17-0223 Thursday “The Daily Bugle”

17-0223 Thursday “The Daily Bugle”

Thursday, 23 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 
for free subscription.
Contact us
 for advertising inquiries and rates.

[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. Commerce/Census: AES Changes Impacted by Export Control Reform Implementation Rules 
  4. Commerce/Census: Port of Export Codes Deleted in the Automated Export System (AES)
  5. DHS/CBP: FDA ACS Messaging NOT Turned Off Today (2/23/17)
  6. DoD/DSS Makes SCAP Content Available to Industry via OBMS
  7. Justice Publishes Summary of Major U.S. Export Enforcement, Economic Espionage, Trade Secret, and Embargo-Related Criminal Cases
  8. State/DDTC: (No new postings.)
  9. German BAFA Publishes Export Control Newsletter
  10. UK/DIT ECO Posts Consolidated List of Strategic Military and Dual-Use Items That Require Export Authorization
  11. UK/DIT ECO Posts UK Strategic Export Control Lists Guidance
  12. UK/DIT ECO Posts Update on Export Control Symposium 2017
  1. Expeditors News: “WTO Trade Facilitation Agreement Enters Into Force” 
  2. Reuters: “Brazil Taurus Shipped Arms to Son of Yemeni Smuggler: U.N. Report” 
  3. Reuters: “U.S. Extends ZTE’s Sanctions Relief Until March 29” 
  1. A. Lakatos, O. Lev & M. Bisanz: “No Violation Is Too Small and No Connection Is Too Attenuated to Escape US OFAC Scrutiny” 
  2. C. Gillis: “Help wanted: High-level Export Compliance Officers Are in Demand as Companies Realize Value of the Position” 
  3. S.I. Irwin: “Industry Jittery About Defense Exports” 
  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 (10 Feb 2017), FTR (15 May 2015), HTSUS (10 Feb 2017), ITAR (11 Jan 2017) 


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


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

(Source: Federal Register)

* Commerce; Industry and Security Bureau; RULES; Temporary General Licenses: Extension of Validity [Publication Date: 24 February 2017.]
* Justice; Alcohol, Tobacco, Firearms, and Explosives Bureau; NOTICES; Agency Information Collection Activities; Proposals, Submissions, and Approvals [Publication Date: 24 February 2017.]:
  – Application for Alternate Means of Identification of Firearm(s) (Marking Variance)
  – Application for Registration of Firearms Acquired by Certain Government Entities
  – Inventories, Licensed Explosives Importers, Manufacturers, Dealers, and Permittees
  – National Firearms Act – Special Occupational Taxes
  – Records of Acquisition and Disposition, Collectors of Firearms

* State; NOTICES; Meetings; Advisory Committee on International Economic Policy; Cancellation [Publication Date: 24 February 2017.]

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

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


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

OGS_a33. Commerce/Census: AES Changes Impacted by Export Control Reform Implementation Rules

census@subscriptions.census.gov, 22 February 2017.)
On July 28, 2016 and October 12, 2016, the Department of Commerce, Bureau of Industry and Security published final rules (available at
here and
here) that became effective December 31, 2016. As a result of these rules, the following changes were made to the Automated Export System (AES) in order for exporters and authorized agents to successfully report electronic export information in the AES.
(1) The Addition of “600 series” Export Control Classification Numbers (ECCN)
600-series ECCNs 1A607, 1B607, 1C607, 1D607, 1E607, 6B619, 6D619, 6E619, 7A611, 7B611, 7D611, and 7E611 were added to the AES ECCN reference table. See the following instructions to determine which “600 series” ECCNs are eligible for certain license types. By using any of the License Exceptions or “No License Required” (NLR), you are certifying that the terms, provisions, and conditions described in the EAR have been met.
  – C30 (BIS license), C40 (TMP), C41 (RPL), C42 (GOV), and C59 (STA) – All “600 series” ECCNs listed above are eligible to the extent permitted under part 740 of the EAR.
  – C33 (NLR) – All “600 series” ECCNs listed above are eligible only if exported to Canada. Some of these “600 series” items were previously authorized under an International Traffic in Arms Regulations (ITAR) Canadian exemption (SCA).
  – C35 (LVS) – The following “600 series” ECCNs are eligible: 1B607, 6B619, 7A611, and 7B611.
  – C44 (TSU) – The following “600 series” ECCNs are eligible: 1D607, 1E607, 6D619, 6E619,7D611, and 7E611.
If the “600 series” ECCNs are reported under any other license type, AES will generate a fatal error (FATAL ERR 666-ECCN MUST BE FROM APPROVED LIST) back to the filer. Please note that under 758.1 of the EAR, an AES filing is required for exports of items classified under “600 series” ECCNs, regardless of the value of the item or destination.
(2) Items subject to the EAR, including “600 series” ECCNs that are licensed by the State Department under the International Traffic in Arms Regulations (ITAR)
Under a delegation of authority, the State Department may license an item subject to the EAR on an ITAR license pursuant to new section 120.5(b) of the ITAR. If this occurs, the AES filer must report the ECCN (including “600 series” ECCNs) or the EAR99 designation in the ECCN field in AES, even if the license type is S05 (DSP-5). All other fields associated with license type S05 are required, such as registration number, significant military equipment indicator, DDTC eligible party certification indicator, USML category code, DDTC unit of measure and DDTC quantity.
A complete list of all of the AES License Type codes and reporting instructions for these types can be found at
For questions regarding these upcoming AES changes, please contact the Bureau of Industry and Security by email at
ECR_AES@bis.doc.gov or at one of the phone numbers below.
  – Office of Technology Evaluation (located in Washington, DC): (202) 482-4933
  – Outreach and Educational Services Division (located in Washington, DC): (202) 482-4811
  – Western Regional Office (located in Irvine, CA): (949) 660-0144
  – Northern California branch (located in San Jose, CA): (408) 998-8806

