;

17-0712 Wednesday “Daily Bugle”

17-0712 Wednesday “Daily Bugle”

Wednesday, 12 July 2017

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

  1. U.S.-China Economic and Security Review Commission Corrects Dates of Meeting
  1. Ex/Im Items Scheduled for Publication in Future Federal Register Editions
  2. Commerce/BIS: (No new postings.)
  3. State/DDTC: (No new postings.)
  4. Treasury/OFAC Publishes FAQ Concerning Sudan, Darfur, and South Sudan-Related Sanctions
  5. White House Releases EO on Three Months Postponement of Decision to Permanently Lift Certain Sanctions Concerning Sudan
  6. Canada Amends Area Control List, Removes Belarus
  7. Canada Amends Export Control List to Reflect Changes of Multilateral Export Control Regimes
  8. Canada TID Announces New Export Controls Guide
  9. EU Amends Restrictive Measures Concerning ISIL and Al-Qaida, Supports Chemical Safety in Ukraine in Line with UN Security Council Resolution 1540
  1. Reuters: “Siemens’ Crimea Predicament Tests Limits of EU Sanctions”
  2. ST&R Trade Report: “Import Restrictions on Aluminum Could Find Support in ITC Report”
  1. E. Carlson & Yan Luo: “China Releases Draft Export Control Law for Public Comment”
  2. G. Kreijen: “The Restrictive Measures Against Qatar: Watch Closely”
  3. Gary Stanley’s ECR Tip of the Day
  4. R.C. Burns: “Don’t Believe Everything You Read in Blogs”
  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 (7 Jul 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.

U.S.-China Economic and Security Review Commission Corrects Dates of Meeting

 
82 FR 32224: Notice of Open Public Roundtable; Correction
 
* AGENCY: U.S.-China Economic and Security Review Commission. 
* ACTION: Notice of open public roundtable; correction.
* SUMMARY: The U.S.-China Commission published a document in the Federal Register on July 3, 2017, concerning notice of an open public roundtable to be held in Washington, DC to inform production of the Commission’s 2017 Annual Report to Congress. The time for this roundtable has changed. …
  Corrections: In the Federal Register of July 3, 2017 in FR Doc. 2017-13993, on page 30943- 30944, in the third column, correct the DATES caption to read: 
  DATES: The meeting is scheduled for Wednesday, July 12, 2017, from 9:30 a.m. to 12:30 p.m.
 
  Michael Danis, Executive Director, U.S.-China Economic and Security Review Commission.

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

OGSOTHER GOVERNMENT SOURCES

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

* DHS/CBP; RULES; Electronic Information for Cargo Exported from United States; Technical Amendments [Publication Date: 13 July 2017.]
 
* DOJ; NOTICES; Agency Information Collection Activities; Proposals, Submissions, and Approvals: Firearms Transaction Record/Registro de Transaccion de Armas [Publication Date: 13 July 2017.] 
* * * * * * * * * * * * * * * * * * * *

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

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

OGS_a45
.

Treasury/OFAC Publishes FAQ Concerning Sudan, Darfur, and South Sudan-Related Sanctions

 
The President issued an Executive Order (E.O.) on July 11, 2017, extending the review period established by E.O. 13761 of January 13, 2017, which set forth criteria for the revocation of certain sanctions on Sudan and the Government of Sudan (GOS).  The new E.O. extends until October 12, 2017 the period of review of the GOS’ actions.  The Office of Foreign Assets Control is publishing a Frequently Asked Question regarding this Executive Order.
 
FAQ: SUDAN, DARFUR, AND SOUTH SUDAN-RELATED SANCTIONS
 
General License Authorizing Transactions Involving Sudan (31 C.F.R. § 538.540)
 
(506) Did OFAC make any changes to sanctions with respect to Sudan and the Government of Sudan on July 11, 2017?
 
No.  The President issued an executive order on July 11, 2017, extending the review period established by E.O. 13761 of January 13, 2017, which set forth criteria for the revocation of certain sanctions on Sudan and the Government of Sudan (GOS).  The new E.O. extends until October 12, 2017 the period of review of the GOS’ actions.  OFAC’s sanctions remain in place, as does the general license broadly authorizing most prohibited transactions with respect to Sudan (the “2017 Sudan Rule”), as described below. [07-12-2017]
 
(490) What does the 2017 Sudan Rule do?
 
The 2017 Sudan Rule amends the Sudanese Sanctions Regulations, 31 C.F.R. part 538 (SSR), effective January 17 2017, to add a general license authorizing all transactions prohibited by the SSR and by Executive Orders 13067 and 13412. The general license does not eliminate the need to comply with other provisions of 31 C.F.R. chapter V or other applicable provisions of law, including any requirements of agencies other than OFAC. Such requirements include, for example, the Export Administration Regulations (15 C.F.R. parts 730 through 774) administered by the Bureau of Industry and Security of the Department of Commerce. [01-13-2017]
 
(491) Does the 2017 Sudan Rule authorize transactions prohibited under the Darfur or South Sudan sanctions programs?
 
No. The 2017 Sudan Rule only authorizes transactions prohibited by the SSR and by Executive Orders 13067 and 13412. It does not authorize transactions that are prohibited under any other OFAC sanctions program, including transactions that are prohibited under the Darfur Sanctions Regulations, 31 C.F.R. part 546, the South Sudan Sanctions Regulations, 31 C.F.R. part 558, or Executive Orders 13400 or 13664. [01-13-2017]
 
(492) In light of the issuance of the 2017 Sudan Rule, are U.S. persons still required to abide by the conditions of other general licenses in the SSR and on OFAC’s Sudan web page?
 
