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17-1012 Thursday “Daily Bugle”

17-1012 Thursday “Daily Bugle”

Thursday, 12 October 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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[No items of interest noted today.]

  1. Ex/Im Items Scheduled for Publication in Future Federal Register Editions
  2. Commerce/BIS: (No new postings.)
  3. DHS/CBP Publishes Updated Draft CATAIR Implementation Guide
  4. DHS/CBP Releases Statements Documentation
  5. Justice: “Florida Businessman Pleads Guilty in Houston to Foreign Bribery Charges in Connection with Venezuelan Contract Scheme”
  6. State/DDTC: (No new postings.)
  7. White House Releases Presidential Memorandum Concerning Delegation of Certain Functions and Authorities under the Countering America’s Adversaries Through Sanctions Act of 2017
  1. NZ Herald: “National Cyber Policy Office Tests Market Appetite for Cybersecurity Scheme Aimed at SMEs”
  2. Reuters: “Iran Still Trying to Buy Items for Missile Development: Germany”
  3. ST&R Trade Report: “CTPAT Reauthorization Bill Would Revise Eligibility, Benefits, Requirements”
  1. A. Josselyn, C. Kimball & K. King: “M&A Guide to CFIUS: How the Review Process Can Impact Your Transaction”
  2. A. Capobianco, B. Curran & A. Kuntamukkala: “De-Certification and the Iran Nuclear Deal: The Beginning of the End, or Much Ado about Nothing?”
  3. CPJ: “Press at Risk as EU-Based Companies Export Surveillance Software to Hostile Regimes”
  4. Flash Global: “Eight Reasons the Customs-Trade Partnership Against Terrorism (C-TPAT) Fosters Legitimate Trade”
  5. M. Volkov: “In Defense of Compliance Checklists”
  1. Fred Helmstetter Moves to L3 Technologies  
  1. Bartlett’s Unfamiliar Quotations 
  2. Are Your Copies of Regulations Up to Date? Latest Changes: ATF (15 Jan 2016), Customs (28 Sep 2017), DOD/NISPOM (18 May 2016), EAR (3 Oct 2017), FACR/OFAC (16 Jun 2017), FTR (20 Sep 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

EXIM_a1
[No items of interest noted today.]

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OGSOTHER GOVERNMENT SOURCES

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

* Commerce/BIS; NOTICES; Meetings [Publication Dates: 13 Oct 2017.]:
  – Materials Processing Equipment Technical Advisory Committee
  – Sensors and Instrumentation Technical Advisory Committee
 
* Treasury/OFAC; NOTICES; Blocking or Unblocking of Persons and Properties [Publication Dates: 13 Oct 2017.]

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OGS_a33.

DHS/CBP Publishes Updated Draft CATAIR Implementation Guide

(Source:
CSMS# 17-000650, 11 Oct 2017.)
 
CBP has published an updated DRAFT CATAIR Implementation Guide (IG) for the ACE ABI FQ message set, whose current Production specifications can be found at “Queries: Extract Reference File” under the ABI CATAIR “Chapters” tab located here. The DRAFT message set update has been posted to CBP.gov under the ABI CATAIR “Chapters: Drafts for Future Capabilities” tab, here as “Extract Reference”.
 
FQ IG changes have been made to allow ACE to generate an error message in response to:
 
  – Trade using an F106 record to query a carrier code that does not exist as active in the ACE system. A new F906 error record will return the error.
  – Trade using an F112 record to query an import specialist team assignment. A new F912 error record will return a rejection error.
 
A minimum of two months will be provided to the Trade for programming these changes. Availability to test this in the ACE CERTIFICATION environment will be announced with a CSMS message update, anticipated for November.
 
This technical document is considered a DRAFT and is subject to revision before a final version is provided. Any decisions a reader makes based on this draft document are taken voluntarily and with the understanding that the draft may be revised.

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OGS_a44.

DHS/CBP Releases Statements Documentation

(Source:
CSMS# 17-000653, 12 Oct 2017.)
 
An updated ACE Deployment G, Release 3 (December 9, 2017) Information Notice has been posted to CBP.gov/ACE. This information notice covers Statements, e214 (electronic Foreign Trade Zone admission), and Manufacturer ID Creation. Additional information regarding Statements has been included and can be accessed here.
 
Documents:
  – An updated Draft CATAIR for Daily Statements has been posted and can be accessed here.
– An updated Draft CATAIR for Periodic Monthly Statements can be accessed here.
  – Additional CATAIR documentation for Statements includes the documents below. These documents can be accessed here.

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OGS_a55.

Justice: “Florida Businessman Pleads Guilty in Houston to Foreign Bribery Charges in Connection with Venezuelan Contract Scheme”

(Source:
Justice, 11 Oct 2017.] [Excerpts.]
 
A partial owner of several Florida-based energy companies pleaded guilty Wednesday to foreign bribery charges for his role in a scheme to corruptly secure contracts from Venezuela’s state-owned and state-controlled energy company, Petroleos de Venezuela S.A. (PDVSA).
 
Acting U.S. Attorney Abe Martinez of the Southern District of Texas, Acting Assistant Attorney General Kenneth A. Blanco of the Justice Department’s Criminal Division and Special Agent in Charge Mark Dawson of U.S. Immigration and Customs Enforcement’s Homeland Security Investigations’ (ICE-HSI) Houston office made the announcement.
 
Fernando Ardila Rueda (Ardila), 49, of Miami, Florida, pleaded guilty Oct. 11 in a Houston federal court to one count of conspiracy to violate the Foreign Corrupt Practices Act (FCPA) and one count of violating the FCPA. U.S. District Judge Gray H. Miller accepted the guilty plea. Sentencing is scheduled for Feb. 8, 2018. 
 
According to admissions made in connection with his plea, Ardila conspired with U.S.-based businessmen Abraham Jose Shiera Bastidas (Shiera) and Roberto Enrique Rincon Fernandez (Rincon) to pay bribes and other things of value to PDVSA purchasing analysts. The bribes were paid to ensure that Shiera’s and Rincon’s companies were placed on PDVSA bidding panels and in order to obtain or retain business with PDVSA. From 2008 through 2014, while he was sales director, manager and partial owner of several of Shiera’s companies, Ardila provided entertainment and offered bribes to PDVSA officials based on a percentage of the value of contracts the officials helped to award to Shiera’s companies. 
 
Including Ardila, the Justice Department has announced a total of 10 individuals have pleaded guilty and are pending sentencing as part of a larger, ongoing investigation by the U.S. government into bribery at PDVSA. … 

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OGS_a77.

