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17-0913 Wednesday “Daily Bugle”

17-0913 Wednesday “Daily Bugle”

Wednesday, 13 September 2017

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

[No items of interest noted today.] 

  1. Ex/Im Items Scheduled for Publication in Future Federal Register Editions
  2. Commerce/BIS: (No new postings.)
  3. State/DDTC: (No new postings.)
  4. EU Parliament: “EU Arms Export Control Needs a ‘Face Lift'”
  5. Singapore Customs Releases Circulars Concerning Exports to and Imports from Turkey under the Turkey-Singapore FTA 
  1. Independent: “DSEI 2017: Liam Fox Defends UK’s Lucrative Weapon Exports as World’s Biggest Arms Fair Opens in London”
  2. Reuters: “U.S. Sanctions Preventing Russian Project Financing”
  3. ST&R Trade Report: “DEA Intends to Restrict Imports and Exports of Three Synthetic Opioids”
  1. F.A.I.R. Trade Group: “DTAG September 2017 Plenary Meeting Update”
  2. Institute for Science and International Security Releases Report on U.S. Export Controls Concerning the Middle East
  3. Gary Stanley’s ECR Tip of the Day
  1. ECTI Presents “Encryption Export Controls 2017 Update Webinar,” 11 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 

EXIMEX/IM ITEMS FROM TODAY’S FEDERAL REGISTER

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[No items of interest noted today.] 

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OGSOTHER GOVERNMENT SOURCES

* Commerce/BIS; NOTICES; Export Privileges; Denials
  – Alexey Krutilin a/k/a David Powell;
  – Ambar Esthela Morales; and
  – Dmitrii Karpenko, a/k/a Simon Fox [Publication Dates: 13 Sept 2017.]

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OGS_a44. 
EU Parliament: “EU Arms Export Control Needs a ‘Face Lift'”

(Source: EU Parliament News, 13 Sept 2017.)
 
Key Points
  – Lack of uniform EU arms export control
  – Need for supervisory body and sanctions mechanism
  – Saudi Arabia should face EU arms embargo
 
The EU’s arms export control should be upgraded by setting up a supervisory body and sanctioning member states not complying with minimum requirements, said MEPs on Wednesday.
 
MEPs are alarmed at a global arms race and at military approaches to solve political conflicts. In a resolution adopted by 386 votes to 107, with 198 abstentions, MEPs criticize member states for violating EU’s common arms export control system and taking conflicting decisions on arms exports, though weapons to be exported are essentially alike and reach similar destinations and end-users. They also regret that only 20 member states fully reported on their arms export.
 
To remedy the situation MEPs advocate:
 
  – setting up an arms control supervisory body under the auspices of the High Representative;
  – creating a mechanism which sanctions member states which do not comply with the EU’s Common Position on arms exports;
  – widening the list of arms export criteria to oblige member states to assess the risk that an arms transfer could spur corruption;
  – increasing the transparency on arms export reporting by providing more and timely information on export licenses and turning the EU’s annual report on arms export into a searchable online database by the end of 2018;
  – creating effective post-shipment controls to ensure that arms are not being re-exported to unauthorised end users;
  – including armed drones in arms control regimes.

MEPs also stress that arms export to Saudi Arabia breaches the EU’s common position. They repeat the European Parliament’s call on the EU foreign policy chief Federica Mogherini to impose an EU arms embargo on Saudi Arabia.
 
Quote
 
Parliament’s rapporteur Bodil Valero (Greens/EFA, SV) said: “We need to shore up arms export controls. The EU should not shut its eyes when European weapons are being used for the purpose that does not comply with our own rules. We want certain changes: better scrutiny, sanctions against those countries that break the rules and Ms. Mogherini to take initiative to use arms embargo card where this is necessary.”
 
Quick facts
 
The EU28 member states are the world’s second largest arms supplier (26% of global arms exports), after the USA (33%) and before Russia (23%). The Middle East was the most significant region in terms of arms export for the EU in 2015.
 
The EU’s Common Position on arms exports is the only legally binding region-wide arrangement on conventional arms exports. It lists eight criteria which member states have to apply when taking a decision on arms export licenses, such as respect for the international obligations and commitments, particularly sanctions or respect for human rights and international humanitarian law by the recipient country.

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NWSNEWS

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Independent: “DSEI 2017: Liam Fox Defends UK’s Lucrative Weapon Exports as World’s Biggest Arms Fair Opens in London”

(Source: Independent, 12 Sep 2017.) [Excerpts.]
 
A cabinet minister has defended Britain’s lucrative weapons export industry as the world’s biggest arms fair opens in London.
 
