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 | | EX/IM ITEMS FROM TODAY’S FEDERAL REGISTER |
[No items of interest noted today.] * * * * * * * * * * * * * * * * * * * *
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OTHER GOVERNMENT SOURCES |
1. Ex/Im Items Scheduled for Publication in Future Federal Register Editions * Commerce Department; NOTICES; Request for Information; Impact of Federal Regulations on Domestic Manufacturing [Publication Date: 7 Mar 2017.] * Foreign Assets Control Office; NOTICES; Blocking or Unblocking of Persons and Properties [Publication Date: 6 Mar 2017.] * Industry and Security Bureau; NOTICES; Agency Information Collection Activities; Proposals, Submissions, and Approvals: – Technical Data Letter of Explanation [Publication Date: 6 Mar 2017.] * * * * * * * * * * * * * * * * * * * *
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2. Commerce/BIS: (No new postings.) * * * * * * * * * * * * * * * * * * * *
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3. DHS/CBP: Ace Production Outage Scheduled on 4-5 Mar ACE Reports Please be advised that there will be an ACE PRODUCTION Outage to perform infrastructure maintenance this Saturday evening, March 4, 2017 from 2200 ET to 0400 ET, Sunday, March 5, 2017 at 0400 ET, with the maintenance to potentially complete as early as 0030 ET. * * * * * * * * * * * * * * * * * * * *
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4. DHS/CBP: FDA Experiences Multiple System Outages (Source: CSMS# 17-000120, 3 March 2017, 12.45 PM EST.) New ACE Programming FDA is currently experiencing outages across many applications, which prevents the processing of entries. The technical team is currently investigating. As a result, FDA’s Division of Food Defense Targeting will be operating under the prior notice scenario 2 contingency. These issues will prevent submitters who filed via Automated Broker Interface (ABI) from receiving Prior Notice Confirmation (PNC)numbers and would prevent Customs and Border Protection (CBP) Officers from auto-checking the PNC for ABI filers. The intermittent downtime will also prevent the receipt of 801(a) admissibility decisions until the systems are operational again. If prior notice has not already been submitted, ABI filers may decide to wait out the intermittent downtime if they determine that the timeliness of prior notice will not be adversely affected. Filers who choose this option should understand that they remain responsible under section 801(m) of the act and under the prior notice final rule for filing timely prior notice. ABI transmissions received by FDA during the downtime will be queued and processed once the maintenance is completed. PNC numbers will not be transmitted back to filers during the downtime. Alternatively, filers may submit prior notice via PNSI, in which case the prior notice confirmation number must accompany the article of food (21 CFR 1.279(g)). If prior notice is submitted through PNSI, FDA and CBP recommend that the PNSI confirmation page, including the prior notice confirmation number and time stamp, be presented to CBP officers for cargo release. If the PNSI confirmation page is not presented, this may delay cargo release while the CBP officer, without being able to access OASIS, contacts FDA for verification of the prior notice confirmation number(s) and time of submission. If prior notice has already been submitted via ABI/ACE prior to the interface intermittent outage, and confirmation has already been received, the submitter may proceed with prior notice using the standard process. If prior notice has already been submitted via ABI/ACE and confirmation has not been received prior to the intermittent interface outage, FDA and CBP recommend that, rather than resubmitting via PNSI, submitters should provide to CBP officers, at the time of cargo release, an endorsed (signed) copy of the ABI transmission or some other evidence adequate to show that prior notice has been submitted via ABI/ACE. Questions regarding prior notice during this downtime should be presented to the FDA’s Division of Food Defense Targeting at (866) 521-2297. As a result of these application issues, FDA also cannot process incoming 801(a) submissions. Entries will be processed and messaging sent once the issue has been resolved. Do not re-transmit entries as this will cause further delays when the issue has been resolved. The Import Trade Auxiliary Communication System (ITACS) is also down due to the same issue. Updates will be provided when they become available via additional CSMS messages. Please continue to contact FDA ACE Support 24/7 at ACE_Support@fda.hhs.gov or 877-345-1101 for ACE inquiries. Please contact FDA’s Division of Food Defense Targeting at (866) 521-2297 for questions regarding prior notice. * * * * * * * * * * * * * * * * * * * *
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5. State/DDTC: (No new postings.) * * * * * * * * * * * * * * * * * * * *
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6. Canada Amends Export Control List Regulations On February 3, 2017, the “Regulations Amending the Export of Substances on the Export Control List Regulations Registration” were amended as a result of changes to subsection 332(1) of the Canadian Environmental Protection Act of 1999, chiefly affecting mercury and other “Ozone-depleting Substances and Halocarbon Alternatives”.
