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17-0322 Wednesday “The Daily Bugle”

17-0322 Wednesday “Daily Bugle”

Wednesday, 22 March 2017

TOP
The Daily Bugle is a free daily newsletter from Full Circle Compliance, containing changes to export/import regulations (ATF, Customs, NISPOM, EAR, FACR/OFAC, FTR/AES, HTSUS, and ITAR), plus news and events.  Subscribe 
here for free subscription.  Contact us
for advertising inquiries and rates.

[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. DHS/CBP Announces ACE Certification Outage on 22 Mar and ACE Production PGA Deployment on 23 Mar 
  4. DHS/CBP Sends Out Notice of Updated ACE PGA Documentation 
  5. State/DDTC Posts Two Name Changes Announcements  
  6. EU Amends Restrictive Measures Concerning Libya, Egypt, and the ISIL (Da’esh) and Al-Qaida Organizations 
  7. UK/DIT ECO Posts Notice on Removal of Iran List 
  1. South China Morning Post: “China’s ZTE Joins an Unwanted Club of US Sanctions Busters” 
  1. L.M. Friedman: “Ruling of the Week: 2017.8: To Drawback, And Beyond!” 
  2. A. Rapa: “Potential Designation of the IRGC as a Foreign Terrorist Organization and What It Could Mean for the Iran Deal” 
  3. Gary Stanley’s ECR Tip of the Day 
  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 (24 Feb 2017), FACR/OFAC (10 Feb 2017), FTR (15 May 2015), HTSUS (7 Mar 2017), ITAR (11 Jan 2017) 

EXIMEX/IM ITEMS FROM TODAY’S FEDERAL REGISTER

EXIM_a1


[No items of interest noted today.]
 

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OGSOTHER GOVERNMENT SOURCES

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

[No items of interest noted today.]
* * * * * * * * * * * * * * * * * * * *

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OGS_a3a3. DHS/CBP Announces ACE Certification Outage on 22 Mar and ACE Production PGA Deployment on 23 Mar

(Source:
CSMS# 17-000160 and
CSMS# 17-000161, 22 Mar 2017.)
 
 (1) ACE CERTIFICATION OUTAGE
 
Export
 
Please be advised that there will be an ACE CERTIFICATION Outage Wednesday evening, March 22, 2017 from 1700 ET to 2000 ET for infrastructure maintenance.
 
(2) ACE PRODUCTION PGA Deployment
 
New ACE Programming
 
Please be advised that there will be an ACE PRODUCTION deployment on Thursday morning, March 23, 2017, from 0500 – 0700 ET, which will impact ACE Cargo Release and ACE Entry Summary processing.
 
To be deployed:
 
  – PGAD-14602 – PG60 validation (resulting in PBG Rejection: “INVALID ADTL INFO QUAL CD PER PARENT REC”). The system will ensure the correct qualifier code is used in the PG60 record, depending on the PGA record that precedes it.
  – PGAD-14647 – Fix to have PU2 error (“PGA DATA MSNG-NOACTION RQD”) generate correctly.
  – PGAD-14616 – Fix to reject entry if the product code is missing for FDA.
  – PGAD-14654 – Fix to trigger error PH8 (INVALID LPCO NUMBER PER PGA) vs. PJ4 (MISSING LPCO DATE PER PGA) for DDTC.
  – PGAD-14684 – Fix to require Entity address line 1 for MF entity type (PJ6 error – MISSING ENTITY ADDRESS PER PGA) for FDA.
  – PGAD-14652 – Fix for issue that was causing data to be accepted/rejected incorrectly, related to the order of PGA data submission (including disclaim).

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OGS_a3b4. DHS/CBP Sends Out Notice of Updated ACE PGA Documentation

(Source: 
CSMS# 17-000158, 22 Mar 2017.)
 
New ACE Programming
 
U.S. Customs and Border Protection (CBP) published a message via the Cargo System Messaging Service (CSMS) # 17-000155 to announce that two Environmental Protection Agency (EPA) Final Rules became effective on 3/21/2017. Pursuant to that, please note the following:
 
The EPA has updated and published version (9.1) of their Implementation Guide and PGA (Partner Government Agency) Message Set samples. The URLs are:
 
 
The coding changes related to this version 9.1 are in CERT. These coding changes are scheduled to go into PROD on 4/27/2017.
 
