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17-0503 Wednesday “The Daily Bugle”

17-0503 Wednesday “Daily Bugle”

Wednesday, 3 May 2017

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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 
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  1. Defense: Government-Industry Advisory Panel to Meet on 10-11 May in Wash DC 
  1. Ex/Im Items Scheduled for Publication in Future Federal Register Editions 
  2. Commerce/BIS: (No new postings.) 
  3. DHS/CBP Posts Notice Concerning TSCA Certification Option for Expedited Release Shipments 
  4. DHS/CBP Posts Update to FDA Foreign Supplier Verification Program (FSVP) Data Requirements 
  5. State/DDTC: (No new postings.) 
  6. Canada TID Posts Regulations Concerning Syria, Côte d’Ivoire, and Liberia 
  7. EU Amends Waiver Concerning Entry and Exit Requirements for Union Goods Declarations Moving Across the Neum Corridor 
  8. EU INTA Announces 4 May Hearing on “Rules of Origin in Trade in Goods 
  1. NewsinEnglish.no: “Defense Minister Defends Herself”
  2. Reuters: “UAE Jails Businessman for Trying to Ship Generator to Iran” 
  1. E. Kirkham: “International Efforts to Prevent Diversion of Arms and Dual-Use Goods Transfers: Challenges and Priorities” 
  2. J. Reeves & K. Heubert: “Recent Court Case Sheds Light on ITAR Brokering” 
  3. M. Volkov: “What is the Real Risk of an FCPA Enforcement Action?”  
  4. T. Murphy: “International Trade-Related Executive Orders” 
  5. R.C. Burns: “Cuban Rum, Pennsylvania, OFAC and a Recipe” 
  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 (18 Apr 2017), FACR/OFAC (10 Feb 2017), FTR (19 Apr 2017), HTSUS (7 Mar 2017), ITAR (11 Jan 2017) 
  3. Weekly Highlights of the Daily Bugle Top Stories 

EXIMEX/IM ITEMS FROM TODAY’S FEDERAL REGISTER

EXIM_a1

1. Defense: Government-Industry Advisory Panel to Meet on 10-11 May in Wash DC


(Source: Federal Register) [Excerpts.]
 
82 FR 20594-20595: Government-Industry Advisory Panel; Notice of Federal Advisory Committee Meeting
* AGENCY: Office of the Under Secretary of Defense, Department of Defense.
* ACTION: Federal advisory committee meeting notice.
* SUMMARY: The Department of Defense is publishing this notice to announce the following Federal advisory committee meeting of the Government-Industry Advisory Panel. This meeting is open to the public.
* DATES: The meeting will be held from 9:00 a.m. to 5:00 p.m. on Wednesday and Thursday, May 10 and 11, 2017. Public registration will begin at 8:45 a.m. on each day. For entrance into the meeting, you must meet the necessary requirements for entrance into the Pentagon. For more detailed information, please go here. The panel will also hold teleconference meetings with the same agenda to prepare for future meetings from 1:00 p.m. to 5:00 p.m. Eastern Standard Time on Wednesday, May 17, and Wednesday, May 31. Teleconference and direct connect information will be provided by the Designated Federal Officer (DFO) at the contact information in this notice.
* ADDRESSES: Pentagon Library, Washington Headquarters Services, 1155 Defense Pentagon, Washington, DC 20301-1155. The meeting room will be displayed on the information screen for both days. The Pentagon Library is located in the Pentagon Library and Conference Center (PLC2) across the Corridor 8 bridge.
* FOR FURTHER INFORMATION CONTACT: LTC Andrew Lunoff, Office of the Assistant Secretary of Defense (Acquisition), 3090 Defense Pentagon, Washington, DC 20301-3090, email: andrew.s.lunoff.mil@mail.mil, phone: 571-256-9004.
* SUPPLEMENTARY INFORMATION: …
  – Agenda: This will be the sixteenth meeting of the Government-Industry Advisory Panel and the initial establishment of recurring teleconference meetings. The panel will cover details of 10 U.S.C. 2320 and 2321, begin understanding the implementing regulations and detail the necessary groups within the private sector and government to provide supporting documentation for their review of these codes and regulations during follow-on meetings. Agenda items for this meeting will include the following: (1) Final review of tension point information papers; (2) Rewrite FY17 NDAA 2320 and 2321 language; (3) Review Report Framework and Format for Publishing; (4) Comment Adjudication & Planning for follow-on meeting. …

   Dated: April 28, 2017.
Aaron Siegel, Alternate OSD Federal Register Liaison Officer, Department of Defense.

