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17-0801 Tuesday “Daily Bugle”

17-0801 Tuesday “Daily Bugle”

Tuesday, 1 August 2017

TOP
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[No items of interest noted today.] 

  1. Ex/Im Items Scheduled for Publication in Future Federal Register Editions
  2. Commerce/BIS: (No new postings.)
  3. DHS/CBP Announces New ACE Entry Summary Business Process Document
  4. DHS/CBP Updates Document Types Available for Document Upload in FDA’s ITACS
  5. DoD/DSCA Posts SAMM and Policy Memo, 1-5 Aug
  6. State/DDTC Announces New Rule Concerning ITAR Definition of NATO
  7. EU Parliament Releases Updated “EU Legislation in Progress” Briefing Concerning EU Dual-Use Export Controls
  8. Singapore, Japan, and the United States Collaborate on Joint Industry Outreach Seminar on Strategic Trade Management
  1. Reuters: “Germany Urges United States to Talk to EU About Russia Sanctions”
  2. ST&R Trade Report: “Base Metal Imports Resume at World Trade Bridge”
  1. J. Reeves & T. Ficaretta: “Myth Busters: Common Misconceptions About the Gun Control Act of 1968”
  2. R.I. Meltzer & D.M. Horn: “President Expected to Sign New Sanctions Bill to Constrain Presidential Authority While Expanding “Sanctions Toolkit” for Russia, Iran, and North Korea”
  1. ECS Presents ITAR/EAR Boot Camp in Annapolis MD, 12-13 Sep 
  1. David Brummond Moves to Jacobson Burton Kelley PLLC 
  2. Glenda Bass Moves to Siemens 
  1. Bartlett’s Unfamiliar Quotations 
  2. Are Your Copies of Regulations Up to Date? Latest Changes: ATF (15 Jan 2016), Customs (28 Jul 2017), DOD/NISPOM (18 May 2016), EAR (7 Jul 2017), FACR/OFAC (16 Jun 2017), FTR (19 Apr 2017), HTSUS (25 Jul 2017), ITAR (11 Jan 2017) 
  3. Weekly Highlights of the Daily Bugle Top Stories 

EXIMEX/IM ITEMS FROM TODAY’S FEDERAL REGISTER

EXIM_a1
 
[No items of interest noted today.]

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OGSOTHER GOVERNMENT SOURCES

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

* State; NOTICES; Arms Export Control Act and International Traffic in Arms Regulations: Rescission of Statutory Debarment and Reinstatement of Pratt and Whitney Canada Corp. [Publication Date: 2 August 2017.]
 
* Trade Representative, Office of the U.S.; NOTICES; Request for Comments: National Trade Estimate Report on Foreign Trade Barriers [Publication Date: 2 August 2017.]
 
* Treasury; NOTICES; List of Countries Requiring Cooperation with International Boycott [Publication Date: 2 August 2017.]
 

* U.S. Customs and Border Protection: NOTICES; Agency Information Collection Activities; Proposals, Submissions, and Approvals [Publication Date: 2 August 2017.]:
  – Cargo Manifest/Declaration, Stow Plan, Container Status Messages and Importer Security Filing
  – Documentation Requirements for Articles Entered Under Various Special Tariff Treatment Provisions

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(Source:
CSMS# 17-000429, 31 July 2017.)
 
The external version of the ACE Entry Summary Business Process document was updated on Friday July 28, 2017. The new version of the document has had a NAFTA Duty Deferral section added to it and includes an AD/CVD Terminology sub-section under section 13. The latest external version of the document, 8.0a, can be accessed by going here.
 
All ACE Entry Summary Business Process document questions, suggestions, and concerns should be emailed to acebusinessrules@cbp.dhs.gov.

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(Source:
CSMS# 17-000428, 31 July 2017.)
 
On August 1, 2017, the following document types will be available for use when uploading documents for FDA review via FDA’s Import Trade Auxiliary Communications System (ITACS):
 
Entry Level Documents:
 
  – Bill of Lading
  – CBP Form 3461
  – CBP Form 3499
  – CBP Form 4647
  – CBP Form 7501
  – CBP Form 7509
  – CBP Form 7512
  – CBP Form 7523
  – CBP Form 7533
  – Entry Documentation
  – Extension Request
  – FDA Form 766
  – Intended Use Statement
  – Invoice
  – Mitigation Request
  – Other
  – Packing List
  – Refusal Request
 
Line Level Documents:
 
  – CBP Form 3499
  – CBP Form 4647
  – CBP Form 7512
  – Certificate of Analysis
  – Extension Request
  – External Lab Analytical Package
  – FDA Form 2877
  – FDA Form 766
  – FWS Permit
  – Impact Resistance Certificate
  – Intended Use Statement
  – Invoice
  – Label/Labeling
  – Mitigation Request
  – Other
  – Packing List
  – Refusal Request
  – USDA Certificate
  – USDA Permit
 
Please direct any questions/comments to ITACSSupport@fda.hhs.gov. 