No. The 2017 Sudan Rule authorizes all transactions prohibited by the SSR and therefore is broader than – and supersedes – other general licenses in the SSR, such as the general licenses relating to noncommercial, personal remittances, 31 C.F.R. § 538.528; commercial sales, exportation, and reexportation of agricultural commodities, medicine, and medical devices, 31 C.F.R. § 538.523; and the exportation, reexportation, or provision of certain services, software, and hardware incident to personal communications, 31 C.F.R. § 538.533. As a result, U.S. persons may rely on the broader authorization in the 2017 Sudan Rule and do not need to abide by the narrower requirements of other general licenses under the SSR. OFAC’s general recordkeeping and reporting obligations continue to apply. See 31 C.F.R. §§ 501.601, 501.602. [01-13-2017]
 
(493) Do U.S. persons engaging in activities pursuant to an Office of Foreign Assets Control (OFAC) specific license issued pursuant to the SSR need to renew such licenses or apply for additional specific licenses?
 
No. The 2017 Sudan Rule authorizes all transactions prohibited by the SSR and, therefore, effective January 17, 2017, U.S. persons are not required to renew or obtain a new specific license from OFAC to engage in activities prohibited by the SSR. Further, pursuant to 31 C.F.R. § 501.801, it is the policy of OFAC not to grant applications for specific licenses authorizing transactions to which the provisions of an outstanding general license are applicable. [01-13-2017]
 
(494) Does the 2017 Sudan Rule impact pending or future OFAC enforcement investigations against individuals or entities for apparent violations of the SSR relating to activities that are now authorized by the 2017 Sudan Rule but that occurred prior to the effective date of such rule?
 
No. The 2017 Sudan Rule will not affect past, present, or future OFAC enforcement investigations or actions related to any apparent violations of the SSR relating to activities that are now authorized by the general license in the 2017 Sudan Rule but that occurred prior to the effective date of such rule. Under longstanding practice, apparent sanctions violations are analyzed in light of the laws and regulations that were in place at the time of the underlying activities, and civil and criminal enforcement authorities are applied accordingly. Current or future investigations regarding apparent violations of the SSR that occurred prior to the effective date of the 2017 Sudan Rule will not be impacted by the 2017 Sudan Rule and may result in OFAC enforcement actions after the effective date of the 2017 Sudan Rule. [01-13-2017]
 
Executive Order 13664, “Blocking Property of Certain Persons with Respect to South Sudan”
 
(368) Are humanitarian aid groups prohibited from making payments to or otherwise transacting with non-designated individuals or entities in South Sudan, including militias and armed groups under the command or control of a designated individual?
 
An entity in South Sudan that is commanded or controlled by an individual designated under Executive Order 13664 is not considered blocked by operation of law. Payments, including “taxes” or “access payments,” made to non-designated individuals or entities under the command or control of an individual designated under E.O. 13664 do not, in and of themselves, constitute prohibited activity. U.S. persons should employ due diligence, however, to ensure that an SDN is not, for example, profiting from such transactions. [06-02-2014]
 
Non-Governmental Organization (NGO) Registration Numbers for Activities in Sudan
 
(57) Are Non-Governmental Organizations (NGOs) involved in humanitarian or religious activities in Sudan still required to obtain an NGO registration number
 
No. The general license at 31 C.F.R. § 538.540 authorizes all transactions prohibited under the Sudanese Sanctions Regulations, 31 C.F.R. part 538, effective January 17, 2017. As a result, NGOs are no longer required to obtain an NGO registration number to operate in or transact with Sudan. [01-13-2017]
 
Exports of Agricultural Commodities, Medicine, and Medical Devices to Sudan
 
Effective January 17, 2017, a specific license is not required to export or reexport agricultural commodities, medicines, or medical devices to Sudan, as such transactions are generally licensed pursuant to 31 C.F.R. § 538.540. For further information regarding exports and reexports of agricultural commodities, medicine, and medical devices to Iran and Sudan pursuant to the Trade Sanctions Reform and Export Enhancement Act of 2000 (TSRA), please see the following topic.

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

OGS_a56
. White House Releases EO on Three Months Postponement of Decision to Permanently Lift Certain Sanctions Concerning Sudan

(Source: The White House)
 
EXECUTIVE ORDER (EO) ALLOWING ADDITIONAL TIME FOR RECOGNIZING POSITIVE ACTIONS BY THE GOVERNMENT OF SUDAN AND AMENDING EXECUTIVE ORDER 13761
 
 By the authority vested in me as President by the Constitution and the laws of the United States of America, including the International Emergency Economic Powers Act (50 U.S.C. 1701 et seq.), the National Emergencies Act (50 U.S.C. 1601 et seq.), the Trade Sanctions Reform and Export Enhancement Act of 2000 (22 U.S.C. 7201-7211), the Comprehensive Peace in Sudan Act of 2004, as amended (Public Law 108-497), the Darfur Peace and Accountability Act of 2006 (Public Law 109 344), and section 301 of title 3, United States Code,
 
I, DONALD J. TRUMP, President of the United States of America, in order to take additional steps to address the emergency described in Executive Order 13067 of November 3, 1997, Executive Order 13412 of October 13, 2006, and Executive Order 13761 of January 13, 2017, with respect to the policies and actions of the Government of Sudan, including additional fact-finding and a more comprehensive analysis of the Government of Sudan’s actions, hereby order as follows:
 
Section 1.  Amendments to Executive Order 13761
.  (a)  Section 1 of Executive Order 13761 is hereby amended by striking “July 12, 2017” and inserting in lieu thereof “October 12, 2017”.
 
