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17-0612 Monday “The Daily Bugle”

17-0612 Monday “Daily Bugle”

Monday, 12 June 2017

TOP
The Daily Bugle is a free daily newsletter from Full Circle Compliance, containing changes to export/import regulations (ATF, Customs, NISPOM, EAR, FACR/OFAC, FTR/AES, HTSUS, and ITAR), plus news and events.  Subscribe 
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[No items of interest noted today.] 

  1. Ex/Im Items Scheduled for Publication in Future Federal Register Editions
  2. Commerce/BIS: Axis Communications, Inc. of Chelmsford, MA, to Pay $700,000 to Settle Alleged Export Violations
  3. Commerce/BIS: Cryomech, Inc. of Syracuse, NY, to Pay $28,000 to Settle Alleged Export Violations
  4. DoD/DSS Posts Notice to Contractors Cleared under the NISP, Inadvertent Exposure to Classified Information in the Public Domain
  5. DHS/CBP Announces ACE PRODUCTION Deployment, 12 Jun
  6. GAO Posts Report “Customs and Border Protection: Improved Planning Needed to Strengthen Trade Enforcement”
  7. DOJ’s David Laufman’s Speech to AUECO on 16 May 2017 – Part 1
  8. State/DDTC: (No new postings.)
  1. Defense News: “Japan Seeks to Expand Arms Deals with Southeast Asia”
  1. G. Kreijen: “Export Controls Enforcement by the Dutch Court | Part 2: The Case of the Airline Company”
  2. M.P. House, R.W. Oehler & D.J. Townsend: “Court Opinion on Liability for Re-Exports to Iran Spurs Practical Guidance for U.S. Exporters”
  3. M. Volkov: “Blockchain and the Future of Compliance”
  4. R.C. Burns: “OFAC Fines Honda For Complying with Canadian Law”
  1. Monday List of Ex/Im Job Openings: 98 Jobs Posted 
  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 (26 May 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

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OGSOTHER GOVERNMENT SOURCES

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

[No items of interest noted today.]

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(Source:
Commerce/BIS) [Excerpts.]
 
* Respondent: Axis Communications, Inc., Chelmsford, MA
* Charges:
  – Thirteen Charges of 15 C.F.R. § 764.2(a), Export of Thermal Imaging Cameras Without the Required Licenses:
On 13 occasions between on or about 16 March 2011, and on or about 15 July 2013, Axis engaged in conduct prohibited by the Regulations when it made unlicensed exports from the United States to Mexico of thermal imaging cameras, items subject to the Regulations, classified under Export Control Classification Number 6A003.b.4, controlled for national security and regional stability reasons, and valued in total at $391,819. These exports to Mexico required BIS licenses pursuant to Sections 742.4 and 742.6 of the Regulations.
  – Two Charges of 15 C.F.R. § 764.2(i): Failure to Comply with Recordkeeping Requirements:
On two occasions, on or about 17 June 2013, and on or about 15 July 2013, respectively, Axis failed to comply with the recordkeeping requirements set forth in Section 762.2 of the Regulations in connection with exports from the United States to Mexico of thermal imaging cameras, items subject to the Regulations, classified under Export Control Classification Number 6A003.b.4, and controlled for national security and regional stability reasons. Axis failed to retain documents required to be retained under Section 762.2, including, but not limited to, invoices relating to these exports.
* Penalty:
  – Civil penalty of $700,000
  – Complete an external audit of its export controls compliance program
  – Hire an unaffiliated third-party consultant with expertise in U.S. export control laws to conduct the external audit of its compliance with U.S. export control laws
* Debarred: Not if penalty is paid as agreed, the audit is completed, and the audit results submitted.
* Date of Order: 9 June 2017.

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(Source:
Commerce/BIS) [Excerpts.]
 
* Respondent: Cryomech, Inc., Syracuse, NY
* Charges: 1 Charge of 15 C.F.R. § 764.2(a): Engaging in Prohibited Conduct:
On one occasion, on or about August 16, 2012, Cryomech engaged in conduct prohibited by the Regulations when it exported an LNP-20 Liquid Nitrogen Plant, an item subject to
the Regulations, designated EAR99, and valued at $33,587, from the United States to the All-Russian Scientific Research Institute of Experimental Physics (VNIIEF) a.k.a
Russian Federal Nuclear Center-VNIIEF (RFNC-VNIIEF) in Sarov, Russia, without the required BIS license. …
* Penalty:
  – Civil penalty of $700,000
  – Complete an external audit of its export controls compliance program
  – Hire an unaffiliated third-party consultant with expertise in U.S. export control laws to conduct the external audit of its compliance with U.S. export control laws
* Debarred: Not if penalty is paid as agreed, the audit is completed, and the audit results submitted.
* Date of Order: 9 June 2017.

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OGS_a44. DoD/DSS Posts Notice to Contractors Cleared under the NISP, Inadvertent Exposure to Classified Information in the Public Domain

(Source: DoD/DSS)
 
When accessing the internet on contractor information systems not authorized or accredited to process classified information, cleared contractor personnel shall not access or download documents that are known or suspected to contain classified information. Paragraph 4-106 of the National Industrial Security Program Operating Manual makes clear that the public posting of classified information does not mean the information is automatically declassified. Classified information in the public domain remains classified and must be treated as such until it is declassified by an appropriate U.S. Government authority. It is the responsibility of every cleared contractor to protect classified information and to follow established procedures for accessing classified information only through authorized means.
Contractor personnel who inadvertently discover potentially classified information in the public domain should immediately report its existence to their Facility Security Officer (FSO). In the event this information is inadvertently discovered on contractor unclassified IT systems, cleared companies are advised to delete the offending material by holding down the SHIFT key while pressing the DELETE key for Windows-based systems, and to clear the internet browser cache. For other than Windows-based systems, a similar “delete” technique shall be used for the affected file(s).
 
If these procedures are followed, subsequent administrative inquires and adverse information reports are not required from the company. These procedures apply only to the inadvertent exposure to classified information in the public domain and NOT to intentional searches for improperly posted classified information in the public domain (e.g., on the internet, Twitter or other media).
 
Questions regarding this notice should be addressed to the Defense Security Service Industrial Security Representative (ISR) or Information System Security Professional (ISSP) assigned to your facility.

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OGS_a55
. DHS/CBP Announces ACE PRODUCTION Deployment, 12 Jun

(Source: CSMS #17-000341, 12 June 2017.)
 
