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16-1229 Thursday “The Daily Bugle”

16-1229 Thursday “Daily Bugle”

Thursday, 29 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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[No items of interest noted today.] 

  1. Ex/Im Items Scheduled for Publication in Future Federal Register Editions
  2. Commerce/BIS Posts Notice on Defense Priorities and Allocations System 
  3. State/DDTC Posts Notice on Scheduled Final Rule Concerning ITAR Amendment, the International Trade Data System 
  4. White House Posts Actions in Response to Russian Malicious Cyber Activity and Harassment 
  1. Outdoor Life: “Top 10 Most Important Gun Right Cases of 2016”
  2. ST&R Trade Report: “Three Countries Being Removed from GSP as of Jan 1”
  3. ST&R Trade Report: “Trade Poised to be Key Priority for Incoming Trump Administration”
  1. N. Dahlvang: “2016 Year-End USML Updates”
  2. T. Bromund: “What’s The Obama Administration Up To On Firearms?”
  1. ECTI Presents Export Control Recordkeeping and Compliance Automation, Webinar – 18 Jan 
  2. University of Liverpool Talks International Trade Compliance in London, 24 Jan 
  1. Bartlett’s Unfamiliar Quotations 
  2. Are Your Copies of Regulations Up to Date? Latest Changes: ATF (15 Jan 2016), Customs (20 Dec 2016), DOD/NISPOM (18 May 2016), EAR (27 Dec 2016), FACR/OFAC (23 Dec 2016), FTR (15 May 2015), HTSUS (16 Dec 2016), ITAR (5 Dec 2016) 

EXIMEX/IM ITEMS FROM TODAY’S FEDERAL REGISTER

EXIM_a1


[No items of interest noted today.]
 

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OGS
OTHER GOVERNMENT SOURCES

OGS_a11. Ex/Im Items Scheduled for Publication in Future Federal Register Editions
(Source: Federal Register)

* Justice; Drug Enforcement Agency; RULES; Import and Export Requirements: Controlled Substances, Listed Chemicals, and Tableting and Encapsulating Machines, etc. [Publication Date: 30 December 2016.]

* State; RULES; International Traffic in Arms: International Trade Data System, Reporting [Publication Date: 3 January 2017.]

* State; NOTICES; Designations as Foreign Terrorist Organizations: Lashkar-e-Tayyiba (and Other Aliases) [Publication Date: 30 December 2016.]

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OGS_a22. Commerce/BIS Posts Notice on Defense Priorities and Allocations System

(Source: Commerce/BIS)
 
The Defense Priorities and Allocations System (DPAS) is used to prioritize national defense-related contracts/orders throughout the U.S. supply chain in order to support military, energy, homeland security, emergency preparedness, and critical infrastructure requirements. The DPAS can also be used to provide military or critical infrastructure assistance to foreign nations.
 
Under Title I of the Defense Production Act of 1950, as amended, the President is authorized to require preferential acceptance and performance of contracts or orders (other than contracts of employment) supporting certain approved national defense and energy programs, and to allocate materials, services, and facilities in such a manner as to promote these approved programs. The Department of Commerce is delegated authority, through Executive Order 13603, to implement these priorities and allocations provisions for industrial resources. The Bureau of Industry and Security administers this authority through the DPAS regulation (15 CFR Part 700).
 
Commerce has delegated authority to the Departments of Defense, Energy, and Homeland Security, and to the General Services Administration, to place, in accordance with the DPAS regulation and the requirements of the Defense Production Act and Executive Order 13603, priority ratings on contracts or orders necessary, or appropriate, to promote the national defense.
 
Commerce may also authorize other government agencies, foreign governments, owners and operators of critical infrastructure, or companies to place priority ratings on contracts or orders on a case-by-case basis. Such requests must first be determined as necessary or appropriate to promote the national defense by the Departments of Defense, Homeland Security, or Energy.
 
This Web site includes a wide range of DPAS resources, including copies of the DPAS regulation and the form to request Special Priorities Assistance, online DPAS training courses, and links to DPAS information and guidance released by the Departments of Defense, Homeland Security, and Energy.
 
The following DPAS training course is designed to assist any company that receives priority rated contracts, subcontracts, or purchase orders from the U.S. Government or from U.S. Government contractors.  The goal of this course if to provide the basic understanding of the DPAS as well as provide a guide for applying the DPAS to contracts and purchase orders.
We hope you will find the content relevant, easy to use, and beneficial as we carry out our mission of supporting military, energy, homeland security, emergency preparedness, and critical infrastructure requirements through the DPAS.
 