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OGSOTHER GOVERNMENT SOURCES

OGS_a12. Ex/Im Items Scheduled for Publication in Future Federal Register Editions
(Source: Federal Register

* President; EXECUTIVE ORDERS; Committees; Establishment, Renewal, Termination, etc.: Trade and Manufacturing Policy, Office of; Establishment (EO 13797) [Publication Date: 4 May 2017.]
* President; EXECUTIVE ORDERS; Trade: Trade Agreement Violations and Abuses: Policy to Address (EO 13796) [Publication Date: 4 May 2017.]
* U.S. Customs and Border Protection; NOTICES; Agency Information Collection Activities; Proposals, Submissions, and Approvals 
[Publication Date: 4 May 2017.]:
  – Notice of Detention
  – Application for Exportation of Articles under Special Bond
  – Importation Bond Structure
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On March 21, 2017 CBP regulations went into effect that, among other things, removed the option for a filer to satisfy the certification requirements under the Toxic Substances Control Act (TSCA) through the use of a blanket permit. Filers must now provide TSCA certification, including information on the certifier, for each shipment prior to entry. 

CSMS# 17-000175 was issued to the trade to reiterate that the requirement to obtain TSCA certification prior to entry applies equally to importers using certain expedited release programs – where the products are released from the manifest – as it does to those making entry through the traditional process. These expedited release programs include Fast and Secure Trade (FAST), Border Release Advanced Screening and Selectivity (BRASS), Line Release and express consignment consolidated informal entries released off of the manifest.

From a technical perspective, however, CBP recognizes the difficulties for shipments that make entry through the indicated programs, to submit TSCA certification prior to entry. As such, for these shipments only, CBP will not require the submission of the TSCA certification documentation prior to entry, but will instead permit the importer and carrier to have the TSCA certification documentation available for submission upon request by a CBP Officer. 

The filer will be required to submit the TSCA certification documentation, for each shipment, at the time of the entry summary filing.

  – Related CSMS No. 17-000175

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(Source:
CSMS# 17-000255, 3 May 2017.)
 
Transmission of Foreign Supplier Verification Program data becomes mandatory May 30, 2017. Among the mandatory ACE data elements is the Unique Facility Identifier (UFI) for the FSVP Importer. FDA recognizes the DUNS as a UFI acceptable to FDA, and FDA expects the transmission of the FSV Importer’s DUNS number in this field in PG19.

This will be available in ACE Certification for testing on or before May 11, 2017. A CSMS will be issued to confirm deployment to ACE Certification. 

For the onboarding period, FDA will temporarily allow the submission of “UNK” (unknown) as the syntax for the DUNS number for the FSV Importer in PG19. “UNK” should only be used if the nine-digit, site-specific DUNS number is not available at the time the entry is transmitted. 

A CSMS will be issued at a later date to indicate when UNK will no longer be accepted.

To obtain a DUNS number for free, visit www.fdadunslookup.com. DUNS numbers should be unique for each firm, i.e., a corporate headquarters with multiple company locations should not have the same DUNS number for each site. Each unique site (address) should have a unique DUNS number.
Please note: There are no additional changes to the required data elements for the Foreign Supplier Verification Program Importer.

  – For a list of specific data elements required for FSVP, refer to the FDA Supplemental Guide V2.5

  – For questions related to FSVP, please contact FDA via here.
  – For questions related to the submission of data elements for FSVP contact FDA’s ACE Support, 6:00 AM to 10:00 PM, 7 days a week at: ACE_Support@fda.hhs.gov, 877-345-1101, or 571-620-7320.

