17-1115 Wednesday “Daily Bugle”

17-1115 Wednesday “Daily Bugle”

Wednesday, 15 November 2017

The Daily Bugle is a free daily newsletter from Full Circle Compliance, containing changes to export/import regulations (ATF, Customs, NISPOM, EAR, FACR/OFAC, FTR/AES, HTSUS, and ITAR), plus news and events.  Subscribe 
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[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 Announces ACE Certification Outage This Evening, Updates ACE Drawback CATAIR (Draft)
  4. State/DDTC Discontinues ELLIE and form DSP-119
  5. Canada Amends Import Control List
  6. EU Implements Technical Arrangements Concerning Information Exchange and Storage Under the Union Customs Code
  7. UK DIT/ECO Releases Notice Concerning EU Sanctions Against Venezuela
  1. Interfax-Ukraine: “Ukrainian Cabinet Brings National List of Goods Subject to Export Control in Line with New Australian Group Requirements”
  2. ST&R Trade Report: “CBP, Trade Working to Develop ACE Downtime Procedures”
  1. G.E. Morales, S.M. Kriesberg & T.A. Soliman: “Trump Administration Amends Sanctions Against Cuba”
  2. M. Volkov: “The FCPA Week That Was – Seven Individuals Charged for FCPA Violations”
  3. S.M. Richer: “The Road Ahead with Exports”
  4. W. Brown Jr., H. Clark & J. Poer: “Sudan Now Open for Business, But Risks Remain”
  5. Gary Stanley’s ECR Tip of the Day
  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 (9 Nov 2017), FACR/OFAC (13 Nov 2017), FTR (20 Sep 2017), HTSUS (20 Oct 2017), ITAR (30 Aug 2017) 
  3. Weekly Highlights of the Daily Bugle Top Stories 



[No items of interest noted today.]

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

* Justice; Alcohol, Tobacco, Firearms, and Explosives Bureau; NOTICES; Agency Information Collection Activities; Proposals, Submissions, and Approvals:
  – Application and Permit for Temporary Importation of Firearms and Ammunition By Nonimmigrant Aliens [Publication Date: 16 Nov 2017.]
  – Report of Multiple Sale or Other Disposition of Certain Rifles [Publication Date: 16 Nov 2017.]
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DHS/CBP Announces ACE Certification Outage This Evening, Updates ACE Drawback CATAIR (Draft)

ACE Certification Outage
There will be an EXTENDED ACE CERTIFICATION Outage this evening, Wednesday, November 15, 2017 from 1715 ET to 0015 ET, November 16th for Infrastructure maintenance.
Updated ACE Drawback CATAIR (Draft)
U.S. Customs and Border Protection (CBP) is announcing the Drawback module now includes coding for the Trade Facilitation and Trade Enforcement Act (TFTEA). The Drawback system is ready for CERTIFICATION testing in the Automated Commercial Environment (ACE). Drawback claims (both non TFTEA and TFTEA) may be submitted in CERTIFICATION through the use of the Automated Broker Interface (ABI) and the Trade Automated Interface Requirements (CATAIR).
Please see the details of the newly posted ACE Drawback Guidelines
ACE Drawback CATAIR (Draft) – This chapter provides conventional trade interface information for the ACE-version of a Drawback Entry Summary filing.
This technical document is considered a DRAFT and is subject to revision before a final version is provided. Any actions a reader takes based on this draft document are taken voluntarily and with the understanding that the draft may be revised. For your information, subsequent revisions to this document will be controlled through the official CBP document amendment process.
The Drawback system is equipped to handle both non TFTEA Drawback and TFTEA Drawback claim submissions in CERTIFICATION at this time. But please note that TFTEA Drawback introduces a number of enhancements to Core Drawback and as such may require new data elements.
For a list of underlying import entries to use on the Drawback claim, CBP has generated a number of test entries and provided them to the Drawback Working Group. To get your list of available test entries, please contact Michael Cerny at mvcerny@sttas.com and Dave Corn at dcorn@dutydrawback.com.
For access to CERTIFICATION testing, please work with your Client Rep so that your profile is updated to test Drawback. If you have any questions or problems with submitting a Drawback claim to ACE, please send all questions and inquiries to our dedicated inbox DrawbackCertification@cbp.dhs.gov and we will work with you to resolve any outstanding issues.
More information on Drawback may be found in the Drawback Information Notice posted to CBP.gov or here.
As we approach the go-live date (February 24, 2018) for Drawback, we appreciate any and all feedback on the design of the system and look forward to working with you for a smooth transition to ACE.
  – Related CSMS No. 17-000629

