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17-0331 Friday “The Daily Bugle”

17-0331 Friday “Daily Bugle”

Friday, 31 March 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 here for free subscription. Contact us for advertising inquiries and rates

  1. President Continues National Emergency With Respect to Significant Malicious Cyber-Enabled Activities 
  2. Treasury Publishes Quarterly List of Countries Requiring Cooperation With an International Boycott
  1. Ex/Im Items Scheduled for Publication in Future Federal Register Editions 
  2. Commerce/BIS: (No new postings.) 
  3. DHS/CBP Announces ACE Production Outage, 1-2 Apr
  4. State/DDTC: (No new postings.)
  5. EU Amends Decision Concerning Restrictive Measures In View of the Situation in Bosnia and Herzegovina
  1. Reuters: “U.S. Trade Barriers Report Slams China on Overcapacity, Tech Transfer”
  2. ST&R Trade Report: “Dates and Deadlines: Importer Errors, Food Imports, Classification, CAFTA-DR”
  3. ST&R Trade Report: “No Changes to International Boycott Country List”
  4. WorldECR News Alert, 30 Mar
  1. A. Rapa & J.W. Cottle: “UK to Move Towards US-Style Sanctions Enforcement with Upcoming Penalty Regulations”
  2. M. Volkov: “Compliance, Technology and Data Analytics”
  3. S. Kovarovics & G. Kreijen: “Voluntary Disclosures: Whether, When and To Whom – US and EU Perspectives”
  4. Gary Stanley’s ECR Tip of the Day
  1. Friday List of Approaching Events
  1. Explanatory Note for Item #3 
  2. Bartlett’s Unfamiliar Quotations 
  3. Are Your Copies of Regulations Up to Date? Latest Changes: ATF (15 Jan 2016), Customs (27 Jan 2017), DOD/NISPOM (18 May 2016), EAR (29 Mar 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

1. 
President Continues National Emergency With Respect to Significant Malicious Cyber-Enabled Activities

(Source:
Federal Register)
 
82 FR 16099: Continuation of the National Emergency With Respect to Significant Malicious Cyber-Enabled Activities
 
On April 1, 2015, by Executive Order 13694, the President declared a national emergency pursuant to the International Emergency Economic Powers Act (50 U.S.C. 1701-1706) to deal with the unusual and extraordinary threat to the national security, foreign policy, and economy of the United States constituted by the increasing prevalence and severity of malicious cyber- enabled activities originating from, or directed by persons located, in whole or in substantial part, outside the United States. On December 28, 2016, the President issued Executive Order 13757 to take additional steps to address the national emergency declared in Executive Order 13694.
 
These significant malicious cyber-enabled activities continue to pose an unusual and extraordinary threat to the national security, foreign policy, and economy of the United States. For this reason, the national emergency declared on April 1, 2015, must continue in effect beyond April 1, 2017. Therefore, in accordance with section 202(d) of the National Emergencies Act (50 U.S.C. 1622(d)), I am continuing for 1 year the national emergency declared in Executive Order 13694.
 
This notice shall be published in the Federal Register and transmitted to the Congress.
 
  (Presidential Sig.)
 
THE WHITE HOUSE,
March 29, 2017.

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EXIM_a2

2
. Treasury Publishes Quarterly List of Countries Requiring Cooperation With an International Boycott

(Source: Federal Register)
 
82 FR 15793: List of Countries Requiring Cooperation With an International Boycott
 
In accordance with section 999(a)(3) of the Internal Revenue Code of 1986, the Department of the Treasury is publishing a current list of countries which require or may require participation in, or cooperation with, an international boycott (within the meaning of section 999(b)(3) of the Internal Revenue Code of 1986).
  On the basis of the best information currently available to the Department of the Treasury, the following countries require or may require participation in, or cooperation with, an international boycott (within the meaning of section 999(b)(3) of the Internal Revenue Code of 1986).
 
  – Iraq
  – Kuwait
  – Lebanon
  – Libya
  – Qatar
  – Saudi Arabia
  – Syria
  – United Arab Emirates Yemen
 
  Dated: March 16, 2017.
 
Douglas Poms, Deputy International Tax Counsel, (Tax Policy).

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OGSOTHER GOVERNMENT SOURCES

OGS_a13
. Ex/Im Items Scheduled for Publication in Future Federal Register Editions
 

(Source:
Federal Register)
 
* President; ADMINISTRATIVE ORDER; All Export Control Reform Regulations to be Reversed on 1 April 2017 (See Item #17.)

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(Source:
CSMS# 17-000182, 31 Mar 2017.)
 
NEW ACE PROGRAMMING
 
Please be advised that there will be an ACE PRODUCTION Outage Saturday evening, April 1, 2017 from 2200 ET to 0400 ET Sunday, April 2, 2017.
 
ACE will perform infrastructure maintenance activities and the following ACE deployment during this time:
 
ACE Reference Data
 
  – CAOM-9998: Database changes to allow all Unlading Ports to become RLF (Remote Location Filing)-eligible.
 
ACE Accounts
 
  – CAOM-9514: When an Importer account was created via EDI message “TI” and Organization Structure code is ’08’ (Other), the update did not make it to ACS, causing “invalid importer” rejections downstream.
 
ACE Manifest
 
  – CAOM-9385,10186: For users of both Air Import and Air Export Manifest, EDI message responses will be sent to the appropriate import or export message queues, respectively, on the trade side.
  – CAOM-4011: Tickets# 1753358, 7240437, 7336580, 7340990, 7340990: Wrong port code sent in Permit To Transfer Authorized (1W) notification if BOL’s discharge port and In-bond destination are in same cluster
  – CAOM-9877: Tickets# 7423094, 7541102 – Express House BOL with entry type 87 (Headnotes)- 1C stuck in “Do Not Send-Transaction Deleted” status even when house air waybill got re-added.
  – CAOM-9780: Ticket# 7389444 – Manifest UI screens: Incorrect C-TPAT Status of Importers were displayed when CBP users viewed shipments’ Entry Party details.
  – CAOM-9634: Ticket# 7374139 – Carrier received 1S (Sent to G.O.)/1R (Eligible for G.O.) messages in error with incorrect G.O. quantities for FTZ withdrawals done via PTT (Permit to Transfer) at the unlading port.
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Decisions:
  – Council Decision (CFSP) 2017/607 of 29 March 2017 amending Decision 2011/173/CFSP concerning restrictive measures in view of the situation in Bosnia and Herzegovina
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NWSNEWS

 
The Trump administration on Friday slammed China on a range of trade issues from its chronic industrial overcapacity to forced technology transfers and longstanding bans on U.S. beef and electronic payment services.
 