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OGS_a56
. State/DDTC: (No new postings.)

(Source: State/DDTC)

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OGS_a78. EU Amends Waiver Concerning Entry and Exit Requirements for Union Goods Declarations Moving Across the Neum Corridor
 
Regulations:
  – Council Regulation (EU) 2017/762 of 25 April 2017 amending Regulation (EU) No 479/2013 on the waiver from the requirement to submit entry and exit summary declarations for Union goods that are moved across the Neum corridor
 
[Editor’s Note: Neum is the only town to be situated along Bosnia and Herzegovina’s 20 km (12 mi) of coastline, making it the country’s sole access to the Adriatic Sea.]  

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OGS_a89
. EU INTA Announces 4 May Hearing on “Rules of Origin in Trade in Goods”

(Source: EU INTA)
 
The EU Committee on International Trade has published the following announcement on its website.
 
The misuse of rules of origin may transform them into a trade policy instrument hampering the smooth running of trade. INTA aims to hear from academic, practitioners and government representatives what are the shortcomings of the current system and how they can best be addressed in the light of increasingly faster and more connected global value chains.
Rules of origin are a key criterion to determine the national source of a product and in turn the duties and restrictions which may apply to such product.
 
Despite being an essential element for the proper conduct of global trade, governments across the world apply a number of different practices with regard to the rules of origin: substantial transformation, change of tariff classification, ad valorem percentage and the manufacturing or processing operation criteria are all used to different degree.
 
  – Date: Thursday, 4 May 2017, 10.30-12.30 CEST.
  – Location: Jozsef Antall Building – Room 4Q1
  – For a live broadcast click here. 

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NWSNEWS

NWS_a110
. NewsinEnglish.no: “Defense Minister Defends Herself”

 
Norwegian Defense Minister Ine Eriksen Søreide has been forced into defense mode herself in recent weeks. Now she faces even more highly critical reports from the State Auditor General’s Office, this time over the sale of retired fighter jets, while her ministry also reportedly tried to get the state auditors to tone down their criticism of a lack of national preparedness.
 
  “It’s not the nation’s security the Defense Ministry wanted to protect,” State Auditor General Per-Kristian Foss told newspaper Dagens Næringsliv (DN) late last week. “It was the military and the ministry against (our) criticism, by softening words and expressions.”

That’s particularly tough criticism from a man who’s been a political colleague of Søreide for years. Foss is a former finance minister for the Conservatives who withdrew as a Member of Parliament and became State Auditor General. Søreide is also a longtime member of the Conservatives who now finds herself under harsh criticism from another Conservatives’ veteran.
 
Foss’ salvo came in the aftermath of his explosive state auditors’ report on a woeful state of national security that Søreide and her government has also tried to keep secret. The full report remains classified, while DN obtained, and has published, a summary of the state auditors’ main points. Søreide then opted to launch a probe into who leaked it to DN. …
 
Now Søreide finds herself in more hot water, over the State Auditor General’s report on the sale of Norway’s old F-5 fighter jets. Foss’ auditors have concluded that the sale was characterized by a “serious lack of control” and insight into the buyers.
 
At a press conference in Oslo this week, Foss claimed that neither the Defense Ministry nor the Foreign Ministry followed regulations applying to the sale of defense material. “This has been terribly handled by the Defense Ministry,” Foss told reporters. “No rules were followed. This is a textbook example of what should not be done.”
 
The sales process began in 1999, during the former left-center government headed by Jens Stoltenberg, and lasted until 2015, two years after the current conservative coalition of which Søreide is part took over government control. Two of the 15 F-5 fighter jets were sold in 2015 to a company in Texas called Northern General Leasing (NGL) for just NOK 116,000 (around USD 20,000 at the time) each. Twelve of the jets were given away to schools and a museum, while one is used for training.
 
