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17-0202 Thursday “The Daily Bugle”

17-0202 Thursday “The Daily Bugle”

Thursday, 2 February 2017

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: (No new postings.) 
  3. State/DDTC: (No new postings.)
  4. Treasury/OFAC: Publication of Cyber-related General License
  5. Treasury/OFAC: Update to the Iranian Transactions and Sanctions Regulations 
  6. EU COARM: Study Visit for Eastern European Partnership Countries to Poland
  7. UK/BIS ECO Posts Overview of Revoked Open General Export Licenses For Cryptographic Development
  1. Reuters: “U.S. Makes Limited Exceptions to Sanctions on Russian Spy Agency”
  2. ST&R Trade Report: “CBP Guidance on Duty-Free Claims for Goods Returning to the U.S.”
  1. C.T. Cherniak: “What Is On Your NAFTA Renegotiation Wish List?” 
  2. G.R. Tuttle: “CBP Posts Advice on New Document Requirements for Subheading 9801.00.10 – U.S. and Foreign Goods Returned Claims” 
  1. Bartlett’s Unfamiliar Quotations 
  2. Are Your Copies of Regulations Up to Date? Latest Changes: ATF (15 Jan 2016), Customs (27 Jan 2017), DOD/NISPOM (18 May 2016), EAR (1 Feb 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

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OGS
OTHER GOVERNMENT SOURCES

OGS_a11. Ex/Im Items Scheduled for Publication in Future Federal Register Editions

(Source: Federal Register)
 
* President; Executive Order; Regulatory Costs; Efforts to Reduce Regulations and Control [Publication Date: 3 February 2017.]

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OGS_a22. Commerce/BIS: (No new postings.)

(Source: Commerce/BIS)
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OGS_a33.

State/DDTC: (No new postings.)

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OGS_a44. Treasury/OFAC: Publication of Cyber-related General License

(Source:
Treasury/OFAC)
 
Today, the Department of the Treasury’s Office of Foreign Assets Control (OFAC) published
Cyber-related General License (GL) 1, “Authorizing Certain Transactions with the Federal Security Service,” pursuant to Executive Order 13694 of April 1, 2015, “Blocking the Property of Certain Persons Engaging in Significant Malicious Cyber-Enabled Activities.” GL 1 authorizes certain transactions with the Federal Security Service (a.k.a. FSB) that are necessary and ordinarily incident to requesting certain licenses and authorizations for the importation, distribution, or use of certain information technology products in the Russian Federation, as well as transactions necessary and ordinarily incident to comply with rules and regulations administered by, and certain actions or investigations involving, the FSB.
 
For more information on this specific action, please visit our
Recent Actions page.

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OGS_a55. Treasury/OFAC: Update to the Iranian Transactions and Sanctions Regulations

(Source:
Treasury/OFAC)
 
The Department of the Treasury’s Office of Foreign Assets Control (OFAC) is updating the
List of Medical Devices Requiring Specific Authorization as identified in 31 C.F.R. § 560.530(a)(3)(ii) of the Iranian Transactions and Sanctions Regulations, 31 C.F.R. part 560 (ITSR), to update and clarify the scope of medical devices that are not authorized for exportation or reexportation pursuant to the general license at 31 C.F.R. § 560.530(a)(3)(i).
 
For reference,
OFAC previously published related frequently asked questions on the general license to provide guidance on the scope and limitations of this general license
 

For more information on this specific action, please visit our Recent Actions page.

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OGS_a66. EU COARM: Study Visit for Eastern European Partnership Countries to Poland

(Source:
EU Outreach)
 
On 14-15 February, a study visit for Azerbaijan, Georgia, and Moldova will take place within the framework of the EU Council Decision 2015/2309 on the promotion of effective arms export control to Warsaw, Poland.
 
The representatives of the beneficiary countries will have the opportunity to visit the Cargo Terminal of the Airport in Warsaw and talk about customs profiling and inter-agency cooperation. Further focal points of the event will be discussion on end-use verification, goods identification and transit provision for conventional arms and military items.
 
In addition to customs and licensing officer from Poland, EU experts from Croatia, Estonia and Germany will support the event.

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OGS_a77. UK/BIS ECO Posts Overview of Revoked Open General Export Licenses For Cryptographic Development

(Source:
UK/BIS ECO)   
 
The UK/BIS Export Control Organisation (ECO) has posted an overview of the revoked versions of the open general export license (OGEL) for Cryptographic Developent. The documents that posted are provided for information only and cannot be used to license the export of any goods. 
 