Also on that date (4/27) the Harmonized Tariff Schedule (HTS) flagging for all EPA programs for all filers will be enforced.
 
Reminder from EPA: The importer is responsible for knowing what to file, regardless of whether a tariff code has been flagged.
 
EPA Supplemental Guidelines Update and Reminders
 
The EPA Supplemental CATAIR version 9.1 updates the ACE PGA Message Set guidance to align with recent rulemaking, updated business rule validations, and EPA HTS code flagging in ACE. These changes include:
 
  – Clarification that a PGA Message Set filer is not required to provide a TSCA negative certification when filing for pesticide imports regulated under FIFRA.
  – Revisions to Vehicles and Engines (V&E) guidance, indicating that additional information provided via DIS is now optional, not required or conditionally required under certain conditions.
  – Reduction in V&E Appendix A additional information requirements provided via DIS.
  – Updates to V&E guidance, removing requirement for Test Group/Engine Family name for Import Codes A, C, J, Z (3520-1) and 3, 4, 16, 24a (3520-21).
  – Updates to V&E guidance, removing requirement for Exemption Number for Import Codes 2, 5, 6, 7, 12 (3520-21).
 
  – Clarification for Type 06 FTZ Entry declarations, allowing filers to provide V&E data with entry summary following a weekly estimate.
 
General Reminders
 
  – V&E: V&E declarations are required to be filed with the entry information, effective March 21, 2017.
  – Original Equipment Manufacturers (OEMs) who are importing onroad and/or nonroad vehicles and engines with certificates of conformity, are not required to file V&E Declarations, but must file the disclaim reason code “B – Data Not Required per Agency Guidance.” The V&E webpage has been updated and can be found at
here.
  – TSCA: The blanket TSCA Certification option was removed in from ACE in January 2017 and the EPA Supplemental CATAIR in November 2015. There are no significant changes for TSCA in this version of the guidance, however, the Pesticides filings no longer require an accompanying TSCA Negative Certification.
 
Pesticides: The Pesticides electronic reporting requirements became effective September 30, 2016. See CSMS# 16-000859 – Publication of an IFR Notice Announcing Interim Regulations for FIFRA
 
Paper filings and disclaims: Submission of paper documents is allowed for filers not using the complete PGA Message Set. However, for a filer proceeding without the PGA Message Set, instead filing via DIS or Paper, the EPA expects a disclaim reason code of C (DIS) or D (Paper).
 
Questions on what to file: For questions regarding which imports require which EPA filing requirements, please contact the following:
  – V&E Hotline:
imports@epa.gov.
  – TSCA Hotline:
tsca-hotline@epa.gov.
  – Pesticides Regional Import Coordinators: weblink
here.  
 
CBP has also updated the following two appendices:
  – Appendix V – Government Agency Codes – PGA codes ICE (U.S. Department of Homeland Security, Immigration and Customs Enforcement) and EXI (Export-Import Bank of the United States) have been added to the document. Weblink:
here.
  – Appendix B – Valid Codes – This document is just being updated to reflect what is already in the system (in production and cert). Weblink:
here
 
To download a copy of the updated ACE PGA documentation, please visit the “ACE Automated Broker Interface (ABI) CATAIR” page of CBP.gov/ACE. You may also copy and paste the URLs above to your internet browser.
 
  – Related CSMS No. 17-000159.

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OGS_a45.

State/DDTC Posts Two Name Changes Announcements

(Source:
State/DDTC) [Excerpts.]
 
State/DDTC has posted the following two name change announcements on its website.
 
 
Effective immediately, D&R Technology Operaciones Mexico S. de R.L. de C.V. will change as follows: CTS Electro De Mexico, S. de R.L.de C.V. (CTS Electro de Mexico). Due to the volume of authorizations requiring amendments to reflect this change, the Deputy Assistant Secretary for Defense Trade Controls is exercising the authority under 22 CFR 126.3 to waive the requirement for amendments to change currently approved license authorizations. The amendment waiver does not apply to approved or pending agreements. …
 
 
Effective immediately, Hewlett Packard Enterprise will change as follows: HP Enterprise Services LLC to Enterprise Services LLC; HP Enterprise Services Defence & Security; and Hewlett Packard Enterprise Services UK Ltd to EntServ UK. Due to the volume of authorizations requiring amendments to reflect this change, the Deputy Assistant Secretary for Defense Trade Controls is exercising the authority under 22 CFR 126.3 to waive the requirement for amendments to change currently approved license authorizations. The amendment waiver does not apply to approved or pending agreements. … 

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OGS_56.

