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- State: DTAG Reschedules 7 Dec 2017 Meeting to 1 Feb 2018 in Wash DC
- Items Scheduled for Publication in Future Federal Register Editions
- Commerce/BIS: (No new postings.)
- State/DDTC: (No new postings.)
- EU INTA to Vote on Proposed Amendment of EU Dual Use Regulations on 23 Nov 2017
- Reuters: “Trump Declares North Korea State Sponsor of Terrorism, Triggers Sanctions”
- ST&R Trade Report: “Threats, Opportunities Highlighted in Annual Report on Trade with China”
- G. Soussan & A.J. Early: “UN and EU North Korea Sanctions: Impacts on European and Cross-Border Trade”
- M. Volkov: “Six Specific Areas to Embed and Promote Business Ethics (Part III of IV)”
- Gary Stanley’s ECR Tip of the Day
- R.C. Burns: “Proposed CFIUS Legislation: Good News for Cattle Prod Makers, Bad News for Cows
- Monday List of Ex/Im Job Openings: 115 Jobs Posted, Including 19 New Jobs
- ECTI Presents “United States Export Control (ITAR/EAR/OFAC) Seminar Series” in Orlando, FL, 5-8 Feb
- Bartlett’s Unfamiliar Quotations
- 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)
- Weekly Highlights of the Daily Bugle Top Stories
ITEMS FROM TODAY’S FEDERAL REGISTER
1 . State: DTAG Reschedules 7 Dec 2017 Meeting to 1 Feb 2018 in Wash DC
(Source: Federal Register) [Excerpts.]
82 FR 55149: Defense Trade Advisory Group; Notice of Open Meeting
* SUMMARY: The Defense Trade Advisory Group (DTAG) originally scheduled an open session on Thursday, December 7, 2017 (See Federal Register/Vol. 82, No. 212/November 3, 2017/Notices) however this session has been cancelled. The session has been rescheduled for February 1, 2018 from 1:00 p.m. until 5:00 p.m. at 1777 F Street NW., Washington, DC 20006. If you wish to attend this meeting, you must submit your registration for the February session even if you previously registered for the December session. Entry will begin at 12:30 p.m. The membership of this advisory committee consists of private sector defense trade representatives, appointed by the Assistant Secretary of State for Political-Military Affairs, who advise the Department on policies, regulations, and technical issues affecting defense trade. The purpose of the meeting will be to discuss current defense trade issues and topics for further study.
The following agenda topics will be discussed and final reports presented:
(1) One-Form electronic filing, review and discuss recommendations for making electronic filing more cost-effective and efficient for industry;
(2) Identify key areas of concern with the proposed definition for defense services in 80 FR 31525 (June 3, 2015);
(3) Review and provide feedback in accurately and effectively defining “manufacturing” and distinguishing it from other related activities like assembly, integration, installment and various services; and
(4) Examine and discuss the current rules regarding the release of technical data to foreign dual-nationals and identify alternative options that sufficiently facilitate risk assessment and risk mitigation. …
As seating is limited to 125 persons, each member of the public or DTAG member that wishes to attend this plenary session should provide: his/her name and contact information such as email address and/or phone number and any request for reasonable accommodation to the DTAG Alternate Designated Federal Officer (DFO), Anthony Dearth, via email at DTAG@state.gov by COB Monday, January 22, 2018. If notified after this date, the Department might be unable to accommodate requests due to requirements at the meeting location. One of the following forms of valid photo identification will be required for admission to the meeting: U.S. driver’s license, passport, U.S. Government ID or other valid photo ID. * FOR FURTHER INFORMATION CONTACT: Ms. Glennis Gross-Peyton, PM/DDTC, SA-1, 12th Floor, Directorate of Defense Trade Controls, Bureau of Political-Military Affairs, U.S. Department of State, Washington, DC 20522-0112; telephone +1 (202) 663-2862; FAX +1 (202) 261-8199; or email DTAG@state.gov.
Anthony Dearth, Alternate Designated Federal Officer, Defense Trade Advisory Group, Department of State.
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OTHER GOVERNMENT SOURCES
|2. Items Scheduled for Publication in Future Federal Register Editions |
(Source: Federal Register)
[No items of interest noted today.]
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| | 5. EU INTA to Vote on Proposed Amendment of EU Dual Use Regulations on 23 Nov 2017 (Source: EU INTA, 17 Nov 2017.)
On Thursday, 23 November 2017, the Committee on International Trade (“INTA”) will vote on a draft report on setting up an EU regime for the control of exports, transfer, brokering, technical assistance and transit of dual-use items. The draft report strengthens export control on these items, which can include cyber-surveillance technologies, chemicals, explosive-resistant armor, radio equipment and lasers, among others.
To access all relevant documents, including the draft amendment, go to item #13 of the adopted INTA agenda for Thursday, 22 November 2017, available here .
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| | 6. Reuters: “Trump Declares North Korea State Sponsor of Terrorism, Triggers Sanctions”
(Source: Reuters, 20 Nov 2017.) [Excerpts.]