See the entire regulatory action at the source URL. * * * * * * * * * * * * * * * * * * * *
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NEWS |
7. American Shipper: “What now? U.S. Trade Without TPP?” Shortly after taking office, United States President Donald Trump lived up to a major campaign promise by issuing an executive order on Jan. 23 that withdrew the U.S. from the Trans-Pacific Partnership (TPP). What this means for the future of the agreement, which would now include 11 countries, is at this point uncertain, but there is no shortage of opinions, signals and speculation on the subject. Since the withdrawal, two related questions have emerged: can the TPP move forward without the U.S., and what approach will the Trump administration take on trade in general? … First, on the immediate future of the TPP, there are mixed messages. Leaders in Australia and New Zealand have expressed a desire to move forward on the deal without the U.S., with Australian Prime Minister Malcolm Turnbull suggesting that China could step in and make the TPP a principally pan-Asian agreement. Elsewhere, Japanese Prime Minister Shinzo Abe said he hopes to convince Trump to come back to the negotiating table. … Similarly, both Chile and Mexico have vowed to continue talks on other trade deals, with policymakers in Chile initiating a March summit for leaders of TPP member countries to discuss next steps and clarify what opportunities might remain among them. And Singapore Trade Minister Lim Hng Kiang said the TPP “cannot come into effect in its current form without the U.S.”-the operative phrase being “in its current form.” But despite the occasional hedge or trial balloon from leaders of its member countries, the consensus viewpoint is that the TPP will not move forward without U.S. involvement, in part because a pan-Asian trade bloc would not sufficiently lessen TPP members’ reliance on China. Singapore, for example, already has free trade agreements with the U.S. and all remaining TPP member-nations except for Canada and Mexico. … The TPP was set to address one of the more technical aspects of trade compliance: the so-called “noodle bowl” effect that occurs when various trade agreements conflict with one another. Instead of having companies continue to follow a patchwork of multiple free trade agreements with different and at times incompatible origination and inclusion rules, the TPP would have provided a harmonized framework across its 12 member countries, streamlining compliance and making it easier to design bills of material and supply chain structures. … Broadly, the U.S. withdrawal from the TPP is likely to cause a bit of uncertainty in the near term, a reliance on current free trade agreements moving forward, and a higher likelihood of new bilateral trade deals (and their inconsistencies) over the long term. But, then again, it all still depends on who you ask. * * * * * * * * * * * * * * * * * * * *
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8. Chemical Watch: “Canada Amends Export Controls on Mercury” The Canadian government has amended its export control list regulations to help the country get into position to ratify the Minamata Convention on Mercury. This global treaty is aimed at protecting human health and the environment from the adverse effects of the substance. The amendments will restrict the export of mixtures containing elemental mercury at a concentration of 95% or more by weight. In line with the Convention, the following types of export will be exempt: – mercury that is, or is contained in, a hazardous waste or hazardous recyclable material regulated by Canada’s Export and Import of Hazardous Waste and Hazardous Recyclable Material Regulations; – mercury-containing manufactured items; and – mercury to be used for laboratory-scale research and analysis or as a reference standard. The amendments come some weeks after Canada added mercury to its export control list. The Export of Substances on the Export Control List Regulations is a document that guides the content and manner of notification requirements under the Canadian Environmental Protection Act (Cepa), as well as requirements relating to compliance with the Stockholm and Rotterdam conventions. * * * * * * * * * * * * * * * * * * * *
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9. ST&R Trade Report: “CBP Eases Rules on Post-Liquidation Preference Claims; Refund Opportunity for Past Filings” Reversing an August 2014 policy change, U.S. Customs and Border Protection is once again allowing post-liquidation claims for preferential duty treatment under certain free trade agreements and preference programs to be filed via administrative protest. In addition, such claims that were previously rejected by CBP may be resubmitted. In an Aug. 11, 2014, guidance letter to the ports CBP stated that post-liquidation protests under 19 USC 1514 could not be used to make an initial claim under the Generalized System of Preferences, the African Growth and Opportunity Act, or the FTAs with