EU Amends Restrictive Measures Concerning Libya, Egypt, and the ISIL (Da’esh) and Al-Qaida Organizations

 
Regulations

  –
Council Regulation (EU) 2017/488 of 21 March 2017 amending Regulation (EU) 2016/44 concerning restrictive measures in view of the situation in Libya.
  –
Council Implementing Regulation (EU) 2017/489 of 21 March 2017 implementing Article 21(5) of Regulation (EU) 2016/44 concerning restrictive measures in view of the situation in Libya.
  – 
Council Implementing Regulation (EU) 2017/490 of 21 March 2017 implementing Regulation (EU) No 270/2011 concerning restrictive measures directed against certain persons, entities and bodies in view of the situation in Egypt.
  –
Council Implementing Regulation (EU) 2017/491 of 21 March 2017 implementing Regulation (EU) No 270/2011 concerning restrictive measures directed against certain persons, entities and bodies in view of the situation in Egypt.
  –
Commission Implementing Regulation (EU) 2017/494 of 21 March 2017 amending for the 262nd time Council 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.
 
Decisions

  –
Council Decision (CFSP) 2017/496 of 21 March 2017 amending Decision 2011/172/CFSP concerning restrictive measures directed against certain persons, entities and bodies in view of the situation in Egypt.
  –
Council Implementing Decision (CFSP) 2017/497 of 21 March 2017 implementing Decision (CFSP) 2015/1333 concerning restrictive measures in view of the situation in Libya.
  –
Council Implementing Decision (CFSP) 2017/498 of 21 March 2017 implementing Decision 2011/172/CFSP concerning restrictive measures directed against certain persons, entities and bodies in view of the situation in Egypt.

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OGS_67.

UK/DIT ECO Posts Notice on Removal of Iran List


 
The Export Control Organisation (ECO) of the UK Department of International Trade (DIT) has posted the following notice to exporters (2017/08).
 
After years of applying wide-ranging sanctions, the international community is re-engaging with Iran following a nuclear deal in 2015. As a result of the deal reached between the E3+3 (France, Germany, UK, China, Russia and USA) and Iran, some nuclear-related and other financial and economic sanctions were lifted in January 2016. For Iran, this is a vital part of its re-integration into the international community.
 
As such the relevance of the Iran List, which provides information for exporters about certain entities, companies and organisations in Iran, has decreased and has been withdrawn.
 
(1) What was the Iran List for?
 
The Iran List was published by the Export Control Organisation (ECO) to help exporters make informed decisions about whether their exports might potentially be of concern on end-use grounds. This is where an export licence is required for goods not normally subject to control because the exporter is aware, or has been informed by the UK Government, that there is concern about diversion to a Weapons of Mass Destruction (WMD) programme.
 
The list, which identified a range of entities, companies and organisations in Iran, was published to help exporters judge whether their exports might potentially be of concern on end-use grounds, based on ECO’s previous decisions about exports.
 
(2) What does this mean for exporters?
 
If exporters have concerns about end users in Iran or other countries they can make use of the end user advice service, which can be accessed via the
SPIRE export licensing system. You can also read more about
WMD end-use controls.
 
(3) What sanctions remain?
 
Some sanctions remain in place for a further 8 years. Some sanctions are also not affected by the nuclear deal – in particular, those relating to human rights and terrorism. UK businesses looking to trade or invest in Iran need to ensure that their business with Iran complies with these measures.
 
Exporters will want to find out whether they are dealing with a designated person or entity under remaining sanctions, or suspect a designated person or entity might be involved in any business transaction. They will also want to be sure that their products or materials are not restricted under these sanctions and that there are no restrictions on those to whom they are making payments.
 
It is important to take appropriate due diligence measures before engaging in any activity. Iran will remain a challenging place to do business so if in doubt exporters should seek legal advice.
 