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State/DDTC Discontinues ELLIE and form DSP-119

State/DDTC, 14 Nov 2017.)
Effective 1 December 2017, DDTC will no longer accept form DSP-119 to amend the DSP-85. All pending DSP-119’s will be processed pursuant to 123.25 of the ITAR. Any DSP-119 form submitted to DDTC on or after December 1, 2017 will be returned without action. When amending the DSP-85, the applicant must submit a completely new DSP-85 along with a transmittal letter, signed by the Empowered Official explaining the amended change.

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Canada Amends Import Control List

Canada Gazette, 15 Nov 2017.)
Global Affairs (GA) Canada has amended the Import Control List. Specifically, the amended Import Control List includes carbon and specialty steel products for a further three years beginning on October 31, 2017.

To read the entire notice, click here

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EU Implements Technical Arrangements Concerning Information Exchange and Storage Under the Union Customs Code

  – Commission Implementing Regulation (EU) 2017/2089 of 14 November 2017 on technical arrangements for developing, maintaining and employing electronic systems for the exchange of information and for the storage of such information under the Union Customs Code

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UK DIT/ECO Releases Notice Concerning EU Sanctions Against Venezuela

, 15 Nov 2017.) [Excerpts.]
On 13 November 2017, the European Union imposed new sanctions against Venezuela. The new measures are contained in Council Decision 2017/2074/CFSP and Council Regulation (EU) No 2017/2063.
The restrictive measures came into force on 14 November 2017 and include:
(1) Arms embargo
The UK interprets the arms embargo as applying to all items on the UK Military List. There are related prohibitions on the provision of technical assistance, financing and financial assistance, brokering services, and other related services.
(2) Prohibition on the supply of equipment which might be used for internal repression
There are related prohibitions on the provision of technical assistance, financing and financial assistance, brokering services, and other related services.
(3) Equipment for monitoring communications
A license will be required for the supply of equipment, technology or software intended primarily for use in the monitoring or interception of internet or telephone communications on mobile or fixed networks in Venezuela. The goods and technologies affected are listed in Annex II to Council Regulation 2017/2063. There are related prohibitions on the provision of technical assistance, financing and financial assistance and brokering services.
There is a prohibition on the provision of telecommunication or internet monitoring or interception services to Venezuela’s government or associated bodies.
The new sanctions permit Member States to authorize transactions, prohibited by the arms embargo, which concern the execution of a contract or an agreement concluded before 13 November 2017.
License applicants wishing to rely on these exemptions must notify the export control joint unit (ECJU) of the contract within 5 working days from the entry into force of the Regulation and provide a copy of the relevant contract or agreement in support of their license application.
The existence of a relevant contract does not guarantee that a license will be granted. License applications for military and dual-use items not prohibited by the new sanctions will continue to be assessed against the consolidated EU and national arms export licensing criteria in the usual way.
The export control joint unit (ECJU) is currently reviewing all extant export and trade control licenses for Venezuela in light of the new EU sanctions. Any license holders affected by these new measures will be contacted directly. We will provide further information in the next few days. We will also be amending the relevant open general export licenses to remove Venezuela as a permitted destination.
(4) Financial sanctions
There are also financial sanctions against Venezuela; further information is available from the office for financial sanctions implementation.
Where can I find the list of restricted goods, technologies and services related to the monitoring or interception of Internet and telephone communications?
The technologies concerned are defined in Article 6 and 7 and Annex II of Council Regulation No 2017/2063.
What form do the restrictions on goods, technologies and services related to the monitoring or interception of internet or telephone communications take?
A license is required for:
  – sale, supply, transfer or export of the listed technologies to Venezuela, or for any other country if the technologies are for use in Venezuela
  – provision of technical assistance, brokering services, financing and financial assistance related to the sale, supply, transfer or export of these technologies to Venezuela or for use in Venezuela
  – provision of telecommunication or internet monitoring or interception services to Venezuela’s government or associated entities.
A license will not be granted for the above if there are reasonable grounds to determine that the equipment, technology, software or services would be used primarily for internal repression monitoring or interception, by Venezuela’s government, public bodies, corporations and agencies or any person or entity acting on their behalf or at their direction.
What date do the new restrictions come into force?
The restrictions came into force on 14 November 2017. … 