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

Please note the following Port of Export codes have been DELETED in the AES effective immediately.
Port of Export Description
  – 3844: Ferrysburg, MI
  – 3820: Mackinac Isle, MI
  – 1181: Allentown-Bethlehem, PA
  – 1408: Hopewell, VA
  – 2784: Los Angeles Field Office
  – 3505: Cedar Rapids, IA
  – 3506: Sioux City, IA
  – 4195: Emery Courier
  – 3981: Waukegan Airport, IL
  – 3985: Decatur Airport, IL
  – 4185: Hulman Regional Airport
  – 4506: Erie, PA
  – 4112: Akron, OH
  – 4192: Burlington Air Express, OH
  – 2873: IBC Pacific INC, CA
  – 3107: Valdez, AK
  – 3112: Petersburg, AK
  – 3279: San Francisco Field Office
  – 3332: Casper, WY
  – 4906: Humacao, PR
  – 4911: Jobos, PR
  – 4912: Guayanilla, PR
  – 5103: Coral Bay, VI
  – 2083: Arkansas Aeroplex, AR
  – 2005: Port Sulphur, LA
  – 2009: Destrehan, LA
  – 2012: Avondale, LA
  – 2013: St. Rose, LA
  – 2014: Good Hope, LA
  – 2682: Williams Gate Airport, AZ
  – 5302: Dallas (inactive), TX
  – 5303: Ft. Worth (inactive), TX
  – 5304: Oklahoma City (inactive), TX
  – 5305: Tulsa, OK
  – 5307: Amarillo, TX
  – 5308: Lubbock, TX
  – 5379: Inactive
  – 1886: Ocala Regional Airport, FL
  – 5299: Miami Seaport Alt., FL
  – 5270: Int. Courier Assoc., FL
  – 5272: MIA/CFS Express Consignment Facility, FL
  – 2479: El Paso Field Office
For further information or questions, contact the U.S. Census Bureau’s Data Collection Branch.
  – Telephone: (800) 549-0595, select option 1 for AES.
  – Email:
  – Blog:
Global Reach Blog

back to top 

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


DHS/CBP: FDA ACS Messaging NOT Turned Off Today (2/23/17)

CSMS# 17-000099, 23 February 2017.)
New ACE Programming
The inbound and outbound FDA ACS transactions that are listed in the attachment were scheduled to be turned off this morning (2/23/17) at 8 AM EST. Unfortunately, due to unforeseen circumstances, this was not able to occur. An updated CSMS will be sent out when a new date is determined to turn off these messages.
For questions, including the equivalent ACE transactions, please send your inquiry to
Note that supplemental information to this message is available in the form of one or more file downloads. Please follow the link in this email message to the CSMS web site to access this information.

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


DoD/DSS Makes SCAP Content Available to Industry via OBMS

The DSS NISP Authorization Office (NAO), in collaboration with the Defense Information Systems Agency and the Space and Naval Warfare Systems Command, has made the Security Content Automation Protocol (SCAP) Compliance Checker available to industry via OBMS. Installation files for the SCAP Compliance Checker are posted in the “ODAA Bulletin Board” section of OBMS for all supported operating systems. For additional information, please view the updated
SCAP Job Aid posted on the
DSS Risk Management Framework website. Applying for sponsorship through MAX.gov is no longer necessary as all PKI-protected SCAP content is available within OBMS.
If you have questions or concerns, please contact your assigned Information Systems Security Professional (ISSP). If you encounter issues accessing the SCAP content on OBMS, contact DSS NAO at

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


Justice Publishes Summary of Major U.S. Export Enforcement, Economic Espionage, Trade Secret, and Embargo-Related Criminal Cases

The U.S. Department of Justice (DoJ) has published its Summary of Major U.S. Export Enforcement, Economic Espionage, Trade Secret, and Embargo-Related Criminal Cases, (January 2014 to the present: updated February 17, 2017), available at

The list contains a brief description of some of the major export enforcement, economic espionage, theft of trade secrets, and embargo-related criminal prosecutions by the Justice Department since January 2014. These cases resulted from investigations by the Homeland Security Investigations (HSI) [formerly Immigration and Customs Enforcement (ICE)], the Federal Bureau of Investigation (FBI), the Department of Commerce’s Bureau of Industry and Security (BIS), the Pentagon’s Defense Criminal Investigative Service (DCIS), and other law enforcement agencies.

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


State/DDTC: (No new postings.)