President Donald Trump on Monday declared North Korea a state sponsor of terrorism, a designation that allows the United States to impose additional sanctions and risks inflaming tensions over Pyongyang’s nuclear weapons and missile programs.
The Republican president, who has traded personal insults with North Korean leader Kim Jong Un but has not ruled out talks, said the Treasury Department will announce more sanctions against North Korea on Tuesday.
The designation came a week after Trump returned from a 12-day, five-nation trip to Asia in which he made containing North Korea’s nuclear ambitions a centerpiece of his discussions. …
North Korea is pursuing nuclear weapons and missile programs in defiance of U.N. Security Council sanctions and has made no secret of its plans to develop a nuclear-tipped missile capable of hitting the U.S. mainland. It has fired two missiles over Japan.
South Korea’s spy agency said on Monday the North may conduct additional missile tests this year to polish up its long-range missile technology and ramp up the threat against the United States.
Experts say the designation will be largely symbolic, as North Korea is already heavily sanctioned by the United States.
Only three other countries – Iran, Sudan and Syria – have been designated state sponsors of terrorism by the United States.
Some experts, as well as U.S. officials speaking privately, believe North Korea does not meet the criteria for the designation, which requires evidence that a state has “repeatedly provided support for acts of international terrorism.”
MOVE COULD BACKFIRE
A U.S. intelligence official who follows developments in North Korea expressed concern that the move could backfire, especially given that the basis for the designation is arguable.
The official, speaking on condition of anonymity, said Kim could respond in a number of ways, including renewing missile or nuclear tests in “a very volatile environment.”
The move also could undercut Trump’s efforts to solicit greater Chinese cooperation in pressuring North Korea to halt its nuclear and ballistic missile tests, the official said.
In any case, it will do little to open the way for U.S. dialogue with North Korea, which China and others have been pushing for. …
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| | 7. ST&R Trade Report: “Threats, Opportunities Highlighted in Annual Report on Trade with China”
The U.S.-China Economic and Security Review Commission’s annual report to Congress offers a mixed review of bilateral trade relations. Trade liberalization continues to backslide, the report states, as Chinese government policy contributes to rising protectionism and unfair regulatory restrictions that have left more than three-quarters of U.S. firms responding to a recent survey feeling less welcome in China than they did a year earlier. However, the report also sees opportunities for U.S. companies in the Chinese market.
The report states that the U.S. trade deficit in goods with China, which President Trump has vowed to take strong action to address, totaled $347 billion in 2016, the second-highest on record, and was up 6.2 percent year-on-year in the first eight months of 2017.
On the other hand, the U.S. services trade surplus with China reached a record high of $38 billion in 2016, up from $438 million in 2006. The report states that China’s strong income growth, expanding middle class, and stated plans to rebalance to a more consumption-driven economy should further boost U.S. services trade with China. At the same time, China maintains market access barriers that restrict U.S. services companies, including caps on foreign equity, discriminatory licensing requirements, and data localization policies. In addition, the opening of China’s services sector to foreign participation has been slow and it may thus be increasingly difficult for U.S. companies to become significant players.
The report highlights rapid growth in China’s e-commerce and logistics sectors as presenting opportunities for U.S. companies. China is already the largest e-commerce market in the world, with sales reaching $787 billion in 2016, and demand is strong in areas where the U.S. excels such as high-quality foods and supplements, beauty products, and healthcare-related goods. The e-commerce market does have challenges and risks, however, such as the prevalence of counterfeit goods on Chinese e-commerce platforms and a logistics industry that remains underdeveloped due to China’s historical focus on improving export logistics at the expense of domestic logistics infrastructure.
The report also finds several reasons to be concerned about Chinese foreign direct investment in the U.S. that has “increased dramatically in recent years.” One is that Chinese FDI is targeting industries deemed strategic by the Chinese government, including information communications technology, agriculture, and biotechnology, leading to the transfer of valuable U.S. assets, intellectual property, and technology to China. In many of these sectors, U.S. firms lack reciprocal treatment in China and are forced to disclose valuable technologies and source code to gain access to the Chinese market. A second reason is that some Chinese companies operating in strategic sectors are private only in name, with the Chinese government using an array of measures to influence private business decisions and achieve state goals. Third, some Chinese companies are attempting to invest in sensitive U.S. industries without obeying normal U.S. regulatory procedures through methods such as facilitating investments through shell companies based outside China and conducting cyber espionage campaigns to financially weaken and then acquire U.S. firms.
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| | 8. G. Soussan & A.J. Early: “UN and EU North Korea Sanctions: Impacts on European and Cross-Border Trade” (Source: Steptoe & Johnson LLP, 17 Nov 2017.)
* Authors: Guy Soussan, Esq. firstname.lastname@example.org, +32 2-626-0535; and Alexis J. Early, Esq., email@example.com, +1 202 429 6742. Both of Steptoe & Johnson LLP.