The
current and in-force version of this license allows, subject to certain conditions, the export or transfer of goods, software or technology from the UK to any of the countries listed in the license.
 
The overview is available at
here

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MSNEWS

MS_a1
8.

Reuters: “U.S. Makes Limited Exceptions to Sanctions on Russian Spy Agency”

 
The U.S. Treasury Department on Thursday adjusted sanctions on Russian intelligence agency FSB, making limited exceptions to the measures put in place by former President Barack Obama over accusations Moscow tried to influence the U.S. presidential election with cyber attacks on political organizations.
 
The department said in a statement it would allow U.S. companies to make limited transactions with FSB that are needed to gain approval to import information technology products into Russia.
 
The Treasury Department often issues general licenses such as the one announced on Thursday to help U.S. companies overcome unintended business consequences of sanctions.
 
Sanctions experts and former Obama administration officials stressed that the new exceptions do not signal a broader shift in Russia policy. They say the general license issued Thursday is designed to fix a unintended consequence caused by last year’s sanctioning of the spy agency.
 
Beyond its intelligence function, the FSB also regulates the importation of software and hardware that contains cryptography. Companies need FSB approval even to import broadly available commercial products like cell phones and printers if they contain encryption, sanctions experts say.
 
The exceptions made today were likely in progress before President Trump took office last month, said Peter Harrell, a sanctions expert and former senior State Department official.
 
Tech companies had been complaining about this collateral consequence since Obama placed sanctions on FSB in December, said Harrell.
 
  “I don’t think when they sanctioned FSB they were intending to complicate the sale of cell phones and tablets,” Harrell said.
 
U.S. intelligence agencies accused the FSB of involvement in hacking of Democratic Party organizations during the election, won by Republican Donald Trump.
 
The agencies and private cyber security experts concluded the FSB first broke into the Democratic National Committee’s computer system in the summer of 2015 and began monitoring email and chat conversations.
 
They said FSB was one of two Russian spy agencies believed to have been involved in a wide-ranging operation by top-ranking individuals in Russia’s government to discredit Democrat Hillary Clinton and help Trump win the election.
 
In December, Obama ordered the expulsion of 35 Russian suspected spies and put sanctions on two Russian spy agencies. He also sanctioned four Russian intelligence officers and three companies that he said provided material support to Russian cyber operations.
 
Trump has said he wants better relations with Russian President Vladimir Putin.

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NWS_a2
9.

ST&R Trade Report: “CBP Guidance on Duty-Free Claims for Goods Returning to the U.S.”

 
U.S. Customs and Border Protection issued Jan. 31 a message setting forth the different documents it may request to verify duty-free claims under HTSUS 9801.00.10.
 
Effective for goods entered or withdrawn from warehouse for consumption on or after April 25, 2016, this subheading was expanded to allow duty-free treatment for all products, regardless of country of origin, that are exported from and returned to the U.S. without having been advanced in value or improved in condition by any process of manufacture or other means while abroad. There is no time limit for filing a claim under this subheading for U.S.-origin products but claims for foreign-origin products must be filed within three years.
 
CBP states that the following documents may be requested from the importer to determine if the duty-free exemption under HTSUS 9801.00.10 applies.
 
  Foreign shipper declaration. For either U.S.-manufactured goods or foreign-origin goods (for formal entries valued over $2,500 only), CBP may require a declaration by the foreign shipper indicating that the products were not advanced in value or condition while outside the U.S. A certificate from the master of a vessel stating that the products are returned without having been unladen from the exporting vessel may be accepted in lieu of the declaration by the foreign shipper.
 
  Manufacturer’s affidavit. For U.S.-manufactured goods (for formal entries valued over $2,500 only) not clearly marked with the name and address of the U.S. manufacturer, CBP may require a manufacturer’s affidavit confirming that the articles were made in the U.S.
 
  Proof of export. One of the following documents will be deemed sufficient proof of export from the U.S. for U.S.-manufactured goods or foreign-origin goods provided that the information contained therein proves an export: copy of the entry into the foreign country, U.S. export invoice or bill of lading/airway bill, or Electronic Export Information or Automated Export System filing exemption.
 
  Aircraft. For aircraft and aircraft parts and equipment returned to the U.S. by or for the account of an aircraft owner or operator and intended for use in his own aircraft operations within or outside the U.S., CBP may require a Form 3311 or its electronic equivalent.
 
