of your products, who would be willing to help us shape the other side of the end-user undertaking. We need to know what they find tricky about the current process, what causes hold-ups at their end and if there’s any information they’re asked to provide that they often find they can’t.
A tricky ask
 
But, naturally, there’s a chance your end users might be suspicious that we’re somehow using this development process to check up on them. We’re hoping that, as readers of this blog who have been following our aims and goals for this project, you’ll be in a position to reassure your customer that anything they tell us will be used solely for the development of the new service, and not attributed to them in any way in the future.
 
All we’re after here is as much information as we can get about end-user undertakings – with plain-sailing weather we’ll be able to develop a system that speeds up and simplifies things for both you and your customers, but without the input of end-users themselves we’ll be missing a big piece of the puzzle.
Putting us in touch
 
If you can think of any of your customers who may be willing to help us, please do forward them a link to this blog so they can see what we’re about. Please don’t send us their details without checking with them – end users are likely to prefer not to have us contact them directly.
 
Alternatively you can simply give them our research address, userresearchforlite@digital.beis.gov.uk, and let them know we’d be very pleased to get any input from them on the current end-user undertaking process, and what they want to see (or don’t want to see) in the new one.
 
If you have any anecdotal evidence from customers who have found the paper-based process a problem in the past, we’d be happy to get that too.
 
And though we’re focused on how end users find the undertakings, we’re still keen to get any feedback on the exporters’ side of things. Please send anything you think might be useful to the address above.

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NWSNEWS

 
Foreign military sales (FMS) are a critical foreign policy tool, one used to bind partners to America while bolstering interoperability on US systems – and providing a boost to domestic industry.
 
The administration of US President Barack Obama has made good use of FMS, setting records for foreign weapons sales in 2015 and coming close in 2016. But as President-elect Donald Trump’s administration spins up, the future of US sales abroad is unclear.
 
As with everything related to the Trump administration at this point, there is little hard evidence to go by. But analysts are watching closely for signs of what might come. In particular, there is concern that two areas of strong sales – the Gulf region and Europe – could be impacted by either the policies of the next administration or the statements of the next president.
 
Analyst Byron Callan, of Capital Alpha Partners, wrote to investors the day after the election, noting some of Trump’s campaign positions could impact foreign weapon sales.
 
  “We would expect if countries increase spending, it would be to the benefit of their own industries and not necessarily favor US defense firms,” Callan wrote to investors, adding: “If a Trump administration takes a harder line on Muslims, that may also bear on US defense exports to some Middle Eastern and Asian countries.”
 
Doug Berenson, managing director with Avascent, agrees there are potential roadblocks from Trump policies but stresses that a lot is still in the air.
 
  “I think there is a chance that many European countries could get nervous about what this means, about the reliability of the US as a supplier,” Berenson said. “But I think it’s too early to assume that would be the outcome.”
 
One British industry executive, however, warned it was “difficult” to make assumptions about a Trump presidency given how unclear those policies may be.
 
  “The only real growing defense market is Asia and he has yet to clarify what his foreign policy position will be in the region. In a sector where the ability to apply political pressure is often crucial to winning business, these policy decisions are important. It’s going to be a similar story with the Gulf,” the executive said.
 
Adds Remy Nathan, vice president of international affairs with the Aerospace Industries Association, “I think everyone, regardless of what industry you’re looking at, everyone is trying to understand what’s going to be different between the theory of what might be done in a Trump administration, versus what will be done in a Trump administration.”
 
Gulf Challenge
 
Throughout the campaign, Trump targeted Muslims, including voicing support for a registry of all Muslims within the United States. (A Trump spokesman has recently denied those comments despite video evidence of then-candidate Trump making them.)
 
The candidate’s Dec. 7, 2015, statement calling for “a total and complete shutdown of Muslims entering the United States” alarmed the Gulf Cooperation Council (GCC) leadership so much that the group issued a statement condemning “the increase of hostile, racist and inhumane rhetoric against refugees in general and Muslims in particular.”
 
And while some spokespeople for Trump have downplayed the idea of a Muslim ban or registry, other surrogates continue to say the president-elect is looking at the idea. Reince Preibus, who has been tapped as Trump’s chief of staff, recently said on NBC’s Meet the Press that “I’m not going to rule out anything,” but “we’re not going to have a registry based on religion.”
 
Even without outright legal targeting of Muslims, if President Trump continues to make public statements against the Islamic faith, the GCC states may react with alarm. Several of those countries, including big customers like the UAE and Saudi Arabia, began looking at dual-sourcing key military items from Europe following the Obama administration’s decision to cut off weapon sales to Egypt following a 2013 coup, and that backup plan could again be in play.
 