As tensions continue to escalate between the United States and North Korea, and President Donald Trump and Kim Jong-Un trade increasingly tense lobs, the United Nations, the EU, the United States, and other countries continue to impose additional stringent sanctions against North Korea to a breaking point (for detail of UN Security Council Resolution 2375 and US’s new sanctions, see here). In this advisory we provide an overview of the EU sanctions measures that have been imposed against North Korea, review their impact, and offer some observations on future actions that may take place.
I. Sanctions Against North Korea: A Historical Context
The modern sanctions regime against North Korea traces back to its first successful nuclear test in October 2006. The UN responded by implementing UN Security Council Resolution (UNSCR) 1718, which demanded that North Korea halt its nuclear program and prohibited Member States from sending certain military supplies and luxury goods to North Korea. The EU also adopted its first restrictive measures against North Korea by transposing UNSCR 1718, as well as imposing additional EU autonomous measures. Since then, the UN Security Council (UNSC) has issued subsequent resolutions, and the EU as well, but North Korea has nevertheless continued its nuclear program. As a result, recent sanctions have involved more concerted efforts to squeeze North Korea by economically pressuring its largest benefactors, China and Russia.
II. EU’s Recent Sanctions Effort Including Autonomous Measures
In response to the North Korea nuclear test conducted on September 2, the UNSC unanimously adopted Resolution 2375 to further strengthen UN sanctions on North Korea. On September 15, and October 10, the European Council strengthened its sanctions against North Korea by transposing the sectoral sanctions imposed by UNSCR 2375 (2017).
The measure includes a ban on the sale of natural gas liquids, textile imports, limitations on the sale of refined petroleum products and crude oil, prohibitions for Member States to provide work authorizations to North Korea nationals, prohibitions on opening, maintenance, and operation of all (new and existing) joint venture or cooperative entities and additional listing of entities and persons who are subject to an asset freeze and travel restriction.
Besides transposing the UNSCR, on October 16, the EU Foreign Affairs Council discussed the situation on the Korean peninsula, and in particular the continuing development of North Korea’s nuclear weapons and ballistic missiles in violation of the UNSCRs. The Council adopted immediately-effective new EU autonomous measures – which complement and reinforce the UN-based sanctions – under Council Regulation (EU) 2017/1858 to further increase the pressure on North Korea to comply with its obligations. The new measures include:
– A total ban on EU investments in North Korea in all sectors;
– A total ban on the sale of refined petroleum products and crude oil;
– Lowering the amount of personal remittances transferred to the North Korea from €15,000 to €5,000 (as the EU believes these personal remittances are used to back Pyongyang’s arms programs); and
– Limitations on renewal of work authorizations for North Korean nationals working on Member States’ territories, apart from refugees and others in need of international protection.
III. Overview of EU Sanctions
(1) EXPORT AND IMPORT RESTRICTIONS
Chapter II of Council Regulation (EU) 2017/1509 [FN/1] lists the restrictions on the export and import of numerous items, materials, equipment, goods and technology that could contribute to facilitate North Korea’s nuclear-related, ballistic missile-related or other weapons of mass destruction program (proliferation program).
It is prohibited to export and import arms and related materiel of all types, including the provision of related technical and financial assistance, or take part in activities aimed at the circumvention of those prohibitions. Procurement of arms and related materiel of all types, technology, key components, any other items or related assistance, technical training, or advice and services that could contribute to North Korea’s nuclear-related proliferation program are also prohibited.
It is prohibited to export to North Korea: (1) items, materials and equipment relating to dual-use goods and technology; (2) and any other item listed in the conventional arms dual-use list adopted by the UN Sanctions Committee pursuant to paragraph 7 of UNSCR 2321 (2016); and (3) related assistance, technical training, advice and services.
On October 16, 2017, the EU imposed a total ban on the sale of refined petroleum products and crude oil as an autonomous measure under Council Regulation (EU) 2017/1858. The competent authorities of Member States may authorize only transactions that meet exemption conditions, such as transactions for humanitarian purposes. Also, the import, purchase, or transfer of North Korean-origin petroleum products is prohibited.
The scope of these restrictions covers not only petroleum products, but also aviation fuel. Trading or transporting on a Member State-flagged vessel aviation fuel to North Korea, whether or not originating in the territories of Member State, are also prohibited. [FN/2] For the purposes of this prohibition, aviation fuel is defined to include gasoline, naphtha-type jet fuel, and kerosene-type jet/rocket fuel.
Minerals, Precious Metals
The EU also imposed broad restrictions on trading numerous minerals and precious metals, such as gold and diamond, with North Korea. Recently, the EU imposed a total ban on all exports of coal, iron, iron ore, lead and lead ore by transposing the sectoral sanctions imposed by UNSCR 2371 (2017). This measure was intended to target North Korea’s economic lifeline, as coal and iron make up roughly 40% of its total exports. Regarding minerals, the import of copper, nickel, silver and zinc, coal, iron, iron ore from North Korea is prohibited (for more details, see Annex V, VII of Council Regulation (EU) 2017/1509). These sanctions require all Member States to curtail their purchases and cease supplying much-needed capital to North Korea, a great deal of which was believed to be funding North Korea’s proliferation programs.