 

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* DSCA Policy Memo 17-35 Rescission and replacement of Program Codes to track Fiscal Year (FY) 2017/18 Counter-ISIL Train and Equip Fund (CTEF) for Iraq, 2017/18 Counter-ISIL Train and Equip Fund (CTEF) for Syria and Pakistan Stability Operations Funds (PSOF) has been posted. This policy rescinds Program Codes “2E” and “2F” issued by DSCA Policy Memos 17-23 and 17-24, and also rescinds Program Code “2G” issued by DSCA Policy Memo 17-28. Effective immediately, DSCA Policy 17-35 assigns Program Code “3T” to track FY 2107/18 Counter-ISIL Train and Equip Fund (CTEF) for Iraq specific programs, assigns Program Code “3U” to track FY 2017/18 Counter-ISIL Train and Equip Fund (CTEF) for Syria specific programs, and assigns Program Code “3V” to track any Pakistan Stability Operations Fund (PSOF) programs.
 

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Pursuant to Montenegro’s accession to the North Atlantic Treaty on June 5, 2017, it is the policy of the Department of State that the term “North Atlantic Treaty Organization” (“NATO”) in the International Traffic in Arms Regulations (“ITAR”) includes Montenegro for the purpose of any subject transactions.
 
The Directorate of Defense Trade Controls (“DDTC”) will soon publish a rule in the Federal Register to amend the definition of NATO in ITAR §120.31 accordingly.

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OGS_a77
. EU Parliament Releases Updated “EU Legislation in Progress” Briefing Concerning EU Dual-Use Export Controls

(Source: EU Parliament)
 
Certain goods and technologies have legitimate civilian applications but can also be used for the development of weapons of mass-destruction, terrorist acts and human rights violations; these so-called ‘dual-use’ goods are subject to the European Union’s export control regime. The regime is now being revised, mainly to take account of significant technological developments and to create a more level playing field among EU Member States. The proposed regulation recasts the regulation in force since 2009. Among other elements, the proposal introduces a controversial new ‘human security’ dimension to export controls, to prevent the abuse of certain cyber-surveillance technologies by regimes with a questionable human rights record. Stakeholders are divided over the incorporation of human rights considerations, with the technology industry particularly concerned that it might lose out to non-European competitors. The European Parliament, the Council and the Commission issued a joint statement on the review of the dual-use export control system in 2014 and the European Parliament has since adopted several resolutions related to the issue.
 
The third edition of the ‘EU Legislation in Progress’ briefing concerning EU dual-use export controls is available here.

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OGS_a88
. Singapore, Japan, and the United States Collaborate on Joint Industry Outreach Seminar on Strategic Trade Management

(Source: Singapore Customs)
 
Japan’s Ministry of Economy, Trade and Industry (METI), Singapore Customs, the United States (U.S.) Bureau of Industry and Security (BIS), and the U.S. Export Control and Related Border Security (EXBS) co-organised a Joint Industry Outreach Seminar on Strategic Trade Management on 20 July 2017.
 
Deputy Chief of Mission, Embassy of Japan in Singapore, Minister Naohiro Tsutsumi; Singapore Customs’ Deputy Director-General (Corporate & Facilitation) Lim Teck Leong; and Chargé d’Affaires, Embassy of the U.S. in Singapore, Stephanie Syptak- Ramnath, co-officiated at the opening of the seminar at The Marriott Tang Plaza Hotel.
 
The seminar featured speakers from various agencies in Australia, Japan, Singapore and U.S., who shared their expert knowledge of export controls of strategic goods.
 
Guest speakers from the private sector, including Center for Information on Security Trade Control (CISTEC), General Electric, NEC Corporation and Infineon Technologies Asia Pacific Pte Ltd, were also invited to speak about the best practices adopted by their companies to comply with national and international regulatory requirements.
 
A total of 270 participants including manufacturers, exporters, logistics providers, and freight forwarders, who deal with strategic goods and its technology, attended the seminar.
 
