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17-1221 Thursday “Daily Bugle”

17-1221 Thursday “Daily Bugle”

Thursday, 21 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. Treasury/OFAC Adds Regulations to Implement Provisions of the Sergei Magnitsky Rule of Law Accountability Act of 2012 
  1. Items Scheduled for Publication in Future Federal Register Editions
  2. Commerce/BIS Denies Export Privileges to 4 Individuals
  3. DHS/CBP Announces Goods with COO of Cuba Allowed via ABI in Cert Environment
  4. DHS/CBP Posts Harmonized System Update 1708
  5. DoD/DSCA Releases 2 New Policy Memos
  6. State/DDTC: Brian Nilsson Retires, Michael Miller Appointed DAS, DTC 
  7. Treasury/OFAC Releases New FAQs Concerning Magnitsky Sanctions
  8. EU Prolongs Economic Sanctions Against Russia by 6 Months
  1. Out-Law.com: “Software Companies in Europe Urged to Review Their Export Control Classifications”
  2. RT.com: “U.S. Wants to Amend Arms Control Agreement to Ease Export of Military Drones”
  3. ST&R Trade Report: “National Security Strategy Includes Trade and Economic Components”
  1. D.M. Edelman: “Iran Sanctions Update: No Change for Companies as Pressure Shifts Back to President Trump as Key Deadline Passes”
  2. K. Bradford: “Update of the EU Control List of Dual-Use Items 2017”
  1. Mike Miller Named Acting Deputy Assistant Secretary of State for Defense Trade Controls
  1. Full Circle Compliance and the Netherlands Defense Academy will Present “Winter School at the Castle”, 5-9 Feb 2018 in Breda, the Netherlands
  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 (21 Dec 2017), FTR (20 Sep 2017), HTSUS (21 Dec 2017), ITAR (30 Aug 2017) 
  3. Weekly Highlights of the Daily Bugle Top Stories 

EXIMITEMS FROM TODAY’S FEDERAL REGISTER

EXIM_a1

1
. Treasury/OFAC Adds Regulations to Implement Provisions of the Sergei Magnitsky Rule of Law Accountability Act of 2012

(Source: Federal Register, 21 Dec 2017.) [Excerpts.]
 