  “The Gulf states previously sought other arms suppliers as a means to send a message to the Obama administration about their unhappiness over US policy and their relationship with Washington,” said Becca Wasser of the think tank Rand. “Many of these arms sales – particularly the French and Russian sales – come without strings attached, which is attractive to many of the GCC countries. Furthermore, arms sales have been a means for the Gulf states to pursue closer relationships with other countries, perhaps as a hedge against a perceived abandonment by Washington.”
 
European nations would certainly welcome that, and both China and Russia would happily increase their sales to the region if offered the shot. However, Wasser notes the Gulf nations may actually find they can do business with America more easily under Trump than with Obama.
 
  “The Obama administration has tied human-rights issues to arms sales, for example conditioning Bahrain’s purchase of F-16 fighter jets to progress on human rights,” she said. “A Trump administration is more likely to adopt a more transactional approach to arms sales as they support the US bottom line and add to the Gulf states’ ability to ensure their own security.”
 
European Relations
 
Another potential danger zone for FMS deals is Europe, particularly in the East. Over the last year, President-elect Trump has made comments many interpreted as threats to NATO nations that they would not be protected unless they invest more in defense.
 
US industry may find itself regretting such a move, however. Royal United Services Institute analyst Elizabeth Quintana said in a post-election note that pushing Europe to spend more on defense means those nations may invest more internally, rather than buying from across the ocean.
 
“The US will need to accept that the Europeans, Japanese, Koreans and the Gulf States will look to build and protect their own defence industries as they rebuild their national capabilities, which will hurt US industrial interests,” Quintana said.
 
Trump’s campaign threat to withhold help to NATO allies should encourage Europe to get organized in the defense sector, said François Lureau of consultancy EuroFLconsult and former French defense-procurement official. He noted that a US policy chill would help stimulate support for the European Commission’s plan to set up a budget for defense research and development.
 
Trump’s arrival could also push France and Germany – the two largest EU military powers once Britain leaves the European Union – to cooperate more on programs, Lureau said.
 
European industrial cooperation led to the creation of Airbus, MBDA and the Nexter-KMW joint venture. That cross-border European drive could extend to German vehicle builder Mannesmann acquiring Renault Trucks Defense from Volvo.
 
Each European country might be tempted to seek strong bilateral ties with the US but there is need for greater European “solidarity,” Lureau said. Germany is unlikely to hit the NATO target of spending 2 percent of gross domestic product on defense, as that was “politically impossible,” he said, and France lacks the means to do so.
 
France can pursue defense cooperation with the UK through the bilateral Lancaster House treaty, but Paris could still pursue cooperation with Berlin on arms programs and the battle group.
 
Eastern Europe, however, might attempt to strengthen political ties to Washington through arms deals, particularly given concern over Trump’s friendly relations to Russian President Vladimir Putin, a French executive. Poland, for instance, could still order a multibillion-dollar US missile defense system in a bid to boost ties with Washington.
 
Berenson said to keep an eye on Poland as a potential bellwether for how NATO allies might respond to a Trump administration’s rapprochement with Russia.
 
  “Poland has not really been in the mix of European defense industry. I think it generally gravitates pretty strongly to the United States, but it is also on the front line of the NATO conflict with Russia,” Berenson said. “Seeing how Poland will accept the Trump administration policy is going to be very telling about how the rest of the continent moves.”
 
There are smaller-scale sales of French Mistral missiles and the Swedish Carl Gustav weapon in Eastern Europe, but countries in the region could seal big-ticket deals with the US in the pursuit of closer political links, the industry executive said. Apart from the Airbus MultiRole Tanker Transport and A400M airlifter, there are no new cooperative European programs. Cybersecurity, however, could be an area for heavy European investment.
 
FMS Reform Under Trump
 
One positive sign for foreign sales under Trump is that there appears to be an interest in continuing export-control reform efforts that are currently underway.
 
Nathan said that officials from AIA met with Trump and part of his team over the summer to express where the aerospace industry stands on a number of issues, including regulatory reform. He added that there have also been early discussions with members of the transition team about export control.
 
Berenson also said he had heard from individuals involved in the Trump transition, and that they were “surprisingly focused on reforming the FMS and ITAR approval processes. I think they get the need to streamline and smooth these processes which have been very immune to reform over the years. So there could be a real move to try and shake up how these programs are managed to get them moving faster, which is something industry and our partners overseas have wanted for a long time.”
 
And, Nathan noted, there is already momentum towards making FMS deals easier in Congress, something he predicts a Trump administration would agree with.
 
