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17-0630 Friday “Daily Bugle”

17-0630 Friday “Daily Bugle”

Friday, 30 June 2017

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

  1. Commerce/BIS Amends EAR, Removes Indira Mirchandani from Entity List
  2. DHS/CBP Delays Effective Date for ACE Becoming the Sole CBP-Authorzed EDI System for Processing Electronic Drawback and Duty Deferral Entry and Entry Summary Filings
  3. DHS/CBP Delays Effective Date for Modifications of the National Customs Automation Program Tests Regarding Reconciliation, Post-Summary Corrections, and Periodic Monthly Statements
  4. DHS/CBP Amends CBP Regulations, Modernizes Customs Brokers Examination
  1. Ex/Im Items Scheduled for Publication in Future Federal Register Editions 
  2. Commerce/BIS: (No new postings.) 
  3. DHS/CBP Announces ACE PRODUCTION Outage on 1-2 July
  4. DHS/CBP Updates ACE and PGA Documentation
  5. State/DDTC Publishes Name Change Announcements
  6. Treasury/OFAC Publishes Reminder for the Annual Report of Blocked Property
  7. Canada TID Amends Area Control List, Removes Belarus
  8. Hong Kong TID Releases Update Concerning Strategic Commodities Regulations
  1. Reuters: “U.S. Targets Chinese Bank, Company, Two Individuals Over North Korea”
  2. ST&R Trade Report: “Dates and Deadlines: CBP Rulings and Forms, Origin Determination, Import Restrictions”
  1. B.S. Haney: “Ethics Pitfalls in Mergers, Acquisitions”
  2. E.S. Crusius: “The Department of Defense Emphasizes Heightened Cybersecurity Compliance at Industry Information Day Event”
  3. J.E. Bartlett: Export Classification of a Bill of Materials (BOM) or Other List of Defense Articles
  4. M. Joyce, P. Greening & Yuen Chun Kitty Ng: “Everything You Need to Know About the Australian Domestic Gas Security Mechanism – What Does This Mean for Australian LNG Exporters and Corporations Importing from Them?”
  1. Friday List of Approaching Events
  1. Bartlett’s Unfamiliar Quotations 
  2. Are Your Copies of Regulations Up to Date? Latest Changes: ATF (15 Jan 2016), Customs (30 Jun 2017), DOD/NISPOM (18 May 2016), EAR (30 Jun 2017), FACR/OFAC (16 Jun 2017), FTR (19 Apr 2017), HTSUS (28 Jun 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. 
Commerce/BIS Amends EAR, Removes Indira Mirchandani from Entity List

(Source: Federal Register

 
82 FR 29714: Control Policy: End-User and End-Use Based
 
CFR Correction

  In Title 15 of the Code of Federal Regulations, Parts 300 to 799, revised as of 1 January 2017, on page 498, in supplement number 4 to part 744, under United Arab Emirates, remove the entry for “Indira Mirchandani”.

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EXIM_a2

2. 
DHS/CBP Delays Effective Date for ACE Becoming the Sole CBP-Authorzed EDI System for Processing Electronic Drawback and Duty Deferral Entry and Entry Summary Filings

(Source: Federal Register) [Excerpts.]
 
82 FR 29910: Delay of Effective Date for the Automated Commercial Environment (ACE) Becoming the Sole CBP-Authorized Electronic Data Interchange (EDI) System for Processing Electronic Drawback and Duty Deferral Entry and Entry Summary Filings
 
* AGENCY: U.S. Customs and Border Protection, Department of Homeland Security.
* ACTION: Delay of effective date. …
* SUMMARY: On 30 August 2016, U.S. Customs and Border Protection (CBP) published a notice in the Federal Register announcing plans to make the Automated Commercial Environment (ACE) the sole electronic data interchange (EDI) system authorized by the Commissioner of CBP for processing electronic drawback and duty deferral entry and entry summary filings. …
* DATES: The effective date is delayed until further notice. CBP will publish a subsequent notice announcing the date when ACE will become the sole CBP-authorized EDI system for processing electronic drawback and duty deferral entry and entry summary filings, and ACS will no longer be a CBP-authorized EDI system for purposes of processing these filings. …
 
  Dated: June 26, 2017.
Brenda B. Smith, Executive Assistant Commissioner, Office of Trade.

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EXIM_a3
3. 
DHS/CBP Delays Effective Date for Modifications of the National Customs Automation Program Tests Regarding Reconciliation, Post-Summary Corrections, and Periodic Monthly Statements

(Source: Federal Register) [Excerpts.]
 
82 FR 29910-29911: Delayed Effective Date for Modifications of the National Customs Automation Program Tests Regarding Reconciliation, Post-Summary Corrections, and Periodic Monthly Statements
 
* AGENCY: U.S. Customs and Border Protection, Department of Homeland Security.
* ACTION: Delay of effective date.
* SUMMARY: This notice announces that the effective date for the modifications to the National Customs Automation Program (NCAP) tests regarding Reconciliation, Post-Summary Corrections (PSC), and Periodic Monthly Statements (PMS) is delayed until further notice. U.S. Customs and Border Protection (CBP) announced these modifications in notices previously published in the Federal Register. 
* DATES: The effective date for the modifications to the reconciliation, PSC, and PMS NCAP tests is delayed until further notice. CBP will publish a notice in the Federal Register announcing a new effective date for changes to these NCAP tests. …
 
  Dated: June 26, 2017.
Brenda B. Smith, Executive Assistant Commissioner, Office of Trade.

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EXIM_a4
4. 
DHS/CBP Amends CBP Regulations, Modernizes Customs Brokers Examination

(Source: Federal Register) [Excerpts.]
 
82 FR 29714-29719: Modernization of the Customs Brokers Examination
 
* AGENCY: U.S. Customs and Border Protection, Department of Homeland Security.
* ACTION: Final rule.
* SUMMARY: This document adopts as a final rule, with changes, the amendments proposed to the U.S. Customs and Border Protection (CBP) regulations concerning the customs broker’s examination provisions. Specifically, this rule transitions the examination to a computer automated customs broker examination, adjusts the dates of the examination to account for the fiscal year transition period and payment schedule requirements, and increases the examination fee to cover the cost of delivering the exam.
* DATES: Effective 31 July 2017. …
* SUPPLEMENTARY INFORMATION: … CBP is removing the term ”written” to describe the examination from the regulation to provide flexibility in the transition from the paper and pen format to delivering the examination via computer. For that reason, CBP is not limiting the examination format by including specific parameters, such as ”multiple choice.”

