17-0912 Tuesday “Daily Bugle”

17-0912 Tuesday “Daily Bugle”

Tuesday, 12 September 2017

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 Seeks Comments on Reducing Regulation and Controlling Regulatory Costs 
  2. Justice/ATF Seeks Comments on Form 3310.12, Report of Multiple Sale or Other Disposition of Certain Rifles 
  1. Ex/Im Items Scheduled for Publication in Future Federal Register Editions
  2. Congressional Research Service Publishes “The U.S. Export Control System and the Export Control Reform Initiative”
  3. Commerce/BIS: (No new postings.)
  4. Commerce/Census Announces AES Scheduled Outage, 16-17 Sep
  5. DHS/CBP Announces ACE Deployment G, Release 2 Deployment, 16-17 Sep 
  6. DHS/CBP Reschedules e214 and Manufacturer ID Creation Capabilities 
  7. DHS/CBP Updates Jones Act Waiver Guidance 
  8. DHS/CBP Updates Notice on CBP Operations for TFO Ports During the Aftermath of Hurricane Irma 
  9. DoD/DSS Requires PKI Tokens for SIPRNet Connections 
  10. President Continues National Emergency with Respect to Certain Terrorist Attacks 
  11. State/DDTC: Bright Lights USA, Inc., Barrington, NJ to Pay $400,000 to Settle Alleged AECA and ITAR Violations 
  1. Defense News: “As China Quietly Invests in American Tech Startups, US Struggles to Respond”
  2. Washington Post: “U.N. Agrees to Toughest-Ever Sanctions against North Korea”
  1. M. Volkov: “The Emperor Has No [Compliance Program]”
  2. Gary Stanley’s ECR Tip of the Day
  3. R.C. Burns: “Florida Imposes Its Own Embargo on Cuba”
  1. Vista Outdoor Posts Import Specialist Position 
  1. ECTI Presents “EAR License Exceptions: Learning by Doing Webinar – A Two Part Series,” 17 & 26 Oct 
  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 (15 Aug 2017), FACR/OFAC (16 Jun 2017), FTR (19 Apr 2017), HTSUS (25 Jul 2017), ITAR (30 Aug 2017) 
  3. Weekly Highlights of the Daily Bugle Top Stories 


1. DHS/CBP Seeks Comments on Reducing Regulation and Controlling Regulatory Costs

(Source: Federal Register) [Excerpts.]
82 FR 42751-42752: Reducing Regulation and Controlling Regulatory Costs
* AGENCY: U.S. Customs and Border Protection, Department of Homeland Security.
* ACTION: Request for information.
* SUMMARY: As part of its implementation of Executive Order 13771, “Reducing Regulation and Controlling Regulatory Costs,” issued by the President on January 30, 2017, and Executive Order 13777, “Enforcing the Regulatory Reform Agenda,” issued by the President on February 24, 2017, U.S. Customs and Border Protection (CBP) within the Department of Homeland Security (DHS) is seeking comments and information from interested parties to assist CBP in identifying existing regulations, paperwork requirements, and other regulatory obligations that can be modified or repealed, consistent with law, to achieve savings of time and money while continuing to achieve CBP’s statutory obligations.
* DATES: Written comments and information are requested on or before December 11, 2017. …
* FOR FURTHER INFORMATION CONTACT: Elena Ryan, Special Advisor, Programs and Policy Analysis, U.S. Department of Homeland Security, U.S. Customs and Border Protection, Office of Trade, Regulations and Rulings, 90 K Street NE., 10th Floor, MS1177, Washington, DC 20229. Telephone: 202-325-0004. Email: regulatoryreformsuggestion@cbp.dhs.gov.
  CBP is, through this document, seeking input from entities affected by CBP, including state, local, and tribal governments, small businesses, consumers, non-governmental organizations, manufacturers, and their trade associations. These entities are in the best position to help CBP identify rules that are obsolete, unnecessary, unjustified, or simply no longer make sense, or rules that could be better modernized to accomplish their objectives. …
  Accordingly, CBP is asking you to consider the following questions when providing your input:
    (1) Are there CBP rules or reporting requirements that have become outdated and, if so, how can they be modernized to better accomplish their objective?
    (2) Are there CBP rules that are still necessary, but have not operated as well as expected such that a modified, or slightly different approach at lower cost is justified?
    (3) Are there CBP rules that unnecessarily obstruct, delay, curtail, or otherwise impose significant costs on the secure flow of legitimate trade and travel to and from the United States?
    (4) Does CBP currently collect information that it does not need or use effectively?
    (5) Are there regulations, reporting requirements, or regulatory processes that are unnecessarily complicated or could be streamlined to achieve statutory obligations in more efficient ways?
    (6) Are there rules or reporting requirements that have been overtaken by technological developments? Can new technologies be leveraged to modify, streamline, or do away with existing regulatory or reporting requirements?
  To allow CBP to more effectively evaluate suggestions, CBP requests that commenters identify with specificity the regulation (in either Title 19 CFR Chapter I, or Title 8 CFR, Chapter I) or reporting requirement at issue, and provide the legal citation where available. Please note that certain regulations which reflect statutory requirements cannot be eliminated until the statute is amended or repealed to eliminate that requirement. CBP also requests that the submitter provide, in as much detail as possible, an explanation why a regulation or reporting requirement should be modified, streamlined, or repealed, as well as specific suggestions of ways CBP can do so while achieving its regulatory objectives. In addition, supporting data or other information, such as cost information, for any suggestions would be useful. …
   Dated: September 6, 2017.
Mark Koumans, Deputy Executive Assistant Commissioner, Operations Support, U.S. Customs and Border Protection.