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8Interfax-Ukraine: “Ukrainian Cabinet Brings National List of Goods Subject to Export Control in Line with New Australian Group Requirements”

(Source: Interfax-Ukraine, 15 Nov 2017.) [Excerpts.]
The [Ukrainian] Cabinet of Ministers has updated the edition of the national list of dual-use goods subject to state export control in international transfers in accordance with the new requirements of the Australian Group regime.
The corresponding draft cabinet resolution on amendments to Supplement 5 to the procedure for implementing state export controls over international transfers of dual-use goods was passed at a government meeting on November 15 without discussion.
According to an explanatory note to the draft document, the structure and content of the new wording of the national list are brought into line with the Australian Group Control List adopted on the basis of its work in 2012-2017. … 

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9ST&R Trade Report: “CBP, Trade Working to Develop ACE Downtime Procedures”

U.S. Customs and Border Protection is collaborating with a working group of the Commercial Customs Operations Advisory Committee to develop procedures to be followed in the case of an Automated Commercial Environment outage. With nearly all core trade processing capabilities having now been transferred to ACE, an Aug. 2 outage that lasted nearly an entire day has raised renewed concerns about trade facilitation and enforcement in the event of a similar occurrence in the future.
CBP officials have said the Aug. 2 outage was due to a hardware failure, not a software issue or a cyberattack. The agency has been examining the cause of the problem and plans to make changes as needed, though no specific details have yet been made public. An overview provided at the Nov. 14 COAC meeting noted that once the remaining core trade processing capabilities are deployed in ACE in February 2018 CBP will work to ensure the availability and reliability of the system through timely bug fixes, program management, software sustainment, and infrastructure support for deployed capabilities.
In the meantime, COAC is moving to address the various negative effects an ACE outage could have on the trade community. Shortly after the Aug. 2 incident COAC established a working group that is cooperating with CBP to develop an ACE downtime procedures document that would establish as much uniformity as possible while still allowing sufficient flexibility for ports to adjust based on local risk factors and infrastructure. As part of this process the working group is examining how different modes of transportation are impacted by ACE disruptions.
In addition, COAC approved a number of related recommendations to CBP at its Nov. 14 meeting. To mitigate the impact an ACE outage might have, members asked CBP to specify the data elements that would be required to release goods during a disruption and to provide early warning notifications of potential unplanned disruptions. To facilitate trade during a disruption, members recommended that CBP enhance the ACE availability dashboard to provide additional information and allow software vendors to directly contact OneNet support rather than going through the ACE helpdesk. Once ACE has been restored following a disruption, members said CBP should avoid manually amending or back dating the release date to the date of arrival. They also requested that CBP conduct a proactive review prior to issuing liquidated damages cases for filings that may have been connected to a system disruption.

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10. G.E. Morales, S.M. Kriesberg & T.A. Soliman: “Trump Administration Amends Sanctions Against Cuba”