82 FR 60507-60517: Magnitsky Act Sanctions Regulations
 
* AGENCY: Office of Foreign Assets Control, Treasury.
* ACTION: Final rule.
* SUMMARY: The Department of the Treasury’s Office of Foreign Assets Control (OFAC) is adding regulations to implement certain provisions of the Sergei Magnitsky Rule of Law Accountability Act of 2012.
* DATES: Effective: December 21, 2017. …
* SUPPLEMENTARY INFORMATION: … On December 14, 2012, the President signed into law the Sergei
Magnitsky Rule of Law Accountability Act of 2012, Public Law 112-208, title IV, 126 Stat. 1502 (2012) (the “Act”). The Act provides authority for the identification of and imposition of sanctions on certain persons related to the detention, abuse, and death of Sergei Magnitsky or responsible for certain gross violations of human rights in the Russian Federation.
  Section 404(a) of the Act requires the President to submit to certain congressional committees a list of each person the President has determined meets certain criteria set forth in the Act. Section 406 of the Act requires the President, with certain exceptions, to exercise powers granted by the International Emergency Economic Powers Act (50 U.S.C. 1701 et seq.) to the extent necessary to freeze, and prohibit all transactions in, all property and interests in property that are in the United States, that come within the United States, or that are or come within the possession or control of any United States person of persons on the list required by Section 404(a) of the Act.
Section 404(a) of the Act sets out criteria for inclusion on the
list, namely, certain persons who the President determines:
  (1) Are responsible for the detention, abuse, or death of Sergei Magnitsky, participated in efforts to conceal the legal liability for the detention, abuse, or death of Sergei Magnitsky, financially benefitted from the detention, abuse, or death of Sergei Magnitsky, or were involved in the criminal conspiracy uncovered by Sergei Magnitsky;
  (2) Are responsible for extrajudicial killings, torture, or other gross violations of internationally recognized human rights committed against individuals seeking: To expose illegal activity carried out by officials of the Government of the Russian Federation; or to obtain, exercise, defend, or promote internationally recognized human rights and freedoms, such as the freedoms of religion, expression, association, and assembly, and the rights to a fair trial and democratic elections, in Russia; or
  (3) Acted as agents of or on behalf of a person in a matter relating to an activity described in paragraph (1) or (2).
Pursuant to Presidential Memorandum of April 5, 2013: Delegation of Functions Under Section 404 and 406 of Public Law 112-208 (78 FR 22761, April 16, 2013), the President delegated certain functions and authorities, including the functions and authorities set forth in section 404(a) of the Act, with respect to the determinations provided for therein, and section 406(a)(1) of the Act, with respect to the freezing, and prohibiting all transactions in, property, to the Secretary of the Treasury, in consultation with the Secretary of State.
Section 406(d) of the Act requires the Secretary of the Treasury to issue regulations, licenses, and orders as are necessary to carry out Section 406 of the Act. In furtherance of this requirement and the Presidential delegation of functions and authorities noted above, OFAC is promulgating the Magnitsky Act Sanctions Regulations, 31 CFR part 584 (the “Regulations”).
  The Regulations implement targeted sanctions that are directed at persons determined to meet the criteria set forth above. The sanctions do not generally prohibit trade or the provision of banking or other financial services to the Russian Federation. Instead, the sanctions apply where the transaction or service in question involves property or interests in property that are blocked pursuant to these sanctions.
  Subpart A of the Regulations clarifies the relation of this part to other laws and regulations. Subpart B of the Regulations implements the prohibitions contained in section 406 of the Act. See, e.g., Sec. Sec. 584.201 and 584.205. Persons designated by or under the authority of the Secretary of the Treasury pursuant to the Magnitsky Act or otherwise subject to blocking pursuant to the Act are referred to throughout the Regulations as “persons whose property and interests in property are blocked pursuant to Sec. 584.201(a).” The names of persons designated pursuant to the Act are published on OFAC’s Specially Designated Nationals and Blocked Persons List, which is accessible via OFAC’s website. Those names also are published in the Federal Register as they are added to the List.
  Sections 584.202 and 584.203 of subpart B detail the effect of transfers of blocked property in violation of the Regulations and set forth the requirement to hold blocked funds, such as currency, bank deposits, or liquidated financial obligations, in interest-bearing blocked accounts. Section 584.204 of subpart B provides that all expenses incident to the maintenance of blocked physical property shall be the responsibility of the owners and operators of such property, and that such expenses shall not be met from blocked funds, unless otherwise authorized. The section further provides that blocked property may, in OFAC’s discretion, be sold or liquidated and the net proceeds placed in a blocked interest-bearing account in the name of the owner of the property.
  Section 584.205 of subpart B prohibits any transaction by a United States person or within the United States that evades or avoids, has the purpose of evading or avoiding, or attempts to violate any of the prohibitions set forth in this part, and any conspiracy formed to violate such prohibitions.
  Section 584.206 of subpart B details transactions that are exempt from the prohibitions of the Regulations pursuant to sections 203(b)(1)-(4) of IEEPA (50 U.S.C. 1702(b)(1)-(4)). These exempt transactions relate to personal communications, donations of articles intended to be used to relieve human suffering, the importation and exportation of information or informational materials, and transactions ordinarily incident to travel.
  Subpart C of the Regulations defines key terms used throughout the Regulations, and subpart D contains interpretive sections regarding the Regulations. Section 584.410 of subpart D explains that the property and interests in property of an entity are blocked if the entity is directly or indirectly owned, whether individually or in the aggregate, 50 percent or more by one or more persons whose property and interests in property are blocked, whether or not the entity itself is designated pursuant to the Act.
  Transactions otherwise prohibited under the Regulations but found to be consistent with U.S. policy may be authorized by one of the general licenses contained in subpart E of the Regulations or by a specific license issued pursuant to the procedures described in subpart E of 31 CFR part 501. Subpart E of the Regulations also contains certain statements of specific licensing policy in addition to the general licenses. General licenses and statements of licensing policy relating to this part also may be available through the Magnitsky Sanctions page on OFAC’s website: www.treasury.gov/ofac.
  Subpart F of the Regulations refers to subpart C of part 501 for recordkeeping and reporting requirements. Subpart G of the Regulations describes the civil and criminal penalties applicable to violations of the Regulations, as well as the procedures governing the potential imposition of a civil monetary penalty or issuance of a Finding of Violation. Subpart G also refers to appendix A of part 501 for a more complete description of these procedures.
  Subpart H of the Regulations refers to subpart E of part 501 for applicable provisions relating to administrative procedures and contains a delegation of authority by the Secretary of the Treasury. Subpart I of the Regulations sets forth a Paperwork Reduction Act notice. …
 
  Dated: December 11, 2017.
John E. Smith, Director, Office of Foreign Assets Control.
 