The White House Releases Presidential Memorandum Concerning Delegation of Certain Functions and Authorities under the Countering America’s Adversaries Through Sanctions Act of 2017

(Source:
The White House, 12 Oct 2017.)
 
Memorandum for the Secretary of State, the Secretary of the Treasury, and the Secretary of Homeland Security
 
SUBJECT: Delegation of Certain Functions and Authorities under the Countering America’s Adversaries Through Sanctions Act of 2017
 
By the authority vested in me as President by the Constitution and the laws of the United States of America, including section 301 of title 3, United States Code, I hereby order as follows:
     Section 1.  (a)  I hereby delegate to the Secretary of State the functions and authorities vested in the President by section 110 of the Countering America’s Adversaries Through Sanctions Act of 2017 (Public Law 115-44) (the “Act”).
  (b)  I hereby delegate to the Secretary of State, in consultation with the Secretary of the Treasury, the functions and authorities vested in the President by the following provisions of the Act: . . .
  (c)  I hereby delegate to the Secretary of the Treasury the functions and authorities vested in the President by the following provisions of the Act: …
  (d)  I hereby delegate to the Secretary of the Treasury, in consultation with the Secretary of State, the functions and authorities vested in the President by the following provisions of the Act: …
  (e)  I hereby delegate to the Secretary of State and the Secretary of the 
Treasury the functions and authorities vested in the President by the following sections of the Act: …
  (f)  I hereby delegate to the Secretary of State, the Secretary of the Treasury, and the Secretary of Homeland Security the functions and authorities vested in the President by the following sections of the Act:
     
Sec. 2
.  The delegations in this memorandum shall apply to any provisions of any future public laws that are the same or substantially the same as those provisions referenced in this memorandum.
     
Sec. 3
.  The Secretary of State is authorized and directed to publish this memorandum in the Federal Register.
 
DONALD J. TRUMP

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NWSNEWS

NWS_a18
. NZ Herald: “National Cyber Policy Office Tests Market Appetite for Cybersecurity Scheme Aimed at SMEs”

(Source: NZ Herald, 12 Oct 2017.) [Excerpts.]
 
The National Cyber Policy Office (NCPO) is testing the market appetite to deliver a ‘Cyber Credentials Scheme’ that would ensure New Zealand’s small and medium-sized businesses – the vast majority of firms – are protected against cyber threats. …
 
[NCPO director Paul Ash] told the Defense, Industry & National Security Forum in Wellington this week that New Zealand’s SMEs were “exceptionally hard to reach” in terms of equipping them with protection from cyber threats, despite being “bombarded by advice” from vendors of security software.
 
The forum, which was organized by the NZ Defense Industry Association, had as its theme: “Emerging Technologies & Cybersecurity Capabilities Supporting National Security Agencies”. It heard from speakers including Tony Kryzewski, a cybersecurity compliance consultant who cited figures showing that worldwide, 1.9 billion records were extracted from organizations in the first half of 2017, and in September alone 174 million files were stolen.
 
This week the ZDNet website reported that a hacker stole restricted technical information on the F-35 Joint Strike Fighter, the P-8 Poseidon maritime patrol aircraft, the C-130 transport aircraft and the Joint Direct Attack Munition (JDAM) smart bomb kit from an Australian defense subcontractor. The breach was in July 2016 although the Australian Signals Directorate wasn’t alerted until November last year. The data was restricted under the US International Traffic in Arms Regulations, the report said. … 

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NWS_a2
9. Reuters: “Iran Still Trying to Buy Items for Missile Development: Germany”

(Source: Reuters, 11 Oct 2017.)
 
German intelligence agencies have warned German companies that Iran is still trying to circumvent restrictions on the sale of dual-use items for its rocket and missile technology program, according to a document seen by Reuters on Wednesday.
 
The BfV domestic intelligence agency reminded German firms in the document that sales of certain technologies remained illegal despite sanctions relief triggered by the landmark Iran nuclear deal of 2015.
 
  “It is important to note that Iran continues to pursue an ambitious rocket and missile technology program which is not affected by the sanctions relief,” the document said.
 
It said the reminder was triggered by “current events” but gave no details.
 
German Foreign Minister Sigmar Gabriel on Monday told reporters that Berlin remains concerned about Iran’s behavior in the Middle East and its missile development program, but stressed that Tehran was sticking to the nuclear agreement.
 
European countries are scrambling to pull together a package of measures to keep the nuclear deal on track if U.S. President Donald Trump decertifies the nuclear pact. Under that pact, Iran agreed to freeze its nuclear program for 15 years in exchange for sanctions relief.
 
Trump is expected to declare this week that Iran is not complying with the pact and to unveil a tough new strategy toward Iran.
 
CIRCUMVENTING REGULATIONS
 
The BfV document said German intelligence agencies were continuing to investigate “intensively” whether Iran was attempting to circumvent existing regulations to acquire products or know-how in Germany.
 
It had reported in June that Iran had sharply scaled back efforts to buy items for its nuclear program, but said attempts to buy items for its development program remained unchanged. It gave no details about the number of such attempts.
 
Germany’s most populous state and its industrial heartland, North Rhine-Westphalia, provided details in its own intelligence report for 2016 that was released on Tuesday.
 
It said it had detected 32 attempts to buy equipment that were probably or definitely proliferation-related in 2016, down from a record 141 attempts seen a year earlier. Most of those attempts were related to Iran’s missile program, although some were also linked to Pakistan, it said.
 
The lion’s share of the cases did not result in delivery of any equipment because state intelligence officials were able to warn companies in time, or companies recognized suspicious inquiries.
 
It said Iran used a variety of front companies to acquire items, often sending goods through Turkey, the United Arab Emirates and China.

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NWS_a3
10. ST&R Trade Report: “CTPAT Reauthorization Bill Would Revise Eligibility, Benefits, Requirements”

 
The House Homeland Security Committee has favorably reported to the full House of Representatives a bill (H.R. 3551) that would reauthorize the Customs Trade Partnership Against Terrorism program. This bill would also make a number of changes to CTPAT to reflect current industry practices and threats to the global supply chain and to improve the benefits for program participants.
 
ST&R will be conducting a webinar Oct. 19 on CTPAT and other trade partnership programs. Click here for more information or to register.
 