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


German BAFA Publishes Export Control Newsletter

The Information Service of German Federal Office for Economic Affairs and Export Control (BAFA) has published the latest issue (January/February 2017) of its Export Control Newsletter.  The content of the newsletter is included below.
With the Commission Implementing Regulation (EU) 2016/2363 of 21 December 2016 (OJ L 350 of 22.12.2016, p. 20) and 2017/44 of 10 January 2017 (OJ L 6 of 11.1.2017, p. 36) amending Council Regulation (EC) No. 1210/2003 concerning certain specific restrictions on the economic and financial relations with Iraq, 9 entities were removed from the list of persons and entities to whom the freezing of funds and economic resources applies.
The amendment implements the resolutions adopted by the Sanctions Committee of the United Nations Security Council on 16 and 28 December 2016.
In accordance with the Council Implementing Regulation (EU) 2017/77 of 16 January 2017 (OJ L 12 of 17.1.2017, p. 24) amending Regulation (EU) No. 267/2012 concerning restrictive measures against Iran, the entries related to four entities listed in Annex IX Part I.B to Regulation (EU) No. 267/2012 were deleted. In addition, the recitals of the Implementing Regulation refer to some individuals and entities whose sanctioning was lifted by judgements of European courts. Since these judgements are self-executing and need no implementing acts, the persons and entities that are removed from the lists continue to be contained in the Annexes of the consolidated legal texts (due to the fact that only the relevant legal acts of the Council are consolidated, but no other acts having an effect on the listing). The EU institutions are working on making the future consolidated versions more transparent in this regard; until then reference is made to the courts’ delisting in the present form.  
Democratic Republic of Congo
With the Council Regulation (EU) 2016/2230 of 12 December 2016 (OJ L 336 of 12.12.2016, p. 1) amending Regulation (EC) No. 1183/2005 imposing certain specific restrictive measures directed against persons acting in violation of the arms embargo with regard to the Democratic Republic of the Congo, the European Council adopted additional restrictive measures against certain individuals, entities and institutions in view of the acts of violence that took place in Kinshasa in September.
North Korea
In accordance with the Commission Implementing Regulation (EU) 2016/2215 of 8 December 2016 (OJ L 334 of 9.12.2016, p. 29) amending Council Regulation (EC) No. 329/2007 concerning restrictive measures against the Democratic People’s Republic of Korea 11 natural persons and 10 entities were added to the list of individuals and entities subject to restrictive measures set out in Annex IV. Furthermore, three of these entities and one person were removed from the list in Annex V.
With the Commission Implementing Regulation (EU) 2017/80 of 16 January 2017 (OJ L 12 of 17.1.2017, p. 86) amending Council Regulation (EC) No. 329/2007 concerning restrictive measures against the Democratic People’s Republic of Korea five vessels were deleted in Annex IV to Regulation 329/2007 because these vessels are not economic resources controlled or operated by Ocean Maritime Management and therefore are not subject to the asset freeze.
The amendment implements the resolution adopted by the Committee of the United Nations Security Council on 17 December 2016.
In accordance with the Council Regulation (EU) 2016/2137 of 6 December 2016 (OJ L 332 of 7.12.2016, p. 3) amending Regulation (EU) No. 36/2012 concerning restrictive measures in view of the situation in Syria, exceptions to restrictive measures were adapted to the current circumstances due to the continuing humanitarian crisis in Syria. In the future clearly defined persons and entities are allowed to purchase and transport mineral oil and petroleum products for the sole purpose of providing humanitarian relief or assistance to the civilian population in Syria and to provide related financing or financial assistance in Syria. Furthermore the relevant associated exceptions to the restrictions on the freezing of funds and economic resources were amended.
Al Qaida and ISIL (Da´esh)
With the Commission Implementing Regulation (EU) 2016/2262 of 15 December 2016 (OJ L 342 of 16.12.2016, p. 22) amending for the 257th time Regulation (EC) No. 881/2002 imposing certain specific restrictive measures directed against certain persons and entities associated with the ISIL (Da´esh) and Al-Qaida organisations, one natural person was added to the list in Annex I to Regulation (EC) No. 881/2002.
The amendment implements the resolution adopted by the Sanctions Committee of the United Nations Security Council on 12 December 2016.
Measures Directed Against Other Terrorism Suspects
In accordance with the Council Implementing Regulation (EU) 2016/2373 of 22 December 2016 (OJ L 352 of 23.12.2016, p. 31) amending Article 2 (3) of Regulation (EC) No. 2580/2001 on specific restrictive measures directed against certain persons and entities with a view to combating terrorism, three persons were added to the list of persons set out in Section I (individuals) of the Annex to the Implementing Regulation (EU) 2016/1127.
Update of Part I Section A of the Export List
The 7th ordinance amending the Foreign Trade and Payments Ordinance of 19 December 2016 (came into effect on 24 December 2016) inserted an additional note to item no. 0013 in Part I Section A of the Export List. The aim is to specify the control of armour plates which have a special composite construction or are made of individual materials as well as to establish the current implementation practice. Further information is published at BAFA’s web sites at “Ausfuhrkontrolle” “Güterlisten”.
Manual on Completion of End-use Certificates for Exports and Transfers of Military Equipment Published in English
The English version of the
Manual on how to complete End-Use Certificates for exports and transfers of military equipment was published at BAFA’s web sites (englischsprachige Ausfüllanleitung). You can provide it to your customer and, thus, support him in filling the templates of end-use certificates.
In the main part you find step-by-step instructions on how to complete the different sections as well as notes on the declarations to be provided. The introduction explains the purpose of end-use certificates, their legal bases and the most important definitions.
Please note that end-use certificates must be filled completely and self-consistent in order to avoid further enquiries and unnecessary delays in the processing of your application. The content of the different sections must not be changed. If some sections are not relevant – for instance section G / trader statement for export to a well-known end-user – you can completely delete the section or provide it with the note “not applicable”.