Imports of gold, titanium ore, vanadium ore and rare-earth minerals from North Korea are also prohibited. Exporting, importing or brokering transactions of gold and precious metals, as well as of diamonds, platinum, and silver from or for the Government of North Korea are also prohibited. This prohibition extends to transactions in the form of waste and scrap of precious metals or of metal clad with precious metal.
Imports or exports of luxury goods to North Korea are prohibited. [FN/3] The scope of luxury goods is broader than general assumptions, and many manufacturers could be caught under the definition of luxury goods, which are defined in a list comprising 22 different categories of goods, for a total of over 300 items). [FN/4]
It is prohibited to import seafood and textiles from North Korea and to deliver newly printed, minted or unissued North Korea-denominated banknotes and coinage to or for the benefit of the Central Bank of North Korea. Procurement of statues and the supply of new helicopters and vessels are also prohibited.
Moreover, the prohibition on imports from and exports to North Korea is not limited to the listed items. If the importer or exporter knows or has reasonable grounds to believe that: (1) the item is destined directly or indirectly for the North Korea’s armed forces; or (2) the item could support or enhance the operational capabilities of the armed forces of a state other than North Korea, the import and export of such items are prohibited. [FN/5]
(2) FINANCIAL SANCTIONS
The UNSCRs and the EU’s autonomous measures made a concerted effort to cut off North Korea’s global financial activities and this brought a wide range of restrictions on financial transactions, including investment.
Within the EU, acceptance or approval of investments in any commercial activity made by North Korea (including natural and legal persons, entities owned or controlled by North Korean nationals, or entities formed under North Korean law) is prohibited. And all EU investments in North Korea, in all sectors, are equally prohibited.
It is prohibited to acquire, or extend participation in, any North Korean entities engage in activities involving: (1) North Korea’s nuclear-related, ballistic-missile-related or other weapons of mass destruction-related activities or programs; (2) conventional arms-related industry; or (3) the mining, refining and chemical, metallurgy and metalworking sectors; and (4) aerospace. It is also prohibited to establish, maintain, or operate all (new and existing) joint venture, grant financing or financial assistance to such entities.
Financial assistance and transfers of funds:
– Providing public or private financial support for trade with North Korea or to North Korean nationals or entities is prohibited. Member States shall not enter into new commitments for grants, financial assistance or concessional loans to North Korea, except for humanitarian and development purposes addressing the needs of the civilian population or the promotion of denuclearisation.
– It is prohibited to transfer funds to or from North Korea. [FN/7]Financial institutions in the Member States shall not enter into, or continue to participate in, any transactions with: (1) banks domiciled in North Korea; (2) branches or subsidiaries within or outside the jurisdiction of the Member States of banks domiciled in North Korea; (3) or financial entities that are controlled by persons or entities domiciled in North Korea. [FN/8] Transactions falling within certain specified categories are exempted, such as foodstuffs, healthcare and medical equipment or for humanitarian purposes. [FN/9]
– On October 16, 2017, the Council decided to lower the amount of personal remittances that could be sent to North Korea from €15,000 to €5,000. [FN/10] The regulations shall be applied regardless of whether the transfer of funds is executed in a single transaction or in several linked transactions (transactions are considered linked when there exists a chain of transfers involving different payment service providers, or natural or legal persons, which are related to a single obligation to transfer funds.) [FN/11]
Branches, subsidiaries and corresponding banking relations and North Korean bonds:
– North Korea’s financial institutions, including the Central Bank of North Korea are prohibited from opening branches, subsidiaries or representative offices in the EU. Existing representative offices, subsidiaries or banking accounts in North Korea shall be closed as well. Also, North Korean banks no longer (1) establish new joint ventures with the banks in EU; (2) take an ownership interest in banks under the jurisdiction of Member States; (3) or establish or maintain correspondent banking relationships with EU banks. Existing joint ventures, ownership interests and correspondent banking relationships with North Korea banks shall be terminated. [FN/12] However, the UN Sanctions Committee could determine otherwise on a case-by-case basis (e.g., the possibility of creating a humanitarian banking channel to facilitate the delivery of humanitarian activities, diplomatic missions, or UN activities). [FN/13]
– It is prohibited for a North Korean diplomatic mission, consular post or diplomat to own or control banking accounts in the EU. [FN/14]
– Lastly, trade and related services (e.g., brokering, providing financial assistance) in the issuance of North Korean public bonds issued after February 18, 2013 to or from the Government of North Korea are prohibited. [FN/15]
Monitoring of financial activities of financial institutions:
– To ensure the measures on financial sectors, the EU imposed enhanced monitoring obligations on credit and financial institutions. EU credit and financial institutions are required in their activities with such bank and financial entities to exercise continuous monitoring of account activity (e.g., customer due diligence, anti-money laundering and counter-terrorism compliance), require completion of all information fields of payments (unless it shall refuse to process), maintain records of all transactions for a period of 5 years and report to the competent Financial Intelligence Unit (FIU) transactions they suspect may contribute to North Korea’s proliferation financing. [FN/16]
Asset Freezes and Prohibition on Making Funds Available
All assets of the listed persons and entities should be frozen [FN/17] for the list, see Annexes XII, XV, XVI and XVII of Council Regulation (EU) 2017/1509). It is also prohibited to make any funds or assets directly or indirectly available to such listed persons and entities because of their promotion or support of North Korea’s nuclear-related proliferation programs or because they provide financial services or transfer financial or other assets or resources that could contribute to those programs. On October 16, the Council also added 3 persons and 6 entities to the lists of those subject to an asset freeze and travel restrictions (Council Implementing Regulation (EU) 2017/1859). 41 persons and 10 entities are now designated by the EU autonomously. In addition, 63 individuals and 53 entities are listed by the UN.