  (b)  Section 10 of Executive Order 13761 is hereby amended by striking “July 12, 2017” and inserting in lieu thereof “October 12, 2017”.
  (c)  Subsection (b) of section 12 of Executive Order 13761 is hereby amended by striking “July 12, 2017” and inserting in lieu thereof “October 12, 2017”.
  (d)  Section 11 of Executive Order 13761 is hereby revoked.
 
Sec. 2.  General Provision
.  This order is not intended to, and does not, create any right or benefit, substantive or procedural, enforceable at law or in equity by any party against the United States, its departments, agencies, or entities, its officers, employees, or agents, or any other person.
 
DONALD J. TRUMP
 
THE WHITE HOUSE,
    July 11, 2017.

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

OGS_a67
Canada Amends Area Control List, Removes Belarus

(Source: Canada Gazette, 12 July 2017) [Excerpts.]
 
… ORDER AMENDING THE AREA CONTROL LIST
 
  Amendment
 
(1) The Area Control List (see [FN/1]) is amended by striking out the following: Belarus
 
  Coming into Force
 
(2) This Order comes into force on the day on which it is registered.
 
REGULATORY IMPACT ANALYSIS STATEMENT
(This statement is not part of the Order.) … 

  Description
 
The Order Amending the Area Control List will remove Belarus from the ACL, a list of destinations to which the Governor in Council deems it necessary to control the export or transfer of any goods and technology. As a result of this amendment to the ACL, exporters of items that are not listed on the Canada’s Export Control List (ECL) will no longer require an export permit under the EIPA in order to lawfully export those items to Belarus. Obligations may nonetheless remain under separate Canadian legislation with respect to any other particular items from Canada. …
 
——–
  [FN/1] SOR/81-543; SOR/89-201, s. 1

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

OGS_a78
Canada Amends Export Control List to Reflect Changes in Multilateral Export Control Regimes 

(Source: Canada Gazette, 12 July 2017) [Excerpts.]
 
… ORDER AMENDING THE EXPORT CONTROL LIST
 
  Amendments
 
(1) The definitions Guide and Wassenaar Arrangement (WA) in section 1 of the Export Control List (see [FN/1]) are replaced by the following:
    – Guide
means A Guide to Canada’s Export Control List – December 2015, published by the Department of Foreign Affairs, Trade and Development. (Guide)
    – Wassenaar Arrangement means the Wassenaar Arrangement on Export Controls for Conventional Arms and Dual-Use Goods and Technologies that was reached at the Plenary Meeting in Vienna, Austria held on July 11 and 12, 1996 and amended by WA-LIST (15) 1 Corr. 1 at the Plenary Meeting in Vienna, Austria held on 2 and 3 December 2015. (Accord de Wassenaar)
 
  (2) Paragraph (b) of Group 3 of the schedule to the List is replaced by the following:
    (b) in accordance with the procedures referred to in the Guidelines for Nuclear Transfers (INFCIRC/254/Rev.13/Part 1), issued by the Nuclear Suppliers Group and adopted at the Plenary Meeting held from 1 to 5 June 2015.
 
  (3) Paragraph (b) of Group 4 of the schedule to the List is replaced by the following:
    (b) in accordance with the procedures referred to in the Guidelines for Transfers of Nuclear-Related Dual-Use Equipment, Materials, Software, and Related Technology (INFCIRC/254/Rev.10/Part 2), issued by the Nuclear Suppliers Group and adopted at the Plenary Meeting held from 1 to 5 June 2015.
 
  (4) Group 6 of the schedule to the List is replaced by the following:
 
    GROUP 6 – 
Missile Technology Control Regime (MTCR)
 
Goods and technology, as described in Group 6 of the Guide, the export of which Canada has agreed to control under bilateral arrangements concluded on April 7, 1987, in accordance with the Guidelines for Sensitive Missile-Relevant Transfers, issued by the Missile Technology Control Regime to control the export of missile equipment and technology referred to in the MTCR/TEM/2015/Annex of October 8, 2015 that was adopted at the Plenary Meeting held from October 5 to 9, 2015.
 
  (5) Paragraph (a) of Group 7 of the schedule to the List is replaced by the following:
    (a) under a bilateral arrangement concluded on December 24, 1992, between Canada and the United States, this arrangement having been made in accordance with the Guidelines for Transfers of Sensitive Chemical or Biological Items, issued by the Australia Group to control the export of chemical and biological weapons the list of which was amended at the Plenary Meeting held from 1 to 5 June 2015; and
 
  Coming Into Force
 
  (6) This Order comes into force on the 30th day after the day on which it is published in Part II of the Canada Gazette.
REGULATORY IMPACT ANALYSIS STATEMENT
(This statement is not part of the Order.) …
 
  (3) Objectives
 
The Order Amending the Export Control List (the Order) amends the ECL to reflect the Government of Canada’s arrangements, commitments and policies resulting from Canada’s participation in the Wassenaar Arrangement on Export Controls for Conventional Arms and Dual-Use Goods and Technologies, the Nuclear Suppliers Group, the Missile Technology Control Regime and the Australia Group up until 31 December 2015.
 
  (4) Description
 
The Order makes various changes, including amending the definition of the “guide,” and updating the various commitments made at the multilateral export control and non-proliferation regimes in which Canada participates. The changes to the ECL are as follows:
 
  – A Guide to Canada’s Export Control List – December 2015: 
The definition of “guide” in section 1 of the ECL is replaced by “
A Guide to Canada’s Export Control List – December 2015
” so that it refers to the latest version of the document.
 