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


UK/DIT ECO Posts Consolidated List of Strategic Military and Dual-Use Items That Require Export Authorization  

The Export Control Organisation (ECO) of the UK Department for International Trade (DIT) has posted a consolidated list of strategic military and dual-use items that require an export license issued by the ECO.
The list is available at

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


UK/DIT ECO Posts UK Strategic Export Control Lists Guidance

The Export Control Organisation (ECO) of the UK Department for International Trade (DIT) has posted guide on Strategic Export Control Lists, including on when to apply for a strategic export license.
The UK Strategic Export Control Lists form the basis of determining whether any products, software or technology that you intend to export are ‘controlled’ and therefore require an export licence.
If your items are referenced on the Control Lists (ie listed under a Control List entry or ‘rating’) then you will need to apply for licence from the Export Control Organisation (ECO). The ECO is the UK Government’s regulatory authority for export licensing of strategic goods.
You should also note that if your goods are not listed on the UK Strategic Export Control Lists, that the ECO has the power to invoke ‘End-Use Controls’ if there are any specific concerns about military or weapons of mass destruction (WMD) end-use.
The UK Strategic Export Control Lists specify goods that need an export licence for ‘strategic’ purposes.
Download the UK Consolidated List of Strategic Military and Dual-Use Items that Require Export Authorisation at
Are My Items Listed on a Control List?
You can use the
Checker Tools database, provided by the Export Control Organisation, to establish this. The Goods Checker helps to establish if your items are controlled and identify the appropriate control entry (‘rating’) reference from the UK Strategic Export Control Lists. If so, you will need to apply for an appropriate export licence. Search Tool available on the ECO’s SPIRE database. The OGEL Checker helps to identify if an appropriate Open General Export Licence (OGEL) exists.
  – Note: The Control List Classification Advice Service is suspended until further notice. Please refer to
Notice to Exporters 2014/16 for more information.
End-Use Controls
If your goods are not listed on the Control Lists, you may still need a licence under End-Use Controls. This applies if the goods are likely to be sent to an end-user where there are concerns that they might be used in a WMD programme.
How Do I Know Whether My Items Are Listed on a Control List?
The Control Lists comprise a wide range of items – some of which will be fairly obvious such as guns and ammunition (military items) and others which are less so, such as a wide variety of dual-use items. If your items are listed, then they will be referenced on the list under a Control List entry or ‘rating’.
What Are ‘Dual-use Items’?
Dual-use Items are goods, software or technology (documents, diagrams etc) which can be used for both civil and military applications. They can range from raw materials to components to complete systems, eg aluminium alloys, bearings, or lasers. They could also be items used in the production or development of military goods or chemical, biological or nuclear weapons, eg machine tools, chemical/manufacturing equipment and computers.
It is an exporter’s responsibility to check whether your items require an export licence issued by the ECO. If you require a licence, you need to apply well in advance of shipment to avoid any potential problems (such as customs snagging at a port).
In doing this you should be aware of the differences between the UK Trade Tariff and the UK Strategic Export Control Lists.
The Tariff
The UK Trade Tariff is a three-volume guide that is designed to give exporters (and importers) information needed to dispatch and acquire goods traded worldwide and the rates of duty payable. The Tariff can be used in completing customs declarations.
  – Note: Find commodity codes and other measures applying to imports and exports by accessing the
online UK Trade Tariff tool.
However, in relation to classifying or ‘rating’ your goods for strategic export control purposes, the Tariff can only provide a broad indication of whether an export licence is required. For a clearer indication of whether your goods might need a licence you need to consult the UK Strategic Export Control Lists, explained below.
Export Control Legislation
The Control Lists are integral to the UK’s strategic export control legislation and should be read in conjunction with the appropriate articles and regulations. The legislation outlines how the Control Lists operate and are implemented.
International Regimes
The UK Strategic Export Control Lists are derived from various international commitments – including foreign policy, national defence and security interests.
They are compiled mostly from the work of various international export control and non-proliferation groups or regimes. One of the main roles of these bodies is to decide what goods should be controlled to meet their counter proliferation objectives. Subsequently, the agreements are incorporated into national country legislation, including in the UK.
The UK Strategic Export Control Lists are periodically updated – mostly every half year. The updates reflect:
  – new concerns (i.e. items added to the lists)
  – changes to the scope of the controls
  – small technical amendments
  – de-control measures (ie items removed from the controls and for which a licence is no longer required)
You should therefore be careful to ensure that you are:
  – aware of all recent updates to the lists
  – check the latest list versions
  – and take appropriate action to obtain a licence where necessary
No Validity Period for Control List Status or ‘Ratings’ Advice
Whether or not you choose to self-rate or to seek advice from the ECO, you should be aware that there is no ‘rating’ validity period.
Past advice is out of date whenever the Control Lists change.
This does not mean that you need to request new advice every time the Control Lists change, since only specific parts of the list are updated. However, you should keep informed of changes and take appropriate action as a result.
ECO Helpline
  – E-mail:
eco.help@trade.gsi.gov.uk or call +44-(0)20-7215-4594.
  – Too much detail? See these quick guides:
Exporting and Doing Business Abroad
  – Apply for an export license using SPIRE, via 

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


UK/DIT ECO Posts Update on Export Control Symposium 2017

The Export Control Organisation (ECO) of the UK Department for International Trade (DIT) has posted an invitation and booking form for this year’s export control symposium.  The form is available at
This year’s export control symposium will take place on Tuesday 21 March at the Westminster Conference Centre 1 Victoria Street, London SW1H 0ET.
  – Note: The 2017 export control symposium is
fully booked. The invitation is now for information only.
Please see the
export control training bulletin for details of courses, seminars and workshops to help exporters understand their obligations under export control legislation.