  [T]he final rule will change the examination dates to the fourth Wednesday in April and October (not the fourth Monday); and, will retain the special examination provision with changes in Sec. 111.13(c) (19 CFR 111.13(c)). …
  Beginning in October 2017, the current paper testing option will no longer be available and the broker examination will be fully electronic. …
 
Currently, examinees go to either a port or to a rented event space in a hotel to take the paper exam with a 35-page test booklet and a scannable answer sheet, which must subsequently be collected and graded. The new all-electronic version of the exam will be administered entirely on a computer where the examinees answer the questions directly on the screen and the exam is graded automatically.  …
 
Under the final rule, the customs broker license examination fee will increase from $200 to $390 in order for CBP to fully recover all of its costs to administer the broker examination. … [T]hese costs are increasing due to a shift in the administration of the exam that will go into effect beginning with the October 2017 exam. … 

 

  Dated: June 27, 2017. 

Elaine C. Duke, Deputy Secretary.

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OGSOTHER GOVERNMENT SOURCES

OGS_a15
. Ex/Im Items Scheduled for Publication in Future Federal Register Editions
 

(Source:
Federal Register)
* Commerce/BIS; NOTICES; Export Privileges; Denials:
  – Edwin Navarro Makasiar II [Publication Date: 3 July 2017.]
  – Jose Abraham Benavides-Cira [Publication Date: 3 July 2017.]
  – Mahan Airways, Pejman Mahmood Kosarayanifard a/k/a Kosarian Fard, Mahmoud Amini, et al.; renewal [Publication Date: 3 July 2017.]
  – Manuel Morales [Publication Date: 3 July 2017.]
 
* Commerce/BIS; NOTICES; Meetings:
  – Emerging Technology and Research Advisory Committee [Publication Date: 3 July 2017.]
  – Materials Processing Equipment Technical Advisory Committee [Publication Date: 3 July 2017.]
  – Materials Technical Advisory Committee [Publication Date: 3 July 2017.]
  – Sensors and Instrumentation Technical Advisory Committee [Publication Date: 3 July 2017.]
  – Technical Advisory Committee [Publication Date: 3 July 2017.]
  – Transportation and Related Equipment Technical Advisory Committee [Publication Date: 3 July 2017.]
 
* DHS/CBP; PROPOSED RULES; Port Limits; Extensions: Savannah, GA [Publication Date: 3 July 2017.]
 
* U.S.-China Economic and Security Review Commission; NOTICES; Meetings [Publication Date: 3 July 2017.] 
 

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OGS_a3
7.

DHS/CBP Announces ACE PRODUCTION Outage on 1-2 July

(Source:
CSMS# 17-000384, 30 June 2017.)  
 
There will be an ACE PRODUCTION Outage Saturday evening, 1 July 2017 from 2200 ET to 0400 ET Sunday, 2 July 2017.
 
ACE will perform infrastructure maintenance activities and the following ACE Deployments during this time:
 
ACE Import Manifest
 
  – CAOM-11269: Air CAMIR AGT line rejected FIRMS code with AAAN format.
 
ABI Message Header Validation
 
  – CAOM-11600: On a DE (Drawback Claim) message, validate the B record’s drawback filer’s ABI Profile for its Operational mode. To pass profile validations in Prod, the value must be “O” for Operational.
 
ACE Entry Summary & Document Imaging System (DIS)
 
  – CAOM-7737: UC7 (Entry Summary Status Notification message: Disposition Type “Document Receipt Acknowledgement”) was not being sent for DIS documents.
 
When documents are received in DIS, and contain a Validation Activity (VA) Action Identifier, a UC7 message should be sent to Trade with the Action Identification Number in output E2 record, position 49-60.
 
ACE Accounts Portal
 
  – CAOM-11478: Ticket# 2334951: Restrict Date of Birth (DOB) information from all users’ view after an account is created.
  – CAOM-9919: Provide Accounts UI capability for authorized users to reset Pending or Denied “Reports Access Requests” for an EIN.
  – CAOM-11299: Update OMB number on CF28 (CBP form for “Request for Information”).

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OGS_a4
8.

DHS/CBP Updates ACE and PGA Documentation

(Source:
CSMS# 17-000385, 30 June 2017.)
 
U.S. Customs and Border Protection (CBP) has posted updated Automated Commercial Environment (ACE) Automated Broker Interface (ABI) CBP and Trade Automated Interface Requirements (CATAIR) chapters and Partner Government Agency (PGA) documentation to CBP.gov. The updated documents include:
 
 
The ACE CATAIR AE-AX Entry Summary Create Update chapter has been updated with a new draft. The AE table usage notes have been updated for Post Summary Corrections, and the Ruling number data element has been revised.
 
 
  – A revised version of the error dictionary has been posted.
 
 
  – Added SIM (Seafood Import Monitoring Program) and removed extra USDA/AMS programs listing.
  – For FWS, removed all processing codes except EDS.
  – For PG05 Scientific Species Code, updated name of the section; Added information about NMFS species codes
  – For the FWS wildlife description codes, added 8 new FWS codes (CSM, FPL, FPS, GIL, PRL, PUP, ROS, and TRU) and re-alphabetized the table.
  – For the PG14, updated definition for A26 (APHIS VS 17-29); added NM6, “Other authorization to Fish” for NMFS
 
 
  – In the introduction, added sentence to last paragraph.
  – In the PG05, updated description for ‘Scientific Species Code’
  – In the PG14, for LPCO UOM, removed reference to Appendix PGA in description
  – In the PG31, UOM (conveyance), removed reference to Appendix PGA in description
  – In the PG32, for Commodity routing country code, removed ‘ISO’ references
 
 
  – The ACE CATAIR PE/PX standalone document has been updated. In the input status record usage map, added “999” loop repeat for PE15. Also, for PE15, added text in record header that this record can be repeated.
 
 
  – EPA has updated their tip sheets for Pesticides, and Vehicles & Engines filing with revised guidelines.
 
To download a copy of the updated ACE CATAIR and PGA documentation, please visit the “ACE Automated Broker Interface (ABI) CATAIR” and “ACE Features” pages of CBP.gov/ACE.

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OGS_a59. 
State/DDTC Publishes Name Change Announcements

(Source: State/DDTC) [Excerpts.]
 
The Directorate of Defense Trade Controls (DDTC) has published the following name change announcements. Excerpts are included below.
 
