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17-1220 Wednesday “Daily Bugle”

17-1220 Wednesday “Daily Bugle”

Wednesday, 20 December 2017

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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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  1. Commerce/BIS Amends EAR by Adding 2 Russian Entities to the Entity List 
  1. Items Scheduled for Publication in Future Federal Register Editions
  2. Commerce/BIS: (No new postings.)
  3. DHS/CBP Announces GSP Due to Expire on 31 Dec
  4. Justice: “Miami-Dade County Residents Sentenced for Conspiracy to Illegally Export Prohibited Articles to Syria in Violation of U.S. Export Control Laws”
  5. State/DDTC: (No new postings.)
  6. The Netherlands Publishes Updated Strategic Goods and Services Handbook
  7. Singapore Customs Releases Update Concerning the ASEAN Single Window
  1. Al Jazeera: “EU Plans to Restrict Export of ‘Dual-Use’ Spy Tech”
  2. Expeditors News: “Customs Broker Triennial Status Report and Fee Submission Opened 15 Dec”
  3. Reuters: “U.S. Sanctions Chechen Leader, Four Others Under Magnitsky Act”
  4. ST&R Trade Report: “Trusted Trader, Routed Exports, AD/CV Among New Items on Commerce’s Regulatory Agenda”
  1. D.M. Edelman: “Best Practices for Compliance with North Korea OFAC Sanctions”
  2. V. Insinna & A. Mehta: “Here’s How the Trump Administration Could Make It Easier to Sell Military Drones”
  3. Gary Stanley’s ECR Tip of the Day
  1. Full Circle Compliance and the Netherlands Defense Academy Will Present “Winter School at the Castle”, 5-9 Feb 2018 in Breda, the Netherlands
  2. ECS Announces “ITAR/EAR Boot Camp” on 13-14 Feb 2018 in Orlando, FL
  1. Bartlett’s Unfamiliar Quotations 
  2. Are Your Copies of Regulations Up to Date? Latest Changes: ATF (15 Jan 2016), Customs (8 Dec 2017), DOD/NISPOM (18 May 2016), EAR (20 Dec 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 

EXIMITEMS FROM TODAY’S FEDERAL REGISTER

EXIM_a1

1. Commerce/BIS Amends EAR by Adding 2 Russian Entities to the Entity List
(Source: Federal Register, 20 Dec 2017.) [Excerpts.]
 
82 FR 60304-60306: Addition of Certain Entities to the Entity List
 
* AGENCY: Bureau of Industry and Security, Commerce.
* ACTION: Final rule.
* SUMMARY: This rule amends the Export Administration Regulations (EAR) by adding two entities to the Entity List. The two entities being added to the Entity List have been determined by the U.S. Government to be acting contrary to the national security or foreign policy interests of the United States. These two entities will be listed on the Entity List under the destination of Russia.
* DATES: This rule is effective December 20, 2017. …
* SUPPLEMENTARY INFORMATION: … The Entity List (Supplement No. 4 to part 744 of the Export Administration Regulations (EAR)) identifies entities and other persons reasonably believed to be involved, or to pose a significant risk of being or becoming involved, in activities contrary to the national security or foreign policy interests of the United States. The EAR imposes additional license requirements on, and limits the availability of most license exceptions for, exports, reexports, and transfers (in-country) to those listed. The “license review policy” for each listed entity or other person is identified in the License Review Policy column on the Entity List and the impact on the availability of license exceptions is described in the Federal Register document adding entities or other persons to the Entity List. BIS places entities and other persons on the Entity List pursuant to sections of part 744 (Control Policy: End-User and End-Use Based) and part 746 (Embargoes and Other Special Controls) of the EAR. … 
  This final rule adds the following two entities to the Entity List:
 
Russia
 
(1) Joint Stock Company Experimental Design Bureau Novator, a.k.a., the following two aliases:
  – Novator Design Bureau; and
  – JSC OKB Novator.
18 Prospekt Kosmonavtov, 620017 Yekaterinburg, Russia; and
 
(2) Joint Stock Company Federal Scientific and Production Center Titan-Barrikady, a.k.a., the following three aliases:
  – Federal Research and Production Center Titan Barrikady JSC;
  – Titan Design Bureau; and
  – JSC FNPTS Titan-Barrikady.
Prospekt Imeni V.I. Lenina, b/n 400071, Volgograd, Russia. …
 
  Dated: December 15, 2017.
Richard E. Ashooh, Assistant Secretary for Export Administration.