  Approved: December 11, 2017.
Sigal P. Mandelker, Under Secretary, Office of Terrorism and Financial Intelligence, Department of the Treasury.

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

OGSOTHER GOVERNMENT SOURCES

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

[No items of interest noted today.]

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

OGS_a23.

Commerce/BIS Denies Export Privileges to 4 Individuals

(Source:
Commerce/BIS, 21 Dec 2017.) [Excerpts.]  
 
 
* Respondent: Gerardo Trevino-Moncivais of Folkston, GA
* Charges: On 18 October 2016, Trevino-Moncivais was convicted of violating Section 38 of the Arms Export Control Act (22 U.S.C. 2778 (2012). Specifically, Trevino-Moncivais was convicted of knowingly and willfully aiding and abetting the export, attempting to export, and causing to be exported from the United States to Mexico defense articles designated on the U.S. Munitions List, without the required U.S. Department of State licenses. Trevino-Moncivais was sentenced to 36 months in prison and a special assessment of $100.
* Order: Trevino-Moncivais is denied export privileges for a period of 10 years from the date of Trevino-Moncivais’s conviction, until 18 October 2026.
 
 
* Respondent: Hunter Perry of Vine Grove, KY
* Charges: On 20 July 2016, Perry was convicted of violating Section 38 of the Arms Export Control Act (22 U.S.C. 2778 (2012). Specifically, Perry was convicted of knowingly and willfully exporting or causing to be exported from the United States to the United Kingdom defense articles on the U.S. Munitions List, without the required U.S. Department of State licenses, including, inter alia, a D-760 night vision scope, a PAS-13 thermal scope, a PAS-23 mini-thermal scope, and a PVS-15 night vision binocular. Perry was sentenced to 1 day in prison, 1 year of supervised release, and a special assessment of $500.
* Order: Perry is denied export privileges for a period of 5 years from the date of Perry’s conviction, until 20 July 2021.
* Date of Order: 19 December 2017.
 
 
* Respondent: Joseph Esequiel-Gonzalez of Bastrop, TX
* Charges: On 30 August 2016, Esequiel-Gonzalez was convicted of violating Section 38 of the Arms Export Control Act (22 U.S.C. 2778 (2012). Specifically, Esequiel-Gonzalez was convicted of knowingly and willfully exporting, attempting to export, and causing to be exported from the United States to Mexico a .380 caliber pistol, which was designated as a defense article on the U.S. Munitions List, without the required U.S. Department of Defense license. Esequiel-Gonzalez was sentenced to 55 months in prison, 3 years of supervised release, and a special assessment of $100.
* Order: Esequiel-Gonzalez is denied export privileges for a period of 10 years from the date of Esequiel-Gonzalez’s conviction, until 30 August 2026.
* Date of Order: 19 December 2017.
 
 
* Respondent: Papa Faal of Brooklyn Park, MN
* Charges: On 12 May 2016, Faal was convicted of violating Section 38 of the Arms Export Control Act (22 U.S.C. 2778 (2012). Specifically, Faal was convicted of knowingly and willfully conspiring to export from the United States to Gambia semi-automatic rifles designated as defense articles on the U.S. Munitions List, without the required U.S. Department of State licenses. Faal was sentenced to time served, three years of supervised release, and a $200 assessment.  
* Order: Faal is denied export privileges for a period of 10 years from the date of Faal’s conviction, until 12 May 2026.
* Date of Order: 19 December 2017.

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OGS_a34.

DHS/CBP Announces Goods with COO of Cuba Allowed via ABI in Cert Environment

(Source:
CSMS #17-000794, 21 Dec 2017.)
 
ACE has deployed the ability to file ACE Cargo Release (SE) and ACE Entry Summary (AE) transactions with goods from Cuba to ACE’s CERT environment for testing. Previously, these transactions required paper filing, as any ABI submissions would be rejected. This functionality is scheduled to deploy to ACE production on 24 February 2018.

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OGS_a45.

DHS/CBP Posts Harmonized System Update 1708

(Source:
CSMS #17-000793, 21 Dec 2017.)
 
Harmonized System Update (HSU) 1708 was created on 20 December 2017 and contains 33,859 ABI records and 6,591 harmonized tariff records.
 