When the 15 jets were put up for sale, the military set a minimum price of NOK 6.6 million each, or NOK 100 million all together. That was never achieved, while newspaper Dagbladet has earlier reported that Norwegian authorities had little if any knowledge about NGL (the lone buyer) other than it was tied to billionaire Ross Perot Jr. Nor did the Norwegians know what NGL would do with the jets.

The State Auditor General is now harshly scolding both the defense and foreign ministries and the military’s logistics’ organization over how the entire process was conducted. They’re accused of poor documentation, deficient archiving and, thus, an inability to track down the reasoning behind the decisions made.
 
  “Documents can’t be found. They were not properly archived. The worst thing is the clear lack of understanding for export control regulations,” Foss said at the press conference. “There’s been deficient routines for control over prospective buyers, even though the military is responsible as exporter.”
 
In this case, both the defense and foreign ministries are admitting their mistakes, and weren’t surprised by the auditors’ criticism. Similar weaknesses had been uncovered in their own internal reviews of the transaction.
 
  “We have imposed a string of improvements,” claims the defense ministry, to ensure better sales processes in the future, while the foreign ministry claims it now has a new digital system that strengthens tracking of export controls.

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A United Arab Emirates court sentenced an Iranian businessman on Wednesday to 10 years in jail for trying to ship a power generator to Iran for use in its nuclear program in violation of international sanctions, the UAE state news agency said.
 
Iran emerged from years of economic isolation last year when world powers led by the United States and European Union lifted sanctions in return for curbs on Iran’s nuclear work meant to ensure it can’t be put to developing the means to make bombs.
 
But the 2015 nuclear accord retained some trade restrictions related to procurement of dual-use technologies – those with both conventional and nuclear applications. The generator fell within that category, the report by WAM news agency indicated.
 
UAE authorities have confiscated the generator and seized other devices related to the case, it said, without elaborating.
 
  “The (business)man was found guilty of violating the international ban on nuclear weapons and will be deported after serving his sentence,” WAM said.
 
It added that the Abu Dhabi Federal Appeals Court also ordered the businessman, identified only as S.M.A.R, deported after he completes his sentence.
 
U.S. President Donald Trump condemned the nuclear deal during his 2016 election campaign and slapped fresh sanctions on Iran in February, though he has not acted to scrap the accord since taking office.
 
But Trump described the new U.S. sanctions as just “initial steps” and vowed Washington would no longer turn a “blind eye” to what he called Iran’s hostile actions.
 
Iranian President Hassan Rouhani said in February that the nuclear deal was beneficial for both sides and could be used as a stepping-stone to defusing tension in the region.
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COMMCOMMENTARY

COMM_a112
. E. Kirkham: “International Efforts to Prevent Diversion of Arms and Dual-Use Goods Transfers: Challenges and Priorities”

 
* Author: Elizabeth Kirkham, Small Arms and Transfer Controls Adviser, Saferworld, communications@saferworld.org.uk
 
This report sheds light on the underlying factors that contribute to the continued diversion of arms and dual-use goods throughout the world. Following a brief overview of the multinational standards that currently exist to blunt these problems, the text’s author examines the diversion risks associated with 1) transfer control systems, 2) end-use/user controls, 3) broker involvement, 4) transit/trans-shipment practices, and 5) the eventual re-transfer of arms and goods. Finally, the author explores how a comprehensive transfer control system, community outreach and improved cooperation might help minimize these risks.
 
The report can be found here.

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* Authors: Johanna Reeves, Esq., 202-715-9941, jreeves@reevesdola.com; and Katherine Heubert, Esq., 202-715-9940, kheubert@reevesdola.com. Both of Reeves & Dola LLP.
 