(3) TRANSPORT SECTOR: PORT AND VESSELS, FLIGHTS [FN/18]
Chapter VI of Council Regulation (EU) 2017/1509 lists the restrictions on the transport sector, in particular the obligation to comply with inspection, prohibition on the provision of vessels to North Korea, registering of vessels and aircrafts and related services.
Member States have an obligation to inspect all cargo (including personal luggage and checked baggage of individuals) to and from North Korea, and cargo that has been brokered or facilitated by North Korea or its nationals or persons or entities acting on their behalf, either via land, sea or air, and Member States shall seize and dispose of any prohibited items. Inspections shall also take place when there are reasonable grounds to believe that the shipment may contain prohibited items. If the inspection is refused, Member States shall deny the vessel entry into their ports. [FN/19]
Member States shall prohibit the entry into their ports of North Korean vessels. It is prohibited to register vessels in North Korea; to obtain authorization for a vessel to use the North Korean flag; to own, lease, operate, or provide any vessel classification, certification or associated service; or to insure any vessel flagged by North Korea. Member States shall de-register any vessel that is owned, controlled, or operated by North Korea. Providing insurance or reinsurance services to vessels owned, controlled or operated by North Korea and servicing North Korea vessels is also prohibited. Vessels listed on the EU sanctions list shall be seized. On October 18, the Council added 4 vessels to the sanctions list ( Council Implementing Decision (CFSP) 2017/1909 , Annex IV to Decision (CFSP) 2016/849). [FN/20]
Regarding flights, airports and aircrafts, Member States shall deny North Korean aircraft permission to land in, take off from or overfly their territory.
(4) RESTRICTIONS ON ADMISSION AND WORKING PERMITS
For North Korean nationals and individuals working on behalf of the North Korean government, travel is restricted. First, the persons listed in Annexes I, II and III of Council Decision (CFSP) 2016/849 cannot travel to Member States. Also, Member States have an obligation to expel: (1) North Korean nationals, diplomats, government representatives who work on behalf of a listed person or entity or assist in the evasion of sanctions; (2) individuals working on behalf of or at the direction of a North Korean bank or financial institution; and (2) any national of a third country determined to be involved in similar activities.
Since North Korean workers are sent abroad to earn foreign currency to support North Korea’s proliferation program, the UN and EU strengthened its restriction on providing working permits and imposed a total ban on new issuance of working authorisations for North Korean nationals in their jurisdictions. The Member States are also not allowed to renew working permits for North Korean workers present on their territory, except for refugees and other persons benefiting from international protection.
(5) OTHER RESTRICTIONS
Besides the above comprehensive restrictions targeting the North Korean government, North Korean nationals and entities, and many North Korean economic sectors, the EU imposed prohibitions on:
(1) providing services incidental to mining and to manufacturing in the chemical industry to North Korea;
(2) leasing real property to or from North Korea for any purpose other than diplomatic or consular activities;
(3) satisfying claims made by North Korea persons, entities, in connection with any contract or transaction the performance of which has been affected by EU restrictions; and
(4) scientific and technical cooperation involving persons or groups officially sponsored by or representing North Korea.
IV. Practical Impact on International Trade
Aside from exports of coal and iron ore, North Korea has fairly limited engagements with global trading partners. The total volume of trade between EU and North Korea was €27 million in 2016, ranked as 184th among all EU partners). Currently, there is currently almost no trade between the EU and North Korea due the significant legal, financial, commercial and reputational disincentives.
However, North Korea still has close relationship with major EU trading partners such as China, Russia and India – who ranked as the EU’s first, fourth and ninth biggest trading partners (2016). Now that the United States has North Korea secondary sanctions tools, EU persons need to be aware of their counterparties’ transactions with North Korea to make sure they do not trigger secondary sanctions risk by indirectly doing business with North Korea.
While EU citizens remain largely restricted from transacting with North Korea, the UN and EU restrictive measures are aimed at squeezing North Korea’s economic ties with other trading countries and are not limited to North Korean targets. In this context and to ensure the effectiveness of measures, the EU imposed the obligation on Member States to lay down rules on effective, proportionate and dissuasive penalties applicable to infringement of EU regulations and to take all the necessary measures to ensure that they are implemented. [FN/21]
– Companies need to be aware of the scope and contents of EU sanctions because insufficient or out-of-date compliance programs could result in unintentional breaches of regulations in a variety of sectors.