Key provisions in H.R. 3551 include the following.
  – Establishes CTPAT as the authorized economic operator program for the U.S. to give U.S. Customs and Border Protection the ability to grow its trusted trader program with both security and compliance elements
  – Grants eligibility to participate in CTPAT to importers, exporters, customs brokers, freight forwarders, air carriers, ocean carriers, land carriers, and contract logistics providers
  – Directs CBP to consider extending eligibility to importers of non-containerized (breakbulk) cargo and non-asset-based third-party logistics providers
  – Requires each CTPAT participant to have a designated employee (not a third-party consultant or contractor) to hold the participant directly accountable for the management of their participation
  – Requires CBP to review (in consultation with industry) the CTPAT minimum security criteria at least every two years and update them as necessary
  – Allows CBP to establish (in consultation with industry) additional and updated security criteria for individual participants, categories of participants, or particular entity types to address security vulnerabilities
  – Grants certain benefits to all participants regardless of status, provides for additional benefits for participants who meet or exceed minimum criteria, and requires CBP to assess benefits annually
  – Encourages CBP to delay publishing the names of those suspended or expelled from CTPAT, which may have economic and reputational ramifications, until any appeals have been completed
  – Requires CBP to conduct recertifications annually and revalidations every four years
  – Requires CBP to develop a five-year plan to identify outcome-based goals and performance measures for CTPAT

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COMMCOMMENTARY

COMM_a01
11. A. Josselyn, C. Kimball & K. King: “M&A Guide to CFIUS: How the Review Process Can Impact Your Transaction”

(Source: Cooley LLP, 10 Oct 2017.) [Excerpts.]
 
* Authors: Amy Josselyn, Esq., ajosselyn@cooley.com; Christopher Kimball, Esq., ckimball@cooley.com; and Keving King, Esq., kking@cooley.com. All of Cooley LLP, Wash DC.
 
The Committee on Foreign Investment in the United States (“CFIUS” or “the Committee”) has received much attention over the past several months for its role in blocking two separate Chinese acquisitions of U.S. semiconductor companies. In September 2017, President Trump issued an Executive Order prohibiting Canyon Bridge Capital Partners, an investment firm with ties to the Chinese government, from acquiring Lattice Semiconductor Corporation (Lattice). In December 2016, President Obama similarly blocked the acquisition of the U.S. subsidiary of Aixtron SE (Aixtron), a German semiconductor company, by Fujian Grand Chip Investment Fund LP, another entity tied to the Chinese government.
 
These highly publicized actions represent one extreme in the range of impacts the CFIUS review process can have on cross-border mergers, acquisitions and investments involving perceived potential threats to US national security. Although less widely discussed, several other recent transactions have been abandoned because the parties could not resolve national security concerns raised during the CFIUS review process. For example, in January 2016, GO Scale Capital, a consortium of Asian investors, withdrew its offer to acquire an 80% interest in Lumileds, a US subsidiary of Dutch company Royal Philips, after failing to receive CFIUS clearance following a lengthy review process. More recently, in June 2017, L1 Energy, which is backed by Russian billionaire Mikhail Fridman, withdrew from CFIUS review and abandoned its plan to invest $700 million in ExL Petroleum Management. Although the vast majority of foreign investment transactions will never suffer this drastic outcome, potential investors and targets should understand the scope of CFIUS’ review authority and the complex factors involved in its analysis of national security concerns.
 
This is the first in a series of four articles aimed at helping companies and their counsel (i) understand how the CFIUS review process can impact a transaction, (ii) decide whether to voluntarily submit to CFIUS review, (iii) proactively address potential national security concerns, and (iv) anticipate the future trends and changes likely to affect the CFIUS regime. This article will provide a general overview of the CFIUS review process, including its purpose and authority to review certain types of transactions.
 
CFIUS Overview and History
 
CFIUS is an interagency committee of the US government chaired by the Department of the Treasury. Its members include representatives from eight other federal departments and offices: the Department of Justice, Department of Homeland Security, Department of Commerce, Department of Defense, Department of State, Department of Energy, Office of the US Trade Representative and Office of Science & Technology Policy. The Director of National Intelligence and the Secretary of Labor also are non-voting members of CFIUS and provide input on issues related to their respective areas of responsibility. The Office of Management & Budget, Council of Economic Advisors, National Security Council, National Economic Council and Homeland Security Council are observer members who participate in CFIUS activities as appropriate. Other agencies with relevant expertise may be asked to participate in CFIUS reviews on an ad hoc basis.
 
CFIUS was created to review foreign investments in US businesses for potential national security concerns. It was formed by President Ford in 1975 in response to concerns that “petrodollar investments” from oil-producing countries in the Middle East would be used to gradually exert control over key US industries. In 1977, Congress enacted the International Economic Emergency Powers Act, which allowed the president to prohibit a transaction involving a foreign person and any US property, after first declaring a national emergency.
 
In the 1980s, security concerns shifted to Japanese investments in US emerging technology sectors, the most notable of which was the attempted acquisition by Fujitsu Corporation of Fairchild Semiconductor Corporation. In response, Congress passed the Exon-Florio Amendment in the Omnibus Trade and Competitiveness Act of 1988, giving the president the power to prohibit a foreign investment without declaring a national emergency. However, in order to prohibit such a transaction, the new law required the president to find “credible evidence” that the investment could threaten US national security and that other provisions of law are not adequate to protect against this threat.
 
To date, the president has used this power to formally block or unwind a transaction only four times. In addition to the recent Lattice and Aixtron transactions, President George H.W. Bush in 1990 ordered the China National Aero-Technology Import and Export Corporation to divest its controlling interest in MAMCO Manufacturing, which supplied parts to the aerospace industry. In 2012, President Obama ordered Ralls Corporation (Ralls), which was owned by Chinese nationals, to divest its interest in various windfarm projects in Oregon, citing concerns about the windfarms’ proximity to a sensitive naval air station and restricted airspace.
 
Initially, the CFIUS review process focused on the US defense industry and whether foreign control of key aspects of that industry could compromise US preparedness to meet national security needs. In the 1990s, this focus expanded to include considerations of transactions with the potential to facilitate the transfer of military and other sensitive technology to countries, entities and individuals targeted by US sanctions and export control laws. In 2007, following heightened public interest in national security issues and a congressional investigation of 9/11, Congress passed the Foreign Investment and National Security Act (FINSA), which broadened the definition of “national security” for purposes of CFIUS review and added more specific requirements with regard to the types of transactions CFIUS must review with greater scrutiny. For example, FINSA expanded the scope of CFIUS’ mandated review to include transactions implicating US “critical infrastructure” and “critical technologies” and requiring CFIUS to conduct a full investigation of all transactions involving a foreign government-controlled investor.
 
