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16-1213 Tuesday “The Daily Bugle”

16-1213 Tuesday “Daily Bugle”

Tuesday, 13 December 2016

TOPThe Daily Bugle is a free daily newsletter from Full Circle Compliance, containing changes to export/import regulations (ATF, Customs, NISPOM, EAR, FACR/OFAC, FTR/AES, HTSUS, and ITAR), plus news and events. Subscribe 
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  1. President Posts Determination and Waiver Concerning Support of U.S. Special Operations to Combat Terrorism in Syria 
  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. EU Amends Restrictive Measures Concerning Democratic Republic of the Congo 
  1. Expeditors News: “CBP Announces ACE Transitions”
  2. ST&R Trade Report: “Tax Break on Imports Could be Eliminated Under GOP Proposal”
  1. C. Greene, C.N. Stinebower & C. De Jager: “U.S. and UN Take Strong Action Against North Korea”
  2. M. Miller Proctor: “Companies Face New Process in Disclosures of Potential Export Violations”
  3. M. O’Kane: “South Korea Introduces New Submarine and Ballistic Missile Export Controls”
  4. R.C. Thomsen II, A.D. Paytas & M.M. Shomali: “Wassenaar Plenary 2016 Dual Use List Review”
  5. Gary Stanley’s ECR Tip of the Day
  1. Bartlett’s Unfamiliar Quotations 
  2. Are Your Copies of Regulations Up to Date? Latest Changes: ATF (15 Jan 2016), Customs (12 Dec 2016), DOD/NISPOM (18 May 2016), EAR (5 Dec 2016), FACR/OFAC (4 Nov 2016), FTR (15 May 2015), HTSUS (30 Aug 2016), ITAR (5 Dec 2016) 

EXIMEX/IM ITEMS FROM TODAY’S FEDERAL REGISTER

EXIM_a1

1. President Posts Determination and Waiver Concerning Support of U.S. Special Operations to Combat Terrorism in Syria

(Source: Federal Register)
 
81 FR 90183-90184: Presidential Determination and Waiver Pursuant to Section 2249a of Title 10, United States Code, and Sections 40 and 40A of the Arms Export Control Act to Support U.S. Special Operations to Combat Terrorism in Syria
 
Memorandum for the Secretary of State [and] the Secretary of Defense
 
By the authority vested in me as President by the Constitution and the laws of the United States, including section 2249a of title 10, United States Code, sections 40 and 40A of the Arms Export Control Act (AECA) (22 U.S.C. 2780 and 2781), and section 301 of title 3, United States Code, I hereby:
 
  – determine that the transaction, encompassing the provision of defense articles and services to foreign forces, irregular forces, groups, or individuals engaged in supporting or facilitating ongoing U.S. military operations to counter terrorism in Syria, is essential to the national security interests of the United States;
  – waive the prohibitions in sections 40 and 40A of the AECA related to such a transaction; delegate to the Secretary of State the responsibility under section 40(g)(2) of the AECA to consult with and submit reports to the Congress for proposed exports, 15 days prior to authorizing them to proceed, that are necessary for and within the scope of this waiver determination and the transaction referred to herein;
  – waive the prohibitions in section 2249a of title 10, United States Code, to the extent necessary to allow the Department of Defense to carry out such support; and
  – delegate to the Secretary of Defense the responsibility under section 2249a(b)(2) of title 10, United States Code, to notify the appropriate congressional committees at least 15 days before this waiver takes effect.
 
(Presidential Sig.)
THE WHITE HOUSE,
Washington, December 8, 2016

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OGS
OTHER GOVERNMENT SOURCES

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

* Defense Security Service; NOTICES; Agency Information Collection Activities; Proposals, Submissions, and Approvals: National Industrial Security Program Cost Collection Survey [Publication Date: 14 December 2016.]

* Justice; Alcohol, Tobacco, Firearms, and Explosives Bureau; NOTICES; Agency Information Collection Activities; Proposals, Submissions, and Approvals: Records of Acquisition and Disposition, Collectors of Firearms [Publication Date: 14 December 2016.]

* Treasury; Foreign Assets Control Office; NOTICES; Blocking or Unblocking of Persons and Properties [Publication Date: 14 December 2016.]

* U.S. Customs and Border Protection; NOTICES; Quarterly IRS Interest Rates Used in Calculating Interest on Overdue Accounts and Refunds on Customs Duties [Publication Date: 14 December 2016.]