For U.S.-manufactured aircraft returning to the U.S. that were sold to a foreign government under the Foreign Military Sales program, formal entry is required if any maintenance is being performed on the aircraft while in the U.S. and the repairs must be authorized via a specific case line in the letter of offer and acceptance (the sales agreement). At the time the aircraft is exported the EEI has to be filed for the maintenance of the aircraft.
 
For U.S.-manufactured aircraft returning to the U.S. that were sold to a foreign government under the FMS program and are returning for modifications or enhancements, formal entry is required and the EEI submission (citing the DDTC export license (DSP-5)) is required at the time of export.
 
  Licensed by State Dept. For U.S.-origin goods that were originally exported under a Department of State license that are now being reimported, formal entry is required regardless of value along with the Directorate of Defense Trade Controls partnership government agency message set.

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COMMCOMMENTARY

COMM_a110. “What Is On Your NAFTA Renegotiation Wish List?”
(Source:
Canada-US Blog) [Excerpts.]
 
* Author: Cyndee Todgham Cherniak, Esq, LexSage PC,
cyndee@lexsage.com, 416-307-4168
 
President Trump has said that he wants to renegotiate NAFTA.  Rather than taking a negative view of change, ask yourself “What is on my NAFTA Renegotation Wish List?”.  What changes to NAFTA could benefit your business?  What improvements to NAFTA can save your business money?  What adjustments will improve your business’ supply chain?  What should Canada ask for?
 
The Canadian Government needs your NAFTA Renegotiation Wish List.  Some of the items of Canada’s NAFTA Renegotiation Wish List are:
 
  (1) A Softwood Lumber Agreement;
  (2) Additional Labour Mobility categories so that more Canadians do not require visas to travel to the United States on business related activities;
  (3) Changes to Rules of Origin that would improve access of Canadian goods to the United States market on a duty-free basis;
  (4) Regulatory Coherence across industry sectors (which would include regulatory reductions);
  (5) More Mutual Recognition;
  (6) Provisions relating to E-commerce and the digital economy;
  (7) Improvements to NAFTA Chapter 11 “Investment Chapter” similar to the clarifications in TPP;
  (8) Electricity Infrastructure Integration provisions;
  (9) Additional Customs Facilitation provisions such as preclearance provisions, auto inspection, cargo pre-inspection, trusted traveler, etc.; and
  (10) Integrated Canada-US market recognition for the purposes of government procurement/regulation (in other words, exemptions for Buy-America clauses in government procurement and federal, state and local statutes.
 
This list can go on further – but I will stop at 10 items.  Each of these items needs to be developed more fully and with specificity. Canadian businesses need to develop specific NAFTA Renegotiation Wish Lists.  For example, businesses can identify specific rules of origin that need to be changed and what the specific changes should be.
 
Which business activities should be exempted under NAFTA from visa requirements.  Canada and U.S entities have integrated R & D activities – the people should be able to cross the border without a work permit in order to work cooperatively on R & D to develop advanced medical equipment, automobiles, green energy, etc.  Astronauts and aviation experts are not on the professionals list. It is not clear that persons in the digital sciences and Silicon Valley professions are covered by NAFTA Chapter 16.  What is most surprising is that actors and all persons involved in film production are not NAFTA business visitors.
 
This is an important discussion for Canadian business owners to engage in.  There is no way for the Government of Canada to guess.  The Canadian officials have an opportunity to find common NAFTA renegotiation benefits with the Trump administration.  . . . .
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COMM_a211. G.R. Tuttle: “CBP Posts Advice on New Document Requirements for Subheading 9801.00.10 – U.S. and Foreign Goods Returned Claims”

 
* Author: George R. Tuttle III, Esq., Law Offices of George R. Tuttle,
george.tuttle.iii@tuttlelaw.com, 415-986-8780.
 
In
CSMS #17-000046 message, dated January 31, 2017, CBP issued guidance on documentation requirements for the new 9801.00.10 – U.S. and Foreign Goods Returned provisions mandated by section 904(b) of the Trade Facilitation and Enforcement Act of 2015.
 
Background
 
On April 25, 2016, a change to the Harmonized Tariff Schedule of the United States (HTSUS) Chapter 98 – U.S. goods returned – went into effect. Specifically, section 904(b) of the Trade Facilitation and Enforcement Act of 2015, “Modification of Provisions Relating to Returned Property,” amended HTSUS subheading 9801.00.10 to read as follows:
 
Products of the United States when returned after having been exported, or any other products when returned within 3 years after having been exported, without having been advanced in value or improved in condition by any process of manufacture or other means while abroad.
 