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EXIM_a22. Justice/ATF Seeks Comments on Form 3310.12, Report of Multiple Sale or Other Disposition of Certain Rifles

(Source: Federal Register) [Excerpts.]
82 FR 42836-42837: Agency Information Collection Activities; Proposed eCollection eComments Requested; Revision of a Currently Approved Collection; Report of Multiple Sale or Other Disposition of Certain Rifles–ATF Form 3310.12
* AGENCY: Bureau of Alcohol, Tobacco, Firearms and Explosives, Department of Justice.
* ACTION: 60-Day notice. …
* DATES: Comments are encouraged and will be accepted for 60 days until November 13, 2017.
* FOR FURTHER INFORMATION CONTACT: If you have additional comments, particularly with respect to the estimated public burden or associated response time, have suggestions, need a copy of the proposed information collection instrument with instructions, or desire any additional information, please contact Ed Stely, Branch Chief, Tracing Operations and Records Management Branch, National Tracing Center Division, either by mail at 244 Needy Road, Martinsburg, WV 25405, or by email at Edward.Stely@atf.gov.
  – The title of the form/Collection: Report of Multiple Sale or
Other Disposition of Certain Rifles.
  – Form number (if applicable): ATF Form 3310.12.
  – Component: Bureau of Alcohol, Tobacco, Firearms and Explosives,
U.S. Department of Justice. …
  – Abstract: The purpose of this information collection is to continue a requirement that Federal firearms licensees report multiple sales or other dispositions whenever the licensee sells or otherwise disposes of two or more rifles to the same person at one time or within any five consecutive business days with the following characteristics: (a) Semi-automatic; (b) a caliber greater than .22; and (c) the ability to accept a detachable magazine. This requirement will apply to Federal Firearms Licensees (FFLs) who are dealers and/or pawnbrokers in Arizona, California, New Mexico and Texas. …
  If additional information is required contact: Melody Braswell, Department Clearance Officer, United States Department of Justice, Justice Management Division, Policy and Planning Staff, Two Constitution Square, 145 N Street NE., 3E.405A, Washington, DC 20530.
  Dated: September 7, 2017.
Melody Braswell, Department Clearance Officer for PRA, U.S. Department of Justice.
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OGS_a13.  Ex/Im Items Scheduled for Publication in Future Federal Register Editions
Federal Register)


* President; ADMINISTRATIVE ORDERS; [Publication Date: 13 September 2017.]:

  – Terrorist Attacks; Continuation of National Emergency (Notice of September 11, 2017)
  – Trading With the Enemy Act; Continuation of Certain Authorities (Presidential Determination No. 2017-11 of September 8, 2017)
[Editor’s Note: Both notices have already been included in the Daily Bugle, and will not be reprinted in tomorrow’s edition.  The 8 September Presidential Determination was included in the 11 September Daily Bugle, item #7.  The notice of 11 September is included in today’s edition, item #12.]