There will be an ACE PRODUCTION deployment on Tuesday morning, June 12, 2017, during the 0500 – 0700 ET window, which will impact ACE Cargo Release and ACE Entry Summary processing.
 
To be deployed:
 
PGA/ITDS
 
* PGAD-15142- CA (Post-Summary Correction) message incorrectly rejecting for a ‘P00’ error (Missing EPA data) if trade does not submit ALL PGA’s that a tariff is flagged for on the correction transaction.
 
Entry Summary
 
* CES-7366: Restrict All TIB-23 entry type changes in ES (entry summary) Change or PSC (post-entry summary correction) scenario (Both From and To).
 
Based on recent information received the Entry Summary validations have been modified as follows: An ES on file with Entry Type 23 is NEVER allowed to change to any other Entry Type. An ES on file with other than Entry Type 23 is NEVER allowed to change to Entry Type 23.

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OGS_a66
. GAO Posts Report “Customs and Border Protection: Improved Planning Needed to Strengthen Trade Enforcement”

 
Two offices within U.S. Customs and Border Protection (CBP) enforce U.S. trade laws and protect revenue. The Office of Trade develops policies to guide CBP’s trade enforcement efforts, while the Office of Field Operations conducts a range of trade processing and enforcement activities at U.S. ports. CBP’s previously port-centric approach to trade enforcement has shifted to a national-level, industry-focused approach with the establishment of the Office of Field Operations’ 10 Centers of Excellence and Expertise. These Centers represent a shift in trade operations, centralizing the processing of certain imported goods on a national scale through a single Center rather than individual ports of entry.
 
CBP conducts trade enforcement across seven high-risk issue areas using a risk-based approach, but its plans generally lack performance targets that would enable it to assess the effectiveness of its enforcement activities. Violations in the high-risk issue areas can cause significant revenue loss, harm the U.S. economy, or threaten the health and safety of the American people. CBP’s trade enforcement activities reduce risk of noncompliance and focus efforts on high-risk imports, according to CBP. For example, CBP conducts targeting of goods, conducts audits and verifications of importers, seizes prohibited goods, collects duties, and assesses penalties. However, CBP cannot assess the effectiveness of its activities without developing performance targets as suggested by leading practices for managing for results.
 
Over the past 5 fiscal years, CBP generally has not met the minimum staffing levels set by Congress for four of nine positions that perform customs revenue functions, and it generally has not met the optimal staffing level targets identified by the agency for these positions. Staffing shortfalls can impact CBP’s ability to enforce trade effectively, for example, by leading to reduced compliance audits and decreased cargo inspections, according to CBP officials. CBP cited several challenges to filling staffing gaps, including that hiring for trade positions is not an agency-wide priority. Contrary to leading practices in human capital management, CBP has not articulated how it plans to reach its staffing targets for trade positions over the long term, generally conducting its hiring on an ad hoc basis.
 
This is a public version of a sensitive but unclassified report that GAO issued in April 2017. Information that CBP deemed sensitive has been redacted.
 
WHY GAO DID THIS STUDY
 
In fiscal year 2015, CBP processed more than $2.4 trillion in imports through more than 300 ports of entry, collecting around $46 billion in revenue. CBP facilitates legitimate trade coming into the United States and enforces U.S. trade laws. CBP is tasked with collecting revenue and identifying harmful and noncompliant imports, such as counterfeit goods and goods that evade duties.
 
In February 2016, Congress passed an Act that included a provision for GAO to review the effectiveness of CBP’s trade enforcement activities. In this report, GAO examines (1) CBP’s structure for carrying out trade enforcement, (2) how CBP conducts trade enforcement across its high-risk issue areas and ensures that its enforcement activities are effective, and (3) the extent to which CBP meets its staffing needs for trade enforcement. GAO reviewed agency documents, interviewed agency officials, and conducted field work at ports in Baltimore, Maryland; Los Angeles/Long Beach, California; and New York, New York. GAO selected ports to visit based on factors including volume of imports and number of trade enforcement units at each port.
 
WHAT GAO RECOMMENDS
 
To strengthen its trade enforcement efforts, CBP should (1) include performance targets in its plans covering high-risk issue areas, and (2) develop a long-term hiring plan specific to trade positions that articulates how it will reach its staffing targets. CBP concurred with both recommendations.
 
For more information, contact Kimberly Gianopoulos at (202) 512-8612 or GianopoulosK@gao.gov.

[Editor’s Note: The entire report can be found here.]

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OGS_a77
. DOJ’s David Laufman’s Speech to AUECO on 16 May 2017 – Part 1

(Source: Justice) [Editor’s Note: This is half of Mr. Laufman’s speech.  The second half will be posted in tomorrow’s Daily Bugle.]

David H. Laufman, Chief, Counterintelligence and Export Control Section for the U.S. Department of Justice National Security Division, delivered the following remarks on U.S. Export Control and Sanctions Laws at the 2017 Annual Association of University Export Control Officers (“AUECO”) Conference, St. Petersburg, Florida – Tuesday, May 16, 2017

Remarks as prepared for delivery   


Thank you for the opportunity to talk with you today. And thanks for everything you do to promote compliance with U.S. export control and sanctions laws.

NSD AND ITS APPROACH

I’d like to begin by providing a brief orientation on where criminal enforcement of export controls and sanctions fits within the structure of the government writ large and the Department of Justice, what our strategic priorities are at the Justice Department, and what our approach is in working with our enforcement partners.  Within the U.S. Government, responsibility for the criminal enforcement of U.S. export control and sanctions laws is vested in the Justice Department. And within the Justice Department, that responsibility is vested in the National Security Division (“NSD”) – because we regard this enforcement mission as a matter of national security. NSD was established by Congress in 2006 as the Justice Ultimately, the goal here is to enable universities to thrive as marketplaces of ideas and engines of research and development, while ensuring that any work performed with implications for U.S. export control or sanctions programs is conducted in a manner consistent with the law and our national security interests.  Thank you again for the work you do in furtherance of compliance, and thanks again for inviting me to be with you today.

The Department’s first new litigating division in almost 50 years, and its organizing principle is to unite prosecutors and law enforcement officers with the U.S. Intelligence Community to ensure that we approach national security threats using every tool and resource available to the federal government. The enforcement of export control and sanctions laws is among the highest priorities of NSD – as evidenced by the name of the section within NSD that I lead: the Counterintelligence and Export Section (“CES”). And we regard the enforcement of U.S. export control and sanctions laws as part of a seamless effort to protect critical national assets.
        