– Companies also need to be aware of the overlapping UN, EU, and US sanctions, as EU entities are subject to UN restrictions and US secondary sanctions restrictions in addition to EU autonomous restrictions.
– If an EU individual or entity found to have violated sanctions, it could be subject to a web of enforcement actions, fines, and reputational damage. Companies can reduce these risks by maintaining an up-to-date compliance program and seeking compliance counsel to ensure that they do not undertake any transactions that violate North Korea sanctions restrictions.
– Finally, if North Korea continues its proliferation program and sabre-rattling, the UN, EU, and US could continue to impose additional restrictions on already-limited trade involving North Korea, so it will be important for EU individuals and entities to stay current on evolving North Korea sanctions.
[FN/1] Council Regulation (EC) No 329/2007 has been amended several times. In view of the extent of amendments introduced, on 30 August 2017 the EU Council adopted Council Regulation (EU) 2017/1509 to consolidate all measures into a new regulation which repeals and replaces Regulation (EC) No 329/2007.
[FN/2] Article 3.1(b) of Council Regulation (EU) 2017/1509.
[FN/3] Article 10 of Council Regulation (EU) 2017/1509.
According to Annex VIII of Council Regulation (EU) 2017/1509 as amended by Council Regulation (EU) 2017/2062 of November 13, 2017, luxury goods include pure-bred horses, caviars, truffles, high quality wine (including sparkling), spirits and spirituous beverages, high quality cigars, luxury perfumes, cosmetics including beauty and make-up product, high quality leather, saddlery and travel goods, handbags, high quality garments, clothing accessories and shoes (regardless of material), pearls, jewellery, tableware of porcelain chinastonefine pottery, items of lead crystal, high end electronic items including digital camera, luxury vehicles, equipment for sports (ski, golf, diving) and even work of art (collector’s pieces and antiques).
[FN/5] Article 5 of Council Regulation (EU) 2017/1509.
[FN/6] Chapter III, Article 17 of Council Regulation (EU) 2017/1509.
[FN/7] Article 21.1 of Council Regulation (EU) 2017/1509.
[FN/8] Article 21.2 of Council Regulation (EU) 2017/1509.
[FN/9] Article 21.3,4 of Council Regulation (EU) 2017/1509.
[FN/11] Article 1(6)(b) of Council Regulation (EU) 2017/1858.
[FN/12] Article 24 of Council Regulation (EU) 2017/1509.
[FN/13] Article 27 of Council Regulation (EU) 2017/1509.
[FN/14] Article 28 of Council Regulation (EU) 2017/1509.
[FN/15] Article 31 of Council Regulation (EU) 2017/1509.
[FN/16] Article 23 of Council Regulation (EU) 2017/1509.
[FN/17] Article 34 of Council Regulation (EU) 2017/1509.
[FN/18] Chapter VI Restriction on Transport, Articles 38~44 of Council Regulation (EU) 2017/1509.
[FN/19] Article 38 of Council Regulation (EU) 2017/1509.
[FN/20] Council Implementing Decision (CFSP) 2017/1909, Annex IV to Decision (CFSP) 2016/849.
[FN/21] Article 55 of Council Regulation (EU) 2017/1509.
[FN/22] For example, though it’s not European companies, this August 2017, the New Zealand Customs Service filed charges against Pacific Aerospace Limited, an aircraft manufacturing company, for three breaches of UN Sanctions against North Korea. The company pleads guilty in a New Zealand Court to indirectly exporting aircraft parts to North Korea and is expected to be sentenced in January 2018. In this jurisdiction, the maximum penalty for a breach of the Regulations is a maximum of 12-months imprisonment or a fine not exceeding $10,000 in the case of an individual or in the case of a company or other corporation, a fine not exceeding $100,000.
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| | 9. M. Volkov: “Six Specific Areas to Embed and Promote Business Ethics (Part III of IV)” (Source: Volkov Law Group Blog. Reprinted by permission.)
* Author: Michael Volkov, Esq., Volkov Law Group, firstname.lastname@example.org, +1 240-505-1992.
[Editor’s Note: Parts 1 and 2 were included in the Daily Bugles of 16 and 17 November, respectively. Part 4 will be published in tomorrow’s Daily Bugle.]
The challenge for corporations is to build practical approaches to business ethics and its specific corporate values. Business ethics as a field is all well and good but we need to start sharing specific and practical strategies to infuse our day-to-day conduct and advance our corporate performance.
In doing so, I am not so limited nor naïve to suggest that the only measure is corporate profitability. To the contrary, we have numerous ways in which a company reflects its ethics – in maintaining a safe and secure workplace; preventing discrimination and harassment; reducing rates of employee misconduct; building loyalty with consumers and suppliers; maintaining a speak up culture; rewarding ethical conduct; and reducing litigation and business disputes.
The problem is that businesses ignore the connection between ethical principles and practical results from such principles. Instead of addressing this issue, I could list ten ethical principles and call it a day – honesty, loyalty, fairness, integrity, trust, accountability, listening to other, excellence, caring/empathy, and respect. But let’s make this a practical discussion.