 
(4) Doing business with Iran
 
The lifting of some sanctions means that Iran is able to trade more freely with the international community. This offers an opportunity for UK companies to win business in the biggest market to enter the global economy in decades.
 
The UK Government fully supports expanding our trading relationship with Iran and encourages UK businesses to take advantage of the commercial opportunities that arise.
 
The Iranian government has clearly stated its desire to attract foreign direct investment to meet the country’s ambitious growth targets, and private firms around the world, including the UK, will soon have new business opportunities that will also benefit Iran and her people.
 
The
Department for International Trade both here in the UK and in the
British Embassy in Tehran plays an important role in supporting trade and investment between the UK and Iran.
 
Read more on
doing business with Iran.

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NWSNEWS

NWS_a18.

South China Morning Post: “China’s ZTE Joins an Unwanted Club of US Sanctions Busters”

 
The US sanctions programme, an extension of the nation’s foreign policy, is given bite by the dominance of the US dollar in global finance, America’s stranglehold on the parts and software that are essential in technology products, and the size of the largest consumer market on earth.
 
ZTE Corp, China’s largest listed telecommunications equipment supplier, earlier this month joined the unenviable fraternity of companies that paid stiff penalties after pleading guilty to breaching the United States’ longstanding sanctions on Iran and North Korea.
 
The company was slapped with a total penalty of US$1.2 billion on March 8, becoming the first technology company alongside some of the world’s largest banks as the biggest US sanctions busters to settle with Washington.
 
The US sanctions programme is an extension of the nation’s foreign policy. Its bite is reinforced by the dominance of the US dollar in global finance, America’s stranglehold on the parts and software that are essential in technology products, and by virtue of the US being the largest consumer market in the world.
 
  “If an organisation wants to do business with the US or have any presence in the US, then violating sanctions can result in severe penalties,” said Paul Haswell, a partner at international law firm Pinsent Masons. “The US is such an important trading partner that compliance with its sanctions is something that all internationally competitive businesses have to follow.”
 
US sanctions vary in scope, according to the US Office of Foreign Assets Control, which is under the US Department of the Treasury. Some are broad-based and oriented geographically, which is the case for Iran and North Korea. Others are “targeted”, such as counterterrorism and cybersecurity-related sanctions, which focus on specific individuals and entities. …
 
  “ZTE is not the first technology company to be fined for violating US sanctions; lower penalties are levied against smaller firms quite frequently for minor breaches,” Haswell said. “Many organisations, especially banks, have been subjected to penalties for dealing with restricted persons or countries under US sanctions. The scale of such breaches determines the severity of the fine imposed.”
 
In June 2014, French bank BNP Paribas pleaded guilty and agreed to pay a record US$8.9 billion penalty for illegally processing financial transactions for countries subject to US economic sanctions, according to the US Department of Justice.
 
BNP Paribas acknowledged that from at least 2004 through 2012, it knowingly and wilfully moved more than US$8.8 billion through the US financial system on behalf of sanctioned Sudanese, Iranian and Cuban entities. BNP Paribas also admitted to using various sophisticated schemes to conceal from US regulators its illicit transactions.
 
ZTE’s large fine also served as a deterrent to other technology companies from committing such breaches, Haswell said. “The Office of Foreign Assets Control may well be considering whether other Chinese companies trading in the US could have breached sanctions,” Haswell said.
 
  “Huawei Technologies would surely be at the top of this list, given the ZTE investigation and the fact that in June last year, Huawei was issued with a subpoena by the US commerce department to turn over all information relating to the export or re-export of US technology to Cuba, Iran, North Korea, Sudan and Syria.”
 
The US government has also remained concerned about China’s role in the proliferation of weapons of mass destruction and missiles, according to a report published by the US Congressional Research Service in January 2015.
 
Those concerns included Chinese companies supplying key technologies to Pakistan’s nuclear and missile programmes.
 
In December 2012, Nanjing-based China Nuclear Industry Huaxing Construction pleaded guilty in a US criminal case for illegal exports of high-performance epoxy coatings to the Chashma-2 nuclear reactor project in Pakistan, the report by the research service said.
 