The December 2015 edition of “A Guide to Canada’s Export Control List” incorporates Canada’s 2014 and 2015 obligations and commitments with respect to the four multilateral export control regimes of which Canada is a member. Some of the changes resulting from this Order include the addition of controls over certain laser materials (rare-earth-metal doped double-clad fibres), specific technology for certain flight control systems (fly-by-wire systems), certain satellite goods and technology (spacecraft buses, spacecraft payloads, spacecraft on-board systems, spacecraft-related terrestrial equipment), various aerospace goods and technologies (specific technology for wing-folding systems for fixed-wing aircraft, specific combustion chambers for liquid propellant rocket engines, specific fuel and polymetric substances for rocket propellants), explosive mixture BTNEN, chemical weapons precursor chemical – diethylamine, several human and animal pathogens (classical swine fever virus, reconstructed 1918 influenza virus, SARS-related corona virus).
 
This Order has also resulted in the removal of controls on certain marine goods and technology (marine surface-effect vehicles and associated equipment, certain hydrofoil vessels and associated equipment), certain small-waterplane-area vessels and associated equipment, certain seals and gaskets, certain hydraulic fluids, certain polymers made from vinylidene fluoride, certain unprocessed fluorinated compounds, certain plasma dry etching equipment, certain laser-based telecommunication test/inspection equipment, certain thermopile arrays, and certain mirrors for terrestrial heliostat installations.
 
Clarifications have also been made to controls relating to machine tools, certain microwave assemblies (converters and harmonic mixers, oscillators and oscillator assemblies), cryptographic items, sonar acoustic projectors, optical mirrors, unmanned aerial vehicles (UAVs), UAV navigation and control equipment, space launch vehicles, military diving and swimming apparatus, liquid slurry and gel propellant control systems, analogue-to-digital converter integrated circuits, analogue-to-digital converter assemblies, valves, biological weapon agents (Ebola, goat pox), machine tools, measuring systems, high energy devices, digital data recorders, electronically steerable phased array antennae, underwater vision systems, fibre/tow placement machines, centrifugal balancing machines, freeze-drying equipment, biocontainment chambers, and aerosol inhalation chambers.
 
  –  Various references to international commitments: 
References to export control texts issued by various multilateral export control regimes to which Canada is a member have been updated to incorporate Canada’s commitments at these export control regimes. These include the Wassenaar Arrangement on Export Controls for Conventional Arms and Dual-Use Goods and Technologies (Dual-Use and Munitions Lists), the Nuclear Suppliers Group (Non-Proliferation and Nuclear-related Dual-Use Lists), the Missile Technology Control Regime (Missile Technology Control Regime List) and the Australia Group (Chemical and Biological Weapons Non-Proliferation List).
 
  – Detailed list of changes
: A detailed document highlighting the changes resulting from the amendment of the ECL will be made available on the Export Controls Division’s website upon the coming into force of the Order. …
 
  (8) Rationale
 
The Order consists of various changes that are a direct result of Canada’s participation in various multilateral export control regimes, the Wassenaar Arrangement on Export Controls for Conventional Arms and Dual-Use Goods and Technologies, the Nuclear Suppliers Group, the Missile Technology Control Regime and the Australia Group.
 
As a participating state in these regimes, Canada implements its export controls over goods and technology on the basis of the commonly negotiated lists. Changes to these multilateral lists are typically negotiated on an annual basis. In order for these changes to be implemented in Canadian law, an amendment to the ECL is required. …
 
——–
  [FN/1] SOR/89-202; SOR/2009-128, s. 1 

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

OGS_a89
Canada TID Announces New Export Controls Guide

(Source: Canada TID)
 
The Trade Controls Bureau (TID) of Global Affairs (GA) Canada (formerly Foreign Affairs, Trade and Development Canada) has announced a new export control guide to reflect the latest changes to its export control regulations.

The current December 2013 version of “A Guide to Canada’s Export Controls” remains in effect until 10 August 2017. On 11 August 2017, the December 2015 version of the “A Guide to Canada’s Export Controls List” (Guide) will formally come into effect. The December 2015 version of the Guide is available here as of today (12 July 2017).
 
To read the entire announcement, click here

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

OGS_a910
EU Amends Restrictive Measures Concerning ISIL and Al-Qaida, Supports Chemical Safety in Ukraine in Line with UN Security Council Resolution 1540

(Source: Official Journal of the European Union, 12 July 2017.)
 
Regulations
* Commission Implementing Regulation (EU) 2017/1251 of 11 July 2017 amending for the 271st time Council Regulation (EC) No 881/2002 imposing certain specific restrictive measures directed against certain persons and entities associated with the ISIL (Da’esh) and Al-Qaida organisations.
 
Decisions
* Council Decision (CFSP) 2017/1252 of 11 July 2017 in support of the strengthening of chemical safety and security in Ukraine in line with the implementation of United Nations Security Council Resolution 1540 (2004) on the non-proliferation of weapons of mass destruction and their means of delivery.

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

NWSNEWS

NWS_a111
.

Reuters: “Siemens’ Crimea Predicament Tests Limits of EU Sanctions”

(Source:
Reuters, 12 July 2017.)
 
The delivery of turbines made by the German company Siemens to Crimea shows the limits of policing European Union sanctions on Russia as no EU enforcement authority exists, officials and experts said.
 
The European Union’s sanctions, painfully negotiated by all 28 EU governments in 2014 and so far renewed every six months, are the bloc’s toughest response to Russia’s annexation of Crimea and its support for separatists in eastern Ukraine.
 