So, let’s take a hypothetical set of values and apply them to a business. Start with trust, integrity and fairness. Based on these three powerful concepts, we want to reflect these values in the following areas:
– Safe and Secure Workplace
– Commercial Interactions
– Employee Reporting
– Social Media
– Corporate Social Responsibility
: We live in a diverse world and our company should reflect the importance of diversity, at the board level, in top management, and our overall workplace and relationships with outside vendors. A diverse workplace has to be a stated objective, should be measured, and promoted as a way to build trust internally and externally with our employees, communities and government stakeholders. To protect our diverse company, the company has to aggressively stamp out real or perceived discrimination.
Safe and Secure Workplace
: Companies have to maintain a safe and secure workplace. Employees’ concerns have to be identified and addressed. There is no place for bullying, harassment, or threats of physical or emotional harm. Again, if the company is committed to its principles, a safe and secure workplace must be protected.
: A company conducts numerous business transactions each day, with consumers, vendors, suppliers, agents, distributors and others. Business ethics need to be applied in each of these situations – honesty, fairness and integrity means that company actors do not cheat, lie, trick or engage in other behaviors designed to earn a transaction to the detriment of the other person. There is nothing wrong with aggressive competition but within the confines of honesty, fairness and integrity. A company that emphasizes this approach will see positive gains while avoiding potentially unethical or illegal conduct.
Ethical business interactions ensure that the company’s interactions are legal. In fact, there may be occasions where the ethical resolution of a dispute or a problem may exceed that which is legally required.
: Companies that encourage and respond promptly to employee concerns reflect a desire to build trust, act fairly, and promote integrity in all of its dealings. Each employee concern gives the company a valuable insight into its culture and its ethical performance. Companies committed to encouraging and responding promptly to employee concerns will build robust reporting systems, communicate the importance of a speak up culture, and respond swiftly to employee concerns by investigating any issues raised and remediating any specific concerns that are substantiated.
: In today’s fast-paced Internet world where a company’s reputation can be destroyed in a single viral incident, companies have to tie its ethical principles to its use of social networking platforms, such as Facebook, Linked In, Snap Chat, and other sites. Human resource professionals face a myriad of challenges with regard to employee use of such platforms and would easily benefit from applying business ethics principles to this medium.
If the company is serious about building trust with internal and external stakeholders, company actors (board members, top management, supervisors and employees) have to be held accountable for use of social media (within the confines of labor laws). Corporate leaders can set examples of proper use by communicating with employees internally and projecting a positive message to external stakeholders about the company’s ethical values and principles. Most importantly, the company can set an example of treating others with respect and avoiding online controversies.
Corporate Social Responsibility
: Companies are devoting greater attention to social responsibility as an important means to promote its reputation as a good corporate citizen. These programs build trust with external stakeholders and promote internal loyalty and pride among its leaders and employees. Our business, like other institutions, are valued for their good deeds and social responsibility programs are an easy way for companies to demonstrate their commitment to their communities as an outgrowth of their own employee values and moral principles.
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| | 10. Gary Stanley’s ECR Tip of the Day (Source: Defense and Export-Import Update; available by subscription from email@example.com. )
* Author: Gary Stanley, Esq., Global Legal Services, PC, +1 202-352-3059, firstname.lastname@example.org .
Release of information by instruction in catalog courses and associated teaching laboratories of academic institutions is not subject to the EAR. On the other hand, proprietary courses on design and manufacture of highperformance machine tools is most likely subject to the EAR, because it would not qualify as “released by instruction in a catalog course or associated teaching laboratory of an academic institution” under EAR § 734.3(b)(3) because the proprietary business offering the instruction does not qualify as an “academic institution” within the meaning of EAR § 734.3(b)(3). Conceivably, however, the instruction might qualify as “unlimited distribution at a conference, meeting, seminar, trade show, or exhibition, generally accessible to the interested public” under EAR § 734.7(a). The conditions that would have to be satisfied are that such a seminar or gathering qualify as “open,” including a fee reasonably related to costs (of the conference, not of producing the data), and that there is an intention that all interested and technically qualified persons be able to attend.
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| | 11. R.C. Burns: “Proposed CFIUS Legislation: Good News for Cattle Prod Makers, Bad News for Cows” (Source: Export Law Blog , 17 Nov 2017. Reprinted by permission.)
* Author: R. Clifton Burns, Esq., Bryan Cave LLP, Wash DC, Clif.Burns@bryancave.com , +1 202-508-6067).
On November 8, 2017, the House and Senate introduced the Foreign Investment Risk Review Modernization Act of 2017 (FIRRMA) proposing the first amendments to the CFIUS process since the Foreign Investment and National Security Act was passed in 2007. Although the bill has bi-partisan support and a good chance of passage, there are no guaranties on anything these days where Congress is concerned.
Of interest to export geeks is the proposed new definition of critical technologies to be considered by CFIUS during the review process. Section 3(a)(8) of the proposed legislation defines critical technologies to include:
(i) Defense articles or defense services included on the United States Munitions List set forth in the International Traffic in Arms Regulations under subchapter M of chapter I of title 22, Code of Federal Regulations.