 
Effective immediately, IGATE Global Solutions Limited will change as follows: Capgemini Technology Services India Limited. Due to the volume of authorizations requiring amendments to reflect this change, the Deputy Assistant Secretary for Defense Trade Controls is exercising the authority under 22 CFR 126.3 to waive the requirement for amendments to change currently approved license authorizations. The amendment waiver does not apply to approved or pending agreements. …
 
 
Effective immediately, Toshiba Corporation will change as follows: Toshiba Infrastructure Systems & Solutions Corporation. Due to the volume of authorizations requiring amendments to reflect this change, the Deputy Assistant Secretary for Defense Trade Controls is exercising the authority under 22 CFR 126.3 to waive the requirement for amendments to change currently approved license authorizations. The amendment waiver does not apply to approved or pending agreements. … 

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OGS_a6
10.

Treasury/OFAC Publishes Reminder for the Annual Report of Blocked Property

 
31 C.F.R. § 501.603 requires financial institutions to provide the Office of Foreign Assets Control (OFAC) with a comprehensive list of all blocked property held as of 30 June of the current year by 30 September 2017.  Please note that the term blocked property only applies to property that is blocked pursuant to OFAC regulations. Property that has been unblocked by general or specific license, but which has not yet been returned to the owner, is not blocked property, and should not be reported to OFAC in the Annual Report of Blocked Property (ARBP). This includes, for example, property of the Government of Sudan unblocked as a result of the 17 January 2017 issuance of the general license found at 31 C.F.R. § 538.540 which may remain in the possession of a financial institution. Similarly, a restricted account of a person ordinarily resident in Iran is not blocked, and should not be reported to OFAC in the ARBP, unless there is an interest in the account of a person whose property and interests in property are blocked pursuant to an applicable sanctions authority.
 
The annual reports must be filed using Form TD F 90-22.50, Annual Report of Blocked Property. Please send completed forms to OfacReport@treasury.gov. For more information, click here to view OFAC’s Guidance on Filing the Annual Report of Blocked Property.

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OGS_a7
11.

Canada TID Amends Area Control List, Removes Belarus

 
The Trade Controls Bureau (TID) of Global Affairs (GA) Canada (formerly Foreign Affairs, Trade and Development Canada) has published the following notice.
 
 
  * Export and Import Permits Act
  * Serial No. 212
  * Date: 30 June 2017
 
On 20 June 2017 the Government of Canada finalized the regulatory process to amend the Area Control List (ACL) of the Export and Import Permits Act (EIPA). This amendment formally removes Belarus from the ACL, a list of countries to which the Governor in Council deems it necessary to control the export or transfer of any goods and technology.
 
Exports of uncontrolled goods and technology (i.e. items that are not listed on Canada’s Export Control List – ECL) no longer require an export permit issued under the authority of the EIPA in order to lawfully export those items to Belarus.
 
For those items that are listed on Canada’s ECL, export permits are required in accordance with the regular export controls process.  More information on this process can be found in the Export Controls Handbook available at Export and Import Controls.
 
This Notice also replaces Notice to Exporters No. 197 “Exports of items listed on the Export Control List to Belarus”.
 
The full text of this regulation and its Regulatory Impact Analysis Statement will be available in the July 12, 2017 edition of the Canada Gazette, Part II.

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OGS_a8
12.

Hong Kong TID Releases Update Concerning Strategic Commodities Regulations

 
The Trade and Industry Department (TID) of Hong Kong has released Circular No. 9/2017, informing traders that the Import and Export (Strategic Commodities) Regulations (Amendment of Schedule 1) Order 2017 (“the Order”) will come into operation on 3 July 2017. Circular No. 9/2017 is included below.
 
Commencement of the Import and Export (Strategic Commodities) Regulations (Amendment of Schedule 1) Order 2017
 
Further to Strategic Trade Controls Circulars No. 5/2017 and No. 8/2017, this is to inform traders that the Import and Export (Strategic Commodities) Regulations (Amendment of Schedule 1) Order 2017 (“the Order”) will come into operation on 3 July 2017.
 
Changes Made to Hong Kong’s Control List
 
The purpose of the Order is to reflect the changes to the control lists of strategic commodities adopted by international non-proliferation regimes which have come into effect after the last amendment of Schedule 1 to the Import and Export (Strategic Commodities) Regulations in 2015.  For details of the amendments, please refer to the Order by visiting the website of the Strategic Commodities Control System or the Gazette online [Legal Supplement No. 2 of the Gazette published on 24 March 2017 (No. 12, Vol. 21)].
 
Reminder
 
Section 6A of the Import and Export Ordinance stipulates that no person shall import or export any article specified in the Schedules to the Import and Export (Strategic Commodities) Regulations except under and in accordance with a licence issued by the Director-General of Trade and Industry.  Any person who contravenes the provision commits an offence and is liable:
 
  (a) on summary conviction to a fine of HK$500,000 and to imprisonment for two years; and
  (b) on conviction on indictment to an unlimited fine and to imprisonment for seven years.
 
In addition to prosecution, the Trade and Industry Department may impose administrative actions against these persons.  Such administrative actions may involve, but shall not necessarily be confined to, suspension of a licence, refusal to issue a licence, debarment of all licensing facilities, etc.

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NWSNEWS

NWS_1
13.

Reuters: “U.S. Targets Chinese Bank, Company, Two Individuals Over North Korea”

(Source:
Reuters, 30 June 2017.) [Excerpts.]
 
The United States imposed sanctions on two Chinese citizens and a shipping company on Thursday for helping North Korea’s nuclear and missile programs and accused a Chinese bank of laundering money for Pyongyang.
 
U.S. Treasury Secretary Steve Mnuchin said the actions were designed to cut off funds that North Korea uses to build its weapons program. “We will follow the money and cut off the money,” he told a news conference.
 
A Treasury statement identified the bank as the Bank of Dandong and the firm as Dalian Global Unity Shipping Co Ltd. It identified the two individuals as Sun Wei and Li Hong Ri.
 
The sanctions imposed on the two Chinese citizens and the shipping company blacklists them from doing business with U.S.-tied companies and people. …
 
Mnuchin said U.S. officials were continuing to look at other companies that may be helping North Korea and may roll out additional sanctions.
 
U.S. foreign policy experts say Chinese companies have long had a key role in financing Pyongyang. However, Mnuchin said the action was not being take to send China a message. “This wasn’t aimed at China. We continue to work with them,” he said.
 