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OGSOTHER GOVERNMENT SOURCES

OGS_a12. Items Scheduled for Publication in Future Federal Register Editions
(Source: Federal Register

* Treasury/OFAC; RULES; Magnitsky Act Sanctions Regulations [Publication Date: 21 Dec 2017.] 
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OGS_a34.

DHS/CBP Announces GSP Due to Expire on 31 Dec

(Source:
CSMS# 17-000789, 19 Dec 2017.)
 
Generalized System of Preferences (GSP) Due to Expire on December 31, 2017
 
Barring Congressional action, the Generalized System of Preferences (GSP) special program indicator (SPI) “A,” “A+,” and “A*” will expire for goods entered or withdrawn from warehouses after midnight, December 31, 2017.
 
Special Procedures for GSP-Eligible Goods
 
In the event of a lapse and until further notice, importers are strongly encouraged to continue to flag otherwise GSP-eligible importations with the SPI “A” pay Normal Trade Relations (column 1) duty rates. Importers may not file SPI “A” without duties.
 
Programming
 
In the event that GSP is renewed with retroactivity, CBP is developing programing to provide for the batch processing of refunds on all importations made with SPI “A” and duties paid.
 
Up-to-Date Importer of Record (IOR) Information
 
Ensure all importer of record information in ACE is up-to-date and valid, including the importer’s mailing address and banking information, if importer is a member of CBP’s ACH refund program. Accurate records will ensure any potential refunds may be processed expeditiously.
 
Post-Importation GSP Claims Made via PSC and Protest
 
Subsequent to the expiration of GSP, CBP will continue to allow post-importation GSP claims made via post summary correction (PSC) and protest (19 USC 1514, 19 CFR 174) on importations made while GSP was still in effect. Until further notice, CBP will not allow post-importation GSP claims on importations made subsequent to the expiration of GSP.
 
African Growth and Opportunity Act (AGOA)
 
The expiration of GSP has no effect on goods entered under the African Growth and Opportunity Act (AGOA). Effective January 1, 2017, the Harmonized Tariff Schedule of the United States (HTSUS) was modified with the addition of the SPI “D” in the “Special” column of all non-textile, AGOA-eligible tariff items. AGOA preference remains in effect through September 30, 2025, irrespective of any lapse in GSP.
 
Merchandise Processing Fee (MPF)
 
The expiration of GSP has no effect on either the collection or waiver of the Merchandise Processing Fee (MPF). Goods of least-developed beneficiary developing countries (LDBDCs) listed in HTSUS General Note 4(b)(i) maintain their MPF exemption per 19 CFR 24.23(c)(1)(iv).
 
Time of Entry
 
CBP will be monitoring time of entry. Per 19 CFR 141.68(a)(2) & (3), time of entry can be as early as the time that the entry documents are filed, provided the merchandise is within the port limits and the entry documents have been requested. For additional information on the significance of time of entry and how to calculate it, please see page 11 of the Informed Compliance Publication, “What Every Member of the Trade Community Should Know About: Entry,” available here.
 
Extension of Liquidation
 
Requests for the suspension of liquidation under 19 CFR 159.12 will be denied on importations of otherwise GSP-eligible goods imported during the lapse period.
 
Questions
 
Questions concerning this guidance should be directed to the CBP Trade Agreements Branch at FTA@dhs.gov

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OGS_a45.

Justice: “Miami-Dade County Residents Sentenced for Conspiracy to Illegally Export Prohibited Articles to Syria in Violation of U.S. Export Control Laws”

(Source:
Justice, 20 Dec 2017.) [Excerpts.]
 