CES has responsibility for investigating and prosecuting all national security matters other than terrorism. In addition to our responsibility for enforcing export control and sanctions laws, CES is responsible for investigating and prosecuting espionage; the mishandling of classified information; economic espionage (i.e., the theft of trade secrets benefiting a foreign government, instrumentality, or agent); and cyber offenses committed by nation states and their proxies. In the export control and sanctions arena, we investigate and prosecute violations of:   

  – The Arms Export Control Act, and the International Traffic and Arms Regulations (“ITAR”);
  – The Export Administration Regulations, currently in force through executive orders issued under the International Emergency Economic Powers Act (“IEEPA”);
  – Various sanctions programs subject to IEEPA, administered by the Department of the Treasury; and
  – The Trading with the Enemy Act.

We investigate and prosecute a broad spectrum of conduct for violations of these statutes and regulations. But we have established several strategic enforcement priorities:

  – First: export control and sanctions violations involving weapons of mass destruction.
  – Second: export control and sanctions violations relating to terrorist activities.
  – Third: export control violations involving China’s defense establishment.
  – Fourth: the cyber exfiltration of export-controlled data.
  – Fifth: violations of export control and sanctions laws by corporate entities and officials.
  – Sixth: proliferation financing.

In carrying out our enforcement mission, we partner with other federal prosecutors in U.S. Attorney’s Offices throughout the United States. We also work closely with our law enforcement and regulatory partners, such as the FBI, the Bureau of Industry and Security at the Commerce Department, the Office of Foreign Assets Control (“OFAC”) at the Department of the Treasury; and the Directorate of Defense Trade Controls at the State Department. Our work also requires us to coordinate closely with the U.S. Intelligence Community.  This dynamic connectivity with our partners throughout the U.S. government is now engrained in our enforcement operations. 


Because while we will exhaust all viable options for bringing criminal prosecutions, criminal prosecution sometimes may not be an option; or, in a given case, other options may be preferable. We therefore pursue a whole-of-government approach in which all levers of federal legal authority are considered. This approach was on display most recently in the landmark prosecution of Chinese telecommunications giant ZTE, in which the Commerce Department’s use of the Entity List played a critical role in bringing about ZTE’S cooperation in our criminal investigation and, ultimately, a global resolution of the case involving the Justice Department, the Commerce Department, and the Department of the Treasury.

RISK ENVIRONMENT   

The challenges you face as compliance professionals at American universities need to be considered in the broader context of the national security threats the United States is facing today. Our adversaries are engaged in a relentless effort to steal U.S. technology and proprietary intellectual property, including information controlled for export. I particularly want to raise your consciousness regarding the cyber threat, because the cyber-enabled theft of export-controlled data is a growing problem.

Every sector of our economy is now a target of malicious cyber activity:

  – energy industry
  – financial institutions
  – healthcare industry
  – agriculture
  – biotechnology
  – defense industry
  – critical infrastructure
  – and, as seen in the 2014 North Korean attack on Sony Pictures Entertainment, even the entertainment industry Experience has now demonstrated that academic institutions in the United States are also vulnerable, and subject to cyber-attacks and intrusions by nation states and their proxies. 

You’re an attractive target: your faculty members engage in cutting-edge research and development with commercial and sometimes military applications – which resides on your computer networks. Vulnerability to cyber-attacks and intrusions comes in many forms: inadequate network security, poor cyber security hygiene by faculty members or administrative personnel, and the compromise of supply chains.

In May 2015, Penn State University publicly announced that it had been the victim of two cyber-attacks at its College of Engineering, including one in 2012 that originated in China. In August 2015, the University of Virginia announced that it had experienced an intrusion originating in China, causing it to shut down portions of its technology systems. In July 2015, the Defense Department issued a warning about “hackers affiliated with a known foreign intelligence agency” who were targeting academic institutions as well as government contractors.  


But the risk of losing export-controlled information through malicious cyber activity is only one among several vulnerabilities you confront. More obvious risks concern the very nature of academic institutions, which, naturally, place a high premium on an open environment facilitating a free flow of information and ideas. That worthy ideal can sometimes be in tension with the need to protect against the unlawful export of controlled information or data. Some of your schools are engaged in research involving export-controlled information. Faculty members working on projects involving export-controlled technology may seek to travel overseas for conferences with digital devices or media containing such information. Foreign students may be serving as research assistants and be exposed to export-controlled information. The latter, of course, implicates the risk of “deemed exports.” As you know, the Export Administration Regulations define a deemed export as the release of technology or source code subject to the EAR to a foreign national in the United States, as such a release is “deemed” to be an export to the home country of the foreign national. Situations that can involve the release of U.S. technology or software constituting an unlawful deemed export may include research and development activities, tours of laboratories, the hosting of foreign scientists, and – as mentioned previously – foreign students or scholars conducting, or being exposed to, research.

Similar restrictions exist under the ITAR, as seen in the successful prosecution of John Roth, a professor at the University of Tennessee, several years ago. As you know, “defense articles” subject to ITAR controls include “technical data,” which is defined to include “information, other than [certain] software which is required for the design, development, production, manufacture, assembly, operation, repair, testing, maintenance or modification of defense articles.” No technical data may be exported from the United States without a license or written approval from the U.S. Department of State, and the term “export” is defined to include the disclosure or transfer of technical data to a foreign person, whether in the United States or abroad.

Working with foreign universities – which might otherwise seem like the normal exchange of academic research – also presents risks. In September 2016, in Orlando, Florida, an individual by the name of Amin Yu was convicted, by means of a guilty plea, of acting in the United States as an illegal agent of a foreign government – China – without prior notification to the Attorney General. Yu also was convicted of conspiring to commit international money laundering. I mention this case because of the foreign academic institution involved in the case. According to her plea agreement, from at least 2002 to February 2014, at the direction of co-conspirators working for Harbin Engineering University in China – a Chinese government controlled entity — Yu obtained systems and components for marine submersible vehicles from companies in the United States.  She then sent those items to China for use by her co-conspirators in the development of marine submersible vehicles, including unmanned underwater vehicles, remotely operated vehicles, and autonomous underwater vehicles for Harbin and other state-controlled entities. Yu violated U.S. laws by failing to file Electronic Export Information (“EEI”), as required by U.S. law, and by also filing false EEI. Specifically, she completed and caused the completion of export-related documents in which she significantly undervalued the items that she had exported.