The Scope of the CFIUS Review Process
 
Under FINSA, CFIUS has jurisdiction to review “covered transactions,” which the law defines as “transactions” pursuant to which a “foreign person” gains “control” of a “US business.” The components of the jurisdictional definition are themselves broadly defined, and as a result, the range of activities that can constitute “covered transactions” may be surprising and counterintuitive.
 
For example, the types of “transactions” that may fall within CFIUS’ scope of review can include not only traditional mergers and acquisitions, but also investments in which a foreign person acquires a small minority investment in a target – in some cases as little as 10 percent or less of the outstanding voting stock in a US company. Covered transactions also can include the formation of a joint venture or even certain long-term leases.
 
The definition of a “foreign person” also is broader than many investors and target companies might expect. Under the CFIUS regulations, a foreign person includes any entity over which a foreign national, foreign government or foreign entity exercises or has the power to exercise control. For purposes of CFIUS review, a foreign person can include a US subsidiary of a foreign business or a US-based investment fund controlled by foreign investors. Accordingly, when considering whether a particular transaction could be subject to CFIUS review, it is important for parties in a transaction to think broadly about the identity of the investor and to understand the investor’s ownership chain.
 
The CFIUS regulations define a “US business” to include any entity engaged in interstate commerce in the United States, regardless of who owns it or where it is formed or headquartered. As demonstrated by the blocked Aixtron transaction discussed above, this broad definition gives CFIUS the authority to review investments by foreign businesses (e.g., Fujian Grand Chip Investment Fund LP) in other foreign businesses (e.g., Aixtron), to the extent the deal involves assets of the target engaged in US interstate commerce, such as a US subsidiary or sales office. Indeed, the Executive Order issued in the Aixtron case was notable in that it included in the scope of Aixtron’s “activities in interstate commerce” any interest in patents issued by or pending with the US Patent and Trademark Office. As a result, parties to a covered transaction also must carefully consider the scope of the US business activities that will be controlled by the foreign investor post-closing.
 
Among all the key CFIUS definitions, the term “control” is perhaps the most expansive and counterintuitive. For CFIUS purposes, “control” means the power, direct or indirect, whether or not exercised, “to determine, direct or decide certain important matters affecting an entity.” As discussed above, control of a US business can manifest in a number of ways, including by the acquisition of a minority ownership interest, board representation, formal or informal voting arrangements or certain other contractual agreements. Notably, the CFIUS regulations include a “safe harbor” provision specifying that a transaction that (i) results in the acquisition of 10 percent or less of the outstanding voting stock in a US business, and (ii) is conducted “solely for the purpose of passive investment,” is not a covered transaction within CFIUS’ review jurisdiction. The safe harbor provision in the regulations include examples of certain minority shareholder protections that, in themselves, will not be deemed to confer control over a US business.
 
CFIUS as a Voluntary Regime
 
One of the most notable aspects of the CFIUS review process is that it is in certain respects a voluntary regime. That is, even where a contemplated transaction falls within CFIUS’ review jurisdiction, the parties do not have an affirmative legal requirement to notify CFIUS of the transaction. That said, CFIUS has authority to unilaterally initiate a review of a covered transaction, either before or after it closes, if it perceives the deal to pose a national security threat.
 
For example, in November 2010, CFIUS asked Huawei Technologies to retroactively submit to a review of its acquisition of certain assets of 3Leaf Systems – a transaction that had closed in May 2010 without a voluntary notification to CFIUS. In February 2011, Huawei “voluntarily” divested its interest in the 3Leaf assets after CFIUS indicated it would recommend that the president order such a divestment.
 
When the parties to a covered transaction decide that the circumstances of their deal warrant a voluntarily filing with CFIUS, the Committee will conduct an initial 30-day review of the transaction. In most cases, CFIUS will approve or clear the transaction at the conclusion of the initial review period. In a significant minority of cases, however, CFIUS will determine that further review is warranted by potential security concerns or required under FINSA (e.g., where the investor is controlled by a foreign government). In such cases, CFIUS will initiate a subsequent 45-day investigation in which it will assess the specific effects the transaction will have on US national security and identify appropriate mitigation measures to which the parties agree in order to receive CFIUS clearance. If the Committee’s national security concerns cannot be resolved within the 45-day investigation period, CFIUS will either ask the parties to withdraw and refile their notice to allow for more time to reach a resolution or inform the parties that CFIUS will refer the matter to the president with a recommendation to prohibit, suspend or impose additional mitigation measures on the transaction. The president must announce a decision to take such an action within 15 days of receiving a CFIUS recommendation.
 
Due in part to the voluntary nature of the CFIUS regime, the Committee reviews only a small percentage of transactions involving foreign investment in the United States. Between 2009 and 2015 – the latest calendar year for which official data are available – CFIUS received 770 notices of covered transactions. Of these, CFIUS initiated an investigation of 310 transactions, or approximately 40 percent of the transactions for which it received a notice. As discussed above, during that period, the president ultimately prohibited only one transaction: the Ralls windfarm acquisition in 2012. Notably, however, an additional 57 notices were withdrawn from the review process after CFIUS initiated an investigation, indicating that these transactions likely were significantly modified or abandoned because the parties anticipated that they would not receive CFIUS clearance.
 
Because of the uncertainty and high stakes involved, parties to a covered transaction must carefully weigh the potential costs and benefits of filing a voluntary notice with CFIUS versus the costs and benefits of not filing a CFIUS notice. Where the parties decide to submit to CFIUS review, they will incur additional fees and may face delays in closing the transaction. If the deal receives CFIUS clearance following review, however, it will be protected from future CFIUS interference. Conversely, parties that forego CFIUS review can avoid the costs and delay associated with the process. However, their deal will remain subject to uncertainty, as CFIUS may unilaterally initiate a review of a covered transaction even after it has closed. …  

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COMM_a2
12. A. Capobianco, B. Curran & A. Kuntamukkala: “De-Certification and the Iran Nuclear Deal: The Beginning of the End, or Much Ado about Nothing?”

(Source: Hogan Lovells, 11 Oct 2017.)
 
* Authors: Anthony Capobianco, Esq., anthony.capobianco@hoganlovells.com; Brian Curran, Esq.,
brian.curran@hoganlovells.com; and Ajay Kuntamukkala, Esq.,
ajay.kuntamukkala@hoganlovells.com. All of All of Hogan Lovells, Wash DC.
 