On March 14, 2017, the United States Court of Appeals for the District of Columbia Circuit issued its decision in Matthew A. Goldstein, PLLC v. United States Department of State, 851 F.3d 1 (D.C. Cir. 2017). For those unfamiliar with the case, the plaintiff was a practicing attorney who sued the State Department, seeking declaratory and injunctive relief from the brokering requirements of Part 129 of the International Traffic in Arms Regulations (ITAR). The appellate court affirmed the lower court’s decision to dismiss Mr. Goldstein’s case, finding he lacked standing to bring a pre-enforcement challenge because he faced no credible threat of enforcement. 
 
The case focused on certain types of legal services and whether providing such services could be construed as a brokering activity. While seemingly limited to the language addressing attorney activities, the case illustrates the broader fact that determining whether an activity constitutes brokering does not always yield a clear cut answer. Indeed, there are valuable lessons to take away from the State Department’s arguments and the court’s analysis on what activities may rise to the level of ITAR-controlled brokering.
 
In the Goldstein case, the plaintiff was a U.S. person, thereby satisfying the first element of the brokering analysis. Remember that under the current brokering regulations, the first question is always whether the person engaging in the activity could be considered a “broker.” The ITAR in section 129.2(a) defines a “broker” as any of the following persons who engage in the business of brokering activities: (1) any U.S. person wherever located; (2) any foreign person located in the United States; or (3) any foreign person located outside the United States where the foreign person is owned or controlled by a U.S. person.
 
If none of the above criteria apply, the person is not a broker and is not subject to the brokering regulations of Part 129. The analysis can stop there.
 
If, however, any of the above criteria are present, the definition of “broker” is met and the analysis must continue to determine whether the proposed activity constitutes a brokering activity. The ITAR section 129.2(b) defines “brokering activities” as “any action on behalf of another to facilitate the manufacture, export, permanent import, transfer, reexport, or retransfer of a U.S. or foreign defense article or defense service, regardless of its origin.” 22 C.F.R. § 129.2(b) (emphasis added). This verbiage may seem straight forward, but it is often the case that details of a transaction aren’t so clear. It is frequently difficult to determine whether a party is engaging in an action that may be captured as brokering under the ITAR.
 
In the oral arguments for the Goldstein case, the State Department explained that when an attorney acts as a “finder” to identify or locate foreign counter-parties for a transaction, that action would constitute brokering. The State Department presented the following example to illustrate when an attorney might venture into brokering:
 


[F]or example, if someone comes to an attorney and they want to sell [ITAR-]controlled explosives, and they ask the attorney to draft a general sales contract, that would be legal advice, [and] it would not constitute brokering. But if the same person came to the attorney, asked them to draft a general sales contract and the attorney happens also to represent a buyer in Pakistan and knows the buyer would want to buy these controlled explosives, and so the attorney recommends that the contract be translated into Urdu knowing that this is going to be the only likely buyer in the area, then the attorney might have used non-legal knowledge and tried to steer the seller towards the particular buyer even though he was engaging in legal advice.” Goldstein at 6 n.2.

 
While this example may seem to stretch the definition of “brokering activities,” it does illustrate the breadth of activity the State Department may consider ITAR-controlled. This broad application would not be limited to attorney activities. Take for example hypothetical Company A, a domestic U.S. manufacturer of defense articles. Company A asks U.S. Company B if it could help identify potential foreign buyers for Company A’s products. Company B then contacts a few foreign companies with which it regularly works and inquires whether any are interested in procuring Company A’s products. Foreign Company C expresses an interest, so Company B proceeds to introduce Company A and Foreign Company C. That introduction results in the export of Company A’s defense articles. The actions of Company B to help Company A “find” a customer, would likely be considered brokering under ITAR Part 129.
 
In this hypothetical, how would the answer change if in response to Company A’s inquiry, Company B merely named several different foreign companies it knew of from engaging only in arms-length sales transactions, did not make any contact with those foreign companies on behalf of Company A, and did not arrange any introductions for Company A? Would that action still be considered brokering under ITAR Part 129? By identifying multiple possible customers, is Company B “finding” anything for Company A? What if Company B later assists A in drafting and negotiating a sales contract because of its experience with dealing with the foreign party? Does it matter whether a sales contract is ultimately executed? Does it matter whether Company B is paid by anyone for its services? These are all variables that likely change the analysis and the conclusion as to whether a particular activity amounts to brokering.
 