U.S. officials told Reuters this week that President Donald Trump was growing increasingly frustrated with China over its inaction on North Korea and bilateral trade issues, and is now considering possible trade actions against Beijing. …
 
The U.S. move came as Trump was due to meet South Korean President Moon Jae-in at the White House on Thursday to discuss steps to push North Korean to abandon its weapons programs, which have become an increasing threat to the United States.
 
It also came after the United States sanctioned a Chinese industrial machinery wholesaler, Dandong Hongxiang Industrial Development Co, in September for its ties to North Korea’s nuclear program, the first time Washington had taken such a step against a Chinese firm.
 
China’s Foreign Ministry said in the same month Hongxiang was under investigation for “illegal behavior” and “economic crimes” following the provisions of U.N. resolution 2270, which imposed tighter sanctions on North Korea in March. …
 
Anthony Ruggiero, a former senior Treasury official in the Office of Terrorist Financing and Financial Crimes, said the action against Bank of Dandong was the first time U.S. authorities sought to punish a Chinese bank accused of helping North Korea.
 
The action would immediately cause Western firms to cut off any transactions with Bank of Dandong, he said. It may also cause financial institutions in Western Europe and the United States to further scrutinize whether their Chinese business could have links to North Korea.
 
  “The designation will make reputable Western banks ask questions about larger financial institutions in China,” said Ruggiero, who is now a senior fellow at the non-profit Foundation for Defense of Democracies.

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NWS_a2
14.

ST&R Trade Report: “Dates and Deadlines: CBP Rulings and Forms, Origin Determination, Import Restrictions”

 
Following are highlights of regulatory effective dates and deadlines and federal agency meetings coming up in the next week.
 
  – 3 July: effective date of CBP revocation or modification of rulings
  – 3 July: deadline for comments on CPSC information collections on exports, multi-purpose lighters
  – 3 July: deadline for comments to CBP on notice of detention, export under special bond
  – 3 July: deadline for comments on sunset reviews of AD/CV duty orders
  – 5 July: deadline for comments to FMC on regulations to repeal or modify
  – 5 July: deadline for comments to ITC on IPR import restrictions on self-balancing vehicles
  – 7 July: deadline for comments to CBP on country of origin determination on surgical and isolation gowns

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COMMCOMMENTARY

COMM_a0115. 
B.S. Haney: “Ethics Pitfalls in Mergers, Acquisitions”

(Source: NDIA Magazine, July 2017 Issue.)
 
* Author: Brian S. Haney, Law Student, University of Notre Dame Law School. Haney authored this article under the supervision of Daniel J. Dell’Orto, executive vice president, government relations and general counsel at AM General LLC. 
 
Integrating two companies’ ethics and compliance programs during the merger and acquisition process is critical and begins well before the union of the companies.
 
Both the target company and the acquiring company should take care to conduct diligent research into the ethics and compliance programs of all parties involved prior to signing the transaction agreement. Failure to perform such diligence can be fatal to the success of the transaction.
 
During the pre-acquisition phase, the first rule to keep in mind is that joining two companies’ ethics and compliance programs is about more than paper and numbers. It is also about culture. A company’s ethics and compliance programs are deeply interwoven with company culture. Company culture is not something that shows up in the transaction paperwork or perhaps even in due diligence reports.
 
Yet, the compatibility of the companies’ cultures is a vital part of merger and acquisition success. Thus, company characteristics that contribute to the make-up of a company’s culture – such as values, work ethic, business practices, leadership style and company mission – are all critical to the merger and acquisition process.
 
A second rule to keep in mind throughout the process is that ethics and compliance issues, including cultural issues, need to be addressed as they arise. Ignoring ethics and compliance issues or placing them on the backburner can jeopardize the transaction’s success. Consequently, disparities in the parties’ ethics and compliance programs need to be managed and resolved prior to finalizing a transaction to maximize the likelihood of long-term success.
 
The third rule that target companies and acquiring companies need to keep in mind is that integrating ethics and compliance programs successfully requires patience. Management of the newly formed company should be mindful of the fact that integration of two companies’ cultures can be a slow process. However, the chances of a successful integration of two companies into one larger company, family and team are substantially increased when the right amount of time, effort and resources are allocated to the integration process.
 
For example, Goodyear in 2015 paid more than $16 million in disgorgement of profits and prejudgment interest as part of a settlement agreement with the Securities and Exchange Commission. The agreement settled Foreign Corrupt Practices Act violations alleged against Goodyear. The violations stemmed from a Goodyear subsidiary in Kenya, Treadsetters Tyres Ltd., paying more than $1.5 million in bribes from 2007 to 2011 to employees of government-owned entities to obtain tire sales. Additionally, as the SEC order reported, Treadsetters paid bribes to police, tax and other local authorities. The bribes were paid in cash and falsely recorded on Treadsetters’ books as expenses for promotional items.
 
Goodyear began doing business with Treadsetters in 2002. By 2006, Goodyear had acquired a majority interest in the company. Although Treadsetters routinely paid bribes from 2007 to 2011, This practice was likely in place prior to Goodyear’s acquisition of Treadsetters. According to a Securities Exchange Commission order, Goodyear did not detect and prevent the bribes because it “failed to conduct adequate due diligence when it acquired Treadsetters, and failed to implement adequate [Foreign Corrupt Practices Act] compliance training and controls after the acquisition.”
 
Goodyear’s failure began before it signed the transaction agreement. Goodyear’s first mistake was neglecting to conduct adequate due diligence into Treadsetters’ books and research into the culture of the company. Had Goodyear been diligent in researching Treadsetters’ culture, it likely would have uncovered its pre-2007 history of bribery.
 
Executing a successful integration of two companies’ cultures takes time and patience after the transaction closes. An essential part of the integration process is ensuring both businesses are operating in a compliant and ethical manner. Goodyear’s failure to implement adequate compliance training and controls after its acquisition of Treadsetters compounded its problem by further delaying the discovery of the bribery.
 
Ultimately, Goodyear paid more than $16 million to the SEC, divested its ownership interest in Treadsetters in 2013, and terminated its relationship with the company. Had Goodyear extended its diligence efforts to include Treadsetters’ culture, identified and addressed the issues with its pre-acquisition Foreign Corrupt Practices Act violations, and allotted adequate time and resources to the integration of the companies’ cultures, the transaction may have ended differently.
 