To obtain additional information on the DPAS or to suggest enhancements to this Web site, please call Commerce’s DPAS team at (202) 482-3634 or email DPAS@bis.doc.gov.
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OGS_a33. State/DDTC Posts Notice on Scheduled Final Rule Concerning ITAR Amendment, the International Trade Data System

(Source: State/DDTC)
 
The Directorate of Defense Trade Controls has issued a Final Rule [to be published in the Federal Register on January 3, 2017]. The International Trade Data System, Public Notice 9811, is viewable on the Federal Register’s public inspection webpage,  here.  [This Final Rule will go into effect on December 31, 2016, but will not be published in the Federal Register until January 3, 2017.]
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OGS_a44. White House Posts Actions in Response to Russian Malicious Cyber Activity and Harassment

(Source: White House) [Excerpts.] 
 
Today, President Obama authorized a number of actions in response to the Russian government’s aggressive harassment of U.S. officials and cyber operations aimed at the U.S. election in 2016. Russia’s cyber activities were intended to influence the election, erode faith in U.S. democratic institutions, sow doubt about the integrity of our electoral process, and undermine confidence in the institutions of the U.S. government. These actions are unacceptable and will not be tolerated.
 
Sanctioning Malicious Russian Cyber Activity
 
In response to the threat to U.S. national security posed by Russian interference in our elections, the President has approved an amendment to Executive Order 13964. As originally issued in April 2015, this Executive Order created a new, targeted authority for the U.S. government to respond more effectively to the most significant of cyber threats, particularly in situations where malicious cyber actors operate beyond the reach of existing authorities. The original Executive Order focused on cyber-enabled malicious activities that:
 
  – Harm or significantly compromise the provision of services by entities in a critical infrastructure sector;
  – Significantly disrupt the availability of a computer or network of computers (for example, through a distributed denial-of-service attack); or
  – Cause a significant misappropriation of funds or economic resources, trade secrets, personal identifiers, or financial information for commercial or competitive advantage or private financial gain (for example, by stealing large quantities of credit card information, trade secrets, or sensitive information).
 
The increasing use of cyber-enabled means to undermine democratic processes at home and abroad, as exemplified by Russia’s recent activities, has made clear that a tool explicitly targeting attempts to interfere with elections is also warranted. As such, the President has approved amending Executive Order 13964 to authorize sanctions on those who:
 
  – Tamper with, alter, or cause a misappropriation of information with the purpose or effect of interfering with or undermining election processes or institutions.
 
Using this new authority, the President has sanctioned nine entities and individuals: two Russian intelligence services (the GRU and the FSB); four individual officers of the GRU; and three companies that provided material support to the GRU’s cyber operations. …
 
Responding to Russian Harassment of U.S. Personnel
 
Over the past two years, harassment of our diplomatic personnel in Russia by security personnel and police has increased significantly and gone far beyond international diplomatic norms of behavior. Other Western Embassies have reported similar concerns. In response to this harassment, the President has authorized the following actions:
 
  – Today the State Department declared 35 Russian government officials from the Russian Embassy in Washington and the Russian Consulate in San Francisco “persona non grata.” They were acting in a manner inconsistent with their diplomatic status. Those individuals and their families were given 72 hours to leave the United States.
  – In addition to this action, the Department of State has provided notice that as of noon on Friday, December 30, Russian access will be denied to two Russian government-owned compounds, one in Maryland and one in New York.
 
Raising Awareness About Russian Malicious Cyber Activity
 
The Department of Homeland Security and Federal Bureau of Investigation are releasing a Joint Analysis Report (JAR) that contains declassified technical information on Russian civilian and military intelligence services’ malicious cyber activity, to better help network defenders in the United States and abroad identify, detect, and disrupt Russia’s global campaign of malicious cyber activities.
 
  – The JAR includes information on computers around the world that Russian intelligence services have co-opted without the knowledge of their owners in order to conduct their malicious activity in a way that makes it difficult to trace back to Russia. In some cases, the cybersecurity community was aware of this infrastructure, in other cases, this information is newly declassified by the U.S. government.
  – The report also includes data that enables cybersecurity firms and other network defenders to identify certain malware that the Russian intelligence services use. Network defenders can use this information to identify and block Russian malware, forcing the Russian intelligence services to re-engineer their malware. This information is newly de-classified.
  – Finally, the JAR includes information on how Russian intelligence services typically conduct their activities. This information can help network defenders better identify new tactics or techniques that a malicious actor might deploy or detect and disrupt an ongoing intrusion.
 