Press reports indicate that President Trump intends to “de-certify” the Iran nuclear deal this week. In practical terms, that means he would refuse to re-certify one or more statutory elements of a law passed by the U.S. Congress pertaining to Iran’s obligations under the deal and the merits of providing sanctions relief to Iran. The next deadline for certification is October 15, 2017.
 
De-certification would not by itself automatically unravel the Iran nuclear deal and result in the re- imposition of U.S. sanctions. Rather, it would initiate a process whereby the U.S. Congress could vote, under special procedural rules, on whether or not to re-impose the “secondary” sanctions that previously had been lifted. “Secondary” sanctions are restrictions that apply to non-U.S. companies even where there is no U.S. nexus involved (e.g., U.S. persons, U.S items or U.S. dollars or financial institutions). In the event Congress does not pass such legislation, continued sanctions relief would depend upon the renewal of a number of statutory waivers by the Secretary of State. Although the situation remains fluid, key stakeholders in Congress do not appear eager to “snap back” the secondary sanctions relief afforded to Iran under the deal.
 
De-certification will exacerbate uncertainty around the deal in the short-term. Depending on what Congress and the Administration choose to do, it could have little to no long-term practical impact for companies engaged in activities involving Iran, or it could result in Iran once again being off-limits for most businesses.

We summarize below what this process might look like, as well as potential actions Iran or the European Union might take in the event that U.S. sanctions are re-imposed.
 
Background – Sanctions and the Iran Nuclear Deal
 
On January 16, 2016, the U.S. and EU lifted nuclear-related sanctions against Iran pursuant to the terms of the Joint Comprehensive Plan of Action (JCPOA or the Iran nuclear deal) after the International Atomic Energy Agency (IAEA) confirmed that Iran had met certain specified commitments regarding its nuclear program. This lifting was effected by the termination in whole or in part of several Executive Orders, as well as the issuance of a number of statutory waivers by the Secretary of State.
 
In particular, these waivers lifted a number of U.S. secondary sanctions restrictions targeting non-U.S. companies engaged in key sectors across the Iranian economy, including banking and finance, insurance, energy and petrochemicals, shipping and shipbuilding, and the automotive sector. (A detailed description of the sanctions relief can be found here.)
 
These statutory waivers must be renewed periodically (either every 120 or 180 days, depending upon the specific provision involved). If the U.S. government did not renew these waivers, the secondary sanctions described above would “snap back” into effect. Under President Obama, these waivers were routinely renewed, and up until now, the Trump Administration has also issued renewals of these waivers.
 
What Does De-Certification Mean?
 
“De-certification” refers to a domestic U.S. statutory requirement that is separate from the JCPOA, which is a non-binding political arrangement. This certification requirement is also separate from the statutory sanctions waivers described above, meaning that such waivers could still be issued even in the event of de-certification.
 
The certification requirement stems from the Iran Nuclear Agreement Review Act of 2015 (INARA, Pub. L. 114-17), which created a period of review allowing Congress to vote on a joint resolution of disapproval on a nuclear agreement with Iran. Such a joint resolution ultimately never passed Congress, and the JCPOA became operational in January 2016.
 
Section (d)(6) of INARA requires that, after this initial Congressional review period, the President must certify to the following every 90 days:
 
  (i) Iran is transparently, verifiably, and fully implementing the agreement, including all related technical or additional agreements;
  (ii) Iran has not committed a material breach with respect to the agreement or, if Iran has committed a material breach, Iran has cured the material breach;
  (iii) Iran has not taken any action, including covert activities, that could significantly advance its nuclear weapons program; and
  (iv) The suspension of sanctions related to Iran pursuant to the agreement is –
    (I) Appropriate and proportionate to the specific and verifiable measures taken by Iran 
with respect to terminating its illicit nuclear program; and
    (II) Vital to the national security interests of the United States.
 
Importantly, in order to make this certification, the President must find that all four conditions noted above are satisfied. Failure to satisfy any one of these conditions is sufficient grounds to not make a certification.
 
If the President does not make such a certification, section (e) of INARA allows for the expedited consideration of legislation re-imposing sanctions on Iran.
 
Expedited Consideration
 
Broadly speaking, INARA creates a 60-day review period permitting, but not requiring, Congress to vote on legislation re-imposing sanctions. During this period, procedural hurdles and opportunities for debate are strictly limited, and certain legislative tools, most notably the Senate filibuster, are unavailable.
 
In the House, either the House Majority or Minority Leader may introduce, within 60 calendar days, a bill to reinstate sanctions. In the Senate, either the Majority or Minority Leader is given this prerogative. The bill is subject to expedited congressional procedures, though each chamber could choose to use its existing procedures instead.
 
In the first instance, committees that are referred the bill are automatically discharged from consideration if they have not reported the bill after 10 legislative days (House) or session days (Senate). The statute specifies the Senate Committee on Foreign Relations as the relevant committee; multiple (unspecified) House committees could potentially receive referral.
 
In the House, on or after the third legislative day after reporting/ discharge, a majority could agree to a non-debatable motion to bring up the bill. In the Senate, after reporting/discharge, a majority could agree to a non-debatable motion to bring up the bill; no cloture process, with its associated three-fifths vote threshold, is necessary for the Senate to do so.
Without the use of the filibuster, no one Senator could block the body from voting, as is typically the case; it would also be more difficult for a group of Senators to do the same. Once taken up, the legislation would remain the unfinished business of the upper chamber until disposed of; in other words, the Senate could effectively not proceed to any other business during the period, except by unanimous consent.
 
House floor consideration is limited to two hours. The statute provides that if the House votes on one such motion to proceed on a qualifying bill, it may not vote on another such motion “with regard to the same agreement.” This provision seems designed to prevent the House from having to vote against serial motions made in relation to the same bill. The Senate limit on floor consideration is 10 hours; thus, a simple majority of 51 votes could pass the bill without the need for three-fifths to first invoke cloture. (A majority could also agree to a non-debatable motion to spend less time on the bill.) Provisions in the statute explicitly or effectively preclude the consideration of amendments to the measure.
 
Other procedures would expedite second-chamber consideration of a bill received from the other body. If one chamber receives the other chamber’s qualifying legislation prior to passage of its own measure, the other chamber’s measure is not referred to committee, and the vote on final passage is on the other chamber’s measure. If one chamber has had no qualifying measure introduced in that chamber, then the measure received from the other chamber is entitled to the expedited floor procedures.
 