Changes include the annual special program staged rate reductions mandated by the individual Free Trade Agreements.
 
This update also contains modifications mandated by the 484 F Committee, the Committee for Statistical Annotation of Tariff Schedules. These adjustments are effective on 1 January 2018, and will be published within the change record, and chapters, of the 2018 USHTS. However, until they are available, please contact your assigned client representative for assistance with discontinued records.
 
We are anticipating additional legislative changes, but due to differences between the draft documentation and the final legislation, we are unable to modify our system until the proclamations are official. Once final approval has been granted, we will begin updating our system, and when the adjustments have been completed, we will create another HTS update and issue an associated CSMS message.
 
Modifications required by the verification of the 2017 Harmonized Tariff Schedule (HTS) are included also.
 
The modified records are currently available to all ABI participants and can be retrieved electronically via the procedures indicated in the CATAIR. For further information about this process, please contact your client representative. For all other questions regarding this message, please contact Jennifer Keeling via email at Jennifer.L.Keeling@cbp.dhs.gov.

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

OGS_a67. 
State/DDTC: Brian Nilsson Retires, Michael Miller Appointed DAS for DTC

(Source: State/DDTC)

The Bureau of Political-Military Affairs announces the retirement of Brian Nilsson, Deputy Assistant Secretary of State for Defense Trade Controls, effective December 22, 2017.
Michael F. Miller
, Regional Security and Arms Transfers Director, will be the Acting Deputy Assistant Secretary for Defense Trade Controls.  

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

OGS_a78. 
Treasury/OFAC Releases New FAQs Concerning Magnitsky Sanctions

(Source: Treasury/OFAC, 21 Dec 2017.)
 

The President has issued a new Executive Order on December 20, 2017 Blocking the Property of Persons Involved in Serious Human Rights Abuses and Corruption. OFAC is concurrently releasing new FAQs related to this Executive Order and the office is publishing the following designations.

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

OGS_a89. 
EU Prolongs Economic Sanctions Against Russia by 6 Months

(Source: European Commission, 21 Dec 2017.)
 
On 21 December 2017, the Council prolonged economic sanctions targeting specific sectors of the Russian economy until 31 July 2018.
 
This decision follows an update from President Macron and Chancellor Merkel to the European Council of 14 December 2017 on the state of implementation of the Minsk agreements. The duration of the sanctions was linked to the complete implementation of the Minsk agreements by the European Council on 19 March 2015, which was foreseen to take place by 31 December 2015. Since this did not happen, and given that the Minsk agreements have still not been fully implemented, the Council has extended the sanctions by a further six months.
 
The Council formalized this decision today by written procedure and, in line with the rule for all such decisions, unanimously.
 
The measures were originally introduced on 31 July 2014 for one year in response to Russia’s actions destabilizing the situation in Ukraine. They were strengthened in September 2014. They target the financial, energy and defense sectors, and the area of dual-use goods.
 
The economic sanctions prolonged by this decision include:
 
  – limiting access to EU primary and secondary capital markets for 5 major Russian majority state-owned financial institutions and their majority-owned subsidiaries established outside of the EU, as well as three major Russian energy and three defense companies
  – imposing an export and import ban on trade in arms
  – establishing an export ban for dual-use goods for military use or military end users in Russia
  – curtailing Russian access to certain sensitive technologies and services that can be used for oil production and exploration
 
In addition to these economic sanctions, several EU measures are also in place in response to the crisis in Ukraine including:
 
  – targeted individual restrictive measures, namely a visa ban and an asset freeze, currently against 150 people and 38 entities until 15 March 2018;
  – restrictive measures in response to the illegal annexation of Crimea and Sevastopol, limited to the territory of Crimea and Sevastopol, currently in place until 23 June 2018.
 
N.B. An overview of EU restrictive measures in response to the crisis in Ukraine is available here

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NWSNEWS

NWS_a110.

Out-Law.com: “Software Companies in Europe Urged to Review Their Export Control Classifications”

(Source:
Out-Law.com, 21 Dec 2017.)
 
Software companies across Europe should “re-assess their current export control classifications” in light of EU regulations that recently came into force, an expert has said.
 
Dublin-based Dermot McGirr of Pinsent Masons, the law firm behind Out-Law.com, who specializes in export control compliance, said that a European Commission delegated regulation, which has updated the EU ‘dual-use’ export control list and came into force on 16 December, should spur the review.
 