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CRS Study: “The U.S. Export Control System and the Export Control Reform Initiative” (July 24, 2017), by Ian F. Fergusson, Specialist in International Trade and Finance, and Paul K. Kerr, Specialist in Nonproliferation
Summary (of 28-page document)  
Difficulty with striking an appropriate balance between national security and export competitiveness has made the subject of export controls controversial for decades. Through the Arms Export Control Act (AECA), the International Emergency Economic Powers Act (IEEPA), and other authorities, the United States restricts the export of defense items or munitions; dual-use goods and technology; certain nuclear materials and technology; and items that would assist in the proliferation of nuclear, chemical, and biological weapons or the missile technology used to deliver them. U.S. export controls are also used to restrict exports to certain countries on which the United States imposes economic sanctions.
The Export Administration Act (EAA) legislated dual-use controls, but it has expired and such controls are presently maintained under IEEPA authorities. The U.S. export control system is diffused among several different licensing and enforcement agencies. Exports of dual-use goods and technologies-as well as some military items-are licensed by the Department of Commerce, munitions are licensed by the Department of State, and restrictions on exports based on U.S. sanctions are administered by the U.S. Department of the Treasury. 
Administrative enforcement of export controls is conducted by these agencies, while criminal enforcement is carried out by the Department of Commerce, units of the Department of Homeland Security, and the Department of Justice. Aspects of the U.S. export control system have long been criticized by exporters, nonproliferation advocates, allies, and other stakeholders as being too rigorous, insufficiently rigorous, cumbersome, obsolete, inefficient, or combinations of these descriptions.
In August 2009, the Barack Obama Administration launched a comprehensive review of the U.S. export control system. In April 2010, then-Defense Secretary Robert M. Gates proposed an outline of a new system based on four singularities:
  – a single export control licensing agency for dual-use, munitions exports, and Treasury-administered embargoes,
  – a unified control list,
  – a single primary enforcement coordination agency, and
  – a single integrated information technology (IT) system.
The rationalization of the two control lists was the Obama Administration’s focus. The Administration made no specific proposals concerning the single licensing agency, although the Administration implemented some elements of a future single system, such as a consolidated screening list and harmonization of certain licensing policies. In considering the future of the U.S. export control system, Congress may weigh the merits of a unified export control system-a chief goal of President Obama’s proposal-or the continuation of the present bifurcated system by reauthorizing the EAA or enacting replacement legislation. In doing so, Congress may debate the record of the present dual-use system maintained by emergency authority, the aims and effectiveness of the present non-proliferation control regimes, the maintenance of the defense industrial base, and the balance between maintaining economic competitiveness and preserving national security.

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. Commerce/Census Announces AES Scheduled Outage, 16-17 Sep

The outage is effective 8:00pm EST Saturday, September 16 – 7:00am EST Sunday, September 17.
AES filers may submit shipments under the AES Downtime Policy. State Department licensable shipments cannot be exported under the AES Downtime Policy and must be held until the connection is restored and an Internal Transaction Number (ITN) is received. Once connection is brought back on-line after the outage, all shipments that were exported under the AES Downtime Policy must be filed along with any new AES transactions.
If you use the AES Downtime Policy for export, please contact the port from which you will be exporting. In lieu of the AES Proof of Filing citation, please use the AES Downtime citation, which consists of the phrase AESDOWN, your individual company’s Filer ID, followed by the date.
For example: AESDOWN 123456789 09/16/2017
Please see the CBP web site for further information on the AES Downtime Policy.
For further information or questions, contact the U.S. Census Bureau’s Data Collection Branch.
  – Telephone: (800) 549-0595, select option 1 for AES
  – Email: askaes@census.gov

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. DHS/CBP Announces ACE Deployment G, Release 2 Deployment, 16-17 Sep

CSMS #17-000561, 12 Sep 2017.)
ACE Deployment G, Release 2 – Non-ABI Entry Summary/Lineless, Duty Deferral and Importer Security Filing – will deploy during an extended system outage this weekend from Saturday, September 16, 8pm ET until Sunday 7am ET, September 17.

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. DHS/CBP Reschedules e214 and Manufacturer ID Creation Capabilities

(Source: CSMS #17-000556, 11 Sep 2017.)
Due to the aggressive 2017 hurricane season and concerns expressed by the trade community for businesses managing a transition of the electronic Foreign Trade Zone (e214) through these events, CBP has decided to reschedule the deployment of e214 and Manufacturer ID (MID) creation capabilities. Deployment of these capabilities will move from September 16, 2017 to our next scheduled deployment on December 9, 2017.