  “I think there is all the positive indicators out there, not because of anything the Trump administration has said relative to an Obama administration but because the facts are the facts and the trends are the trends,” he said. “Doing security cooperation properly is a bipartisan affair, because it’s the right thing to do given the challenges we face out there.”
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COMMCOMMENTARY

COMM_a18. M.A. Goldstein: “Recommendations for the Next Reform”

(Source:
Defense Trade Law Blog
. Reprinted by permission.)
 
* Author:  Matthew A. Goldstein, Esq.,
matthew@goldsteinpllc.com
, 202-550-0040
 
The complexity of U.S. export control regulations is at an all-time high. If you had the ability to decide the next administration’s export control reform agenda, what would it be?
 
PAST REFORMS
 
U.S. export controls are principally administered by the State Department under the International Traffic in Arms Regulations (“ITAR”) and the Commerce Department under the Export Administration Regulations (“EAR”). Over the years, private industry, academia, think tanks, and even the government have criticized these regulations as outdated and overly complex.
 
President Clinton’s EAR Simplification (1996)
 
The Clinton Administration made a significant attempt to simplify the regulations in 1996 when it issued a 328 page rule that restructured and reorganized the EAR, clarified regulatory language, and generally made the regulations more user-friendly. [FN/1] This rule, which was issued shortly after the end of COCOM and beginning of the Wassenaar Arrangement, established much of the modern day EAR.
 
President Bush’s NSPD-56 on Defense Trade Controls (2008)
 
Responding to industry complaints of delays in State Department license and commodity jurisdiction processing, President George W. Bush issued National Security Presidential Directive 56 (“NSPD-56”) on Defense Trade Reform in 2008. NSPD-56 focused on the State Department’s failure to timely process license applications and commodity jurisdiction requests and required that the State Department complete such reviews within 60 days. However, in implementing NSPD-56 requirements, the State Department created broad exceptions to the license review deadline and it often exceeds the commodity jurisdiction review deadline.
 
President Obama’s Export Control Reform Initiative (2010-2016)
 
President Obama’s Export Control Reform Initiative (“ECR”) promised to merge the ITAR U.S. Munitions List (“USML”) and EAR Commerce Control List (“CCL”) into a single list, to establish a single agency to administer the single list and issue licenses for exports, and to create a single information technology platform to accept and process license requests. The reform updated export control lists and transferred certain COMSAT items to the CCL. But, with over 100 Federal Register notices, it also vastly increased the complexity of the regulations, and transferred many purely military articles from the USML to the CCL without establishing a single control list, single agency or a single information technology platform. 
 
RECOMMENDATIONS
 
Below are Defense Trade Law Blog’s Top 5 recommendations for the incoming Trump Administration on how to fix the U.S. export control system in the next reform.
 
(1) Push Congress to reauthorize the Export Administration Act.
 
The Export Administration Act of 1979 served as authority for the EAR, but expired in 2001. Several attempts at reauthorization failed and, albeit the time, energy, and millions of dollars spent on reform, legislation to reauthorize the Export Administration Act remains far from sight. In the meantime, the Commerce Department continues to administer the EAR under the authority of the International Emergency Economic Powers Act (“IEEPA”).

IEEPA was not intended to serve as long-term authority for the EAR. Although courts recognize it as authority for agency enforcement of EAR violations, IEEPA does not address control lists, multilateral regime commitments, reasons for control (i.e., national security, foreign policy, and short supply), foreign availability determinations, limitations on the use of unilateral “foreign policy” based controls, types of licenses or license processing. These are all necessary elements of the U.S. export control framework previously addressed by the Export Administration Act.
 
(2) Transfer military items back to the ITAR where they belong.
 
The ECR transfers of defense articles from the ITAR USML to the EAR CCL created the lion’s share of confusion that characterizes the post-ECR U.S. export controls system. The new rules applicable to these items require interpretation of “specially designed”, a complex multilayered term; require companies that formerly only needed to comply with one set of regulations to comply with two sets of complex regulations; and provide Commerce Department control over many military items that often still require State Department authorization to export depending on the circumstances of related activities (e.g., part of Foreign Military Sale, associated defense services, associated brokering of foreign defense services, etc.).
 
Many companies have not yet reclassified their products post-ECR. Moreover, several years after the start of ECR, the State Department’s Defense Trade Advisory Group (“DTAG”), a Federal Advisory Committee Act committee comprised of industry experts in the area of export controls, reported that the reclassifications of hardware and technical data required by ECR is still problematic for industry and that significant expenditures of time, money, and company resources continue to tax industry in reclassifying products. [FN/2]
 
The Obama Administration claimed that the USML to CCL transfers were necessary to increase interoperability with NATO allies. More specifically, it claimed that the Arms Export Control Act (“AECA”), the legislative authority for the ITAR, does not permit the creation of country-based exemptions in the ITAR, and that the list transfers were therefore needed to allow use of EAR country-based license exceptions in exports of parts and components to NATO countries and other U.S. allies. But AECA Section 38(j) expressly allows the President to create country-based ITAR license exemptions. While Section 38(j) also requires bilateral defense trade treaties, members of Congress proposed legislation waiving this requirement in a bipartisan measure, which passed by the House and was pending in the Senate at the start of the ECR. [FN/3] But the Obama Administration pushed for its list transfers instead.
 