Mayer Brown LLP, 13 Nov 2017.)
* Authors: Gretel Echarte Morales, Esq.,
gecharte@mayerbrown.com; Simeon M. Kriesberg, Esq.,
skriesberg@mayerbrown.com; and Tamer A. Soliman, Esq.,
tsoliman@mayerbrown.com. All of Mayer Brown LLP.
On November 8, 2017, the US Treasury, Commerce, and State Departments announced amendments to the Cuban Assets Controls Regulations and the Export Administration Regulations to continue the Trump administration’s policy of restricting travel to and trade with Cuba, while easing export controls on US exports to the Cuban private sector (See the
Treasury announcement containing links to the amendments.) These amendments focus on banning individual people-to-people travel to Cuba and prohibiting business transactions with entities controlled by the Cuban military, intelligence, or security services. These amendments implement President Trump’s June 2017
National Security Presidential Memorandum Strengthening the Policy of the United States Toward Cuba. Some of the most important changes implicated by these amendments are described below.
I. Restrictions on people-to-people exchanges and educational travel
Individual people-to-people travel, one of the categories of travel authorized under the prior administration, is now prohibited. This category allowed American travelers to visit Cuba for informal and non-academic cultural and educational exchanges without the need to purchase often-costly guided tours. American travelers who want to engage in people-to-people travel can now do so only under the auspices of a US organization that sponsors such exchanges to promote people-to-people contact and must be accompanied by a US representative of the sponsoring organization.
The amendments also provide for additional requirements in relation to educational travel. Americans planning to travel to Cuba to engage in educational activities may now be required to obtain a letter from a US educational institution making a number of statements as to the enrollment status of the student and the structure and duration of the program, among others. The amendments to the travel provisions will undoubtedly moderate the recent increases in US travelers to Cuba and the interactions between Cubans and individuals from the United States.
II. Prohibition on doing business with entities controlled by Cuban military, intelligence, and security services
The State Department has published a list of entities that are controlled by the Cuban military, intelligence, and security services, the ”
Cuba Restricted List.” US persons are now precluded by Treasury regulations from engaging in financial transactions involving listed entities, which include ministries, holding companies (notably GAESA), numerous hotels across the island, tourist agencies, marinas, stores, and manufacturing and logistics companies, among many others. The prohibition extends not only to US companies but also to US travelers visiting the island under authorized travel categories. Given the extensive role of the listed entities in the Cuban economy, including the hospitality industry, the restrictions on dealings with those on the Cuba Restricted List will greatly reduce Cuba-related opportunities for US businesses and travelers.
The new restrictions also prohibit US parties from entering into agreements with listed entities, even if they are made contingent upon obtaining appropriate US licenses; such contingent agreements were previously permitted. In addition, transactions ordinarily incident to authorized activities are also prohibited if they involve listed entities, unless expressly authorized. Financing of exports by US financial institutions, which was previously authorized (with the exception of exports of agricultural commodities), is now prohibited if it involves listed entities. Dealings to establish business and physical presence in Cuba that were permitted to certain categories of businesses under prior regulations are now authorized only for a narrower range of businesses.
Exceptions have been carved out for various transactions with listed entities including purchases of Cuban visas and transportation to, from, and within Cuba. Financing of exports involving listed entities is also permitted for medicines and medical devices, telecom and internet related items, and items associated with air and sea operations that support permissible travel, cargo, or trade.
III. Expansion of definition of “prohibited official of the Government of Cuba”
Pursuant to the recent amendments, the term “prohibited official of the Government of Cuba”-for whom certain authorized transactions are off-limits-has been expanded. While under the prior regulations the term applied only to members of the Council of Ministers and flag officers of the Revolutionary Armed Forces, it now applies to: ministers and vice-ministers; members of the Council of State and the Council of Ministers; members and employees of the National Assembly of People’s Power; members of any provincial assembly; local sector chiefs of the Committees for the Defense of the Revolution; directors general and sub-directors general and higher of all Cuban ministries and state agencies; employees of the Ministry of the Interior (MININT); employees of the Ministry of Defense (MINFAR); secretaries and first secretaries of the Confederation of Labor of Cuba (CTC) and its component unions; chief editors, editors, and deputy editors of Cuban state-run media organizations and programs, including newspapers, television, and radio; and members and employees of the Supreme Court (Tribunal Supremo Nacional).
IV. Export control restrictions on dealings with restricted entities
The Department of Commerce, Bureau of Industry and Security (BIS) has also amended its licensing policy with respect to the export/re-export of commercial and dual-use goods, software and technology subject to US export controls to Cuba. Under the new policy, license applications submitted to BIS that involve one or more parties included in the Cuba Restricted List will generally be denied unless BIS, in coordination with the Department of State, determines that the transaction is consistent with the administration’s Cuba policy, which aims to channel funds toward the Cuban people and away from the Cuban government. Furthermore, Commerce’s amendments expressly provide that export licenses for items to meet the needs of the Cuban people, which are regularly considered on a case-by-case basis, will be denied for transactions involving entities included in the Cuba Restricted List.
V. Loosening of export controls for exports to Cuban private sector
Under prior regulations, an export license was available for certain exports directed to the Cuban private sector, including exports for construction or renovation of privately owned buildings, for agricultural activities, and for use by entrepreneurs. Commerce’s amendments simplify and expand this license availability by authorizing the export and re-export to Cuba of items for use by the Cuban private sector for private sector economic activities, without specifying categories of items.
VI. Entry into effect
The regulatory amendments take effect on
November 9, 2017. They will not affect travel arranged before June 16, 2017, however, nor business dealings entered into prior to the inclusion of the relevant entity in the Cuba Restricted List.
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11. M. Volkov: “The FCPA Week That Was – Seven Individuals Charged for FCPA Violations”