The updated Deployment G schedule is as follows: 

  – ACE Deployment G, Release 2 (September 16, 2017) – Non-ABI Entry Summary/Lineless (for CBP only), Duty Deferral and Importer Security Filing
  – ACE Deployment G, Release 3 (December 9, 2017) – Statements, e214 (electronic Foreign Trade Zone admission) and Manufacturer ID Creation
  – ACE Deployment G, Release 4 (February 24, 2018) – Reconciliation, ACE Core Drawback and Trade Facilitation and Trade Enforcement Act (TFTEA) Drawback, Liquidation and Automated Surety Interface (ASI)

The ACE Deployment G2 Information Notice will be updated to include the schedule above. If you experience issues during the deployment, please contact the help desk or your assigned client representative. 

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. DHS/CBP Updates Jones Act Waiver Guidance

(Source: CSMS #17-000562, 12 Sep 2017.)
On September 8, 2017, the Department of Homeland Security (“DHS”) issued a limited waiver of 46 U.S. C. § 55102 (the “Jones Act”) pursuant to 46 U.S.C. § 501(a), at the request of the Department of Defense. U.S. Customs and Border Protection (“CBP”) requests that any member of the trade community who intends to conduct transportation of refined petroleum products, including gasoline, diesel and jet fuel, on a foreign-flag vessel, authorized by and within the parameters of the September 8 waiver, provides notice to CBP at JonesActWaiverRequest@cbp.dhs.gov of the following details of any such transportation:
  – Vessel name (including IMO number)
  – Commodity
  – Carrier
  – Ports and dates of departure and arrival
If you have already commenced such transportation pursuant to the September 8 waiver, please provide the details set forth above by email to JonesActWaiverRequest@cbp.dhs.gov. Thank you for your cooperation.
Related CSMS No. CSMS #17-000563.

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. DHS/CBP Updates Notice on CBP Operations for TFO Ports During the Aftermath of Hurricane Irma

(Source: CSMS #17-000557, 12 Sep 2017.)
This message is being issued to provide trade partners an update on the operational status for Tampa Field Office (TFO) ports during the aftermath of Hurricane Irma. Please review the information below:
  – All ports, except Ft. Myers (1822) and Naples (1880), will resume their normal operations on Tuesday, September 12th, 2017.
  – Ports of Ft. Myers and Naples will resume regular operations on Wednesday, September 13th, 2017.
Related CSMS No. 17-000554, and 17-000555.

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. DoD/DSS Requires PKI Tokens for SIPRNet Connections

(Source: DoD/DSS)
Effective October 1, 2017, in accordance with the DoD Chief Information Officer Memo dated July 14, 2017, the following is required:
  (a) All DoD sponsors of contractor-site SIPRNet connections must obtain SIPRNet PKI tokens for their cleared contractors. User names and passwords will no longer be used.
  (b) All DoD sponsors of contractor-site SIPRNet connections using Microsoft Active Directory (AD) must configure these connections to require user network crypto-logon with DoD SIPRNet PKI tokens.
  (c) All users of contractor-site SIPRNet connections must use PKI tokens to authenticate to websites and applications.
  (d) All Command Cyber Readiness Inspections will check for compliance with these requirements.
For additional information on SIPRNet PKI, please see the Defense Information Systems Agency SIPRNet PKE webpage.
Please contact your assigned Information Systems Security Professional with any questions or concerns regarding the implementation of this requirement.

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. President Continues National Emergency with Respect to Certain Terrorist Attacks

(Source: The White House)
Consistent with section 202(d) of the National Emergencies Act, 50 U.S.C. 1622(d), I am continuing for 1 year the national emergency previously declared on September 14, 2001, in Proclamation 7463, with respect to the terrorist attacks of September 11, 2001, and the continuing and immediate threat of further attacks on the United States.
Because the terrorist threat continues, the national emergency declared on September 14, 2001, and the powers and authorities adopted to deal with that emergency must continue in effect beyond September 14, 2017. Therefore, I am continuing in effect for an additional year the national emergency declared on September 14, 2001, in response to certain terrorist attacks.This notice shall be published in the Federal Register and transmitted to the Congress.
September 11, 2017.