The seminar demonstrated the strong commitment of the export control agencies of Japan, Singapore and the U.S. to promote greater industry awareness of export controls on strategic goods.
It also provided a good platform for the industry to be kept up to date on the latest updates to the regulatory controls so that they will be compliant with these requirements.
 
Seminar Materials:
 
  – Agenda

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NWSNEWS

(Source:
Reuters, 1 August 2017.)
 
Germany’s economy minister appealed to the United States on Tuesday to talk to Europeans about the effects of tougher sanctions they plan to introduce against Russia, saying European companies must not be punished.
 
The White House has said U.S. President Donald Trump will sign the sanctions bill, a response to Russian meddling in the 2016 U.S. presidential election and a further punishment for Russia’s 2014 annexation of Crimea from Ukraine.
 
The European Union fears new U.S. restrictions could hurt some of its companies, especially those involved in the energy sector.
 
  “The threat from the United States to also punish European companies by so-called extra-territorial sanctions is not acceptable,” said Economy Minister Brigitte Zypries.
 
  “It would be very desirable for the U.S. government to sit down with us at the negotiating table and to work through an acceptable solution for all parties,” she said.
 
She also said the unilateral move had set off an escalation in a diplomatic tit for tat, after Moscow ordered the United States to cut some 60 percent of its diplomatic staff in Russia.
 
Germany’s government and business leaders say the new sanctions could prevent German companies from working on pipeline projects they say are essential to the country’s energy security.
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As of July 31, U.S. Customs and Border Protection has added base metals to the list of imports processed at the World Trade Bridge in Laredo, Texas. This change is part of CBP’s continuing efforts to restore full operations at the bridge following significant damage from a May 21 storm. CBP has previously resumed processing at this facility of empty tractors and trailers, informal entries, shipments from FAST-certified companies, agriculture (perishables), automotive products, machinery, electronics, and goods regulated by the Food and Drug Administration. Trucks carrying other goods that attempt to enter at the WTB will be returned to Mexico and directed to the Colombia Solidarity Bridge.
 
CBP notes that the reconstruction of its permanent facilities at the WTB has begun and that it still expects this project to be completed and to return to full operations at these facilities in October. There has been no change to CBP’s operating hours for processing imports or exports at the WTB or to the FDA’s operating hours at the Colombia Solidarity Bridge, where staff are conducting import lot dock inspections, or the Juarez Lincoln Bridge II, where staff are conducting field exams at warehouses.

 

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COMMCOMMENTARY

COMM_a01
11J. Reeves & T. Ficaretta: “Myth Busters: Common Misconceptions About the Gun Control Act of 1968”

(Source: R/D Alert, 1 August 2017.)
 
* Authors: Johanna Reeves, Esq., jreeves@reevesdola.com; and Teresa Ficaretta, Esq., tficaretta@reevesdola.com. Both of Reeves & Dola LLP.
 
This is our second installment of our Myth Busters series.  Our first installment addressed common myths of the National Firearms Act. In this article, we address some frequently encountered myths of the Gun Control Act of 1968 (GCA), the federal statute that regulates interstate and foreign commerce in firearms and ammunition.
 
MYTH #1: IF A PARTICULAR DEVICE EXPELS A PROJECTILE BY THE ACTION OF AN EXPLOSIVE, IT MUST BE A “FIREARM” SUBJECT TO THE GCA
 
The definition of “firearm” in the statute covers, in part, “any weapon (including a starter gun) which will or is designed to or may readily be converted to expel a projectile by the action of an explosive.” 18 U.S.C. § 921(a)(3). The word “weapon” is an integral part of the definition. The Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF) takes the position that certain devices that expel a projectile by the action of an explosive are not regulated as “firearms” because they are not designed as weapons. For example, nail guns used in the construction industry use an explosive to expel the nails, but ATF does not regulate them as firearms because they are tools, not weapons. Other unregulated devices include flare guns, tear gas guns, line throwing guns, certain animal tranquilizer devices, and spear fishing guns.
 
The determination of whether a particular device is a “weapon” is one that must be made by ATF. As indicated in ATF Rul. 1995-3 (relating to 37mm flare guns), the test the agency uses to determine whether a particular device is a weapon is whether it is capable of offensive or defensive use. Questions concerning particular devices should be referred to ATF’s Firearms and Ammunition Technology Division.
 
