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17-0125 Wednesday “The Daily Bugle”

17-0125 Wednesday “Daily Bugle”

Wednesday, 25 January 2017

TOP
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 
here for free subscription.  Contact us
for advertising inquiries and rates.

  1. President Orders U.S. Withdrawal From TPP Negotiations and Agreement 
  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 ECO Updates Collection of Documents Related to OGELs  
  1. Global Trade News: “US Makes Major Schedule B Tariff Updates” 
  2. Reuters: “China Gives Details of Items Banned From Export to North Korea” 
  1. B. Conlin: “When It Comes to Documentation, Smart Companies Behave Like Every Day Is Audit Day” 
  2. R.C. Burns: “OFAC Designation of Putin’s Spy Agency May Trip Up U.S. Exports” 
  1. “16th Annual ‘Partnering for Compliance™’ East ECR/Export/Import Control Program” – Orlando FL, Mar 7-10 
  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 (23 Jan 2017), FACR/OFAC (17 Jan 2017), FTR (15 May 2015), HTSUS (1 Jan 2017), ITAR (11 Jan 2017) 

EXIMEX/IM ITEMS FROM TODAY’S FEDERAL REGISTER

EXIM_a1

1. President Orders U.S. Withdrawal From TPP Negotiations and Agreement
(Source:
Federal Register)
 
82 FR 8497: Withdrawal of the United States From the Trans-Pacific Partnership Negotiations and Agreement
 
Memorandum for the United States Trade Representative
 
It is the policy of my Administration to represent the American people and their financial well-being in all negotiations, particularly the American worker, and to create fair and economically beneficial trade deals that serve their interests. Additionally, in order to ensure these outcomes, it is the intention of my Administration to deal directly with individual countries on a one-on-one (or bilateral) basis in negotiating future trade deals. Trade with other nations is, and always will be, of paramount importance to my Administration and to me, as President of the United States.
 
Based on these principles, and by the authority vested in me as President by the Constitution and the laws of the United States of America, I hereby direct you to withdraw the United States as a signatory to the Trans-Pacific Partnership (TPP), to permanently withdraw the United States from TPP negotiations, and to begin pursuing, wherever possible, bilateral trade negotiations to promote American industry, protect American workers, and raise American wages.
 
You are directed to provide written notification to the Parties and to the Depository of the TPP, as appropriate, that the United States withdraws as a signatory of the TPP and withdraws from the TPP negotiating process.
               
(Presidential Sig.)
THE WHITE HOUSE,
Washington, January 23, 2017.

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OGSOTHER GOVERNMENT SOURCES

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


[No items of interest noted today.] 
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OGS_a23. Commerce/BIS: (No new postings.)

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OGS_a34. State/DDTC: (No new postings.)

(Source: State/DDTC

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OGS_a45. UK/BIS ECO Updates Collection of Documents Related to OGELs

(Source:
UK/BIS ECO)   
 
The UK/BIS Export Control Organisation has updated its collection of documents related to Open General Export Licenses (OGELs). The full collection is available at
here

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NWSNEWS

NWS_a16.

Global Trade News: ”
US Makes Major Schedule B Tariff Updates

This year many countries have published updates to their tariff schedules based on the WCO 2017 changes.  The United States has previously published updates to US HTS, but just yesterday the U.S. updated the Schedule B Tariff Schedule to the WCO 2017 changes.
 
Last year the Integration Point Global Trade Content team published a summary on the WCO 2017 changes. This is a great opportunity to review what subheadings are impacted and how. Click
here to download.

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NWS_a27.

Reuters: “China Gives Details of Items Banned From Export to North Korea”

 
China released on Wednesday a new, comprehensive list of goods that can not be exported to North Korea, including many “dual use” items that can be used to build weapons of mass destruction.
 
The publication of the list comes as international concern grows over North Korea’s nuclear program and missile development and weeks after then U.S. President-elect Donald Trump said China “won’t help” control North Korea.
 
The technical list of products with possibly both civilian and military use provides an unusually comprehensive outline of items that could be used to contribute to North Korea’s weapons programs.
 
The items include materials and equipment to develop nuclear missiles, software related to rockets or drones, high-speed video cameras, submarines, sensors and lasers.
 
The Ministry of Commerce said the list was meant to comply with the requirements of a round of U.N. sanctions imposed in November in response to North Korea’s fifth and largest nuclear test in September.
 
The list was jointly released with the Ministry of Industry and Information Technology, the State Administration of Science, Technology and Industry for National Defence, the China Atomic Energy Authority and the Customs Bureau.
 
The list comes as concern is mounting over the expected test by North Korea of an intercontinental ballistic missile that might be able to reach the west coast of the United States.
 
U.S. officials said last week they had seen indications that North Korea may be preparing for a new missile test-launch.
 
A launch could be an early test of the administration of President Trump, who was sworn in last Friday.
 
Trump’s defense secretary, James Mattis, planned to visit Japan and South Korea next week, choosing the two U.S. allies for his debut trip abroad as Pentagon chief, a U.S. official said on Tuesday.
 