Three Miami-Dade residents were sentenced today for their roles in a conspiracy to defraud the United States and to illegally export aviation parts and equipment to Syria, contrary to comprehensive U.S. economic sanctions against Syria, in violation of Title 18, United States Code, Section 371 and the International Emergency Economic Powers Act (IEEPA), Title 50, United States Code, Sections 1701-1706. The exports were sent to Syrian Arab Airlines, a/k/a “Syrian Air” (Syrian Air).  Syrian Air had been designated as a Specially Designated National (SDN) by the U.S. Department of Treasury, Office of Foreign Assets Control (OFAC), meaning that U.S. persons and entities were prohibited from doing business with Syrian Air without a license. …
 
Ali Caby, a/k/a “Alex Caby”, 40, was sentenced by U.S. District Court Judge Beth Bloom to 24 months in prison, followed by two years of supervised release.  Co-defendant Arash Caby, a/k/a “Axel Caby”, 43, was sentenced to 24 months in prison, followed by two years of supervised release and a $10,000 fine.  Co-defendant Marjan Caby, 34, was sentenced to 12 months and one day in prison, followed by two years of supervised release.  The defendants had previously pled guilty to the charged conspiracy to violate IEEPA by exporting dual-use goods, that is, articles that have both civilian and military application, without a license to Syrian Air, the Syrian government’s airline, which is an entity designated and blocked by OFAC for transporting weapons and ammunition to Syria in conjunction with Hizballah, a terrorist organization, and the Iranian Revolutionary Guard Corps (IRGC).
 
Ali Caby ran the Bulgaria office of AW-Tronics, a Miami export company that was managed by Arash Caby, and which shipped and exported various aircraft parts and equipment to Syrian Arab Airlines.  Ali Caby and Arash Caby closely supervised and encouraged subordinate employees of AW-Tronics in the willful exportation of the parts and equipment to SDN Syrian Air, whose activities have assisted the Syrian government’s violent crackdown on its people.  Marjan Caby, as AW-Tronics’ export compliance officer and auditor, facilitated these exports by submitting false and misleading electronic export information to federal agencies. …  

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OGS_a67. 
The Netherlands Publishes Updated Strategic Goods and Services Handbook

 
The Netherlands Ministry of Foreign Relations has published an updated version of the
Handboek Strategische Goederen en Diensten (“Strategic Goods and Services Handbook”).  The handbook (in Dutch) is available in PDF
here.
 
The latest English version (March 2013) of the handbook is available
here

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OGS_a78. 
Singapore Customs Releases Update Concerning the ASEAN Single Window

(Source:
Singapore Customs, Notice No: 17/2017, 20 Dec 2017.)
 
Singapore Customs has posted updates to Circular Number 15/2017: Live Operation of the ASEAN Single Window (ASW) for the Electronic Exchange of Form D under the ASEAN Trade in Good Agreement of the ASEAN Free Trade Area (“ATIGA”) issued on 9 Nov 2017.  
 
  – You may access the circular at the Singapore Customs Website at
www.customs.gov.sg > News & Media > Circulars > Circular No. 15/2017.
  – With effect from 1 Jan 2018, Thailand will join Indonesia, Malaysia, Singapore and Viet Nam to commence live operation of the ASW for the electronic exchange of Form D under the ATIGA. 
  – If you require further clarification on the update, please write to
Customs_roo@customs.gov.sg.  

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NWSNEWS

NWS_a1
9. Al Jazeera: “EU Plans to Restrict Export of ‘Dual-Use’ Spy Tech”

(Source: Al Jazeera, 19 Dec 2017.) [Excerpts.]
 
The European Union is working to adopt a new regulation that will introduce tougher export controls for technologies which can be used to spy on citizens. 
 
The new rules, which were proposed last year, are up for a plenary vote early next month in the European Parliament, where they are expected to pass.
 
Proponents say the proposal is aimed at making the export of “dual-use” items – goods, software and technology designed for both civil and military applications – more transparent.
 
They also say it will strengthen the protection of human rights by preventing governments outside the bloc from obtaining European technology products that can be used for the online surveillance of their citizens. …
 
Under the new framework, companies and member states will be obligated to disclose which countries are buying these spy technologies. Currently, this is done voluntarily. 
 
If the current proposal is approved by the European Parliament, the new regulation will then need to be adopted by the European Council and the European Commission before it passes into law. … 

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NWS_a2
10. Expeditors News: “Customs Broker Triennial Status Report and Fee Submission Opened 15 Dec”

(Source: Expeditors News, 19 Dec 2017.)
 
U.S. Customs and Border Protection (CBP) announced the submission period for the 2018 Customs Broker Triennial Status Report and the fee for licensed customs brokers opened December 15, 2017.
 
All licensed brokers are required to file a status report with CBP and pay a processing fee every three years. The deadline for submitting the 2018 Triennial Status Report and fee is Feb. 28, 2018.
 
CBP’s announcement can be found here.