WILLFULNESS STANDARD   

As I mentioned, the Justice Department investigates and prosecutes potential criminal violations of the Arms Export Control Act and the ITAR, violations of the Export Administration Regulations, and violations of IEEPA in connection with sanctions programs administered by OFAC. But there is a significant factor that must be present in a case in order for us to pursue a criminal prosecution. Regardless of which statutory or regulatory regime is at issue, in each case we must be able to prove, beyond a reasonable doubt:
  – That an export or attempted export occurred;
  – That the item exported was a defense article on the U.S. Munitions List, was on the Commerce Control List, or went to a prohibited destination;
  – That the defendant failed to get a license from the Department of State,
Department of Commerce, or Department of Treasury; and
  – That the defendant acted willfully.

Willfulness is often the key issue in our criminal prosecutions of export control and sanctions violations, and there is a consensus among the courts on how willfulness should be defined. An act is done willfully if it is committed with the knowledge that it was prohibited by law, or was done in disregard of a known legal obligation. The government must prove that the defendant acted with knowledge that his conduct was unlawful. While the government must show that the defendant knew his conduct was unlawful, it is not necessary for the government to show that the defendant was aware of the specific law or rule that his conduct violated. In other words, the government is not required to prove that the defendant had read, was aware of, or had consulted the U.S. Munitions List, the Commerce Control List, Treasury sanctions regulations, or the licensing provisions of ITAR, the Export Administration Regulations, or OFAC. The government simply must prove, beyond a reasonable doubt, by reference to facts and circumstances surrounding the case, that the defendant knew his conduct was unlawful. …

[Editor’s Note: This is half of Mr. Laufman’s speech.  The second half will be posted here in tomorrow’s Daily Bugle.]

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OGS_a88. State/DDTC: (No new postings.)
(Source: State/DDTC)

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NWSNEWS

NWS_a19
. Defense News: “Japan Seeks to Expand Arms Deals with Southeast Asia”

(Source:
Defense News) [Excerpts.]
 
A defense official said Monday that Japan is seeking to increase its sales of military equipment to Southeast Asian nations amid growing tensions with China and North Korea.
 
The move is part of Prime Minister Shinzo Abe’s push to bolster Japan’s military role and its sales of defense equipment, especially in Southeast Asia, where China has expanded its own arms sales.
 
Hideaki Watanabe, head of the Defense Ministry’s Acquisition Technology and Logistics Agency, said Japan will host a meeting Thursday with defense officials from the Association of Southeast Asian Nations to discuss the sharing of equipment and technology. …
 
Japan had restricted arms exports under its post-World War II war-renouncing constitution, limiting joint research and development to the U.S. under a bilateral security pact. Since an easing of the rules in 2014, Japan now has joint research deals with Britain, Australia and France.
 
In order to scale up the defense industry, Japan’s government has bolstered research funding to more than 10 billion yen this year.
 
Japan has been promoting the transfer of defense equipment to Southeast Asian countries to help their maritime security capabilities amid China’s growing presence in the South China Sea, but deals have been limited to the sale of TC-90 surveillance aircraft to the Philippines.
 
China already exports mostly low-cost military equipment to many Southeast Asian countries. …
 
Japanese manufacturers are still cautious about the prospects of military sales.

Mitsubishi Industries, a maker of Aegis destroyers and fighter jets, is not expecting booming business right away, as Japan’s defense equipment sales are more focused on disaster prevention and international peace. …

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COMMCOMMENTARY

COMM_a01
10. G. Kreijen: “Export Controls Enforcement by the Dutch Court | Part 2: The Case of the Airline Company”

 
* Author: Gerard Kreijen, Esq., Loyens & Loeff, Gerard.Kreijen@loyensloeff.com, +31 20 578 53 95.
 
[Editor’s Note: Part 1 of this item was included in the 2 June Daily Bugle, Item #10.]

In our previous post, we discussed the export controls enforcement case brought against a logistics provider. At the same date, the same court also issued a judgment against an airline company that had acted as a carrier of certain military goods. (Rechtbank Noord-Holland, nr. 15/994178-17, 24 April 2017). This second case contains some observations by the Court that are worth highlighting and that may serve as further guidance for companies active in the trade and handling of strategic goods.
 
In April 2016, a transit shipment from South Africa to Ecuador was stopped and investigated by Dutch airport customs. It appeared that the shipment consisted of aircraft parts for fighter jets. The airline company which had accepted the shipment had received the aircraft parts from a logistics company in South Africa. The parts classified as ML10(a) (‘Manned “aircraft” … and specially designed components therefor’) on the Common (EU) Military List. No application had been made for the transit license required for the shipment.
 
The airline company (the defendant) was charged by the Public Prosecution with willfully transiting goods that are listed on the Military List without a license.
 
As in the case of the logistics provider, the Court observed that the defendant had been issued (repeatedly) with a formal warning by Team POSS (PrecursOrs, Strategic goods, and Sanctions) and that, given the classification of the goods on the Military List, an individual transit license was required for the shipment. And, as in the case of the logistics provider the Court found proof of ‘blanc’ willfulness in the mere fact that the defendant had executed the shipment. Accordingly, the Court judged the defendant to have committed a serious offense for which it was criminally liable. Apart from these similarities, however, the second case also contains a number of other interesting observations.
 
First, the Court found that the defendant, as the carrier of the goods, qualified as the person with the power of disposition (beschikkingsbevoegde) meaning that the defendant was under an obligation to comply with applicable Dutch export control regulations. The defendant had argued that the logistics provider in South Africa was to be regarded as the (sole) person with the power of disposition. In this context, it had also argued that, based on the 1999 Montreal Convention, the logistics provider, as the consignor of the goods, had a duty of care to provide adequate information on the goods that the shipment contained and was responsible for reporting to Dutch Customs.
 
The Court rejected both these arguments. It observed that, pursuant to Article 3 of the Dutch Implementation Regulation Strategic Goods (Uitvoeringsregeling strategische goederen) the duty to request a license rests on the person with the power of disposition, the person performing the customs formalities on its behalf or, if no customs formalities are being performed, the person transporting the goods. The Court established that, in addition to the South African logistics provider, the defendant was also to be regarded as the person with the power of disposition and, therefore, under a duty to arrange for the required license. There is no order of precedence in this respect, thus the Court. Furthermore, the Court reiterated that, irrespective of whether or not the logistics provider had failed to comply with its obligations under the Montreal Convention, the defendant had its own responsibility and was therefore not discharged from its duty to independently investigate with respect to the transit of strategic goods.
 