(Source: Volkov Law Group Blog, 12 Nov 2017. Reprinted by permission.)
* Author: Michael Volkov, Esq., Volkov Law Group, mvolkov@volkovlaw.com, 240-505-1992.
To all the “nattering nabobs of negativity” concerning FCPA enforcement, the US Justice Department responded with a resounding message – not only is FCPA enforcement here to stay, but individual violators are on DOJ’s radar screen. In an FCPA enforcement week like no other, the Justice Department unveiled a total of seven charging documents (indictments or informations) for FCPA violations, five arising from the Rolls Royce enforcement action and two from an upcoming enforcement action against SBM Offshore.
The Justice Department’s action sent an unmistakable message, whether it reflects the impact of the Yates memorandum or a continuing focus on individual prosecutions in the proper circumstances, FCPA enforcement has taken a new and dramatic turn to include individual criminal enforcement.
Two SBM Offshore Individuals: Mace and Zubiate
In the ongoing investigation involving Unaoil and SBM Offshore, two former executives, Anthony Mace and Robert Zubiate, plead guilty to FCPA conspiracy charges in federal court in Houston Texas.
SBM Offshore was the subject of an enforcement action in 2014 when US prosecutors deferred to Netherlands prosecutors who reached a $240 million settlement with SBM Offshore for foreign bribery violations. The Justice Department re-opened its investigation against SBM Offshore in early 2016 based on information it learned during the Unaoil investigation. Recently, SBM Offshore has disclosed that it has reserved $238 million in anticipation of a future settlement with the Justice Department.
Mace was the former CEO of SBM Offshore and a director of an SBM Offshore subsidiary. Zubiate was a former sales and marketing executive.
Mace admitted that, during the period from 2008 to 2011 while he served as the CEO, he authorized $16 million in payments pursuant to agreements in place prior to his assuming the position of CEO. The payments were made to foreign officials at Petrobas in Brazil, Sonangol in Angola, and GEPetrol in Equatorial Guinea. Interestingly, Mace conceded that he authorized the payments and “deliberately avoided learning” that the payment were bribes paid to foreign officials at these state-owned enterprises.
Mace authorized these illegal bribes to a total of fine individuals who he suspected were Equitorial Guinea officials or persons who received the payments at the direction of the foreign officials. In Brazil, Mace authorized payments to a Brazilian third-party intermediary’s accounts in Brazil and a shell company in Switzerland, ultimately owned by Petrobas officials.
Zubiate’s involvement in bribery stretched from 1996 to 2012, during which he and co-conspirators paid bribes to Petrobas foreign officials through a third-party sales agent in exchange for winning bids. The sales agent also was paid kickbacks for facilitating the bribe payments to Petrobas foreign officials.
It is not clear if Mace and Zubiate are cooperating in the ongoing investigation to investigate and prosecute other individuals and entities. They are scheduled to be sentenced in early 2018.
Five Rolls Royce Individuals: Petros Contoguris, James Finley, Aloysius Johannes Jozel Zuurhout, Andreas Kohler and Keith Barnett
As a follow-on to an enforcement action against Rolls Royce, the Justice Department unsealed FCPA criminal charges against two former Rolls Royce executives, a former Rolls Royce employee, a former third-party intermediary for Rolls Royce in Kazakhstan, and an executive for an international engineering consulting firm. Four of the individual entered guilty pleas during 2016, and one defendant has not been apprehended.
In January 2017, Rolls Royce entered into a global settlement with prosecutors in the UK, US and Brazil under which Rolls Royce paid a total of $800 million in fines and penalties, $169 million of which was paid to the United States.
The Justice Department’s criminal prosecution focused on one aspect of Rolls Royce’s conduct relating to the construction of a gas pipeline from Central Asia to China. The UK’s Serious Fraud Office has ongoing criminal investigations involving individuals involved in foreign bribery schemes in other countries.
Petros Contoguris, a Greek citizen, residing in Turkey was charged by indictment with conspiracy to violate the FCPA , money laundering conspiracy, 7 counts of FCPA violations and 10 counts of money laundering.
James Finley, a UK citizen residing in Taiwan, plead guilty to one count of FCPA conspiracy.
Aloysius Johannes Jozef Zuurhout, a Netherlands citizen, Andreas Kohler, an Austrian citizen and Keith Barnett, a US citizen, each plead guilty to one count of conspiracy to violate the FCPA.
The five defendants conspired to pay bribes to foreign officials in exchange for securing business for Rolls Royce’s energy systems subsidiary, in relation to the construction of a gas pipeline. Contoguris and Kohler were engineering consultans and devised a scheme with the Rolls Royce executives and employee would pay bribes to at least one foreign official and disguise the payments through commission payments to Contoguris’s company.
Asia Gas Pipeline was a joint venture consisting of state-owned entities from China and Kazakhstan, which was created to build a gas pipeline between Kazakhstan and China. In November 2009, Rolls Royce was awarded a contract worth $145 million to supply gas turbines to the project, and Rollys Royce made commission payments to Contoguris’s company, who in turn passed the payments to a Technical Advisor company, knowing that the Advisor would in turn pay various foreign officials with bribes.
The three Rolls Royce former employees, Finley, Barnett and Zuurhout, admitted their participation in a conspiracy to violate the FCPA stretching back to 1999 and continuing to 2013, in which they would retain Technical Advisors who would transmit bribery payments to foreign officials in a number of countries to win contracts for the pipeline project. In a perverted twist, the Rolls Royce former employees conducted due diligence of potential technical advisors to ensure that they had close relationships with key foreign officials in order to facilitate bribery payments.