The expansion of subheading 9801.00.10 includes all products exported from and returned to the United States, regardless of country of origin. For U.S. origin products, there is no time limit on filing a claim. For foreign origin products, there is a 3-year time limit. The provision affecting “Returned Property” applies to U.S. or foreign articles returned to the United States and entered or withdrawn from warehouse for consumption on or after April 25, 2016.
 
Guidance
 
CBP has advised that the following documents may be requested from the importer to determine if the duty free exemption under 9801.00.10 applies for either U.S. manufactured goods exported from and returned to the United States at any time, or foreign origin goods exported from the United States and returned within the 3-year time limit:
 
  (1) For either U.S. manufactured goods or foreign origin goods (for formal entries valued over $2,500 only): Declaration by Foreign Shipper indicating that the products were not advanced in value or condition while outside the United States or a certificate from the master of a vessel stating that the products are returned without having been unladen from the exporting vessel may be accepted in lieu of the declaration by the foreign shipper.
 
  (2) For U.S. manufactured goods (for formal entries valued over $2,500 only): for U.S. goods formally entered that are not clearly marked with the name and address of the U.S. manufacturer, CBP may require a Manufacturer’s Affidavit confirming that the articles were made in the United States.
 
  (3) One of the following documents will be deemed sufficient proof of export from the United States for U.S. manufactured goods or foreign origin goods, provided the information contained therein proves an export from the United States:

    (a) Copy of the entry into the foreign country;
    (b) U.S. export invoice or bill of lading/airway bill; or,
    (c) Electronic Export Information (EEI) or the Automated Export System

         (AES) filing exemption.
 
  (4) For aircraft and aircraft parts and equipment returned to the United States by or for the account of an aircraft owner or operator and intended for use in his own aircraft operations, within or outside the United States, a CBP Form 3311, or its electronic equivalent may be used as stated in 19 CFR 10.1.
 
  (5) For U.S. origin goods that were originally exported under a Department of State license that are now being re-imported, formal entry is required regardless of value along with the Directorate of Defense Trade Controls (DDTC) Partnership Government Agency (PGA) message set.
 
  (6) For U.S. manufactured aircraft returning to the United States that were sold to a foreign government under the Foreign Military Sales Program, formal entry is required if any maintenance is being performed on the aircraft while in the United States. The repairs have to be authorized via a specific case line in the Letter of Offer and Acceptance (LOA). The LOA is the agreement between the United States and the foreign government regarding the sale of munitions and other articles to the foreign government. 
(a) At the time of export of the aircraft, the EEI has to be filed for the maintenance of the aircraft.
 
  (7) For U.S. manufactured aircraft returning to the United States that were sold to a foreign government under the Foreign Military Sales program, where modifications or enhancements will be made to the aircraft, then the following is required for the import and subsequent export of the aircraft:

  (a) Formal entry is required.
  (b) At the time of export, the EEI submission is required, citing the

       Directorate of Defense Trade Controls export license (DSP-5).
 
CBP has advised its field operations to continue to use risk management in reviewing formal claims filed under 9801.00.10.
 
The inability to produce the identified documents when requested can result in the denial of the claim and possible expansion to similar situations.

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ENEDITOR’S NOTES

(Source: Editor)

* Ayn Rand (born Alisa Zinov’yevna Rosenbaum, 2 Feb 1905 – 6 Mar 1982, was a Russian-American novelist, philosopher, playwright, and screenwriter. Ayn Rand was her pen name, adopted in 1924.  (“Ayn” rhymes with “line”, although it is often mispronounced as “Ann”.)  She is known for her two best-selling novels, The Fountainhead and Atlas Shrugged, and for developing a philosophical system she called Objectivism.)
  – “A creative man is motivated by the desire to achieve, not by the desire to beat others.”
  – “The question isn’t who is going to let me; it’s who is going to stop me.”

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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: 27 Jan 2017: 82 FR 8589-8590: Delay of Effective Date for Importations of Certain Vehicles and Engines Subject to Federal Antipollution Emission Standards; and 82 FR 8590: Delay of Effective Date for Toxic Substance Control Act Chemical Substance Import Certification Process Revisions 

* 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: 1 Feb 2017: 82 FR 8893-8894: Commerce Control List: Removal of Certain Nuclear Nonproliferation (NP) Column 2 Controls

  
*
FOREIGN ASSETS CONTROL REGULATIONS (OFAC FACR)
: 31 CFR, Parts 500-599, Embargoes, Sanctions, Executive Orders
  – Last Amendment: 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: 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 with all amendments is contained in 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 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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