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17-0802 Wednesday “Daily Bugle”

17-0802 Wednesday “Daily Bugle”

Wednesday, 2 August 2017

TOP
The Daily Bugle is a free daily newsletter from Full Circle Compliance, containing changes to export/import regulations (ATF, Customs, NISPOM, EAR, FACR/OFAC, FTR/AES, HTSUS, and ITAR), plus news and events.  Subscribe 
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  1. DHS/CBP Continues to Seek Comments on Cargo Manifest/Declaration, Stow Plan, Container Status Messages, and Importer Security Filing, Form Numbers 1302, 1302A, 7509, and 7533
  2. DHS/CBP Continues to Seek Comments on Documentation Requirements for Articles Entered Under Various Special Tariff Treatment Provisions
  3. State/PM Rescinds Statutory Debarment of and Reinstates Pratt & Whitney Canada Corporation Pursuant to AECA and ITAR
  4. Treasury Publishes List of Countries Requiring Cooperation with an International Boycott
  5. USTR/TPSC Seeks Comments Concerning Significant Barriers to U.S. Exports of Goods, Services, and U.S. Foreign Direct Investment
  1. Ex/Im Items Scheduled for Publication in Future Federal Register Editions
  2. Commerce/BIS: (No new postings.)
  3. Justice: California Man Arrested for Alleged Scheme to Smuggle Export-Controlled Rifle Scopes and Tactical Equipment to Syria
  4. State/DDTC Will Be Closed on Thursday Afternoon, 3 August
  5. German BAFA Publishes New Export Control Newsletters Concerning Amendments to AWV, Export Control List, General License No. 16, and EU Restrictive Measures of the EU
  6. Hong Kong TID Provides List of Officers Authorized to Sign Delivery Verification Certificates and Ex/Im Licenses
  7. Singapore Customs Changes Prohibitions of Imports, Exports, Transshipments, and Goods in Transit From or to North Korea
  1. Bloomberg: “North Korean Missiles May Be Too Advanced for More Sanctions”
  2. CBS News: “China’s Tech-Transfer Demands May Spark Pushback from U.S.”
  3. The Globe and Mail: “Human-Rights Lawyer Calls for End to Canadian Arms Sales to Saudi Arabia”
  4. Reuters: “Trump Signs Russia Sanctions Law, But Slams It As ‘Flawed'”
  5. Reuters: “UK Sets Out New Powers to Impose Sanctions After Brexit”
  6. SPIE Press Room: “Optics and Photonics Recognized by Senate Committee in Context of Export Controls”
  7. ST&R Trade Report: “ACE Submission of Import/Export Data for DEA-Regulated Goods Now Mandatory”
  1. M.P. Court, L.A. Covington & J.M. Epstein: “ExxonMobil Fined $2 Million for Ukraine/Russia Sanctions Violations”
  2. M. Volkov: “How Do You Define a Compliance Program Failure?”
  3. Shearman & Sterling LLP: “SEC Brings First Corporate FCPA Enforcement Action Under Its New Leadership”
  1. ECTI Presents U.S. Export Control (ITAR/EAR/OFAC) Seminar on 16-19 Oct in Amsterdam, The Netherlands 
  2. “Eighth Annual ‘Partnering for Compliance™’ West Export/Import Control Program” on 10-13 Oct in Dallas, TX 
  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
1. DHS/CBP Continues to Seek Comments on Cargo Manifest/Declaration, Stow Plan, Container Status Messages, and Importer Security Filing, Form Numbers 1302, 1302A, 7509, and 7533

(Source: Federal Register, 2 August 2017.) [Excerpts.]
 
82 FR 35982-35984: Agency Information Collection Activities: Cargo Manifest/Declaration, Stow Plan, Container Status Messages and Importer Security Filing
 
* AGENCY: U.S. Customs and Border Protection (CBP), Department of Homeland Security.
* ACTION: 60-Day notice and request for comments; revision of an existing collection of information.
* SUMMARY: The Department of Homeland Security, U.S. Customs and Border Protection will be submitting the following information collection request to the Office of Management and Budget (OMB) for review and approval in accordance with the Paperwork Reduction Act of 1995. The information collection is published in the Federal Register to obtain comments from the public and affected agencies. Comments are encouraged and will be accepted (no later than October 2, 2017) to be assured of consideration. …
* SUPPLEMENTARY INFORMATION: …
 
  Overview of This Information Collection
 
  – Title: Cargo Manifest/Declaration, Stow Plan, Container Status Messages and Importer Security Filing.
  – OMB Number: 1651-0001.
  – Form Numbers: CBP Forms 1302, 1302A, 7509, 7533.
  – Abstract: This OMB approval includes the following existing information collections: CBP Form 1302 (or electronic equivalent); CBP Form 1302A (or electronic equivalent); CBP Form 7509 (or electronic equivalent); CBP Form 7533 (or electronic equivalent); Manifest Confidentiality; Vessel Stow Plan (Import); Container Status Messages; and Importer Security Filing, Electronic Ocean Export Manifest; Electronic Air Export Manifest; Electronic Rail Export Manifest; and Vessel Stow Plan (Export). CBP is proposing to add a new information collection for the Air Cargo Advance Screening (ACAS) Pilot Program. …
 
  Dated: July 28, 2017.
 
Seth Renkema, Branch Chief, Economic Impact Analysis Branch, U.S. Customs and Border Protection.

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EXIM_a22.

DHS/CBP Continues to Seek Comments on Documentation Requirements for Articles Entered Under Various Special Tariff Treatment Provisions

(Source:
Federal Register, 2 August 2017.) [Excerpts.]
 
* AGENCY: U.S. Customs and Border Protection (CBP), Department of Homeland Security.
* ACTION: 60-Day Notice and request for comments; extension of an existing collection of information.
* SUMMARY: The Department of Homeland Security, U.S. Customs and Border Protection will be submitting the following information collection request to the Office of Management and Budget (OMB) for review and approval in accordance with the Paperwork Reduction Act of 1995. The information collection is published in the Federal Register to obtain comments from the public and affected agencies. Comments are encouraged and will be accepted (no later than October 2, 2017) to be assured of consideration. …
 
* SUPPLEMENTARY INFORMATION: …
 
  Overview of This Information Collection
 
  – Title: Documentation Requirements for Articles Entered Under Various Special Tariff Treatment Provisions.
  – OMB Number: 1651-0067.
  – Current Actions: CBP proposes to extend the expiration date of this information collection with no changes to the burden hours or to the information being collected.
  – Type of Review: Extension (without change).
  – Abstract: CBP is responsible for determining whether imported articles that are classified under Harmonized Tariff Schedule of the United States (HTSUS) subheadings 9801.00.10, 9802.00.20, 9802.00.40, 9802.00.50, 9802.00.60 and 9817.00.40 are entitled to duty-free or reduced duty treatment. In order to file under these HTSUS provisions, importers, or their agents, must have the declarations that are provided for in 19 CFR 10.1(a), 10.8(a), 10.9(a) and 10.121 in their possession at the time of entry and submit them to CBP upon request. These declarations enable CBP to ascertain whether the requirements of these HTSUS provisions have been satisfied.
 