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NWS_a3
11. Reuters: “U.S. Sanctions Chechen Leader, Four Others Under Magnitsky Act”

(Source: Reuters, 20 Dec 2017.) [Excerpts.]
 
The U.S. Treasury Department on Wednesday imposed new sanctions on five Russians and Chechens, including the head of the Russian republic of Chechnya, for alleged human rights abuses.
 
The new sanctions blacklisted Ramzan Kadyrov, the Chechen leader and a close ally of Russian President Vladimir Putin, the Treasury Department said in a statement. …
 
The U.S. Treasury Department imposed the sanctions, which freeze the banks accounts of those targeted, under a 2012 law known as the Magnitsky Act. …
 

  “Treasury remains committed to holding accountable those involved in the Sergei Magnitsky affair, including those with a role in the criminal conspiracy and fraud scheme that he uncovered,” Director of the Treasury Department’s Office of Foreign Assets Control John Smith said in a statement. … 

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NWS_a4
12. ST&R Trade Report: “Trusted Trader, Routed Exports, AD/CV Among New Items on Commerce’s Regulatory Agenda”

 
New rules on a trusted trader program, routed export transactions, and antidumping and countervailing duty proceedings are among the items listed on the Department of Commerce’s (“DOC”) most recent semiannual regulatory agenda. This online resource lists the following regulations affecting international trade that could be issued within the next year as well as rulemaking proceedings that have been in process for some time and are not as likely to see further progress in the near term. The expected timeframes for issuance of the rules are indicated in parentheses.
 
Upcoming Regulations
 
  – a proposed rule to clarify that for all entries subject to antidumping duties the importer must file its reimbursement certification in either proper electronic form or paper form in accordance with U.S. Customs and Border Protection requirements (December 2017; previously July)
  – a proposed rule setting forth procedures to address covered merchandise referrals from CBP (December 2017; previously August)
  – a final rule specifying that where the exporting country does not constitute a viable market the DOC will normally calculate normal value based on constructed value (December 2017, previously July; proposed rule published in August 2016)
  – a final rule eliminating the regulation describing how the DOC will issue, and the effect of, licenses for the allocation of tariff-rate quotas on worsted wool fabric, as the underlying program has been transferred to the Department of Agriculture (December 2017; first time published)
  – a proposed rule to establish a voluntary Commerce Trusted Trader Program for importers that aims to provide benefits such as reduced targeting and inspections and enhanced streamlined entry (December 2017)
  – a final rule to eliminate the regulation describing how the DOC will determine whether applicants are bona fide motor vehicle manufacturers under the Automotive Products Trade Act of 1965, as the authority for this regulation is no longer part of the U.S. tariff schedule (March 2018; first time published)
  – a proposed rule to improve the export clearance requirements under the Export Administration Regulations, including better harmonizing them with similar requirements under the International Traffic in Arms Regulations (March 2018; previously September 2017)
  – a final rule removing the complex provisions and related procedure setting forth review policy, licensing procedure, and reporting requirements for activities involving items subject to the EAR that may have been illegally exported or reexported to Libya before the comprehensive embargo on Libya ended in 2006 (March 2018; previously July 2017)
  – a proposed rule on the definition of a routed export transaction and the responsibilities of parties in routed export transactions (April 2018, first time published; advance notice of proposed rulemaking issued in October 2017)
– a proposed rule to eliminate references to (a) information provided by domestic interested parties regarding sales made below the cost of production in order to allege dumping and (b) the DOC’s use of voluntarily submitted information to calculate constructed value (April 2018; first time published)
  – a proposed rule that would align DOC regulations with the Trade Preferences Extension Act of 2015, which provides that the DOC shall not be required to corroborate any dumping margin or CV duty applied in a separate segment of the same proceeding (April 2018; first time published)
  – a proposed rule expanding the scope of the maritime nuclear propulsion prohibition in the EAR to apply to both commodities and software as well as technology (April 2018; previously December 2017)
  – a proposed rule updating and clarifying certain license exception AVS provisions (June 2018; previously December 2017)
  – a proposed rule to amend certain 600 series ECCNs to clarify the controls on items related to military vehicles, vessels of war, submersible vessels, oceanographic equipment, and auxiliary and miscellaneous military equipment (June 2018; previously October 2017)
  – a final rule imposing export controls on read-out integrated circuits, seismic intrusion detection systems, radar for helicopter autonomous landing systems, and technology required for the development or production of specified nanotechnology (August 2018; previously August 2017)
 