MYTH #2: FEDERAL FIREARMS LICENSEES, WHEN SHIPPING FIREARMS TO ANOTHER LICENSEE, MAY LAWFULLY SHIP ONLY TO THE ADDRESS SPECIFIED ON THE TRANSFEREE’S LICENSE
 
There is no provision in the GCA or its implementing regulations that requires federal firearms licensees (FFLs) to ship firearms to another FFL only at the address specified on the transferee’s license. FFLs may lawfully ship to another FFL at any address. There are a number of reasons FFLs may not want firearms delivered to the address on their license, including the fact they have a separate storage location or they are licensed at their residence but are not home to accept deliveries during the day. We are aware that some common and contract carriers will only deliver firearms to the licensee’s licensed premises. This practice is intended to prevent diversion of firearms into illicit channels.  However, it is not required by law.
 
MYTH #3: A LICENSED MANUFACTURER MAY “BUFF OUT” AN INCORRECT OR ILLEGIBLE SERIAL NUMBER, AS LONG AS THE FIREARM HAS NOT LEFT THE MANUFACTURER’S PREMISES
 
The GCA makes it unlawful for any person knowingly to transport, ship, or receive in interstate or foreign commerce any firearm which has had the importer’s or manufacturer’s serial number removed, obliterated, or altered or to possess or receive any firearm which has had the serial number removed, obliterated, or altered and has, at any time, been shipped or transported in interstate or foreign commerce. 18 U.S.C. § 922(k).
 
Altering a serial number that has already been marked on a firearm may be viewed by ATF as a violation of section 922(k). Alterations could consist of buffing out the serial number, remarking a serial number to make it deeper, or making any other alteration to the serial number. Because the statute includes an interstate commerce element, manufacturers and importers may take the position that no violation of the statute has occurred if firearms have not left their premises or otherwise previously moved in interstate commerce. We agree that ATF must prove an interstate commerce element to sustain a violation of section 922(k). However, there are risks to adopting a practice of removing or altering serial numbers even if the firearms have never traveled in interstate or foreign commerce. ATF has consistently advised manufacturers and importers that removing or altering the serial number after it has been marked on a firearm potentially violates the statute, irrespective of the commerce element of section 922(k).
 
MYTH #4: FFLs MAY LAWFULLY EMPLOY PERSONS WHO HOLD MEDICAL MARIJUANA CARDS IF STATE LAW MAKES IT LAWFUL TO POSSESS MARIJUANA FOR MEDICAL PURPOSES
 
The GCA makes it unlawful for persons who are unlawful drug users to receive or possess firearms or ammunition. The GCA also makes it unlawful for any person, including an FFL, to sell or otherwise dispose of any firearm to ammunition to any person knowing or having reasonable cause to believe that such person is an unlawful drug user.
 
In an Open Letter dated September 21, 2011, ATF made it clear that marijuana is listed in the Controlled Substances Act and is prohibited under federal law. This is the case regardless of state law authorizing the possession of marijuana for medicinal or recreational purposes. The Open Letter states that if an FFL is aware an employee or potential firearms transferee is in possession of a card authorizing the possession and use of marijuana under state law, then the FFL would have reasonable cause to believe the person is an unlawful drug user. The Open Letter states that FFLs may not lawfully transfer firearms or ammunition to such a person.
 
Any FFL employing an individual who the employer knows is in possession of a card authorizing the possession of marijuana under state law should consult with qualified counsel. Allowing such individuals to possess firearms or ammunition in the course of their employment could place the license in jeopardy of revocation.
 
MYTH #5: FFLS MAY LAWFULLY SELL RIFLES AND SHOTGUNS
TO RESIDENTS OF ANY U.S. STATE
 
The GCA allows FFLs to sell or deliver rifles and shotguns to nonresidents if the transfer is in person and the sale, delivery, and receipt fully comply with the legal conditions of sale in the seller’s state and in the buyer’s state. 18 U.S.C. § 922(b)(3). This provision of the statute requires the FFL to determine the conditions of sale in the buyer’s state and ensure that all conditions are met. If it is not possible to comply with state law (for example, the rifle in question is restricted as an assault weapon in the buyer’s state), then the sale may not be made.
 
A starting point for this inquiry is ATF’s publication State Laws and Published Ordinances-Firearms. However, this publication was last updated in 2011. Consequently, to ensure a transaction is in compliance with current state law, FFLs should locate online versions of the relevant state code and regulations. Violations of section 922(b)(3) are one of the most commonly cited against FFLs during ATF compliance inspections. Taking care to ensure understanding of the relevant and current state law will help avoid violations.
 