This information will allow network defenders to take specific steps that can often block new activity or disrupt on-going intrusions by Russian intelligence services. DHS and FBI are encouraging security companies and private sector owners and operators to use this JAR and look back within their network traffic for signs of malicious activity. DHS and FBI are also encouraging security companies and private sector owners and operators to leverage these indicators in proactive defense efforts to block malicious cyber activity before it occurs. DHS has already added these indicators to their Automated Indicator Sharing service.
 
Cyber threats pose one of the most serious economic and national security challenges the United States faces today. For the last eight years, this Administration has pursued a comprehensive strategy to confront these threats. And as we have demonstrated by these actions today, we intend to continue to employ the full range of authorities and tools, including diplomatic engagement, trade policy tools, and law enforcement mechanisms, to counter the threat posed by malicious cyber actors, regardless of their country of origin, to protect the national security of the United States.
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NWSNEWS

NWS_a15
. Outdoor Life: “Top 10 Most Important Gun Right Cases of 2016”

(Source:
Outdoor Life
) [Excerpts.]
 
When President-elect Donald Trump assumes office on Jan. 20, he will inherit the immediate responsibility of nominating a Supreme Court Justice to succeed the late Antonin Scalia. During the next four years, he could appoint at least two more justices with Ruth Bader Ginsburg, 83, and Anthony Kennedy, 80, both liberals, nearing retirement.
 
Supreme Court decisions are, of course, the most closely followed of legal rulings. They are often the penultimate finales of intricate cases that have been working their way through state and federal courts for years.
Since 2010’s McDonald v. Chicago ruling, however, the Supreme Court has not accepted any significant cases directly related to the Second Amendment. Therefore, once again, 2016’s most interesting and potentially important rulings were issued in federal circuit or district courts, or in state courts.
 
Which underscores an under-emphasized component of the litigative infrastructure that President Trump will also have an opportunity to address: As of October, 12 of 179 judgeships in the 13 federal circuit courts were vacant and at least 77 – or 11.5 percent – of 673 judgeships in the 93 federal district courts were unfilled.
 
While the Supreme Court hears about 80 cases a year, the 13 U.S. circuit courts handle more than 30,000 cases annually. Their rulings are often the final word on Constitutional law, or the final step in getting a case before the Supreme Court.
 
So, not only will Trump have the immediate opportunity to change the dynamics of the Supreme Court, but to steadily stock the bench with judges who could shape the federal judiciary for decades.
Below is a roundup of the 10 most significant – or potentially significant – gun-related court rulings in 2016. …
 
(6) VIRTUAL PLANS, REAL FIREARMS
 
3D-Printer Seeks Rehearing On Ruling That Bans Online File-Sharing
 
On Dec. 5, a Texas-based 3D-printer filed a motion asking the 5th Circuit Court for a rehearing of a September ruling that essentially made it illegal for anyone to share gun-design files online.
 
In a case that could go on for years and ultimately engender precedent-setting First and Second amendment rulings, Defense Distributed et al v. United States Department of State et al, argues the 5th Circuit disregarded precedents set by the circuit court, as well as the U.S. Supreme Court, in reaching its ruling.
 
Defense Distributed describes itself as a non-profit that develops and publishes open source gun designs, so-called “wiki weapons.” It has been embroiled in legal tangles with the federal government since the U.S. State Department demanded in 2013 that founder Cody Wilson pull plans for a plastic 3-D printed pistol, the Liberator, from Defense Distributed’s website because it violated the International Traffic in Arms Regulation (ITAR) treaty.
 
Wilson complied with the request after Liberator blueprints had been downloaded more than 100,000 times. He later sued the federal government, alleging First Amendment infringement. The Second Amendment Foundation eventually joined the suit.
The suit claims ITAR is “clearly an unconstitutional grab against our fundamental liberties.”
 