When the State Department revised the brokering regulations in 2013, it included examples of activities that constitute brokering. Specifically, ITAR section 129.2 (b)(1) cites the following as examples of action on behalf of another that constitute a brokering activity: financing, insuring, transporting, or freight forwarding defense articles or defense services; or soliciting, promoting, negotiating, contracting for, arranging, or otherwise assisting in the purchase, sale, transfer, loan, or lease of a defense article or defense service. Conversely, section 129.2(b)(2) cites examples of activities that would not be considered brokering. These include: (i) activities by a U.S. person limited exclusively to U.S. domestic sales or transfers; (ii) activities by employees of the U.S. Government acting in an official capacity; (iii) activities by “regular employees” (ITAR Section 120.39) acting on behalf of their employer (except in cases involving a defense article or service originating in or destined for any proscribed country, area or person identified in ITAR 126.1); (iv) activities that do not extend beyond administrative services (the section includes examples, but it should be noted that even with the examples, if the activity extends beyond administrative services, the ITAR may be triggered); (v) activities performed by an affiliate (defined in ITAR 120.40) on behalf of another affiliate; and (vi) activities by persons, including regular employees (defined in ITAR 120.39) that do not extend beyond acting as an end-user of a defense article or defense service exported under a license or other ITAR approval, or subsequently acting as a reexporter or retransferor of such article or service under such license or approval or under a separate reexport or retransfer approval. 
 
As the above examples illustrate, determining whether a particular activity rises to the level of ITAR-controlled brokering is case specific and will not always yield an easy yes or no answer. In any sales transaction, it is important to to do adequate due diligence to completely understand the roles and responsibilities of each party to a transaction. Such due diligence is also necessary to determine whether a party’s action or role in a transaction triggers the brokering provisions of the ITAR. 
 
The Directorate of Defense Trade Controls provides a few answers to Frequently Asked Questions (FAQs) about brokering on its Registration webpage. These should be reviewed in the context of the ITAR Part 129. Questions about a particular transaction should be discussed with DDTC or with qualified legal counsel. 
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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.
 
When speaking to clients or potential clients, the question of risk of enforcement is the moose on the table. Sometimes, the question gets asked and other times, the subject is never discussed. To be fair, it is not an easy question to answer because of the variables.
 
When a company has to analyze whether to seek the benefits of the FCPA Pilot Program and agree to voluntarily disclose, cooperate with the government and remediate its compliance program, the company has to consider the alternative course – do not disclose the possible violations to the government, remediate and hope that the US government does not learn about the conduct.
 
On its own, the government is unlikely to learn about the conduct, especially if it is confined to one country or region. But there are a lot of assumptions in relying on such a view.
 
First, a company that may have violated the FCPA may have also violated anti-corruption laws in the foreign country that may lead to discovery by local law enforcement or prosecutors. A foreign investigation is likely to lead to a US investigation of the same conduct, especially if there are additional activities that may have occurred in the United States.
 
Second, an employment dispute with any officer or employee who may know or have heard about the possible FCPA violations could result in the Justice Department learning about such allegations as part of an employment claim.
 
Third, as the Justice Department’s investigation of FCPA, antitrust and other global white collar crimes increases, the Justice Departmenty’s access to cooperating witnesses who may know or have heard about FCPA violations also increases. As a consequence, white collar officers and employees may obtain or hear information about alleged FCPA violations and seek to trade on such information for sentencing leniency in other white collar prosecutions, especially antitrust cartel cases.
 
In a “perfect” world of no information sharing or communications about persons who may know or have heard about potential FCPA violations, it is possible that the risk of the Justice Department discovering FCPA violations on its own is very low. But this “perfect” world is not the “real world,” and company officials have to consider a number of factors relating to the potential risk and the harm to the company, especially if it is caught after deciding not to disclose the conduct to the government.
 