The annual trade barriers list from the U.S. Trade Representative’s (USTR) office sets up more areas of potential irritation for the first face-to-face meeting between President Donald Trump and Chinese President Xi Jinping next week in Florida.
 
Commerce Secretary Wilbur Ross, asked about his expectations for the meeting, told Fox News on Friday: “What I would hope will come out would be a commitment to starting to abide by the rules and a commitment to working collaboratively to help reduce our deficit.”
 
USTR, controlled by the White House, said that Chinese government industrial policies and financial support for industries such as steel and aluminum have resulted in overproduction and a flood of exports that have distorted global markets and undermined competitors.
 
  “While China has begun to take steps to address steel excess capacity, these steps have been inadequate to date and even fewer efforts have been taken by China in aluminum and other sectors,” USTR said in the report.
 
USTR released the list of trade irritants in 63 countries just after senior Trump trade officials announced an executive order to study the causes of U.S. trade deficits.
 
The report said China also is using a series of cybersecurity restrictions as part of an apparent long-term goal to replace foreign information and communications technology products and services with locally produced versions.
 
USTR also accused China of using a range of measures to engineer the transfer of foreign technology to Chinese firms. They include denying financial or regulatory approvals to companies using foreign-owned intellectual property (IP) or that do not conduct research or manufacture products in China.
 
  “China also reportedly conditions foreign investment approvals on technology transfer to Chinese entities, mandates adverse licensing terms on foreign IP licensors, uses anti-monopoly laws to extract technology on unreasonable terms and subsidizes acquisition of foreign high technology firms to bring technology to the Chinese parent companies.”
 
Gaps in IP rights enforcement have allowed the misappropriation of foreign IP and trade secrets, both within and outside of China.
 
USTR’s criticisms are consistent with increasingly vocal concerns raised by international business groups about what they see as a worsening business climate for foreign firms in China, as well as China’s goal to boost domestic manufacturing content in 10 sectors from robotics to biopharmaceuticals.
 
Earlier this month, the European Union Chamber of Commerce said the “Made in China 2025” plan amounts to a “large-scale import substitution plan aimed at nationalizing key industries” or “severely curtailing the position of foreign business.”
 
USTR also brought up longstanding complaints about online piracy of movies, books, music, video games and software in China as well as a ban on U.S. beef that has been in place since 2003.
 
It said delays in China’s approval process for agricultural products derived from biotechnology also worsened in 2016, hurting U.S. corn exports.
 
Ross, the commerce secretary, also said Trump will sign two executive orders on Friday. The first calls for a 90-day study by the Commerce Department into the causes of U.S. trade deficits, the results of which would be used to formulate policy.
 
A second order would solve a problem involving collection of anti-dumping duties, he said.
 
  “There’s some $3 billion worth of duties that have never been collected because they set up straw-man importers that don’t have any financial substance, so by the time the case ends, there’s nobody there against whom you can assess the fine. So what these orders will do is require letters of credit or insurance company bonds or cash so there will be somebody against whom we can levy the fine,” Ross said.
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Following are highlights of regulatory effective dates and deadlines and federal agency meetings coming up in the next week.
 
  – 3 Apr: deadline for comments to FTZ Board on production and subzone requests
  – 3 Apr: deadline for replies to CAFTA-DR short supply petition on printed woven fabric
  – 4 Apr: deadline for comments to CPSC on compliance with mattress standards
  – 4 Apr: ITC hearing on markets for digital products and services
  – 4 Apr: deadline for comments to ITC on potential IPR investigation of electric vehicle motors
  – 5 Apr: deadline for comments to BIS on information collection on exports of U.S.-origin technical data
  – 6 Apr: FDA meeting in preparation for Codex Committee on Food Import and Export Inspection and Certification Systems
  – 7 Apr: deadline for comments to CBP on proposed revocation or modification of classification rulings
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The Treasury Department has published its quarterly list of countries that require or may require participation in, or cooperation with, an international boycott. This list comprises Iraq, Kuwait, Lebanon, Libya, Qatar, Saudi Arabia, Syria, the United Arab Emirates, and Yemen and is unchanged from the previous list.
 
U.S. law prohibits U.S. companies and their foreign affiliates from participating in foreign boycotts that the U.S. does not sanction. The Arab League boycott of Israel is the principal foreign economic boycott that U.S. companies must be concerned with today, but the anti-boycott laws apply to all boycotts imposed by foreign countries that are unsanctioned by the U.S.
 
The U.S. maintains two anti-boycott laws that are enforced by the Commerce Department through the Export Administration Regulations and the Treasury Department through the Internal Revenue Code. Under the anti-boycott provisions of the EAR, companies are prohibited from the following actions.
 
  – Refusing to do business with or in Israel or with blacklisted companies;
  – Furnishing information about relationships with or in Israel or with blacklisted companies;
  – Discriminating against others based on race, religion, sex, national origin, or nationality
  – Furnishing information about the race, religion, sex, or national origin of another person; and
  – Implementing letters of credit containing prohibited boycott terms or conditions.
 
The EAR also require U.S. persons to report each quarter requests they have received to take certain actions to comply with, further, or support an unsanctioned foreign boycott. Maximum civil penalties under the EAR for anti-boycott violations are the greater of $250,000 per violation or twice the value of the transaction. For criminal violations, penalties of up to $1 million and/or 20 years’ imprisonment may be imposed.
 
The anti-boycott provisions of the Internal Revenue Code require U.S. taxpayers to report annually to the Internal Revenue Service their operations in boycotting countries. These provisions also penalize taxpayers who participate in or cooperate with an unsanctioned foreign boycott by denying them the right to claim certain tax benefits. Willful violations of the IRS anti-boycott requirements can lead to a criminal fine of up to $25,000 and/or imprisonment for one year.
 