Singapore, Australia, Israel, and Jordan (i.e., those not subject to the special rules in 19 USC 1520(d)). This change from long-standing practice was done without notice and comment and created a substantial amount of uncertainty for importers. The guidance had no effect on imports under the agreements listed in 520(d), for which post-entry claims can be filed within one year from the date of importation. Following an August 2016 Court of International Trade decision rejecting CBP’s rationale for this change, the agency has revised its guidance to state as follows. – The protest mechanism in 19 USC 1514 may be used to submit initial post-importation preference claims for the following FTAs and preference programs that do not specifically provide for claims under the statutory post-importation mechanism of 19 USC 1520(d): AGOA, Australia FTA, Bahrain FTA, Caribbean Basin Economic Recovery Act, U.S.-Caribbean Basin Trade Partnership Act, Civil Aircraft Agreement, GSP, Insular Possessions, Israel FTA, Uruguay Round Concession on Intermediate Chemicals for Dyes, Jordan FTA, Morocco FTA, Pharmaceutical Products Agreement, Singapore FTA. – Unliquidated entries under these agreements and programs may continue to be amended by filing a post-entry amendment or post-summary correction prior to liquidation in accordance with current PEA and PSC procedures. – A 1520(d) post-importation claim remains the only appropriate mechanism to seek preference when not claimed at the time of importation under NAFTA, CAFTA-DR, and the FTAs with Chile, Colombia, Korea, Oman, Panama, and Peru, which by law have post-importation provisions. CBP states that in compliance with its August 2014 guidance ports may have rejected as non-protestable (rather than denied) initial post-importation preference claims made under 19 USC 1514. CBP now intends to process such protests and is asking importers to resubmit them to the appropriate field offices within 180 days of Feb. 15 (approximately Aug. 15). * * * * * * * * * * * * * * * * * * * *
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COMMENTARY |
10. A.P. Bosch & V.J.A. Goossen: “Latest Changes in UK Export Controls” * Authors: Alexander P. Bosch, Program Manager, apbosch@fullcirclecompliance.eu; and Vincent J.A. Goossen, Program Manager, vjagoossen@fullcirclecompliance.eu; both of Full Circle Compliance, Bruchem, the Netherlands, and Washington, DC. THE EXPORT CONTROL (NORTH KOREA SANCTIONS AND IRAN, IVORY COAST AND SYRIA AMENDMENT) ORDER 2017 North Korea The Export Control Order 2017 updates and revokes the Export Control (North Korea and Ivory Coast Sanctions and Syria Amendment) Order 2013, which prohibited: – Trade with North Korea in dual-use goods and technology as listed in Annex I to Council Regulation (EC) No 428/2009; – Trade with North Korea in goods and technology which would contribute to North Korea’s nuclear-related, other weapons of mass destruction-related or ballistic missile-related program, and on the provision of related service; and – Trade in luxury goods as listed in Annex III of EU Council Regulation No 329/2007. The Export Control Order 2017 includes the above restrictions and provides for enforcement of the North Korea sanctions amended in 2016 by the United Nations and the European Union. Moreover, it provides for national offences, penalties and licensing provisions as specified in the European Union’s Council Regulation (EC) No. 329/2007 of 27 March 2007 concerning restrictive measures against the Democratic People’s Republic of Korea. Ivory Coast, Iran and Syria The Export Control Order 2017 also makes amendments to the Export Control Order 2008 by moving the Ivory Coast from Part 2 of Schedule 4 (embargoed destinations) to that Order to Part 4 of Schedule 4 (destination subject to transit control) as sanctions against the Ivory Coast have recently been lifted. In addition, it makes amendments to the Export Control (Syria Sanctions) Order 2013. This amendment, along with the amendment to the Export Control Order 2008, re-enacts and therefore continues the amendments that were contained in the Export Control (North Korea and Ivory Coast Sanctions and Syria Amendment) Order 2013, which is revoked by this order. Finally, the Export Control Order 2017 amends the Export Control (Iran Sanctions) Order 2016 by correcting a small drafting error. The following changes are made: – Articles 5 to 12 create offences for contravention of the trade restrictions in the North Korea Regulation. – Article 13 creates offences for the circumvention of the trade restrictions in the North Korea Regulation. – Article 14 supplements the provisions of the North Korea Regulation that allow a competent authority to authorize activities that are otherwise prohibited. Article 14(1) makes it an offence knowingly and recklessly to provide false information for the purpose of obtaining an authorization and article 8(3) makes it an offence to fail to comply with authorization requirements or conditions. – Article 15 sets out the penalties relating to