;

17-1017 Tuesday “Daily Bugle”

17-1017 Tuesday “Daily Bugle”

Tuesday, 17 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 
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. DoD/DSS Posts Notice on ISFD and e-FCL Shut Downs
  4. State/DDTC: (No new postings.)
  5. UK/DIT ECO Seeks Comments on National Security and Infrastructure Investment Review
  6. UK/DIT ECO Updates Strategic Export Controls Licensing Data
  1. BBC: “UK Merger Rules Face Change to Bolster National Security”
  2. Expeditors News: “Canada Publishes Consolidated Sanctions List”
  3. Reuters: “Iran Aircraft Deals Hang by Thread as Trump Targets Tehran”
  4. ST&R Trade Report: “17 Oct Deadline for Petitions to Modify GSP Duty-Free Treatment”
  1. J.A. Lee, A.M. Smith & C. Krass: “Trump Decertifies the Iran Deal, Creating Both New Uncertainties and Potentially Unexpected Clarity”
  2. M. Volkov: “A Closer Look at ISO37001 – Something Old or Something New? (Part I of V)”
  3. N.A. Baylis, R. Dereskeviciute & A. Di Mario: “EU and UK Sanctions and Export Controls Update – Autumn 2017”
  4. T. Murphy: “GSP Expiration”
  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.]

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

OGSOTHER GOVERNMENT SOURCES

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

* Commerce; Industry and Security Office; NOTICES; Meetings: Information Systems Technical Advisory Committee [Publication Date: 18 October 2017.]
 
* Treasury; Foreign Assets Control Office; NOTICES; Blocking or Unblocking of Persons and Properties [Publication Date: 18 October 2017.]
 
* U.S. Customs and Border Protection; NOTICES; Quarterly IRS Interest Rates Used in Calculating Interest on Overdue Accounts and Refunds on Customs Duties [Publication Date: 18 October 2017.]

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

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

 

 
The Industrial Security Facilities Database (ISFD) and Electronic Facility Clearance System (e-FCL) shut downs are on hold pending issue resolutions with the National Industrial Security System (NISS)/NISP Central Access Information Security System (NCAISS). For more information, visit the NISS site.

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

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

OGS_a55. UK/DIT ECO Seeks Comments on National Security and Infrastructure Investment Review

(Source: UK/DIT ECO)
 
We’re seeking views on how government can best ensure that investments and takeovers do not raise national security concerns.
 
This green paper is the result of the government’s review of the Enterprise Act 2002 and its powers in relation to foreign investment and national security. It sets out the approach the government proposes to take in both the short and long term. We will use your responses to the green paper to develop these proposals further.
 
The consultation is split into 2 parts.
 
PART 1
 
In the short term, we propose to amend the turnover threshold and share of supply tests within the Enterprise Act 2002. This is to allow government to examine and potentially intervene in mergers that currently fall outside the thresholds in 2 areas:
 
  – the dual use and military use sector
  – parts of the advanced technology sector
 
Part 1 of the consultation lasts 4 weeks, closing on 14 November 2017.
 
PART 2
 
The second part of the green paper seeks views about potential long-term reforms that government should take to its approach to ensuring that investments and takeovers cannot raise national security concerns.
 
Part 2 of the consultation lasts 12 weeks, closing on 9 January 2018.
 
DOCUMENTS
 

 

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

OGS_a66
. UK/DIT ECO Updates Strategic Export Controls Licensing Data

(Source:
UK/DIT ECO
)   
 
All of the updated reports can be found here.
 
Each quarterly report published since ‘Strategic export controls: licensing statistics, 1 January to 31 March 2015’ (published in July 2015) provides users with:
 
* a set of data tables presenting data on licensing decisions and processing times for all licence applications

  – for each quarterly report data is provided annually and quarterly from 2008 to the latest available quarter as excel sheets.

  – each set of tables is fully updated where they have been changes to data since the last publication (back to the start of 2008) so users should refer to the latest release for the most up to date data

* the same data presented in csv spread sheets for easier data manipulation
* a statistical commentary report that aims to summarise the key data trends and provide context and explaination for trends
* a country level data report giving data per country published as a PDF
 
Country level data reports are available for each quarter and year from January to March 2008 onwards. The information available in these reports is provided in each quarterly report from January to March 2015.
 
Users can also download data relating to specific licence types, destinations and goods by generating a ‘new report’ from the strategic export controls: reports and statistics website
. 

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

NWSNEWS

NWS_a17
. BBC: “UK Merger Rules Face Change to Bolster National Security”

(Source: BBC, 17 Oct 2017.)
 
Rules around mergers and foreign investment in UK businesses are set to be tightened by the government in order to protect national security.
 
Currently the government can only scrutinise deals involving businesses with a turnover of more than £70m.
 
However, proposed new laws would allow it to check on deals with businesses that have a turnover of £1m or more.
 
The changes are targeted at companies making military and dual-use products, and parts of the technology sector.
 
Two public consultations will take place on the proposals, which are set out in a Green Paper, with the second one ending on 9 January.
 
“OBVIOUS FLAW”
 
Business and Energy Secretary Greg Clark told the BBC’s Today programme: “We had a national security risk assessment in 2015 which pointed out the increasing threats from overseas.
 
  “It identified particular pieces of chip technology where it is possible to embed aspects of its operation that would allow a hostile party to disrupt a system into which it was embedded.
 
  “Given that those companies can be quite small, not to be able to conduct a security assessment unless they had a turnover of over £70m seems an obvious flaw, so we are moving to correct that.”
 
Mr Clark added: “We want to continue to expand our openness to investment inwards and outwards.
 
  “If you want to be a free-trading nation, then it makes sense to have a framework in place that allows the comprehensive scrutiny so that everyone can know that investments are made that don’t disrupt national security.”

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

NWS_a2
8. Expeditors News: “Canada Publishes Consolidated Sanctions List”

(Source: Expeditors News, 16 Oct 2017.)
 
On 12 October 2017, Global Affairs Canada published the Consolidated Special Economic Measures Act (SEMA) sanctions list, which contains the names of individuals and entities that have economic sanctions applied to them.
 
In the news release, Global Affairs Canada states that “the consolidated list is one of the commitments the government made in July in response to recommendations made by the House of Commons Standing Committee on Foreign Affairs and International Development in its review of the Special Economic Measures Act and the Freezing Assets of Corrupt Foreign Officials Act.”
 