  Dated: July 28, 2017.
 
Seth Renkema, Branch Chief, Economic Impact Analysis Branch, U.S. Customs and Border Protection.

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EXIM_a33.

State/PM Rescinds Statutory Debarment of and Reinstates Pratt & Whitney Canada Corporation Pursuant to AECA and ITAR

(Source:
Federal Register, 2 August 2017.) [Excerpts.]
 
82 FR 36068: Bureau of Political-Military Affairs; Rescission of Statutory Debarment and Reinstatement of Pratt & Whitney Canada Corporation Under the Arms Export Control Act and the International Traffic in Arms Regulations
 
* ACTION: Notice.
* SUMMARY: Notice is hereby given that the Department of State has rescinded the statutory debarment of, and reinstated Pratt & Whitney Canada Corporation, pursuant to the Department’s authorities under the Arms Export Control Act and the International Traffic in Arms Regulations.
* DATES: Rescission and reinstatement as of July 12, 2017. …  
* SUPPLEMENTARY INFORMATION: Section 38(g)(4) of the AECA, 22 U.S.C. 2778(g)(4), prohibits the issuance of export licenses or other approvals for the export of defense articles or defense services where the applicant, or any party to the export, has been convicted of violating the AECA and certain other U.S. criminal statutes enumerated at section 38(g)(1) of the AECA. In addition, section 127.7(b) of the ITAR provides for the statutory debarment of any person who has been convicted of violating or conspiring to violate the AECA. Persons subject to statutory debarment are prohibited from participating directly or indirectly in the export of defense articles, including technical data, or in the furnishing of defense services for which a license or other approval is required.
  In June 2012, Pratt & Whitney Canada Corporation pleaded guilty to violating the AECA (U.S. District Court, District of Connecticut, 12-CR-146-WWE). Based on this plea, Pratt & Whitney Canada Corporation was ineligible in accordance with section 120.1 of the ITAR and was statutorily debarred, with certain exceptions, pursuant to section 127.7(b) of the ITAR. Notice of debarment of Pratt & Whitney Canada Corporation, 1000 boul. Marie-Victorin, Longueuil, Quebec, Canada J4G 1A1 (and all other Pratt & Whitney Canada Corporation locations) was published in the Federal Register (77 FR 40140, July 6, 2012).
  In accordance with section 127.7 of the ITAR, the statutory debarment may be rescinded after consultation with other appropriate U.S. agencies, after a thorough review of the circumstances surrounding the conviction, and a finding that appropriate steps have been taken to mitigate any law enforcement concerns. The Department of State has consulted with other appropriate U.S. agencies and has determined that Pratt & Whitney Canada Corporation has taken appropriate steps to address the causes of the violations and to mitigate any law enforcement concerns.
  Therefore, in accordance with section 38(g)(4) of the AECA and sections 127.7(b) and 127.11(b) of the ITAR, Pratt & Whitney Canada Corporation is eligible to be involved in ITAR-regulated activities and the statutory debarment is rescinded, effective July 12, 2017. Pratt & Whitney Canada Corporation may participate directly or indirectly in any activities that are subject to the ITAR.
 
Tina S. Kaidanow, Acting Assistant Secretary, Bureau of Political-Military Affairs (PM).

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EXIM_a44.

Treasury Publishes List of Countries Requiring Cooperation with an International Boycott

(Source:
Federal Register, 2 August 2017.)
 
82 FR 36076: List of Countries Requiring Cooperation with an International Boycott
 
In accordance with section 999(a)(3) of the Internal Revenue Code of 1986, the Department of the Treasury is publishing a current list of countries which require or may require participation in, or cooperation with, an international boycott (within the meaning of section 999(b)(3) of the Internal Revenue Code of 1986).
  On the basis of the best information currently available to the Department of the Treasury, the following countries require or may require participation in, or cooperation with, an international boycott (within the meaning of section 999(b)(3) of the Internal Revenue Code of 1986).
 

  – Iraq

  – Kuwait

  – Lebanon

  – Libya

  – Qatar

  – Saudi Arabia

  – Syria

  – United Arab Emirates

  – Yemen

 
  Dated: July 26, 2017.
 
Danielle Rolfes, International Tax Counsel, (Tax Policy).

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EXIM_a55.

USTR/TPSC Seeks Comments Concerning Significant Barriers to U.S. Exports of Goods, Services, and U.S. Foreign Direct Investment

(Source:
Federal Register, 2 August 2017)
 
82 FR 36069-36070: Request for Comments to Compile the National Trade Estimate Report on Foreign Trade Barriers
 
* AGENCY: Office of the United States Trade Representative.
* ACTION: Notice.
* SUMMARY: Section 181 of the Trade Act of 1974, as amended, requires the Office of the United States Trade Representative (USTR) annually to publish the National Trade Estimate Report on Foreign Trade Barriers (NTE). The Trade Policy Staff Committee (TPSC) is asking interested persons to submit written comments to assist the TPSC in identifying significant barriers to U.S. exports of goods, services, and U.S. foreign direct investment for inclusion in the NTE.
  Section 1377 of the Omnibus Trade and Competitiveness Act of 1988 (Section 1377) requires USTR annually to review the operation and effectiveness of all U.S. trade agreements regarding telecommunications products and services that are in force with respect to the United States. USTR will consider written comments in response to this notice regarding the trade barriers pertinent to the conduct of the review called for in Section 1377.
* DATES: We must receive all written comments no later than 11:59 p.m., October 25, 2017. …
* SUPPLEMENTARY INFORMATION: …
 
  Topics on Which the TPSC Seeks Information
 
To assist USTR in preparing the NTE, commenters should submit information related to one or more of the following categories of foreign trade barriers:

  (1) Import policies (e.g., tariffs and other import charges, quantitative restrictions, import licensing, and customs barriers).
  (2) Government procurement restrictions (e.g., “buy national policies” and closed bidding).
  (3) Export subsidies (e.g., export financing on preferential terms, subsidies provided to equipment manufacturers contingent on export and agricultural export subsidies that displace U.S. exports in third country markets).
  (4) Lack of intellectual property protection (e.g., inadequate patent, copyright, and trademark regimes).
  (5) Services barriers (e.g., limits on the range of financial services offered by foreign financial institutions, regulation of international data flows, restrictions on the use of data processing, quotas on imports of foreign films, unnecessary or discriminatory technical regulations or standards for telecommunications services, and barriers to the provision of services by professionals).
  (6) Investment barriers (e.g., limitations on foreign equity participation and on access to foreign government-funded R&D consortia, local content, technology transfer and export performance requirements, and restrictions on repatriation of earnings, capital, fees, and royalties).
  (7) Government-tolerated anticompetitive conduct of state-owned or private firms that restrict the sale or purchase of U.S. goods or services in the foreign country’s markets.
  (8) Trade restrictions affecting electronic commerce (e.g., tariff and non-tariff measures, burdensome and discriminatory regulations and standards, and discriminatory taxation).
  (9) Trade restrictions implemented through unwarranted sanitary and phytosanitary measures, including unwarranted measures justified for purposes of protecting food safety, and animal and plant life or health.
  (10) Trade restrictions implemented through unwarranted standards, conformity assessment procedures, or technical regulations (Technical Barriers to Trade) that may have as their objective protecting national security requirements, preventing deceptive practices, or protecting human health or safety, animal or plant life or health, or the environment, but that can be formulated or implemented in ways that create significant barriers to trade (including unnecessary or discriminatory technical regulations or standards for telecommunications products).
  (11) Other barriers (e.g., barriers that encompass more than one category, such as bribery and corruption, or that affect a single sector).