In September 2001, the Bush administration imposed sanctions, which denied exports of satellites for two years, on China Metallurgical Equipment Corp for the proliferation of missile technology to Pakistan.
 
The US State Department ruled in August 2003 that government-owned China North Industries Corp substantially contributed to missile proliferation in an unidentified country, resulting in a two-year ban for the company on export licences from the US and imports from China.
 
  “There is a market for all kinds of technologies in the countries subject to certain US sanctions, and there will always be money to be made from selling technologies to these areas,” Haswell said. “Chinese companies with international ambitions will need to ensure they stay on the right side of these sanctions.”
 
————-
  – Note (1): This article appeared in the South China Morning Post print edition as: “ZTE feels sting of massive US$1.2b sanctions fine”.
  – Note (2): “The Busted Dozen” an overview of the companies fined for breaching US sanctions on Iran and other countries is available
here.

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COMMCOMMENTARY

COMM_a19.

L.M. Friedman: “Ruling of the Week: 2017.8: To Drawback, And Beyond!”

 
* Author: Lawrence M. Friedman, Esq., Barnes, Richardson & Coburn LLP,
Lfriedman@barnesrichardson.com, 312-297-9554.
 
The customs implications of space travel have always interested me. NASA has confirmed, at least according to
this article, that astronauts have to make customs declarations on returning to earth. It is not exactly clear to me whether that would be the case for an orbital flight that departs the U.S. and returns to the U.S. without an intervening stop at the International Space Station or elsewhere. In fact, the Apollo 11 customs entry seems to have been something of a joke, even if it was “official.”
 
The future is certainly going to be filled with questions about this sort of thing. What will happen, from a customs-perspective, the first time someone starts a commercial asteroid mining operation? Will we need to expand the notion of “country of origin.”  
 
The obvious analogy is to ships at sea. Today, the law is clear with respect to fish caught in international waters. According to the Court of International Trade, in a case called
Koru North America v. U.S.:
 

On the high seas, the country of origin of fish is determined by the flag of the catching vessel. 
Procter & Gamble Mfg. v. United States, 60 Treas. Dec. 356
, T.D. 45099 (1931), 
aff’d
, 19 CCPA 415, C.A. D. 3488, 
cert. denied
, 287 U.S. 629, 53 S.Ct. 82, 77 L.Ed. 546 (1932). In international law, a ship on the high seas is considered foreign territory, functionally, “a floating island of the country to which [it] belongs.” 
Thompson v. Lucas, 252 U.S. 358, 361, 40 S.Ct. 353, 64 L.Ed. 612 (1920).
See also 
Robbins (Inc.) v. United States, 47 Treas. Dec. 261, T.D. 40728 (1925
) (fish are characterized by their first taking).

 
That means an asteroid or portion thereof brought to the earth by a U.S.-registered space vessel will have a U.S. country of origin.
 
The folks who negotiated NAFTA thought this through. According to Article 415 of the Agreement, “goods taken from outer space, provided they are obtained by a Party or a person of a Party and not processed in a non Party” are considered to be “wholly obtained or produced” in North America. For you NAFTA nerds out there, that means they qualify as originating under Preference Criterion A.
 
What about going the other way? What if I import some fuel and send it out into orbit? Does that constitute exportation for purposes of drawback? That is the question presented in
HQ H282698 (Feb. 24, 2017).
 
The law permits an importer receive drawback on duties, taxes, and fees paid on imported merchandise that it unused in the united stated and then exported or destroyed within five years of importation. There are lots of documentary requirements and procedures that need to be followed to secure drawback, so don’t assume that I just explained all the ins and outs to you.
 
Merchandise is still unused if it has been repacked or subjected to other operations specified in the law. Again, don’t try this at home without getting legal advice. In this case, about 66% of the fuel is loaded onto the satellite to power its thrusters in orbit. The remainder is exported from the U.S. According to CBP, transferring the unused propellant to a container for export is repacking and does not constitute use. It is, therefore, eligible for drawback.
 
The propellant loaded into the satellite is a different story. According to CBP, it is “used at the moment of its injection into a satellite thruster system.” It is, therefore, not eligible of “unused merchandise” drawback.
 