MYTH #6: IT IS UNLAWFUL FOR A FFL TO TAKE UNMARKED FIREARMS INTO INVENTORY
 
There are still firearms in circulation that were made before the marking requirements of the GCA or its predecessor, the Federal Firearms Act, were effective. Such firearms are usually shotguns or .22 caliber rifles, and they may bear only manufacturer’s markings but no serial number. It is not unlawful to possess firearms without a serial number, unless the serial number was removed, obliterated, or altered. However, it is difficult to record and track firearms that bear no serial number. FFLs who record all the information on the firearm will comply with the law. An entry in the serial number column such as “pre-1957 firearm no serial number” will comply with the law and regulations.
 
ATF has a procedure for assigning a serial number to an unserialized firearm. Although this procedure is not required, it helps FFLs account for firearms in their inventory and avoid any question about the missing serial number. FFLs who wish to utilize this procedure may contact the nearest ATF office.
 
MYTH #7: ATF INVESTIGATORS HAVE THE RIGHT TO ENTER A LICENSED PREMISES AT ANY TIME TO CONDUCT COMPLIANCE INSPECTIONS
 
The GCA gives ATF authority to inspect FFLs without a warrant in three specific situations: (1) annual compliance inspections; (2) for purposes of firearms tracing; and (3) for bona fide criminal investigations of persons other than the FFL. All other inspections must be carried out with a warrant or voluntary consent from the licensee.
 
FFLs should ensure they know the identity of the ATF representatives who arrive at the licensed premises and the purposes for which they are requesting access to the FFL’s records and inventory. If investigators are there for a reason other than an annual compliance inspection, this is particularly important. FFLs often feel they must consent to inspections outside the three situations outlined in the statute, but this is not the case. FFLs should consult with qualified counsel before consenting to any inspections by ATF personnel.
 
MYTH #8: FIREARMS UNLAWFULLY IMPORTED BY A LICENSED IMPORTER MAY BE TAKEN INTO THE INVENTORY OF ANOTHER FFL AS LONG AS THE SECOND FFL HAD NOTHING TO DO WITH THE IMPORT VIOLATION
 
The GCA (18 U.S.C. § 922(l)) prohibits the knowing importation of any firearm or ammunition into the United States, unless the importation is specifically authorized by the import provisions in 18 U.S.C. § 925(d). Section 922(l) also makes it unlawful for any person knowingly to receive any firearm or ammunition imported in violation of the GCA. Thus, purchasers of firearms who know they were illegally imported will violate the law when they receive the firearms. This is true even if they had no part in the unlawful importation itself.
 
MYTH #9: ATF HAS THE AUTHORITY TO REVOKE A LICENSE FOR “WILFULL” VIOLATIONS OF THE GCA ONLY IF THE VIOLATIONS ARE REPEAT VIOLATIONS CITED IN WRITING DURING A PREVIOUS COMPLIANCE INSPECTION
 
Pursuant to 18 U.S.C. §923(e), ATF has the authority to revoke a license for willful violations of any provisions of the GCA or any rule or regulation prescribed thereunder. Courts have taken the position that a willful violation of the GCA is one that is a deliberate, knowing, or reckless violation of the statute’s requirements. To sustain its burden of proof, ATF must prove the licensee knew of the legal obligation and purposefully disregarded or was plainly indifferent to the requirement. In most reported cases ATF establishes willfulness through previous Reports of Violation or warning conferences held with the FFL for the same or similar violations.
 
However, ATF may revoke a license if the agency has other evidence the FFL was aware of the law or regulation at issue and failed to abide by the requirement. For example, ATF may rely upon a regulations checklist completed by ATF personnel during a license application inspection as evidence of the FFL’s knowledge of a requirement. ATF may also rely upon instructions on Form 4473 or another ATF form, information in FFL Newsletters, and published Open Letters or ATF rulings on a particular issue. FFLs should not be complacent about their lack of an ATF regulatory history. If the agency believes a first-time inspection results in significant violations that pose a threat to public safety, ATF may proceed with license revocation.

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COMM_a2
12
. R.I. Meltzer & D.M. Horn: “President Expected to Sign New Sanctions Bill to Constrain Presidential Authority While Expanding “Sanctions Toolkit” for Russia, Iran, and North Korea”

(Source:
Wilmer Hale)
 
* Authors: Ronald I. Meltzer, Esq.,
ronald.meltzer@wilmerhale.com; and David M. Horn, Esq.,
david.horn@wilmerhale.com. Both of Wilmer Hale, Washington DC.
 