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. State/DDTC:
Bright Lights USA, Inc., Barrington, NJ to Pay $400,000 to Settle Alleged AECA and ITAR Violations

(Source: State/DDTC)  
* Respondent: Bright Lights USA, Inc., 145 Shreve Ave., Barrington, NJ
* Charges: Eleven charges of violations of the AECA and ITAR between 2010 and 2012, and 2014 and 2015
  – Four Charges of Unauthorized Export of Defense Articles to a Proscribed Destination
  – One Charge of Unauthorized Export of Defense Article (Technical Data)
  – One Charge of Failure to Maintain and Provide Required Records
  – Five Charges of Unauthorized Export of Defense Articles (Parts and Components)
* Civil Settlement: $400,000
* Debarred or Suspended from Export Transactions: Not if penalty is paid and corrective actions are completed as agreed.
* Result of Voluntary Self-Disclosure: Yes
* Date of Order: 11 September 2017
* Available documents:
  – Order
* Mitigating Factors:
  – Submitting two voluntary disclosures;
  – Cooperating with the Department’s review of the disclosed events and signed multiple agreements tolling the statutory period;
  – Provided information suggesting that the violations were not willful in nature; and
  – Significant improvements to its export compliance program that reduce the likelihood of future violations.
* Aggravating Factors:
  – Central role of an individual with a prior AECA conviction;
  – Significant ITAR training and compliance program deficiencies that directly contributed to the violations;
  – Unauthorized export of technical data to a proscribed destination.

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. Defense News: “As China Quietly Invests in American Tech Startups, US Struggles to Respond”