If Congress Acts
 
In the event that both houses of Congress approve a bill re-imposing U.S. sanctions, the President would then have a choice as to whether to approve or veto such legislation. (Expedited consideration does not change the fundamental mechanism whereby both houses of Congress must act to pass the same legislative vehicle.) Were he to veto it (which would appear to be an unlikely outcome, given President Trump’s criticism of the JCPOA, and his decision to de-certify in the first place), Congress would then have an opportunity to override the veto, which would require a 2/3 majority in both houses.
 
If he did not veto such a bill, and either signed it or allowed it to enter into law without his signature, U.S. sanctions would “snap back” into effect, thereby eliminating the sanctions relief of the JCPOA. In this scenario, Iran may seek to challenge the U.S. actions through a dispute resolution mechanism established by the JCPOA. The EU, as well, might take action by bolstering restrictions known as “blocking statutes” prohibiting compliance with U.S. sanctions, similar to rules in effect for Cuba.
 
If Congress Does Not Act
 
If legislation is either not introduced or fails to pass both houses of Congress, the status quo would remain in effect, and the President would have to decide whether to have the Secretary of State continue issuing the statutory waivers described above.

Notably, the standards for these waivers are different from the INARA certification standard discussed above, meaning that, as a legal matter, the U.S. could continue reissuing these waivers even after de- certification occurs. In the event of de-certification, we expect that the White House would face tremendous pressure, particularly from the EU, to continue issuing these waivers, given the impact that snapback would have on many European businesses.
 
The waiver requirements under other statutory authorities are much more general than the certification requirements under INARA – generally speaking, they only entail a finding that issuance of a waiver is “vital to the national security of the United States,” or “in the national security interest of the United States.” (See, e.g., Section 1245(g)(1)((A) of the Iran Freedom and Counter-Proliferation Act of 2012 (IFCA), Subtitle D of Pub. L. 112-239; Section 1245(d)(5)(A) of the National Defense Authorization Act for Fiscal Year 2012 “NDAA 2012”, Pub. L. 112-81.)
 
In practice, this could mean that the White House could refuse to certify on the grounds that Iran is not being transparent or fully implementing its obligations under the JCPOA, or that Iran has taken actions that could further its nuclear weapons program (such as continued ballistic missile testing), while nonetheless finding that continued issuance of waivers under other statutory authorities is in the national security interests of the United States.
 
If the White House were to de-certify on national security grounds, the continued issuance of such waivers could be seen as inconsistent with its stated grounds for de-certification. Therefore, the precise grounds for de-certification could serve as an indication of the White House’s continued willingness to issue statutory waivers.
 
If the White House were to cease issuing such waivers, the reaction from both Iran and the EU would be largely the same as if legislation re-imposing sanctions were to enter into force; that is, they would likely claim that the U.S. had violated the terms of the JCPOA.
 
Possible Iranian and European Responses
 
Under the JCPOA, if any of the parties to the deal (that is, the U.S., EU, U.K., Russia, France, Germany, China, or Iran) believe that another party is not meeting its commitments under the deal, it may refer the matter to the Joint Commission (i.e., a dispute settlement body comprised of the eight parties to the deal), triggering a series of procedural steps to resolve the matter. (See Sections 36 and 37 of the JCPOA.) If these efforts do not resolve the matter, the complaining participant may then refer the matter to the U.N. Security Council.
 
Although Iran may avail itself of the Joint Commission mechanism, it seems unlikely that it would take the issue to the Security Council, as such a move could result in the snapback of UN sanctions that were lifted as part of the deal. However, if Iran opts to stop implementing its nuclear-related commitments due to U.S. non-compliance, it would technically be required to trigger Security Council involvement. In practice, it is entirely conceivable that an ad hoc diplomatic process-rather than the diplomatic process envisioned by the JCPOA-will emerge should a party to the deal raise grievances regarding the other side’s non-performance.
 
Conclusion
 
Thus, de-certification would not by itself result in the re-imposition of sanctions or the restarting of Iran’s nuclear program. Rather, it would be the first step in a series of actions that could result in re-imposition of sanctions and the unraveling of the deal. Ultimately, these are complex political and national security decisions in the hands of decision-makers from not only the United States, but also Tehran, Europe, Beijing, and Moscow. In Washington, de-certification means that Congress has an opportunity to play a major role in the future of the deal alongside the Trump Administration.

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COMM_a3
13. CPJ: “Press at Risk as EU-Based Companies Export Surveillance Software to Hostile Regimes”

(Source: 
Committee to Protect Journalists
, 10 Oct 2017.)
In August, Danish Foreign Minister Anders Samuelsen 
told
 the daily newspaper 
Information
 that the government had 
authorized
 
sales
 of online surveillance software to several Middle Eastern countries. While acknowledging the potential for human rights violations that could result from the use of these tools, the minister said that Denmark has an interest in the fight against “terror” groups, especially the militant group Islamic State.
Denmark is not alone when it comes to surveillance exports. According to a 2016 policy review by the European Commission, three EU member states issued 27 export licenses of mobile surveillance in 2015 alone, and denied only two. The review said that intrusion software–which allows the covert interception and monitoring of online activity–exported from companies registered in EU member states was connected to government-sponsored online attacks directed at journalists, activists and human rights defenders in countries including Morocco, the United Arab Emirates, and Bahrain.
 
The review estimated the dual-use technologies market in 2014 was worth €2.8 billion ($3.3 billion).
The review did not specify details about the countries or licenses exported, but news outlets and human rights groups have separately reported that surveillance software from EU-based companies was exported to countries under EU sanctions–including 
Syria

Iran
, and 
Yemen
. The sanctions prohibit the export of tools that can be used for “internal repression.”
 
Current
 EU legislation on technologies, including cyber surveillance tools, specify licensing criteria between EU member states and non-EU countries, but leaves licensing decisions at a country’s discretion. On October 12, the EU parliament will 
vote
 on proposed legislation that will bind member states to a set of regulations and include a review mechanism that examines the potential abuse of these tools against journalists and activists.
The EU proposal, which is focused on changing regulation rather than penalizing a specific company, is a welcome move. Of course, any proposals for reforming laws should be framed to ensure journalists are protected from surveillance and still able to access the tools they need to work and to stay safe online.
CPJ has 
documented
 a growing 
trend
 of governments cracking down 
on independent journalism in the name of fighting terrorism worldwide
. In addition to mass surveillance, journalists have also been targeted in phishing and hacking attacks that create a chilling effect among independent journalists and small news organizations that cannot afford tools to protect themselves.
 