China’s list of banned items adds detail to lists released last year and in 2013 and comes after the commerce ministry told companies in December they needed to pay attention to the latest U.N. sanctions on North Korea, especially those related to coal, to avoid unnecessary economic losses.
 
China is believed to be the only country buying North Korean coal, one of the isolated state’s few sources of hard currency.
 
China unexpectedly boosted imports of coal from North Korea in December, even after it imposed a temporary ban on shipments from its northern neighbor ahead of new U.N. sanctions that came into effect at the beginning of December.
 
For the whole of 2016, China imported 22.5 million tonnes of coal from North Korea, up 14.5 percent from 2015.

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COMMCOMMENTARY

COMM_a1
8. B. Conlin: “When It Comes to Documentation, Smart Companies Behave Like Every Day Is Audit Day”

 
* Author: Bob Conlin, President and CEO of NAVEX Global. Contact via
here.
 
Audits are part of nearly every ethics and compliance program. They come from the Internal Audit Department, outside auditors testing control systems and processes, and in some cases, government regulators evaluating the effectiveness of your program as part of an investigation. In most assessments, auditors will focus specific attention on policy related processes. Are they current? Are they reviewed regularly? Are employees attesting when required and following expectations? The objective is to determine whether you are doing what you say you are going to do.
 
A successful audit is more than just a “clean” audit – it’s one that is relatively pain-free and does not drain unnecessary time, money or energy from legal, accounting, compliance or human resources.
 
As a CEO I’ve had the opportunity to take a step back from the audit process, specifically audits that call for robust documentation such as policy management. These types of audits, whether it be a formal audit by external entities or an impromptu phone call from a client asking about a business practice, require us to provide quick, accurate responses that have the necessary evidence to prove their validity. 
 
I’ve learned that there is a clear difference between those teams that prepare for an audit and those that are always prepared for an audit. The difference is in how they handle the day-to-day.
 
Unfortunately, many organizations could do better when it comes to audit-readiness of their policy management processes. This is a persistent problem in the world of ethics and compliance – inability to access or use efficient tools and processes to keep up with the growing demands of the industry. And if our regular processes are unsatisfactory, our irregular processes – audits – will be exponentially worse.
 
The good news is that there is a solution to this abiding challenge: automation. Automating compliance functions not only makes each day more efficient, but also puts you in position to respond to an audit request quickly, thoroughly and effectively. 
 
Bringing Documentation into the Modern Compliance Era
 
Consider for a moment the internal audit process of your policies. Is it manual? Does it rely on hardcopy documentation? Does it leave inordinate room for human error? Are reports or analytics siloed between departments? Does the process rely on multiple systems with various owners? There is a good chance you answered “yes” to several of these. That’s because many organizations are still working to bring compliance programs up to the same level of automation as other business processes. I’m sure there are many reasons why some organizations have failed to automate critical compliance functions, but those reasons won’t matter to auditors.  Our job is to make sure our internal processes hold up to external review – and to make the necessary changes when they do not.
 
If you have been through an audit before, you know that auditors often rely on the resources of the targeted organization to find answers to their questions and determine their findings. Those resources are your documents, and more specifically the systems you employ to archive and call up those documents. When your organization can produce information quickly and thoroughly it has two immediate benefits. First, it shows that your organization has control of the processes and data required. Second, it shows that your compliance is not by chance. It is intentional, achieved through daily investment and commitment. In the world of compliance, this intention translates into auditor goodwill – a benefit that is intangible but also invaluable. 
 
As they say, if it isn’t written down, it didn’t happen. When it comes to an audit, we are looking to prove a clear “yes” or “no,” so if “it didn’t happen,” chances are it’s going to be a “no.”
 
Investing in a system that effectively manages your daily compliance program processes shows your organization’s commitment to doing the right things right. And auditors and investigators will take notice. As we’ve
seen recently, government agencies reward organizations that demonstrate a culture of ethics and strong compliance programs, even if an investigation uncovers a problem.
 
The common denominator between being compliant on audit day and being compliant every day is automation. Automating business processes removes manual overhead, digitizes paper trails so they are easily navigable, reduces the chances for human error and provides a single source of truth for the information requested.
 
Beyond policies, also consider your training programs – do you have on hand the proper documentation that proves completion? How about your case management program – is there a system in place the catalogues incident reports as well as case closures and resolutions?
 
Not every day is audit day. But with the right tools and commitment to compliance excellence, audit day will (almost) just be another day for you and your team to show your proficiency and deepen your company’s reserve of goodwill.

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COMM_a2
9R.C. Burns: “OFAC Designation of Putin’s Spy Agency May Trip Up U.S. Exports”

(Source:
Export Law Blog. Reprinted by permission.)
 