the offences in the Order. – Article 16 applies the ancillary provisions relevant to the enforcement of customs and excise legislation to the enforcement of this Order. – Article 17 omits Ivory Coast from the list in Part 2 of Schedule 4 to the Export Control Order 2008 (Statutory Instruments 2008/3231) and inserts it into the list in Part 4 of Schedule 4 to that Order, reflecting the fact that the Ivory Coast is no longer an embargoed destination. – Article 19 makes a minor amendment to the Export Control (Syria Sanctions) Order 2013 (Statutory Instruments 2013/2012). This amendment, along with the amendment to the Export Control Order 2008 in article 17(b)(ii), re-enacts and therefore continues the amendments that were contained in the Export Control (North Korea and Ivory Coast Sanctions and Syria Amendment) Order 2013, which is revoked by this Order. CHANGES TO THE EXPORT CONTROL ORDER 2008 On February 15, the UK ECO published a notice on the amended Export Control Order 2008. The amendment includes changes to the UK Military List (Schedule 2), the UK Dual-Use List (Schedule 3), and the list with Information Security Items (Schedule 5) of the order. The amending order makes several changes to the UK schedule 2 to the main order, which includes the military goods, software and technology subject to UK export controls. These changes reflect amendments made to the EU Common Military List following agreement to alter this list in the Wassenaar Arrangement, a multilateral export control regime for conventional arms and dual-use goods and technology. These changes need to be incorporated into UK control lists to reflect the UK commitment to the international non-proliferation regime. The main changes are to: – The definitions for “library”, “spacecraft” and “software”, – ML 1, note on “deactivation”; and – Text revisions to ML9, ML13, ML17 and ML21. Also, there are a number of minor typographical changes made throughout the control entries in the schedule. The national control (PL5017) within this schedule has been deleted (on equipment and test models). The order itself has been amended in article 2(1) to remove the reference to the deleted national control PL5017 from the definition of European military items. Article 26 is amended to ensure that a UK license now authorizes the export or transfer of minimum technology required for the installation of goods and software listed In Schedules 2 and 3 of the order. Article 30 is deleted (registration and record keeping – information security items) together with the associated references to article 30 in articles 28, 31 and 38. The deletion of article 30 means schedule 5 (Information security Items) has also been deleted. Schedule 3 has been amended to make some minor amendments to the controls on firearms. The latest edition of the UK Strategic Export Control Lists, published on February 23, is available at here. UPDATE AND AMENDMENT OF SIX OGELs The Export Control Organisation has updated and amended 6 open general export licenses (OGELs). Changes are detailed in the table below. The changes reflect amendments to the Export Control Order 2008 which came into force on 22 February and the replacement of Schedule 1 to the OGEL for printed circuit boards (PCBs) and components for military goods. All the licenses have been updated to refer to the new Department for International Trade, of which Export Control Organization forms a part. Furthermore, control list classification PL5017 has been removed from five of the amended OGELs. You will still need to complete an annual return at the end of the calendar year in December if you have been using OGELs to export PL5017 goods during 2017. The range of PCBs and Components for military goods listed in Schedule 1 to that OGEL has been considerably extended to include a wide range of additional minor components for equipment controlled in ML5, ML6, ML9, ML10 and ML11. Exporters are encouraged to familiarize themselves with the new schedule and to consider use of this OGEL if appropriate. See Open General Export Licenses (OGELs) for further information about OGELs. CONCLUDING REMARKS UK Exporters should determine how these changes affect their business operations, and amend their Internal Compliance Programs accordingly. To stay up-to-date with the latest (UK) regulatory changes subscribe to the EX/IM Daily Update (“The Daily Bugle”) here. * * * * * * * * * * * * * * * * * * * *