In the 5th Circuit’s 3-1 September ruling, justices said the government’s “exceptionally strong interest in national defense and national security outweighs Plaintiffs-Appellants’ very strong constitutional rights … The fact that national security might be permanently harmed while Plaintiffs-Appellants’ constitutional rights might be temporarily harmed strongly supports our conclusion that the district court did not abuse its discretion in weighing the balance in favor of national defense and national security.” …
 
(8) PREEMPTION GIVETH & TAKETH AWAY
 
Until 10th Amendment prevails, preemption a double-edged sword
 
With Republicans in control of both legislative chambers in 32 states and the governor’s office in 33 states, preemption – the Constitutional doctrine that federal law takes precedence over state laws, and state law pre-empts local laws – will be a tool used by GOP lawmakers in many states in 2017.
 
Preemption can be broadly applied to preventing cities and counties from passing local ordinances and regulations that state legislators deem contrary to their designs, such as nullifying local gun ordinances that vary from state gun laws.
 
The Constitutionality of state preemption has been vigorously debated in Pennsylvania. On June 20, the Pennsylvania Supreme Court unanimously upheld lower court rulings in Leach et al v. Commonwealth that state legislators violated the state’s Constitution when it tacked a state preemption law onto a bill – Act 192 – about copper wire theft in 2014.
 
The preemption bill allowed citizens and civil right groups, such as the NRA, to sue local governments that tried to regulate guns within their jurisdictions in a more restrictive manner than state law.
 
A new proposal – Senate Bill 1330 – would expand state preemption over firearms regulations, passed 30-19 in the Senate on Oct. 17 and was referred to the House Judiciary Committee, where it is likely to be introduced in 2017.
 
Nevertheless, the Pennsylvania Supreme Court ruling is a defeat for preemption and the 10th Amendment and a victory for the 14th Amendment.
 
Many maintain the 10th Amendment gives states exclusive right to regulate firearms. By this interpretation, all federal gun laws and regulations, beginning with the National Firearms Act of 1934, are unconstitutional. Therefore, states can evoke the 10th Amendment to preempt local governments and also use the 10th Amendment to thwart federal preemption of state gun laws.
 
Lawmakers in at least 11 states have adopted resolutions and laws nullifying federal gun laws or denying federal entities the resources to enforce them.
 
At least one state preemption bill – Kentucky BR 84, sponsored by Rep. Kevin Bratcher (R-Louisville) – had been pre-filed for the 2017 legislative session by mid-December.
 
But, as two Kansas men learned in November, the federal government does not agree with this interpretation of the 10th Amendment and will impose preemption when it sees fit. In 2013, Kansas adopted a 10th Amendment measure – the Second Amendment Protection Act (SAPA) – which says firearms, accessories and ammunition manufactured and kept in Kansas are exempt from federal laws.
 
On Nov. 14, Shane Cox and Jeremy Kettler, both Chanute, were found guilty in Wichita’s U.S. District Court of violating federal law for manufacturing and marketing sound suppressors. The men claimed they were adhering to state statute that exempted them from federal gun control laws.
 
Therefore, preemption is a double-edged sword, although divergent court decisions in 2016 could set the stage for ensuing rulings that define its reach, as well as its limits. …

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NWS_a2
6. ST&R Trade Report: “Three Countries Being Removed from GSP as of Jan 1”

 
Seychelles, Uruguay, and Venezuela will be graduated from the Generalized System of Preferences as of Jan. 1, 2017. This change was set forth in an October 2015 presidential proclamation after these three countries were determined to have become high-income countries as defined by the official statistics of the World Bank.
 
As a result of this change, effective Jan. 1 goods under about 3,500 eight-digit tariff lines from Seychelles, Uruguay, and Venezuela will again be subject to tariffs when imported into the U.S. A list of affected products is available here.
 
Also as of Jan. 1 Seychelles is also being removed as a beneficiary under the African Growth and Opportunity Act.

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NWS_a3
7. ST&R Trade Report: “Trade Poised to be Key Priority for Incoming Trump Administration”

 
President-elect Donald Trump vowed on the campaign trail to make some significant changes to U.S. trade policy, and several recent developments appear to be consistent with that pledge.
 
One key development is the announcement of a new National Trade Council that, according to a statement from Trump’s transition team, will “advise the President on innovative strategies in trade negotiations, coordinate with other agencies to assess U.S. manufacturing capabilities and the defense industrial base, and help match unemployed American workers with new opportunities in the skilled manufacturing sector.” The NTC will also lead the Buy America, Hire America program and work with the National Security Council, the National Economic Council, and the Domestic Policy Council to think “strategically about the health of America’s defense industrial base and the role of trade and manufacturing in national security.”
 