[Editor’s note: The List of Countries Requiring Cooperation With an International Boycott was published in the Federal Register of Thursday, 30 March 2017, and is available
here.]  
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  (1) U.S. sanctions 30 parties active in Iran, North Korea and Syria; Iran sanctions 15 U.S. companies
  (2) EU updates sanctions against Libya, Egypt; ISIL (Da’esh) and Al-Quaida
  (3) WTO Trade Facilitation Agreement finally comes into effect
  (4) ECJ upholds EU sanctions against Russia’s Rosneft
  (5) President Trump extends state of national emergency concerning South Sudan
 
[Editor’s Note: To subscribe to WorldECR, the journal of export controls and sanctions, please visit
http://worldecr.com/.] 
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COMMCOMMENTARY

 
Authors: Anthony Rapa, Esq., Steptoe & Johnson LLP,
arapa@steptoe.com
, +1-202-429-8120; and Jeffrey W. Cottle, Esq.,
jcottle@steptoe.com
, +44 20 7367 8002. Both of Steptoe & Johnson LLP, Washington DC and London, respectively.
 
The UK Office of Financial Sanctions Implementation (OFSI) is expected to issue regulations in April 2017 introducing a civil penalties framework for violations of financial sanctions.  See our previous
advisory
and
blog post
, and
draft guidance issued by OFSI
in December 2016.  This measure will mark a significant change to the existing UK sanctions framework, which provides for criminal liability only, and will orient UK sanctions enforcement more towards the type of civil sanctions regime administered by the US Department of Treasury, Office of Foreign Assets Control (OFAC).  This figures to significantly impact the UK sanctions enforcement landscape.
 
Section 146 of the
Policing and Crime Act 2017
(the Act), enacted in January 2017, authorizes Her Majesty’s (HM) Treasury to impose civil penalties for sanctions violations of up to the greater of £1 million or 50% of the value of the transaction at issue.  This is significant in several respects, including:
  – Civil liability. The civil penalties regime will be the first of its kind for sanctions violations in the United Kingdom.  Previously, violators were subject to criminal liability only.
  – Standard of proof. In order for a person to be held liable for a civil violation, HM Treasury must conclude that “on the balance of probabilities,” the person committed a violation of financial sanctions regulations.  This is equivalent to the US standard of “preponderance of the evidence.”  Notably, this is a significantly more relaxed standard than the UK criminal standard, which requires proof of guilt beyond a reasonable doubt.
  – Magnitude of penalty. As discussed in more detail below, the £1 million penalty figure far exceeds the maximum OFAC penalty, and could potentially clear the way for very large penalties of a magnitude unseen in the UK sanctions context to date.  As a point of reference, in recent years, the United States has seen nine- and ten-figure sanctions settlements in cases involving allegedly egregious conduct, including several enforcement actions targeting the European financial industry.  The United Kingdom, as a global financial center, could adopt a similar enforcement posture.
 
Additionally, under sections 144 and 145 of the Act, criminal sentences for sanctions violations have been increased on summary conviction from six months to 12 months, and on conviction on indictment from two years to seven years.
 
Types of Activities Covered
 
Notably, the Act focuses only on financial sanctions.  In this regard, it is useful to explain the UK distinction between financial and trade sanctions, a distinction that does not really exist in US sanctions law.
 
 The Act defines “financial sanctions legislation” as, inter alia, legislation providing for measures that:
 
Impose [] prohibitions or obligations for one or more of the following purposes-
 
  (i) freezing funds or economic resources;
  (ii) preventing funds or economic resources being made available; [or]
  (iii) prohibiting or restricting access to financial markets or financial services.
 
The term refers also to freezing orders issued under the Anti-terrorism, Crime and Security Act 2001 and directives to cease business with designated persons under the Counter-Terrorism Act 2008.
 
Therefore, the Act’s civil penalties are applicable to dealings with listed persons and entities owned or controlled by listed persons.  As a threshold matter, this clearly includes entities designated for asset freezing and prohibitions against the provision of funds or economic resources.
 
Significantly, the Act appears to go farther than that, covering the restrictions on capital markets access that are a linchpin of the EU/UK-Russia sanctions program.  Under those sanctions, EU persons are prohibited from dealing in, or providing investment services related to, certain transferable securities and money-market instruments issued by designated Russian financial institutions, defense companies, and energy companies.  See our
previous advisory
.  These restrictions would appear to be included within the ambit of measures that “prohibit[] or restrict[] access to financial markets or financial services” as set out in the definition above, and therefore would be “financial sanctions” subject to civil enforcement by OFSI.
 
Notably, the term “financial sanctions” does not include trade sanctions such as restrictions on exports to a targeted country.  For example, the Act does not provide for civil penalties for violations of the EU/UK export restrictions targeting the Russian energy industry, or the remaining trade sanctions in effect with respect to Iran.  This is a key difference between the UK sanctions regime and the US regime, which does not distinguish between financial and trade sanctions for penalty purposes.
 
State of Mind Requirement
 
The Act provides that a person is subject to civil liability for violating financial sanctions where the person knows, or has “reasonable cause to suspect,” that the person is in breach.  OFSI has provided the following guidance regarding the “reasonable cause to suspect” standard:
 
“Reasonable cause to suspect” is a higher standard.  It covers situations where the relevant person does not have clear confirmation of an event, but they are aware of something that can prompt them to think it may have happened.  It does not cover merely the theoretical possibility that an event might have happened.
 
This is in sharp contrast to most US sanctions programs, which are strict liability regimes, meaning that OFAC need not conclude that a person acted with any particular state of mind in order to hold a person civilly liable.
 
Applicability to Officers
 
 The Act provides at Section 148 that an “officer” of a company civilly penalized for a financial sanctions violation can himself or herself be penalized where HM Treasury is satisfied, on the balance of probabilities, that the company’s violation:
 
(a) took place with the consent or connivance of the officer, or
(b) was attributable to neglect on the part of the officer.
 
“Officer” is defined to include directors, managers, secretaries, and partners.
 
This could represent a potentially significant risk for individual officers in the sanctions enforcement context, especially considering that the Act subjects officers to liability for negligence.
 