Regulations in Process
 
  – a final rule establishing time limits for the submission of requests for sampling in administrative reviews of AD duty orders
  – a proposed rule to adopt an export licensing amendment process and make other licensing process efficiencies
  – a final rule that (a) clarifies the parties’ responsibilities under the EAR in a routed export transaction, including when the U.S. principal party in interest maintains its responsibility for license requirement determination and licensing, and (b) details when and how a U.S. PPI may delegate to the foreign PPI its responsibilities to determine license requirements and apply for a license
 
Completed Regulations
 
– a final rule making four clarifications to license exception GOV and adding five notes to license exception STA

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COMMCOMMENTARY

COMM_a01
13. D.M. Edelman: “Best Practices for Compliance with North Korea OFAC Sanctions”

(Source: Export Compliance Matters, 19 Dec 2017.)
      
* Author: Doreen M. Edelman, Esq., Baker Donelson LLP, 202-508-3460, dedelman@bakerdonelson.com
.
 
As we discussed further at length here, the U.S. and nations around the world have recently sought to implement and impose harsh economic sanctions programs against  North Korea to pressure Pyongyang into ceasing its development of a nuclear weapons program.  The international community has ramped up its pressure by adopting increasingly severe measures since August, when President Trump signed into law a wide-ranging sanctions bill titled the Countering America’s Adversaries Through Sanctions Act (CAATSA), and the UN Security Council followed suit by unanimously passing a US-drafted resolution targeting $1 billion worth of the DPRK’s primary exports.
 
On November 21, the Office of Foreign Assets Control (OFAC) issued expansive additional sanctions, highlighted by secondary sanctions against several Chinese entities. The sanctions target thirteen new entities (including four Chinese trading companies and six North Korean shipping companies), one Chinese national, and twenty DPRK-flagged shipping vessels.  OFAC stated that this most recent round of sanctions serves to target third-country persons with “long-standing commercial ties” to the DPRK, as well as the “transportation networks that facilitate North Korea’s revenue generation.”
 
Business entities from Dandong, China are coming under particularly increased scrutiny, as between two-thirds and three-quarters of all North Korea’s foreign trade with China goes through the Yalu River border town.  OFAC included three Dandong entities, Dandong Kehua Economy and Trade, Dandong Xianghe Trading and Dandong Hongda Trade on its sanctions list, as the three Chinese trading companies were accused of exporting approximately $650 million worth of goods to North Korea and importing more than $100 million worth of goods from the rogue nation. The sanctioned Chinese national and his company were further accused of exporting over $28 million worth of goods to North Korea, including motor vehicles, electrical machinery, radio navigational items, and items associated with nuclear reactors.
 
How can your company best protect itself from violating the updated Treasury Department restrictions?
 
  – Screen all parties involved in a potential transaction. At a minimum use the updated SDN List and OFAC Sanctions List Search tools provided on the Treasury Department’s website; as well as the UN Security Council Sanctions List Search.
  – Document your diligence and conduct routine inquiries, particularly if you engage with Chinese or Russian subsidiaries within the supply chain.
  – Be on the lookout for potential “shell companies” and smaller financial intuitions utilized to evade North Korea sanctions. Use a questionnaire and get it in writing.  Also, follow up when you get answers.
  – Establish and conduct effective training programs with overseas subsidiaries on compliance risks; monitor and evaluate the effectiveness of such compliance programs.
  – Identify and follow up on Red Flags – problematic industries (defense, aircraft, oil), potential exposure to North Korean business and banking, joint ventures, undisclosed third parties, front companies, etc.
 
These sanctions are only getting more complicated.  Find a way to monitor your transactions so you can worry less.  

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COMM_a2
14. V. Insinna & A. Mehta: “Here’s How the Trump Administration Could Make It Easier to Sell Military Drones”

(Source: Defense News, 19 Dec 2017.) 
 
* Authors: Valerie Insinna, Air Warfare Reporter, vinsinna@defensenews.com; and Aaron Mehta, Senior Pentagon Correspondent, Amehta@defensenews.com.  Both of Defense News.
 
The United States is actively pursuing a change to a major arms control treaty that would open the door for wider exports of military drones.
 