Dual-use items are goods, software or technology which can be used for civil and military purposes. Encryption software, for example, is subject to export controls because it is capable of dual-use: although such software can be used to ensure the confidentiality of information for common commercial transactions, it can also be used for illicit purposes.
 
The delegated regulation, finalized by the Commission in September, contains major changes to rules in relation to the export of encryption software and technology.
 
Further changes in respect of exceptions to ‘controlled items’ under the Dual-Use Regulation were also set out. These changes mean that some organizations that previously were able to rely on an exception to the requirement to obtain an export authorization may no longer benefit from that exception, or may need to rely on another exception.
 
McGirr said the amendments are of particular interest to software companies based in Ireland. Many of Europe’s biggest software companies are based in the country.
 
  “There are certain exceptions to the export control regime and the requirement to obtain an export license that software companies regularly rely on,” McGirr said. “Some of these exceptions have changed by virtue of the new regulation and certain new exceptions have been introduced. For this reason, software companies and exporters of products that contain software may need to re-assess their current export control classifications.”
 
  “If companies export their products illegally, the Irish government’s Department of Business, Enterprise and Innovation can levy fines of up to €10 million and / or can put the officers of the company forward for criminal prosecution, resulting in imprisonment for up to five years,” he said.

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NWS_a2
11RT.com: “U.S. Wants to Amend Arms Control Agreement to Ease Export of Military Drones”

(Source: RT.com, 20 Dec 2017.)
 
Washington is seeking an amendment to an agreement limiting the proliferation of delivery systems that could be used to deploy WMD. If successful, it would remove a formal hurdle blocking the global sales of US military drones.
 
The Missile Technology Control Regime (MTCR) aims to limit the proliferation of delivery systems and sensitive technologies that could potentially be used to launch chemical, biological and nuclear attacks. It was formed in 1987 by the G-7 industrialized countries (Canada, France, Germany, Italy, Japan, the UK, and the United States), currently has 35 nations as members, and is described as an “informal political understanding among states.”
 
Most restraints are applied to the Category I items, which along with ballistic missiles, space launch vehicles and sounding rockets, also include “unmanned air vehicle systems” that can fly faster than 300km an hour with a 500kg payload.
 
The limitations, however, are non-binding and countries are only obliged to show “restraint” and expected to behave on a “strong presumption to deny” any transfers of such sensitive technologies.
 
Nevertheless, the US wants to amend the MTCR agreement to reclassify UAVs that are capable of flying under 650 km per hour under Category II, multiple government sources told Defense News. American officials have reportedly circulated such a proposal in a white paper during the latest plenary session on the MTCR in October, a State Department official confirmed to Defense News.
 
  “I can’t confirm any specific numbers because it’s treated – inside the MTCR – as proprietary, particularly because there’s a deliberative process,” the unnamed official said, declining to comment on the exact speed under consideration. “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.”
 
  “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 added.

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NWS_a3
12ST&R Trade Report: “National Security Strategy Includes Trade and Economic Components”

 
Promoting U.S. prosperity, including by encouraging free, fair, and reciprocal trade relationships, is one of the four pillars of a national security strategy announced this week by President Trump.
 
The strategy identifies China and Russia as specific challenges to U.S. interests and accuses them of attempting to erode U.S. security and prosperity. These competitions “are not passing trends or momentary problems,” the strategy states, and so require the U.S. to “rethink the policies of the past two decades,” which were “based on the assumption that engagement with rivals and their inclusion in international institutions and global commerce would turn them into benign actors and trustworthy partners.” However, experience shows that these countries “distorted and undermined” these institutions “without undertaking significant reform of their economies or politics.”
 
The strategy also blames previous administrations for negotiating “disastrous trade deals” and allowing the growth of unfair trading practices by foreign countries such as dumping, discriminatory non-tariff barriers, forced technology transfers, non-economic capacity, industrial subsidies, and other support from governments and state-owned enterprises to gain economic advantages.
 
In response to these challenges, the strategy sets forth the following priority actions on economic and trade issues.
 