  In addition, Section 1377 (19 U.S.C. 3106) requires USTR annually to review the operation and effectiveness of all U.S. trade agreements regarding telecommunications products and services that are in force with respect to the United States. The purpose of the review is to determine whether any act, policy, or practice of a country that has entered into a trade agreement or other telecommunications trade agreement with the United States is inconsistent with the terms of such agreement or otherwise denies U.S. firms, within the context of the terms of such agreements, mutually advantageous market opportunities for telecommunications products and services.

We invite commenters to identify those barriers covered in submissions that may operate as “localization barriers to trade.” Localization barriers are measures designed to protect, favor, or stimulate domestic industries, services providers, and/or intellectual property at the expense of goods, services, or intellectual property from other countries, including the provision of subsidies linked to local production. For more information on localization barriers, please go here.
  Commenters should place particular emphasis on any practices that may violate U.S. trade agreements. The TPSC also is interested in receiving new or updated information pertinent to the barriers covered in the 2017 NTE as well as information on new barriers. If USTR does not include in the NTE information that it receives pursuant to this notice, it will maintain the information for potential use in future discussions or negotiations with trading partners. …
 
  Edward Gresser, Chair, Trade Policy Staff Committee, Office of the United States Trade Representative.

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OGSOTHER GOVERNMENT SOURCES

OGS_a16. Ex/Im Items Scheduled for Publication in Future Federal Register Editions
(Source: Federal Register

* ATF; NOTICES; Agency Information Collection Activities; Proposals, Submissions, and Approvals: Federal Firearms License RENEWAL Application [Publication Date: 3 August 2017.]
 
* DHS/CBP; NOTICES; Meetings: Commercial Customs Operations Advisory Committee [Publication Date: 3 August 2017.]
 
* International Trade Administration; MEETINGS; Civil Nuclear Trade Advisory Committee [Publication Date: 3 August 2017.] 

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OGS_a38.

Justice: California Man Arrested for Alleged Scheme to Smuggle Export-Controlled Rifle Scopes and Tactical Equipment to Syria

(Source:
Justice) [Excerpts.]
 
Rasheed Al Jijakli, 56, the chief executive officer of an Orange County, California check cashing business, was arrested this morning (Tuesday) on federal charges that accuse him of procuring and illegally exporting rifle scopes, laser boresighters and other tactical equipment from the U.S. to Syria, in violation of the International Emergency Economic Powers Act (IEEPA).  Jijakli is expected to be arraigned this afternoon in the U.S. District Court for the Central District of California, on a three-count indictment that was returned by a federal grand jury on July 14. The indictment was unsealed this morning after Jijakli was taken into custody without incident by law enforcement authorities. …
 
The indictment accuses Jijakli, a naturalized U.S. citizen, of violating IEEPA, which authorizes the President of the U.S. to impose economic sanctions on a foreign country in response to an unusual or extraordinary threat to the national security, foreign policy or economy of the U.S. In accordance with that authority, the President issued an executive order that included broad restrictions on exports to Syria.  The U.S. Department of Commerce subsequently issued corresponding regulations restricting exports to Syria of items subject to the Export Administration Regulations.  Jijakli also faces charges of conspiring to violate IEEPA and smuggling.
 
From January 2012 through March 2013, Jijakli and three other individuals purchased and smuggled export-controlled items to Syria without obtaining licenses from the Department of Commerce. Jijakli and others allegedly hand-carried the items through Istanbul, Turkey and provided them to fighters in Syria. Those items allegedly included day-and night-vision rifle scopes, laser boresighters (tools used to adjust sights on firearms for accuracy when firing), flashlights, radios, a bulletproof vest and other tactical equipment.
 
An indictment contains allegations that a defendant has committed a crime. Every defendant is presumed to be innocent until and unless proven guilty in court.  If convicted of all three charges in the indictment, Jijakli would face a statutory maximum penalty of 50 years in prison.  The maximum statutory sentence is prescribed by Congress and is provided here for informational purposes.  If convicted of any offense, the defendant’s sentence will be determined by the court after considering the advisory Sentencing Guidelines and other statutory factors. … 

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OGS_a49
.

State/DDTC Will Be Closed on Thursday Afternoon, 3 August

 
The entirety of DDTC will be closed for an off-site business meeting on Thursday, 3 August from 12 noon EST until the end of the day. There will be no responses to phone or email inquiries during this time. Electronic submission transfers and the 3:00 pm paper license pick-up/drop-off will take place on their normal schedule. Normal operations will resume on Friday, August 4, 2017.

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OGS_a510
. German BAFA Publishes New Export Control Newsletters Concerning Amendments to AWV, Export Control List, General License No. 16, and Restrictive Measures of the EU

(Source: German BAFA)
 
The German Federal Office for Economic Affairs and Export Control (BAFA) has published two new Export Control Newsletters (June/July Issue and August Issue, respectively) containing information on amendments to the Außenwirtschaftsverordnung (AWV or “Foreign Trade and Payments Ordinance”), the Export Control List, General License No. 16, and the EU’s Restrictive Measures. 
 
Key sections are included below. To read the entire newsletters, including the sections on the EU’s restrictive measures, click here for the June/July Newsletter, and here for August Newsletter.
 
  NATIONAL LAW
 
Update and Amendment of the AWV and of Part I Section A of the Export List
 
The 8th ordinance amending the Foreign Trade and Payments Ordinance of 27 April 2017 adapted the statutory provisions to impose administrative fines in section 82 AWV to the current EU legislation.
 
In addition, the Export List (Annex AL to Foreign Trade and Payments Ordinance) was revised. This is mainly due to amendments agreed for conventional armaments within the Wassenaar Arrangement in 2016, which were incorporated in Part I Section A. In addition there was an expansion of the range of goods to specific diesel motors controlled by the Export List by amending item 0009b No. 1 of Part I Section A of the Export List.  In this way, the efforts of the Federal government are taken into account to be able to impose restrictions on all deliveries of diesel motors intended for submarines that are relevant from the security policy point of view.
 