The proposed change to the Missile Technology Control Regime would make it easier for nations to sell the systems, also known as unmanned aerial vehicles or UAVs, that fly under 650 km per hour, according to multiple sources who are aware of the efforts.
 
The MTCR is an agreement among 35 nations that governs the export of missiles and UAVs. Under the terms of the MTCR, any “category-1” system capable of carrying 500-kilogram payloads for more than 300 kilometers is subject to a “strong presumption of denial.”
 
Proponents of UAV exports argue that language, while appropriate for curtailing the sale of cruise missiles, should not group together expandable weapons and unmanned systems. Instead, they argue, UAVs should be looked at the same way fighter jets or other high-tech military vehicles are.
 
As part of an effort to find a compromise, American officials floated a white paper during the latest plenary session on the MTCR in October, proposing new language to the treaty: that any air vehicle that flies under 650 kilometers per hour would drop to “category-2” and thus be subject to approval on a case-by-case basis.
 
A State Department official confirmed to Defense News that the U.S. presented the white paper, and that American negotiators have zeroed in on the speed of the vehicles as a potential change to the treaty. However, the official declined to comment on the exact speed under consideration.
 
  “I can’t confirm any specific numbers because it’s treated – inside the MTCR – as proprietary … particularly because there’s a deliberative process,” the official said. “But I can tell you that speed is the thing that we, based on industry input and all, have looked at. And that’s what we have discussed with partners. And I know other governments are also looking at speed as well, so we’re all sort of coming to a similar conclusion.”
 
Under the MTCR, a “presumption of denial” about exports for category-1 systems exists. In essence, that means countries tied into the MTCR need to have a very compelling case to sell them.
 
However, the speed change, if adopted, would result in most drones used by the U.S. military dropping down from category-1 to category-2, allowing the U.S. to sell them through the traditional foreign military sale or direct commercial sale methods.
 
  “Treating drones as missiles is fundamentally incoherent. It reflects a 1980s view of the technology,” said Michael Horowitz, a former Pentagon official now with the University of Pennsylvania who has studied drone issues.
 
  “To the extent creating a speed delineation helps you get around that problem, it’s a good practical solution.”
 
The Impact of Speed
 
Most medium-altitude, long-endurance systems like General Atomics’ MQ-1 Predator and MQ-9 Reaper fly at slow speeds, with the Reaper clocking in with a cruise speed of 230 mph or 370 kph, according to an Air Force facts sheet. Northrop Grumman’s RQ-4 Global Hawk, a high-altitude ISR drone, flies only at a cruise speed of about 357 mph or 575 kph.
 
The 650 kph ceiling would also keep the door open for companies developing cutting-edge rotorcraft that could be modified in the future to be unmanned – a key request made by the companies involved in the Future Vertical Lift consortium, said one industry source.
 
Those companies include Bell Helicopter and a Sikorsky-Boeing team, both of which are developing high-speed rotorcraft that can fly at excess of 463 kph, or 250 knots, for the Army’s Joint Multi Role technology demonstrator program.
 
However, the limitation would ensure that some of the United States’ most technologically advanced UAVs stay out of the grasp of other nations. For example, it would prevent the proliferation of jet-powered, fast moving flying wing drones like Boeing’s Phantom Ray and Northrop Grumman’s X-47B demonstrators, both of which can cruise at near-supersonic speeds.
 
While the UAV industry wants the U.S. government to pick up the pace on drone export reform, the State Department and other agencies argue that a prudent approach is needed. For example, any change to the MTCR that loosens restrictions on low-speed drones also needs to be closely examined to ensure that missile technology is still strictly controlled.
 
  “We don’t want any unintended consequences, so it has to be crafted carefully. We don’t want to inadvertently drop something else out like a cruise missile,” the State Department official said.
 
The focus on speed is particularly smart at a time when countries are focused on increasing the speed of their munitions, Horowitz said.
 
He pointed to growing investments in hypersonic weapons as an example where creating a speed delineation in the MTCR would allow the U.S. to push for greater UAV exports while “holding the line on exports of next-generation missiles.”
 
Industry Desires
 
Industry has long argued that the United States has taken an overly proscriptive route, hamstringing potential drone sales to allies and pushing them into the arms of more nefarious actors such as China, the other major UAV producer on the worldwide market.
 