Deferred Prosecution Agreements
 
Section 150 of the Act provides that entities can enter into deferred prosecution agreements (DPAs) with prosecutors regarding potential violations of financial sanctions.  Specifically, the Act amends the Crime and Courts Act 2013 to add financial sanctions violations to the list of offenses for which entities may enter into DPAs, which provide for suspension of enforcement by the Crown Prosecution Service and/or the Serious Fraud Office in exchange for the entity agreeing to certain conditions.  Notably, DPAs have been available under the UK Bribery Act since 2014.  See our
previous advisory
.
 
This marks another move towards US-style sanctions enforcement.  DPAs have been a key feature of US sanctions enforcement in the criminal context for several years.
 
Serious Crime Prevention Orders
 
Section 151 of the Act designates a financial sanctions violation as a “serious crime” for purposes of the Serious Crime Act 2007, thereby authorizing the issuance of serious crime prevention orders (SCPOs) with respect to such activity.  An SCPO is a civil injunction issued by a court that restrains a person’s involvement in “serious crime” as defined under the Serious Crime Act 2007.
 
Requirement of a “UK Nexus”
 
OFSI has provided the following draft guidance regarding its sanctions jurisdiction:
 
To come within our enforcement of sanctions, there has to be a UK connection.  The breach does not have to occur within UK borders – a “UK nexus” could be created by such things as a UK company working overseas, an international transaction clearing or transiting through the UK, action by a local subsidiary of a UK parent company, or financial products or insurance bought on UK markets but held or used overseas.  We will consider the facts to see whether they come within our authority.
 
For the most part, this is similar to the jurisdictional reach of US sanctions regulations, which apply to the actions of all US persons worldwide, including those occurring outside the United States, and strictly (and occasionally creatively) control transactions clearing or transiting the US financial system.
 
The reference to “action by a local subsidiary of a UK parent company,” however, is of particular interest.  EU sanctions do not purport to apply to non-EU subsidiaries of EU companies, and UK sanctions – both those implementing EU sanctions and those issued by the United Kingdom itself – generally provide that they apply only to UK persons, which does not include non-UK subsidiaries of UK entities.  Additionally, it is worth noting that US sanctions programs, other than the Cuba and Iran programs, generally do not apply to non-US subsidiaries of US companies.  So any move towards applying sanctions to a local subsidiary, even on a case-by-case basis as described in the OFSI guidance above, would be notable.  The OFSI guidance seems to suggest that the subsidiary’s activities, in order to trigger sanctions, would somehow have to touch the United Kingdom, perhaps through the support of the parent company or involvement by UK person individuals.  In any event, caution in this area is warranted.
 
OFSI Guidance / Aggravating & Mitigating Factors / Penalty Matrix
 
The December 2016 draft OFSI guidance sets out a detailed explanation of which aggravating and mitigating factors OFSI will consider in assessing a civil penalty.  Specifically, OFSI will consider the following factors:
 
  – Whether there was a direct provision of funds or economic resources to a designated person
  – Whether there was a circumvention of sanctions
The severity of the violation, including the GBP value of the transaction and the harm done to the sanctions program’s objectives
  – Whether a company’s knowledge of the law and compliance standards were consistent with established standards in the company’s industry
  – Whether the violation was deliberate, involved a failure to take reasonable care, or involved failure of controls or inadequate legal representation
  – Whether the activity involved the breach of license conditions
  – Whether a professional (such as an attorney) was involved in facilitating unlawful behavior
  – Whether there were repeated violations
  – Whether there was a voluntary disclosure
  – Whether it is in the public interest to pursue enforcement in a particular case
 
Regarding voluntary disclosure in particular, OFSI stated in its draft guidance that it will regard the failure to voluntarily disclose a violation as an aggravating factor.  Where a person does submit a disclosure, it must be materially complete and made in good faith.
 
Furthermore, in its draft guidance, OFSI set out a matrix specifying how it will impose penalties.  First, OFSI will determine the base penalty applicable to the violation by determining the statutory maximum penalty, then assessing what penalty within that maximum is reasonable and proportionate.  Next, OFSI may downwardly adjust the base penalty based on certain mitigating factors.  Specifically, OFSI will reduce the penalty by up to 50% if there is a voluntary disclosure in a “serious” case; by up to 30% if there is a voluntary disclosure in a “most serious” case; and by up to 15% if there is no voluntary disclosure, but the case is not assessed as “most serious.”
 
Notably, the proposed OFSI matrix is similar to the matrix set out in OFAC’s enforcement guidelines, as set out in a
2008 interim rule
(which contains the matrix) and a
2009 final rule
(which refers to the 2008 interim rule and matrix).  See our
previous advisory
.
 
Comparison with OFAC Sanctions
 
The new civil enforcement framework for UK sanctions closely resembles the system that OFAC administers, and very well may set the United Kingdom on a path to US-style sanctions enforcement.  Similar to the US approach to sanctions, there is an agency within HM Treasury (OFSI) specifically responsible for sanctions enforcement; statutory authorization for large civil penalties; and draft OFSI guidance providing for aggravating and mitigating factors that are similar to those set out in OFAC guidance.
 
However, there remain key differences between the UK and US civil enforcement regimes:
  – Financial vs. trade sanctions. The UK civil enforcement program focuses on financial sanctions only, while the US system does not distinguish between financial and trade sanctions.  This may reflect significant substantive differences between UK and US sanctions, with US sanctions featuring far stricter and export and reexport controls in the sanctions context.  This was evident, for example, in the recent US enforcement action against ZTE.  See our
previous advisory
.
  – State of mind requirement. The UK civil sanctions regime provides for liability only where a person has “reasonable cause to suspect” that a violation took place, while the US regime provides for strict liability.  This is a significant difference in legal standards, although practically speaking, this may not materially impact how a UK company would develop a sanctions compliance policy as compared to a US company.
  – Magnitude of penalty. The UK maximum penalty is at once higher and lower than its US counterpart.  The specified GBP maximum is £1 million, which is nearly quadruple the specified dollar maximum $289,238 (as periodically adjusted for inflation) under most OFAC sanctions programs.  However, with regard to penalties tied to the value of the transaction, the UK maximum is 50% of the value of the transaction, while the US maximum is twice the value of the transaction.
 