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11. E. Barbour-Lacey: “Understanding Vietnam’s Import and Export Regulations” * Author: Edward Barbour-Lacey, International Business Advisory Associate for Vietnam, Dezan Shira & Associates, vietnam@dezshira.com. Once an investor has set up their trading company within Vietnam, it is important that their workers gain a strong understanding of the country’s import and export regulations and procedures. Below we lay out the key takeaways that companies must be aware of before starting their trading activities in Vietnam. Import and Export Licensing Procedures Vietnam does not require a company to have an import/export license in order to set up a trading company. However, in order to be able to conduct import/export business, a foreign investor must register with the Department of Planning and Investment (DPI). Additionally, foreign investors who wish to engage in import/export activities in Vietnam are required to obtain an Investment Certificate. Companies that wish to expand their current business operations in order to engage in import/export activities must follow the procedures for adjusting their Investment Certificates. According to Circular 34/2013/TT-BCT, there are certain goods that foreign invested enterprises may not export from, or import into, Vietnam. Goods banned for export include petroleum oil. Goods banned from import into the country include cigars, tobacco, petroleum oils, newspapers and journals, and aircraft. Certain goods require the trading company to obtain import and export permits from the government, as per Appendix II of Decree 187/2013/ND-CP. These include: – Goods subject to export control in accordance with international treaties to which Vietnam is a contracting party – Goods exported within quotas set by foreign countries – Goods subject to import control in accordance with international treaties to which Vietnam is a contracting party – Chemicals, explosive pre-substances and industrial explosives All imports and exports must comply with the relevant government regulations on quarantine, food safety, and quality standards, and must be inspected by the relevant government agencies before clearing customs. Import/Export Duties Most goods imported/exported across the borders of Vietnam, or which pass between the domestic market and a non-tariff zone, are subject to import/export duties. Exceptions to this include goods in transit, goods exported abroad from a non-tariff zone, goods imported from foreign countries into non-tariff areas for use in non-tariff areas only, and goods passing from one non-tariff zone to another. Most goods and services being exported are exempt from tax. Export duties (ranging from zero percent to 45 percent and computed on free-on-board (FOB) price) are only charged on a few items, mainly natural resources such as minerals, forest products, and scrap metal. Consumer goods, especially luxury goods, are subject to high import duties, while machinery, equipment, materials and supplies needed for production, especially those items which are not produced domestically, enjoy lower rates of import duties, or even a zero percent tax rate. Duty rates for imported goods include preferential rates, special preferential rates, and standard rates depending on the origin of the goods. Import/export duties declarations are required upon registration of customs declarations with the customs offices. Export duties must be paid within 30 days of registration of customs declarations. For imported goods, import duties must be paid before receipt of consumer goods. Depending on the trade conditions, Vietnam imposes a number of different types of duties on the import and export of goods. Companies wishing to find in-depth information on a range of goods would be well advised to visit the website of Vietnam Customs. Imports Vietnam imposes a tax on almost every type of product that is imported into the country. The import tax rates range depending on the type of product, for example, consumer products and luxury goods are highly taxed while machinery, equipment, and raw materials, tend to receive lower taxes and even tax exemptions. Imports are subject to import tax, Value-added tax (VAT) and, for certain goods, Special Consumption Tax (SCT). Tax rates applicable to imported goods include preferential tax rates, special preferential tax rates, and ordinary tax rates: – Preferential tax rates apply to goods originating from countries, groups of countries, or territories, which apply the most favored nation treatment in their trade relations with Vietnam – Special preferential tax rates apply to goods originating from countries, groups of countries, or territories, which apply special preferences on import tax to Vietnam. Currently, it is mainly applicable to ASEAN nations under common preferential tariffs (CEPT). – Ordinary tax rates apply to goods originating from countries, groups of countries, or territories, which do not apply the most favored nation treatment of special preferences on import tax to Vietnam. Ordinary tax rates will be no more than 70 percent higher than the preferential tax rates specified by the government VAT rates range from zero to ten percent, with ten percent being the most common rate. Detailed information can be found in Circular No. 83/2014/TT-BTC. Exports Only certain commodities are liable for export tax. Export taxes range from zero to 45 percent. Many goods are also subject to Value-added Tax. In addition, the Law on Special Consumption Tax (SCT) stipulates that exporters who purchase SCT tax-liable goods for export, but instead sell the