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


NWS_a113. Expeditors News: “WTO Trade Facilitation Agreement Enters Into Force”

Expeditors News)
On February 22, 2017 the World Trade Organization (WTO) announced the Trade Facilitation Agreement (TFA) had met its two-thirds WTO member ratification requirement as a result of Rwanda, Oman, Chad, and Jordan submitting their acceptance notices, allowing the agreement to enter into force.
According to the announcement the TFA, “…seeks to expedite the movement, release and clearance of goods across borders, launches a new phase for trade facilitation reforms all over the world and creates a significant boost for commerce and the multilateral trading system as a whole.”
In 2015, WTO economists conducted a study on the effects of implementing the TFA and listed proposed benefits as follows:
  – Average trade cost reduction of 14.3%
  – Approximately 1.5 days reduced on the importation of goods; a reduction of 47%
  – Almost 2 days reduced on exports; a reduction of 91%
  – Exports of global merchandise could benefit by an increase of approximately US$ 750 billion – US$ 1 trillion
Additionally, developing and least developed countries can predict to see a growth in the amount of exported products by as much as 20-35%.
Additional TFA information can be accessed at

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

NWS_a214Reuters: “Brazil Taurus Shipped Arms to Son of Yemeni Smuggler: U.N. Report”

Brazil’s Forjas Taurus SA, the largest weapons maker in Latin America, shipped guns to the son of a known arms trafficker in July 2015, three months after the United Nations imposed an arms embargo on his allies in Yemen’s civil war, according to a U.N. report released last week.
The U.N. document cited and expanded upon a Reuters report in September that detailed the charges in Brazil against former executives at Taurus who allegedly shipped handguns in 2013 to Fares Mohammed Hassan Mana’a, a Yemeni arms smuggler sanctioned for dealings around the Horn of Africa for more than a decade.
U.N. experts on the conflict in Yemen said an investigation turned up several red flags in the sale of the handguns, which were registered for use in Djibouti but allegedly destined for black markets in the region.
Authorities in Saudi Arabia seized an arms shipment in November 2015 before it got to Djibouti, on suspicion the arms were bound for Houthi forces fighting a Saudi-backed coalition in Yemen, according to the report.
  “Had Taurus … exercised due diligence then they would have identified aspects of this arms purchase that were suspicious in relation to the targeted arms embargo on Yemen, and could have stopped the shipment,” wrote the experts.
Responding to the U.N. report, the gun maker told Reuters in an email that the transaction followed all protocols required by Brazilian and international law, and the company halted any further shipments involving Djibouti after learning of concerns about the deal.
  “Taurus had no grounds to distrust the buyers,” it said.
The U.N. report questioned why an end-user certificate from Djibouti cleared the transfer of up to 80,000 pistols to the Ministry of Defense, when the country’s armed forces consist of just 16,000 active personnel and 9,500 reservists.
Investigators also said the company listed as importer on the certificate appeared on none of the shipping, financial or legal documentation for the arms transfer. Instead, the report said, Taurus worked with Itkan Corporation for General Trading, a Yemeni firm owned by Adeeb Mana’a, son of the arms trafficker.
The transfer was “designed to circumvent normal security and customs controls,” the UN report concluded.
The U.N. experts said they could not find a valid address for Itkan in Djibouti, nor did the government there respond to a request for the company’s registration and banking details.
Brazil’s Defense Ministry and Djibouti’s Foreign Ministry did not respond to requests for comment about the U.N. report. The Mana’a family and Itkan Corp could not be reached for comment.
Taurus told Reuters it did not know why Itkan had been selected as an intermediary for the shipment in Djibouti and it was unaware at the time of restrictions against the company or its owner.
Taurus also said it had not taken part in any efforts to evade security controls and has since reinforced internal controls to avoid similar situations. Taurus noted that the April 2015 Yemen arms embargo was not implemented in Brazilian law until July 2016.

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

NWS_a315Reuters: “U.S. Extends ZTE’s Sanctions Relief Until March 29”

Chinese telecom equipment maker ZTE Corp has been granted a slightly longer reprieve from export restrictions imposed by the U.S. government as it seeks to resolve a probe of alleged violations of U.S. sanctions on Iran.
The U.S. Commerce Department extended ZTE’s temporary export license until March 29, the agency said in an online posting on Thursday. The license was set to expire on Monday.
The extension allows U.S. firms to continue to supply the Chinese company with software, technology and components despite the restrictions announced in March 2016.
But the latest window is smaller than earlier 90-day reprieves granted by the Commerce Department, which keeps the pressure on and may be interpreted in two ways, according to Washington attorney Douglas Jacobson.
  “It indicates the final settlement is imminent or is just a stopgap to give the new administration time to decide how they want to proceed,” said Jacobson, who specializes in international trade law and represents a number of U.S. companies that supply ZTE.
ZTE said on Feb. 14 it was negotiating with the Commerce Department, the U.S. Treasury Department and the U.S. Department of Justice to conclude an investigation into its re-exporting American-made items to Iran and other sanctioned countries in violation of U.S. law.
It said the anticipated penalties would likely have a material impact on the company’s financial results. ZTE has annual sales of more than $15 billion.
A spokesman for ZTE did not immediately respond to a request for comment on Thursday. Representatives of the Treasury and Commerce departments also did not immediately respond. A Justice Department spokesman declined to comment.
One of the world’s biggest telecoms gear makers with a 10 percent market share in the United States, ZTE relies on U.S. companies including Qualcomm Inc, Microsoft Corp and Intel Corp for components.
It is also the No. 4 smartphone vendor in the United States, and sells handsets to U.S. mobile carriers AT&T Inc, T-Mobile US Inc and Sprint Corp.
The uncertainty hanging over the company has weighed on its business.
Last month, company sources told Reuters that the equipment maker was cutting about 3,000 jobs, or 5 percent of its 60,000 global workforce.