In summary, a key element of a successful merger-and-acquisition transaction is the careful integration of the companies’ ethics and compliance programs. An important rule to remember during the pre-acquisition phase is that considering culture is a vital aspect of successfully merging ethics and compliance programs.
 
Another critical rule to remember throughout the merger-and-acquisition process is that addressing ethics and compliance issues as they arise is necessary to avoid later pitfalls.
 
Lastly, it is important to be cognizant of the fact that successfully merging two companies’ ethics and compliance programs takes time and will not happen overnight.
 
Keeping these three rules in mind will help to maximize the probability of a successful transaction. Ignoring them could lead to a nightmare deal. 

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COMM_a216.

E.S. Crusius: “The Department of Defense Emphasizes Heightened Cybersecurity Compliance at Industry Information Day Event”

 
* Author: Eric S. Crusius, Esq., Holland & Knight LLP,
eric.crusius@hklaw.com
.
 
We had the opportunity to attend Department of Defense’s (DoD) Industry Information Day on Friday, 23 June, at the Mark Center Auditorium in Alexandria, Virginia. DoD’s Chief Information Officer published advance notice of the meeting in the Federal Register on 5 April 2017.
 
At the start of the event and throughout, DoD emphasized the importance of industry’s role in its overall cybersecurity posture. DoD also stated that:
 
  – The cybersecurity threat is not going away and it is real and pervasive;
  – The Defense Industrial Base is a target for cyber actors;
  – Senior executives need to be involved with cybersecurity compliance;
  – It is critical to DoD that information contractors receive is protected; and
Cyber breaches cost companies $400 billion a year.
 
The above comments and others reflect a growing sense of urgency at DoD that information received from DoD or created by contractors for DoD does not fall into the wrong hands.
 
The main emphasis event, however, was the implementation of proposed Defense Federal Acquisition Regulation Supplement (DFARS) clause 252.204-7012, which will apply to all DoD procurements that involve Covered Defense Information (except for Commercial Off-the Shelf purchases). Covered Defense Information is “unclassified controlled technical information or other information” and includes information “[m]arked or otherwise identified in the contract, task order, or delivery order and provided to the contractor by or on behalf of DoD in support of the performance of the contract [and] [c]ollected, developed, received, transmitted, used, or stored by or on behalf of the contractor in support of the performance of the contract.” DFARS 252.204-7012(a). Covered Defense Information is a broad category of information which includes information subject to export control, controlled technical information, and information about critical infrastructure. The full list of Covered Defense Information is available at the CUI Registry.
 
For contractors needing to comply with this clause, it is first important to study NIST 800-171 (“Protecting Controlled Unclassified Information in Nonfederal Systems and Organizations”). The 110 security requirements listed in NIST 800-171 are categorized into 14 separate “families” that include access control, awareness and training, audit and accountability, configuration management, identification and authentication, incident response, maintenance, media protection, personnel security, physical protection, risk assessment, security assessment, system and communications protection, and system and information integrity. Within these families are the individual requirements that range from escorting visitors and monitoring physical security (3.10.3) to storing and transmitting only cryptographically-protected passwords (3.5.10). Unlike NIST 800-53, 800-171 does not mandate how contractors achieve these requirements and leaves the flexibility for contractors to tackle them as they see fit.
 
Other requirements of DFARS 252.204-7012 discussed at the Industry Information Day include:
 
  – reporting cyber incidents that affect a covered contractor information system directly to DOD;
  – submitting malicious software that a contractor has recovered;
  – if requested, submitting any media associated with that incident if DoD wants to do a damage assessment of the incident; and
  – flowing down the DFARS clause into any contracts that will involve controlled defense information or involve operationally critical support.
 
DoD recommended utilizing the Cybersecurity Evaluation Tool (CSET) to pinpoint an organization’s cybersecurity gaps. View the full list of Covered Defense Information at the CUI Registry. The Framework helps an organization evaluate its current cybersecurity posture and formulate its goals.
 
The Defense Contract Management Agency (DCMA) will also play a role in the implementation of the DFARS clause, including ensuring the applicable cybersecurity clauses are in the contract and engaging with contractors to verify they have a security plan. Like with DOD’s recently enacted requirements for detection and avoidance of counterfeit parts, contractors are responsible for monitoring their subcontractors’ compliance.
 
Even though DoD contractors have until 31 December 2017 to comply with DFARS 252.204-7012, there is an immediate requirement to comply with NIST 800-171 if a contractor is not operating an IT system on behalf of the government. For contracts awarded prior to 1 October 2017, “the Contractor shall notify the DoD Chief Information Officer (CIO), via email at osd.dibcsia@mail.mil, within 30 days of contract award, of any security requirements specified by NIST SP 800-171 not implemented at the time of contract award.” DFARS 252.204-7012(b)(2)(ii)(a).
 
These are just a few highlights from DoD’s Industry Information Day. Look for future blogs discussing these new requirements in greater detail.
 

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

COMM_JEB17.

J.E. Bartlett: Export Classification of a Bill of Materials (BOM) or Other List of Defense Articles

 
* Author: Jim Bartlett, Principal, Law Office of James E. Bartlett III, PLLC, JEBartlett@JEBartlett.com, 202-802-0646; Partner, Full Circle Compliance.
                                                         
Question
:  Should a list of defense articles or components of a defense article, such as a Bill of Materials (BOM), which is a list of the parts or components required to build a product, but does not contain information other than simple part descriptions, serial numbers, and prices, be considered ITAR-controlled technical data?
 
Answer
:  No. A simple list of defense articles or components of a defense article which contains only simple part descriptions, serial numbers, and prices is not ITAR technical data, even if it lists all the parts of a defense article.
 
Discussion
:                                    
 
ITAR § 120.10(a)(1) states in part that technical data means “Information … required for the design, development, production, manufacture, assembly, operation, repair, testing, maintenance, or modification of defense articles.”  A simple list of defense articles, or of the parts of defense articles, that does not include the information in ITAR § 120.10(a) is–by definition–not technical data, and is not ITAR controlled. However, adding blueprints, test reports, maintenance instructions, detailed performance characteristics, or any other items in the § 120.10 definition would cause the list to be considered technical data.
 
A similar question was presented to the Directorate of Defense Trade Controls (DDTC) in a Commodity Jurisdiction (CJ) request for classification of a BOM of a USML Category XX submarine diesel generator.  DDTC’s CJ reply, dated February 11, 2016, and published on the DDTC website [FN/1], classified that BOM as EAR99.  A similar CJ request dated July 9, 2012 [FN/2], for classification of a BOM, stated that DDTC “determined that the list of items provided in your request which are ITAR-controlled would not be considered technical data under ITAR § 120.10 unless it also provides information (e.g., test reports) that were technical data.”
 