These risk factors are fairly well known but worth restating:
 
  – Prior FCPA enforcement investigations in the same (or related) industries;
  – Prior FCPA enforcement investigations involving the same third party agent(s) or distributor(s);
  – Prior antitrust, sanctions or fraud enforcement investigations involving competitors or companies competing in adjacent markets;
  – Extensive cooperation and information sharing between prosecutors and law enforcement in the United States and the foreign country in which the possible violations may have occurred;
  – Cooperation and information sharing between the Justice Department and the World Bank or other multi-lateral development banks involving related parties or projects.
 
Companies have to take these factors into account when weighing a decision to disclose or not to disclose potential violations to the US Department of Justice. This analysis, however, is a flat calculation of risk versus reward/damage, and does not take into account the reputational harm to the company if the conduct is discovered by the government despite the company’s attempt not to disclose the conduct. If added to the equation, reputational harm to the company can have a significant negative impact to corporate stakeholders and on the overall goodwill generated by the company as a result of its reputational value.
 
Wherever a company comes out, one thing is clear – the risk of detection in today’s global economy is much higher than ten years ago. Public interest watchdogs are now omnipresent looking to raise the specter of corruption against multinational companies, especially when such corruption is part of an overall corruption problem in a foreign country.
 
In this new enforcement world, companies have to take into account all of these factors and influences. It is not an easy choice but it is one that comes up in numerous contexts.
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(Source: Author)
 

 
What an interesting time to be working in international trade! 
 
We are writing to make sure you saw the Executive Orders President Trump issued over the past few days on international trade issues.  All of the Executive Orders are available here.
 
The Presidential Executive Order Addressing Trade Agreement Violations and Abuses was signed on April 29, 2017.  It directs the Secretary of Commerce and the United States Trade Representative to conduct “comprehensive performance reviews” of all international trade and investment agreements the United States is a party to, as well as trade relations with those WTO member countries with which the United States does not have a trade agreement, but does have a significant trade deficit in goods. The goal of these reviews is to (i) identify violations or abuses by our trading partners, (ii) trade or investment agreements that have not created new U.S. jobs, had favorable effects on our trade balance, increased U.S. exports, etc., and (iii) make recommendations to address the issues identified in (i) and (ii).  
 
Based on statements President Trump has made to date, we expect that NAFTA as it relates to trade with Mexico, the Korea-U.S. Free Trade Agreement, the WTO Government Procurement Agreement and others to receive negative marks under the standards to be used in the performance reviews.  What will be more interesting are the recommendations that are made to address those perceived shortcomings (e.g., revising rules of origin, withdrawing from agreements, etc.).  The performance reviews must be submitted to the President by October 26, 2017.
 
The Presidential Executive Order on Establishment of Office of Trade and Manufacturing Policy was also signed on April 29, 2017.  It creates a new Office of Trade and Manufacturing Policy (OTMP) within the White House.  The stated mission of the OTMP “
is to defend and serve American workers and domestic manufacturers while advising the President on policies to increase economic growth, decrease the trade deficit, and strengthen the United States manufacturing and defense industrial bases.”
 
These Executive Orders encapsulate much of the President’s trade policy, which is focused on (1) seeking to identify and remedy unfair trading practices, and (2) reducing the trade-in-goods deficits the United States has with other countries.  Companies should be viewing these Executive Orders as a creating an opportunity to engage with the Administration to help shape the recommendations for addressing the problems that they perceive exist with trade.
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(Source:
Export Law Blog
. Reprinted by permission.)
 
* Author: R. Clifton Burns, Esq., Bryan Cave LLP, Wash DC,
Clif.Burns@bryancave.com
, 202-508-6067)
 
In an earlier post, I expressed some incredulity with respect to an dubious scheme cooked up by some Pennsylvania legislators to import Cuban rum without an OFAC license. The scheme was based on a questionable reading of Clause 2 of the Twenty-First Amendment. There’s no way to tell whether my derision directed at the legal case for Cuban rum-running by the Pennsylvania legislators was responsible, but it appears that someone in Pennsylvania has thought better of the idea.
 