Trump’s choice to lead the NTC is Peter Navarro, an economics professor at the University of California Irvine who co-authored an economic blueprint for Trump along with Wilbur Ross, the billionaire businessman tapped to lead the Department of Commerce. A news release from the transition team said that in this role Navarro “will develop trade policies that shrink our trade deficit, expand our growth, and help stop the exodus of jobs from our shores.”
 
Trump has also selected Jason Greenblatt, who is currently chief legal officer of the Trump Organization and someone Trump said “has a history of negotiating substantial, complex transactions” as well as “the expertise to bring parties together and build consensus on difficult and sensitive topics,” to serve as a special representative for international negotiations. Trump said that in his role Greenblatt will assist on “international negotiations of all types and trade deals around the world.”
 
Trump has yet to name a U.S. trade representative, though a number of potential nominees have been mentioned. These include former Rep. Charles Boustany, former UPS executive and deputy administrator of the Small Business Administration Jovita Carranza, former steel company CEO Dan DiMicco, and former deputy USTR Robert Lighthizer. Trump transition team spokesman Jason Miller said “whoever ultimately gets named as U.S. trade rep will be someone who really fits with” Navarro and Ross.
 
It is unclear at this point how these individuals and organizations will work together to formulate and implement trade policy in the Trump administration. Miller said that Ross “will ultimately direct much of the administration’s trade policy” but that details are still being worked out. While Miller added that USTR will remain in independent agency, the creation of the NTC and the naming of Greenblatt suggest that its influence could be diminished.

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COMMCOMMENTARY

COMM_a1
8. N. Dahlvang: “2016 Year-End USML Updates”

 
* Author: Niclas Dahlvang, Export Compliance Solutions LLC
 
The Directorate of Defense Trade Controls (DDTC) has revised USML Categories VIII, XII, XIV, XVIII, and XIX effective December 31, 2016.  (The revisions effective December 31, 2016, that will be published in the Federal Register on January 3, 2017, will be discussed in a later post.]
 
The revisions to Categories XII (Fire Control/Sensors/Night Vision), XIV (Toxicological Agents), and XVIII (Directed Energy Weapons) under the Export Control Reform (ECR) process are found in Federal Register notices 81 FR 70340 and 81 FR 49531.
 
In addition to increased detail and technical performance thresholds, the revision of Category XII also includes minor revisions to related parts of Categories VIII, XI, XIII, and XV. VIII(e) (aircraft inertial reference systems), XIII(a) (cameras), and XV(c) (GPS equipment) have been removed and reserved with their contents now covered by the revised Category XII. Radar and sensor specifications in XI(a)(3)(ii) and (a)(10) are also revised.
 
Revisions to Category XIV, which was already highly detailed, include the addition of XIV(a)(5) “Chemical warfare agents not enumerated above adapted for use in war to produce casualties in humans or animals, degrade equipment, or damage crops or the environment.” XIV(b) and (g) are revised to identify biological agents and antibodies not previously specified. Tear gasses and riot control agents are moved to the jurisdiction of the Department of Commerce.
 
As revised, Category XVIII is actually shorter, with a smaller list of directed energy weapons systems.
 
For previously-revised Categories VIII (Aircraft and Related Articles) and XIX (Gas Turbine Engines and Associated Equipment), some articles made subject to the EAR will again be subject to the ITAR (81 FR 83126). DDTC’s rationale is that they “constitute or are specially designed for next-generation technology.” Unshipped balances on Commerce licenses may not be used after the effective date, requiring a State Department authorization. Any reexport or retransfer of articles previously subject to the EAR will be subject to the ITAR.
 
As a result of the changes in USML categories, DDTC is also updating licensing forms and batch Common Schema.   The new versions will be 9.3 for the DSP-5, DSP-61, and DSP-73 forms, version 3.2 for the DSP-85, and version 7.6 for the Common Schema. The new versions have been posted on the DDTC website and must be used starting January 3, 2017. DTrade will be down for maintenance from 6pm December 30, 2016 until 7am January 3, 2017.
 
In related news, Section 1292 of the 2017 National Defense Authorization Act (NDAA) (S.2943), signed by the President on December 23, 2016, states that the Secretaries of Defense and State should recognize India as a “major defense partner” and improve cooperation. However, this does not currently require any specific amendments to the AECA or ITAR. The NDAA does direct “an assessment of the defense export control regulations and policies that need appropriate modification, in recognition of India’s capabilities and its status as a major defense partner.”