Ironically, the USML to CCL transfers now present significant obstacles to interoperability with NATO member countries and other allies. For instance, before ECR, U.S. companies supporting allies could simply apply for a license from the State Department for exports of parts and components for use in tanks, jetfighters, and other inherently military defense articles. Following ECR, U.S. suppliers must now go line-by-line through long part number lists and work with a multitude of manufacturers to determine which items are described on the USML and which are described on the CCL-subject to million dollar fines for any mistakes made in the process.
 
Even when able to complete the classifications in time to navigate potential ITAR proposal and brokering restrictions and enter a successful response to a foreign government request for quote, U.S. suppliers must often obtain separate licenses from the Departments of State and Commerce for exports under the same contract. And while the revised regulations may permit the export of EAR items under a State Department license in certain narrow circumstances, these circumstances are largely outside the control of U.S. suppliers because the order of shipments is most often determined by customer purchase orders.
 
Behind the scenes, Defense Department officials are reportedly seeking reversal of the USML to CCL list transfers. Such reversal is needed and would be much less burdensome on industry than continuing to live under the ECR USML to CCL transfers for a variety of reasons:
 
  – The return of military items to the USML does not require Congressional approval and can be performed by executive order;
  – The military nature of most items to be transferred back to the USML is obvious;
  – Many companies have not yet reclassified their items under ECR;
  – Most companies that have already reclassified items maintain records of how their items were classified before the ECR list transfers;
  – The agencies can recognize existing licenses for exports of transferred items; and
  – The long-term benefits of clarity in jurisdiction, consistency with multilateral regime commitments, and other simplifications that result from controlling military items on a “munitions list” outweighs the inconveniences of reversing the ECR list transfers.
 
In conjunction with returning military items to the USML, the Trump Administration can also follow-up on Congress’ earlier offer to amend AECA Section 38(j) to allow country-based exemptions for exports of parts, components, accessories, and attachments to U.S. allies without the need for bilateral defense trade treaties.
 
(3) Replace “specially designed” with simple terms.
 
Instead of following the simple definition of “specially designed” used in the Missile Technology Control Regime and by members of the Wassenaar Arrangement, the Obama Administration created its own multilayered definition for “specially designed” and inserted it throughout revised control listings. Public comments to proposed notices of rulemaking described the definition as “overly complex, even for large sophisticated businesses”; “intrinsically complicated and inconsistent with the basic concept of a definition”; “complicated and imprecise”; and “overly complex and confusing.” [FN/4]
 
Today, the ITAR definition for “specially designed” is over 900 words long. [FN/5] The EAR definition, with explanatory notes, is over 1,500 words long. [FN/6] These definitions are so complex that the Departments of State and Commerce each developed online tutorials on use of the term; export compliance practitioners offer assistance in applying the term as a key service area; trainers offer seminars devoted entirely to helping industry understand the term; and testimony before Congress warned that reclassifications under the definition of “specially designed” is financially prohibitive for many small businesses and requires information that is often hard to obtain. [FN/7]
 
Perhaps most significant in evaluating the ECR definition of “specially designed,” the DTAG found that application of the term leads to inconsistent results, even among highly experienced export control professionals. [FN/8]
 
In conjunction with returning military items to the USML, the Trump Administration should replace the specially designed term with common words given their ordinary meaning. Industry can then look to the dictionary for definitions that stay consistent over time and do not vary among agency officials.
 
(4) Eliminate undefined export controls on emerging technology.
 
Under the Due Process Clause of the United States Constitution, the government, not private industry, should bear the risk of uncertainty arising from the government’s failure to clearly describe what is controlled. Nevertheless, through ECR, the Obama Administration significantly expanded unenumerated controls on emerging technologies by expanding the scope of USML Category XXI, which subjects “Articles, Technical Data, and Defense Services Not Otherwise Enumerated” to ITAR control; and by creating new Export Control Classification Number (“ECCN”) 0Y521 on the CCL to catch emerging technologies not yet enumerated on the CCL.
 
Prior to the ECR revisions, the scope of Category XXI was applied to articles, technical data, and services which (1) had substantial military applicability and (2) which had been specifically designed, developed, configured, adapted, or modified for military purposes. The Obama Administration removed these two qualifiers and, following other ECR changes to the State Department’s policy on designating defense articles and services on the USML at ITAR Section 120.3, the government can now apply Category XXI to many emerging technologies regardless of design intent, if the government determines the technology provides a critical military or intelligence advantage such that it warrants AECA control.
 