On July 27, the US Senate passed the Countering America’s Adversaries Through Sanctions Act (CAATSA), a comprehensive sanctions bill that expands US sanctions against three countries: Russia, Iran, and North Korea. The legislation has also passed the US House of Representatives and is now awaiting the President’s signature. One notable aspect of CAATSA is the codification of existing sanctions against Russia, which were previously implemented through executive action. As a result, the legislation constrains the President’s ability to ease such sanctions without congressional approval.
 
CAATSA also establishes and expands a wide range of authorities for the imposition of new sanctions to address US national security and foreign policy challenges in the three countries. For example, the legislation further tightens US sectoral sanctions against Russia, which has been an ongoing compliance challenge for financial, energy, and other firms since their 2014 implementation. CAATSA also targets certain investments and commercial activities, including those related to Russia’s construction of energy export pipelines.
 
With respect to Iran and North Korea, the legislation authorizes the expansion of existing US sanctions against these countries, including their potential applicability to non-US firms, e.g., by establishing mandatory sanctions for those engaged in defense trade with Iran and both mandatory and discretionary sanctions for those engaged in a wide range of trading activity with North Korea.
 
RUSSIA
 
  Codification and Congressional Review
 
As noted, CAATSA codifies existing sanctions against Russia and requires that the President submit notices or reports to Congress prior to taking certain actions with respect to such sanctions. This requirement covers not only Obama-era executive orders concerning Ukraine and cyber-enabled threats and prior statutory sanctions, but also additional Russia sanctions established by CAATSA. In doing so, the legislation effectively constrains presidential action on the termination of sanctions, the waiver of the applicability of sanctions, and “a licensing action that significantly alters United States’ foreign policy with regard to” Russia. For actions requiring reports by the President, Congress would generally have 30 days to review the action, during which time “the President may not take that action unless a joint resolution of approval with respect to that action is enacted” by Congress. If Congress enacts a joint resolution of disapproval, then the President may not take the action. CAATSA also delineates limitations on action during presidential consideration of a joint resolution of disapproval (e.g., between the time it is enacted and the time he may veto the joint resolution) and establishes procedural rules for the enactment of a joint resolution.
 
  Modification of US Sectoral Sanctions
 
CAATSA makes several important modifications to existing Russia sanctions. First, it specifically authorizes the Secretary of the Treasury to subject Russian state-owned entities operating in the railway and metals and mining sectors to ”
sectoral sanctions” imposed under Executive Order 13662. Second, CAATSA shortens the tenor for “new debt” of designated Russian financial firms under Directive 1 from 30 to 14 days. Because such tenor applies to permissible payment terms, this action effectively precludes most US financial dealings with such firms. The legislation similarly shortens the permissible tenor for “new debt” of designated Russian energy firms under Directive 2 from 90 to 60 days. Finally, CAATSA would expand the territorial applicability of Directive 4. Currently, Directive 4 prohibits the direct or indirect provision, exportation, or reexportation of goods, services (other than financial services), or technology in support of exploration or production for deepwater, Arctic offshore, or shale projects in Russia and its claimed maritime area. Under CAATSA, the prohibition applies to deepwater, Arctic offshore, or shale projects that have the potential to produce oil anywhere, if the project involves designated Russian firms under Directive 4 that have a property interest of at least 33 percent in such a project.
 
  New Sanctions Authority
 
CAATSA also empowers the President to make new sanctions designations for certain conduct. Against the wishes of some European countries, CAATSA authorizes the President to impose five or more measures from a sanctions “menu” against any person found to have “knowingly” made an investment that directly and significantly contributes to the enhancement of Russia’s ability to construct energy export pipelines, or against those who sell, lease, or provide to Russia for the construction of such pipelines certain goods, services, technology, information, or support with a fair market value of $1 million or more or an aggregate fair market value of $5 million or more over a 12-month period. [FN/1] This authority is similar to that of secondary sanctions imposed against non-US persons for engaging in targeted dealings with Iran. [FN/2]
 
Other new sanctions authorized under CAATSA target:
 
  – Persons investing ($10 million or more, including through any combination of $1 million or greater investments within a 12-month period) in or facilitating the “unjust” privatization of state-owned Russian assets;
  – Persons supporting the supply of financial, material, or technological support that materially contribute to Syria’s acquisition or development of WMD and certain conventional weapons; and
  – Persons engaging in significant transactions with the Russian intelligence or defense sectors.
 