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COMM_a2
9. T. Bromund: “What’s The Obama Administration Up To On Firearms?”

(Source:
Forbes
)
 
* Author: Ted Bromund, Senior Research Fellow at The Heritage Foundation,
staff@heritage.org
, 202-675-1761.
 
The Obama Administration’s record on firearms is curiously mixed. On the one hand, the President deserves an award – which he is unlikely to receive or want – as America’s greatest gun salesman . All of his musings about gun control have gone hand in hand with boom times for the firearms industry.
 
Imports
have surged. In 2008, the U.S. imported 1.468 million handguns and 538,000 rifles. Last year, we imported 2.423 million handguns and 708,000 rifles – though remarkably, imports in 2015 were down from their peak 2013 levels. Much the same is true of
manufacturing
: up from 4.5 million firearms in 2008 to 10.8 million in 2013. Exports are still below the levels of the early 1990s, but even here, the story over the Obama years is one of growth: 228,000 firearms exported in 2008, 393,000 in 2013.
 
Finally, interest in items covered by the National Firearms Act – including automatic weapons, suppressors, and certain shotguns – has skyrocketed. Before 2006, fewer than 350,000 forms processed annually. In 2014, that number exceeded 1.37 million. This remarkable record undoubtedly has many causes, including concern about terrorism. But the one thing all of these numbers have in common is that the growth correlates well with President Obama’s rise, his re-election in 2012, and the approach of the 2016 election, which former Secretary of State Hillary Clinton appeared poised to win.
 
ut then there is another side of the story. Over the past several years, the Obama Administration’s actions – or, in one case, non-action – regarding firearms exports have been, at best, vexatious. At worst, they are more than vexatious: they are commercially damaging, bad for our national security, and inconsistent with previous pledges and regulations.
 
Most recently, in November 2016, the State Department’s Directorate of Defense Trade Controls (DDTC)
confirmed
, in response to a
request
for a ruling from the FireArms Import/Export Roundtable (FAIR) Trade Group, that it would treat parts and components for firearms as though they are, for the purposes of congressional notification, actually firearms.
 
DDTC argues that, since the Arms Export Control Act (AECA) does not define “firearm,” it is free to define the term as it pleases. DDTC’s interpretation is in direct conflict with the regulations and their own published industry guidance. Coming after a July ruling by the DDTC on what constitutes firearms “manufacturing,” a ruling that met with vehement industry and Congressional
protests
, the November decision continues a pattern of regulatory overreach based on the AECA.
 
One problem with the Administration’s approach is that it is completely arbitrary. Christopher Stagg, an international trade and regulatory attorney who served as Senior Advisor with the DDTC from 2010-2013, commented to me that “Seven years ago, the Seventh Circuit unanimously admonished DDTC over its constitutionally dubious practices of carrying out and enforcing secret laws, which that court noted were akin to the behavior of a totalitarian regime. . . . It is certainly deeply troubling that the DDTC now tacitly acknowledges it secretly disavows publicly-noticed, unambiguous regulations.”
 
But there are other concerns. Apart from being unjust, DDTC’s ruling is particularly damaging for smaller firms because the AECA requires congressional notification of exports of firearms valued over $1 million. (The
threshold
for notification in all other cases is much higher: a minimum of $14 million for major defense equipment sales to governments, and $50 million for defense articles and services.) The concern isn’t about congressional notification per se: it’s entirely reasonable that Congress be notified about major exports. It’s whether the $1 million threshold, coupled with the amount of time required for congressional notification, is reasonable for parts and components of firearms.
 
This threshold, and the notification provisions, have real world consequences. U.S. firearms and ammunition manufacturers can find it hard to compete internationally because the notification delays make it impossible for them to meet delivery requirements. Foreign competitors realize this, and urge foreign purchasers to include provisions that U.S. manufacturers cannot meet. Furthermore, the low congressional notification bar makes it easier for lawmakers to express informal concerns that end up scuppering exports because DDTC is unwilling to proceed to the formal notification stage.
 
For example, a recent U.S. sale of rifles to the Philippine police was halted for exactly this reason. The net result: Philippine President Duterte
indicated
he was likely to turn to other suppliers. In his words, “Russia, they are inviting us. China also. China is open, anything you want, they sent me brochure saying we select there, we’ll give you.” It is certainly true that there are legitimate reasons for concerns about human rights in the Philippines. But it is also true that the U.S. will find it difficult to make its ‘Asia pivot’ work without the Philippines, and that alienating the Philippines to the extent they start buying from China weakens the U.S. strategic position, reduces U.S. exports, strengthens China’s export position and its influence, and saves no lives in the Philippines at all.
 