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OGS_a23. Commerce/BIS: (No new postings.)

(Source: Commerce/BIS)
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OGS_a34. State/DDTC: (No new postings.)

(Source: State/DDTC)
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OGS_a45. EU Amends Restrictive Measures Concerning Democratic Republic of the Congo

 
Regulations:
  – Council Regulation (EU) 2016/2230 of 12 December 2016 amending Council Regulation (EC) No 1183/2005 imposing certain specific restrictive measures directed against persons acting in violation of the arms embargo with regard to the Democratic Republic of the Congo
 
Decisions:
  – Council Decision (CFSP) 2016/2231 of 12 December 2016 amending Decision 2010/788/CFSP concerning restrictive measures against the Democratic Republic of the Congo
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NWSNEWS

NWS_a16
. Expeditors News: “CBP Announces ACE Transitions”

 
On December 9, 2016 U.S. Customs and Border Patrol (CBP) released Cargo Systems Messaging Service (CSMS) #16-001005 announcing the deployment date for the final core trade processing capabilities in ACE.
 
According to the notice, “The date for the deployment and mandatory transition of these capabilities will be January 14, 2017.” The core trade processes include:
 
  – Liquidation
  – Drawback
  – Reconciliation
  – Duty Deferral
  – Statements
 
CBP has provided an “ACS to ACE Application Transition Plan” that provides details on the specific details of each transition, this can be found under Guidance on the CBP website.
 
The full CSMS can be accessed here.

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NWS_a2
7. ST&R Trade Report: “Tax Break on Imports Could be Eliminated Under GOP Proposal”

 
Costs associated with imported articles or inputs might no longer be deductible from corporate income taxes under a controversial proposal being developed by congressional Republicans. There are currently few details on how this concept might be implemented, but with the GOP controlling the House, Senate, and White House and intent on passing the most sweeping reforms to the U.S. tax code in 30 years it is likely to see further discussion and refinement. Companies with international supply chains should closely monitor the Sandler, Travis & Rosenberg Trade Report for further developments.
 
A blueprint released by House Ways and Means Committee Chairman Kevin Brady states that all of the United States’ major trading partners raise a significant portion of their tax revenues through value-added taxes that include a border adjustability feature, meaning the tax is rebated when a product is exported and imposed when a product is imported. When trade is conducted between two countries that both have border-adjustable VATs, the effects in both directions are offsetting and the tax costs borne by exports and imports are in relative balance. However, the blueprint states, the U.S. tax system includes no such border adjustability measures, which “amounts to a self-imposed unilateral penalty on U.S. exports and a self-imposed unilateral subsidy for U.S. imports.”
 
The GOP’s draft proposal would make the U.S. corporate tax system more like those of its foreign competitors, which the blueprint states would enable the U.S. to apply border tax adjustments as they do. As a result, products, services, and intangibles imported into the U.S. would be subject to U.S. tax regardless of where they are produced, while exports would not. Congressional Republican leaders appear to see this change as an alternative to President-elect Donald Trump’s threat to impose 35-45 percent tariffs on imports from countries like China and Mexico.
 
Other aspects of the proposed tax reform include lowering the corporate tax rate from 35 percent to 20 percent and allowing U.S.-based companies to repatriate foreign earnings without additional tax cost. The blueprint states that the goal of these changes is to eliminate current tax incentives to move or locate operations outside the U.S. and to improve the global competitiveness of U.S. products, services, and intangibles.
 
Few additional details about the proposed changes, including the possible mechanism for the border adjustments, are yet available. However, tax reform is one of the top priorities of Republican leaders, so further developments are anticipated in the next few months.

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COMMCOMMENTARY

COMM_a18. C. Greene, C.N. Stinebower & C. De Jager: “U.S. and UN Take Strong Action Against North Korea”

* Authors: Carlton Greene, Esq., cgreene@crowell.com, 202-624-2818; Cari N. Stinebower, Esq., cstinebower@crowell.com, 202-624-2757; and Charles De Jager, Esq., cdejager@crowell.com, +32 2-214-2822. All of Crowell & Morning LLP.
 