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12. S.M. Richer: “The Road Ahead with Exports”

Logistics Viewpoints
, 14 Nov 2017.)
* Author: Suzanne M. Richer, Director, Trade Advisory Practice, Amber Road. Contact here
The United States exported $2.2 trillion dollars of product in 2016, making it the third largest world exporter after China and the European Union. [FN/1] Much of this is due to the easing of export controls over the past five years by the Department of Commerce Bureau of Industry and Security (BIS) in cooperation with other federal agencies. That’s great news for US companies seeking to expand their sales beyond the domestic market.
Yet still, the BIS made it clear at their annual conference in October 2017 that the ease of doing business globally isn’t without risk, specifically in the area of enforcement. Key speakers clearly illuminated the goal of building a strong US industrial base through export incentives, while balancing that with penalty and enforcement actions for those who misuse these privileges. Here are three dominant themes exporters should be aware of:
  (1) Export Control Reform Isn’t a One Trick Pony: Assistant Secretary of Commerce Rick Ashooh made it clear when he said, “The policies we advocate for are not for today, they are for tomorrow, for the future of our nation.” With that in mind, he advanced the idea that export control reform (ECR) is here to stay, and there will be no beginning, middle, or end for ECR. Firms must remain vigilant by educating their export teams on these changes, understanding that compliance with the rules is a must.
  (2) Export Enforcement is Real – and Costly: Anyone who hasn’t heard that export enforcement is changing missed a crucial message of the conference. The ZTE penalty of $1.19 billion was the highest ever levied against a company for export violations. While that sum and the circumstances around the violation may appear to be an outlier for most companies, due to the egregious nature of the multiple violations, even one penalty assessed against your company for noncompliance can be quite costly. In 2017, we saw all-time high criminal fines, the longest ever prison sentence, and forfeiture dollars doubling over last year. Coupled with export violation arrests and over 2,000 warning letters issued by the government, companies need to think twice about how they manage their compliance responsibilities with export transactions.
  (3) Education and Technology Help: The intersection of continued ECR and the government’s savvier enforcement strategy has made training and automation a must. The “Education – Automation (EA)” balance is the true formula to supporting increased sales and reducing risk. Automating denied party screening, for example, removes some of the judgement calls from daily operations and safeguards the firm in the process. Upgrade this to include export automation for recordkeeping and visibility of the entire transaction into one platform, and you have the beginning of a recipe for success.
Key takeaways from BIS were grounded in penalty cases, yet the path to success is clearly laid out. While ECR isn’t a one pony trick, your training and automation programs can’t be either; both need to adapt to catch changing requirements in these areas. Continued training will get you there; export automation will keep you there.
  [FN/1] “
U.S. Trade in Goods and Services
,” U.S. Census. CIA World Factbook Rankings.