Then there is the Administration’s effort to use the International Traffic in Arms Regulations (ITAR) as the basis for a
case against Defense Distributed
, the makers of the ‘Liberator’ 3D printed firearm. This case rests on the DDTC’s assertion that the publication of the plans for this firearm on the internet makes it an export, which in turn allows them to apply ITAR, which in turn allows them to impose a pre-publication approval requirement – and thus, that Defense Distributed, having not secured that approval, is guilty of exporting firearms without approval.
 
Complicated stuff – but the gist of it is that the government is saying that you can’t put technical data on line (and thus into the public domain) without its approval, and that the government is the one that gets to decide what constitutes technical data. That sounds an awful lot like prior restraint, and thus, like a First Amendment case. Just as bad is the fact that, again, the government is changing the rules of the game. As Mr. Stagg comments, “Curiously, DDTC unequivocally represented to a federal court in 1996 that it does not regulate the publication of technical data. It even included statements it made to the plaintiff in that case that it was not concerned with publication of technical data to the internet. And since then, the ITAR has not been amended otherwise.”
 
Finally, there is Export Control Reform. This is an enormous – and well-intentioned – effort to review items that are subject to both the ITAR and the Export Administration Regulations (EAR) so as to more appropriately regulate these items. Export Control Reform isn’t about abandoning controls: it’s an effort to make U.S. export controls effective where they are needed. The devil, of course, is in the details, and U.S. export controls are incredibly detailed.
 
Still, as of late December 2016, the Administration has finished, or all but finished, its review of 18 of the 21 categories in the USML. This has resulted in a huge transfer of items from the controls of the ITAR to the controls of the EAR. But what are the
three USML Categories
on which no public progress has been made? Ammunition, artillery and firearms. It’s widely believed that
public
progress on these categories has been, to quote Jeffrey G. Grody of Orchid Advisors, “
stalled
due to the sensitivity of gun control issues in the current political environment.”
 
You can’t say that no one has noticed this. The
National Shooting Sports Foundation
(NSSF) has waged a long battle on this front and helped develop the Export Control Reform Act of 2016. This bill, H.R. 6176 in the House and S. 3405 in the Senate, would finish the job of export control reform for the three final categories. Rep. Mike Kelly (R-Penn.), a long-time stalwart on firearms issues, pressed the administration on this issue last December. This February, he received a State Department
response
that it is “committed to finalizing an initial review of the entire U.S. Munitions List in 2016.” It now has barely a week to fulfill that promise. There is at least widespread optimism that the incoming administration, with the support of Congress, will publish proposed rulemaking transferring most firearms and ammunition over to the EAR for export licensing purposes.
 
It’s important to note that none of this, with the exception of the Defense Distributed case, has anything at all to do with the availability of firearms in the U.S. – and even that case rests on the charge that Defense Distributed is exporting by publishing online. All of these issues are about exports – and no matter what the U.S. does by way of improving its export control system, firearms exporters still have to obey the laws, import rules, and permitting arrangements of the importing nation. Ending these vexatious measures, or completing Export Control Reform, would simply reduce costs for U.S. firearms manufacturers and make it easier for them to export. The alternative isn’t that foreign purchasers don’t buy firearms: the alternative is they don’t buy firearms from us.
 
So why has the Obama Administration done all of this? Perhaps it is simply bureaucracies doing what bureaucracies do: make rules. Perhaps it is administrative stubbornness in defending initial mistakes by digging in. Perhaps it is the impact of an increased sensitivity bred by the
Arms Trade Treaty
– and indeed, the most troubling thing about these steps is that, collectively, they show how regulatory decisions that are nominally about exports can have a substantial impact on the firearms industry inside the United States, a point that those concerned about the Treaty should bear in mind.
 
Or perhaps – and this is the most likely explanation – it is just unwillingness to be seen to be treating U.S. firearms manufacturers and exporters fairly in an administration that is rhetorically committed to gun control. Whatever the cause, the next administration can’t end it all soon enough.