Of course, even with a robust civil sanctions framework in place, the great wild card will be the frequency and intensity of OFSI enforcement.  Over the last decade or so, OFAC enforcement actions – in particular those targeting European financial institutions – have made worldwide headlines, with occasional nine- and ten-figure settlements sending shockwaves through industries engaged in trade (both lawful and otherwise) with sanctioned countries.  The Bush and Obama Administrations made sanctions enforcement a key aspect of US national security and foreign policy, and the Trump Administration’s approach has been consistent with this to date.  With the new civil sanctions program coming into effect, it will be for the UK government to decide just what role sanctions enforcement should play as a tool of UK foreign policy.  As a global financial center, the United Kingdom may continue to orient its enforcement posture towards the US position.

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(Source:
Volkov Law Group Blog. Reprinted by permission.)
 
* Author: Michael Volkov, Esq., Volkov Law Group, mvolkov@volkovlaw.com, 240-505-1992.
 
Compliance professionals cannot do it alone. Of course, Chief Compliance Officers (CCOs) need compliance staff and the collaboration of business, human resources, legal, financial and audit, and related functions in order to succeed. I have made this point over and over (again and again).
 
Along with human and functional resources, CCOs need to embrace technology and data analytics. I have written about the importance of technology to the compliance function. We have seen a rapid increase in the development of technology solutions for compliance professionals, particularly with respect to compliance dashboards, third party risk management platforms, and internal investigation management programs.
 
CCOs who embrace technology have greater access to metrics and monitoring data. In the end, CCOs who understand the importance of technology are more productive and have greater job satisfaction. Technology is an important means to collect data, monitor performance, and increase communications with compliance staff, business participants in a compliance program, and facilitate compliance operations.
 
For example, internal investigations and incident management systems have been developed to permit entry of information by corporate managers and employees responsible for reporting investigations and incidents into a databases where such data is stored, and organized for monitoring and reporting purposes. Companies can use this technology to keep track of internal investigations but collect and maintain important incident information that may not rise to the level of an internal investigation.
 
As part of the technology and compliance movement, CCOs have yet to embrace the capabilities of data analytics. Mature and sophisticated compliance programs with substantial resources have been utilizing data analytics to promote compliance.
 
Just like the compliance technology industry, we are likely to see growth in accessible and user-friendly data analytics programs. A compliance program generates significant data across the company. The data can be classified and divided on a number of fronts. It can also be linked to financial expenditures relating to certain key functions (e.g. gifts, meals and entertainment).
 
Data analytics can provide important insights into business activities in select categories and geographic areas. As data is collected, the analytical function can identify important trends, red flags and point to areas that should be scrutinized.
 
A data analytic program organizes large amounts of data, which by itself can be reviewed and understood through presentation modules that allow compliance professionals to understand patterns and trends and understand ongoing business activities.
 
In addition to organizing data, mixing compliance analysis with financial transactions can explain important financial activity and determine whether these activities are captured by the compliance controls.
 
Hopefully, we will see an increased effort to make data analytics easily accessible for compliance professionals. It may take years for such programs to operate like “plug-ins” for other computer programs but I am aware of various efforts in this area.
 
Compliance officers have numerous challenges in terms of subject-matter expertise outside of compliance. An understanding of the law, financial accounting systems, and technology are just a few to consider. When it comes to leveraging resources, and given the typical corporate resistance to assign more personnel, technology is an excellent resource to consider, along with data analytics and other systems that enhance efficiency and improve overall understanding of a company’s compliance environment.
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* Author: Susan Kovarovics, Esq. of Brian Cave LLP, susan.kovarovics@bryancave.com, +1-202-508-6132; and Gerard Kreijen, Esq., Loyens & Loeff Amsterdam, gerard.kreijen@loyensloeff.com, +31-(0)20-578-5395.
 
You just got that dreaded call.  Someone within the business just called to report that a shipment may have been made without all of the proper authorizations.  When you investigate more closely, you discover that the matter may involve US export controls and trade sanctions in addition to EU trade controls.  What do you do?
 
Of course, you conduct an investigation to determine whether there is, in fact, a violation.  Assuming you determine there is a violation, the conversation often turns to whether to notify the relevant government authorities about the issue.
 
The US Perspective
 
US export controls and sanctions regulations (particularly the Export Administration Regulations (“EAR”), the International Traffic in Arms Regulations (“ITAR”), and the Foreign Assets Control Regulations) all set forth a process for parties to voluntarily disclose violations.  They also provide that a valid voluntary disclosure will generally be considered a mitigating factor in the agency’s decision about whether to take administrative action to resolve a matter and, if so, what that action should be, including what amount any penalty should be.
 
Under some circumstances, a voluntary disclosure is essentially mandatory.  For instance, it is a violation of General Prohibition 10 of the EAR to order, buy, remove, conceal, store, use, sell, loan, dispose of, transfer, transport, finance, forward, or otherwise service an item if you know that it was exported, reexported or transferred in violation of the EAR.  So once you know that an item was reexported in violation of the EAR, you cannot service it or have it sent back to you for repair without first getting authorization from the Bureau of Industry and Security (“BIS”) at the US Department of Commerce.  To do so, you need to submit a request to BIS and explain the circumstances of the violation, as well as what you are seeking permission to do with the item now.  To the extent that your entity was involved in the violation, it is strongly recommended that you submit a voluntary disclosure explaining the circumstances either before or at the same time that you submit the request for waiver of General Prohibition 10.  Otherwise, BIS is likely to begin an investigation on its own, and your entity will lose the benefit of a voluntary disclosure.
 
In addition, Section 126.1(e) of the ITAR has a mandatory notification requirement to the Directorate of Defense Trade Controls at the US Department of State if you know or have reason to know about “a proposed, final, or actual sale, export, transfer, reexport, or retransfer of [defense] articles, [defense] services, or data to any country identified in Section 126.1 of the ITAR.
 