Conclusion
: If data sets such as BOMs, Routers, Work Orders, etc., are (1) simply a list of part numbers, quantities, prices, serial numbers, or (2) instructions that themselves do not contain technical data but instead identify the document to use for the work step (e.g. Mark per gauge assembly drawing), then the data sets are not ITAR-controlled technical data.
 
Caution
: Even though a BOM contains no visible technical data, an ITAR violation may result if an unauthorized foreign person has access to a link in the list which reveals technical data.  An ERP system that reveals technical data when the user clicks on a text field programmed to reveal information on requirements for maintenance and calibration is defined by ITAR § 120.10 as technical data.
 
Fundamental Rule
: If you have any doubt about the classification of a specific BOM or other document, submit a CJ request to DDTC per ITAR § 120.4 to obtain an official classification.
 
——-  

  [FN/1] See
here (search 2016 entries for “Bill of Material”.)

  [FN/2] Unpublished copy available from author.
 
[Author’s Note:  Thanks to Marla Lyon, CIRCOR, for suggesting we publish an article clarifying this issue.]

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

COMM_a318. 
M. Joyce, P. Greening & Yuen Chun Kitty Ng: “Everything You Need to Know About the Australian Domestic Gas Security Mechanism: What Does This Mean for Australian LNG Exporters and Corporations Importing from Them?”

(Source: Akin Gump)
 
* Authors: Michael Joyce, Esq., michael.joyce@akingump.com; Paul Greening, Esq., paul.greening@akingump.com; and Yuen Chun Kitty Ng, Esq., kitty.ng@akingump.com; all of Akin Gump, Singapore and Hong Kong, respectively.
 
The Australian Domestic Gas Security Mechanism at a Glance
 
On 5 June 2017, the Australian government released draft amendments to the existing Customs (Prohibited Exports) Regulations 1958 (the “Amended Regulations”) that proposes a mechanism (the Australian Domestic Gas Security Mechanism or ADGSM) that calls for liquefied natural gas (LNG) export control restrictions in circumstances where the Resources Minister reasonably believes that there will not be sufficient gas supply for the Australian domestic market in any given year.
 
The ADGSM – When and Why?
 
The ADGSM is expected to be effective from 1 July 2017, with a five-year sunset clause (until 1 January 2023). There will be a review in 2019 to assess the overall effectiveness and efficiency of the ADGSM against its stated objectives.
 
The ADGSM is designed to be a short-term, targeted solution to ensure security of the gas supply at an affordable price. Many have seen this as a response to national energy security concerns as a result of the surging domestic gas price in Eastern Australia, evidenced by an 80 percent price increase over the past 18 months. LNG exporters drawing gas (in net terms) from the domestic market are therefore required under the ADGSM to limit export or find offsetting sources of new gas.
 
The Declaration – Consultation – Determination Process
 
Under the ADGSM, LNG export restrictions will be imposed in only a “domestic shortfall year.” In order to arrive at such a conclusion, the Resources Minister will have to:
 
  – formally issue a declaration to announce his/her intention to consider whether the forthcoming year will be a domestic shortfall year (the “Declaration”);
  – consult relevant market bodies, government agencies, potentially impacted industry players, other relevant Australian government ministers and other stakeholders to seek their view on the then-current and forecast gas market conditions and any potential for a gas market shortfall (the “Consultation”);
  – if he/she has reasonable grounds to believe that there is a domestic gas market shortfall after the Consultation, make a determination that gas export controls will apply in a particular year (the “Determination”).
 
The Declaration – Consultation – Determination process follows a statutory timeline. The Declaration should be issued before October 1, and the Determination has to be made no later than November 1 of the year preceding the domestic shortfall year.
 
Export Permissions in a Domestic Shortfall Year – the Licensing Regime
 
In any given domestic shortfall year, export controls will apply. Under the ADGSM, this means that LNG export activities are prohibited across Australia (even though the shortfall exists in only certain parts of the country) without an Export Permission. 
An Export Permission will take the form of either an Unlimited Volume Export Permission (a “UV Permission”) or an Allowable Volume Export Permission (an “AV Permission”).
 
UV Permission
. This will typically be granted to an LNG project that is a net contributor to the domestic gas market and that is unable to deliver gas at a reasonable price to a market experiencing a shortfall. A UV Permission allows for the export of an unlimited volume of LNG from a particular project over the market shortfall year.
 
AV Permission
. This will typically be granted to an LNG project connected to markets experiencing a shortfall, including an LNG project that is in net deficit to the domestic gas market. An AV Permission will set a maximum LNG volume that can be exported from a specific project over the market shortfall year. The maximum amount would customarily represent the difference between the in-net-deficit exporter’s forecast total export quantity and its allocated share of/contribution toward the gas shortfall amount to be met by export controls as determined by the Resources Minister under the ADGSM.
 
Net Market Position of an LNG Project
. In any given domestic shortfall year, the Resources Minister will determine whether each LNG project is a net contributor to, or in net deficit to, the domestic gas market, based on its upstream tenements. According to this classification, different LNG projects will be entitled to a different type of Export Permission in such a domestic shortfall year. An LNG project is in net deficit if:
 
  – its total gas used is greater than the sum of gas produced by upstream tenements (i) owned by the LNG project, (ii) owned by the LNG project or third parties and is contracted directly to supply the LNG project and primarily developed for exports purposes, and (iii) owned by third parties and is contracted directly to supply to the LNG project and the contract was entered into before a final investment decision was made in relation to that LNG project or
  – its gas purchases from the domestic market are greater than its gas sales to the domestic market.
 
Conversely, if an LNG project is not in net deficit, it will be regarded as a net-contributor LNG project.
 
Enforcement of the Licensing Regime Under the ADGSM
 
Under the Amended Regulations, noncompliance with a condition of an Export Permission may lead to a revocation of the Export Permission. Alternatively, the Resources Minister may grant a replacement Export Permission with different conditions attached, such as granting a lesser LNG export volume or imposing a stricter information reporting requirement.
 