Secondly, and with respect to timing, the Court noted that pursuant to the definition of ‘transit’ under Dutch law the required license should have been available at the moment the goods entered Dutch territory, i.e., Dutch airspace, in order to avoid violation. As it happened, the electronic information the defendant had received about the shipment – the mere description of the goods being ‘consolidation’ – had given the defendant no cause to investigate the airway bills and the nature of the goods. However, even if there had been cause to investigate it is unlikely that the required license could have been timely issued, because the electronic information was usually received by the responsible handling department of the defendant only one hour after departure of the flight.
 
Thirdly, the Court mitigated the full penalty of 40,000.00 euros which the Public Prosecution had sought to impose. In this respect the Court considered that during the court hearings the defendant had committed to revise its internal procedures, tighten its internal controls, and train its staff to avoid future breaches. The court also considered relevant that the defendant had not been previously convicted and that the goods had eventually been released for transit to Ecuador following the successful (although delayed) application for a license by the South African logistics provider. Accordingly, the Court imposed a penalty of 40,000.00 euros of which only 20,000.00 euros was to be paid by the defendant, unless the defendant would commit another breach within two years of the date of the judgement.
 
PLEASE NOTE:
 
Under Dutch law virtually any party involved in the handling of a shipment of strategic goods (logistics providers, customs agents, carriers) may be held liable for failing to obtain the required licenses. If there are several persons responsible for arranging a license the failure of one person to do so will not discharge the other person from its obligations. Companies active in the trade and handling of strategic goods should at all times have in place robust internal compliance programs. Such programs will not only greatly diminish the risk of violation of export control regulations, but they may also result in the mitigation of penalties in the event of enforcement action by the authorities. Internal compliance programs should leave ample time for investigation of critical issues as well as for requesting and obtaining – in a timely manner – the required licenses and authorizations.

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* Authors: Michael P. House, Esq., MHouse@perkinscoie.com, 202-654-6288; Richard W. Oehler, Esq., ROehler@perkinscoie.com, 206-359-8419; and David J. Townsend, Esq., DTownsend@perkinscoie.com, 202-654-6302. All of Perkins Coie LLP.
 
A recent federal appeals court decision addresses a familiar issue for many companies: When can a U.S. exporter be liable for a product that is re-exported to a sanctioned country, such as Iran? This update summarizes the opinion of the U.S. Court of Appeals for the District of Columbia Circuit in Epsilon Electronics Inc. v. United States Dep’t of Treasury (Epsilon), and offers practical advice to U.S. exporters on how to avoid potential liability resulting from transactions with distributors in light of Epsilon.
 
SUMMARY OF EPSILON OPINION
 
The Epsilon case concerned the decision of the Office of Foreign Assets Control, U.S. Department of Treasury (OFAC), to impose a $4.1 million penalty on Epsilon, a U.S. exporter of electronics. The transactions at issue concerned Epsilon exports of electronic products to a United Arab Emirates (UAE) distributor, which OFAC believed were later re-exported to Iran. 
 
In charging Epsilon with 39 violations of the Iranian Transactions and Sanctions Regulations (ITSR), OFAC invoked the ITSR prohibition on sending items to a non-sanctioned third country if the U.S. exporter knew or had reason to know that the goods are intended for re-export to Iran. OFAC relied upon evidence showing that the distributor in question sold items exclusively to Iran, and that Epsilon was aware of this distributor’s practice.
The Epsilon opinion is a rare instance of a U.S. Court of Appeals opining on OFAC’s regulations and an OFAC enforcement action. The Epsilon opinion holds that:
 
  – U.S. exporters can be liable even if the items in question did not go to Iran.
A U.S. exporter may be liable for an export violation under the ITSR even if the third-country recipient did not actually re-export the items to Iran. The relevant inquiry is what the U.S. exporter knew, or had reason to know, concerning the distributor’s activities. OFAC does not need to prove that the items in question were actually re-exported to Iran.
  – OFAC must evaluate evidence indicating the sales went to non-Iranian locations. 
According to Epsilon, OFAC unlawfully failed to explain why evidence suggesting that the distributor was reselling the merchandise in the UAE market, rather than the Iranian market, was not credible. On this basis, the Court of Appeals for the D.C. Circuit remanded OFAC’s finding of violations for five transactions where evidence suggested those transactions were for the UAE market. In contrast, the opinion affirmed OFAC’s findings of ITSR violations for 34 transactions where evidence showed that the distributor sold such items exclusively to the Iranian market.
  – The general inventory exception does not trump evidence imputing knowledge to a U.S. exporter of resales to Iran.
The ITSR provide what Epsilon argued was a safe harbor if the third-country distributor put the items from the United States into general inventory. The court disagreed. Where a U.S. exporter sells to a third-country distributor and has reason to know that the product is intended for resale to Iran, this is a violation of the ITSR notwithstanding that the products might go into a distributor’s general inventory. Thus, the general inventory exception does not necessarily negate evidence placing the U.S. exporter on notice that the goods ultimately might be destined for Iran. Historically, many believed that, if a third-country distributor places goods into general inventory, this precluded a U.S. exporter from having knowledge required to establish an ITSR violation. At OFAC’s urging, the Epsilon opinion rejected this position.
 
The Epsilon court affirmed several aggressive positions taken by OFAC concerning the scope of the ITSR. These interpretations are not obvious from reading the ITSR. But standard tools for interpreting regulatory text can be risky in the sanctions setting because: (1) the underlying statutes broadly delegate authority to the executive branch; (2) courts rarely disagree with an agency’s interpretation of its own regulations; and (3) deference to the executive branch is even greater in the national security context. These legal realities suggest a conservative reading of OFAC sanctions regulations.
 
PRACTICAL ADVICE FOR U.S. EXPORTERS
 
U.S. exporters often have limited visibility into what distributors will do with goods, software or technology after they are exported from the United States. Certain actions can mitigate the risk of a U.S. exporter’s product being diverted to a prohibited destination. 
 