If you need to ask the US party that supplied the goods or technology involved in the violation to you to amend the export authorization pursuant to which you received such items, or to obtain a new authorization, (or if you need to seek reexport authorization) in order to pursue additional activities involving such items going forward, then a disclosure is likely warranted.  Section 127.2 of the ITAR indicates that it is a violation of the ITAR to omit or conceal material information from a license application.  Section 764.2(g) of the EAR takes the same position.  Not including information to indicate that some technology or thirty export-controlled widgets were previously provided to the same party without a license, for instance, would likely be considered material information by the relevant licensing agency.  Thus, in such a situation, it would be highly advisable to submit a voluntary disclosure before submitting the license application, so the agency is already aware of what the party has received before being asked to decide on the new authorization request.
 
If the above circumstances do not apply, then it really may be your choice whether to submit a voluntary disclosure or not.  Many other factors may contribute to your decision.  What does your company policy say?  How serious was the matter?  Are there other parties involved who are planning to submit a voluntary disclosure?  Keep in mind, though, that the US regulators have a strong preference in favor of voluntary disclosures.  Voluntary disclosures are given great weight in most agencies’ decisions about how to resolve a matter.
 
In the event that you decide not to voluntarily disclose, be sure to document your internal investigation process and the results and document the corrective actions that were taken to mitigate the risk of the same or similar issues occurring again in the future.  That way if questions are raised in the future about the matter, the information will be readily available and you can explain what occurred and how it was addressed.
 
The EU Perspective
 
In the context of EU trade controls, you will find that there is much less statutory guidance, if any at all, when it comes to deciding the issue whether or not to notify the competent authorities about the discovery of a violation. Contrary to the situation in the US, EU sanctions and export control regulations generally do not set forth any process for parties – whether mandatory or not – to disclose violations. Neither do the EU regulations provide for the mitigating effects of a voluntary disclosure or the kind of administrative action that it may initiate.
 
In the EU the Member States are primarily responsible for the implementation and enforcement of sanctions and export control regulations. The relevant EU regulations merely require EU Member States to lay down the ‘rules and penalties’ that apply to violations and take the ‘necessary measures’ to ensure their implementation. The penalties as such must be ‘effective, proportionate, and dissuasive’. Accordingly, the Member States enjoy relative discretion in this respect. This being so, it should not come as a surprise that there is no common EU denominator with respect to voluntary disclosure and the mitigating effect that it may entail.
 
Therefore, when requiring an answer to the question whether or not to disclose, the first thing you should do is to obtain an understanding of the voluntary disclosure policy of the relevant Member State. As this policy will often not be formally published you may need to involve qualified local counsel to have it clarified.
 
Nonetheless, it would be mistaken to think that the EU context does not provide you at least with some basic guidance concerning voluntary disclosure. As a rule, the competent authorities of the EU Member States, like those of the US, will attribute considerable weight to a voluntary disclosure when deciding how to deal with a violation. Given the general absence of statutory and procedural requirements however, the competent Member State authorities in principle are in a better position to apply flexibility than their US counterparts.
 
A voluntary disclosure to the competent authorities of an EU Member State may significantly mitigate risk and scale of potential penalties. Again, failing the necessary statutory underpinnings there is no guarantee that voluntary disclosure of a violation will not result in a penalty. But generally, it will make the formal determination of a violation and, if a violation should be determined to exist, the imposition of a penalty, less likely.
 
As far as the Netherlands are concerned (Belgian and Luxembourg practice being somewhat similar) when a violation has occurred and you report to the competent authorities, they may in fact be quite considerate. Of course, they will treat each instance on its merits and may decide to impose a substantial penalty in serious cases. You may find however, that in the Netherlands a voluntary disclosure will typically result in a settlement and/or official warning with no financial penalties provided that:
 
  – The party that is in violation is a first-time offender;
  – The disclosure provides all relevant information regarding the items or activities that required authorization;
  – Authorization would have been granted had it been properly applied for; and
  – The activities in question or the destination or end-use of the items are not subject to sanctions
 
In general, if you discover that you have violated EU sanctions or export controls it is recommended to seriously consider – taking into account all relevant factors, including the relevant Member State’s enforcement policies – making a voluntary disclosure.
* * * * * * * * * * * * * * * * * * * *

 
* Author: Gary Stanley, Esq., Global Legal Services, PC, (202) 352-3059,
gstanley@glstrade.com
 
If a

600 series item is incorporated into a non

600 series item, the de minimis provision for

600 series items applies, unless the part or component after incorporation is no longer a “600 series” item because it is no longer “specially designed

for a

600 series” item.  However, it is quite likely the non-U.S. made item into which the

600 series

item is being incorporated would be classified under ECCN 0A919, a foreign made military commodity that if in the United States would be subject to the EAR. (See ECCN 0A919 for additional details on the classification and jurisdiction of such items).

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

TEEX/IM TRAINING EVENTS & CONFERENCES

TE_a216
. Friday List of Approaching Events

(Sources: Event sponsors.) 
 
Published every Friday or last publication day of the week. Send events to
apbosch@fullcirclecompliance.eu
, composed in the below format:

* DATE: PLACE; “TITLE;” SPONSOR; WEBLINK; CONTACT (email and phone number)

#” New listing this week:   

Continuously Available Training:
* Executive Masters: “
International Trade Compliance
;” University of Liverpool;
exed@liverpool.ac.uk
;
+44 (0) 20 768 24614
* E-Seminars: “
US Export Controls” / “Defense Trade Controls
;” Export Compliance Training Institute;
danielle@learnexportcompliance.com 
* On-Line: “
Simplified Network Application Process Redesign (SNAP-R)
;” Commerce/BIS; 202-482-2227
* E-Seminars: “
Webinars On-Demand Library
;” Sandler, Travis & Rosenberg, P.A.
 