(ii) Items included on the Commerce Control List set forth in Supplement No. 1 to part 774 of the Export Administration Regulations under subchapter C of chapter VII of title 15, Code of Federal Regulations, and controlled-
(I) pursuant to multilateral regimes, including for reasons relating to national security, chemical and biological weapons proliferation, nuclear nonproliferation, or missile technology; or
(II) for reasons relating to regional stability or surreptitious listening.
What that means is that items controlled solely for Crime Control or AT reasons won’t be critical technologies and that CFIUS will not get worked up if a Chinese company seeks to buy the Cowpoke Cattle Prod (ECCN 0A985) Company in Wyoming. Nor should it care much if a foreign purchaser makes a bid for Missouri-based Ferguson Sjamboks and Tonfas (ECCN 0A9678) R US, Inc.
It is, of course, unlikely that CFIUS would have, either before or after any potential passage of the proposed legislation, considered the fact that the target made cattle prods (or tonfas) even though it has routinely examined transactions where other export-controlled goods were involved. But the proposed legislation, if it becomes law, would provide a statutory basis for CFIUS to ignore issues arising from the U.S. business producing AT- or CC-controlled items.
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EX/IM MOVERS & SHAKERS
|12. Monday List of Ex/Im Job Openings; 115 Jobs Posted This Week, Including 19 New Jobs |
Published every Monday or first business day of the week. Please, send job openings in the following format to email@example.com.
* COMPANY; LOCATION; POSITION TITLE (WEBLINK); CONTACT INFORMATION; REQUISITION ID
” New or amended listing this week (
* General Dynamics Land Systems; Sterling Heights, MI; Licensing Officer ; Requisition ID: SHC-LC-17-20056
* Georgia Institute of Technology; Atlanta, GA; Research Associate I; Requisition ID: PVA37002
* Georgia Institute of Technology; Atlanta, GA; Research Associate II; Requisition ID: PVA37001
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EX/IM TRAINING EVENTS & CONFERENCES
|13. ECTI Presents “United States Export Control (ITAR/EAR/OFAC) Seminar Series” in Orlando, FL, 5-8 Feb |
* What: United States Export Control (ITAR/EAR/OFAC) Seminar Series in Orlando, FL
* When: ITAR Seminar: February 5-6, 2018; EAR/OFAC Seminar: February 7-8, 2018
* Where: Orlando: Embassy Suites Orlando-Jamaican Court
* Sponsor: Export Compliance Training Institute (ECTI)
* ECTI Speaker Panel: John Black, Scott Gearity, Greg Creeser, Marc Binder and Melissa Proctor
* Register: Here, or Jessica Lemon, +1 540-433-3977, firstname.lastname@example.org.
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|EDITOR’S NOTES |
* Robert F. Kennedy (20 Nov 1925 – 6 Jun 1968; was an American politician and lawyer from Massachusetts. He served as the junior senator from New York from January 1965 until his assassination in June 1968.)
– From the speech Robert F. Kennedy, delivered on April 4, 1968, in Indianapolis, Indiana, upon announcing the assassination of Martin Luther King, Jr.: “What we need in the United States is not division; what we need in the United States is not hatred; what we need in the United States is not violence or lawlessness, but love and wisdom, and compassion toward one another, and a feeling of justice towards those who still suffer within our country, whether they be white or whether they be black. … Let us dedicate ourselves to what the Greeks said so many years ago, ‘To tame the savageness of man, and make gentle the life of this world.’ Let us dedicate ourselves to that, and say a prayer for our country and our people.”
Monday is pun day.
Q. What’s the best thing to eat when you’re stuck in your car on the freeway?
A. Traffic jam.
— Eva Walters, Supply, VA
Q. What is a soldier who survived mustard gas and pepper spray?
A. A seasoned veteran.
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| | 15 . 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.
– 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.
– Last Amendment: 28 Sep 2017: 82 FR 45366-45408: Changes to the In-Bond Process [Effective Date: 27 Nov 2017.]
– Last Amendment: 13 Nov 2017: 82 FR 52209-52210: Removal of Côte d’Ivoire Sanctions Regulations
– 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.
– 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: 19 Nov 2017) of the ITAR with all amendments is contained in Bartlett’s Annotated ITAR
(“BITAR”) , by James E. Bartlett III. The BITAR contains all ITAR amendments to date, plus a large Index, over 800 footnotes containing amendment histories, case annotations, practice tips, DDTC guidance, and explanations of errors in the official ITAR text. Subscribers receive updated copies of the BITAR in Word by email, usually revised within 24 hours after every ITAR amendment. The BITAR is available by annual subscription from the Full Circle Compliance website . BAFTR subscribers receive a 25% discount on subscriptions to the BITAR, please contact us to receive your discount code.
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| | 16. Weekly Highlights of the Daily Bugle Top Stories
Review last week’s top Ex/Im stories in “Weekly Highlights of the Daily Bugle Top Stories” published here
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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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