(Source: Defense News)
Amid concerns from U.S. lawmakers and the Pentagon that China is “weaponizing” investment in early-stage technologies, Congress is considering legislation aimed at sealing regulatory gaps.
Sen. John Cornyn, the Senate’s No. 2 Republican, is poised to introduce a bill to modernize and broaden the reach of the Committee on Foreign Investment in the United States, or CFIUS, a secretive, interagency panel that screens foreign investment in the U.S. economy to safeguard national security.
China has been able to circumvent the committee by investing in early-stage technologies that are potentially critical to the military. The trend, which is setting off alarm bells as both an economic and national security threat, has been detailed in an unreleased Pentagon report.
The Senate Armed Services Committee has meanwhile advanced its 2018 defense policy bill with language to order the secretaries of defense, state and treasury to develop plans to better screen foreign investments with potential impacts on U.S. national security.
Neither the SASC’s nor Cornyn’s proposal names any countries, but Cornyn has highlighted China as “the most aggressive.”
The proposals come amid broader questions of whether the White House will make good on U.S. President Donald Trump’s protectionist, America-first campaign rhetoric and whether that would create a backlash for U.S. defense firms that rely on exports to overseas markets. Many U.S. defense firms use international sales to keep production lines viable and drive down costs domestically.
Concurrently, the administration has attempted to both renegotiate the U.S.-China trade relationship and seek Beijing’s help to crack down on North Korea’s nuclear missile program. Trump has in recent days inched toward possible tariffs or trade restrictions to punish China for its theft of U.S. intellectual property.
Beijing, meanwhile, has rocked Western companies with the launch of its Made in China 2025 plan, which aims to use state funds to turn China into a self-sufficient tech superpower dominant in semiconductors, robotics, smart sensors, aerospace and other technologies.
There’s concern that technologies invented in the U.S. might fuel that rise. Chinese investment in acquisitions, new operations and expansions in the U.S. jumped to $46 billion in 2016, more than three times the previous record in 2015, according to a report by the Rhodium Group.
The Pentagon report, detailed by Cornyn, warned that China is taking advantage of America’s open market to invest in U.S. firms under the radar, all to close the technological gap with the U.S. It’s unclear how widespread the tactic is, but Chinese firms are said to be supplying early seed money to tech startups, which offers access to new technologies instead of a controlling interest.
Though the Pentagon has a 2-year-old effort to invest in startup tech firms, the Defense Innovation Unit Experimental, the military typically does not invest in this way – and the concern is it is being outflanked.
  “Most of what China wants to invest in is leading-edge U.S. technology that’s key for our future military capabilities,” Cornyn, of Texas, said at an event in June to announce his bill. “Unless the trend line changes, we may one day see some of these technologies incorporated in China-made equipment that could be used against our own country in the event, heaven forbid, of a military conflict.”
The draft legislation would expand CFIUS’ jurisdiction to review both noncontrol transactions and overseas joint ventures that result in access to U.S. technology. It proposes a tiered system, with heightened scrutiny for countries of special concern – likely China and Russia.
CFIUS reform, Cornyn said, has the support of the intelligence community as well as the secretaries of defense, commerce and treasury.
Treasury Secretary Steven Mnuchin has, in public remarks, urged legislative fixes for CFIUS, while Commerce Secretary Wilbur Ross has specifically expressed concern for protecting the U.S. edge in semiconductors from China. (The Obama administration acknowledged cutting-edge semiconductor technology as critical to defense systems and U.S. military strength.)
Defense Secretary Jim Mattis told a Senate Armed Services Committee hearing earlier this year that CFIUS is “outdated” and “needs to be updated to deal with today’s situation.”
A Center for Strategic and International Studies report last year, however, stopped short of recommending an overhaul. It concluded that CFIUS is working, but complex, cross-border ownership structures are making it difficult to identify the origin of investments, fueling the perception of risk.
One of the report’s authors, Andrew Hunter, a former Pentagon acquisition official and congressional staffer, said there is legitimate concern with China. However, he warned that expanding mandatory reporting requirements could saddle industry and swamp an already backlogged CFIUS.
  “There’s an easy possibility that the government gets overwhelmed and not only might they miss transactions that need government scrutiny, and they may have to extend the length of these investigations,” Hunter said. “You could have a lot more deals that fail because of the extended time frame.”
The White House in July ordered a broad review of the U.S. defense-industrial base and supply-chain resiliency to suggest steps to strengthen it. Earlier in the year, it launched an investigation into whether foreign imports of steel compromise U.S. national security, a move that was viewed as a step toward cracking down on China’s unfair trading practices and protecting defense needs.
On Aug. 14, Trump authorized United States Trade Representative Robert Lighthizer to investigate state-backed theft by China of intellectual property from American technology and defense companies. The White House estimates intellectual property theft costs the U.S. economy $600 billion per year.
That probe will reportedly focus on Beijing’s practice of forcing U.S. companies that seek market access in China to partner with local firms to hand over of proprietary technological secrets, which is deemed unfair.
Seeking to outdo Trump and perhaps play to Rust Belt voters, Senate Democrats earlier in the month introduced a trade agenda that includes an American Jobs Security Council, like CFIUS, to review foreign investments in American companies for their economic impact – as opposed to their national security impact.
  “China is trying to buy up our best robotics companies, our best American intelligence companies – Hollywood,” Senate Minority Leader Chuck Schumer, D-N.Y., said at an Aug. 2 news conference. “They’re rapacious, they do not play by the rules and we sit there.”

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. Washington Post: “U.N. Agrees to Toughest-Ever Sanctions against North Korea”

(Source: Washington Post) [Excerpts.]
The U.N. Security Council on Monday agreed on its toughest-ever sanctions against North Korea that passed unanimously after the United States softened its initial demands to win support from China and Russia.
The sanctions set limits on North Korea’s oil imports and banned its textile exports in an effort to deprive the reclusive nation of the income it needs to maintain its nuclear and ballistic missile program and increase the pressure to negotiate a way out of punishing sanctions. …

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. M. Volkov: “The Emperor Has No [Compliance Program]”