As the prohibitions may not apply in the same way to each entity, users are urged to refer to the correct regulation governing a specific individual or entity.
 
The Global Affairs Canada news release may be found here:
 
The entire list may be found online here.

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

NWS_a3
9. Reuters: “Iran Aircraft Deals Hang by Thread as Trump Targets Tehran”

(Source: Reuters, 17 Oct 2017.)
 
President Donald Trump’s hawkish new approach towards Tehran, coupled with banking worries and domestic political turbulence in both countries, are causing growing uncertainty over Iran’s $36 billion deal to buy airliners from Boeing, Airbus and ATR.
 
IranAir’s decision to buy a total of 200 aircraft from the two giants and Franco-Italian turboprop maker ATR marked the zenith of a 2015 pact between Tehran and world powers to renew trade in exchange for placing curbs on Iran’s nuclear activity.
 
IranAir says its $16.5 billion deal with Boeing is the biggest with a U.S. company since the 1979 Islamic Revolution.
 
Such high stakes make the deals a prominent target for critics of detente in both Washington and Tehran, and experts say that could further frighten off European banks and others whose reluctance to provide finance is already a major obstacle.
 
Trump struck a blow against the nuclear agreement with Iran on Friday choosing not to certify that Tehran is complying with the deal and warning he might ultimately terminate it.
 
His Iran strategy angered Tehran and put Washington at odds with other signatories of the accord – Britain, France, Germany, Russia, China and the European Union – some of which have benefited economically from renewed trade with Iran.
 
While Trump did not pull the United States out of the agreement, he gave the U.S. Congress 60 days to decide whether to reimpose economic sanctions on Tehran that were lifted under the pact. Even without such sanctions, the fate of the aircraft deals depends on U.S. administration approval.
 
Several people involved in the airliner deals fear they have become too big to cancel but too sensitive to implement fully beyond a limited number of jets for which Iran has the funds to pay for in cash without foreign loans.
 
  “I don’t see who would be willing to provide financing for Iran with such a negative groundswell in the United States,” said consultant and former aviation banker Bertrand Grabowski.
 
“INCREASINGLY DIFFICULT”
 
That raises immediate concerns for Boeing as it prepares to start building 15 long-range, twin-engined 777-300ER jets, originally due for delivery to Iran from next April.
 
The fate of those aircraft – part of a total order for 80 jets – is seen affecting jobs as Boeing tries to put a floor under declining production of one of its most profitable models.
 
  “For the 777s it seems increasingly difficult now,” a Western banker said.
 
Unexpected hurdles have arisen on the Iranian side too. Financial sources say Boeing has already had to push Iran back in the queue for jets because it has yet to receive a deposit.
 
For now, Boeing can manage by juggling deliveries with other airlines. But a complete breakdown of the IranAir order could put new pressure on 777 production.
 
U.S. exports are not the only ones at stake.
 
Although the European Union backs the nuclear deal, the export of any Western aircraft to Iran depends on permits from the U.S. administration because of the number of U.S. parts.
 
That means Airbus could get caught in the crossfire between Boeing and Congressional critics who want the whole deal axed, something likely to deepen tensions over Iran with Europe.
 
Iran has so far imported nine aircraft: three from Airbus and six from turboprop maker ATR.
 
Losing the rest of Iran’s business would hit Airbus’s order book hard because it took the risk of booking all 100 Iranian plane sales last December to help beat Boeing in their annual order race. Boeing has not yet formally posted its orders.
 
INTERCONNECTED DEALS
 
Because the Airbus and Boeing deals are so interconnected, with approvals passing through Washington, all eyes are now on how Trump’s administration will treat the high-profile plane deals while kicking the broader nuclear issue to Congress.
 
Iran’s Foreign Minister Mohammad Javad Zarif said on Saturday any negative move would be considered a violation of the 2015 nuclear pact between Tehran and world powers.
 
Industry sources say Washington has so far issued licenses for aircraft sales to Iran until the end of the decade, after which they must be renewed.
 
Based on estimated delivery plans, that effectively opens the door to the 15 Boeing 777s and 30-40 Airbus jets, they said. Airbus and Boeing declined to comment on delivery schedules.
 
One source said a possible outcome was that the status quo would remain in place regarding licenses already issued, because of the political and legal consequences of revoking them, but that it would become harder to extend or obtain new ones.
 
If so, the fate of the second part of the IranAir deals could be pushed beyond the next U.S. election in 2020, even if the nuclear pact survives scrutiny in Congress until then.
 
And other airlines, like Aseman Airlines which has ordered 30 Boeing jets and may want to buy turboprops, face an uncertain wait for U.S. approval.
 
A Boeing spokesman said Boeing and IranAir continue to work on implementing the contract. Airbus declined to comment.
 
In Tehran, the aircraft deals remain center-stage as Iranian hard-liners seek to exploit the latest dispute with Washington to weaken domestic rivals who are open to the West.
 
  “For Iran it is important that the deal remains intact… the failure of the (plane) deals will be a major blow for us,” said a senior Iranian official.
 
  “Their collapse will have a domino effect on other deals and potential foreign investors.”

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

NWS_a4
10. ST&R Trade Report: “17 Oct Deadline for Petitions to Modify GSP Duty-Free Treatment”

 
Importers, foreign governments, and others wishing to make changes in the coverage of the Generalized System of Preferences face an Oct. 17 deadline for submitting their petitions to the Office of the U.S. Trade Representative.
 
Interested parties, including foreign governments, may submit petitions to:
 
  – designate additional articles as eligible for GSP benefits, including when imported only from (a) least-developed beneficiary developing countries or (b) beneficiary sub-Saharan African countries under the African Growth and Opportunity Act;
  – withdraw, suspend, or limit the application of GSP duty-free treatment with respect to any article; and
  – otherwise modify GSP coverage.
 
Such petitions are due by Oct. 17 and must include a detailed description of the product and the eight-digit HTSUS subheading under which it is classified.
 
In addition, any interested party may submit a petition to review the GSP eligibility of any BDC with respect to any of the GSP designation criteria. These petitions are also due by Oct. 17.

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

COMMCOMMENTARY

COMM_a01
11. J.A. Lee, A.M. Smith & C. Krass: “Trump Decertifies the Iran Deal, Creating Both New Uncertainties and Potentially Unexpected Clarity”

(Source: Gibson, Dunn & Crutcher LLP, 16 Oct 2017.)
 