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13. W. Brown Jr., H. Clark & J. Poer: “Sudan Now Open For Business, But Risks Remain”

(Source: Orrick, 10 Nov 2017.)
* Authors: Walter Brown Jr., Esq., wbrown@orrick.com; Harry Clark, Esq., hclark@orrick.com; and Jennifer Nejad Poer, Esq., jpoer@orrick.com.  All of Orrick.  
On October 12, 2017, the United States made permanent its lifting of a longtime general embargo on trade and investment with Sudan. As a result, U.S. individuals and companies are now generally free to engage in transactions involving Sudan, the Government of Sudan or many formerly sanctioned Sudanese persons without a license from the Department of the Treasury’s Office of Foreign Assets Control (OFAC). While this presents opportunities for new business in Sudan, any U.S. person considering business relating to Sudan should be aware of the legal restrictions that remain in place and the risks associated with such an undertaking.
For almost two decades, Executive Orders (EOs) by Presidents Bill Clinton (
EO 13067
) and George W. Bush (
EO 13412
), along with the Sudanese Sanctions Regulations (SSR), have generally prevented U.S. persons from conducting transactions involving the Government of Sudan or certain sanctioned Sudanese persons, importing goods or services of Sudanese origin, exporting any goods or services to Sudan, or performing any contract “in support of an industrial, commercial, public utility, or governmental project in Sudan,” among other things. This trade and investment embargo was prompted by findings that the Government of Sudan was engaged in support for international terrorism, efforts to destabilize its neighboring countries, and myriad human rights violations.
On January 13, 2017, President Obama issued
EO 13761
, which observed that the dangerous and unstable situation in Sudan that had prompted sanctions by his predecessors “has been altered by Sudan’s positive actions over the past 6 months.” In particular, the order praised Sudan for “a marked reduction in offensive military activity, culminating in a pledge to maintain a cessation of hostilities in conflict areas in Sudan, and steps toward the improvement of humanitarian access throughout Sudan, as well as cooperation with the United States on addressing regional conflicts and the threat of terrorism.” The order, which was one of President Obama’s final acts in office, called for a conditional return of U.S. trade and investment transactions with Sudan with permanent revocation of sanctions after a six-month monitoring period and approval by certain U.S. agencies. Consistent with this order, OFAC issued a temporary general license on January 17, 2017, authorizing transactions that were previously prohibited by the aforementioned sanctions. As it turns out, the January 17 general license marked the end of the main set of sanctions against Sudan.
On July 11, 2017, President Trump signed
EO 13804
, which extended the six-month period initially set forth by President Obama to October 12, 2017, so as to permit “a more comprehensive analysis of the Government of Sudan’s actions.” On October 6, 2017, OFAC announced that as of October 12, 2017, the revocation of the SSR and EOs 13067 and 13412 would take permanent effect.
Remaining Restrictions and Risks
As an initial matter, it is important to note that last month’s revocation only applies to those sanctions imposed pursuant to EOs 13067 and 13412. Sanctions imposed pursuant to other Executive Orders, such as those relating to the region of Darfur within Sudan (
EO 13400
), remain in place. And while a number of Sudanese individuals and entities have now been removed from OFAC’s Specially Designated Nationals and Blocked Persons List (SDN List), other Sudanese nationals and persons operating in Sudan that were designated because of their support for terrorist activities and/or their involvement in the Darfur and South Sudan conflicts will remain on the SDN List. Consequently, any US person seeking to do business in Sudan should maintain screening and due diligence processes to detect and prevent any transactions involving these restricted parties.
In addition, the revocation does not affect the U.S. State Department’s designation of Sudan as a State Sponsor of Terrorism (SST). This has several implications.
First, SSTs are subject to the Trade Sanctions Reform and Export Enhancement Act of 2000 (TSRA), which requires licenses for all exports of agricultural commodities, medicine and medical devices. To that end, OFAC has issued
General License A
, which authorizes exports and re-exports of certain TSRA items to Sudan. Companies in the agricultural, pharmaceutical, or medical device industries who wish to do business in Sudan should ensure that they comply with the conditions of General License A.
Second, Sudan’s designation as an SST implicates the Terrorism List Governments Sanctions Regulations (TLGSR), which prohibit U.S. persons from engaging in transfers from the Government of Sudan that would pose a risk of furthering terrorist acts in the United States.
Third, as an SST, Sudan remains subject to far-reaching export controls implemented through the U.S.
Export Administration Regulations (EAR)
. This means that the export or re-export to Sudan of items on the Commerce Control List (CCL), part of EAR, continues generally to require a license from the U.S. Commerce Department’s Bureau of Industry and Security. The CCL includes a variety of types of goods, software and technology, including items relating to computers, telecommunications systems, and aerospace. For exports to Sudan of items that are not on the CCL (aka “EAR99 items”), a license is generally not required, but, depending on factors relating to end users and end uses, any of a variety of other export license requirements could apply.
There are a few other practical concerns that should be considered by U.S. companies and individuals who have been doing, or intend to do, business in Sudan. One is the lack of retroactivity in the revocation of sanctions. OFAC has confirmed that the revocation will not affect past, present, or future OFAC enforcement investigations or actions related to activities that were prohibited prior to the embargo’s rescission. Another is the high risk of corruption in the form of bribery and money laundering. Sudan remains one of the most challenging environments for anti-corruption in the world as evidenced by its ranking of 170 out of 176 nations in the
most recent Corruption Perceptions Index
. Any transaction involving the Government of Sudan or Sudanese officials should thus be rigorously assessed and monitored to ensure compliance with the FCPA and any applicable AML regulations. Finally, that Sudan remains a SST in the eyes of the State Department and contains large groups of sanctioned persons suggests there is a risk that the U.S. could re-impose comprehensive sanctions if there is any breakdown in Sudan’s recent progress towards stability and cooperation.