Modifying the MTCR is just one facet of the Trump administration’s review of drone export policy, which also includes taking a second look at domestic regulations that can be amended by the president at will. Because changes to the MTCR require consensus among the regime’s 35 member countries, industry sees it as a direly-needed, but long-term solution.
 
  “Now we have lighter-than-air vehicles; we have intelligence, surveillance reconnaissance [UAVs]. We still have cruise missiles, we have aircraft that could autonomous for cargo and other purposes. But [the MTCR] doesn’t distinguish between any of that, so a revisit of those MTCR rules is in order for things that fly and can fly autonomously,” said Aerospace Industries Association President David Melcher during a December 14 roundtable with reporters.
 
American firms are particularly concerned about losing out on sales in the Middle East. China has already exported its Wing Loong – a medium altitude, long endurance UAV that resembles General Atomics’ MQ-1 Predator – to multiple countries worldwide, including some close U.S. partners such as Saudi Arabia and the United Arab Emirates.
 
Meanwhile, sales of U.S.-made drones have been rarer, with many Middle Eastern countries such as the UAE only able to buy unarmed versions of American UAVs, even though those nations regularly purchase more technologically advanced weaponry like fighter jets from the United States.
 
The State official noted that any change in the MTCR would not need to wait until the next plenary session, but could be introduced in some form as early as an April technical meeting. And at least one industry source was optimistic about the administration’s MTCR reform plan.
 
  “They’re taking a pretty smart process in not trying to tackle everything at once, but trying to get some of the language corrected in small bites,” the source said. “I don’t see this as being an overnight process. I don’t think we’re going to end up in the next six months with a brand new MTCR policy.”
 
However, Horowitz warned that the nature of the MTCR, where any single country could veto such a change, means getting any changes will not be easy. Russia, for example, could block the move not on technical reasons but geopolitical ones, given relations between Moscow and Washington.
 
If that happens, Horowitz noted, the U.S. could potentially look to apply the 650 kph speed definition on its own, something possible because of the voluntary nature of the MTCR.

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

(Source: Defense and Export-Import Update, 19 Dec 2017. Available by subscription from
gstanley@glstrade.com
.)
 
* Author: Gary Stanley, Esq., Global Legal Services, PC, (202) 352-3059,
gstanley@glstrade.com
.
 
As described in paragraph (d) of Supplement No.3 to EAR Part 774, the specifications described in the CCL apply equally to both new and used items. Thus, if a “600 series” item undergoes demilitarization but is still capable of meeting the relevant specifications in the applicable ECCN, then the classification does not change. However, if demilitarization renders the item incapable of meeting the applicable specifications, then the classification may change and the item may be designated EAR99, unless another ECCN applies.

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TEEX/IM TRAINING EVENTS & CONFERENCES

(Source: Editor)
 
* What: Winter Seminar “Compliance and Integrity in International Military Trade”, including the following topics:
  – Day 1: International Trade in Defense Markets and Relevance of Trade Compliance
  – Day 2: U.S. Export Control Regulations (International Traffic in Arms Regulations), and the EU Perspective
  – Day 3: U.S. Export Control Regulations (Export Administration Regulations), and EU Export Control Regulations (Military and Dual-Use)
  – Day 4: Compliance & Integrity / Ethics, and Setting up an Internal Compliance Program
  – Day 5: Setting up an Internal Compliance Program (continued)
* When: 5-9 February 2018.
* Where: the Netherlands Defense Academy (“The Castle”), Breda, the Netherlands.
* Event Sponsors: Full Circle Compliance & the Netherlands Defense Academy, Faculty of Military Sciences
* Speakers include: Prof. dr. J.M. Beeres; Col. Dr. Robert M.M. Bertrand RA RC RO; Drs. Ghislaine C.Y. Gillessen RA; James E. Bartlett III, LLM; Michael E. Farrell; and Drs. Alexander P. Bosch.