The U.S. investigation followed reports by Reuters in 2012 that the company had signed contracts to ship millions of dollars’ worth of hardware and software from some of America’s best-known technology companies to Iran’s largest telecoms carrier. 

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


A. Lakatos, O. Lev & M. Bisanz: “No Violation Is Too Small and No Connection Is Too Attenuated to Escape US OFAC Scrutiny”

* Authors: Alex C. Lakatos, Esq.,
alakatos@mayerbrown.com, 202-263-3312; Ori Lev, Esq.,
olev@mayerbrown.com, 202-263-3270; and Matthew Bisanz, Esq.,
mbisanz@mayerbrown.com, 202-263-3434.  All of Mayer Brown Washington DC.
Recent actions involving the economic sanctions programs administered by the Office of Foreign Assets Control (“OFAC”) highlight the strict liability nature of those programs, as they involve routine low-dollar-value transactions and/or connections with sanctioned individuals that would appear attenuated to the average observer. All US businesses, even those that deal in small-dollar-value transactions or have attenuated ties to international trade, need to be aware of OFAC’s expectation of a comprehensive compliance program and the lack of any sort of de minimis or inadvertence exceptions in US sanctions laws.
In February 2017, a major US retailer disclosed that it had voluntarily disclosed to OFAC that it had violated US economic sanctions with respect to Iran from 2012 until 2016. It appears that the aggregate amount of the prohibited transactions was $100,000, but what is particularly interesting was the size of individual prohibited transactions. The retailer disclosed that one prohibited transaction was a $50 order of consumer products that were sent to an Iranian embassy. Other transactions included a $1,300 order of consumer products by a person sanctioned under Executive Order 13224 and a $250 order of consumer products by a person who may have been acting for an entity sanctioned under Executive Order 13382. Each of these consumer transactions was minuscule in comparison to the retailer’s overall business and none appears to have involved the retailer knowingly doing business with a prohibited person (indeed, the retailer has completely automated order processing systems). Despite these mitigating circumstances, the retailer concluded that it should self report to OFAC.
In another case, in January 2017, OFAC entered into a settlement involving violations of US sanctions with respect to Cuba. In that case, an individual and a small affiliated charity were fined $10,000 for arranging two trips to Cuba for a total of 20 people in 2010 and 2011. OFAC imposed the fine even though OFAC expressly noted both that the violations caused minimal harm to the current objectives of US sanctions law and that the size of the fine was constrained by the individual’s modest financial means.
Another case demonstrates the truly strict liability of US economic sanctions. In September 2016, a US exporter was penalized for exporting seven shipments of orthodontic devices to Iran between 2008 and 2010. In the consent order, OFAC noted that it probably would have granted a special license to the exporter if the exporter had requested pre-authorization for the shipments. The fact the shipments were medical devices, had occurred six years earlier, and could have been allowed under certain compliance procedures did not dissuade OFAC from imposing a $43,000 penalty for transactions that had an aggregate value of $60,000.
Another relevant de minimis case includes two findings of violation that OFAC issued to US insurance companies in August 2016. The insurance companies had issued health insurance policies to three individuals in 1992 and then serviced the policies. The insured individuals were subsequently designated by OFAC in 2009. Between 2010 and 2011, the two insurance companies accepted a total of 34 premium payments with an aggregate value of $14,000 from the sanctioned individuals. While OFAC did not fine the companies for these violations, its findings of violation publicly named the companies and could serve as an aggravating factor in any future sanctions matters.
Lastly, in February 2016, OFAC fined a US oil services company $305,000 for allowing its Cayman Island subsidiaries to provide services to an Angolan oil and gas consortium in which a Cuban government-owned company owned only a five percent interest. In the settlement agreement, OFAC indicated that it expected the US provider would have systems in place such that its Cayman subsidiaries would have conducted due diligence on who owned the consortium and identified the presence of a five percent Cuban-government-owned investor. Under the Financial Crimes Enforcement Network’s recently adopted customer due diligence rule, a bank is not necessarily expected to conduct due diligence to identify sub-25 percent owners of potential customers. OFAC, however, appears to be taking a much harder line on the issue of identifying minority investors in customers.
OFAC officials have publicly stated that they consider even a $1 violation to be important because it shows that a company’s compliance systems are not sufficient to prevent all prohibited transactions. This can be a difficult standard for many businesses, especially high-volume, low-dollar-value businesses, to address. By contrast, anti-money laundering requirements incorporate risk-based compliance measures rather than impose strict liability for violations. Similarly, US criminal laws typically require a wrongful state of mind as an element of any violation.
Given OFAC’s focus on violations regardless of the dollar value of the transaction at issue, it is good practice for all companies-including those engaged in a large volume of low-dollar-value transactions-to dedicate compliance resources to identify and investigate potential violations of US sanctions. Companies may wish to engage outside counsel to assist in investigating the violations, implementing appropriate remedial measures and determining whether a voluntary self-disclosure to OFAC would be prudent.