  INSIDE BAFA
 
General Licence No. 16
 
As of 1 July 2017 the General Licence No. 16 was expanded until 31 March 2018 and supplemented by another condition for exclusion in Section II number 3.2. This expansion excludes the use of this General Licence in cases where goods with IT security functions under sect. 37 of Classified Information Directive (VSA) are to be exported, goods that are approved by BSI under VSA or for which an authorisation was applied for uses in connection with information classified as RESTRICTED or higher under sect. 4 (1) of the Act on Security Review Requirements and Procedure of the Federal Government (Security Review Act – SÜG).
 
There are no further amendments of the content of this General Licence. For your information a consolidated version of the General Licence No. 16 may be found at BAFA’s website.

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OGS_a611
Hong Kong TID Provides List of Officers Authorized to Sign Delivery Verification Certificates and Ex/Im Licenses

(Source: Hong Kong TID)
 
The Trade and Industry Department (TID) of Hong Kong has released Strategic Trade Controls Circular No. 11/2017 concerning the updated list of officers that are authorised to sign delivery verification certificates and export and import licenses. 
The circular is available
here

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EXIM_a712
Singapore Customs Changes Prohibitions of Imports, Exports, Transshipments, and Goods in Transit From or to North Korea

(Source: Singapore Customs)
 
Singapore Customs has released Circular No. 10/2017, “Changes to the Prohibitions of Imports, Exports, Transhipments and Goods in Transit from or to the Democratic’s Republic of Korea” (North Korea or DPRK). Key takeaways are included below.
 
Changes to the Prohibitions of Imports, Exports, Transshipments and Goods in Transit from or to DPRK
 
Under Regulation 6(1)(b) of the Regulation of Imports and Exports Regulations, the importation into, exportation from, or transhipment or transit through Singapore of any goods which will contravene the decisions of the United Nations Security Council (UNSC) in resolutions made under Chapter VII of the United Nations Charter, are prohibited.
 
With the adoption of the UNSC Resolutions 2270 (2016) and 2321 (2016), Singapore has updated the scope of prohibition on the importation into, exportation from, or the transhipment or transit through Singapore of certain goods from or to the Democratic People’s Republic of Korea (DPRK).
 
The updated prohibitions have been published in the Regulation of Imports and Exports (Amendment) Regulations 2017 [FN/1]. These Regulations took effect on 31 Jul 2017.
 
  Permit Applications for Imports from and (Re-)exports to DPRK
 
Traders should note that any goods which are imported from, exported or re- exported to the DPRK would require a TradeNet® permit to be applied at least 3 working days before the intended date of shipment. You are also reminded to comply with any stipulated permit conditions.
 
  Penalties

Under the Regulation of Imports and Exports Act (RIEA), any person who contravenes any of these prohibitions shall be guilty of an offence and shall be liable to –
 
  a) a fine of not exceeding S$100,000 or 3 times the value of the goods in respect of which the offence was committed, whichever is the greater, or to imprisonment for a term not exceeding 2 years or to both, on the first conviction; and
  b) a fine of not exceeding S$200,000 or 4 times the value of the goods in respect of which the offence was committed, whichever is the greater, or to imprisonment for a term not exceeding 3 years or to both, on the second or subsequent conviction.
 
  More Information
 
Details on the UNSC sanctions can be found at: https://www.customs.gov.sg > Businesses > United Nations Security Council Sanctions. 
You may view the subsidiary legislation at
Singapore Statutes Online
.

———
  [FN/1] Besides the prohibition of goods in relation to the DPRK, the Seventh Schedule of the Regulation of Imports and Exports Regulations also lists the prohibition of goods in relation to other countries or territories that are sanctioned by the UNSC.

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NWSNEWS

NWS_a113
.

Bloomberg: “North Korean Missiles May Be Too Advanced for More Sanctions”

(Source:
Bloomberg, 1 August 2017.) [Excerpts.]
 
It may already be too late for sanctions to halt North Korea’s missile program.
 
That’s the view of analysts who have watched Kim Jong Un accelerate progress on North Korea’s decades-long quest for a functioning intercontinental ballistic missile. Friday’s launch, the second in a matter of weeks, showed it’s just a matter of time before he has a full-fledged ICBM that could hit any part of the U.S. with a nuclear weapon.
 
As North Korea’s economy holds up, and the regime moves beyond the startup costs of its nuclear program, efforts to choke off its finances become less effective, the analysts say. …
 
  “It’s ridiculous if you believe the North needs billions of dollars to develop its nuclear weapons and missiles,” said Lim Eul-chul, director for strategic planning at the Center for International Cooperation for North Korean Development at Kyungnam University in South Korea. “He doesn’t pay his scientists that much and North Korea can make most of the weapons components internally on its own.” …
 
North Korea’s capabilities are currently on par with the U.S. and Soviet Union in the 1960s and 1970s, according to Jeffrey Lewis, director of the East Asia Nonproliferation Program at Middlebury Institute of International Studies at Monterey.
 

  “There is a technology diffusion that has gone on so far that export controls and sanctions have a very, very small impact,” he said in Tokyo this week. … 

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NWS_a214
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CBS News: “China’s Tech-Transfer Demands May Spark Pushback from U.S.”

(Source:
CBS News, 2 August 2017.) [Excerpts.]
 
China’s intellectual property practices may spark a backlash from the Trump administration.
 
President Donald Trump’s administration is considering using rarely invoked U.S. trade laws to fend off China’s demands that foreign companies share their technology in return for access to the country’s vast market, a person familiar with U.S. discussions said Wednesday.
 
The administration is discussing the use of Section 301 of the Trade Act of 1974, which empowers Washington to launch an investigation into China’s trade practices and, within months, raise tariffs on imports from China, or impose other sanctions, said the person, who spoke on condition of anonymity because the plans have not been made public.
 
The investigation would be focused on China’s alleged “forced technology transfer policies and practices,” the person said, adding that the Trump administration could move to launch such a probe this week. ….
 

U.S. and other Western governments and business groups accuse Beijing of blocking access to promising industries by requiring foreign companies to hand over proprietary technologies in exchange for being allowed to operate in China. Such requirements are seen as an attempt by Beijing to nurture its own competitors in fields from medical equipment to renewable energy to electric cars. … 

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NWS_a3
15.

The Globe and Mail: “Human-Rights Lawyer Calls for End to Canadian Arms Sales to Saudi Arabia”

(Source:
The Globe and Mail, 1 August 2017.) [Excerpts] 
 
A former federal Liberal cabinet minister and human-rights lawyer says Saudi Arabia’s apparent deployment of Canadian-made combat vehicles against Saudi citizens demonstrates why Canada should end all arms sales to the Islamic kingdom.
 