But it is up to each EU government to enforce them and they do not apply to companies’ Russian subsidiaries, making any possible wrongdoing very hard to prove.
 
Reuters reported on July 5 that two electricity turbines made by Siemens were shipped to the Black Sea peninsula of Crimea, which is subject to EU sanctions that ban EU firms from supplying energy technology there. Siemens said the turbines were transferred to Crimea without its knowledge and against its will.
 
  “Implementation and enforcement of EU restrictive measures rests with the member states,” a spokesman for the European Commission said in response to the Siemens case. “The Commission is in touch with the German competent authorities on this particular case,” the spokesman said, referring to Siemens.
 
Still, economic sanctions on Russia, including those on Crimea, have deterred many EU firms from doing business there.
 
EU exports to Russia fell by 40 percent between 2013 and 2016 to 72 billion euros ($82.09 billion), according to the EU’s statistics office Eurostat. Direct investment by the European Union’s 28 countries into Russia fell 18 percent to 162 billion euros between 2013 and 2015, the latest data available.
 
“The reputational damage of a potential sanctions breach can be enormous,” said Maya Lester, a London-based barrister and author of a European sanctions website. “One practical effect of imposing sanctions can be about sending a message, as well as the restrictions themselves, and compliance is a big issue too.”
 
Overall, the European Union has imposed sanctions banning most EU business with Crimea, has frozen the assets and prohibited travel for Russians linked to the Ukraine crisis and has limited EU investment in Russia’s defense and energy sectors. Financing to Russian banks is severely restricted.
 
Unlike the United States, which has robust economic and trade sanctions enforcement through its Office of Foreign Assets Control at the U.S. Department of the Treasury, the European Union has no single such agency.
 
While the EU’s institutions in Brussels are instrumental in drawing up the legal language for the punitive regime and drumming up diplomatic support for them, the few dozen experts who help design them do not have the resources to enforce them.
 
  “Theatrical rhetoric is not matched by enforcement,” said Tom Keatinge, director of financial crime studies at RUSI think-tank in London. “They have become symbolic,” he said, saying not enough was done to update sanctions to avoid both EU and Russian companies circumventing them.
 
A Sept. 2016 investigation by Reuters showed that at least two European retailers, Auchan and Metro, were active on the Crimean market through Russian subsidiaries, shipping there from Russia via a ferry and port that are subject to EU sanctions.
 
Furthermore, France last year granted Russian Agriculture Minister Alexander Tkachev a visa even though he has been banned from entering the EU since 2014 because of Crimea.
 
  No Database
 
In April, Britain moved to a U.S.-style enforcement policy to allow civil fines of at least 1 million pounds ($1.28 million) on breaches of financial sanctions.
 
However, Britain has not so far prosecuted any company for any potential breach of sanctions, Lester said.
 
It was not immediately clear if other EU countries have brought criminal proceedings because no public database exists of sanctions breaches.
 
Many EU countries rely on different agencies, from the central bank to the export licensing authority, to enforce measures. Refusal of licenses can be challenged in court, while customs offices and the public prosecutor are responsible for violations of export controls.
 
EU officials have designed sanctions to be as specific as possible to avoid hurting the wider population, making loopholes easier to find. EU companies are expected to adhere to what EU officials call “the spirit” of the sanctions regime but it does not apply directly to their subsidiaries incorporated in Russia.
 
  “If the sanctions are too wide ranging, they may be too disruptive to the EU, or contribute to a financial crisis,” said Erica Moret, chair of the Geneva International Sanctions Network at the Graduate Institute Geneva. “The human costs of blanket sanctions have been too great in the past.”
 
EU governments also want the measures to be able to be lifted quickly in case of a rapprochement with Russia.
 
Defence, energy and financial sanctions could be removed if all sides implement the Minsk peace deal involving the withdrawal of troops and weaponry from eastern Ukraine.
 
Russian denies any direct involvement in the conflict that has killed more than 10,000 people since April 2014.

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

NWS_a212
.

ST&R Trade Report: “Import Restrictions on Aluminum Could Find Support in ITC Report”

 
A new International Trade Commission (ITC) report finds that the U.S. primary unwrought aluminum segment shrank significantly from 2011 to 2015 but the secondary unwrought and wrought product segments expanded. The report could be a factor in the Trump administration’s pending determination on whether to impose import restrictions on aluminum.
 
The Department of Commerce is conducting a section 232 investigation into whether imports of foreign-made aluminum are harming U.S. national security. If the DOC’s determination is affirmative, and the president concurs, the president will have the authority to adjust imports, including through the use of tariffs and quotas. Trump had pushed for the DOC to conclude its investigation by the end of June (two months after initiation, in contrast to the nine months allowed by law), but it remains unclear when a final decision may be announced.
 
The ITC report includes findings that could be cited as support for a potential affirmative DOC determination and subsequent decision to restrict imports. It assesses the strengths and weaknesses of major aluminum producing and exporting countries, provides qualitative and quantitative assessments of the impact of foreign government policies, identifies countries where primary unwrought aluminum capacity has substantially increased, and includes information on trade flows of aluminum through third countries. … 

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

COMMCOMMENTARY

COMM_a01
13. E. Carlson & Yan Luo: “China Releases Draft Export Control Law for Public Comment”

 
* Authors: Eric Carlson, Esq., ecarlson@cov.com; and Yan Luo, Esq., yluo@cov.com. Both of Covington & Burling LLP, Shanghai.
 