The months of November and December saw major steps by both the U.S. and the United Nations targeting the Democratic People’s Republic of Korea’s (DPRK) nuclear and ballistic missile programs. First, on November 9, the U.S. Treasury Department’s Financial Crimes Enforcement Network (FinCEN) published a final rule imposing correspondent banking restrictions on U.S. financial institutions in an effort to wall off North Korean banks from the U.S. financial system. Citing ongoing concerns over the DPRK’s ability “to access the international financial system to support its WMD and conventional weapons programs,” the rule exercises FinCEN’s authority under Section 311 of the USA PATRIOT Act to impose so-called “special measures,” requiring covered financial institutions to both prevent North Korean banks from opening correspondent accounts to take steps to ensure that North Korean banks do not indirectly make use of their correspondent relationships with other foreign financial institutions.
 
Second, on November 30, the United Nations Security Council passed United Nations Security Council Resolution (UNSCR) 2321, which imposed additional sanctions targeting North Korea’s government as well as the country’s trade in commodities. The new sanctions aim to cut the DPRK’s coal exports by an estimated 60 percent and ban the export of copper, nickel, silver, and zinc. The resolution requires member states to prohibit persons subject to their jurisdictions from providing public or private support for trade with the DPRK such as export credits, guarantees, and insurance; to close foreign bank offices, accounts, and subsidiaries within the DPRK within 90 days, except as approved by a committee of the council; and to expel from their territory persons working on behalf of DPRK banks or financial institutions located outside the DPRK. It also calls on U.N. member states to limit the number of bank accounts held by DPRK diplomatic missions and consular posts, as well as the number of DPRK diplomats within their respective territories. The resolution imposes asset freezes on 11 individuals and 10 entities, including North Korean banks like Korea United Development Bank and North Korean trading companies like Singwang Economics and Trading General Corporation. The U.S. Ambassador to the United Nations, Samantha Power, estimated that, altogether, the new sanctions would slash the DPRK’s export revenue by at least $800 million dollars per year, or 25 percent of its total export revenues. UNSCR 2321 builds on a previous UNSCR (2270) from March, which imposed several similarly strong measures with respect to the DPRK, most notably requiring member states to inspect cargo transiting their territories originating from or directed to the DPRK.
 
Third, on December 2, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) designated seven individuals and sixteen entities for sanctions, some of which are names from resolution 2321, some of which are unilateral actions by OFAC. Among the latter is OFAC’s designation of Air Koryo, North Korea’s only commercial airline, and the identification as blocked property of 16 of its planes. The Council of the European Union has since issued its own statement on December 12 welcoming UNSCR 2321 and promising that it soon will take steps to implement it.
 
The new FinCEN rule is particularly significant to U.S. banks. Although U.S. financial institutions have been prohibited from maintaining direct relationships with North Korea’s financial institutions since at least March 2016, when Executive Order 13722 prohibited U.S. persons from exporting any goods, services, or technology to North Korea, according to the final rule the DPRK nonetheless has accessed the U.S. financial system “through its use of aliases, agents, foreign individuals in multiple jurisdictions, and a long-standing network of front companies.” The rule targets such indirect access, requiring covered financial institutions to “take reasonable steps to not process a transaction for the correspondent account of a foreign bank in the United States if such a transaction involves a North Korean financial institution.” FinCEN specified that these “reasonable steps” include sending a formal notice to foreign correspondent account holders informing them that they may not allow any North Korean financial institution to use their accounts and implementing risk-based procedures to identify any foreign correspondent accounts that violate this prohibition. To that end, banks must follow up with account holders whenever there is reason to believe that North Korean financial institutions are involved in transactions through the use of aliases or front companies. Foreign correspondent account holders involved in such transactions risk having their accounts terminated.
 
The rule follows FinCEN’s June 2016 Notice of Finding designating the DPRK as a “primary money laundering concern” for its covert use of the financial system to support its nuclear and ballistic missile programs. The Notice of Finding provides insight into the types of activities that U.S. banks should monitor. For instance, it describes how, in 2013, “senior North Korean leadership utilized a . . . front company to open accounts at a major Chinese bank under the names of Chinese citizens, and deposited millions of U.S. dollars into the accounts” before processing transactions through U.S. correspondent accounts. In another example, it recounts how a front company named Leader (Hong Kong) International Trading Limited “cleared at least $13.5 million through correspondent accounts at U.S. banks.” In its final rule, FinCEN urges U.S. banks to use current screening and reporting procedures, such as those used for compliance with economic sanctions programs administered by the Office of Foreign Assets Control (OFAC), to detect such covert transactions.
 