Training by Date:

* Apr 2-6: New Orleans LA;
NCBFAA Annual Conference 

* Apr 3-5: Sterling VA; “
Basics of Government Contracting
;” Federal Publications Seminars

* Apr 3-6: Wash DC; “EAR/OFAC/ITAR Commercial and Military Export Controls/How US Controls Impact Non-US Companies, Affiliates and Transactions, PLUS Other Country Controls Comparison to US (EU & Canada) Seminar;” ECTI; jessica@learnexportcompliance.com; 540-433-3977

* Apr 3: Wash DC; “
NAFTA Renegotiated – The Winners and Losers
;” Arent Fox LLP

# Apr 4-5: Southampton UK; “
Maritime and Defence Dual-Use Conference 2017
;” European Network of Defence-Related Regions

 * Apr 4: Webinar; “GTM Webinar Series Part Four: Supply Chain Collaboration;” Amber Road

* Apr 4: Webinar; ”
When Importers Give Loans and Advances: Protecting Returns;” Sandler, Travis & Rosenberg, P.A.;
webinarorganizers@strtrade.com 

* Apr 5: Webinar; ”
Changes in the EU;” Livingston International

* Apr 5: Webinar; ”
Food Imports: Classification, Quotas, and Cost Savings Opportunities;” Sandler, Travis & Rosenberg, P.A.;
webinarorganizers@strtrade.com 

* Apr 6: Webinar; “Global Export Control Classification Master Session;” ECTI; 
danielle@learnexportcompliance.com; 540-433-3977

* Apr 6: Webinar; ”
Top 10 Mistakes Importers Make and How to Avoid Them;” Sandler, Travis & Rosenberg, P.A.;
webinarorganizers@strtrade.com 

* Apr 11: Webinar; “
GTM Webinar Series Part Five: Free Trade Agreements;” Amber Road

* Apr 18: Milwaukee WI; “AES Compliance Seminar;” Dept. of Commerce/Census itmd.outreach@census.gov 

* Apr 25: Webinar; ”
Antidumping 101: Minimizing Risk, Maximizing Compliance;” Sandler, Travis & Rosenberg, P.A.;
webinarorganizers@strtrade.com 

* Apr 26: London UK; “
Intermediate Seminar
;” UK/BIS Export Control Organisation;
denise.carter@bis.gsi.gov.uk 

* Apr 27: London UK; “
Beginners Workshop
;” UK/BIS Export Control Organisation;
denise.carter@bis.gsi.gov.uk 

* Apr 27: London UK; “
Making Better License Applications
;” UK/BIS Export Control Organisation;
denise.carter@bis.gsi.gov.uk 

* May 1-4: Las Vegas; “EAR Export Controls / ITAR Defense Trade Controls Seminar;” ECTI; jessica@learnexportcompliance.com; 540-433-3977

* May 1-2: Tucson AZ; “2017 Spring Conference;” Society for International Affairs

# May 4-5: Aarhus, Denmark; “
Dual-Use Conference 2017 – Drones & Space
;” European Network of Defence-Related Regions

* May 7-9: Toronto; “ICPA Toronto Conference;”
International Compliance Professionals Association;
wizard@icpainc.org 

* May 8-10: San Diego CA; “
Basics of Government Contracting
;” Federal Publications Seminars

* May 9: Webinar; ”
Exports – New Incentives, Old Rules;” Sandler, Travis & Rosenberg, P.A.;
webinarorganizers@strtrade.com 

* May 10: London UK; “
Control List Classification – Military
;” UK/BIS Export Control Organisation;
denise.carter@bis.gsi.gov.uk 

* May 10: Baltimore MD; “
AES Compliance Seminar
;” Dept. of Commerce/Census Bureau;
itmd.outreach@census.gov 

* May 11: London UK; “
Making Better License Applications
;” UK/BIS Export Control Organisation;
denise.carter@bis.gsi.gov.uk 

* May 15-18: London UK; “United States Export Control (EAR/OFAC/ITAR) Seminar in London (for EU and other non-US Companies);” ECTI; jessica@learnexportcompliance.com; 540-433-3977

* May 17-19: Minneapolis MN; “
Basics of Government Contracting
;” Federal Publications Seminars

* May 17: Southampton UK; “
Intermediate Seminar
;” UK/BIS Export Control Organisation;
denise.carter@bis.gsi.gov.uk 

* May 17: The Hague, Netherlands; ”
Exportcontrole en Strategische Goederen” (Event in Dutch); Dutch Ministry of Foreign Affairs

* May 17: Webinar; ”
Preparing for a Customs Investigation;” Sandler, Travis & Rosenberg, P.A.;
webinarorganizers@strtrade.com 

* May 18: Southampton UK; “
Beginners Workshop
;” UK/BIS Export Control Organisation;
denise.carter@bis.gsi.gov.uk 

* Mary 23: Chicago IL; ”
2017 Global Trade & Commercial Compliance Update;” Baker McKenzie; Eunkyung Kim Shin, +1 312 861 8211,
eunkyung.kim.shin@bakermckenzie.com 

* May 23: Tampa FL; “AES Compliance Seminar;” Dept. of Commerce/Census Bureau; itmd.outreach@census.gov 

* May 24-25: Annapolis MD; “
Advanced ITAR/EAR Compliance: Using Export Controls to Your Advantage
;” 
spalmer@exportcompliancesolutions.com
; 866-238-4018 / 410-757-1919

* May 24-25: Scottsdale AZ; ”
2017 West Coast Trade Symposium;” Dept. of Homeland Security/Customs and Border Protection

* Jun 5-7: Boston MA; “
Basics of Government Contracting
;” Federal Publications Seminars

* Jun 5-8: Wash DC; “
United States Export Control (EAR/OFAC/ITAR) Seminar
;” ECTI;
jessica@learnexportcompliance.com
; 540-433-3977

* Jun 7: London UK; “
Control List Classification – Combined Dual Use and Military
;” UK/BIS Export Control Organisation;
denise.carter@bis.gsi.gov.uk 
* Jul 10-12; Baltimore MD; “
2017 Summer Back to Basics Conference
;” Society for International Affairs

* Jun 11-13: Dublin IRL; “ICPA Dublin Conference;”

International Compliance Professionals Association;
wizard@icpainc.org 

* Jun 12-15: San Francisco; “
United States Export Control (EAR/OFAC/ITAR) Seminar
;” ECTI;
jessica@learnexportcompliance.com
; 540-433-3977

* Jun 12: Shanghai China; “
5th Advanced China Forum on Import Compliance
;” American Conference Institute

* Jun 13: Philadelphia PA; “AES Compliance Seminar;” Dept. of Commerce/Census Bureau; itmd.outreach@census.gov 