Customs, however, provides a helpful alternative. It is also possible to secure drawback on imported materials used to manufacture goods in the U.S. CBP has previously applied that to parts of a satellite manufactured in the U.S. and exported to China for launch. That export to China was the relevant export for drawback purposes, not the launch into space. But, other rulings had determined that “merchandise assembled into a communications satellite sent into permanent orbit in outer space” is exported for drawback purposes. In this recent ruling, CBP reaffirmed that decision and held that launch to permanent orbit is an exportation for drawback purposes. 

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COMM_a210.

A. Rapa: “Potential Designation of the IRGC as a Foreign Terrorist Organization and What It Could Mean for the Iran Deal”

 
* Author: Anthony Rapa, Esq., Steptoe & Johnson LLP,
arapa@steptoe.com, 202-429-8120.
 
The Trump Administration recently
floated the idea of designating Iran’s Islamic Revolutionary Guard Corps (IRGC) and the Muslim Brotherhood as Foreign Terrorist Organizations (FTOs).  This post focuses on the potential designation of the IRGC as an FTO, while a future post will discuss the implications of designating the Muslim Brotherhood as an FTO.
 
The IRGC proposal, reportedly slated to be rolled out in February, apparently has stalled in the face of objections from the U.S. Department of State and the U.S. Department of Defense.  Fueling the reported objections have been concerns over Iran’s role in combating the Islamic State (IS), particularly in Iraq, where IRGC-backed militias have played a key role in combating IS forces.
 
In addition to raising such national security concerns, a designation of the IRGC as an FTO could seriously impact sanctions relief under the
Joint Comprehensive Plan of Action (JCPOA) agreement regarding Iran’s nuclear program.  How so?  By making it a criminal offense for
all persons worldwide to provide “material support” to the IRGC, which, as discussed in a
previous post and as discussed below, reportedly controls major sectors of Iran’s economy.
 
So what would designating the IRGC as an FTO entail?  The
Antiterrorism and Effective Death Penalty Act of 1996 (AEDPA), signed into law by President Clinton, authorizes the Secretary of State to designate an organization as an FTO following a determination that:
 
  – the organization is a foreign organization;
  – the organization engages in terrorist activity or retains the capability and intent to do so; and
  – the terrorist activity of the organization threatens the security of U.S. nationals or of the United States.
 
The State Department maintains a
list of designated FTOs on its website.
 
What are the consequences of an FTO designation?  First, as required by the AEDPA and as implemented by the
Foreign Terrorist Organizations Sanctions Regulations (31 C.F.R. Part 597), U.S. financial institutions are required to block the property and interests in property of FTOs, and to report to the Department of Treasury the existence of such blocked funds.  Furthermore, pursuant to
Executive Order 13224 and the
Global Terrorism Sanctions Regulations (31 C.F.R. Part 594), practically all FTOs also are designated as Specially Designated Global Terrorists (SDGTs), meaning that all U.S. persons-including U.S. citizens, U.S. lawful permanent residents, persons located within the United States, and entities organized under U.S. law and their foreign branches-are required to block their property and interests in property.
 
However, the severity of the above restrictions notwithstanding, it is the AEDPA prohibition against providing “material support” to FTOs that garners much of the publicity in the FTO context.  Specifically, the AEDPA makes it a criminal offense to provide “material support” to a designated FTO, and explicitly provides that this prohibition has
extraterritorial application
The statute provides that jurisdiction exists where, inter alia, “after the conduct required for the offense occurs an offender is brought into or found in the United States,
even if the conduct required for the offense occurs outside the United States” (emphasis added).  A material support charge is serious business-individuals face up to 20 years’ imprisonment and penalties of up to the greater of $250,000 per violation or twice the pecuniary gain from the activity, while companies are subject to penalties of up to $500,000 per violation or twice the pecuniary gain from the activity. …
 
So what would all of this mean for non-U.S. companies seeking to do business in Iran?  The IRGC, as noted above, is a major player in Iran.  However, it already is subject to a raft of U.S. sanctions restrictions, even after implementation of the JCPOA.  Notably, non-U.S. persons remain subject to “secondary” sanctions to the extent they provide significant support to the IRGC, meaning that they are subject to the denial of certain privileges of doing business with the United States-including loss of trade privileges and access to the U.S. financial system-where they engage with the IRGC.  This has proven to be vexing for non-U.S. companies seeking to do lawful business in Iran following implementation of the JCPOA, given the IRGC’s potentially pervasive influence on the Iranian economy.  Contributing to the headaches over the IRGC is
lingering uncertainty over whether a non-U.S. person is subject to sanctions only for providing direct support to the IRGC or its designated affiliates, or if it is also sanctionable to provide support to IRGC-controlled-or-affiliated companies not specifically identified by the U.S. Government.
 