Practical Considerations
 
The final rule and the recent UNSCR increase the pressure on banks to accurately identify and prevent transactions with DPRK financial institutions and their agents. At the same time, the DPRK’s fluid network of foreign companies presents a substantial hurdle to compliance with the rule. As discussed in a recent report by C4ADS, a nonprofit organization dedicated to transnational security issues, the DPRK evades, or quickly responds to, detection of its illicit network by frequently changing the names and ownership structures of its front businesses. To U.S. financial institutions dealing with foreign banks, the DPRK network is therefore often obscured by layers of apparently legitimate operations. In some cases, specialized commercial compliance databases already used in sanctions screening may be able to assist with identifying foreign financial institutions and other parties likely to be dealing with or affiliated with DPRK financial institutions. However, banks providing correspondent access to foreign financial institutions that operate in areas at high risk for DPRK involvement may in special cases wish to seek expert assistance in considering available information, posing questions as needed to correspondent account holders, and determining their obligations under this rule. Given the likely continued increase of U.S. designations and enforcement in this area, it is not unreasonable for banks to expect greater cooperation and partnership with U.S. regulators to recognize and take action against such risks.
 
FinCEN’s final rule is effective on December 9.

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COMM_a29. M. Miller Proctor: “Companies Face New Process in Disclosures of Potential Export Violations”

* Author: Melissa Miller Proctor, Esq., Polsinelli PC, mproctor@polsinelli.com, 602-650-2002.
 
Companies opting to file voluntary disclosures of potential export violations with the State Department’s Directorate of Defense Trade Controls (DDTC) will soon be required to utilize a new process for submitting their disclosures: filing new Forms DS-7787 and supporting documentation in the online Defense Export Control Compliance System (DECCS). This new process will be a sharp departure from the way in which companies have historically approached disclosures, in which they filed detailed, narrative submissions in hardcopy with the DDTC.
 
On November 28th, the Department of State published a Federal Register notice soliciting comments from the public regarding the proposed rollout of the new Form DS-7787 for the submission of voluntary disclosures of violations of the Arms Export Control Act and International Traffic in Arms Regulations. Public comments may be submitted on or before December 28, 2016. See 81 Federal Register 85668 (November 28, 2016).
 
The State Department’s Directorate of Defense Trade Controls (DDTC) is responsible for administering and enforcing the Arms Export Control Act (AECA) and the International Traffic in Arms Regulations (ITAR) which apply to exports, reexports, temporary imports and brokering activities involving defense articles (including technical data) and the provision of defense services. Like other U.S. federal government agencies that regulate imports into and exports from the United States, the DDTC encourages companies to voluntarily disclose potential AECA and ITAR violations. Voluntary disclosures assist the DDTC in determining what, if any, administration action should be taken in cases of AECA and ITAR violations, and may be considered mitigating factors in ITAR enforcement actions. Despite the use of the term voluntary in connection with disclosures, there is an affirmative duty imposed on companies to notify the DDTC of potential AECA and ITAR violations involving:
 
  – The failure to return certain firearms, ammunition, parts, components, accessories and attachments for firearms, body armor and chemical agent protective gear to the United States as required by the temporary export license exemptions in Section 123.17 of the ITAR; and,
  – Unauthorized exports, reexports, temporary imports into the United States, proposals or presentations to sell, transfers or retransfers of defense articles (or the provision of services) involving proscribed countries identified in Section 126.1 of the ITAR.
 
The DDTC may also direct an ITAR registered company or another party to disclose details about a particular transaction based on information the DDTC may have received from partner federal agencies. Further, the failure to report a violation of the AECA or ITAR that harmed U.S. national security and foreign policy objectives may be treated as an aggravating or adverse factor in enforcement actions. Regardless of whether a voluntary disclosure is filed, the DDTC has the authority to refer cases to the Department of Justice for criminal prosecution if warranted. The DDTC will notify the Department of Justice that a voluntary disclosure has been submitted; however, the Department of Justice is not required to give that disclosure any weight. Nonetheless, the DDTC reports that, in Fiscal Year 2015, approximately 1,200 voluntary disclosures were submitted, and the vast majority of those cases were closed without the imposition of any civil penalties.

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COMM_a310. M. O’Kane: “South Korea Introduces New Submarine and Ballistic Missile Export Controls”

 
* Author: Michael O’Kane, Esq., Peters & Peters Solicitors LLP, mokane@petersandpeters.com, +44 (0) 20 7822 7777.
 