  
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TEC_a217. ECS Announces “ITAR/EAR Boot Camp” on 13-14 Feb 2018 in Orlando, FL 

 
* What: ITAR/EAR Boot Camp, Orlando, FL
* When: February 13-14, 2018
* Sponsor: Export Compliance Solutions (ECS)
* ECS Speaker Panel:  Suzanne Palmer, Mal Zerden
* Register: Here or by calling 866-238-4018 or email  spalmer@exportcompliancesolutions.com

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ENEDITOR’S NOTES

 

* Branch Rickey (Wesley Branch Rickey; 20 Dec 1881 – 9 Dec 1965; was an American sports executive. He was perhaps best known for breaking Major League Baseball’s color barrier by signing African American player Jackie Robinson, for drafting the first Hispanic superstar, Roberto Clemente, for creating the framework for the modern minor league farm system, for encouraging the Major Leagues to add new teams through his involvement in the proposed Continental League, and for introducing the batting helmet. He was elected to the Baseball Hall of Fame in 1967.)
  – “I don’t care if I was a ditch-digger at a dollar a day, I’d want to do my job better than the fellow next to me. I’d want to be the best at whatever I do.”
  – “Leisure is the handmaiden of the devil.”
 
* Harvey S. Firestone (Harvey Samuel Firestone; 20 Dec 1868 – 7 Feb 1938; was an American businessman, and the founder of the Firestone Tire and Rubber Company, one of the first global makers of automobile tires. Firestone, Henry Ford, and Thomas Edison were generally considered the three leaders in American industry in the early 1900’s, and often worked and vacationed together. All three were part of an exclusive group titled “The Millionaires’ Club.”)
  – “Success is the sum of details.”
  – “The secret of my success is a two-word answer: Know people.”

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EN_a319
. Are Your Copies of Regulations Up to Date?
(Source: Editor)

The official versions of the following regulations are published annually in the U.S. Code of Federal Regulations (C.F.R.), but are updated as amended in the Federal Register.  Changes to applicable regulations are listed below.
 
*
ATF ARMS IMPORT REGULATIONS
: 27 CFR Part 447-Importation of Arms, Ammunition, and Implements of War
  – Last Amendment: 15 Jan 2016: 81 FR 2657-2723: Machineguns, Destructive Devices and Certain Other Firearms; Background Checks for Responsible Persons of a Trust or Legal Entity With Respect To Making or Transferring a Firearm. 
 
*
CUSTOMS REGULATIONS
: 19 CFR, Ch. 1, Pts. 0-199
  – Last Amendment: 8 Dec 2017: 82 FR 57821-57825: Civil Monetary Penalty Adjustments for Inflation
 
DOD NATIONAL INDUSTRIAL SECURITY PROGRAM OPERATING MANUAL (NISPOM): DoD 5220.22-M

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


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

  – Last Amendment: 20 Dec 2017: 82 FR 60304-60306: Addition of Certain Entities to the Entity List

  
*
FOREIGN ASSETS CONTROL REGULATIONS (OFAC FACR)
: 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

 
*
FOREIGN TRADE REGULATIONS (FTR)
: 15 CFR Part 30
  – Last Amendment:
20 Sep 2017:
 
82 FR 43842-43844
: Foreign Trade Regulations (FTR): Clarification on Filing Requirements; Correction
 
  – HTS codes that are not valid for AES are available
here.
  – The latest edition (20 Sep 2017) of Bartlett’s Annotated FTR (“BAFTR”), by James E. Bartlett III, is available for downloading in Word format. The BAFTR contains all FTR amendments, FTR Letters and Notices, a large Index, and footnotes containing case annotations, practice tips, Census/AES guidance, and to many errors contained in the official text. Subscribers receive revised copies every time the FTR is amended. The BAFTR is available by annual subscription from the Full Circle Compliance website.  BITAR subscribers are entitled to a 25% discount on subscriptions to the BAFTR.
 
*
HARMONIZED TARIFF SCHEDULE OF THE UNITED STATES (HTS, HTSA or HTSUSA)
, 1 Jan 2017: 19 USC 1202 Annex. (“HTS” and “HTSA” are often seen as abbreviations for the Harmonized Tariff Schedule of the United States Annotated, shortened versions of “HTSUSA”.)
  – Last Amendment: 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.

 
INTERNATIONAL TRAFFIC IN ARMS REGULATIONS (ITAR): 22 C.F.R. Ch. I, Subch. M, Pts. 120-130.
  – Last Amendment: 30 Aug 2017: 82 FR 41172-41173: Temporary Modification of Category XI of the United States Munitions List
  – The only available fully updated copy (latest edition: 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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EN_a0320
Weekly Highlights of the Daily Bugle Top Stories

(Source: Editor) 

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

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EPEDITORIAL POLICY

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

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

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

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

* TO UNSUBSCRIBE: Use the Safe Unsubscribe link below.

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