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TEEX/IM TRAINING EVENTS & CONFERENCES

TE_a110. ECTI Presents Export Control Recordkeeping and Compliance Automation, Webinar – 18 Jan

(Source: Danielle McClellan, danielle@learnexportcompliance.com)

* What: Export Control Recordkeeping and Compliance Automation
* When: January 18, 2017; 1:00 p.m. (EST)
* Where: Webinar
* Sponsor: Export Compliance Training Institute (ECTI)
* ECTI Speaker: Felice Laird
* Register: Here or Danielle McClellan, 540-433-3977, danielle@learnexportcompliance.com.

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TE_a211. University of Liverpool to Talk Post-Brexit International Trade Compliance in London, 24 Jan

(Source: University of Liverpool,
exed@liverpool.ac.uk
)
 
Join The University of Liverpool’s Executive Education team on Tuesday 24 January 2017 to hear David Hayes talk about Post Brexit Licensing.
 
Taking place at the University’s London campus at 33 Finsbury Square, this informal event will offer attendees an opportunity to hear from David Hayes, an expert in trade compliance as he talks about a topic which will have implications for years to come.
 
David Hayes has many years’ experience in export controls and sanctions, both from an industry and regulator’s perspective.  After leaving the UK Export Control Organisation in the late 90’s David worked in industry as Head of Compliance for Fortune 500 and FTSE 100 companies, with significant involvement in US export compliance under both ITAR and EAR as well as OFAC sanctions. 
 
After David’s talk there will be time for questions, with refreshments and networking to follow.
 
The event is free to attend and will start at 6:00pm, if you wish to join them please reply to
exed@liverpool.ac.uk
before 16 January 2017.

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ENEDITOR’S NOTES

(Source: Editor)


* Pablo Casals (Pau Casals i Defilló, 29 Dec 1876 – 22 Oct 1973, was a cellist and conductor from Catalonia, Spain. He is generally regarded as the pre-eminent cellist of the first half of the 20th century, and one of the greatest cellists of all time.  When Casals, at age 93, was asked why he continued to practice the cello three hours a day, Casals replied, “I’m beginning to notice some improvement… And that’s the thing that’s in me. I notice myself getting better at this.”

  – “To retire is to die.”

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EN_a213
. 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: 20 Dec 2016: 81 FR 92978-93027: Regulatory Implementation of the Centers of Excellence and Expertise 

* 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: 27 Dec 2016: 81 FR 94971-94974: Commerce Control List: Updates Based on the 2015 and 2016 Nuclear Suppliers Group (NSG) Plenary Meetings; Conforming Changes and Corrections to Certain Nuclear Nonproliferation (NP) Controls; 81 FR 94962-94963: Burma: Amendment of the Export Administration Regulations Consistent With an Executive Order That Terminated U.S. Government’s Sanctions; and 81 FR 94963-94971: Russian Sanctions: Addition of Certain Entities to the Entity List, and Clarification of License Review Policy 

  
*
FOREIGN ASSETS CONTROL REGULATIONS (OFAC FACR)
: 31 CFR, Parts 500-599, Embargoes, Sanctions, Executive Orders
  – Last Amendment: 23 Dec 2016: 23 Dec 2016: 81 FR 94254-94259: Iranian Transactions and Sanctions Regulations 
 
*
FOREIGN TRADE REGULATIONS (FTR)
: 15 CFR Part 30
  – Last Amendment: 15 May 2015; 80 FR 27853-27854: Foreign Trade Regulations (FTR): Reinstatement of Exemptions Related to Temporary Exports, Carnets, and Shipments Under a Temporary Import Bond 
  – HTS codes that are not valid for AES are available
here.
  – The latest edition (9 Mar 2016) of Bartlett’s Annotated FTR (“BAFTR”), by James E. Bartlett III, is available for downloading in Word format. The BAFTR contains all FTR amendments, FTR Letters and Notices, a large Index, and footnotes containing case annotations, practice tips, and Census/AES guidance.  Subscribers receive revised copies every time the FTR is amended. The BAFTR is available by annual subscription from the Full Circle Compliance website.  BITAR subscribers are entitled to a 25% discount on subscriptions to the BAFTR.
 
*
HARMONIZED TARIFF SCHEDULE OF THE UNITED STATES (HTS, HTSA or HTSUSA)
, 1 Jul 2016: 19 USC 1202 Annex.  (“HTS” and “HTSA” are often seen as abbreviations for the Harmonized Tariff Schedule of the United States Annotated, shortened versions of “HTSUSA”.)
  – Last Amendment: 16 Dec 2016; Harmonized System Update (HSU) 1614, containing 27,913 ABI records and 4,820 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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