CAATSA newly authorizes the President to impose blocking sanctions against those who knowingly engage in significant activities undermining cybersecurity against any person or government on behalf of Russia. The legislation also authorizes the imposition of restrictive measures from a sanctions “menu” against those who provide financial services in support of such activities.
 
  Other Modifications of Existing Sanctions
 
CAATSA modifies two existing statutes, the Ukraine Freedom Support Act of 2014 (UFSA) and the Sovereignty, Integrity, Democracy, and Economic Stability of Ukraine Act of 2014 (SIDESUA). Sections 225 and 226 of CAATSA amend UFSA so that the President would be required – unless he determined it was not in the national interest to do so – to (i) impose measures from a sanctions menu against foreign persons who knowingly make a significant investment in projects intended to extract crude oil from deepwater, Arctic offshore, and shale formations in Russia (UFSA currently provides discretionary authority for such action); and (ii) prohibit correspondent and payable-through accounts in the United States by foreign financial institutions that knowingly engage in certain significant transactions, such as those involving support for Syrian arms acquisition and Russian deepwater, Artic offshore, and shale oil projects.
 
In addition, Section 227 of CAATSA would require the President under SIDESUA (subject to presidential waiver and certification) to impose blocking sanctions against Russian government officials, their associates and family members found to be engaged in significant corruption. Section 228 of CAATSA also contains a comparable measure making mandatory the imposition of sanctions against those who evade or attempt to evade Russia sanctions.
 
IRAN
 
Under the
Joint Comprehensive Plan of Action, the United States committed to lifting nuclear-related sanctions against Iran. Under CAATSA, Congress would impose new sanctions against Iran for non-nuclear related reasons, such as activities relating to Iran’s ballistic missile program, support for terrorism, and human rights abuses.
 
Section 104 of CAATSA requires the imposition of blocking sanctions against any person determined to knowingly engage in activity that materially contributes to Iran’s ballistic missile program and other Iranian WMD activities. Section 105 of CAATSA would apply existing terrorism-related sanctions against the Iran’s Islamic Revolutionary Guard Corps (IRGC), which is already sanctioned under WMD and human rights sanctions, in addition to the Quds Force that is already targeted by US terrorism-related provisions. Section 106 of CAATSA requires that the Secretary of State identify, and notify Congress concerning, Iranian human rights abusers. The legislation also grants the President discretionary authority to impose blocking sanctions against such human rights abusers. Section 107 of CAATSA generally requires the imposition of blocking sanctions against persons who knowingly violate the arms embargo against Iran. In addition, Section 108 requires at least a quinquennial review of existing blocking sanctions against Iranian persons to determine whether WMD and/or terrorism-related sanctions can be applied to such persons. All of these sanctions could be waived by the President on a case-by-case basis based on a determination that such waiver is vital to the national security interests of the United States. In sum, these provisions are intended to reinforce and expand existing, non-nuclear-related US sanctions measures against Iran.
 
NORTH KOREA
 
CAATSA contains several modifications and new sanctions authorities to address the escalating tensions in east Asia caused by the North Korea nuclear program. In connection with such action, Senator Bob Corker, chairman of the Senate Foreign Relations Committee, has insisted on
a commitment from the House of Representatives to impose further enhancements to North Korea sanctions “in the near future.”
 
Section 311 of CAATSA expands the
North Korea Sanctions and Policy Enhancement Act of 2016 (NKSPEA) in several ways. It increases mandatory blocking sanctions, including by applying them to those connected to trade with North Korea in certain extractives and rare earth minerals and in rocket, aviation, or jet fuel (with a limited exception for non-North Korean passenger aircraft). This section also broadens the scope of NKSPEA’s defense export controls, mandates sanctions against those engaged in transactions involving vessels or aircraft designated by the United States or United Nations, and mandates sanctions against those who knowingly maintain a correspondent account with any North Korean financial institution.
 
Furthermore, CAATSA expands discretionary sanctions under NKSPEA, including with respect to transactions with the government of North Korea in coal, iron, or iron ore; in textiles; in crude oil, refined petroleum, natural gas, and other energy products; in food and agricultural products; and in funds or property transfers that materially contribute to a violation of a United Nations Security Council resolution. The legislation also requires the President to consider the imposition of sanctions against several specific entities, including The Korea Shipowners’ Protection and Indemnity Association, Chinpo Shipping Company (Private) Limited (Singapore), The Central Bank of the Democratic People’s Republic of Korea, and Kumgang Economic Development Corporation (KKG).
 