* Jun 14: Kegsworth, Derby UK; “
Intermediate Seminar
;” UK/BIS Export Control Organisation;
denise.carter@bis.gsi.gov.uk 
* Jun 15: Kegsworth, Derby UK; “
Beginners Workshop
;” UK/BIS Export Control Organisation;
denise.carter@bis.gsi.gov.uk 
* Jun 15: Kegsworth, Derby UK; “
Making Better License Applications
;” UK/BIS Export Control Organisation;
denise.carter@bis.gsi.gov.uk 
* Jun 15: Kegsworth, Derby UK; “
Control List Classification – Combined Dual Use and Military
;” UK/BIS Export Control Organisation;
denise.carter@bis.gsi.gov.uk 
* Jun 21: Brussels, Belgium; “
Export Controls and Economic Sanctions: US & EU Update 2017
;” International Chamber of Commerce Belgium

* July 11-12: Seattle WA; “ITAR/EAR Boot Camp;” spalmer@exportcompliancesolutions.com; 866-238-4018 / 410-757-1919

* Jul 17-19: Hilton Head Island SC; “
Basics of Government Contracting
;” Federal Publications Seminars

* Jul 26-27
: Seattle WA; “
2017 Export Controls Conference
;” Dept. of Commerce/U.S. Commercial Service, Dept. of Homeland Security/Homeland Security Investigations, Seattle University, Dorsey & Whitney LLP

* Aug 14-16: McLean VA; “
Basics of Government Contracting
;” Federal Publications Seminars

* Sep 4-9: Galveston TX;
ICPA Conference at Sea;”

International Compliance Professionals Association;
wizard@icpainc.org

* Sep 6: Nashville TN; “AES Compliance Seminar;” Dept. of Commerce/Census Bureau; itmd.outreach@census.gov 

* Sep 12-13: Annapolis MD; “ITAR/EAR Boot Camp;” spalmer@exportcompliancesolutions.com; 866-238-4018 / 410-757-1919

* Sep 12-13: Wash DC; “Interactive Export Controls Workshop;” ECTI; jessica@learnexportcompliance.com; 540-433-3977

* Sep 18-20: Las Vegas NV; “
Basics of Government Contracting
;” Federal Publications Seminars

* Oct 2-5: Columbus OH; “University Export Controls Seminar;” ECTI; jessica@learnexportcompliance.com; 540-433-3977

* Oct 12: Boston MA; “AES Compliance Seminar;” Dept. of Commerce/Census Bureau; itmd.outreach@census.gov 

* Oct 22-24: Grapevine TX; “
Annual ICPA Fall Conference
;” International Compliance Professional Association;
Wizard@icpainc.org 

* Oct 23-24: Arlington VA; “

2017 Fall Advanced Conference
;” Society for International Affairs

* Oct 30-Nov 2: Phoenix AZ; “
ITAR Defense Trade Controls / EAR Export Controls Seminar
;” ECTI;
jessica@learnexportcompliance.com
; 540-433-3977

* Nov 6-8: Chicago IL; “
Basics of Government Contracting
;” Federal Publications Seminars

* Nov 7: Norfolk, VA; “AES Compliance Seminar;” Dept. of Commerce/Census Bureau; itmd.outreach@census.gov 

* Dec 5: San Juan PR; “AES Compliance Seminar in Spanish;” Dept. of Commerce/Census Bureau; itmd.outreach@census.gov 

* Dec 6: Wood Ridge NJ; “
AES Compliance Seminar
;” Dept. of Commerce/Census Bureau;
itmd.outreach@census.gov 

* Dec 7: Laredo, TX; “AES Compliance Seminar in Spanish;” Dept. of Commerce/Census Bureau; itmd.outreach@census.gov 

* Dec 11-13: Sterling VA; “
Basics of Government Contracting
;” Federal Publications Seminars

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

ENEDITOR’S NOTES

(Source: Editor)
 
April fool!  There will be no reversal of Export Control Reform regulations on April 1st (or any other time as far as we know).
* * * * * * * * * * * * * * * * * * * *

EN_a118
. Bartlett’s Unfamiliar Quotations

(Source: Editor) 

*
Otto von Bismarck (Otto Eduard Leopold, Prince of Bismarck, 1 Apr 1815 – 30 Jul 1898, was a conservative Prussian statesman who dominated German and European affairs from the 1860s until 1890. In the 1860s, he engineered a series of wars that unified the German states, significantly and deliberately excluding Austria, into a powerful German Empire under Prussian leadership.)
  – “People never lie so much as after a hunt, during a war or before an election.”
 
*
Johann Sebastian Bach (31 Mar 1685 – 28 Jul 1750, was a German composer and musician of the Baroque period. Bach’s abilities as an organist were highly respected during his lifetime, although he was not widely recognized as a great composer until a revival of interest in and performances of his music in the first half of the 19th century. He is now regarded as one of the greatest composers of all time.)
  – “I worked hard. Anyone who works as hard as I did can achieve the same results.”
 
*
René Descartes (31 Mar 1596 – 11 Feb 1650, was a French philosopher, mathematician, and scientist. Dubbed the father of modern western philosophy, much of subsequent Western philosophy is a response to his writings, which are studied closely to this day.)
  – “A state is better governed which has few laws, and those laws strictly observed.”
 
Friday funnies:
 
The preacher’s lawnmower finally gives out and he decides to go buy a used one. He sees a little boy with a lawnmower for sale, so he buys it. When he gets home, he fills it with gasoline and pulls the cord. After a few tries, it won’t start, so he goes back to the boy and says it won’t work. The boy tells him, “You have to cuss at it and it will start.” The preacher, shocked, replies, “Cuss?  Young man, I don’t use profanity, I’ve never used profanity, so I wouldn’t even know how to cuss.” The boy looks at him and says, “You keep pullin’ on that cord long enough and it will come to ya!”
  — Bill Yates, Akron, Ohio

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

EN_a219. 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: 29 Mar 2017: 82 FR 15461-15463: Removal of Certain Persons From the Entity List; and 82 FR 15458-15461: Removal of Certain Persons From the Entity List; Addition of a Person to the Entity List; and EAR Conforming Change.

  
*
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 
 
*
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 (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. 
 
*
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 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.  

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

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 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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