products domestically, are liable for SCT. The export tax rates applicable to exported goods are specified for each item in the Export Tariff. For the year 2017, the tax tariff can be found in Decree 122/2016/ ND-CP. Whenever there is an update in the tax tariff, the Ministry of Finance will issue new Circulars which will either replace or supplement the previous ones. VAT on exported goods is zero percent. Tax exempt goods In certain situations, imported and exported goods are exempt from tax, these include the following: – Goods temporarily imported for re-export or temporarily exported for re-import – Goods imported for processing for foreign partners then exported or goods exported to foreign countries for processing for Vietnam then re-imported under processing contracts – Goods imported to create fixed assets for projects entitled to investment incentives or investment projects funded with official development assistance (ODA) capital sources – Goods imported in service of petroleum activities – Goods imported for direct use in activities of scientific research and technological development Tax Calculation The payable import/export tax amount is equal to the unit volume of each actually imported/exported goods item. These are inscribed in the customs declarations and are multiplied by the tax calculation price and the tax rate of each item, which is stated in the tariff at the time of tax calculation. The tax calculation methods are specified below: – Payable Tax = unit volume of each actually imported/exported goods item x the tax calculation price x the tax rate of each item at time of calculation – For goods items subject to absolute tax: Payable tax = unit volume of each actually imported/exported goods item x the absolute tax rate provided for a goods unit at time of tax calculation Vietnam’s Key Tax Rates – CIT: 20% – VAT: 0%/5%/10% * – Withholding Tax: Divid. 0%, Interest 5%, Royalties 10% – Individual Income Tax: Min. 5%, Max. 35% * 0% on exported goods * * * * * * * * * * * * * * * * * * * *
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12. M. Volkov: “DOJ’s Compliance Program Evaluation: Risk Assessment, Policies and Procedures and Third-Party Risk Management (Part III of IV)” * Author: Michael Volkov, Esq., Volkov Law Group, mvolkov@volkovlaw.com, 240-505-1992. [Editor’s note: Part I and II of Michael Volkov’s series of commentaries on the DOJ Compliance Program were posted in
The Daily Bugle of 1 and 2 March 2017.] To design and implement an effective ethics and compliance program, companies have to conduct a risk assessment and tailor its policies and programs to its risk profile. DOJ’s Compliance Evaluation reinforces this framework for a compliance program. Risk Assessment At the outset, a company has adopt a specific methodology for its risk assessment, the types of information it will collect and analyze, and the metrics it will use to inform its compliance program. No longer can a company avoid such a requirement by claiming that such an analysis is “obvious” or that it is part of the internal audit function given the different objective of an internal audit risk profile. A company should commit to a fulsome risk assessment, preferably every three years, with annual check ups or analyses to address potential changes in risk profiles. Design of Policies and Procedures With this foundation in mind, the DOJ Compliance Evaluation asks how a company designs and implements its compliance policies and procedures, who has been consulted in the process, and what role, if any, businesses units play in the design of such policies and procedures. DOJ’s Compliance Evaluation continues to inquire how the company assesses whether its procedures have been effectively implemented, and whether the function with ownership of the policies and procedures has been held accountable for supervisory oversight. Once again, DOJ has emphasized the importance of “operationalizing” a compliance program. A company can craft policies and procedures, and can announce and adopt them, but companies must also ensure that the policies and procedures are implemented and that they are being adequately supervised. In this regard, DOJ underscored the importance of communicating company policies and procedures “to employees and third parties.” This typically requires that important gatekeepers and policy owners collaborate and communicate with each other to implement policies and procedures and identify potential red flags that may occur. DOJ’s Compliance Evaluation looks to the issue of “operational Integration” for compliance programs and raises several important issues. As an initial matter, companies have to examine an individual(s) who are responsible for integrating policies and procedures into the overall business operation. This requires creation and oversight of compliance controls. In focusing on important functions in this area, DOJ points to the role of: (1) payment systems; (2) approval/certification process; and (3) vendor management. DOJ is highlighting the bread