An FTO designation would seriously raise the stakes in this context by introducing the threat of criminal prosecution.  Furthermore, such a designation would only exacerbate the uncertainties around dealing with Iranian companies with potentially murky ties to the IRGC.  For example, if a European company were to engage in a major transaction with an Iranian company indirectly owned or controlled by senior IRGC officers-
as up to 200 Iranian companies may be-could that company be charged with providing material support to an FTO?  The AEDPA does not seem to shed much light on this.  It defines “material support” broadly, but simply provides that it is an offense to provide such support “to” an FTO-leaving unanswered the question of how direct the nexus with the FTO must be.
 
Designating the IRGC as an FTO could prove to be a fateful decision with serious implications for national security, U.S. diplomatic relations, and sanctions relief under the Iran deal.  And yet, in light of
President Trump’s professed hostility for the Iran deal, coupled with his stated intention to leave the deal in place but get “tough” with Iran, the proposal may resurface before long.

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COMM_a311.

Gary Stanley’s ECR Tip of the Day

 
* Author: Gary Stanley, Esq., Global Legal Services, PC, (202) 352-3059,
gstanley@glstrade.com
 
Under EAR§ 734.11, any export or reexport of information resulting from government-sponsored research that is inconsistent with contract controls you have agreed to will not qualify as “fundamental research” and any such export or reexport would be subject to the EAR. Any such export or reexport that is consistent with the controls will continue to be eligible for export and reexport under the “fundamental research” rule set forth in EAR § 734.8(a).
 
Thus, if you abide by the specific controls you have agreed to, you need not be concerned about violating the EAR. If you violate those controls and export or reexport information as “fundamental research” under EAR § 734.8(a), you may subject yourself to the sanctions provided for under the EAR, including criminal sanctions, in addition to administrative and civil penalties for breach of contract under other law.

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ENEDITOR’S NOTES

(Source: Editor) 

 
*
Louis L’Amour (Louis Dearborn L’Amour; 22 Mar 1908 – 10 Jun 1988; was an American novelist and short story writer. His books consisted primarily of Western novels (though he called his work ‘frontier stories’. John Wayne once said he was the most interesting man in the world. L’Amour’s books remain popular and most have gone through multiple printings. At the time of his death almost all of his 105 existing works (89 novels, 14 short-story collections, and two full-length works of nonfiction) were still in print, and he was considered “one of the world’s most popular writers”.)

  – “Often I hear people say they do not have time to read. That’s absolute nonsense. In the one year during which I kept that kind of record, I read twenty-five books while waiting for people. In offices, applying for jobs, waiting to see a dentist, waiting in a restaurant for friends, many such places.” 

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EN_a313
. Are Your Copies of Regulations Up to Date?
(Source: Editor)

The official versions of the following regulations are published annually in the U.S. Code of Federal Regulations (C.F.R.), but are updated as amended in the Federal Register.  Changes to applicable regulations are listed below.
 
*
ATF ARMS IMPORT REGULATIONS
: 27 CFR Part 447-Importation of Arms, Ammunition, and Implements of War
  – Last Amendment: 15 Jan 2016: 81 FR 2657-2723: Machineguns, Destructive Devices and Certain Other Firearms; Background Checks for Responsible Persons of a Trust or Legal Entity With Respect To Making or Transferring a Firearm. 
 
*
CUSTOMS REGULATIONS
: 19 CFR, Ch. 1, Pts. 0-199
  – Last Amendment: 27 Jan 2017: 82 FR 8589-8590: Delay of Effective Date for Importations of Certain Vehicles and Engines Subject to Federal Antipollution Emission Standards [New effective date: 21 March 2017.]; and 82 FR 8590: Delay of Effective Date for Toxic Substance Control Act Chemical Substance Import Certification Process Revisions [New effective date: 21 March 2017.]