* Authors: Judith A. Lee, Esq., jalee@gibsondunn.com, 202-887-3591; Adam M. Smith, Esq., asmith@gibsondunn.com, 202-887-3547; and Caroline Krass, Esq., ckrass@gibsondunn.com, 202-887-3784. All of Gibson, Dunn & Crutcher LLP.
 
On Friday, October 13, 2017, President Trump announced a significant change in U.S. policy towards Iran by declaring his intention to refuse to certify to Congress that the 2015 Iran nuclear deal was in the national security interests of the United States. [FN/1] For the casual and even expert observer this announcement has been the cause of confusion and concern, conflating U.S. domestic political requirements with internationally-negotiated agreements and blurring the boundaries of exactly what was agreed (and what was not) under the nuclear accord. This alert seeks to explain what has happened, what it means, and what the likely next steps might be.
 
As described in detail below, there are two sets of rules implicated by President Trump’s statement. The first, and most well-known, is the 2015 Iran nuclear deal-the Joint Comprehensive Plan of Action (the “JCPOA”). This agreement, signed between Iran and the five permanent members of the United Nations Security Council (the United States, the United Kingdom, France, Russia, and China) and Germany (the “P5+1”) committed both sides to certain obligations related to Iran’s nuclear development. In short, Iran committed to various limitations on its nuclear program and in return the international community (the P5+1 alongside the European Union and the United Nations) committed to relieving substantial portions of the sanctions that had been placed on Iran to address that country’s nuclear activities.
 
The second set of rules implicated is the much less well-known 2015 Iran Nuclear Agreement Review Act (“INARA”), a domestic, U.S. statute that governs the United States’ activities with respect to the JCPOA. [FN/2] Among other requirements, the INARA requires the President to publicly certify to Congress Iran’s compliance with the nuclear deal every 90 days. While then-Candidate and current President Trump often criticized the JCPOA as “an embarrassment” and a “bad deal,” since his inauguration in January 2017, he has certified the agreement twice before. Faced with an October 15 deadline for recertification (which marked the end of a 90 day cycle), President Trump refused to certify for a third time.
 
President Trump’s October 13 statement was made pursuant to requirements in place under the INARA and not under the JCPOA. As discussed below, the requirements for the INARA go beyond those of the JCPOA-even if Iran is compliant with the agreed upon limitations on its nuclear capacities, the President can nonetheless pursuant to U.S. law “de-certify” Iran’s compliance by claiming that the sanctions relief provided by the United States is not in the United States’ interests.
 
While there is international debate concerning the legality of a broader, domestically-implemented law like the INARA-which is arguably inconsistent with a multilaterally-agreed upon accord like the JCPOA-the United States views the INARA as consistent with its international and domestic obligations and the Trump Administration will be enforcing the INARA regardless of international criticism. [FN/3]        
 
Pursuant to the INARA, Congress now has 60 calendar days to consider whether it will introduce “snap-back” legislation that would reimpose nuclear sanctions on Iran automatically in a number of circumstances or take other actions through legislation. Meanwhile, the other signatories to the JCPOA have announced their intention to continue complying with the terms of the agreement.
 
Though the President’s decision jeopardizes the sanctions relief that the Obama Administration provided to Iran in exchange for Tehran’s nuclear concessions, the Trump Administration’s announcement does not result in any immediate change in U.S. nuclear sanctions relief policy. All U.S. nuclear sanctions relief-and all licenses issued to companies pursuant to sanctions relief-remain fully in force. Indeed, the October 13 decision could paradoxically begin to remove a cloud of uncertainty that has lingered over companies seeking to invest in Iran under the terms of the JCPOA ever since President Trump took office.
 
Though it remains uncertain what will transpire over the next 60 days, we assess that the most likely outcome will be one that maintains the JCPOA and nuclear-related sanctions relief; however, a combination of Congressional and Executive action will probably result in new pressures on Iranian commerce and especially on those Iranian economic actors owned or controlled by entities implicated in Iran’s other troubling behaviors, including conventional weapons development, human rights abuses, and terrorism support. This, in turn, while perhaps creating brighter lines allowing companies to engage with Iranian entities not implicated in these activities, could exacerbate challenges faced by entities seeking to engage with Iran under the JCPOA and thus for Iran to receive the benefits of international investment and trade it believes it was granted by the JCPOA.
 
THE JCPOA
 
The JCPOA is a purposefully limited accord focusing only on Iran’s nuclear activities and the international community’s nuclear-related sanctions. Prior to the JCPOA, the international community, including the United Nations, the European Union, and the United States imposed substantial sanctions on Iran. The European Union had implemented an oil embargo and U.S. nuclear sanctions alone had included the “blacklisting” of more than 700 individuals and entities on the U.S. Treasury Department’s Office of Foreign Assets Control’s (“OFAC’s”) list of Specially Designated and Blocked Nationals (“SDN List”), as well as economic restrictions imposed on entities under U.S. jurisdiction (“Primary Sanctions”) and restrictions on entities outside U.S. jurisdiction (“Secondary Sanctions”). In the United States, Secondary Sanctions threatened non-U.S. entities with limitations on their access to the U.S. market if they transacted with various Iranian entities-broadly, Secondary Sanctions forced non-U.S. entities to decide whether they were going to deal with Iran or with the United States. They could not do both.
 
Finalized in July 2015, the JCPOA provided for the easing of comprehensive international sanctions restricting dealings with Iran and Iranian entities. Under the terms of the JCPOA, as Iran continued to comply with provisions of the deal-including caps on its uranium enrichment capabilities and inspections of its key nuclear facilities to ensure that no prohibited activity is occurring-the other parties agreed to relax, and continue the relaxation of, existing nuclear-related sanctions. This relaxation included the United States’ commitment to ease certain Secondary Sanctions, thus opening up the Iranian economy for non-U.S. companies that had not wished to risk their access to the U.S. market to pursue Iranian deals. This sanctions relief came into effect in January 2016 (on “Implementation Day”) when the IAEA determined that Iran was compliant with the initial nuclear components of the JCPOA.
 