(Source: Volkov Law Group Blog. Reprinted by permission.)
* Author: Michael Volkov, Esq., Volkov Law Group, mvolkov@volkovlaw.com, 240-505-1992.
At the outset, I have to apologize for the title but during my morning bike ride I usually come up with blog posting titles. But moving past the trite title, I have a point to make.
It starts with a hypothetical – a CEO is supposed to introduce a company’s new code of conduct at a company event. Everyone attends – in person or virtually – and the CEO is supposed to lead off the event with a speech about the new code of conduct and reinforce the company’s commitment to live by the new code.
Shortly before speaking, the CEO turns to the CCO and informs the CCO that the CCO should introduce the new code and speak in the CEO’s place. The CCO, of course, follows the CEO’s instruction.
What is the message behind this scenario?
I know it is obvious but this has happened in the real world. The CEO does not understand ethics and compliance and the importance of his or her commitment to compliance. The company’s program, to the extent, it has been implemented will suffer. In fact, I would argue that the compliance program by definition is not effective.
Let me add another indication of a company’s commitment to ethics and compliance.
A new chief compliance officer is hired. During the interview process, the CCO candidate is assured that the company is committed to promoting an independent CCO and compliance function. The CCO believes the representations and takes the job.
On the first day of the new job, the CCO shows up and after preliminary paperwork and orientation is taken to his/her new office – on the fourth floor, 12 floors away from the C-Suite, where the CEO and senior executives are located.
What is the message behind this scenario?
I know it sounds shallow but there is a point here. A CCO is either a part of the senior executive team or is not – anyone who thinks there are gradations here of acceptable solutions to this issue is deluding themselves. The location of a CCO’s office and standing in the corporate ladder is a critical reflection of the CCO’s role in the company, and ultimately the influence that the CCO will have in the company.
Let’s consider another scenario.
A CCO reports quarterly to the company’s audit committee. The CCO has been pushing for additional staff to implement a comprehensive third-party risk management program. The CCO’s request has been resisted by the CEO and the Chief Legal Officer (CLO) because of other competing needs. The CCO believes that the request is imperative.
During the Audit Committee meeting, the CCO provides a quarterly review of relevant ethics and compliance program topics. The CCO brings up the issue and the CEO is quiet during the discussion. At the close of the presentation, the Audit Committee enters into executive session with the CCO. The Audit Committee chair asks the CCO if there are any issues to discuss. The CCO replies that there are no issues to discuss.
What is the message behind this scenario?
CCOs are under pressure in the corporate world to “go along to get along.” But a CCO who is not comfortable to bring up significant issues with the Audit Committee, when necessary, is not maximizing his/her ability to improve the company’s ethics and compliance program.
While there are other ways to solve this problem, such as informal discussions with the Audit Chair or other possibilities to secure the resources needed for compliance, the scenario sets up a situation where a CCO does not use all of the available tools to solve a specific problem.   A CCO has to speak up, while balancing political factors in the corporate governance world. There are a number of ways to accomplish compliance objectives, and CCOs have to use creative strategies to get what they need.
These scenarios highlight ethics and compliance omissions. Each of the scenarios reflects potential weaknesses in the compliance program. When you add them up, or even consider the implications of each one by themselves, the company’s compliance program is likely not to be effective.

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17. Gary Stanley’s ECR Tip of the Day

(Source: Defense and Export-Import Update; available by subscription from
* Author: Gary Stanley, Esq., Global Legal Services, PC, (202) 352-3059,
Any foreign national is subject to the EAR’s deemed export regulations except a foreign national who (1) is granted permanent residence, as demonstrated by the issuance of a permanent resident visa (i.e., Green Card); or (2) is granted U.S. citizenship; or (3) is granted status as a protected person under 8 U.S.C. 1324b(a)(3). This includes all persons in the U.S. as tourists, students, businesspeople, scholars, researchers, technical experts, sailors, airline personnel, salespeople, military personnel, diplomats, etc. As noted, one exception to this general statement is a protected person. Protected persons include political refugees and political asylum holders. Be aware that individuals seeking protected person status must satisfy all of the terms and conditions that are fully set forth in 8 U.S.C. 1324b(a)(3). It should be emphasized that although the deemed export regulations may be triggered, this does not necessarily mean that a license is required. For example, the technology may be EAR99 or license exception eligible.

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18. R.C. Burns: “Florida Imposes Its Own Embargo on Cuba”