The Obama Administration also created 0Y521 to serve as a holding place in the CCL similar to Category XXI that can catch items warranting Commerce Department control, but that are not yet enumerated in an existing ECCN. Pursuant to the final rule implementing the control, 0Y521 classification determinations focus on whether an item provides a significant military or intelligence advantage to the U.S. or is justified for foreign policy reasons. Upon such a determination, the classifications are made through Commerce Department Federal Register notices, which are followed by descriptions of classified items at Supplement No. 5 to the CCL.
 
The post-ECR Category XXI and 0Y521 controls are much broader and open ended than previous catchalls, allowing the government to apply tight export control restrictions on any technologies that officials perceive as providing a critical military or intelligence advantage-a determination that is entirely in the eyes of the beholder. Worsening this situation, the only way to know if technology is subject to Category XXI is through a commodity jurisdiction determination or other official letter from the State Department. These unique compliance risks raise significant Constitutional issues. They also reduce the certainty necessary to cost-benefit analyses of international investment and collaborations in emerging technologies.
 
(5) Clearly establish the Fundamental Research Exclusion.
 
Issued by the Reagan Administration in 1985, National Security Decision Directive 189 sets forth longstanding U.S. Government policy limiting controls on “fundamental research,” defined by the Directive as “basic and applied research in science and engineering, the results of which ordinarily are published and shared broadly within the scientific community, as distinguished from proprietary research and from industrial development, design, production, and product utilization, the results of which ordinarily are restricted for proprietary or national security reasons.”
 
The scope of ITAR and EAR exclusions from control for fundamental research have confused academia and industry for decades-a problem worsened by inconsistent agency guidance and recent ECR amendments.
 
The State Department advised academia that the ITAR Fundamental Research Exclusion only covers the publication of the results of fundamental research and does not cover disclosures of information to foreign students in the course of research involving ITAR technical data or defense articles because such disclosures constitute defense services. Then, in a proposed ECR rule amending the ITAR definition of “Public Domain” (under which the ITAR Fundamental Research Exclusion exists), the State Department stated that it requires U.S. government agency approval before any publications of ITAR-controlled technical data in the public domain. [FN/9] As a result, it is unclear what, if anything, the ITAR Fundamental Research Exclusion actually covers.
 
ECR amendment of the EAR Fundamental Research Exclusion has also set the stage for significant confusion in application of the exclusion. Rather than select from a variety of established agency definitions for the “basic” and “applied” research-key terms used by the State Department, Defense Department, National Science Foundation and other agencies in defining “fundamental research”-ECR altogether removed these key terms from the EAR definition of fundamental research. [FN/10]
 
The incoming Trump Administration should require the Departments of State and Commerce to commit to the Fundamental Research Exclusion by amending the regulations to adopt consistent definitions for basic and applied research and by clearly stating on the regulations when, if ever, the exclusions apply to information disclosed to researchers for use in performing of research, information disclosed to researchers in the course of performing research, and information that results from the research.
 
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  [FN/1] 61 Fed. Reg. 12,714 (March 25, 1996).
  [FN/2] See DTAG ECR Working Group White Paper (October 28, 2015), Documents and Presentations from October 29, 2015 DTAG Plenary. Available at here.
  [FN/3] The Foreign Relations Authorization Act for Fiscal Year 2013 (H.R. 6018) proposed to amend the Arms Export Control Act by adding “38(l) SPECIAL EXPORT LICENSING FOR UNITED STATES ALLIES,” which provided:
 
“The President may establish special licensing procedures for the export of replacement components, parts, accessories, attachments, equipment, firmware, software or technology that are not designated as major defense equipment or significant military equipment to the North Atlantic Treaty Organization, any member country of that Organization, or any other country described in section 36(c)(2)(A) of this Act.”
 
The bill passed the House on July 17, 2012 and was pending at the Senate at the time ECR provisions were added to the National Defense Reauthorization Act for Fiscal Year 2013.
  [FN/4] See e.g. Public Comments to “Specially Designed” Definition RIN 0694-AF66 from: Tech America (“the “catch and release” approach is overly complex, even for large sophisticated businesses.”); Semiconductor Equipment and Materials International (“This structure is intrinsically complicated and inconsistent with the basic concept of a definition – which should simply specify the meaning of a term.”); Alliance for Network Security (“The definition published in the Proposed Rule is complicated and imprecise.”); ION Geophysical (“This third proposed definition of “specially designed” is again overly complex and confusing.”).
  [FN/5] 22 C.F.R. § 120.41.
  [FN/6] 15 C.F.R. § 772.1.
  [FN/7] “Export Control Reform: Challenges for Small Business? (Part I),” Subcommittee on Agriculture, Energy and Trade, February 10, 2016. Available at here.
  [FN/8] See DTAG ECR Working Group White Paper (October 28, 2015), supra
  [FN/9] 80 Fed. Reg. 31,525, 31,528 (June 3, 2015).
  [FN/10] 81 Fed. Reg. 35,586, 35,589 (June 3, 2016).