  “I am not saying we shouldn’t be trading with Saudi Arabia. I’m not saying we shouldn’t be engaging with Saudi Arabia. I’m just saying we shouldn’t be selling any more arms to Saudi Arabia,” Irwin Cotler, who served as justice minister under former Liberal prime minister Paul Martin, told The Globe and Mail.
 

  “I don’t think we should be [undertaking] arms sales with a country that is engaged in major human-rights violations.” …
 
As The Globe and Mail reported last week, the Saudis appear to have deployed combat machines made by Terradyne Armored Vehicles, based in Newmarket, Ont., in an escalating and deadly conflict with Shia militants in the Mideast country’s Eastern Province. Military-equipment experts identify the vehicles, which feature armour cladding and weapons turrets, as Terradyne Gurkha RPVs.
 
After The Globe’s report on Friday, Foreign Affairs Minister Chrystia Freeland said she was “deeply concerned” and ordered an investigation into Saudi Arabia’s conduct. “If it is found that Canadian exports have been used to commit serious violations of human rights, the minister will take action,” her department announced. …
 
Last week marked the first time videos and photos have surfaced allegedly showing the Saudis wielding Canadian-made defence equipment against their own people. The House of Saud’s apparent use of Canadian combat machines against its Shia population in eastern Saudi Arabia goes to the very heart of a long-running controversy over whether the Trudeau government is violating Canada’s weapons export-control rules. These rules call for restrictions on arms exports to countries with a “persistent record of serious violations of the human rights of their citizens.” Shipments are supposed to be blocked if there is a real risk the buyer could turn arms against its own population. … 

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NWS_a5
16.

Reuters: “Trump Signs Russia Sanctions Law, But Slams It As ‘Flawed'”

(Source:
Reuters, 2 August 2017.)
 
U.S. President Donald Trump grudgingly signed into law on Wednesday new sanctions against Russia that Congress had approved overwhelmingly last week, criticizing the legislation as having “clearly unconstitutional” elements.
 
After signing a bill that runs counter to his desire to improve relations with Moscow, and which also affects Iran and North Korea, the Republican president laid out a lengthy list of concerns.
 
  “While I favor tough measures to punish and deter aggressive and destabilizing behavior by Iran, North Korea, and Russia, this legislation is significantly flawed,” Trump said in a statement announcing the signing.
 
The Republican-controlled Congress approved the legislation by such a large margin on Thursday that it would have thwarted any effort by Trump to veto the bill.
 
The legislation has already provoked countermeasures by Russian President Vladimir Putin, who has ordered big cuts to the number of staff at the U.S. diplomatic mission to Russia.
 
Congress approved the sanctions to punish the Russian government over interference in the 2016 presidential election, annexation of Ukraine’s Crimea and other perceived violations of international norms.
 
Trump said he was concerned about the sanctions’ effect on work with European allies, and on American business.
 
  “My administration … expects the Congress to refrain from using this flawed bill to hinder our important work with European allies to resolve the conflict in Ukraine, and from using it to hinder our efforts to address any unintended consequences it may have for American businesses, our friends, or our allies,” he said.

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NWS_a4
17.

Reuters: “UK Sets Out New Powers to Impose Sanctions After Brexit”

(Source:
Reuters, 2 August 2017.)
 
The British government published plans on Wednesday for a bill that would give it the legal power to impose sanctions after it leaves the European Union, including making it easier to cut off terrorism funding and freeze assets.
 
Britain now negotiates and imposes non-UN sanctions against specific countries through EU laws. Without the new legislation, it would not have the legal authority to enforce those sanctions.
 
More than 30 sanctions regimes are currently in place, including against Russia, North Korea and Iran.
 
  “This will enable us to impose sanctions as appropriate either alone or with partners in the EU and around the world, to take targeted action against countries, organizations and individuals who contravene international law, commit or finance terrorism or threaten international peace and security,” Alan Duncan, the minister for Europe, said in a statement.
 
The new powers would see the introduction of an annual review of sanctions regimes to ensure they remained appropriate. It would also allow individuals and organizations to challenge sanctions imposed on them.
 
The government said its proposals would also make it easier to freeze a suspected terrorist’s bank account and stop a person from making money from their assets, including by selling a house or car.

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NWS_a6
18.

SPIE Press Room: “Optics and Photonics Recognized by Senate Committee in Context of Export Controls”

(Source:
SPIE Press Room, 1 August 2017.)
 
U.S. Senate report recognizes need for well-written regulations on export of optics and photonics technologies
 
A report accompanying a U.S. Senate bill proposing funding levels for science, commerce, and justice agencies includes encouraging language backed by SPIE, the international society for optics and photonics, recognizing the importance of optics and photonics to the US economy and the need for well-written regulations on export of optics and photonics technologies and components.
 
The Commerce, Justice, and Science Appropriations Bill for the fiscal year 2018 (FY2018) passed out of the Senate Appropriations Committee on Thursday 27 July.
 
A section of the report accompanying the bill acknowledges the global photonics market for core photonics components at $182 billion in annual sales, an estimate based on an SPIE market analysis.
 
  “Photonic components such as optics, sensors, fibers, lasers, photodetectors, and light modulators constitute [a] $182,000,000,000 global industry, supporting 190,000 jobs in the United States alone,” the report stated. Language in the bill also notes the rapid growth of technologies controlled under Category XII of the US Munitions List (USML) and Category 6 of the Commerce Control List (CCL). It said “well-written and precise regulations” were necessary to support business, research, and workforce development for US manufacturers and exporters.
 
SPIE has been closely involved in the U.S. government’s export control reform initiative since its launch in 2009 and continues to be involved in ongoing reform efforts through SPIE Government Affairs Director Jennifer Douris’ leadership on the Sensors and Instrumentation Technical Advisory Committee (SITAC) at the Department of Commerce. Last week’s committee report highlights the importance of regulations that are not overly restrictive and the necessity to look at foreign availability and commercial use of the controlled technology as key factors in ensuring US companies can compete in the global market place.
 
  “We are very grateful to the Senate Appropriations Committee for making this statement of position,” said SPIE CEO Eugene Arthurs. “This is extraordinary progress to see language now in an appropriations bill acknowledging the importance of the industry, when only a few years ago photonics was met by blank stares in Congress.
 
  “Export controls are a very delicate balance between the interests of US-based technology industries and national security,” he added. “We at SPIE know this language will resonate with both large and small companies throughout the US and beyond.”
 
Although final decisions on US government funding levels for FY2018 won’t be decided until later this year, the Senate Appropriations Committee set funding levels for NASA, the National Oceanic and Atmospheric Administration, the National Science Foundation, and the National Institute of Standards and Technology in this bill. The levels are 1% to 2% less than this year’s budgets, which were in the limits of their current allocations.
 
The report can be found on the Senate Appropriations Committee website.
 
Reports by SPIE on the photonics marketplace, workforce, export controls, as well as other resources for the photonics industry can be found here.
 