  – Federal departments and agencies will eliminate unnecessary regulations that stifle growth, drive up costs for U.S. businesses, impede research and development, discourage hiring, and incentivize domestic businesses to move overseas.
  – A simpler, fairer, and pro-growth tax code will lower business tax rates and establish a territorial system for foreign subsidiary earnings that will improve the competitiveness of U.S. companies and encourage their return to the U.S.
  – Federal, state, and local governments will work together with private industry to improve U.S. airports, seaports and waterways, roads and railways, transit systems, and telecommunications. In addition, the U.S. digital infrastructure will be improved by deploying a secure 5G Internet capability nationwide.
  – The U.S. will pursue bilateral trade and investment agreements with countries that commit to fair and reciprocal trade and will modernize existing agreements to ensure they are consistent with those principles. Agreements must adhere to high standards in intellectual property, digital trade, agriculture, labor, and the environment.
  – The U.S. will counter all unfair trade practices that distort markets using all appropriate means, from dialogue to enforcement tools.
  – Using its economic and diplomatic tools the U.S. will continue to target corrupt foreign officials and work with countries to improve their ability to fight corruption.
  – The U.S. will work with like-minded partners to preserve and modernize the rules of a fair and reciprocal economic order, emphasizing fair trade enforcement actions when necessary as well as multinational efforts to ensure transparency and adherence to international standards within trade and investment projects.
  – The U.S. will partner with countries as they build their export markets, promote free market competition, and incentivize private sector growth.
  – The U.S. will reduce the illicit appropriation of its public and private sector technology and technical knowledge by hostile foreign competitors, including by working work with Congress to strengthen the Committee on Foreign Investment in the U.S. to ensure it addresses current and future national security risks.
  – The U.S. will prioritize counterintelligence and law enforcement activities to curtail intellectual property theft by all sources and will explore new legal and regulatory mechanisms to prevent and prosecute violations.
  – The U.S. will promote exports of its energy resources, technologies, and services and expand its export capacity through the continued support of private sector development of coastal terminals.

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COMMCOMMENTARY

COMM_a01
13D.M. Edelman: “Iran Sanctions Update: No Change for Companies as Pressure Shifts Back to President Trump as Key Deadline Passes”

(Source: Export Compliance Matters, 20 Dec 2017.)
      
* Author: Doreen M. Edelman, Esq., Baker Donelson LLP, 202-508-3460, dedelman@bakerdonelson.com
.
 
On December 12, a key deadline passed for Congress to reimpose nuclear-related sanctions against Tehran, shifting the pressure back to the executive branch and setting new deadlines that will be critical to the fate of the 2015 Iran nuclear deal.  In October, President Trump refused to certify Iran’s compliance with the 2015 Joint Comprehensive Plan of Action (JCPOA), calling on Congress to set “trigger points” related to Iran’s nuclear and ballistic missile programs, and setting off a 60-day window for lawmakers to reimpose secondary sanctions that have been suspended under the terms of the JCPOA.  That window closed on December 12 without any Congressional action.
 
The onus is now back on President Trump to decide the fate of the JCPOA, and there are two deadlines approaching in mid-January.  The first deadline is for President Trump and Secretary of State Tillerson to decide whether to continue to issue waivers on the Iran sanctions program, which Tillerson has said he would. Second, there will be another certification deadline under domestic legislation that would reopen yet another 60-day window for Congress to reimpose sanctions, assuming the President stays the course from October when he first refused to certify Iran’s compliance with the terms of the nuclear deal.
 
For U.S. businesses, the lack of any Congressional action means that not much has changed, including the primary sanctions regime that already prohibits U.S. businesses from participation in most activities and transactions involving Iran or Iranian entities.  Under the Iranian Transactions and Sanctions Regulations (ITSR), which remain in full force with respect to U.S. businesses and continue to apply today, U.S. companies (and U.S. individuals) are prohibited from doing business in or with Iran, Iranian entities, or entities listed on the Office of Foreign Assets Control’s (OFAC) Specially Designated Nationals and Blocked Persons (SDN) List. The 2015 JCPOA only conditionally suspended a narrow category of nuclear-related “secondary sanctions” that apply to non-U.S. entities abroad.
 
One development worth keeping an eye on is Boeing’s tentative deal to sell passenger aircraft to Iran beginning in late 2018. In September 2016, OFAC issued licenses for Boeing and its main European competitor Airbus to sell nearly 300 planes to Iranian airlines. However, the OFAC license for the aircraft deal has come under increasing scrutiny from both Congress and the Trump administration in recent months due to concerns Iran would use the planes to intervene in regional conflicts, particularly in Syria. On December 15, the Wall Street Journal reported that the Trump administration was considering blocking the sales, and a White House spokesman said that the administration would not grant licenses for the sales unless Iran can ensure the airplanes would strictly be used for commercial passenger aviation.