  – Add diversion prohibitions to contracts and obtain certifications of compliance with these prohibitions. U.S. exporters should insist that distributors agree not to divert the U.S. goods to sanctioned locations and then follow up by obtaining regular certifications of compliance from the distributor confirming that no improper product diversion has occurred. 
  – Ask distributors to explain how they prevent product diversion.
U.S. exporters should ask their distributors what actions they take to prevent diversion of items to sanctioned destinations. The answers to such questions can identify risk and even red flags that warrant follow-up by the U.S. exporter. Moreover, documenting those interactions can protect against later OFAC action by showing the U.S. exporter was diligent in vetting its distributors or resellers. In Epsilon, the U.S. exporter pointed to email correspondence indicating that it believed the reseller was involved in the UAE market, not the Iranian market. The court faulted OFAC for failing to fully consider this evidence.
  – Review publicly available sources about distributors.
U.S. exporters sometimes can gain insight into their distributor’s markets by reviewing public filings, the distributor’s website and news articles. In Epsilon, the UAE reseller’s website made clear that it provided items to the Iranian market. Enforcement authorities regularly urge U.S. exporters to conduct sufficient due diligence to avoid unnecessary risk. They also will adjust penalties based on the robustness of the U.S. distributor’s due diligence efforts.
  – Examine carefully all export information provided by the distributor.
For significant transactions, U.S. exporters should examine carefully the export documentation from the distributor. Such examination may reveal a reference to a prohibited destination or end user in the documentation, or raise a question that merits follow-up by the U.S. exporter.
 
These efforts should form part of a comprehensive effort to mitigate risk and educate employees to identify potential export compliance problems.  
* * * * * * * * * * * * * * * * * * * *

(Source:
Volkov Law Group Blog. Reprinted by permission.)
 
* Author: Michael Volkov, Esq., Volkov Law Group, mvolkov@volkovlaw.com, 240-505-1992.
 
At a recent conference of the high-tech industry, an IBM representative provided a fascinating presentation on blockchain technology and the application to compliance programs. It was a fascinating presentation. Maybe I cam coming to the party relatively late, but blockchain technology, as it gain acceptance in the marketplace, could have a real significant impact on compliance functions.
 
Aside from compliance applications, blockchain could have significant benefits in financial services, capital markets, supply chain management, trade management and a number of other applications where secure and transparent transactions could be recorded in secure blockchain environments.
 
The key to blockchain is creating a secure environment among multiple actors in which the actors can record events and transactions in real time in shared ledgers. These ledgers are immutable, meaning they cannot be modified, and secure from potential hacking or modification.
 
Blockchain users can receive real-time reports of activities without having to rely on post hoc reports. As a consequence, a specific user can flag potential red flags early, almost in real time, when events occur based on specific settings they establish for monitoring blockchain events.
 
IBM is devoting significant efforts to developing blockchain applications that are useful for a variety of business purposes. A company interacts with a number of businesses, including banks, suppliers, vendors, distributors, manufacturers and a host of other companies. A secure ledger available to each business and restricted to the specific interactions with each other creates numerous possibilities for real-time recording of transactions consistent with established rules among the participant companies.
 
A key aspect of blockchain is the immutability of information – companies cannot modify an entry; a new entry has to be made relating to the prior entry.
 
In the compliance area, a company could maintain immutable records of its due diligence process for a specific third party or a specific regulatory requirement. Due diligence delays would be eliminated by providing immediate and real-time and immediate access to the data, collection of information from potential third parties, and analysis of the information. A compliance officer could expedite the entire verification and validation process.
 
Compliance officers would have real-time access to a variety of business functions for monitoring processes. Proactive monitoring functions could become the new trend in the compliance arena. Regulators could then gain access to such information to verify compliance with a specific regulatory requirement. An audit trail, for example, could be preserved, accessible and immutable.
 
One other key application of blockchain technology is smart contracts. If a company develops custom contract programs to run on blockchain, a custom contract can update the blockchain in accordance with the contract rules. Instead of hiring an intermediary to perform certain functions, the company can retain control of a function and perform certain actions when a triggering event occurs.
 
Blockchain requires participation in a defined environment. Like any type of network service that requires a certain number of participants to create the network, blockchain will not gain acceptance until required number of participants have joined a specific defined environment. The interesting issue will be how quickly blockchain and its applications will be accepted. As more companies find ways to implement blockchain technology, the cost of blockchain services will decrease and the use will expand.
* * * * * * * * * * * * * * * * * * * *

(Source:
Export Law Blog
. Reprinted by permission.)
 
* Author: R. Clifton Burns, Esq., Bryan Cave LLP, Wash DC,
Clif.Burns@bryancave.com
, 202-508-6067)
 
Apparently Cuban diplomats in Cuba like to drive spiffy new Hondas (as opposed to the somewhat older cars almost everybody else in Cuba drives). But, because a dealership in Ottawa financed leases on those cars for the Cuban Embassy through Honda Canada Finance Inc. (“HCFI”), a subsidiary of California-based American Honda Finance Corporation (“AHFC”), there was all hell – or rather $87,255 – to pay to OFAC.
 
OFAC went out of its way to point out a not-uncommon deficiency in HCFI’s screening process:
 
The Cuban entity had the word “Cuba” in its name and provided documentation to HCFI demonstrating it was a Government of Cuba entity. Although AHFC and HCFI had policies and procedures in place review transactions against OFAC’s List of Specially Designated Nationals and Blocked Persons for compliance with U.S. economic sanctions laws, they did not include the names of countries subject to OFAC-administered comprehensive sanctions in their screening system.
 
Many screening processes simply check names against lists and stop there. So, HCFI screened “Embassy of Cuba” and when that did not show up in the SDN list, the leases were issued. I can’t tell you how many times I’ve seen something like this.
 
As usual, and longtime readers will know where I’m going, OFAC works itself up in a high dudgeon over these leases without bothering to mention at all the Canadian Foreign Extraterritorial Measures Act.  That law makes it clearly illegal  for HCFI, a Canadian company in Canada and fully subject to Canadian law, to deny financing based on the U.S embargo of Cuba.  This applicable Canadian law is not even mentioned as a mitigating factor. Once again, it appears that the U.S. is telling one of its closest allies that we don’t really care what their laws are.
 
But wait, there’s something in the OFAC release that hints that this might not be entirely the case. The transactions leading to the penalty occurred between 2011 and 2014. OFAC lists as a mitigating factor that “it issued a specific license to AHFC in June 2015 regarding the subject leases.” In most cases, getting an OFAC license to deal with the Cuban government in a third-country would be considered a near impossibility. One has to wonder whether AHFC, after it disclosed the violations, applied for a license and relied on the Canadian Foreign Extraterritorial Measures Act as a basis.  This might indeed be the reason why the licenses were granted here and why HCFI wasn’t forced to repo the diplomats’ cars.
 