* Author: R. Clifton Burns, Esq., Bryan Cave LLP, Wash DC,
Clif.Burns@bryancave.com, 202-508-6067)
 
The recent
OFAC sanctions on Russia’s FSB né KGB, which is the Kremlin’s spy agency, may have unintended consequences. According to
this article on the Russian website by my friend Иван Ткачёв (Ivan Tkachev) the FSB, besides doing typical spy things, is also responsible for overseeing the importation of encryption devices into Russia. This shouldn’t come as a big surprise since the NSA, our very own spy agency, has its nose in the encryption export business as anyone who has ever filed an annual self-classification report or a semi-annual sales report for encryption products knows perfectly well.
 
For items where encryption is a primary function, an FSB approval of the product is necessary prior to import. For items where encryption is ancillary (such as mobile phones, laptops, etc.) notification must be given to the FSB. Clearly a request for approval filed by a U.S company with the FSB is now forbidden. Even a notification for ancillary encryption products may be problematic.
 
A prior designation of FAU Glavgosekspertiza Rossii, a Russian federal agency that it is required to approve construction project designs, created similar unintended consequences and led OFAC, on December 20, 2016, to issue a general license permitting U.S. companies to seek reviews from FAU Glavgosekspertiza Rossii for certain construction projects in Russia. Perhaps a general license will be issued to permit filing these encryption notices and approval requests with the FSB, but there is no telling when at this point.
 
The other issue which may occur and which would require action by the Bureau of Industry and Security is that the FSB was also added to the
Entity List. If the notifications or approval requests contain any technology subject to the EAR, a BIS license is required. It seems likely that this will be the case given the broad definition of technology in the EAR unless all the information in the documents supplied to the FSB has been “published” as defined in
section 734.7 of the EAR.

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TEEX/IM TRAINING EVENTS & CONFERENCES

TE_a110. “16th Annual ‘Partnering for Compliance™’ East ECR/Export/Import Control Program” – Orlando FL, Mar 7-10

(Source: Ailish NicPhaidin,
Ailish@PartneringForCompliance.org
)
 
* What: The 16th Annual “Partnering for Compliance™” East will focus intensely on a broad spectrum of export/import regulatory and compliance matters of current relevance to companies and individuals involved in global trading.  Senior-level government officials and trade experts will provide first-class training. Our objective is to greatly expand your knowledge and awareness of the requirements needed to adhere to US export/import control regulations, thus helping to ensure your success as a global trader. 
* Where: Orlando/Holiday Inn Orlando International Airport Hotel, Orlando, FL
* When:
  – Tue – Thurs, 7-9 Mar: “16th Annual ‘Partnering for Compliance™’ East ECR/Export Control Program
  – Fri, 10 Mar: 1-Day Program “Customs/Import Boot Camp”
* Speakers: DoS/DDTL: Terry Davis & Catherine Hamilton; DoS/DDTC: Daniel Buzby; DoC/BIS: Adam Krepp & OEE Jonathan Barnes; DoD/DTSA: Ken Oukrop; OFAC: Jamie Rose(I); Census Bureau: Dale Kelly; DHS/CBP: Russell Morgan & Joseph Mitchell; ICE: Jacquelyn Metzger; AND, Braumiller Law Group PLLC: Bruce Leeds & Brad Menard (Imports); Global Legal Services, PC: Gary Stanley; General Dynamics Mission Systems-Canada: Kristen Stewart; and Enterprise Florida: Manuel (Manny) A. Mencia. Cyber Security will be covered as appropriate as will ECR updates.
* Opening Address: James E. Bartlett III, Principal, Law Office of James E. Bartlett III, PLLC & Partner, Full Circle Compliance
* Cost: Customs/Import 1-day program: $200.  Export 3-day program: $600.  Both programs: $800. 
* Remarks: As time permits, all Government and trade speakers will informally hold short “one-to-one” meetings with participants on a “first-come, first-served” basis. 
* Certificates of Completion granting: 4.5 IIEI CEUs and 20 CES NCBFAA Credits for 3-day Exports program, and 6.5 CCS NCBFAA Credits for 1-day Customs/Import Boot Camp will be awarded for each program.  
* More information
Here
.

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ENEDITOR’S NOTES

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EN_a312
. 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: 23 Jan 2017: 82 FR 7641-7642: Updated Statements of Legal Authority for the Export Administration Regulations  

  
*
FOREIGN ASSETS CONTROL REGULATIONS (OFAC FACR)
: 31 CFR, Parts 500-599, Embargoes, Sanctions, Executive Orders
  – Last Amendment: 17 Jan 2017: 82 FR 4793-4794: Sudanese 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 Jan 2017: 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: 1 Jan 2017: 2017 Basic HTS 
  – 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: Latest Amendment: 11 Jan 2017: 82 FR 3168-3170: 2017 Civil Monetary Penalties Inflationary Adjustment.
  – The only available fully updated copy (latest edition 24 Jan 2017) of the ITAR is Bartlett’s Annotated ITAR (“BITAR”), by James E. Bartlett III.  The BITAR contains all ITAR amendments to date, 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 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.

* SUBSCRIPTIONS: Subscriptions are free.  Subscribe by completing the request form on the Full Circle Compliance website.

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