There were at least two challenges built into the JCPOA that President Trump has seized upon. First, in an effort to reach an agreement to limit Iran’s nuclear capabilities, the Obama Administration and other JCPOA parties not only provided “sunset” provisions in the accord after which certain restrictions on Iran would be lifted, but also drew a distinction between Iran’s compliance with the nuclear deal and its conduct in other areas (including its support for groups the United States deems terrorists, its repression of its citizens, it support for Syrian President Assad, and its conventional weapons development programs). Supporters of the deal argued that addressing the immediate nuclear weapons risk was paramount-this necessitated both the sunset provisions and the absence of addressing other troubling activities. Critics of the deal, however, including some powerful Congressional leaders and President Trump himself, derided these compromises and claimed not only that the sunset periods were too brief to be meaningful, but also that by ignoring non-nuclear issues Iran was given both a free pass to continue its bad behavior and indeed the ability to fund that bad behavior out of proceeds received from the nuclear-related sanctions relief.
 
The second challenge to the deal came from the fact that while the other parties to the JCPOA agreed to remove almost all of their sanctions on Iran, U.S. relief was far more surgical and reversible. This was recognized by all parties to the JCPOA but so long as President Obama (or a successor with similar political views) was in office, it was thought to be a manageable limitation. One of the key limits to the U.S. relief was that U.S. persons-including financial institutions and companies-have remained broadly prohibited from engaging with Iran even after Implementation Day. Instead, the principal relief the U.S. offered was on the sanctions risks posed to non-U.S. parties pursuant to Secondary Sanctions and related measures. As a consequence, it has remained a challenge for non-U.S. parties to fully engage with Iran due to the continued inability to leverage U.S. banks, insurance and other institutions that remain central to the bulk of cross-border finance and trade. The continuing centrality of U.S. institutions to international commerce means that even unilateral measures by the Trump Administration could impact the ability of others to enhance their JCPOA-compliant engagement with Iran.  
 
INARA
 
While the terms of the JCPOA were being finalized in the Spring of 2015, Congress passed the INARA in order to ensure that it would have the ability to review any nuclear deal and that it would have a role to play to in monitoring Iran’s compliance with the terms of that deal. The bill, which passed with overwhelming support in the House and Senate, requires the President to certify, at least every 90 days, that Iran (i) is fully implementing the agreement; (ii) has not committed a material breach of the agreement; (iii) has not taken any action that could significantly advance its nuclear weapons program; and that (iv) suspension of sanctions against Iran is appropriate and proportionate to measures taken by Iran with respect to terminating its illicit nuclear program and vital to U.S. national security interests. If the President does not certify compliance every 90 days, the INARA provides a 60-day window to Congress to introduce legislation on a fast track basis reinstating nuclear sanctions against Iran.
 
The INARA is distinct from the JCPOA-the INARA is domestic U.S. legislation and does not call for, require, or even consider the views of other parties to either the original JCPOA nor the United Nations Security Council which formally endorsed the agreement shortly after it was concluded.
 
Even though the IAEA has confirmed Iran’s continued compliance with the terms of the JCPOA, President Trump asserts that elements of the sanctions relief provided under the JCPOA are no longer in the United States’ national interest-as a legal matter Trump is triggering criteria (iv) under the INARA. As the INARA is written he need not provide any evidence or assertion that criteria (i), (ii), or (iii) have also been triggered. The President is not contending or even signaling that all sanctions relief is to be reversed; rather he is only asserting that some sanctions relief is no longer “appropriate and proportionate” and/or “vital to U.S. national security interests.”
 
The next steps under the INARA are uncertain because the law has no mandatory provisions and does not require Congress to take any action. The law solely provides that Congress “may” act to reimpose sanctions-an authority Congress already possessed even if the specific fast-track provisions under the INARA could speed up the reimposition. The Trump Administration has not yet requested that Congress reimpose nuclear-related sanctions. Indeed, Secretary of State Rex Tillerson indicated that the Administration has been quietly lobbying lawmakers to preserve nuclear-related sanctions relief in the short term, but to signal the potential that tough new sanctions could be imposed.
 
Reports indicate that the Administration has asked Congress to amend the INARA to provide for the automatic snap-back of nuclear sanctions at some future time if certain, as-yet-unarticulated circumstances come to pass. This would allow the reimposition of sanctions even if Iran continues to remain in compliance with the deal (which, once again, is limited to nuclear-related requirements).
 
WHAT HAPPENS NEXT
 
As we go to press, leading Republican Senators (including both more conservative and more moderate members on the Iran issue) are purportedly crafting a legislative proposal based on the Trump Administration’s “automatic snap-back” proposal. Such legislation would presumably reimpose nuclear sanctions automatically at several trigger points: (1) when the JCPOA “sunset” periods would be reached, i.e., at 10, 15, 20, or 25 year marks depending upon the measure covered by the JCPOA (unless Iran continued performing those commitments even after it is no longer required to do so under the JCPOA); and (2) in the event of unspecified, non-nuclear activities, such as the continued development of Iran’s ballistic missile program. [FN/4] The ballistic missile program is of central concern to President Trump and he emphasized that issue in noting the “flaws” in the JCPOA during his October 13 remarks.
 
In light of public criticism by leading Democrats in both the Senate and the House of the President’s move to decertify Iran’s JCPOA compliance it is not yet known whether this legislation will receive adequate backing in both chambers. However, given the long history of bipartisan support for tough Iran legislation, the recent past in which many of these same Democrats publicly rejected the JCPOA, and the potential for Trump to act unilaterally under Executive authority to further impede sanctions relief if Congress does not pass adequate legislation, we think it highly likely that a strong bill will be passed out of Congress and sent to the President for his signature.
 
On Friday, immediately after the President’s remarks, the leaders of France, Germany and the United Kingdom issued an unusual joint statement of concern regarding President Trump’s decision, noting that they “stand committed to the JCPOA and its full implementation by all sides.”[FN/5] The statement reiterated that the JCPOA was the culmination of 13 years of diplomacy. However, they did acknowledge shared “concerns about Iran’s ballistic missile program and regional activities that also affect our European security interests,” and offered to “stand ready to take further appropriate measures to address these issues in close cooperation with the US and all relevant partners.” Despite this pledge to cooperate with the United States, the Trump Administration has indicated its clear willingness to act on its own with uncertain implications for trans-Atlantic unity on this issue.  
 