* 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 

  
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FOREIGN ASSETS CONTROL REGULATIONS (OFAC FACR)
: 31 CFR, Parts 500-599, Embargoes, Sanctions, Executive Orders
  – Last Amendment:
10 Feb 2017: 82 FR 10434-10440: Inflation Adjustment of Civil Monetary Penalties. 
 
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FOREIGN TRADE REGULATIONS (FTR)
: 15 CFR Part 30
  – Last Amendment: 15 May 2015; 80 FR 27853-27854: Foreign Trade Regulations (FTR): Reinstatement of Exemptions Related to Temporary Exports, Carnets, and Shipments Under a Temporary Import Bond 
  – HTS codes that are not valid for AES are available
here.
  – The latest edition (9 Mar 2016) of Bartlett’s Annotated FTR (“BAFTR”), by James E. Bartlett III, is available for downloading in Word format. The BAFTR contains all FTR amendments, FTR Letters and Notices, a large Index, and footnotes containing case annotations, practice tips, and Census/AES guidance.  Subscribers receive revised copies every time the FTR is amended. The BAFTR is available by annual subscription from the Full Circle Compliance website.  BITAR subscribers are entitled to a 25% discount on subscriptions to the BAFTR.
 
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HARMONIZED TARIFF SCHEDULE OF THE UNITED STATES (HTS, HTSA or HTSUSA)
, 1 Jan 2017: 19 USC 1202 Annex. (“HTS” and “HTSA” are often seen as abbreviations for the Harmonized Tariff Schedule of the United States Annotated, shortened versions of “HTSUSA”.)
  – Last Amendment: 7 Mar 2017: Harmonized System Update 1702, containing 1,754 ABI records and 360 harmonized tariff records. 
  – HTS codes for AES are available
here
.
  – HTS codes that are not valid for AES are available
here.
 
INTERNATIONAL TRAFFIC IN ARMS REGULATIONS (ITAR): 22 C.F.R. Ch. I, Subch. M, Pts. 120-130.
  – Latest Amendment: 11 Jan 2017: 82 FR 3168-3170: 2017 Civil Monetary Penalties Inflationary Adjustment
  – The only available fully updated copy (latest edition 8 Mar 2017) of the ITAR is Bartlett’s Annotated ITAR (“BITAR”), by James E. Bartlett III. The BITAR contains all ITAR amendments to date, plus a large Index, over 750 footnotes containing case annotations, practice tips, DDTC guidance, and explanations of errors in the official ITAR text.  Subscribers receive updated copies of the BITAR in Word by email, usually revised within 24 hours after every ITAR amendment.  The BITAR is available by annual subscription from the Full Circle Compliance website.  BAFTR subscribers receive a 25% discount on subscriptions to the BITAR, please contact us to receive your discount code.

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EPEDITORIAL POLICY

* The Ex/Im Daily Update is a publication of FCC Advisory B.V., edited by James E. Bartlett III and Alexander Bosch, and emailed every business day to approximately 8,000 readers of changes to defense and high-tech trade laws and regulations. We check the following sources daily: Federal Register, Congressional Record, Commerce/AES, Commerce/BIS, DHS/CBP, DOJ/ATF, DoD/DSS, DoD/DTSA, State/DDTC, Treasury/OFAC, White House, and similar websites of Australia, Canada, U.K., and other countries and international organizations.  Due to space limitations, we do not post Arms Sales notifications, Denied Party listings, or Customs AD/CVD items.

* RIGHTS & RESTRICTIONS: This email contains no proprietary, classified, or export-controlled information. All items are obtained from public sources or are published with permission of private contributors, and may be freely circulated without further permission. Any further use of contributors’ material, however, must comply with applicable copyright laws.

* CAVEAT: The contents of this newsletter cannot be relied upon as legal or expert advice.  Consult your own legal counsel or compliance specialists before taking actions based upon news items or opinions from this or other unofficial sources.  If any U.S. federal tax issue is discussed in this communication, it was not intended or written by the author or sender for tax or legal advice, and cannot be used for the purpose of avoiding penalties under the Internal Revenue Code or promoting, marketing, or recommending to another party any transaction or tax-related matter.

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