On June 16, 2017, China’s Ministry of Commerce (MOFCOM) released for public comment a draft of the Export Control Law (“the Draft Law”). While China has a number of regulations relating to export controls and has signed numerous nonproliferation agreements, the Draft Law would be China’s first law specifically addressing export controls and would implement an export controls system that protects China’s national security and consolidates its nonproliferation efforts. This new law, if enacted as drafted, would bring China’s system somewhat closer to other export control regimes, although certain provisions are still inconsistent with the approach of other jurisdictions. The Draft Law also introduces new restrictions on the provision of “export control-related” information” outside of China, highlighting the government’s desire to tighten the control of cross-border transfers of technical data related to controlled items. The Draft Law is expected to be introduced to the National People’s Congress for a first reading in 2018.
 
  Background of the Draft Law
 
The Draft Law represents a continuation of the Chinese government’s efforts to strengthen national security during President Xi Jinping’s administration, focusing specifically on the export of nuclear, biological, chemical, military, or other dual-use goods and services.
 
China began to formulate export control regulations in the 1990s. In its drafting notes, MOFCOM highlighted three reasons to enact a stand-alone Export Control Law now: (i) the existing regulations have weaker legal authority as departmental regulations; (ii) the most recent export control regulation was promulgated a decade ago in 2007 and has not been updated regularly; and (iii) the current system is unable to support enforcement actions in practice.
 
  Key Points of the Draft Law
* Definition of “dual-use” and “military items”. The Draft Law provides basic definitions of key terms:
  – “Dual-use” is defined as “goods, technologies, services, or other items that have civil uses, and also have military use or enhance military potential, particularly the
design, development, production, or use of weapons of mass destruction.”
  – “Military items” are defined as “equipment, special production equipment and other materials, technology, and related services used for military purposes.”
  – Nuclear” is defined as “nuclear materials, nuclear equipment, non-nuclear materials used in reactors, and related technologies and services.”
  – The draft does not define “export” or “regarded as an export”.
 
* Re-Exports. Re-exports — the transfer of an item from a country outside of China to a third country — were not previously addressed by regulations. The Draft Law would apply to items produced outside of China if “the value of the Chinese-controlled goods reaches a certain percentage of foreign products.” The Draft Law does not specify those percentages, which we anticipate would be addressed in subsequent implementing regulations.
 
* Deemed Exports. For the first time, the Draft Law considers providing regulated goods or technologies to non-Chinese citizens (or to residents of Taiwan, Hong Kong, or Macao) as “exports”, even if the goods or technologies have not been transferred outside of mainland China. This newly expanded definition of “export” will regulate activities such as non-citizens who work in China viewing controlled equipment or technical data.
 
* Export Control System. The Draft Law aims to establish a unified export control system that has two elements: a controlled item list and a license system for exporters. The Draft Law does not contain the list, although presumably it will build from existing lists scattered across different laws and regulations. In addition to the controlled item list, Article 14 allows certain agencies to designate a particular product or technology that is not on the list as a “temporarily controlled item” for up to two years. It is unclear whether China will continue to use its current system based on HS codes.
 
In formulating the list, the agencies are also to look at, among other things, “technological development” and “competitiveness.”
 
The license application would include a technical description of the item, and end- user and end-use statement, and a copy of the contract or agreement between the parties.
 
Seven factors are to be considered when the licensing agency makes licensing decisions:
 
  – national security and “development interests” (undefined)
l
international obligations and external commitments
  – degree of sensitivity of the item
  – market availability
  – end-user and end-use
  – internal compliance systems of the exporter
  – other circumstances prescribed by laws and regulations
 
Licenses are to be reviewed and decided within 45 working days.
 
* Agencies and Their Responsibilities. The Draft Law does not clearly identify departments under the State Council and the Central Military Commission that will perform the functions of export control, although it states that different agencies will regulate and license different controlled items under the Draft Law. For example, China Atomic Energy Authority, the Commission of Science, Technology and the Industry for National Defense and MOFCOM will jointly manage nuclear exports. Export control agencies in general enjoy significant authority such as conducting site inspections of end-users. Article 31 also provides that where China has entered into international agreements that already provide export control licensing guidelines, those provisions will take precedence. Military aid is specifically exempted from the scope of the Draft Law.
 
The Draft Law does not outline how the agencies will work together, or set forth a procedure whereby a company can seek a classification or ruling to determine which agency has jurisdiction over regulating and licensing exports.
 
* National Security Assessment for the Provision of “Export control-related” Information. The Draft Law specifically adds a requirement of the national security assessment for the provision of “export control-related” information “abroad.” Article 10 however does not define how procedures for such a national security assessment for international information sharing will be conducted. It is uncertain whether and how this requirement will be consolidated with the cross-border data transfer requirements imposed by the Cybersecurity Law.
 
* Penalties for Noncompliance.
  – Potential penalties for exporter: Exporting without a license, obtaining a license through bribery or other fraudulent behavior, circumventing export control measures, or conducting transactions with parties on the blacklist all could result in a fine that amounts to five to ten times the value of the illegal gain. In addition to the penalties on the company, the responsible person may be fined between RMB 100,000 to 300,000 (about USD 15,000 to 45,000).
  – Potential penalties for parties facilitating illegal conduct: Third parties providing freight services, customs declarations, electronic trading platforms, and financial services to exporters that violate the Draft Law will be fined five to ten times of the illegal gain. The responsible person may also be fined between RMB 100,000 to 300,000(about USD 15,000 to 45,000).
  – Investigation and procedural rules:
    (i) If an exporter applies for a license using fraudulent information, the application shall be denied and a fine between RMB 30,000 to 150,000 (about USD 4,500 to 22,000) will be imposed.
    (ii) Obstruction of investigations (including non-cooperation with a site inspection) may result in penalties of between RMB 100,000 and 300,000 (about USD 15,000 to 45,000). In addition, the responsible person may also be fined between RMB 100,000 and 300,000(about USD 15,000 to 45,000).
    (iii) For exporters and individuals who violate this Draft Law, their information may be added to the national credit system database and made public. Export control agencies may deny applications for export licenses filed by these companies or individuals for three years after the penalty decisions.
 