CAATSA imposes new restrictions on the entry into the navigable waters of the United States, and on the transfer of cargo in any US port, of vessels owned by North Korea or other countries identified by the President as acting inconsistently with US and United Nations sanctions targeting North Korea trade.
 
Other key areas in which CAATSA expands NKSPEA sanctions include:
 
  – Establishing a general prohibition on correspondent accounts used by foreign financial institutions to provide significant financial services indirectly to persons designated pursuant to NKSPEA;
  – Increasing the scope of defense trade by foreign governments that would result in a prohibition on their receipt of US foreign assistance; and
  – Broadening the President’s reporting requirement to Congress under NKSPEA on foreign seaports and airports that knowingly facilitate sanctioned trade with North Korea or fail to implement effective enforcement measures (Congress seeks particular findings with respect to ports in China (Dandong and Dalian), Iran (including Bandar-e-Abbas and Kish), Russia (Nakhodka, Vanino, and Vladivostok), and Syria).
 
CONCLUSION
 
As noted above, CAATSA expands the scope of sanctions applicable to Russia, Iran and North Korea in key sectors and types of transactions. The legislation also affects the manner in which the President can exercise sanctions authority with respect to targeted dealings with these countries. On the one hand, CAATSA seeks to constrain presidential authority, particularly concerning possible steps to ease or waive Russia sanctions, on the other hand, the legislation expands the “sanctions toolkit” available to the President in addressing difficult geopolitical challenges presented by Russia, Iran and North Korea.
 
In light of these changes, global companies should remain vigilant in monitoring possible sanctions designations and restrictions that are likely to result from the implementation of CAATSA and consider how best to ensure that internal compliance policies properly address CAATSA-related sanctions risks in ongoing business dealings.
 
———
  [FN/1] The menu of options includes: limitations on financing from the Export-Import Bank of the United States, restrictions on US export privileges, prohibitions on US financial institutions from providing credit to sanctioned persons, prohibitions on the sanctioned person’s ability to receive a US Federal Reserve designation as a primary dealer or act as a repository of US government funds, prohibitions on US procurement, prohibitions on foreign exchange, prohibitions on banking transactions, prohibitions on acquiring or transferring property subject to US jurisdiction, exclusion of corporate officers from the United States, and application of any of these sanctions measures on principal executive officers.
  [FN/2] E.g., 22 U.S.C. § 8742.

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TEEX/IM TRAINING EVENTS & CONFERENCES

TE_a113. ECS Presents ITAR/EAR Boot Camp in Annapolis MD, 12-13 Sep
 
* What: ITAR/EAR Boot Camp, Annapolis, MD 
* When: September 12-13, 2017
* Sponsor: Export Compliance Solutions (ECS)
* ECS Speaker Panel:  Suzanne Palmer, Mal Zerden
* Register:
Here or by calling 866-238-4018 or e-mail
spalmer@exportcompliancesolutions.com.
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MSEX/IM MOVERS & SHAKERS

MS_a114. David Brummond Moves to Jacobson Burton Kelley PLLC

 
David J. Brummond, Esq., formerly with OFAC and DLA Piper, has joined the Washington, DC office of Jacobson Burton Kelley, PLLC, where he will continue his sanctions-related practice. Contact David at 571-354-0736 or dbrummond@jacobsonburton.com.

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MS_a215. Glenda Bass Moves to Siemens

(Source: Editor)
 
Glenda Bass has retired from Lockheed Martin and moved to her new position as Director, International Trade Compliance, at Siemens Government Technologies. Contact Glenda at (607) 590-7246 or
glenda.bass@siemensgovt.com
.   

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ENEDITOR’S NOTES

 
* Herman Melville (1 Aug 1819 – 28 Sep 1891; was an American novelist, short story writer, and poet of the American Renaissance period. His best known works include Typee, a romantic account of his experiences in Polynesian life, his whaling novel Moby-Dick, and the novella, Billy Budd.)

  – “It is better to fail in originality than to succeed in imitation.”

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EN_a317
. 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: 28 Jul 2017: 82 FR 35064-35065: Technical Corrections to U.S. Customs and Border Protection Regulations
 
* 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 (18 July 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, Census/AES guidance, and to many errors contained in the official text. 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: 25 Jul 2017: Harmonized System Update 1706, containing 834 ABI records and 157 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.

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EN_a0318. 
Weekly Highlights of the Daily Bugle Top Stories

(Source: Editor) 

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

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EPEDITORIAL POLICY

* The Ex/Im Daily Update is a publication of FCC Advisory B.V., 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.

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