Implications for Australian LNG Exporters
 
  – The ADGSM is of nationwide application. If a given year is determined to be a domestic shortfall year, all LNG exports will be prohibited, unless exported in accordance with an Export Permission, and all in-net-deficit LNG projects will be allocated a gas shortfall amount that will be counted toward the reduction in the allowable LNG export volume in the relevant exporter’s Export Permission. As such, an in-net-deficit exporter located in a gas surplus region (e.g., Western Australia) will still be affected, since the ADGSM will impose on it an obligation to offset a portion of the country’s gas shortage amount to be met by export controls. Conversely, if an LNG exporter is classified as a net contributor, regardless of where it is situated geographically, it is still very likely to be granted a UV Permission and therefore can export an unlimited volume of LNG from gas produced from its upstream tenements even in a domestic shortage year.
 
  – The Rise of Resource Nationalism
. The ADGSM follows a new wave of resource nationalism around the Asia-Pacific region in the name of national energy security. Earlier this year, Indonesia banned exports of unprocessed copper ore in a mining dispute, and the Philippines restricted open pit mining and curbed nickel ore shipments. It remains to be seen whether the ADGSM will be an effective means to deal with the gas shortage in Australia or whether it would be a mechanism adding complications and uncertainty to the Australian domestic gas market. The enforcement of the ADGSM also has some clear World Trade Organization (WTO) and Australia-U.S. FTA angles, since countries are generally prohibited under these trade rules from restricting imports/exports except through duties. While (albeit limited) exceptions do exist in the WTO for purposes of preservation of natural resources and ensuring domestic supply, with respect to the former, there is recent WTO case jurisprudence (e.g., China-Measures Related to the Exportation of Rare Earths, Tungsten and Molybdenum (WT/DS431-433)) that make clear that such restrictions are permissible only if there are also effective restrictions imposed on domestic production and consumption. With respect to the latter, countries would essentially have to establish that the restricted products are “critical” to the exporting country and that the restrictions are “temporary” for the stated purpose only. Finally, while the ADGSM hints at potential national security concerns, it is unclear whether this is, in fact, an argument being put forward by the Australian government, since such positions-while mostly self-judging-will only encourage other trading partners to arbitrarily invoke the same with respect to certain of their export products.
 
  – Wide Government Discretion in the Decision-Making Process. The ADGSM contains two decision points: the Resources Minister’s determination that (i) a particular calendar year shall be classified as a domestic shortfall year, and (ii) an Export Permission shall be granted to a particular LNG exporter during such a domestic shortfall year. In each case, even though the Resources Minister is obliged to consult various stakeholders in the industry and across the government within certain statutory time frames, he/she has considerable discretion during the decision-making process. The consultation period may be as short as 30 days before the Resources Minister can formally announce such radical export control measures with far-reaching implications.
 
  – Ability for LNG Projects to Adjust Commercial Operations in Response to Government Decisions. Under the ADGSM, the Declaration process will be made prior to October 1, and the Determination process will be made no later than November 1 of the year preceding the domestic shortfall year. In addition, the Resources Minister may, at any time, revoke his/her decision that a particular calendar year is a domestic shortfall year. LNG projects may not have sufficient time to adjust commercial operations around these government decisions/determinations, which may eventually lead to an even more volatile gas market domestically.
 
  – Implications on LNG Supply Obligations Under Long-Term Offtake Arrangements. Most Australian LNG volumes are exported under long-term supply contracts, where failure to supply in a non-force majeure scenario triggers a seller obligation to procure replacement LNG cargoes with incremental costs borne by the seller. Although “acts or omissions of a Government Authority” are often within the scope of a “force majeure” event, a failure to supply resulting from the lack of economically recoverable reserves from a seller’s upstream tenements would (under most long-term LNG supply contracts) disqualify a force majeure argument. This suggests that a force majeure argument would be difficult to raise in response to an export restriction imposed under the ADGSM, meaning that any LNG exporters that cannot meet their LNG export obligations will need to procure replacement LNG cargoes and incur any incremental replacement costs. How significant these shortfall amounts will be as a result of the application of the ADGSM remains to be seen, but some analysts have suggested that the impact will be limited to Australian suppliers having to buy just one or two additional cargoes a year to make up the shortfall. [FN/1]

—–
  [FN/1] See here

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

TEEX/IM TRAINING EVENTS & CONFERENCES

TE_a219
. Friday List of Approaching Events

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

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

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

* Jul 5: Cambridge UK; ”
Beginners Workshop;” UK Department for International Trade;
denise.carter@trade.gsi.gov.uk 

* Jul 5: Cambridge UK; ”
Licenses Workshop;” UK Department for International Trade;
denise.carter@trade.gsi.gov.uk 

* Jul 10-12; Baltimore MD; “
2017 Summer Back to Basics Conference
;” Society for International Affairs

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

* Jul 17-19: Hilton Head Island SC; “
Basics of Government Contracting
;” Federal Publications Seminars
*
Jul 20: Webinar; ”
Destination Control Statements;” Shipman & Goodwin LLP
# Jul 26: Free Webinar; ”
Discover Value in Your Trade Compliance Data;” Integration Point

* Jul 26-27: Oklahoma City OK; ”
Complying with U.S. Export Controls;” Dept. of Commerce/Bureau of Industry and Security

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

*
Jul 27: Webinar; ”
Site Visits, Enforcement Actions, and Voluntary Disclosures;” Shipman & Goodwin LLP
*
Aug 1: Webinar; ”
Consideration for Exporting to China;” Shipman & Goodwin LLP
* Aug 2-3: Naperville, IN; “Automated Export System Compliance Seminar and Workshop;” Commerce/Census, Commerce/BIS, DHS/CBP, State/DDTC, Treasury

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

*
Aug 17: Webinar; ”
Export Controls in the Cloud;” Shipman & Goodwin LLP

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

International Compliance Professionals Association; wizard@icpainc.org

* Sep 4: Glasgow, UK; ”
Intermediate Seminar;” UK Department for International Trade;
denise.carter@trade.gsi.gov.uk 

* Sep 5: Glasgow, UK; ”
Beginners Workshop;” UK Department for International Trade;
denise.carter@trade.gsi.gov.uk 

* Sep 5: Glasgow, UK; ”
Licenses Workshop;” UK Department for International Trade;
denise.carter@trade.gsi.gov.uk 

* Sep 5: Glasgow, UK; ”
Control List Classification – Combined Dual Use and Military;” UK Department for International Trade;
denise.carter@trade.gsi.gov.uk 

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

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

* Sep 12-13: Louisville KY; ”
Complying with U.S. Export Controls;” Dept. of Commerce/Bureau of Industry and Security