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

MSEX/IM MOVERS & SHAKERS

MS_a19
. Monday List of Ex/Im Job Openings: 116 Jobs Posted

(Source: Editor)  


 
Published every Monday or first business day of the week.  Send openings in the following format to
apbosch@fullcirclecompliance.eu
.
 
COMPANY; LOCATION; POSITION TITLE (WEBLINK); CONTACT INFO; REQ ID

#” New listing this week:

 

* Amazon; London, UK;
Senior Trade Compliance Program Manager (M/F)
; Requisition ID: 429019

* Amazon; Seattle WA;
Compliance Investigator
; Requisition ID: 432560
* Amazon; Seattle WA;
Compliance Investigator
; Requisition ID: 432561
* Amazon; Seattle WA;
Compliance Investigator
; Requisition ID: 432564
* Amazon; Seattle WA;
Sanctions Compliance Specialist
; Requisition ID: 431298

* Amazon; Seattle WA;
NA Compliance Analyst; Requisition ID: 256357

* Amazon; Seattle WA;
Prime Air Trade Compliance Program Manager; Requisition ID: 395658

* Amazon; Singapore;
Sr. Trade Compliance Manager
; Requisition ID: 441734

* Aramco Services Company; Houston TX;
Trade Compliance Specialist
; Requisition ID: 295802

# AT&T; Dallas TX;
Global Trade Compliance Manager; Requisition ID: 1661045


* Bendix; Elyria OH;
Trade Compliance Lead
; Requisition ID: 13130

* Boeing; Bristol, UK;
Trade Control Specialist
; Requisition ID: 1600018482


* Boeing; Englewood, CO;
Trade Specialist 3
; Requisition ID: 793846
* Boeing; Neu-Isenburg, Germany;
Trade Specialist 4 m/f
; Requisition ID: 760960
*
Bose Corporation; Framingham MA;
Senior Trade Compliance Analyst
; Requisition ID: R1867

* Bunn-O-Matic Corporation; Springfield IL;
Global Logistics Analyst
;
employment.openings@bunn.com
; GO1678

* Continental; Manila,
Philippines;
Head of Transportation and Foreign Trade Compliance
; Requisition ID: 42475BR


* Coriant; Naperville IL;
Sr Mgr of Global Trade Compliance
; Requisition ID: 11353

* Crane Currency; Nashua NH;
Import/Export & Logistics Manager
; Requisition ID: 2016-1459
* CSL Behring; King of Prussia PA;
Global Trade Compliance Manager
; Requisition ID: R-031549

*
DRS Technologies; Dayton OH;
Senior Trade Compliance Specialist
III
; Requisition ID: 61027

* DRS Technologies; Germantown MD;
Senior Trade Compliance Manager
;
Requisition ID: 54749

* Edgewell Personal Care; Milford CT; 
FTA Export Compliance And Security Lead; Requisition ID: NAM00808

# Emerald Performance Materials; Vancouver WA;
Manager, North America Logistics

* Esterline Technologies Corporation; Bellevue WA;
Audit Manager – Compliance
; Requisition ID: 8215BR

* Esterline Technologies Corporation; Bellevue WA;
Sr. Trade Compliance Manager – Sensors & Systems (Engineering)
; Requisition ID: 8791BR
# Esterline Technologies Corporation; Brea, CA;
Logistics Coordinator
; Requisition ID:
8887BR

* Esterline Technologies Corporation; Brea CA;
Trade Compliance Manager; Requisition ID: 7333BR

* Esterline Technologies Corporation; Paso Robles CA;
Trade Compliance Manager
; Requisition ID: 6148BR

# Esterline Technologies Corporation; Tijuana, Mexico;
Import-Export Specialist
; Requisition ID: 8617BR

* Expeditors; Bangkok, Thailand; Regional Trade Compliance Manager – Indochina & Philippines
* Export Solutions Inc.; Melbourne FL; 
Trade Compliance Specialist II

info@exportsolutionsinc.com

* Facebook; Menlo Park CA;
Head of Global Trade Compliance Operations

* FD Associates; Senior Export Compliance Associate,
jobs@fdassociates.net

* FLIR Systems; Arlington VA;
Director of Defense Trade Licensing & Compliance

* FLIR; Arlington VA;
Sr. Defense Trade Licensing & Compliance Analyst
; Requisition ID: 7924
* FLIR; Billerica MA; 
Sr. Defense Trade Licensing & Compliance Analyst
;
Requisition ID: 8008