  About SPIE
 
SPIE is the international society for optics and photonics, an educational not-for-profit organization founded in 1955 to advance light-based science, engineering, and technology. The Society serves nearly 264,000 constituents from approximately 166 countries, offering conferences and their published proceedings, continuing education, books, journals, and the SPIE Digital Library. In 2016, SPIE provided $4 million in support of education and outreach programs. 

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NWS_a7
19.

ST&R Trade Report: “ACE Submission of Import/Export Data for DEA-Regulated Goods Now Mandatory”

 
A Drug Enforcement Administration final rule requiring the electronic submission through the Automated Commercial Environment of required data for the import and export of tableting and encapsulating machines, controlled substances, and listed chemicals took effect Aug. 1. 

As of that date U.S. Customs and Border Protection began enforcing HTSUS flagging with a reject for import data not provided for such goods, meaning that importers must provide either full DEA message set data or a valid disclaim code. For export data, participating government agency line data must be provided. In addition, Document Imaging System documents are no longer being accepted for the DEA.

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COMMCOMMENTARY

COMM_a01
20. M.P. Court, L.A. Covington & J.M. Epstein: “ExxonMobil Fined $2 Million for Ukraine/Russia Sanctions Violations”

 
* Author: Michael P. Court, Esq.
Michael.Court@hklaw.com
; Lara A. Convington, Esq.,
Lara.Covington@hklaw.com
; and Jonathan M. Epstein, Esq.,
Jonathan.Epstein@hklaw.com
. All of Holland & Knight LLP, Washington DC.
 
  Key Takeaways 
 
  * On July 20, 2017, the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) announced a $2 million civil monetary penalty against Exxon Mobil Corp., including its U.S. subsidiaries ExxonMobil Development Company (EMDC) and ExxonMobil Oil Corporation (EMOC) (collectively, ExxonMobil), for violations of §589.201 of the Ukraine-Related Sanctions Regulations, 31 C.F.R. part 589.
  * The civil penalty against ExxonMobil is the first monetary fine imposed by OFAC for violations of the Ukraine-/Russia-related sanctions program since it began in March 2014. ExxonMobil has challenged OFAC’s finding of violation and penalty assessment as unlawful under the Administrative Procedure Act (APA) and a violation of its Fifth Amendment rights to due process.
  * The civil penalty this large sends a clear message to U.S. persons that OFAC is now interpreting prohibited dealings with SDNs to include executing documents countersigned by an SDN in his representative capacity.
 
On July 20, 2017, the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) announced a $2 million civil monetary penalty against Exxon Mobil Corp., including its U.S. subsidiaries ExxonMobil Development Company (EMDC) and ExxonMobil Oil Corporation (EMOC) (collectively, ExxonMobil), for violations of §589.201 of the Ukraine-Related Sanctions Regulations, 31 C.F.R. part 589. In May 2014, presidents of ExxonMobil’s U.S. subsidiaries signed eight legal documents related to oil and gas projects in Russia with Rosneft OAO (Rosneft) countersigned by Igor Sechin, the president of Rosneft. ExxonMobil has challenged OFAC’s finding of violation and penalty assessment as unlawful under the Administrative Procedure Act (APA) and a violation of its Fifth Amendment rights to due process. The lawsuit is currently pending in the U.S. District Court for the Northern District of Texas.
 
Sechin is an individual on OFAC’s List of Specially Designated Nationals and Blocked Persons (SDN List). As an SDN, the assets of Sechin are blocked and U.S. persons may not receive, deal in or benefit from any service he might provide. The penalty and subsequent challenge represent a disagreement between ExxonMobil and OFAC over whether a distinction exists between dealings with an SDN in his “individual” capacity as opposed to his “representative” capacity as an officer of Rosneft.
 
  Background on Ukraine-/Russia-Related Sanctions
 
The civil penalty against ExxonMobil is the first monetary fine imposed by OFAC for violations of the Ukraine-/Russia-related sanctions program. The program began on March 6, 2014, when President Obama, in Executive Order (E.O.) 13660, declared a national emergency to deal with the threat posed by Ukrainian- and Russian-backed separatists responsible for, or complicit in, destabilizing actions and policies which undermine the territorial integrity of Ukraine.
 
Subsequent sanctions were also established against Russian individuals and entities in response to the purported annexation of the Crimea region of Ukraine. These targeted sanctions are aimed at officials of the Government of the Russian Federation, persons operating in the arms or related materiel sector of the Russian Federation, and individuals and entities operating in the Crimea region of Ukraine.1
 
  Facts Surrounding Violations
 
OFAC added Sechin to the SDN List on April 28, 2014. Approximately three weeks later, at some point between or around May 14, 2014 and May 23, 2014, it is alleged that “ExxonMobil moved forward with signing the legal documents” with Sechin. In response, ExxonMobil states that it relied on a press statement by a Treasury representative quoted “as saying that a U.S. person would not be prohibited from participating in a meeting of Rosneft’s board of directors.” Further, ExxonMobil also cites informal guidance from White House and Treasury officials describing that Sechin was sanctioned in his “individual capacity.” ExxonMobil further references a May 16, 2014 article in The Wall Street Journal in which the Treasury Department purportedly authorized an oil and gas company CEO, an American, to “participate in board meetings with Mr. Sechin as long as they are conducting Rosneft’s, and not Mr. Sechin’s, personal business.”
 
After the legal documents were signed by Sechin, on July 22, 2014, OFAC issued an administrative subpoena to EMDC relating to the execution of the documents. ExxonMobil claims that OFAC, even after the subpoena was issued, had not yet interpreted the legal standard that it thought should apply to actions by SDNs in their representative capacities. Specifically, ExxonMobil references communications between OFAC and ExxonMobil’s outside legal counsel during which OFAC “conceded that the agency itself had not reached a position on the propriety of executing documents countersigned by SDNs in a representative capacity.” In addition, in its federal district court lawsuit, ExxonMobil claims that prohibiting business with Sechin in his representative capacity could be tantamount to a prohibition on U.S. persons’ business with Rosneft itself, thus substantially and inappropriately expanding the scope of the sanctions authorized by E.O. 13661.
 
In response, OFAC noted that the referenced public statements by White House and Treasury officials did not address the violative conduct – Sechin’s signature on legal documents in his official capacity as CEO of Rosneft. According to OFAC, no materials or statements were issued that “asserted an exception or carve-out for the professional conduct” of SDNs. In addition, based on publicly available informal guidance from other sanctions programs, OFAC concluded that ExxonMobil should have known “the U.S. parties should ‘be cautious in dealings with [a non-designated] entity to ensure that they are not providing funds, goods, or services to the SDN, for example, by entering into any contracts that are signed by the SDN'” (emphasis added). OFAC concluded that previous OFAC precedent, publicly available at the time of the violations, put ExxonMobil “on notice” that it would consider executing documents with Sechin to violate the Ukraine-Related Sanctions Regulations.
 
  An “Egregious” Case?
 