In response to that trend, CPJ has joined the Coalition Against the Unlawful Surveillance Exports (CAUSE), a coalition set up by civil society groups to ensure that surveillance technology exports do not contribute to human rights violations.
 
In some cases, government surveillance has forced journalists to leave their home country. Freelance journalist Houssam al-Deen said he knew he must had been “on the radar” for a long time before he had to flee Syria in 2011. Al-Deen told CPJ that during his military service in 2001, he learned that in addition to targeting journalists and activists, the Syrian government owned what was then state-of-the-art software that could scan e-mail messages for keywords. Al-Deen, who had worked for 14 years with international media outlets as a freelancer, said he felt vulnerable when several journalists were arrested while reporting on the civil war.

 
To try to protect himself, he logged on from different computers in internet cafés and made sure to delete all files and clear passwords after use. Yet these precautions were not enough protect him. Al-Deen said that while he was on a video call with his editors at the BBC in 2011, the police raided the internet café he was working from and arrested him.
 
  “They had detailed logs of all my online activity and they confronted me with them during the interrogation,” he said.
 
The journalist, who was facing charges of espionage, said he had to pay $30,000 as a bribe to be released after spending two days in custody. He now lives as a refugee in Germany, where he works as an aid worker. “I was lucky that I had money,” he said. “I would have been doomed otherwise.”
 
CPJ and other rights organizations are aware of several journalists in at least 10 countries in the Middle East who said that they believe security agencies used cyber-attacks try to target or intimidate them.
 
Additionally, in Egypt since May 2017, at least 434 websites, including more than 90 news outlets and blogs have been blocked, according to local rights group Association for Freedom of Thought and Expression. The state-owned Middle East News Agency reported that government was behind the order to block the sites. The government did not issue an official statement or comment, according to reports.
 

In 2015, the EU released an action plan to defend human rights around the world. Yet by allowing countries such as Syria, Iran, and Yemen–all countries that, as CPJ research shows, have a poor press freedom record–access to surveillance software, the EU is failing to uphold its pledge.

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COMM_a4
14. Flash Global: “Eight Reasons the Customs-Trade Partnership Against Terrorism (C-TPAT) Fosters Legitimate Trade”

(Source: Flash Global, 9 Oct 2017.)
 
Why C-TPAT?
 
Terrorism poses an obvious risk to your supply chain processes. Minimizing that risk is a sign of a more secure supply chain. Working directly with counter-terrorism efforts offers a robust way for supply chain managers to create more security, and to earn more trust from their customers and stakeholders.
 
In the United States, working with terrorism specialists means joining the Customs-Trade Partnership Against Terrorism (C-TPAT) – a formal grading system that determines how much inspection (and thus delay) will affect your supply chain. Your participation in C-TPAT offers you the direct means to relieve and even reverse this impact, as we illustrate below in the many benefits.
 
C-TPAT was initiated by US Customs and Border Protection (CBP) in November, 2001, to join the business community in open dialog with counter-terrorism actors. Participation in C-TPAT is voluntary but it’s grown from an initial 7 partnerships to more than 10,000 today.

C-TPAT increases security measures and ensures appropriate documentation on imports, especially those from countries known to sponsor terrorism.  While some have viewed it as an impediment to efficient importing, to the contrary C-TPAT can fast-track the process when security is assured.
 
In reality, compliance is the stumbling block for some – but meeting the regulation and oversight that makes everyone safer simply reduces cost and streamlines the supply chain.
 
Although C-TPAT focuses on imports, exporters may also now apply for participation within the program. Participants include many highway carriers in the US, Mexico, and Canada, rail and sea carriers, US Customs brokers, US freight consolidators, ocean transportation carriers, North American manufacturers, and long-haul carriers in Mexico.
 
This growing network equates to more vigilance over the state of global supply chain processes, which fosters legitimate trade opportunities between your business, your customers, and your suppliers.
 
It’s a network your supply chain can’t afford NOT to belong to. Let’s look at its many benefits and protections.
 
Benefits Of C-TPAT Protection
 
C-TPAT offers many benefits to participating partners that enhance the integrity and fluidity of their supply chain processes.
 
Reduced Cargo Examination
– When crossing US Borders, importers experience reduced cargo examination rates with C-TPAT partnership. Inspection is based on a 3-tier system that grades the safety and risk of allowing rapid importation.
 
Tier 3 partners import 9 times more frequently than Tier 1 partners without undergoing an examination, while Tier 2 partners manage 3.5 times more frequently. Obviously the incentive for compliance and best practice is great.
 
Free, Secure Trade Lanes With Canada and Mexico
– Rather than waiting with the crush of vehicles to pass through the border, C-TPAT-certified companies can access FAST lanes for transport between North American countries without stopping at all.
 
C-TPAT Specialist Present in Supply Chain
– This doesn’t mean CBP simply turns a blind eye to C-TPAT-certified importers. On the contrary, a C-TPAT Specialist is assigned to your unique supply chain processes. This ensures constant vigilance over your merchandise, and diminishes the chance of inspection even further.
 
Self-Assessment and Self-Monitoring
– As a C-TPAT Partner, you can begin using self-monitoring and self-assessment techniques to inspect your own containers as part of the Self-Assessment Program. This eliminates the possibility of inspection from the pool of Focused Assessment by CBP officials.
 
Access to C-TPAT Public Document Library Board
– The C-TPAT Public Document Library Board is an invaluable collection of best practices among C-TPAT Partners that help other partners achieve higher tier status. This includes assistance with implementation of new security standards and creation of self-assessment techniques.
 
Removal of Demurrage Charges for Additional Containers
– If one of your shipping containers does happen to be selected for examination, as a C-TPAT Partner you can have all other containers removed while awaiting the examination. This reduces demurrage charges for leaving containers on the pier for extended periods, which results in savings for your supply chain processes.
 
Access to a “Green Lane”
– When an importer, or someone else in the supply chain, exceeds the minimum security standards, identified by the C-TPAT, that partner receives a “pass” to avoid all examinations and the overwhelming majority of random inspections.
 
Furthermore, if one of these companies’ containers is selected, the container advances to the front of all other container inspections, which means the company will have the fastest production-to-delivery supply chain possible.
 
Joining the Fight Against Terrorism
– Since your business joins the fight against terrorism by becoming a C-PAT Partner, you can enjoy the benefits of a fully integrated system of all supply chain processes, a degree of integrity, reduced manufacture-to-delivery times, reduced cargo theft, stronger brand name recognition, a safer work environment, and a positive public persona.
 