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COMM_a2
14K. Bradford: “Update of the EU Control List of Dual-Use Items 2017”

(Source: Baker McKenzie, 19 Dec 2017.)
 
* Author: Kelly Bradford, Esq., Baker McKenzie.
 
On 16 December 2017, the annual Delegated Regulation that updates the EU dual-use export control list in Annex I to Regulation (EC) No. 428/2009 (“Annex”) came into force.  As a recap, Annex I sets out a lengthy list of dual-use items which are controlled for export to outside the EU and is generally updated on an annual basis. The list of dual-use items set out in the Annex needs to stay current in order to ensure full compliance with international security obligations, guarantee transparency, maintain the Union competitiveness and facilitate references for export control authorities and economic operators. The update aligns the list with decisions taken within the framework of the international non-proliferation regimes and export control arrangements in 2016.
 
The majority of the changes this year result from amendments that were agreed in the Wassenaar Arrangement, including:
 
  – An updated list of acronyms and abbreviations;
  – New definitions for “biological agents” (Category 1), “Monolithic Microwave Integrate Circuit” (MMIC) (Categories 3 and 5) and “authentication” (Category 5 Part 2). The definition of “adapted for use in war” (Category 1) was removed;
  – The restructuring of Category 5 Part 2 into a more positive control list of dual-use information security items. Note 4 (decontrol note to Category 5, Part 2) was removed, and is now incorporated in the 5A002.a. control entry; and
  – The addition of new (sub-entry) controls in Category 3 for integrated circuits with analogue-to-digital converters (3A001.a.14.) and for MMIC transmit/receive modules (3A001.b.12.), and in Category 6 for certain lasers (6A005).

Changes were also made to reflect amendments to the Australia Group and Nuclear Suppliers Group lists.
 
The Missile Technology Control Regime was also changed. The changes included a new note to the 9D105 software control  to highlight that this control includes software specially designed for a manned aircraft converted to operate as an unmanned aerial vehicle.
 
Please see below for the relevant documents:

  – Announcement
  – Delegated regulation (including the new list)

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MSEX/IM MOVERS & SHAKERS

MS_a215. Mike Miller Named Acting Deputy Assistant Secretary of State for Defense Trade Controls

(Source: Editor)

 
Michael F. Miller has been appointed Acting Deputy Assistant Secretary of State for Defense Trade Controls and Director of DDTC, effective 1 January 2018. 
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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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ENEDITOR’S NOTES

 

* Frank Zappa (Frank Vincent Zappa; 21 Dec 1940- 4 Dec 1993; was an American musician, composer, activist and filmmaker.)
  – “Communism doesn’t work because people like to own stuff.”
 
* Thomas à Becket (21 Dec 1119 or 1120 – 29 Dec 1170; was Archbishop of Canterbury from 1162 until his murder in 1170. He is venerated as a saint and martyr by both the Catholic Church and the Anglican Communion. He engaged in conflict with Henry II, King of England, over the rights and privileges of the Church, and was murdered by followers of the king in Canterbury Cathedral. Soon after his death, he was canonized by Pope Alexander III.)
  – “Do you not know that the largest trees, which have required years to grow, are cut down in one hour? It is foolish to look for their fruits and yet to be unprepared for their fall. Let it be your consolation, then, that God’s enemies, however honorable and exalted they may have been, shall nevertheless fade away like the smoke.”

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

The official versions of the following regulations are published annually in the U.S. Code of Federal Regulations (C.F.R.), but are updated as amended in the Federal Register.  Changes to applicable regulations are listed below.
 
*
ATF ARMS IMPORT REGULATIONS
: 27 CFR Part 447-Importation of Arms, Ammunition, and Implements of War
  – Last Amendment: 15 Jan 2016: 81 FR 2657-2723: Machineguns, Destructive Devices and Certain Other Firearms; Background Checks for Responsible Persons of a Trust or Legal Entity With Respect To Making or Transferring a Firearm. 
 
*
CUSTOMS REGULATIONS
: 19 CFR, Ch. 1, Pts. 0-199
  – Last Amendment: 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: 21 Dec 2017: 82 FR 60507-60517: Magnitsky Act 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: 21 Dec 2017: Harmonized System Update 1708, containing 33,859 ABI records and 6,591 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_a0319
Weekly Highlights of the Daily Bugle Top Stories

(Source: Editor) 

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

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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 W. 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.

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