More than 100 protesters have already been arrested while demonstrating against the controversial Defense and Security Equipment International (DSEI) event. … 
 
The Government has been accused of double standards for participating in arms control talks in Geneva as the exhibition opens, amid continued criticism over sales to regimes including Saudi Arabia that are accused of perpetrating war crimes using British weapons.
 
Liam Fox, the International Trade Secretary, defended the UK’s multibillion-pound arms export industry by claiming that if countries were unable to acquire weapons legally, there would be an eruption of unregulated sales. …
 
Dr Fox told delegates the UK had one of the most sophisticated export licensing regimes in the world, designed to ensure that British-made weaponry was not used to endanger international security.
 
  “There are robust safety measures to allow ethical defenses exports to flourish, protected by a licensing system to ensure exports are rational and lawful and which guarantees that we do not in the process violate international law, create tensions, promote terrorism or endanger global security,” he added.
 
  “If nations and peoples have an inalienable right to look after their own defense, those of us from advanced economies must remember that if we do not provide countries with means of defending themselves, then we will see a proliferation of uncontrolled and unregulated arms sales free from oversight or inhibitions.
 
  “To allow such a situation to develop would be vastly irresponsible.”
 
His comments came amid fresh calls from campaigners for Britain to end sales to Saudi Arabia, following claims that UK armaments are being used to kill civilians in Yemen as part of the country’s campaign against Houthi rebels. … 

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NWS_a2
7. 
Reuters: “U.S. Sanctions Preventing Russian Project Financing”

(Source: Reuters, 13 Sept 2017.) [Excerpts.]
 
U.S. sanctions have made financing large Russian projects “almost impossible”, the chief executive of Austrian energy company OMV, which has invested in the Nord Stream-2 trans-Baltic gas pipeline project, said on Wednesday.
 
Washington imposed new sanctions, several targeting Russia’s energy sector, last month to punish Moscow over alleged interference in the 2016 U.S. presidential election and the annexation of Ukraine’s Crimea.
 
  “The financing of such large infrastructure projects becomes almost impossible after the introduction of such sanctions,” OMV CEO Rainer Seele was quoted as saying by Interfax.
 

The Russian state news agency also quoted Seele as saying that it was hard to raise project financing for 70 percent of the costs and that partners in the Nord Stream-2 project were ready to provide bridge financing if necessary. …

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NWS_a3
8. ST&R Trade Report: “DEA Intends to Restrict Imports and Exports of Three Synthetic Opioids”

(Source: Sandler, Travis & Rosenberg Trade Report, 13 Sept 2017.)
 
The Drug Enforcement Administration has announced its intent to issue an order temporarily including the synthetic opioids N-(2-fluorophenyl)-N-(1-phenethylpiperidin-4-yl)propionamide (ortho-fluorofentanyl or 2-fluorofentanyl), N-(1-phenethylpiperidin-4-yl)-phenyltetrahydrofuran-2-carboxamide (tetrahydrofuranyl fentanyl), and 2-methoxy-N-(1-phenethylpiperidin-4-yl)-N-phenylacetamide (methoxyacetyl fentanyl) into schedule I of the Controlled Substances Act. Available information indicates that these substances have a high potential for abuse, no currently accepted medical use in treatment in the U.S., and a lack of accepted safety for use under medical supervision.
 
The temporary scheduling order will impose the administrative, civil, and criminal sanctions and regulatory controls applicable to schedule I substances under the CSA on the manufacture, distribution, reverse distribution, possession, importation, exportation, research and conduct of instructional activities, and chemical analysis of these substances. It will be effective on the date it is published in the Federal Register, which will be no sooner than Oct. 12, and will remain in effect for two years, with a possible extension of one year.

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COMMCOMMENTARY

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9. F.A.I.R. Trade Group: “DTAG September 2017 Plenary Meeting Update”

 
The
Defense Trade Advisory Group
(DTAG) held its most recent open session meeting on September 8, 2017. For those unfamiliar with DTAG, it is a committee of industry members appointed by the U.S. Department of State, Directorate of Defense Trade Controls (DDTC) to provide regular consultation and coordination with DDTC on issues involving U.S. laws, policies, and regulations (specifically, the International Traffic in Arms Regulations (ITAR)). Additional information on DTAG, as well as minutes and presentations from past meetings can be found on DDTC’s
website
. F.A.I.R.’s Executive Director, Johanna Reeves, is a current member of DTAG.
 