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

COMM_a0217. C. Gillis: “Help Wanted: High-level Export Compliance Officers Are in Demand as Companies Realize Value of the Position”

American Shipper, March 2017 Edition, and
Adam Smith Project) [Excerpts of subscription publication.]
* Author: Christopher Gillis, Editor, American Shipper,
Highly competent export compliance officers don’t grow on trees, and that’s a big problem for companies increasingly aware of the impact of complying with complex and intensifying export controls in the United States and abroad.  Demand is rising for qualified export compliance officers (ECOs) as the role shifts from being associated more with administrative tasks to touching multiple layers within an organization.
  “The people we look for to fill this role are leaders,” said Mitch Fonda, senior manager of global trade compliance and product stewardship at Waters Corp. “There are a lot of people who know the regulations, but what you want is that cross-functional adaptation of technical knowledge to manufacturing, sales and research and development within your organization. We refer to these people as business owners, because they actually own the business that impacts you.”
Waters Corp., a Boston-based analytical laboratory instrument and software company, has recently added these types of resources to its compliance team, including one person that has an MBA in supply chain management, another who oversaw a European operation, and most recently a new addition early in their career “who is a natural at this,” Fonda said. “It can take five to seven months to find someone with those qualities,” he added. “You can find a tactician in this field on just about every street corner, it seems, but you won’t find a team leader just to fill this role just anywhere.” …
  “More companies are recognizing the importance of the ECO’s role,” said Paul DiVecchio, head of Boston-based DiVecchio & Associates, who has spent more than 35 years advising companies on export compliance. “I think this is a direct result of the advice from their outside counsel as to export compliance being a key role to ensure corporate governance and also because of the transparency of the many compliance violations and investigations.” …
Where Does The ECO Reside?
Where an export compliance officer sits within the corporate structure depends on the size of the company and nature of its business. Ideally, the position should be within a department that has access to information about the entire operation globally. …
ECO Shortage
Despite growing demand, many companies struggle to find highly qualified export compliance officers to place within their corporate ranks. Jim Bartlett, former senior counsel for imports and exports at Northrop Grumman, and publisher of
The Daily Bugle, a 17-year-old
free online newsletter focused on export/import regulatory changes, said the job postings that he receives from companies have jumped from an average of 25 per week three years ago to about 125 weekly job listings today.  “Some companies go on hiring sprees as corrective actions after export violations” and enforcement by the federal government, he said in an interview.
However, Bartlett said more companies are realizing that export compliance is not just about “avoiding punishment for violations, because trade compliance can improve a company’s competitiveness, move freight faster, and increase profits.” Bartlett, who is a partner in the Dutch trade audit/advisory company
Full Circle Compliance, maintains a law office in Washington and teaches a
master’s degree program in international trade for the University of Liverpool in London, said, “I tell my students not to worry about the job market for compliance specialists, because it’s headed up. Regardless of who is in office, enforcement is increasing, and there will be more need for compliance specialists.”  …
Warren R. Carter, senior managing partner of The QualiFind Group, who has worked with large corporations (mostly in the automotive, aerospace and defense sectors) since 1997 to find and hire qualified compliance officers, said these individuals are increasingly in demand. … “I can pretty much tell right away when a person in a compliance role is not taken seriously,” Carter said. “When I’m hearing their frustrations, that means it’s easier for me to recruit that candidate into a role where they will be taken seriously. “However, if I call someone who is revered and their opinions are listened to, then it will be extremely difficult to unseat that person for a new opportunity. And people in this industry know which companies are difficult to work for.” The job of an export compliance officer in a large corporation pays well, about $150,000 to $300,000 for a vice president level, and $125,000 to $175,000 for those with senior manager or director titles. “Unfortunately, many mid-sized firms will tend to plug any eligible person they can get for the job at a reduced salary, as opposed to paying the market value for a highly qualified ECO,” Carter said.  …
  “The role of the ECO is to be a solution provider-enhance the sales opportunities, while eliminating the risk,” said Paul DiVecchio, head of export compliance consultancy DiVecchio & Associates. “The final outcome may still be that one cannot go forward with the transaction, but at least an effective ECO can demonstrate all efforts were made to pursue the opportunity.” … DiVecchio, who works with scores of companies’ compliance officers in the New England area, said successful export compliance in his view requires the individual to be a:
  – Diplomat-dealing with all levels within and outside the employer’s environment;
  – Tactician-having both the theoretical and practical understanding of the subject;
  – Psychologist-being able to identify with the personnel with which one deals in order to achieve goals;
  – Manager-managing people and processes;
  – And decision maker-analyzing data and feeling confident to make the best decisions possible.
DiVecchio also said an export compliance officer should possess skill sets for using logic and effective communications, which will lead the individual to being a recognized “problem solver.” “These positions have moved from glorified administrators to corporate compliance officers due to the critical nature of the position in the realm of corporate governance within the employer’s environment,” DiVecchio said.  …
An ECO’s Daily Checklist: 
[See checklist at one of the Source URLs.]

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

COMM_a318S.I. Irwin: “Industry Jittery About Defense Exports”