* General Dynamics; South Wales, UK;
Senior Trade Compliance Officer
; Requisition ID: 6079

# Google; San Francisco CA;
Associate Counsel, Customs Compliance

* Graco; Rogers MN;
Trade Compliance Supervisor 

* Henderson Group Unlimited Inc.; Wash DC;
Commodities Jurisdiction Analyst
;
alannasmith@hendersongroupinc.net


* Ingersoll Rand; San Diego, CA;
Trade Compliance Manager (Trilingual: English, Spanish, and Portuguese)
; Requisition ID: 1610632

* Intel; Santa Clara, CA;
Global Export Compliance Specialist
; Requisition ID: JR0814909

* Jacobs; Houston TX;
Trade Compliance Coordinator
; Requisition ID: REF00008A

* Lam Research Corporation; Fremont CA:
Foreign Trade Analyst 6
; Requisition ID: 12079BR

* Leica Biosystems; Nußloch, Germany;
Trade Compliance Manager (Import-Export)
; Requisition ID: COR000633

* Linde; Stewartsville NJ;
Compliance Administrator; Requisition ID: 916130

* Lumber Liquidators; Toano VA;
Compliance Auditor
; Requisition ID: 913

* Lutron; Coopersburg PA;
Trade Manager-Export
; Requisition ID: 2926

* Lutron; Coopersburg PA; Trade Compliance Coordinator; Requisition ID: 2834

* MACOM; Lowell MA;
Trade Compliance Analyst 1
; Requisition ID: 1529

* Medtronic; Heerlen, The Netherlands;
Trade Compliance Analyst
; 16000DYY

* Meggitt PLC; Los Angeles CA;
Export Control/Trade Compliance Administrator
; Requisition ID: 22591

# Meggit PLC; Los Angeles CA;
Trade Compliance Officer
# Meggit PLC; Simi Valley CA;
Trade Compliance Administrator

* Meggitt Control Systems; North Hollywood CA;
Trade Compliance Officer
;
jenn.avritt@meggitt.com
; Requisition ID: 23720

* Meggitt Advanced Composites Limited; Shepshed, UK;
Trade Compliance Officer
; Requisition ID: 22122

* Mentor Graphics; Fremont CA;
Senior Global Trade Compliance Manager
; Requisition ID: 5129
* Merck KGaA; South West England, UK;
Trade Compliance Specialist
; Requisition ID: 153405

* Microsoft; Redmond WA;
Trade Director, Regulatory Compliance & Standards
;
rybeli@microsoft.com
; Requisition ID: 973167

* Moog; East Aurora NY;
Export Compliance Manager
;
anihill@moog.com
; Requisition ID: 161913
# North Dakota State University; Fargo ND; 
Export Control Administrator
; Requisition ID: 1600266

* Northrop Grumman T
echnology Services Sector, Advanced Defense Services (ADS) Division
; International Posting (Saudi Arabia);
Manager International Trade Compliance 1
(Saudi Arabia)
; Requisition ID: 16003577

* Northrop Grumman Corporation; El Segundo CA;
International Trade Compliance Analyst 4
; Requisition ID: 16024349 
 

* Northrop Grumman Corporation; Falls Church VA;
International Trade Compliance Analyst 3/4
; Requisition ID: 16026961

* Northrop Grumman Corporation; Linthicum MD;
International Trade Compliance Analyst 3
; Requisition ID: 16013233

* Northrop Grumman Corporation; Redondo Beach CA;
International Trade Compliance Analyst 4
; Requisition ID: 16024309

* Northrop Grumman Corporation; Rolling Meadows IL;
International Trade Compliance Analyst 2
; Requisition ID: 16024684


* Northrop Grumman Corporation; Rolling Meadows IL;
International Trade Compliance Analyst 3
; Requisition ID: 16023994
* Pall Corporation; Portsmouth, UK;
Trade Compliance Specialist

; Requisition ID: SHA000201 

* Parexel; Berlin, Germany;
Trade Compliance Specialist
; Requisition ID:
pare-10055069
# Parexel; Buenos Aires, Argentina;
Trade Compliance Specialist
; Requisition ID: pare-10055899
# Parexel; Taipei, Taiwan;
Global Trade Compliance Specialist
; Requisition ID: pare-10055899

* PerkinElmer; Krakow, Poland or Zaventem, Belgium;
Regional Trade and Compliance Specialist – Belgium or Poland based