NEW DESIGNATIONS AND POTENTIAL NEW CLARITY ON IRAN-RELATED TRANSACTIONS FOR NON-U.S. COMPANIES
 
As the policy implications of the Trump Administration’s approach play out in the coming months, there will be numerous implications. At this early stage two have already become apparent: first, new designations could bring needed clarity to certain Iran-related transactions for non-U.S. companies; and, second, OFAC may be able to resume its licensing activities with clearer direction on the Trump Administration’s policy goals.
 
First, Treasury Secretary Steve Mnuchin accompanied President’s Trump’s announcement on the JCPOA de-certification with several designations. The most important of these was the first step towards President Trump’s pledge that he would be imposing “tough sanctions on Iran’s Islamic Revolutionary Guard Corps.” The IRGC has been under U.S. sanctions for some time and the organization has a large role in the Iranian economy. Even under the sanctions relief provided by the JCPOA, Secondary Sanctions risks have attached to any entity that has transacted with the IRGC. However, critics of the Obama Administration strategy noted that there are relatively few entities (less than 40 by some counts) officially sanctioned by OFAC as IRGC affiliates. The President’s order could see that number expand significantly as most experts contend that there are hundreds of entities in Iran affiliated with the IRGC.
 
The shadowy nature of the IRGC and the lack of clarity regarding the organizations over which the IRGC exercises control has been a primary reason that many non-U.S. entities have shied away from legally entering the Iranian market. Such companies did not want to risk U.S. Secondary Sanctions by engaging with an entity that turned out to be owned or controlled by the IRGC. The unintended consequence of expanding the list of known IRGC affiliates may be to provide greater clarity for those who want to engage with Iran but who do not want to transact with the IRGC. If the U.S. is committed to a full detailing of the IRGC’s affiliates it could become clearer which entities are outside the IRGC’s control and thus which entities are more suitable and less risky for JCPOA-compliant engagement.  
 
Second, in addition to the potential clarity of detailing the IRGC’s control over Iran’s economy, the Trump Administration’s actions may also make it easier for companies seeking to engage in Iran-related transactions with U.S. persons, or U.S.-origin goods, technology, and services that would trigger U.S. licensing requirements from OFAC. While the Iran policy review has been pending, OFAC has essentially been in a holding pattern with respect to action on Iran-related license applications. This is logical given that licenses are a tool of foreign policy and while the Administration was considering next steps there was uncertainty as to the direction of that policy. Indeed, some thought it was possible that the result of the policy review would be for the President to revoke existing licenses or mandate a more significant departure from the Obama strategy.
 
However, at least for now, it appears that the Trump Administration has opted to broadly stay the course regarding the JCPOA and has decided not to modify some longstanding licenses and exemptions that were issued to allow certain transactions related to telecommunications, health and agriculture, civil aviation, and those involving foreign subsidiaries of U.S. companies. Moreover, it is also possible that OFAC licensing officers and their State Department colleagues have now been given the policy direction they need to make decisions, one way or another, to clear a backlog of pending license applications and to consider new ones. While President Trump indicated that the JCPOA “is under continuous review, and our participation can be cancelled by me, as President, at any time,” as of today the United States remains party to the agreement-which requires certain aspects of sanctions relief. The President’s statement about the long-suffering Iranian people and his desire for a “better deal” for both the international community and Iranian citizens provide some guidance as to the types of licenses that may receive positive consideration.
 
CONCLUSION – CONGRESSIONAL ACTION AND A POTENTIALLY LIMITED IRANIAN RESPONSE?
 
As the legislative year draws to a close, it is possible that Congress will decide that the United States’ continued adherence to the terms of the JCPOA remains in the U.S. national interest and that it lacks bipartisan support for legislation that would impose additional measures on Iran sufficient to unravel the deal. Moreover, it is possible that President Trump will also be convinced to remain inside the JCPOA complete with the provision of sanctions relief. Regardless, initial signals from the other, non-Iran JCPOA parties are that the U.S. is on its own. The rest of the P5+1 remain committed to complying with the agreement provided Iran continues to meet its terms. This continued commitment by the European Union and others to compliance will likely limit the range and severity of Iran’s responses to President Trump’s statements and the eventual outcomes of his policy. After all, even if Iran argues that the United States will breach its JCPOA commitments, if Iran responds by resuming work on its nuclear weapons program or greatly enhancing its other “troubling behaviors” it could risk the commitment of the European Union to Brussels’ own sanctions relief efforts. A resumption of EU sanctions-let alone enhanced U.S. measures-would place billions of dollars of potential investment and trade at risk. As such, a resumption by Tehran of any activities that could lead the EU to question its own sanctions relief would appear to significantly hem in Iran’s options to meaningfully react to the U.S. moves by substantially altering its own course and commitments under the JCPOA.
 
We will be closely following the fast-moving political and policy debates as they unfold in the United States, the European Union, and elsewhere and will update you as the situation evolves.
 
———–

  [FN/1] Press Release, The White House, Remarks by President Trump on Iran Strategy (Oct. 13, 2017), available
here.

  [FN/2] Pub.L. 114-17 (May 2015).
  [FN/3] While the broader debate is outside the confines of this alert, a primary reason that a broader INARA is permitted is that the JCPOA is not a treaty which would have required approval by the U.S. Senate. Had the JCPOA been a treaty, and had it been self-executing, it would have had legally-mandated enforceability across administrations as a matter of domestic law. Instead, the U.S. views the JCPOA as an “Executive Agreement,” and as such it remains the purview of the Executive (namely the President) to determine whether, as a legal matter, the United States will comply or otherwise.   Such an agreement is politically (and perhaps diplomatically) binding but can be overturned by U.S. law.
  [FN/4] Office of U.S. Senator Bob Corker, Corker Statement on Legislative Strategy to Address Flaws in Iran Nuclear Deal (including fact sheet), (Oct. 13, 2017), available here.
  [FN/5] U.K. Prime Minister’s Office, Joint statement from Prime Minister Theresa May, Chancellor Angela Merkel and President Emmanuel Macron following President Trump’s statement on the US’ Iran Strategy (Oct. 13, 2017), available here.

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

COMM_a2
12. M. Volkov: “A Closer Look at ISO37001 – Something Old or Something New? (Part I of V)”

(Source: Volkov Law Group Blog, 15 Oct 2017. Reprinted by permission.)
 
* Author: Michael Volkov, Esq., Volkov Law Group, mvolkov@volkovlaw.com, 240-505-1992.
 