South Korea has introduced new export controls on items used in the construction and operation of submarines and submarine-launched ballistic missiles. The controls are intended to cut-off North Korea’s access to the items, and cover areas that are not under the control of a pre-existing multilateral export control system. South Korea has said that it plans to share the new control list with the 41 member states of the Wassenaar Arrangement at the group’s upcoming meeting this month.

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COMM_a411. R.C. Thomsen II, A.D. Paytas & M.M. Shomali: “Wassenaar Plenary 2016 Dual Use List Review”

 
* Authors: Roszel C. Thomsen, Esq., Roz@t-b.com; Antoinette D. Paytas, Esq., Toni@t-b.com; and Maher M. Shomali, Esq., maher@t-b.com. All of Thomsen & Burke, LLP.
 
Introduction

The Wassenaar Arrangement has amended its List of Dual-Use Goods and Technologies and Munitions List. The amendments were approved by the 2016 Plenary, which was held in Vienna on December 6 – 8. The Wassenaar Arrangement is a multilateral export control regime with 41 participating states, including the U.S.

Although the U.S. is a member of the Wassenaar Arrangement, it has not implemented these amendments into the Export Administration Regulations (EAR). It is BIS’s custom to implement these changes between the spring and fall of the following year, and they do not become effective until they are published as a final rule in the Federal Register. For example, the Wassenaar control list changes agreed to at the December 2015 Plenary were not implemented into the EAR until they were published in the Federal Register in September 2016.

We will keep you posted on the EAR implementation. However, we wanted to summarize the significant changes to Categories 3, 4, 5, Part 1 and 6 of the Dual Use List and the Munitions List. This will give you the opportunity to prepare for the future changes to the EAR. You and your affiliates may also export or reexport out of other Wassenaar participating states, including the EU member states, who may implement the amendments prior to the implementation of the changes to the EAR.

Online Resources:

   – 2015 Dual Use List (to review prior text)

Category 3 – Electronics

3.A.1.a:
* Added a new control subparagraph (a.14) – 3.A.1.a.14 controls integrated circuits that perform all of the following:
* Analog-to-digital conversions meeting certain parameters and any of the 
following:
   (1) Storage of digitized data; or
   (2) Processing of digitized data.
* Note 2 to 3.A.1.a was modified to include “Monolithic Microwave Integrated Circuits” (“MMICs”) as integrated circuits. Thus, MMICs need to be evaluated against the radiation hardened parameters in 3.A.1.a.1.
* 3.A.1.a.5 – Analog-to-Digital Converters (ADCs):
   – The entry was updated to change words per second to giga samples per second (GSPS) or mega samples per second (MSPS),
   – the parameters in a.1 through a.3 were increased, and
   – A new note was added, “Forintegrated circuits that contain analogue-to-digital converters and store or process the digitized data, see 3.A.1.a.14”
* 3.A.1.a.7 – A new note was added, “For integrated circuits having field programmable logic devices that are combined with an analogue-to-digital converter, see 3.A.1.a.14.”
 
3.A.1.b:
* Added a new control subparagraph (b.12) and explanatory technical notes – 3.A.1.b.12 controls certain ‘Transmit/receive modules’, ‘transmit/receive MMICs’, ‘transmit modules’, and ‘transmit MMICs’, rated for operation at frequencies above 2.7 GHz.
* 3.A.1.b.1 – There was a change in terminology – ‘electronic vacuum tubes’ was replaced by ‘Vacuum electronic devices’ and a definition note was added, “‘vacuum electronic devices’ are electronic devices based on the interaction of an electron beam with an electromagnetic wave propagating in a vacuum circuit or interacting with radio-frequency vacuum cavity resonators. ‘Vacuum electronic devices’ include klystrons, travelling-wave tubes, and their derivatives.”
* 3.A.1.b.1.a – the phrase ‘Travelling wave tubes’ was replaced by “Travelling-wave ‘vacuum electronic devices'”
* 3.A.1.b.1.a.1, a.2, and a.4: the terms tubes and helix tubes were replaced by devices
* 3.A.1.b.2 was modified from Microwave “Monolithic Integrated Circuits” (MMIC) to “Monolithic Microwave Integrated Circuit” (“MMIC”) and the MMIC is a defined term, “A “monolithic integrated circuit” that operates at microwave or millimeter wave frequencies.”
* 3.A.1.b.2 added a note: For “MMIC” amplifiers that have an integrated phase shifter see 3.A.1.b.12.
* 3.A.1.b.4.f was deleted
* 3.A.1.b.11 – the parameters for frequency synthesizers were modified
 
3.A.1.f which controls certain rotary input type absolute position encoders was modified to include specially designed encoder rings, discs or scales
 
3.A.2.c.4- the control on certain signal analyzers was modified
 
3.A.2.c.5 was eliminated
 
3.B.1.a.1: Was modified from “Equipment capable of producing…” to “Equipment designed or modified to produce…”

3.C.1.d: The exclusionary note was modified to include GaAs, AlGaAs, and InP.