* PerkinElmer; Waltham MA;
International Trade Compliance Associate, Informatics


* Raytheon; Arlington VA;
Export Licensing Manager I
; Requisition ID: 88665BR
*Raytheon; Arlington VA;
Export Licensing Manager I
; Requisition ID: 87321BR
* Raytheon; El Segundo CA;
Import Control & Compliance Administration
; Requisition ID: 87699BR

* Raytheon; Fullerton CA;
Global Trade Compliance Manager
; Requisition ID: 85521BR

* Raytheon; Indianapolis IN;
Principal SC Compliance Specialist
; Requisition ID: 84932BR

* Smith and Wesson; Springfield MA;
International Sales Administrator
; Requisition ID: SCB-1223
* Solenis; Wilmington, DE;
Global Trade Compliance NAFTA Specialist
; Requisition ID: 2016-5783

* SpaceX; Wash DC;
Counsel – Export Compliance Officer


* State Department; Wash DC;
Supervisory Compliance Specialist; Requisition ID: HRSC/T/PM-2017-0003

* Tecomet; Lansing MI;
Export Control Coordinator – EAR/ITAR
; Requisition ID: 1539


* TE Connectivity; Middletown PA;
Senior Director Global Trade Services
; Requisition ID: 2016-73314

* Tenneco; Edenkoben, Germany;
Global Trade Compliance Manager (m/w)
; Requisition ID: 176871-846

* Tesla Motors; Fremont CA;
Global Trade Compliance Manager
; Requisition ID: 40738 

* Textron Systems; Wilmington MA;

Principal Export Compliance Analyst
; Requisition ID: 242857


* Thales; Piscataway NJ;
Manager, Trade Compliance
; Requisition ID: R0012077

* Thales; Piscataway NJ;
Trade Compliance Specialist/Facility Security Officer; Requisition ID: R0012102

* ThermoFisher Scientific; Madison WI;
Import/Export Compliance Coordinator
; Requisition ID: 41440BR

* ThermoFisher Scientific; Matamoros, Mexico;
Import/Export Supervisor
; Requisition ID: 39750BR

* ThermoFisher Scientific; Shanghai, China;
Compliance Director, Greater China
; Requisition ID: 38520BR

* Toyota; Dallas TX;
Export Control Analyst
; Requisition ID: TMS003DS

* Tractor Supply Company; Brentwood TN;
Customs Process Manager
;
nknott@tractorsupply.com
; Requisition ID: 16-986

* Troy Corporation; Florham Park NJ;
Global Trade and Compliance Manager
; Requisition ID: 306


* United States Pharmacopeia; Rockville MD OR Frederick MD;
Trade Compliance Specialist
;
Meaghan Ireland –
mci@usp.org
;
Requisition ID: 709-679

* United Technologies Corporation, UTC Aerospace Systems; Charlotte NC;
Manager, ITC-Authorizations
; Requisition ID: 22846BR  

* United Technologies Corporation, UTC Aerospace Systems; Charlotte NC;
* United Technologies Corporation, UTC Aerospace Systems; Charlotte NC;
International Trade Compliance Auditor; Requisition ID:
34285BR
* United Technologies Corporation, UTC Aerospace Systems; Charlotte NC;
* United Technologies Corporation, UTC Aerospace Systems; Charlotte NC;
* United Technologies Corporation, UTC Aerospace Systems; Charlotte NC;
Program Manager, Customs; Requisition ID:
31331BR


* United Technologies Corporation, UTC Aerospace Systems; Phoenix AZ; Sr Analyst, International Trade Compliance; Requisition ID: 30058BR 


* University of Florida; Gainesville FL; Asst. Director Research Admin. – Export Control; Requisition ID: 499437 

* XPO Logistics; Greenwich CT;
Global Trade Compliance Analyst


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

ENEDITOR’S NOTES

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

EN_a311
. 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: 25 Nov 2016: 81 FR 85138-85147: Commerce Control List: Removal of Certain Nuclear Nonproliferation (NP) Column 2 Controls  

  
*
FOREIGN ASSETS CONTROL REGULATIONS (OFAC FACR)
: 31 CFR, Parts 500-599, Embargoes, Sanctions, Executive Orders
  – Last Amendment: 4 Nov 2016: 81 FR 76861-76863: Amendments to OFAC Regulations To Remove the Former Liberian Regime of Charles Taylor Sanctions Regulations and References to Fax-on-Demand Service 
 
*
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: 21 Nov 2016 (effective 31 Dec 2016): 81 FR 83126-83135: Amendment to the International Traffic in Arms Regulations: Revision of U.S. Munitions List Categories VIII and XIX
  – The only available fully updated copy (latest edition 21 Nov 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 on 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 8,000 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 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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