By issuing a penalty notice, OFAC made a final agency determination that ExxonMobil violated the Ukraine-Related Sanctions Regulations and imposed the statutory maximum civil penalty of $2 million. In so doing, OFAC stated that ExxonMobil did not voluntarily self-disclose and that OFAC determined ExxonMobil’s conduct to be “egregious.” An “egregious” determination generally gives substantial weight to the following four factors:
 
  (1) Willful or reckless violation of law. Willfulness, recklessness, concealment, pattern of conduct, prior notice and management involvement.
  (2) Awareness of conduct at issue. Actual knowledge, reason to know or management involvement.
  (3) Harm to sanctions program objectives. Economic or other benefit to the sanctioned individual, entity, or country, implications for U.S. policy, license eligibility or humanitarian activity.
  (4) Individual characteristics. Commercial sophistication, size of operations, financial condition, volume of transactions or sanctions history.
 
OFAC considered the following to be aggravating factors: “(1) ExxonMobil demonstrated reckless disregard for U.S. sanctions requirements when it failed to consider warning signs associated with dealing in the blocked services of an SDN; (2) ExxonMobil’ssenior-most executives knew of Sechin’s status as an SDN when they dealt in the blocked services of Sechin; (3) ExxonMobil caused significant harm to the Ukraine-related sanctions program objectives by engaging the services of an SDN designated on the basis that he is an official of the Government of the Russian Federation contributing to the crisis in Ukraine; and (4) ExxonMobil is a sophisticated and experiencedoil and gas company that has global operations and routinely deals in goods, services, and technology subject to U.S. economic sanctions and U.S. export controls.” As a mitigating factor, OFAC noted that ExxonMobil has not violated OFAC sanctions regulations in the five years preceding the date of the first transaction with Sechin. It is notable that OFAC did not credit ExxonMobil for other common mitigating factors, such as remedial steps, compliance programs, tolling agreements or limited harm based on conduct potentially eligible for a specific license.
 
  Conclusion
 
The civil penalty this large sends a clear message to U.S. persons that OFAC is now interpreting prohibited dealings with SDNs to include executing documents countersigned by an SDN in his representative capacity. It will be up to the courts to determine whether the message was clear before ExxonMobil acted, or whether OFAC’s action is a “new interpretation” that is arbitrary and capricious.

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COMM_a2
21. M. Volkov: “How Do You Define a Compliance Program Failure?”

(Source: Volkov Law Group Blog. Reprinted by permission.)
 
* Author: Michael Volkov, Esq., Volkov Law Group, mvolkov@volkovlaw.com, 240-505-1992.
 
In our perpetual quest for simplicity, sometimes we fail to understand the complexity of an issue. In the corporate world, if you ask board members and CEOs how they would define a compliance program “failure,” I am sure most  would answer that a compliance program fails when the government brings an enforcement action. In other words, when the government investigates a company and when a company breaks the law, compliance has failed in its primary responsibility –  to prevent a violation of the law.
 
This is a good definition in extreme enforcement cases. Take for example, Siemens, Alstom, Volkswagen and other significant enforcement actions that involved systematic breakdowns in a company’s culture and compliance controls. When a significant number of actors circumvent controls and embrace behaviors inconsistent with the company’s culture and code of conduct, it is reasonable to conclude that the company’s compliance program has failed.
 
So far, there is nothing controversial about that argument.  However, the issue is more nuanced than that because a “failure” should not depend on whether the government catches a company but should depend on the overall performance of a compliance program.
 
The definition here appears to depend on certain degrees of misconduct. In other less significant enforcement actions, is it fair to conclude that a compliance program failed when a smaller number of employees, possibly in one office, carry out an illegal scheme?
 
In the Johnson Controls FCPA action last year, sixteen employees at an office in China banded together to circumvent financial controls to collect money and use it to pay bribes. That was not a systemic breakdown across the company, but was a local breakdown.  Is it fair to conclude that the company’s compliance program failed?
 
On the other side of extremes of misconduct, we often hear about the myth of the so-called rouge employee who engages in misconduct causing corporate liability under the respondeat superior doctrine. Without getting into whether such a circumstance actually occurs, as the number of actors dwindles, it is harder to characterize a company’s compliance program as a “failure.”
 
A company’s compliance program cannot be judged on a standard of perfection. Nor can a CCO be held accountable for each and every significant occurrence of misconduct. Bad people work at good companies and it is unfair to suggest that a compliance program has to ensure that everyone at a company comports with a code of conduct and the law. Such a standard is unfair and irrelevant.
 
Let’s try some other measures. What if we adopt a standard based on rates of employee misconduct? Even that standard, however, is subject to other variables such as detection resources, availability of hotlines, and internal investigation programs. It is hard to measure accurately a single factor – rate of misconduct – when such a factor is subject to multiple variables.
 
The issue is really much more nuanced. Government prosecutors who hold corporations to a strict standard of corporate compliance are not necessarily being fair. Companies that have effective programs may fail to prevent misconduct and law-breaking. Just like many issues in life, the answer is one of degrees.
 
With 20-20 hindsight, it is easy to conclude that General Motors, Takada, BNP Paribas, or HSBC suffered from compliance program failures. These cases easily fall into the systemic sets of violations where compliance appears to be just an after thought or compliance officers are ignored or overrun by bad actors.
 
Corporate leaders, however, contribute to the definition problem as well. By simplistically asserting that a compliance program “fails” when there is a government enforcement action, the board and CEO have adopted the simplistic – and inaccurate – measurement of an effective compliance program. More attention needs to be given to how the compliance profession defines success and how it defines failure. There are grey areas surrounding these questions and they require closer examination and thoughtful solutions.

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COMM_a3
22. Shearman & Sterling LLP: “SEC Brings First Corporate FCPA Enforcement Action Under Its New Leadership”

 
On July 27, 2017, the Securities and Exchange Commission (“SEC”) brought an enforcement action against Halliburton Company, a Houston-based oilfield services corporation. Specifically, the SEC alleged that Halliburton violated the books and records and internal accounting controls provisions of the Foreign Corrupt Practices Act (“FCPA”) by utilizing a local Angolan company to obtain business from the Angolan state oil company.
In the Matter of Halliburton Company and Jeannot Lorenz
, Admin. Proc. No. 3-18080 (July 27, 2017) (“Order”). Without admitting or denying the alleged conduct and charges, Halliburton agreed to pay approximately $29.2 million to settle SEC charges stemming from the long-running investigation which commenced in 2011. As part of the Order, former Halliburton Vice-President Jeannot Lorenz, who allegedly spearheaded the conduct that formed the basis for the company’s settlement, agreed to pay a $75,000 penalty for “causing” the company’s underlying violations, circumventing internal accounting controls, and falsifying books and records.
 