The release of ISO 37001 has triggered an important discussion among legal and compliance professionals. In a five-part series, I plan to address the value of ISO 37001, provide a substantive analysis, and to evaluate the contribution ISO 37001 has made (or will make) in the compliance field.
 
First, I recommend that everyone spend time studying ISO 37001. It is a mistake to write off ISO 37001 as contributing nothing “new” to compliance. A number of authors have concluded that ISO 37001 offers only minimal improvements to existing guidance. In fact, as I will point out in future posts there are some valuable new ideas and requirements contained in ISO 37001 that should be considered when designing and implementing an ethics and compliance program.
 
Second, and perhaps most importantly, the new ISO 37001 raises some critical issues surrounding enforcement credit and the ISO 37001 certification process itself.
 
  – What is the value of earning an ISO 37001 certification?
  – How much, if any, credit will be given to companies investigated by the Justice Department, Securities and Exchange Commission, the Serious Fraud Office and other law enforcement agencies?
  – How will the certification process actually work and how will consistency be maintained in the certification process?
 
The Justice Department and the SEC have provided significant guidance on anti-corruption enforcement and compliance. They have attempted to increase transparency in its enforcement policies and standards under which they exercise prosecutorial discretion. Specifically, building on the basic elements defined in the US Sentencing Guidelines, DOJ and the SEC issued The FCPA Guidance in November 2012, the FCPA Pilot Program in April 2016, and a compliance guidance document in March 2017. Of course, DOJ and the SEC could do more to improve their efforts, but the guidance provided so far has been unprecedented in terms of scope and quality. Many prosecutors, however, are not very comfortable providing such guidance because it may act to constrain prosecutorial discretion in certain situations.
 
While ISO 37001 provides some helpful ideas on effective anti-bribery strategies, the fundamental difference between ISO 37001 and prior DOJ and SEC guidance is the availability of earning a certification of compliance with ISO 37001. DOJ and the SEC have not defined the amount of credit, if any, to be awarded to a company for maintaining an effective anti-corruption compliance program as defined under ISO 37001.
 
The relevance of ISO 37001, however, may apply only in circumstances when companies seek to remediate their existing compliance programs after a violation has occurred. DOJ and the SEC have not awarded credit to companies for implementing an effective existing compliance program before the violation occurred.
 
The ISO 37001 certification may create an opportunity for companies to argue for some credit to offset against an FCPA violation. A company that meets such a standard could argue that such certification reflects the company’s commitment to ethics and compliance and that it should be taken into account when weighing the overall penalty for a violation.
 
Unfortunately, DOJ and the SEC have not embraced the ISO 37001 standard, and are unlikely to do so. Therefore, the prospective value of obtaining such a certification is unlikely to be significant, except that companies can argue the benefits of the certification to law enforcement and prosecutors.
 
The ISO 37001 standard requires certification by trained evaluators. The review and assessment process has been defined and the application of such evaluation criteria will be an important aspect of the certification process. The intricacies for such evaluations will be interesting since such an evaluation necessarily involves judgment calls as to the sufficiency and quality of specific components of an anti-corruption compliance program.
 
Apart from the uncertainty surrounding the legal credit for the ISO 37001, the standard does provide some valuable benchmarking insights for companies seeking to design and implement an effective anti-corruption compliance program. Companies always have questions pertaining to design and implementation of a program, and ISO 37001 creates some guidance on a variety of subjects, as will be explained in further postings on the issue.
 
As with any important compliance guidance program, ISO 37001 is sure to contribute to the overall implementation of effective ethics and compliance programs. It is hard to predict at this point how much of an impact ISO 37001 will have on ethics and compliance programs. For now, ethics and compliance program officers should take this new resource and tool into account in carrying out their responsibilities.
 
[Editor’s Note: The other parts in this series will be included when they are released by the author.]

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

COMM_a3
13. N.A. Baylis, R. Dereskeviciute & A. Di Mario: “EU and UK Sanctions and Export Controls Update – Autumn 2017”

(Source: K&L Gates LLP, 6 Oct 2017.)
 
* Authors: Neil A. Baylis, Esq., neil.baylis@klgates.com, +44 (0)20-7360- 8140; Raminta Dereskeviciute, Esq., raminta.dereskeviciute@klgates.com, +44 (0)20-7360-8264; and Alessandro Di Mario, Esq., alessandro.dimario@klgates.com, +32 (0)2-336-1938.  All of K&L Gates LLP.
 
There have been a number of key developments in the European Union (“EU”) and United Kingdom (“UK”) sanctions regimes over the summer of 2017. Alongside the inevitable updates to the UK’s sanctions policy in light of Brexit, the EU has also revised many of the sanctions it imposes on individuals, entities and governments in countries such as North Korea, Russia, Syria and the Central Democratic Republic of Congo. Below is a summary of both the general changes and changes specific to key jurisdictions.
 
SANCTIONS AND BREXIT
 
On 21 April, the UK published a white paper seeking views on the legal powers the UK Government will need upon the UK’s withdrawal from the EU in order to be able to continue imposing and implementing sanctions. After a review of the comments submitted during the consultation period, on 2 August the UK Government published its plans for a new Sanctions Bill. If adopted, the new Bill will allow the UK to impose substantial sanctions on another country or individual, without having to implement new legislation as part of the EU policy. The Sanctions Bill also foresees granting new powers to the UK Government to further prevent terrorist organisations from obtaining funds, by ensuring that the process of imposing asset freeze orders is quicker and easier. It will also grant greater powers to the Office of Financial Sanctions Implementation (“OFSI”) to issue licences, such as delivering humanitarian aid.
 
However, the Bill acknowledges that the UK is still obliged to implement UN sanctions under international law. Moreover, it will require that autonomous sanctions are reviewed once a year and each and that every individual listing is reviewed at least once every three years, whilst individuals and entities subject to sanctions will have the ability to challenge them.
 
Yet, there are still uncertainties underlying this new UK sanctions regime. The UK Government has not carried out consultations on whom or where the sanctions should target or how the UK plans on coordinating its action with that of the EU. Without an efficient mechanism to enable the UK to harmonise its regime with the EU’s, there could be divergence in the implementation of sanctions and the issuance of export licences.
 