NDIA News)
* Author: Sandra I. Irwin, Editor
National Defense Magazine,
It could have been a quick and easy deal. India’s navy last fall agreed to buy 22 maritime surveillance drones from U.S. manufacturer General Atomics.
The deal was seen as a sign that the budding security alliance that the Obama administration had been nurturing for years with the government of India was poised to benefit U.S. defense industry sales.
The sale, still under review by the U.S. government, is somewhat more complicated because long-range unmanned aircraft – even those that are sold without weapons – are tightly controlled as they could be used as cruise missiles. Regardless, this sale should have been approved by now, says David Melcher, president and CEO of the Aerospace Industries Association.
  “The Obama administration ran out of time and energy,” Melcher said in a webinar. “These are the kinds of cases the Trump administration should be trying to resolve quickly.”
Aerospace and defense generated the largest trade surplus of any sector last year, he said. Even though the Trump administration has made growing the economy and creating jobs top priorities, Melcher worries U.S. defense firms are going to see their dominance erode unless the government steps up to help.
  “We could do so much more when it comes to defense exports,” he said. “When we sell these systems overseas – and especially the parts and components to keep them running year after year – we’re helping to sustain and bolster ties with partners.”
So far in fiscal year 2017, the Pentagon has notified Congress of foreign military weapon requests worth $45 billion, and sales could top $60 billion for the year.
The numbers are impressive, so why the angst?
Melcher said the data show that U.S. companies moving forward are in danger of losing ground to other competitors. Several U.S. weapon systems are behind schedule because of budget cuts, causing delays in deliveries. And once a sale is made, the red tape can hold up deals for months or years. “Our competitors have considerable economic and political support for their sales campaigns,” he said. “They are eager to fill the gap when U.S. systems are hung up by slow deliveries or the approval process.”
The Obama administration did simplify the licensing process and was aggressive in championing U.S. systems overseas, but the industry is hoping for more assistance from the current president.
Melcher has proposed the creation of a “national security cooperation strategy” to boost defense exports. From Trump’s perspective, this “resonates,” said Melcher. It satisfies two of his top priorities: ease business regulations and protect U.S. jobs.
What, if any, policy changes or new approaches might be considered by Trump officials at the State, Defense and Commerce departments remains to be seen. 
Greg Hill, vice president of DRS Technologies and vice chair of the National Defense Industrial Association’s international division, said the regulatory burdens for defense exports were significantly reduced under Obama. “Where we were eight or nine years ago was absolutely stifling, in ways that actually harmed national security,” he told National Defense. “Today, from a business perspective we’re in a much better place.”
But there is room for improvement in the new administration, said Hill. Even close U.S. allies today continue to jump through massive hoops to buy equipment. “If Boeing sells fighters to Canada and the Canadian government wants local suppliers to change the oil, they have to ask the U.S. government for permission,” said Hill. “These are good friends. We should cut down unnecessary hurdles.”
Defense companies also are pushing back on policies that they believe unfairly target exporters. A newly proposed rule, for instance, would allow the Pentagon to suspend contractors from export deals for technical data disclosure violations. Hill said industry groups are challenging that rule because the State Department already has a regulatory apparatus to identify and punish companies that violate such rules.
The industry finds the Pentagon’s proposal “troubling” because it adds more complexity to a system that is already beyond byzantine. The issue with this particular rule is that Defense would be making its own decisions on what constitutes a violation even though the State Department is the actual regulator.
Export laws and regulations are a “bizarre little niche field,” said Hill. Companies don’t want to risk their business so they spend millions of dollars in an effort to understand the rules and comply with them.
For defense exporters, the key to success in a larger sense is building relationships with governments. And in the Trump administration this comes with its own set of challenges as the president has openly criticized allies and has espoused anti-Muslim views, leading many to wonder how this might influence arms deals in Europe, the Middle East and elsewhere.
Already there are signs that Trump may not be as eager to work with other countries on defense programs. Reuters reported that the administration wants to revisit Lockheed Martin’s agreement with the government of India to build F-16 fighters there if the nation agrees to buy a large number of them. This might appear to be a case of jobs moving overseas, but the F-16 line would be shutting down anyway as the U.S. Air Force transitions to the F-35. And India will not buy F-16s unless they are manufactured domestically.
The proposal last year was cheered by all parties as a “win-win.” But times have changed. Industry analyst William Hartung, of the Center for International Policy, does not see Trump significantly disrupting the defense export market. “My sense is that Trump will view arms exports as a job creator and push them accordingly,” said Hartung. “There have been some concerns about whether his anti-Muslim rhetoric and ‘America First’ posture will hurt the United States. In some markets, it might, but I don’t think it will have an impact in the anti-Iran Gulf States.”

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


(Source: Editor)

W.E.B. Du Bois (William Edward Burghardt “W. E. B.” Du Bois (pronounced “doo-boyze”), 23 Feb 1868 – 27 Aug 1963, was an American sociologist, historian, civil rights activist, Pan-Africanist, author, and editor. He was the first African American to earn a doctorate at Harvard, and was one of the co-founders of the National Association for the Advancement of Colored People (NAACP) in 1909.)

  – “A little less complaint and whining, and a little more dogged work and manly striving, would do us more credit than a thousand civil rights bills.”


Samuel Pepys ((Pronounced “peeps”) 23 Feb 1633 – 26 May 1703, was an administrator of the English navy and Member of Parliament. Pepys had no maritime experience, but rose to be the Chief Secretary to the Admiralty through patronage, hard work, and his talent for administration. His influence and Admiralty reforms were important in the early professional improvements of the Royal Navy.)

  – “Strange to see how a good dinner and feasting reconciles everybody.”

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

. 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.
: 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 
: 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 

  – 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.)

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

: 31 CFR, Parts 500-599, Embargoes, Sanctions, Executive Orders
  – Last Amendment: 10 Feb 2017: 82 FR 10434-10440: Inflation Adjustment of Civil Monetary Penalties.  
: 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
  – 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.
, 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: 10 Feb 2017: Harmonized System Update 1701, containing 1,295 ABI records and 293 harmonized tariff records.   

  – HTS codes for AES are available
  – HTS codes that are not valid for AES are available
  – 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
.  BAFTR subscribers receive a 25% discount on subscriptions to the BITAR, please
contact us
to receive your discount code.  

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


* 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.

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

* TO UNSUBSCRIBE: Use the Safe Unsubscribe link below.

Scroll to Top