3.E.1: The notes were modified as follows:
* Old text: Note 1 3.E.1. does not apply to “technology” for the “production” of equipment or components specified by 3.A.3.
* New text: Note 1 3.E.1. does not apply to “technology” for equipment or components specified by 3.A.3.
* Old text: Note 2 3.E.1. does not apply to “technology” for the “development” or “production” of integrated circuits specified by 3.A.1.a.3. to 3.A.1.a.12., having all of the following:
  – Using “technology” at or above 0.130 μm; and
  – Incorporating multi-layer structures with three or fewer metal layers.
* New text: Note 2 3.E.1. does not apply to “technology” for integrated circuits specified by 3.A.1.a.3. to 3.A.1.a.12., having all of the following:
  – Using “technology” at or above 0.130 μm; and
  – Incorporating multi-layer structures with three or fewer metal layers.
 
3.E.2: The notes were modified as follows:
* Old text: Note 2 3.E.2. does not apply to “technology” for the “development” or “production” of micro-processor cores, having all of the following:
  – Using “technology” at or above 0.130 μm; and
  – Incorporating multi-layer structures with five or fewer metal layers.
* New text:Note 2 3.E.2. does not apply to “technology” for micro-processor cores, having all of the following:
  – Using “technology” at or above 0.130 μm; and
  – Incorporating multi-layer structures with five or fewer metal layers.
* Old text: Note 3 3.E.2. includes “technology” for digital signal processors and digital array processors.
* New text: Note 3 3.E.2. includes “technology” for the “development” or “production” of digital signal processors and digital array processors
 
3.E.3.g: was amended to change “Electronic vacuum tubes” to “‘Vacuum electronic devices'”
 
Category 4 – Computers

4.A.3.b:
* The Adjusted Peak Performance (APP) control for digital computers was increased from 12.5 Weighted TeraFLOPS (WT) to 16 WT
 
4.D.1.b.1:
* The APP control for software specially designed for digital computers was increased from 6.0 WT to 8.0 WT

4.E.1.b.1:
* The APP control for technology for the development or production of digital computers was increased from 6.0 WT to 8.0 WT
 
4.A.4 and 4.D.4 Intrusion Software Controls:
* The only changes are minor wordsmithing to the chapeaus of 4A5 and 4D4 to omit the terms “operation” and “communication” plus the insertion of the term “command and control.”
* Old text: Systems, equipment, or components therefor, specially designed or modified for the generation, operation or delivery of, or communication with, “intrusion software”.
* New text: Systems, equipment, and components therefor, specially designed or modified for the generation, command and control, or delivery of “intrusion software”.
 
Category 5, Part 1 – Telecommunications
 
5.A.1.b.6:
* Modified the performance parameter for telecommunications items employing digital signal processing to provide ‘voice coding’ output.
  – Changes the output rate from “less than 2,400 bit/s” to “less than 700 bit/s”
 
5.B.1.b.2:
* Deleted controls on equipment for the development of telecommunications equipment employing a coherent optical transmission or detection techniques
 
5.E.1.c.1:
* Deleted controls on technology for equipment employing digital techniques designed to operate at a “total digital transfer rate” exceeding 560 Gbit/s
 
5.E.1.c.2.c:
* Deleted controls on technology for equipment employing coherent optical transmission or detection techniques
 
Category 6 – Sensors and “Lasers”

6.A.3.b.4. Note 3.b.1:
* Changes part of the exemption for imaging cameras from those with an IFOV of at least 10 mrad/pixel to those with an IFOV of at least 10 mrad total
 
6.A.5.a.6.a:
* Increases power output threshold from 200W to 500W for controlled non-“tunable” continuous wave “(CW) lasers” with output wavelength exceeding 975 nm but not exceeding 1,150 nm
 