and butter issues of compliance implementation. In the anti-corruption context, DOJ asks the critical issue, how was the misconduct or bribery funded? In other words, follow the money – was it false purchase orders? Petty cash? Employee reimbursements? Discounts? These are very typical sources of funds for illegal bribery and DOJ wants companies to create robust controls around these specific areas. Similarly, DOJ wants companies to examine who approved a particular expenditure, third party or vendor who was part of an illegal scheme. If the process did not work in the past, companies have to remediate these controls to make sure they work in the future. Finally, if vendors were involved in the misconduct, companies have to review how vendors are selected and how they are paid. Third-Party Risk Management In a clear reflection of the importance of third-party risk management, DOJ’s Compliance Evaluation outlines important issues, some old and some new, to managing third-party risks. At the outset, DOJ brings a fresh approach to reviewing how companies manage their third parties and incorporate identified risk into the process. DOJ underscores the importance of integrating third-party risk into the procurement and vendor management process. Those companies that have failed to bring together third-parties and its procurement function are woefully behind in this area. Third-party risk controls have to address basic issues, including the business justification for the third party; the contact management and drafting process to ensure accurate description of services to be performed; agreement to appropriate payment terms; verification of third-party work performed pursuant to a contract; and confirmation that the amount paid is commensurate with the work to be performed. In reviewing and approving a third-party relationship, a company has to analyze the incentives created by the relationship, and how the company will monitor the third party’s activities. In this area, DOJ has injected a fairly new inquiry and requirement. Companies have to train those “responsible persons” on the compliance risks and how to manage those risks. Additionally, DOJ asks how a company created, if any, incentives for compliance and ethical behavior by the third party. DOJ’s Compliance Evaluation repeats many well-known requirements for companies to identify and resolve specific red flags during the due diligence process. In a new twist, however, DOJ asks if “similar” third parties ever been “suspended, terminated or audited as a result of compliance issues?” DOJ seeks to ensure that companies ensure that risky vendors are not reauthorized or used again to provide services. While this risk may appear to be relatively minor in comparison to other areas, recent enforcement actions have focused on situations where prohibited third parties reappeared or continued to be used by companies. * * * * * * * * * * * * * * * * * * * *
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EX/IM TRAINING EVENTS & CONFERENCES |
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| EDITOR’S NOTES |
14. Bartlett’s Unfamiliar Quotations (Source: Editor) * William Godwin (3 Mar 1756 – 7 Apr 1836, was an English journalist, political philosopher and novelist. He is considered one of the first exponents of utilitarianism, and the first modern proponent of anarchism.) – “No man knows the value of innocence and integrity but he who has lost them.” * Knute Rockne (Knute Kenneth Rockne, 4 Mar 1888 – 31 Mar 1931, was a Norwegian-American football player and coach at the University of Notre Dame. Rockne is regarded as one of the greatest coaches in college football history.) – “One man practicing sportsmanship is far better than a hundred teaching it.” – “Drink the first. Sip the second slowly. Skip the third.” Friday funnies: A diner in a restaurant was disappointed that his steak was served too rare. “Waiter,” he barked, “didn’t you hear me when I said ‘well done’?” “Oh yes, I can’t thank you enough, sir,” replied the waiter. “I don’t often get compliments.”
— Tom Ratkowski, Milwaukee, WI * * * * * * * * * * * * * * * * * * * *
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15. 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. – 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 – 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: 24 Feb 2017: 82 FR 11505-11506: Temporary General License: Extension of Validity – Last Amendment: 10 Feb 2017: 82 FR 10434-10440: Inflation Adjustment of Civil Monetary Penalties – 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 (15 Nov 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. Please contact us to receive your discount code. – HTS codes that are not valid for AES are available here. – 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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| * 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 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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