The Deputy Assistant Secretary of State for Defense Trade, Brian Nilsson, kicked off the meeting with introductory remarks on the state of affairs at DDTC. The following are highlights from DAS Nilsson’s remarks:
 
  – There has been movement on the rewrites for
U.S. Munitions List Categories I (Firearms, Close Assault Weapons and Combat Shotguns), II (Guns and Armament), and III (Ammunition/Ordnance)
. There has been a series of inter-agency meetings to discuss the rewrites, and the target for publication of these rules is “within the next year.” However, the Department of Commerce must publish a rule amending the Export Administration Regulations (EAR) to accept the items that will move off of the USML.  Unfortunately, the Department of Commerce does not qualify for the foreign affairs exemption from
Executive Order 13771
, as does DDTC. Executive Order 13771 requires that “when an executive department or agency…publicly proposes for notice and comment or otherwise promulgates a new regulation, it shall identify at least two existing regulations to be repealed.” This means that if the Department of Commerce is delayed in meeting its Executive Order 13771 obligations, this will impact the timeline for publication of rewritten Categories I, II, and III because DDTC cannot remove items from the USML without the Department of Commerce being able to issue simultaneously a rule adding the items to the Commerce Control List (CCL) under the Export Administration Regulations (EAR).
  – Clean up rules for USML Categories V and XI are expected because of Commodity Jurisdiction (CJ) requests that have been adjudicated.
  – A revision to §126.4 is currently in interagency review, then will be sent to OMB for publication in the Federal Register.
A revision to the 123.4 exemption for repair and return of defense articles has been drafted, but is receiving scrutiny during the OMB review process.
  – Some Advisory Opinions (AO) and General Correspondence (GC) have been delayed because they require high-level regulatory approval.  Since there are no confirmed political appointees within the Bureau of Political-Military Affairs (PM), which is the Bureau under which DDTC is housed, any AO or GC that requires such regulatory approval must go to Secretary of State Tillerson for signature.
  – The UAV export policy is under review. This will be the first policy review undertaken by this Administration.
  – Improvements to the Defense Trace Cooperation Treaties with the U.K. and Australia are being reviewed in hopes to identify improvements that can make the Treaty Exemptions more user friendly.
  – A review of the current suppressor and silencer policy is being undertaken. Currently, approval is only given for official end-users (i.e., not for civilian end-use).
 
DAS Nilsson also noted that there is an inter-agency partnership currently underway, which is considering a wholesale rewrite of the ITAR. The purpose of this endeavor is to clarify the ITAR and make it easier to understand and follow. This proposed ITAR rewrite would be done in phases, through a series of rules:
 
  (1) First would be a restructuring of the ITAR.  This rule has been drafted, but is currently under review at the White House.
  (2) Rules would follow to revise and update definitions.
  (3) Updates to Part 124 to add to the ITAR certain information that is currently contained in the Guidelines for Preparing Agreements.
 
The next public DTAG meeting is scheduled for December 7, 2017. There will be a publication in the Federal Register announcing the meeting and providing instruction for public attendance, for those interested in sitting in on the next DTAG open session.
 

Note: The F.A.I.R. Trade Group is a 501(c) (6) organization dedicated since 1994 to protecting the interests of the firearms and ammunition import and export community. F.A.I.R. operates entirely on the funds derived from our dues-paying membership. If you are interested in becoming a member or contributing to the organization, please visit our website.  

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COMM_a2
10. Institute for Science and International Security Releases Report on U.S. Export Controls Concerning the Middle East

 
The Institute for Science and International Security (ISIS) has published a 69-page report U.S. export controls concerning the Middle East, entitled ” Strengthening the Counter-Illicit Nuclear Trade Regime in the Face of New Threats: A Two-Year Review of Proliferation Threats Associated with the Middle East”. The freport is written by David Albright (Founder and President). Andrea Sticker (Senior Policy Analyst), among others, and is available in PDF
here
. Excerpts of the executive summary are included below.
 
Overview
 
The United States’ and associated global export control regime is losing ground due to several global events and trends underway in the United States and the Middle East. The developments at home and abroad are reducing controls and oversight over the flow of commodities vital to the development of nuclear weapons. Unless these trends are reversed, U.S. efforts to stem and stop nuclear proliferation in the Middle East and elsewhere will weaken. Events contributing to this greater proliferation danger include: 1) relaxed U.S. export control regulations and greater emphasis on global trade with streamlined exchange of intellectual property and commodities, including nuclear commodities; 2) on-going questions over the strong regulation of sensitive trade to Iran’s nuclear and ballistic missile programs; and 3) the expected actions of additional states to obtain nuclear capabilities to counterbalance Iran. This report provides findings from four studies that were part of a two-year Institute for Science and International Security review which identified threats to the United States’ and interconnected global export control regime and actions to take now to mitigate damages.
 