  Potential Implications
 
Companies active in China should continue to track the legislative developments and be aware of how the Export Control Law, if enacted as drafted, might affect their operations, sales, or other relevant actions. Based on the wording of the draft, exporters and their customers may face additional burdens, such as on-site inspections of end-users, as well as strict licensing review processes.

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

COMM_a2
14. G. Kreijen: “The Restrictive Measures Against Qatar: Watch Closely”

 
* Author: Gerard Kreijen, Esq., 
Gerard.Kreijen@loyensloeff.com
Loyens & Loeff, Amsterdam.
 
The unprecedented restrictive measures which Saudi Arabia, the U.A.E., Bahrain, and Egypt have imposed on Qatar last month could pose a greater challenge to international business than you might expect. The measures are difficult to navigate, making their scope opaque. Once you have taken the trouble to familiarize yourself with the activities that are being targeted, it will become clear that the practical implications may go well beyond what the measures seem to tell you at face value.
 
According to the latest news reports, the crisis has been sparked by a disagreement between Qatar and its Gulf neighbors over the breach of a number of secret agreements concluded in 2013 and 2014. Apparently, these agreements lay out a commitment for the contracting parties not to interfere in each other’s internal affairs. These commitments are said to include the barring of political or financial support for opposition and militant groups in the Gulf nations as well as in Egypt and Yemen. The agreements have been known to exist, but their content and the documents themselves had been kept secret because of their sensitivity.
 
The present crisis is deep, indeed much deeper than a similar one that existed a few years ago and that lasted for roughly nine months. The severity of the situation is reflected by the fact that the restrictive measures, at least in some respects, resemble (although they still fall short of) the old-fashioned ‘blockade’ which old-fashioned manuals of international law once labelled as an act of war.
 
The measures levied on Qatar so far are:
 
  – The severing of diplomatic relations by Saudi Arabia, the U.A.E., Bahrain, and Egypt.
  – A ban by Saudi Arabia, the U.A.E, and Bahrain on sea and air travel from and to Qatar. Saudi Arabia has closed Qatar’s only land border.
  – Qatari aircraft carriers banned from flying over the territories of Saudi Arabia, the U.A.E., Bahrain, and Egypt. Foreign airlines may have to seek permission for overflights to and from Qatar.
  – Vessels flying the Qatari flag banned from all Saudi and Bahraini berths. The U.A.E.’s Abu Dhabi Petroleum Ports Authority has stepped up this ban to include all vessels from or destined to Qatar, regardless of their flag, these restrictions also being imposed at Fujairah, one of the U.A.E.’s seven emirates.
  – Reportedly, Saudi Arabia’s central bank has ordered lenders not to increase their exposure to Qatari clients while the Saudi Arabian Monetary Agency is said to have informed banks licensed in Saudi not to process payments denominated in Qatari riyals.
Qatari news websites have been banned in Saudi Arabia, the U.A.E., and Egypt. The Al Jazeera TV channel has been closed down in Saudi Arabia.
  – Reportedly, Saudi Arabia and the U.A.E have stopped the exportation of white sugar to Qatar.
  – Restrictions of citizens movements by an order for Qatari citizens to depart Saudi Arabia, the U.A.E., and Bahrain and a ban for citizens from these three countries on visiting Qatar.
  – Etihad and Emirates airlines (which are U.A.E. state-owned) have stated that expats which are resident in Qatar will not be eligible for U.A.E visa on arrival.
 
While these measures, if viewed separately, appear to have a regional and limited effect only, it is obvious that when looked at in combination they have the potential of considerably disrupting the economic activity of local operators. This will be the case in particular for Qatar-based projects that depend on the movement of labor, goods, and services. As it happens, the petroleum and liquefied natural gas industries and the sectors related thereto, which are the cornerstones of Qatar’s economy typically rely on such projects. The recent measures may be expected therefore, to create difficulties and raise cost for any foreign contractors and their sub-contractors that are involved.
 
As has been noted by at least one shrewd observer, the measures imposed on Qatar appear to qualify as an ‘unsanctioned foreign boycott’ under US law, meaning that they are likely to trigger the applicability of the U.S. Bureau of Industry and Security’s Anti-Boycott Rules. If so, any U.S. Person with economic activities in Qatar will be in the unenviable position of having to cope not only with the restrictive measures imposed on Qatar, but also with the U.S. restrictions that apply to the boycotting countries. This, it seems fair to assume, is likely to also have an adverse impact on such a U.S. Person’s business with its non-U.S. counterparts.
 
Although it is still too early to accurately assess the risks to which the restrictive measures against Qatar will expose foreign economic operators in the Gulf Region, the nature and potential of these measures require that businesses with local activities closely monitor the developments in order to prevent unnecessary loss. 

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

COMM_a3
15. Gary Stanley’s ECR Tip of the Day

(Source: Defense and Export-Import Update; available by subscription from gstanley@glstrade.com)
 
* Author: Gary Stanley, Esq., Global Legal Services, PC, (202) 352-3059,
gstanley@glstrade.com.
 