According to the SEC, in early 2008, officials at Angola’s state oil company-Sonangol-threatened to veto subcontracting work to Halliburton if the company didn’t utilize additional local content as required by Angolan regulations governing foreign companies operating in Angola. In response, Halliburton tasked Lorenz, who had previous experience cultivating relationships and business networks in Angola, to lead efforts to partner with more local Angolan-owned businesses. When a new round of oil company projects in Angola came up for bid in April 2009, Lorenz engaged in extensive, multi-year negotiations in an attempt to retain a local Angolan company owned by a former Halliburton employee. The former employee was a friend and neighbor of the Sonangol official who had the authority to award subcontracts.
 
Lorenz repeatedly attempted to get internal approval of various proposed contracts with the local firm. The Order notes that on a number of occasions over the course of these negotiations, personnel from various Halliburton departments raised concerns about the contracts being contemplated. Halliburton ultimately entered into an interim consulting agreement in February 2010, which was backdated to September 2009, and a Real Estate Transaction Management Agreement on May 1, 2010. The company eventually paid $3.705 million to the local Angolan firm as part of these contracts, and Sonangol subsequently approved the award of seven lucrative subcontracts to Halliburton, which resulted in approximately $14 million of profit to the company.
 
The Order explores in some detail the internal processes that Lorenz violated over the course of his negotiations with the local Angolan firm. First, Lorenz violated Halliburton’s internal accounting controls by (1) first selecting the local Angolan company as a potential business partner, and (2) subsequently backing into the list of services that were to be contracted for. Company policy was to first assess the company’s need for a particular material or service, rather than the potential supplier itself. Second, Lorenz failed to conduct competitive bidding relating to the selection of Sonangol or substantiate the need for a single source of supply. Third, Lorenz ignored a company internal accounting control that required contracts worth more than $10,000 in high-risk countries like Angola to be reviewed and approved by an internal committee.
 
According to the Order, Halliburton agreed to pay the SEC $14 million in disgorgement plus $1.2 million in prejudgment interest, along with a $14 million civil penalty. The company also agreed to an independent compliance monitor for eighteen months, which is in line with a recent increased focus by the DOJ and the SEC on requiring compliance monitors as part of significant FCPA enforcement actions. The imposition of a compliance monitor is also less than surprising given that Halliburton previously settled alleged FCPA violations with the DOJ and the SEC in 2009.
 
Halliburton’s settlement comes during a period of reported uncertainty about how vigorously the new administration will pursue FCPA enforcement. See generally Shearman & Sterling LLP, Recent Trends and Patterns in the Enforcement of the Foreign Corrupt Practices Act (July 5, 2017). Though some commentators have opined that the Trump administration would fundamentally change the FCPA, senior SEC and DOJ officials in the new administration have expressed a continued commitment to FCPA enforcement. See, e.g., Acting Principal Deputy Assistant Attorney General Trevor N. McFadden Speaks at Anti-Corruption, Export Controls & Sanctions 10th Compliance Summit, available
here
(noting that the “[DOJ] remains committed to enforcing the FCPA and to prosecuting fraud and corruption more generally”). The SEC’s enforcement action against Halliburton is consistent with the statements of these Administration officials. Although the underlying investigation commenced under the prior Administration, the enforcement action was approved under the new leadership and corroborates their professed commitment to FCPA enforcement. We will continue to monitor and review developments in this space, to see if this recent enforcement action is a sign of more investigations and enforcement actions to come, or if it is instead more emblematic of the new SEC and DOJ leadership “closing out” cases that have been pending for some time.

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MSEX/IM TRAINING EVENTS & CONFERENCES

MS_a223ECTI Presents U.S. Export Control (ITAR/EAR/OFAC) Seminar on 16-19 Oct in Amsterdam, The Netherlands

(Source: Jill Kincaid; 
jill@learnexportcompliance.com)
 
* What: U.S. Export Control (ITAR/EAR/OFAC) Seminar Series in Amsterdam, The Netherlands (for EU and other non-US Companies)
* When: ITAR Seminar:  Oct 16-17, 2017; EAR/OFAC Seminar: Oct 18-19, 2017 
* Where: Amsterdam, Hilton Amsterdam Hotel; Apollolaan 138, 1077 BG, Amsterdam, The Netherlands
* Sponsor: Export Compliance Training Institute (ECTI)
ECTI Speaker Panel:  Scott Gearity, Greg Creeser, Stephan Müller
* Register: Here or contact Jessica Lemon at +1 540-433-3977 or jessica@learnexportcompliance.com.

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MS_a124Eighth Annual ‘Partnering for Compliance™’ West Export/Import Control Program on 10-13 Oct in Dallas, TX

[UPDATE: NIST/Computer Security Division Confirmed]
(Source: A.M. NicPhaidin,
Info@PartneringForCompliance.org
)

 
* What: The 8th Annual “Partnering for Compliance™” West will focus intensely on a broad spectrum of export/import regulatory and compliance matters of current relevance to companies and individuals involved in global trading. Senior-level government officials and trade experts will provide first-class training.
* Where: Dallas/Dallas-Fort Worth Marriott South Airport Hotel (completely renovated)
* When:
  – Tue – Thurs, 10-12 Oct: “8th Annual ‘Partnering for Compliance™’ West Export Control Program
  – Fri, 13 Oct: 1-Day Program “Customs/Import Boot Camp”
* Speakers Confirmed: DoS/DDTL: Terry Davis & one other TBD; DoS/DDTC: Sr. Specialist TBD; DoC/BIS: Lani Tito & OEE James Fuller; DoD/DTSA: Susan Daoussi; NIST: Kelley L. Dempsey; Census Bureau: Dale Kelly; DHS/CBP: Raul H. Orona; ICE: Dean Fittz; OFAC: Jamie Rose (Invited):  UK/EU: Strategic Shipping Company Ltd., UK: Bernadette Peers; Braumiller Law Group PLLC: Adrienne Braumiller & Bruce Leeds (Imports); and U.S. Commercial Service: David Royce.
* Opening Address: The Honorable Brian Nilsson (Invited), Deputy Assistant Secretary, Defense Trade Controls, Department of State
* Cost: Customs/Import 1-day program: $200. Export 3-day program: $600. Both programs: $800.
* Remarks: As time permits, all Government and trade speakers will informally hold short “one-to-one” meetings with participants on a “first-come, first-served” basis.
* Certificates of Completion granting: 4.5 IIEI CEUs and 20 CES NCBFAA Credits for 3-day Exports program, and 6.5 CCS NCBFAA Credits for 1-day Customs/Import Boot Camp will be awarded for each program.
* More information: Here.  

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ENEDITOR’S NOTES


* Elisha Gray (2 Aug 1835 – 21 Jan 1901; was an American electrical engineer who co-founded the Western Electric Manufacturing Company. Gray is best known for his development of a telephone prototype in 1876 in Highland Park, Illinois. Gray is also considered to be the father of the modern music synthesizer, and was granted over 70 patents for his inventions.)
  – “As to Bell’s talking telegraph, it only creates interest in scientific circles… its commercial values will be limited.”

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EN_a326
. 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_a0327. 
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.

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