6.A.5.a.8 – .a.10:
* Creates new wavelength ranges for controlled non-“tunable” continuous wave “(CW) lasers”:
  – Exceeding 1,555 nm but not exceeding 1,850 nm [Power output thresholds unchanged]
  – Exceeding 1,850 nm but not exceeding 2,100 nm [Power output thresholds increased for this range compared to prior controls]
  – Exceeding 2,100 nm [Power output thresholds unchanged]
 
6.A.5.b.8 – b.10:
* Creates new wavelength ranges for controlled non-“tunable” “pulsed lasers”:
  – Exceeding 1,555 nm but not exceeding 1,850 nm [Power output thresholds unchanged]
  – Exceeding 1,850 nm but not exceeding 2,100 nm [Power output thresholds increased for this range compared to prior controls]
  – Exceeding 2,100 nm [Power output thresholds unchanged]
 
Munitions List
 
ML7.a:
 
Expanded the scope of biological agents or radioactive materials controlled under this entry by removing the requirement that they be “adapted for use in war”. This includes those that “produce casualties in humans or animals, degrade equipment or damage crops or the environment”

Conclusion

As we mentioned above, these changes have not been implemented into the EAR. It is BIS’s custom to implement these changes between the spring and fall of the following year, and they do not become effective until they are published in the Federal Register. However, we encourage our clients to review these amendments now to prepare for the future changes in the EAR that will affect their products. You or your affiliates may also be exporting or reexporting U.S.-origin items from Wassenaar member countries, including the EU member states, that may implement the amendments prior to the changes in the EAR next year.

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COMM_a512. Gary Stanley’s ECR Tip of the Day
(Source: Defense and Export-Import Update; available by subscription from
gstanley@glstrade.com
)
 
* Author: Gary Stanley, Esq., Global Legal Services, PC, (202) 352-3059,
gstanley@glstrade.com
 
In defining the term “Empowered Official,” ITAR § 120.25 provides that an Empowered Official must understand the provisions and requirements of the various export control statutes and regulations, and the criminal liability, civil liability and administrative penalties for violating the Arms Export Control Act and the International Traffic in Arms Regulations.
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ENEDITOR’S NOTES

(Source: Editor)

* Phillips Brooks (13 Dec 1835 – 23 Jan 1893, was an American Episcopal clergyman and author, long the Rector of Boston’s Trinity Church and briefly Bishop of Massachusetts, and particularly remembered as lyricist of the Christmas hymn, “O Little Town of Bethlehem”.)
  – “I do not pray for a lighter load, but for a stronger back.”
 
* Heinrich Heine (Christian Johann Heinrich Heine, 13 Dec 1797 – 17 Feb 1856, was a German poet, journalist, essayist, and literary critic.)
  – “Music played at weddings always reminds me of the music played for soldiers before they go into battle.” 

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EN_a214
. 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 
 
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CUSTOMS REGULATIONS
: 19 CFR, Ch. 1, Pts. 0-199
  – Last Amendment: 12 Dec 2016: 81 FR 890375-89381: Electronic Notice of Liquidation 

* 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: 5 Dec 2016: 81 FR 87426-87427: Amendment to the Export Administration Regulations: Removal of Semiconductor Manufacturing International Corporation From the List of Validated End-Users in the People’s Republic of China (effective 5 Dec 2016); and 81 FR 87424-87426: Amendment to the Export Administration Regulations: Removal of Special Iraq Reconstruction License (effective 4 Jan 2017) 

  
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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 
 
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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.
 
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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: 5 Dec 2016 (effective 5 Dec 2016): 81 FR 87427-87430: Corrections & Additions to ITAR Parts 120, 121, 122, 124, 126 and 127
  – The only available fully updated copy (latest edition 9 Dec 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 2016, plus a large Index, 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.  

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EPEDITORIAL POLICY

* The Ex/Im Daily Update is a publication of FCC Advisory B.V., edited by James E. Bartlett III and Alexander Bosch, and emailed every business day to approximately 8,000 subscribers to inform readers of changes to defense and high-tech trade laws and regulations. We check the following sources daily: Federal Register, Congressional Record, Commerce/AES, Commerce/BIS, DHS/CBP, DOJ/ATF, DoD/DSS, DoD/DTSA, State/DDTC, Treasury/OFAC, White House, and similar websites of Australia, Canada, U.K., and other countries and international organizations.  Due to space limitations, we do not post Arms Sales notifications, Denied Party listings, or Customs AD/CVD items.

* 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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