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14. Gary Stanley’s ECR Tip of the Day

(Source: Defense and Export-Import Update; available by subscription from
* Author: Gary Stanley, Esq., Global Legal Services, PC, (202) 352-3059,

The U.S. Department of State’s Directorate of Defense Trade Controls (DDTC) has posted on its website a notice that effective December 1, 2017, it will no longer accept form DSP-119 to amend the DSP-85. All pending DSP-119’s will be processed pursuant to 123.25 of the ITAR. Any DSP-119 form submitted to DDTC on or after December 1, 2017, will be returned without action. When amending the DSP-85, the applicant must submit a completely new DSP-85 along with a transmittal letter, signed by the Empowered Official explaining the amended change.

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* Erwin Rommel (15 Nov 1891 – 14 Oct 1944; was a German general and military theorist. Popularly known as the Desert Fox, he served as field marshal in the Wehrmacht of Nazi Germany during World War II. Rommel was implicated in the 20 July plot to assassinate Hitler. Rommel was given a choice between committing suicide, in return for assurances that his reputation would remain intact and that his family would not be persecuted following his death, or facing a trial that would result in his disgrace and execution; he chose the former and committed suicide using a cyanide pill.)
  – “Don’t fight a battle if you don’t gain anything by winning.”
* Johann Kaspar Lavater (15 Nov 1741 – 2 Jan 1801; was a Swiss poet, writer, philosopher, physiognomist and theologian.)
  – “Say not you know another entirely till you have divided an
inheritance with him.”

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

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

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

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

  – Last Amendment: 9 Nov 2017: 82 FR 51983-51986: Amendments to Implement United States Policy Toward Cuba

: 31 CFR, Parts 500-599, Embargoes, Sanctions, Executive Orders
  – Last Amendment: 13 Nov 2017: 82 FR 52209-52210: Removal of Côte d’Ivoire Sanctions Regulations

: 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
  – 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.
, 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: 20 Oct 2017: Harmonized System Update 1707, containing 27,291 ABI records and 5,164 harmonized tariff records.

  – HTS codes for AES are available here.
  – HTS codes that are not valid for AES are available here.

  – 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: 1 Nov 2017) of the ITAR with all amendments is contained in Bartlett’s Annotated 

, by James E. Bartlett III. The BITAR contains all ITAR amendments to date, plus a large Index, over 800 footnotes containing amendment histories, case annotations, practice tips, DDTC guidance, and explanations of errors in the official ITAR text. Subscribers receive updated copies of the BITAR in Word by email, usually revised within 24 hours after every ITAR amendment.
 The BITAR is available by annual subscription from the Full Circle Compliance
. BAFTR subscribers receive a 25% discount on subscriptions to the BITAR, please
contact us
to receive your discount code.

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Weekly Highlights of the Daily Bugle Top Stories

(Source: Editor) 

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

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

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

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

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