According to this article, the Pennsylvania Liquor Control Board which runs the Fine Wine and Good Spirits stores, Pennsylvania’s state-owned monopoly on the sales of wines and hard liquor, is preparing a license to file with OFAC to permit the PLB to purchase Cuban rum for sales in those stores. The application apparently argues that the “mystique” of Cuban rum would create a boon to the Pennsylvania economy by enticing shoppers into the state-run liquor stores. After all, who needs to fly down to Havana when you can buy Cuban rum in a state store in Erie or drink authentic daiquiris made with Havana Club in Wilkes-Barre?
 
A Pennsylvania state senator instrumental in the state’s efforts to bring Cuban rum to his state dismissed the notion that this plan posed a threat to national security, telling ABC News “We’re talking about buying a rum.” Good point.
 
But, of course, with all things Cuba not everyone agrees – here’s an irate letter to the editor of the Express Times in Lehigh Valley criticizing the proposed rum deal.
 
For those of you now planning a road trip to Pennsylvania to stock up on Cuban rum when (and if) it becomes available there, I commend to you this recipe for the El Presidente Cocktail. This cocktail was named after Cuban president Gerardo Machado (who served between 1925 and 1933) and was a favorite among Americans who sought respite from Prohibition in the night clubs of Havana. And, as the recipe makes clear, use real grenadine that you make yourself, not that pink-colored sugar water that you find on grocery shelves or in the wells of your less estimable drinking establishments. Cheers!

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ENEDITOR’S NOTES

 
* Niccolò Machiavelli (3 May 1469 – 21 June 1527; was an Italian Renaissance historian, politician, diplomat, philosopher, humanist, and writer. He has often been called the founder of modern political science. Machiavelli’s most renowned work is Il Principe (The Prince), which describes the aims of state leaders – such as glory and survival- and justifies the use of immoral means to achieve those ends.
  – “It is better to be feared than loved, if you cannot be both.” 
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EN_a318
. Are Your Copies of Regulations Up to Date?
(Source: Editor)

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

* DOD NATIONAL INDUSTRIAL SECURITY PROGRAM OPERATING MANUAL (NISPOM): DoD 5220.22-M
  – Last Amendment: 18 May 2016: Change 2: Implement an insider threat program; reporting requirements for Cleared Defense Contractors; alignment with Federal standards for classified information systems; incorporated and canceled Supp. 1 to the NISPOM  (Summary here.)

* EXPORT ADMINISTRATION REGULATIONS (EAR): 15 CFR Subtit. B, Ch. VII, Pts. 730-774 
  – Last Amendment: 18 Apr 2017: 82 FR 18217-18220: Revision to an Entry on the Entity List)

  
*
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: 19 Apr 2017: 82 FR 18383-18393: Foreign Trade Regulations: Clarification on Filing Requirements 
  – HTS codes that are not valid for AES are available
here.
  – The latest edition (19 Apr 2017) of Bartlett’s Annotated FTR (“BAFTR”), by James E. Bartlett III, is available for downloading in Word format. The BAFTR contains all FTR amendments, FTR Letters and Notices, a large Index, and footnotes containing case annotations, practice tips, and Census/AES guidance.  Subscribers receive revised copies every time the FTR is amended. The BAFTR is available by annual subscription from the Full Circle Compliance website.  BITAR subscribers are entitled to a 25% discount on subscriptions to the BAFTR.
 
*
HARMONIZED TARIFF SCHEDULE OF THE UNITED STATES (HTS, HTSA or HTSUSA)
, 1 Jan 2017: 19 USC 1202 Annex. (“HTS” and “HTSA” are often seen as abbreviations for the Harmonized Tariff Schedule of the United States Annotated, shortened versions of “HTSUSA”.)
  – Last Amendment: 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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Review last week’s top Ex/Im stories in “Weekly Highlights of the Daily Bugle Top Stories” published
here

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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.

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* 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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