To overcome this lack of clarity, the UK continues to carry out consultations and develop its post-Brexit sanctions policy, with the House of Lords EU External Affairs Sub-Committee having recently taken evidence from the UK Government on its proposed post-Brexit sanctions policy.
 
FURTHER UK UPDATES
 
Office of Financial Sanctions Implementation
 
Since 3 April, the Office of Financial Sanctions Implementation (“OFSI”) has had the power to impose penalties for serious breaches of UK financial sanctions that occur on or after 1 April 2017. What is deemed to be a serious breach will be fact-specific, but OFSI will look at a various factors including the value and frequency of the breaches, harm or risk of harm caused by the breaches and whether the offending party has self-reported. Although no penalties have yet been issued, the risks for non-compliance with UK sanctions are now much greater.
 
Until August, OFSI required only financial institutions to report sanctions breaches. However, as of 8 August 2017, in accordance with EU Regulations (Regulation 2017 No. 754), the UK broadened the types of organisations that are required to inform OFSI about sanctions breaches, which now include law firms and legal professionals, auditors and accountants, tax advisors, dealers in precious metals or stones and even casinos. Under the new reporting requirements, these organisations must notify OFSI if they have reasonable cause to suspect that an individual or entity has committed a sanctions offence or is subject to an asset freeze. A failure to report such a suspicion is a criminal offence.
 
Furthermore, OFSI is currently conducting its annual review of frozen assets. Any entity or individual that controls or is holding the funds of a sanctioned entity or individual must report details of those assets by 13 October 2017.
 
OFSI has also recently published a quick guide on financial sanctions. The guidance summarises what financial sanctions are, their purpose, how to comply with them and what other guidance is available.
 
EXPORT CONTROLS
 
On 7 July 2017, the UK Department of International Trade issued a notice to exporters stating that the Export Control Organisation (“ECO”) had amended Schedule 2 of the Export Control Order 2008. The amendments follow changes made to the EU Common Military List and thereby apply to lists regarding military goods, software and technology, subject to export controls. The new order came into force on 13 July 2017.
 
The ECO has gone on to amend and re-publish the open general export licence (“OGEL”) for a variety of military goods. These OGELs cover components, technology and information required for the development and production of military goods, military goods imported into the UK for exhibition, demonstration or repair/replacement under warranty and military goods or technology exported or transferred under the US-UK Defence Trade Co-operation Treaty. The ECO also amended and re-published the OGELs regarding printed circuit boards and goods, software or technology in relation to the Turkish Aerospace Industries TF-X Programme.
 
JURISDICTIONAL UPDATE
 
North Korea
 
In June, the EU added 14 individuals and four entities to the list of those subject to an asset freeze, while lifting restrictive measures previously placed on both Pyon Yong Rip, the previous President of Democratic People’s Republic of Korea (“DPRK”) Academy of Science and the Korea International Chemical Joint Venture Company.
 
In August, following the imposition by the United States of further sanctions on the DPRK (to read our alert on the new US sanctions on North Korea, click here), the EU also implemented additional sanctions, including the prohibition of the supply, transfer or sale of coal, iron, iron ore, seafood, lead and lead ore to the DPRK. In addition, the EU imposed a travel ban and froze the assets of a further nine individuals and four entities, including the state-owned Foreign Trade Bank. However, the Foreign Trade Bank and the Korean National Insurance Company have since become exempt from these restrictions in circumstances where the transactions with these entities are for the sole purpose of diplomatic missions in the DPRK or humanitarian activities undertaken by, or in partnership with, the United Nations (“UN”).
 
In September, as a result of the DPRK’s ongoing nuclear-weapon and ballistic development activities (for instance, the missile launches over Japan conducted by the DPRK), which are clear violations of UN Security Council resolutions, the UN approved a US proposal for further sanctions on the DPRK. The new sanctions place a ban on trading the following goods with the DPRK: natural gas liquids, refined petroleum products in excess of 500,000 barrels for the remainder of 2017 and thereafter in excess of two million barrels and crude oil in excess of existing levels of trade. These new sanctions, which the EU has since implemented, also proscribe DPRK exports of textiles, prohibit Member States from permitting North Korean citizens from working in their jurisdictions without prior approval from the UN and forbid any joint ventures with the DPRK.
 
In this new round of sanctions, the EU has added three governmental entities to its sanctions lists: the Central Military Commission, the Organisation and Guidance Department and the Propaganda and Agitation Department and one individual, Pak Yong Sik, a member of the Central Military Commission.
 
Finally, following President Trump’s recent imposition of new sanctions on the DPRK, the EU is said to have provisionally agreed further sanctions on the DPRK, prohibiting, inter alia, all EU investment in the country.
 
Russia
 
Following the EU Council’s affirmation in June that it did not recognise Russia’s illegal annexation of the Crimea and Sevastopol, it extended its sanctions against the Russian Federation until 23 June 2018. These sanctions include a prohibition on making investments in Russia, importing or exporting goods, services or technologies to or from Russia or providing tourism services in relation to Crimea or Sevastopol.
 
Moreover, on 28 June 2017, economic sanctions against Russia were renewed, which are now due to last until 31 January 2018. These financial sanctions, which are the result of the Minsk Agreements, target the financial, energy and defence sectors, as well as dual-use goods.
 
In August, alongside the more stringent sanctions imposed by the US (to read our alert on the new US sanctions on Russia, click here) the EU added Andrey Vladimirovich Cherezov (Russia’s Vice-Minister for Energy), Evgeniy Petrovich Grabchak (the Head of Russia’s Department for Energy) and Sergey Anatolevich Topor-Gilka (Director General of Technopromexport) to the list of persons and OAO Technopromexport, OOO Technopromexport and ZAO Interavtomatika to the list of entities that are subject to restrictive measures. Sanctions were imposed on these individuals and entities for their involvement in the transfer of gas turbines to Crimea in breach of the EU’s prohibition of the supply of key equipment in the energy sectors to the Russian Federation for infrastructure projects in that area.
 
The most recent update to EU sanctions against Russia is the extension of sanctions imposed on individuals and entities to 15 March 2018, in relation to the unlawful annexation of Ukraine. In addition, the EU has added Crimean Sea Ports to its sanctions lists and removed four deceased individuals and three reorganised entities.
 