* Sep 12-13: Milpitas CA; ”
Complying with U.S. Export Controls;” Dept. of Commerce/Bureau of Industry and Security

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

* Sep 14: Milpitas CA; “
Encryption Controls;”
Dept. of Commerce/Bureau of Industry and Security

* Sep 18-21: Austin TX; “ITAR Defense Trade Controls / EAR Export Controls Seminar; ECTI; jessica@learnexportcompliance.com; 540-433-3977
* Sep 18-20: Las Vegas NV; “
Basics of Government Contracting;” Federal Publications Seminars

* Sep 21: 
Webinar; “
US Export Administration Regulations
;
” Foreign Trade Association 

* Sep 20-22: Houston TX; ”
Advanced Topics in Customs Compliance Conference;” Deleon Trade LLC
* Sep 27: Oxford, UK; ”
Intermediate Seminar;” UK Department for International Trade;
denise.carter@trade.gsi.gov.uk 

* Sep 27-28: Rome, Italy; “Defence Exports 2017;” SMi

* Sep 28: Oxford, UK; ”
Beginners Workshop;” UK Department for International Trade;
denise.carter@trade.gsi.gov.uk 
* Sep 28: Oxford, UK; ”
Licenses Workshop;” UK Department for International Trade;
denise.carter@trade.gsi.gov.uk 

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

# Oct 5-6: London, UK; ”
The World ECR Forum 2017;” World ECR

* Oct 10-12: Dallas TX; “
‘Partnering for Compliance™’ West Export/Import Control Training and Education Program
;” Partnering for Compliance
 
* Oct 12-13: Boston, MA; “Automated Export System Compliance Seminar and Workshop;” Commerce/Census, Commerce/BIS, DHS/CBP, State/DDTC, Treasury 

* Oct 13: Dallas TX; “
Customs/Import Boot Camp
;” Partnering for Compliance
# Oct 16-17: Washington, DC; “The World ECR Forum 2017;” World ECR

* Oct 16-19: Amsterdam, Netherlands “
US Export Controls for EU/NL and other Non-US Companies/How US Controls Impact Non-US Companies, Affiliates and Transactions, PLUS Other Country Controls Comparison to US Seminar
;” ECTI;
jessica@learnexportcompliance.com
; 540-433-3977

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

* Oct 23-24: Arlington VA; “
2017 Fall Advanced Conference
;” Society for International Affairs

* Oct 30-Nov 2: Phoenix AZ; “
ITAR Defense Trade Controls / EAR Export Controls Seminar
;” ECTI;
jessica@learnexportcompliance.com
; 540-433-3977
* Nov 5-7: Singapore; ”
ICPA Singapore Conference;”
International Compliance Professionals Association;
wizard@icpainc.org 

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

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

* Nov 9-10: Shanghai, China;
ICPA China Conference;”
International Compliance Professionals Association;
wizard@icpainc.org 

* Nov 13-16: Wash DC; “ITAR Defense Trade Controls / EAR Export Controls Seminar;” ECTI; jessica@learnexportcompliance.com; 540-433-3977

* Nov 15: Leeds, UK; ”
Intermediate Seminar;” UK Department for International Trade;
denise.carter@trade.gsi.gov.uk 

* Nov 16: Leeds, UK; ”
Beginners Workshop;” UK Department for International Trade;
denise.carter@trade.gsi.gov.uk 

* Nov 16: Leeds, UK; ”
Licenses Workshop;” UK Department for International Trade;
denise.carter@trade.gsi.gov.uk 

* Nov 16: Leeds, UK; ”
Control List Classification – Combined Dual Use and Military;” UK Department for International Trade;
denise.carter@trade.gsi.gov.uk 

* Nov 16: Nijkerk, the Netherlands; “Training Export Control” [in Dutch]; Fenedex
* Dec 4-7: Miami FL; “
ITAR Defense Trade Controls / EAR Export Controls Seminar;” ECTI; jessica@learnexportcompliance.com; 540-433-3977
* Dec 5: San Juan PR; “AES Compliance Seminar in Spanish;” Dept. of Commerce/Census Bureau; itmd.outreach@census.gov

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

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

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

* Mar 11-14: San Diego CA; ”
ICPA Annual Conference;”
International Compliance Professionals Association;
wizard@icpainc.org 
* * * * * * * * * * * * * * * * * * * * 

ENEDITOR’S NOTES

EN_a120
. Bartlett’s Unfamiliar Quotations

(Source: Editor)

* Czeslaw Milosz (30 Jun 1911 – 14 Aug 2004, was a Polish poet, prose writer, translator and diplomat. His World War II-era sequence The World is a collection of twenty “naïve” poems.)
  – “The voice of passion is better than the voice of reason. The passionless cannot change history.”
 
* George Sand (Amantine-Lucile-Aurore Dupin, 1 Jul 1804 – 8 Jun 1876, best known by her pseudonym George Sand, was a French novelist and memoirist. She is equally well known for her much publicized romantic affairs with a number of artists, including the composer and pianist Frédéric Chopin and the writer Alfred de Musset.)
 – “There is only one happiness in this life, to love and be loved.”
 
Friday Funnies:
 
Two Englishmen sit down to share a pot of tea. The first Englishman says, “I do hope you enjoy this new green tea. It’s full of antioxidants.” The second Englishman replies, “I say, might you be suggesting that I’m clumsy?”  
  — Jason Frank, Isanti, MN

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

EN_a221. 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: 30 Jun 2017: 
82 FR 29714-29719: Modernization of the Customs Brokers Examination 
[Effective Date: 31 July 2017.] 

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

* EXPORT ADMINISTRATION REGULATIONS (EAR): 15 CFR Subtit. B, Ch. VII, Pts. 730-774 

  – Last Amendment:
 
30 Jun 2017: 92 FR 29714: 
Control Policy: End-User and End-Use Based
 [Removal of an Entry From the Entity List.] 

  
*
FOREIGN ASSETS CONTROL REGULATIONS (OFAC FACR)
: 31 CFR, Parts 500-599, Embargoes, Sanctions, Executive Orders
  – Last Amendment: 16 Jun 2017: 
82 FR 27613-27614: Removal of Burmese Sanctions Regulations
 
 
*
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: 28 Jun 2017: Harmonized System Update 1704, containing 2,564 ABI records and 463 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 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.  

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

EN_a322
. Weekly Highlights of the Daily Bugle Top Stories

(Source: Editor)
 

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