The review found that U.S. policy goals should include strong efforts to restrict the flow of sensitive technologies to the Middle East where proliferation and security concerns are currently high. This includes examining its own export control reforms and repairing new or ongoing deficiencies that contribute to the spread of sensitive military or other technologies. It should work to negotiate or otherwise impose the extension of limitations on Iran’s nuclear program in the Joint Comprehensive Plan of Action (JCPOA), since the legitimization of Iran’s advanced nuclear program exacerbates proliferation concerns. It should counter illicit nuclear and missile trade in the Middle East and elsewhere, which could support nuclear weapons development. The United States should affirm its strong defensive commitment to allies such as Saudi Arabia, the United Arab Emirates (UAE), Turkey, and Egypt, while working against their development or import of advanced fuel cycle capabilities. The United States should also support the implementation of strong controls and transparency measures in the Middle East to ensure that burgeoning civilian nuclear programs remain peaceful, such as commitments not to enrich or reprocess, implementation of the Additional Protocol, and provision of secure, lifetime fuel supplies for nuclear reactors. It should monitor via national intelligence capabilities any concerning research or imports by Middle East nations that could signify proliferation intentions, and use all available diplomatic or coercive means to prevent additional nuclear proliferation. Finally, the United States and its allies should work to reduce Middle East security tensions and develop threat reduction efforts more broadly. … 
  
 

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

(Source: Defense and Export-Import Update; available by subscription from
gstanley@glstrade.com
)
 
* Author: Gary Stanley, Esq., Global Legal Services, PC, (202) 352-3059,
gstanley@glstrade.com
.
 
EAR Part 772 defines the term “component” as an item that is useful only when used in conjunction with an “end item.” “Components” are also commonly referred to as assemblies. For purposes of this definition an assembly and a “component” are the same. 

There are two types of “components”: “major components” and “minor components.” A “major component” includes any assembled element which forms a portion of an “end item” without which the “end item” is inoperable. 
For example, for an automobile, “components” will include the engine, transmission, and battery. If you do not have all those items, the automobile will not function, or function as effectively. A “minor component” includes any assembled element of a “major component.” “Components” consist of “parts.” References in the CCL to “components” include both “major components” and “minor components.”

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TECEX/IM TRAINING EVENTS & CONFERENCES

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ECTI Presents “Encryption Export Controls 2017 Update Webinar,” 11 Oct


 
* What: Encryption Export Controls 2017 Update Webinar
* When: 11 Oct 2017; 1:00 p.m. (EDT)
* Where: Webinar
* Sponsor: Export Compliance Training Institute (ECTI)
* ECTI Speaker: Felice Laird
* Register:
Here
or Danielle McClellan, 540-433-3977,
danielle@learnexportcompliance.com
.

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ENEDITOR’S NOTES


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EN_a314
. 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: 15 Aug 2017: 
82 FR 38764-38819: Wassenaar Arrangement 2016 Plenary Agreements Implementation

  
*
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: 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 

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_a0315. 
Weekly Highlights of the Daily Bugle Top Stories

(Source: Editor) 

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

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EPEDITORIAL POLICY

* The Ex/Im Daily Update is a publication of FCC Advisory B.V., compiled by: Editor, James E. Bartlett III; Assistant Editors, Alexander P. Bosch and Vincent J.A. Goossen; and Events & Jobs Editor, John Bartlett. The Ex/Im Daily Update is emailed every business day to approximately 8,000 readers of changes to defense and high-tech trade laws and regulations. We check the following sources daily: Federal Register, Congressional Record, Commerce/AES, Commerce/BIS, DHS/CBP, DOJ/ATF, DoD/DSS, DoD/DTSA, State/DDTC, Treasury/OFAC, White House, and similar websites of Australia, Canada, U.K., and other countries and international organizations.  Due to space limitations, we do not post Arms Sales notifications, Denied Party listings, or Customs AD/CVD items.

* RIGHTS & RESTRICTIONS: This email contains no proprietary, classified, or export-controlled information. All items are obtained from public sources or are published with permission of private contributors, and may be freely circulated without further permission. Any further use of contributors’ material, however, must comply with applicable copyright laws.

* CAVEAT: The contents of this newsletter cannot be relied upon as legal or expert advice.  Consult your own legal counsel or compliance specialists before taking actions based upon news items or opinions from this or other unofficial sources.  If any U.S. federal tax issue is discussed in this communication, it was not intended or written by the author or sender for tax or legal advice, and cannot be used for the purpose of avoiding penalties under the Internal Revenue Code or promoting, marketing, or recommending to another party any transaction or tax-related matter.

* SUBSCRIPTIONS: Subscriptions are free.  Subscribe by completing the request form on the Full Circle Compliance website.

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