The takeaway here is that U.S. companies with foreign subsidiaries in countries with statutes blocking compliance with the Cuba embargo might consider applying for a license and basing the request on the blocking statute.  Because the U.S. company is applying for the license, the application itself would not violate the Canadian blocking law, which only covers “persons in Canada” from complying with the U.S. embargo on Cuba.  Given the massive delays at OFAC in getting license granted this may not be a practical solution. But it is, at least, something to consider.
* * * * * * * * * * * * * * * * * * * *

MSEX/IM MOVERS & SHAKERS

MS_a114. Monday List of Ex/Im Job Openings: 98 Jobs Posted

(Source: Editor)  
 
Published every Monday or first business day of the week.  Send openings in the following format to jobs@fullcirclecompliance.eu.
 
COMPANY; LOCATION; POSITION TITLE (WEBLINK); CONTACT INFO; REQ ID
 
#” New listing this week:
 
* Abcam; Cambridge, United Kingdom;
Trade Compliance Coordinator; Requisition ID: CAM-012-996
# Acteon Group Ltd.; Norwich, Suffolk, or London, UK;
Head of Compliance; or email
Mike Pay


Akin Gump Strauss Hauer & Feld LLP; Washington DC; 
International Trade and Customs Specialist
; 
staffrecruiter@akingump.com
; Requisition ID: 147

* Amazon; Mexico City, Mexico; Mexico Trade Compliance Program Manager; Requisition ID: 520481

* Amazon; Mexico City, Mexico;
Senior Manager, Mexico Trade Compliance
; Requisition ID: 520460

* Amazon; Seattle WA; NA Compliance Analyst; Requisition ID: 256357

* Amazon; Seattle WA;
U.S. Export Compliance PM
; Requisition ID: 475927

* Amazon; Tokyo, Japan;
Trade Compliance Specialist
; Requisition ID: 481891

* Advanced Micro Devices (AMD); Austin TX;
Import/Export Compliance Manager; Requisition ID: 24061

* Ansell; Iselin NJ;
Senior Specialist NA Trade Compliance; Requisition ID: IRC6513
* Applied Materials; Alzenau, Germany;
Europe Trade Manager
; Requisition ID: (M3)-1701376

* ASML; Veldhoven, the Netherlands;
Senior Manager Trade & Customs;
Requisition ID: RC05619
* Babcock; Portsmouth, United Kingdom; 
Divisional Trade & Compliance Manager

* Bemis Company; Neenah WI;
Director – Global Trade Compliance
; Requisition ID: REQ_13735
* Berry Plastics Corporation; Evansville IN;
International Trade Compliance Administrator
; Requisition ID: 4054

* Boeing; Sydney, Australia, and other locations;
Global Trade Control Manager; Requisition ID: 1700006067

* Boeing; Amsterdam, The Netherlands, and Brussels, Belgium;


Trade Control Specialist
; Requisition ID: 1700006121

* Brunswick Corporation; Lake Forest IL;
Trade Compliance Auditor
; Becky Longrie, 847-735-4755,
becky.longrie@brunswick.com
; Requisition ID: 22999

* Cobham Advanced Electronic Solutions; Exeter, NH, Plainview, NY, Eatontown, NJ, or Lansdale, PA;
Export Compliance Manager
; Charles Trokey
Charles.trokey@yoh.com

* CSRA Inc.; Falls Church VA;
Global Trade & Compliance Principal
; Alan Strober 571-375-4890; Requisition ID: 17002RN
*
Cubic Corporation; San Diego, CA; 
Senior Export Compliance Analyst

Requisition ID: 5982


* Danaher; Wash DC (Other locations possible);
Global Trade Compliance Manager; Requisition ID: DAN000510

* DB Schenker (2 positions); Atlanta GA, and Long Beach CA;
Area Customs Director
;
Crystal.Adair@dbschenker.com
; Requisition ID: 17P009

* Eaton; Titchfield, United Kingdom;
Global Trade Manager (Trade Compliance); Requisition ID: 020681

* Erickson Inc.; Portland OR;
Trade Compliance Manager
; 
Joanna Rafiner-Jarboe
; Requisition 2017-2267

* Expeditors; Sunnyvale CA;
Customs Compliance Specialist
* Export Solutions Inc.; Melbourne FL; Trade Compliance Specialist;
info@exportsolutionsinc.com

* FD Associates, Tysons Corner VA;
Senior Export Compliance Associate
;
jobs@fdassociates.net

* FlightSafety International; Oklahoma; Trade Compliance Advisor; Requisition ID 16480

*
FLIR; Billerica MA; 
Sr. Defense Trade Licensing & Compliance Analyst
; Requisition ID: 8008

* Fluke: Everett WA; 
Trade Compliance Manager
; Requisition ID: FLU005544

* General Atomics Aeronautical Systems, Inc.; San Diego CA; 


International Trade Compliance Analyst (ITC) / Export Import Specialist / Global Trade Administrator
; Requisition ID: 12252BR

* General Dynamics Information Technology; Falls Church VA;
Division Export Compliance Coordinator
;
Kara.Reynolds@gdit.com
; Requisition ID: 2017-21288

* George Washington University; Washington DC;
Research Compliance Officer, Export Control; Requisition ID: PI97906765

* Givaudan; Bogor, Indonesia;
Compliance Manager
; Requisition ID: 68063
* Harris Corporation; Clifton NJ; 
Trade Compliance Analyst

lsolomon@harris.com
; Requisition ID: ES20172404-18675

* KPMG; Antwerp, Brussels;
Manager Global Trade & Customs – SAP GTS
; 122756BR

* Lam Research Corporation; Fremont CA;
Foreign Trade Intern 1

* Lam Research Corporation; Shanghai, China;
Foreign Trade Analyst 

* Lutron; Coopersburg PA;
Trade Manager-Export
; Requisition ID: 2926
*
Livingston International; Western Region (TX, CA, OR, WA preferred)
;

Trade Ad
visory
Consu
ltant

*
Livingston International; Western Region (TX, CA, OR, WA preferred);
Research Consultant

* L-3 Technologies; Arlington VA;
Sr. Mgr. Corporate Customs Compliance
; Requisition ID: 087862

* L-3 Technologies, Platform Integration Division; Waco TX;
 