Export Law Blog
. Reprinted by permission.)
* Author: R. Clifton Burns, Esq., Bryan Cave LLP, Wash DC,
, 202-508-6067).
Last week, before other things got in the way, Florida governor Rick Scott looked in the mirror and suddenly realized that he had been elected by the American voters to run the foreign policy of the United States. So, without further delay, Scott announced that Florida would cut off all state funding for any port that permitted traffic to Cuba. As a result, the ports in Everglades and Palm Beach cancelled memoranda of understanding that they were planning to sign with Cuban officials visiting the state.
Now, of course, we all understand that Governor Scott’s 8th grade civics class may not have covered some of the finer points of the U.S. Constitution, and we also understand that Cuba-bashing is a favorite sport for Florida politicians, but even a quick review of the Supreme’s Court’s decision in Crosby v. National Foreign Trade Council reveals the problems with the governor’s actions here. In Crosby, Massachusetts prohibited state agencies from buying goods from companies that did business with Burma. The Supreme Court held that the law was preempted by the Supremacy Clause of the United States Constitution. In doing so, the Court noted that the Massachusetts law interfered with the ability of the federal government to conduct foreign policy with respect to Burma. Central to that holding was the court’s finding that the Massachusetts law penalized companies for engaging in trade with Burma that was expressly permitted by the federal sanctions against Burma
Here, Governor Scott’s threat extends to all trade with Cuba, even if that trade is permitted by a specific or general license. So, to take a timely example, it is legal, under section 515.591 of the Cuban Assets Control Regulations and License Exception SCP of the Export Administration Regulations to export goods and services to Cuba to assist with rebuilding infrastructure damaged by Hurricane Irma. Yet, under the threatened action, if that relief is shipped through a Florida port, that port will be penalized by Florida. This does seem, shall we say, pretty ungrateful under the circumstances: Irma’s strength, and impact on Florida, was lessened by the time she spent wreaking havoc on the northern coast of Cuba. Florida ought to think of that before blocking aid to Cuba in rebuilding destroyed infrastructure.

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MS_a219. Vista Outdoor Seeks Import Specialist

Vista Outdoor)

Company: Vista Outdoor
* Location: Overland Park, Kansas

Title: Import Specialist 
* Req. ID: R0002750
* Apply 
here or by contacting Holly Greenwood:
– 763-433-1052

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* What: EAR License Exceptions: Learning by Doing – A Two Part Series
* When: (TWO DAYS) October 17 & 26, 2017; 1:00 p.m. (EDT)
* Where: Webinars (two-part series)
* Sponsor: Export Compliance Training Institute (ECTI)
* ECTI Speaker: Melissa Proctor
* Register: Here or Danielle McClellan, 540-433-3977, danielle@learnexportcompliance.com. 
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* Maurice Chevalier (Maurice Auguste Chevalier; 12 Sep 1888 – 1 Jan 1972; was a French actor, cabaret singer and entertainer. He is perhaps best known for his signature songs, including “Louise”, “Mimi”, “Valentine”, and “Thank Heaven for Little Girls” and for his films, including The Love Parade, The Big Pond and Love Me Tonight. His trademark attire was a boater hat, which he always wore on stage with a tuxedo.)
  – “The French are true romantics. They feel the only difference between a man of forty and one of seventy is thirty years of experience.”
  – “It is always the same: women bedeck themselves with jewels and furs, and men with wit and quotations.”
* H. L. Mencken (Henry Louis Mencken, 12 Sep 1880 – 29 Jan 1956, was an American journalist, satirist, cultural critic and scholar of American English. Known as the “Sage of Baltimore”, he is regarded as one of the most influential American writers and prose stylists of the first half of the twentieth century. He commented widely on the social scene, literature, music, prominent politicians and contemporary movements. His satirical reporting on the Scopes trial, which he dubbed the “Monkey Trial”, also gained him attention.)
  – “On some great and glorious day the plain folks of the land will reach their heart’s desire at last, and the White House will be adorned by a downright moron.”

  – “The whole aim of practical politics is to keep the populace alarmed (and hence clamorous to be led to safety) by menacing it with an endless series of hobgoblins, all of them imaginary.”

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. 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.
: 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. 
: 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

  – 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 

: 15 CFR Subtit. B, Ch. VII, Pts. 730-774

– Last Amendment: 15 Aug 2017: 
82 FR 38764-38819: Wassenaar Arrangement 2016 Plenary Agreements Implementation

: 31 CFR, Parts 500-599, Embargoes, Sanctions, Executive Orders
  – Last Amendment: 16 Jun 2017: 82 FR 27613-27614: Removal of Burmese Sanctions Regulations 
: 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
  – 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.
, 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
  – HTS codes that are not valid for AES are available
  – Last Amendment: 30 Aug 2017: 82 FR 41172-41173: Temporary Modification of Category XI of the United States Munitions List
  – The only available fully updated copy (latest edition: 30 Aug 2017) of the ITAR with all amendments is contained in Bartlett’s Annotated 

, 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
. BAFTR subscribers receive a 25% discount on subscriptions to the BITAR, please
contact us
to receive your discount code.

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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 

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* 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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