Achieving C-TPAT Certification
 
Your business signs an agreement with the CBP to protect your supply chain processes. This includes providing information about all of your supply chain practices, your current security profile, planned actions in response to a terrorist event or threat, and your company’s best practices.
 
Every facet of your supply chain will undergo an intensive assessment to determine if you have any potential security risks that could hinder your participation as a C-TPAT Partner.
 
After you achieve implementation of the relevant security measures, CBP will assign your Tier status, and you can begin taking advantage of its benefits.
 
C-TPAT is not an organization designed to help importers and those in the supply chain improve their processes. What it does do is guarantee faster and more predictable examinations during your shipping processes.
 
Refining a super-efficient supply chain is still your responsibility. C-TPAT is a crucial piece of that plan.

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COMM_a5
15. M. Volkov: “In Defense of Compliance Checklists”

(Source: Volkov Law Group Blog, 11 Oct 2017. Reprinted by permission.)
 
* Author: Michael Volkov, Esq., Volkov Law Group, 240-505-1992,
 
Compliance officers have to avoid complicating a compliance program. As in many areas in life, there is a value in simplicity.
 
Take for example a compliance training presentation. If a compliance officer overwhelms his/her audience with legal mumbo jumbo, you can rest assured that no one will retain anything and the training program will not be very successful.
 
On the other hand, if a compliance officer presents a training program that is relevant, uses examples that employees often encounter, and is kept simple from a legal standpoint, the compliance officer’s training session is likely to be effective.
 
Compliance officers have to engage the business and they have to build a successful working relationship with the business. It can be the determinant of an effective ethics and compliance program. After all, the front lines of business operations are an important area where compliance has to occur.
 
Chief compliance officers have to be creative in reaching out to business partners, learning to work with them, and to convince them of the importance of compliance controls. In doing so, I always encourage compliance officers to develop strategies and procedures that minimize the burden on business managers and employees.
 
If a compliance officer can persuade the business side to take responsibility for compliance, compliance officers should develop simple checklists and other mechanisms to support the business. For example, the CCO could prepare a checklist for the onboarding of a new third party under the company’s due diligence policy, or a checklist for sponsoring a government official’s trip to company headquarters for product marketing and demonstration sessions. In these cases, the CCO can make the process transparent to the business managers and employees and provide them a clear and concise tool they can use to ensure that they follow company compliance tools.
 
This is an example of what some call the “win-win” strategy for operationalizing a compliance program. From the compliance perspective, the CCO has provided a tool that the business can use to make it easier for the business to comply with a specific compliance policy and procedure. Conversely, from the business side, the CCO’s tool facilitates compliance from the business side by translating a corporate policy and procedure into a more accessible format – a checklist.
 
We all use checklists in one way or another for organizational purposes. A checklist sometimes helps individuals to understand an otherwise complex procedure and encourages compliance because of the apparent simplicity of the checklist (assuming it does not consist of 100 items).
 
To be clear, I am not suggesting that a compliance program should be watered down into checklists; however, I am suggesting that a checklist can be used as a means to facilitate compliance with a procedure by simplifying the steps for compliance. A checklist can be a valuable tool to supplement a compliance program, and build bridges with the business side of the company.
 
Compliance depends on a company’s business taking responsibility for compliance functions. If compliance is viewed solely as the province of a compliance department or a legal department, the likelihood of success is remote. When a business embraces compliance, the company wins and ethics and compliance is enhanced.

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

MSEX/IM MOVERS & SHAKERS

MS_a1
16. Fred Helmstetter Moves to L3 Technologies

(Source: Editor)
 
Fred Helmstetter, previously the Director of Export Compliance for BAE Systems’ Electronic Systems sector has recently moved to L3 Technologies, Inc. where he is now the Director, Global Trade Compliance in the corporate Global Trade Group. Fred can be reached at 703-236-2603 and Fred.Helmstetter@L3T.com

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

ENEDITOR’S NOTES

* Eugenio Montale (12 Oct 1896 – 12 Sep 1981; was an Italian poet, prose writer, editor and translator, and recipient of the 1975 Nobel Prize in Literature. He is widely considered the greatest Italian lyric poet since Giacomo Leopardi.)
  – “Slowly poetry becomes visual because it paints images, but it is also musical: it unites two arts into one.”
 
* Lyman Beecher (Lyman Beecher; 12 Oct 1775 – 10 Jan 1863; was a Presbyterian minister, American Temperance Society co-founder and leader, and the father of 13 children, many of whom became noted figures, including Harriet Beecher Stowe, Henry Ward Beecher, Charles Beecher, Edward Beecher, Isabella Beecher Hooker, Catharine Beecher and Thomas K. Beecher.)
  – “No great advance has been made in science, politics, or religion without controversy.”

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

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

The official versions of the following regulations are published annually in the U.S. Code of Federal Regulations (C.F.R.), but are updated as amended in the Federal Register.  Changes to applicable regulations are listed below.
 
*
ATF ARMS IMPORT REGULATIONS
: 27 CFR Part 447-Importation of Arms, Ammunition, and Implements of War
  – Last Amendment: 15 Jan 2016: 81 FR 2657-2723: Machineguns, Destructive Devices and Certain Other Firearms; Background Checks for Responsible Persons of a Trust or Legal Entity With Respect To Making or Transferring a Firearm. 
 
*
CUSTOMS REGULATIONS
: 19 CFR, Ch. 1, Pts. 0-199
  – Last Amendment: 28 Sep 2017: 82 FR 45366-45408: Changes to the In-Bond Process [Effective Date: 27 Nov 2017.]
 
DOD NATIONAL INDUSTRIAL SECURITY PROGRAM OPERATING MANUAL (NISPOM): DoD 5220.22-M

  – Last Amendment: 18 May 2016: Change 2
: Implement an insider threat program; reporting requirements for Cleared Defense Contractors; alignment with Federal standards for classified information systems; incorporated and cancelled Supp. 1 to the NISPOM (Summary 
here
.)


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

  
– Last Amendment: 3 Oct 2017: 82 FR 4 5959-45962: Updated Statements of Legal Authority for the Export Administration Regulations 

  
*
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:
20 Sep 2017:
 
82 FR 43842-43844
: Foreign Trade Regulations (FTR): Clarification on Filing Requirements; Correction
 
  – HTS codes that are not valid for AES are available
here.
  – The latest edition (20 Sep 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: 12 Sep 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.

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

EN_a0319. 
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

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

EPEDITORIAL POLICY

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

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

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

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