Syria
 
On 1 June 2017, the EU renewed sanctions imposed on Syria. The EU Council has stated that restrictive measures against the Syrian regime and its supporters will remain in force while the repression of its civilians continues.
The sanctions imposed by the EU target Syria’s finance and transportation sectors and include measures such as oil embargos, constraints on certain investments and the trade of certain equipment and technology as well as restrictions on the access that Syrian banks’ have to EU capital markets.
 
The list of sanctioned persons and entities in Syria has recently grown, imposing travel bans on, and freezing the assets of, Syria’s Justice Minister (Hisham Mohammad Mamdouh al-Sha’ar), Economy and Foreign Trade Minister (Mohammad Samer Abdelrahman al-Khalil) and Administrative Development Minister (Salam Mohammad al-Saffaf). Furthermore, eight high-ranking military personnel and eight scientists have been added to the EU sanctions list, for their involvement in the proliferation of the chemical weapons that were used against Syrian civilians. It should also be noted that George Haswani, a leading Syrian businessman and Abdulkarim Group, a Syrian conglomerate, were removed from the EU sanctions list.
 
Due to their alleged involvement in the violent repression and use of chemical weapons against civilians in Syria, a total of at least 255 persons and 67 entities have now been targeted by the EU’s sanctions.
 
Democratic Republic of the Congo
 
The EU sanctions imposed on the Democratic Republic of the Congo (the “DRC”) stem from the human rights violations committed by certain persons and the general obstruction of the electoral process.
 
The EU recently implemented the UN decision to change the way it imposes its sanctions on the DRC, by amending the criteria for the designation of persons and entities subject to restrictive measures to now include those involved in planning, sponsoring or participating in attacks on members of the UN Group of Experts.
 
In addition, in May, the EU froze the assets and enforced a travel ban on nine individuals, all of which are said to hold positions of responsibility within state administration or in the DRC security forces while also prohibiting any other person or entity from providing financial assistance to those persons.
 
Iran
 
In April the EU Council extended the existing EU sanctions against Iran, which will now be in place until 13 April 2018. In June, the EU amended the details of its authorisation regime for reviewing and deciding on nuclear-related transfers to, or activities with, Iran.
 
Although there has been little change recently regarding EU sanctions on Iran, it should be noted that in August the US implemented a new set of Iranian sanctions (to read our alert on the new US sanctions on Iran, click here). While it deliberately omits nuclear issues, so as not to undermine the recent Iran nuclear deal (the Joint Comprehensive Plan of Action, or JCPOA), it does indicate that the Trump administration is taking a different stance to its predecessor on its Iranian sanctions policy.
 
Libya
 
In light of the migration crisis, the EU introduced new restrictions in July on the export and supply to Libya of inflatable boats and outboard motors, which could be used by people smugglers and human traffickers.
 
In August, following the latest UN Security Council resolution, the EU extended the measures imposed on vessels loading, transporting or discharging petroleum that are in place to combat illicit exports from Libya so as to include crude oil and refined petroleum products. Consequently, the vessels already listed are now subject to further prohibitions. In addition, the EU added the Lynn S vessel to this list.
 
Myanmar (Burma)
 
In April, the EU extended the embargos on arms and equipment that might be used for internal repression that it currently imposes on Myanmar until 30 April 2018.
 
Recently there have been calls by human rights pressure groups for the UN and EU to implement further sanctions on Myanmar, including a more complete arms embargo, in response to the violence carried out against Rohingya Muslims by its military. We will provide updates on the sanctions of Myanmar as the political situation in the country develops.
 
Central African Republic
 
In May, the EU implemented the UN’s sanctions listings relating to the Central African Republic, freezing the assets of eleven individuals and two entities, The Lord’s Resistance Army and Bureau D’achat de Diamant en Centrafrique/Kardiam. In June, the EU also added Hissene Abdoulaye to its Central African Republic sanctions list and Fared Saal (a Central African Republic national) to its ISIL and Al-Qaida sanctions list.
 
Guinea-Bissau
 
In June, the EU renewed the restrictive measures placed on individuals and entities that were first introduced on 3 May 2012, following the coup d’état of 12 April 2012.
 
Terrorist Organisations (including ISIL and Al-Qaida)
 
Over the past few months, the EU has added and removed several individuals and entities to its sanctions listings relating to terrorist organisations.
 
More generally, in September the EU extended all ISIL and Al-Qaida sanctions until 31 October 2018 while in August, the EU determined that terrorism sanctions imposed on individuals involved in all other terrorist organisations should continue.

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

COMM_a4
14. T. Murphy: “GSP Expiration”

(Source: Author, 17 Oct 2017.)
 
* Author: Ted Murphy, Esq., Baker & McKenzie LLP, ted.murphy@bakermckenzie.com, 202-452-7069.
 
As those of you who import articles under the Generalized System of Preferences (“GSP”) program know, it is scheduled to expire in a little over two months — on December 31, 2017. While it is possible that it will be renewed prior to December 31, 2017, Congress is cutting it close (e.g., the House of Representatives will be in session for only ~27 days between now and the end of the year). So far, there has not been much movement on renewal.
 
As a result, companies which rely on the program for duty savings should (i) continue pushing for renewal (e.g., through their trade associations, their Congressional representatives, etc.) and (ii) prepare for at least a temporary gap in coverage. If the program is not renewed prior to December 31st, then importers will need to start depositing duties and merchandise processing fees. This possibility should be raised internally, so that your finance colleagues can plan for the potential increase in cost. Of course, if the program is eventually renewed, and renewed retroactively (as has happened in the past), then importers will be able to apply for a refund. Nevertheless, given the (hopefully short-term) increase in cost, it is best to make sure your finance colleagues are prepared for this eventuality.

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

ENEDITOR’S NOTES

* John Wilkes (17 Oct 1725 – 26 Dec 1797; was an English radical, journalist, and politician.)
  – In a famous exchange with John Montagu, 4th Earl of Sandwich, where Montagu exclaimed, “Sir, I do not know whether you will die on the gallows or of the pox,” Wilkes is reported to have replied, “That depends, my lord, on whether I embrace your lordship’s principles or your mistress.” (This quotation was later attributed to exchanges between Honoré Gabriel Riqueti and Cardinal Jean-Sifrein Maury, as well as to U.K. Prime Minister Gladstone and Benjamin Disraeli.) 

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

EN_a316
. 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_a0317. 
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.

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

* TO UNSUBSCRIBE: Use the Safe Unsubscribe link below.

Scroll to Top