Import/Export Compliance Administrator 3
; Requisition ID 
089343

* Lockheed Martin; Orlando FL;
International Trade Compliance Sr Staff / ITAR / EAR / Export Control Officer
; Requisition ID: 387435BR

# ManTech International; Herndon VA;
Director of Corporate Export Control
;
Jenna.Brady@ManTech.com
; Requisition ID: 90965BR

* Mars – Wrigley; Chicago IL; 
Global Trade Compliance Analyst (Corporate Export)
;
Ryan.Martin@effem.com
; Requisition ID: 69452

* Maxim Integrated; Dallas TX;
Manager, Global Trade
; 3304BR

* Medtronic; Heerlen, The Netherlands;
Trade Compliance Analyst
; Requsition ID: 16000DYY

* Medtronic; Wash DC;
Global Trade Lawyer
;
stacy.m.johnson@medtronic.com
; Requisition ID: 170002ON

* Meggitt PLC; Maidenhead, UK;
Trade Compliance Officer 

# North Dakota State University; Fargo ND;
Director for Research Integrity Compliance; Requisition ID: 1700372

* Northrop Grumman Corporation; Herndon VA;
International Trade Compliance Analyst 2
; Requisition ID: 17010105

* Northrop Grumman Corporation; Herndon VA;
International Trade Compliance Analyst 3/4; Requisition ID: 17001180

* Northrop Grumman Corporation; Linthicum MD;
International Trade Compliance Analyst 1
; 17003433
* Northrop Grumman Corporation; Linthicum MD;
International Trade Compliance Analyst 3
; 17005262

* Northrop Grumman Sperry Marine; New Malden, UK;
Trade Compliance Coordinator
;
careers.uk@sperry.ngc.com

* Panduit; Tinley Park IL;
Global Trade Compliance Agent
; Requisition ID: PAND-03297

* Plexus Corporation; Neenah Wi;
Manager – Export Compliance
; Requisition ID: 14645BR
* Plexus Corporation; Neenah Wi;
Manager – Import Compliance
; Requisition ID: 14593BR
* Premier Farnell Organisation; Leeds, UK;
Trade Compliance Specialist – Europe
; Requisition ID: 4301
#
Raytheon; (El Segundo CA, McKinney TX, Dallas TX, Marlborough MA, or Washington D.C.);
Senior Manager of Global Trade Management
; Requisition ID: 98724BR

* Roanoke Insurance Group; Schaumburg IL; 
Carnet Service Representative
; Requisition ID: 1019

* Saab Defense and Security USA LLC; Syracuse NY;
Senior Import/Export Analyst
; Requisition ID: USA_00413
* SABIC; Houston TX;
Analyst Import/Export Compliance
;
danielle.cannata@sabic.com
; Requisition ID: 7792BR

* SIRE: Noord-Brabant province, the Netherlands;
Trade Compliance Expert; Requisition ID: 33934

* Talbots; Hingham MA;
Sr Mgr Global Trade & Customs Compliance
; Requisition ID: 1077
* Talbots; Lakeville MA;
Dir., Global Logistics & Customs Com
; Requisition ID: 1085

* Teledyne Microwave Solutions; Mountain View CA;
 


Trade Compliance Administrator 2
; Requisition ID: 2017-4111

* Tesla Motors; Fremont CA;
Global Supply Manager – Logistics
; Requisition ID: 38153

* Thales Defense and Security, Inc.; Clarksburg MD; Senior Manager Trade Compliance
; William.Denning@thalesdsi.com; Requisition ID: 2592

* ThermoFisher Scientific; Breda, the Netherlands;
Import/Export Specialist – EMEA CMD Commercial Offices
; Requisition ID: 44930BR

* UBC; Monheim, Germany;
Manager Customs and Trade Compliance 
* Ultra Electronics; Greater London, United Kingdom;
International Trade and Export Compliance Specialist

* United Technologies Corporation, UTC Aerospace Systems; Brea CA;
Sr. Anlst, Intl Trade Compl
; Requisition ID: 46798BR

* United Technologies Corporation, UTC Aerospace Systems; Burnsville MN;


Senior International Trade Compliance Analyst- Imports
; Requisition ID:33469BR

* United Technologies Corporation, UTC Aerospace Systems; Burnsville MN;


ITC Tech Manager- SIS
; Requisition ID:38565BR

* United Technologies Corporation, UTC Aerospace Systems; Chula Vista CT;
International Trade Compliance Analyst
; Requisition ID: 46876BR


* United Technologies Corporation, UTC Aerospace Systems; Troy OH;
Sr. Manager, Intl Trade Compliance
; Requisition ID: 44065BR 

* United Technologies Corporation, UTC Aerospace Systems; Windsor Locks CT;
Sr. Anlst, Intl Trade Compl
; Requisition ID: 48594BR

* VAG; Mannheim, Germany;
Trade Compliance Manager (m/w)
; Contact: Mr. Florian Uhl, +49 621 749 – 1870

* Varex Imaging Corp; Salt Lake City UT; 
Senior Customs Compliance Analyst
; Requisition ID: 
11402BR

* Vigilant; Unknown location in the U.S.;
BioTech/Pharmaceutical Global Trade Analyst

* XPO Logistics; Greenwich CT;
Global Trade Compliance Analyst

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

ENEDITOR’S NOTES

* Charles Kingsley (12 Jun 1819 – 23 Jan 1875, was a priest of the Church of England, a university professor, social reformer, historian and novelist. He was a friend and correspondent with Charles Darwin.)
  – “All we need to make us really happy is something to be enthusiastic about.”
 
* Ben Jonson (Benjamin Jonson, 11 Jun 1572 – 6 Aug 1637, was an English playwright, poet, actor, and literary critic of the 17th century, whose artistry exerted a lasting impact upon English poetry and stage comedy.)
  – “Language most shows a man. Speak that I may see thee.”
 
Monday is pun day:
 
Did you hear about the factory worker who fell into a vat of varnish?  It was a terrible way to go, but he had a wonderful finish.
  — Jenny Ramseyer, Lexington, MA

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

EN_a316
. 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: 26 May 2017: 82 FR 24242-24248: Addition of Certain Persons and Revisions to Entries 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 10 Jun 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 800 footnotes containing amendment histories, 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.

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

Review last week’s top Ex/Im stories in “Weekly Highlights of the Daily Bugle Top Stories” published
here

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

EPEDITORIAL POLICY

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

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

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

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

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