Arbitration-related TAAs permit applicants to provide and discuss technical data and provide defense services to or with foreign parties as required to conduct the Pre-Hearing, Hearing, and Post-Hearing Phases of an Arbitration proceeding. The proceeding may be in response to legal claims or anomalous events related to a failed launch, aircraft malfunction, satellite anomaly, or other event involving a USML component. The format of the Arbitration-related agreement/amendment submission is virtually identical to the layout of the standard agreement/amendment (see Sections 5.0 and 6.0, respectively).
 
However, with respect to obtaining signatures, given the fluid nature of the proceedings, DTCL grants a special provision known as “incremental signature”–also known as a “rolling signature.” This exception to ITAR § 124.4(a) permits the applicant to execute transfers to foreign parties as they sign, rather than wait until all parties have concluded the agreement. As a result, transfers may take place between the U.S. person(s) and a foreign party as soon as that foreign person signs the agreement. Furthermore, any approved foreign party identified on an original agreement or subsequently approved amendment may sign at any time without further DTCL approval.

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

COMM_a4
16. R.C. Burns: “Don’t Believe Everything You Read in Blogs

(Source:
Export Law Blog
. Reprinted by permission.)
 
* Author: R. Clifton Burns, Esq., Bryan Cave LLP, Wash DC,
Clif.Burns@bryancave.com
, 202-508-6067).
 
Road Warrior at LAX by Clif BurnsA lawyer, without any apparent background in export law, recently decided to write a post on export law for “In House,” which bills itself as the “FindLaw Corporate Counsel Blog.” The purpose of the post, it would seem, is to frighten people traveling internationally with their laptops with the suggestion that they may well be greeted on their return trip by an arrest warrant if they don’t have an export license for their laptop. No, really, he actually says that
 
Traveling abroad? Don’t forget your passport, your laptop, and your export license.
 
Wh-what export license? Oh, maybe your company attorney didn’t tell you that your laptop requires an export license.
 
That’s right, the United States requires a license for certain technology and software going abroad.
 
What the FindLaw post, in order to maximize clickbait value, never reveals is that while technically true that some laptop exports require an export license due to software or technology on that laptop, there are broad license exceptions which mean that, as a practical matter, such licenses are almost never required. That’s what License Exceptions TMP and BAG and the exemption in section 125.4(b)(9) of the ITAR are for. These are, oddly enough, never even mentioned in the FindLaw blog post.
 
I discussed these provisions permitting laptops to be exported without a license recently in a post about whether a requirement to check laptops in the cabin hold might mean that these provisions would no longer apply. As explained there, section 125.4(b)(9) and license exception BAG permit export of laptops (and any software or technology on them) accompanying passengers and for their personal use as long as the laptop is password protected. License exception TMP requires that the laptop remain in the effective control of the traveler. (The difference between BAG and TMP is that BAG applies to laptops owned by the traveler and TMP applies to company laptops taken on a business trip).
 
So, no, if you password protect that laptop and keep it with you on your travels, you’re not going to need a license just to take the laptop with you. (If you intend to transfer the laptop or give the technology or software to someone else in the foreign country, these exceptions won’t apply.)
 
This all goes to show that, with perhaps one exception, don’t believe everything you read on a blog!
 
[Editor’s Note: Two other commentaries concerning this topic were included in the Daily Bugle of Monday, 3 July 2017 (item #21), and Tuesday, 11 July 2017 (item #10), respectively.]

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

ENEDITOR’S NOTES


* R. Buckminster Fuller (12 Jul 1895 – 1 Jul 1983, was an American architect, systems theorist, author, designer, and inventor.  Fuller published more than 30 books, coining or popularizing terms such as “Spaceship Earth” and “synergetic”. He also developed numerous inventions, and popularized the widely known geodesic dome.)
  – “There is nothing in a caterpillar that tells you it’s going to be a butterfly.”
 
* Henry David Thoreau (13 July 1817 – 6 May 1862, was an American essayist, poet, philosopher, abolitionist, and historian. Thoreau is best known for his book Walden, a reflection upon simple living in natural surroundings, and his essay “Civil Disobedience” (originally published as “Resistance to Civil Government”), an argument for disobedience to an unjust state.)
  – “An early-morning walk is a blessing for the whole day.”

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

EN_a318
. Are Your Copies of Regulations Up to Date?
(Source: Editor)

The official versions of the following regulations are published annually in the U.S. Code of Federal Regulations (C.F.R.), but are updated as amended in the Federal Register.  Changes to applicable regulations are listed below.
 
*
ATF ARMS IMPORT REGULATIONS
: 27 CFR Part 447-Importation of Arms, Ammunition, and Implements of War
  – Last Amendment: 15 Jan 2016: 81 FR 2657-2723: Machineguns, Destructive Devices and Certain Other Firearms; Background Checks for Responsible Persons of a Trust or Legal Entity With Respect To Making or Transferring a Firearm. 
 
*
CUSTOMS REGULATIONS
: 19 CFR, Ch. 1, Pts. 0-199
  – 
Last Amendment: 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 cancelled Supp. 1 to the NISPOM  (Summary here.)


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

  – Last Amendment:7 July 2017: 
82 FR 31442-31449: Revisions to the Export Administration Regulations Based on the 
2016 Missile Technology Control Regime Plenary Agreements. 

  
*
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.
  – Last 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., compiled by: Editor, James E. Bartlett III; Assistant Editors, Alexander P. Bosch and Vincent J.A. Goossen; and Events & Jobs Editor, John Bartlett. The Ex/Im Daily Update is 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.

* TO UNSUBSCRIBE: Use the Safe Unsubscribe link below.

Scroll to Top