18-0315 Thursday “Daily Bugle”

18-0315 Thursday “Daily Bugle”

Thursday, 15 March 2018

The Daily Bugle is a free daily newsletter from Full Circle Compliance, containing changes to export/import regulations (ATF, DOE/NRC, Customs, NISPOM, EAR, FACR/OFAC, FAR/DFARS, FTR/AES, HTSUS, and ITAR), plus news and events.  Subscribe 
here for free subscription. Contact us
for advertising inquiries and rates

[No items of interest noted today.] 

  1. Items Scheduled for Publication in Future Federal Register Editions
  2. Commerce/BIS: (No new postings.)
  3. Commerce/Census Posts FTR Letter No. 10, “Annotating the Electronic Manifest for U.S. Customs and Border Protection”
  4. DHS/CBP Deployed ACE Reconciliation Item
  5. DHS/CBP Posts New ACE Monthly Trade Update
  6. GAO: “Customs and Border Protection: Automated Trade Data System Yields Benefits, but Interagency Management Approach Is Needed”
  7. State/DDTC Posts Notice on Corporate Reorganization of GKN Aerospace Services/Fokker Technologies Management
  8. Treasury/OFAC Amends Cyber General License No. 1 and Posts Related FAQs
  1. American Shipper: “Lawmakers Push Bill to Codify Export Control Reform”
  2. Expeditors News: “USTR Issues Joint Statement from meeting of the US, EU, and Japan in Brussels”
  3. ST&R Trade Report: “Tariff Hike on Imports from China Could be Next Trade Move for Trump”
  1. M. Volkov: “Compliance and the Attorney-Client Privilege”
  2. R. Labianco: “Russian Spy Attack Shows International Law on Chemical Weapons Is Not Fit for Purpose”
  3. Gary Stanley’s EC Tip of the Day
  1. ECS Announces “ITAR/EAR Boot Camp” on 12-13 Sep in Annapolis, MD
  2. ECTI Presents “Global Export Control Lists and Classification Update 2018” Webinar, 11 Apr
  1. Bartlett’s Unfamiliar Quotations 
  2. Are Your Copies of Regulations Up to Date? Latest Amendments: ATF (15 Jan 2016), Customs (22 Feb 2018), DOD/NISPOM (18 May 2016), EAR (16 Feb 2018), FACR/OFAC (5 Mar 2018), FTR (20 Sep 2017), HTSUS (14 Mar 2018), ITAR (14 Feb 2018) 
  3. Weekly Highlights of the Daily Bugle Top Stories 



[No items of interest noted today.]

[Editor’s Note: The Presidential Proclamations concerning the adjusting of import tariffs of aluminum and steel included in today’s Federal Register, were already included in the 9 March Daily Bugle, items #8, and #9.]

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


OGS_a11. Items Scheduled for Publication in Future Federal Register Editions
(Source: Federal Register)

[No items of interest noted today.]
* * * * * * * * * * * * * * * * * * * *

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

Commerce/Census, 14 Mar 2018.)
  – U.S. Customs and Border Protection Headquarters, Directors of Field Operations, Port Directors, Foreign Trade Zone Operators, U.S. Departments of Commerce District Offices, U.S. Principal Parties in Interest, Freight Forwarders, Exporting Carriers, Consolidators, U.S. Customs Brokers, and All Others Concerned U.S. Census Bureau and U.S. Customs and Border Protection
U.S. Census Bureau and U.S. Customs and Border Protection
Annotating the Electronic Manifest for U.S. Customs and Border Protection
This letter is to provide guidance on the appropriate annotations to be used when submitting export manifest data electronically. As many of you are aware, U.S. Customs and Border Protection (CBP) is conducting pilots to test the functionality regarding the filing of export manifest data for air rail, and ocean cargo to the Automated Commercial Environment (ACE). These pilots will further the International Trade Data Systems (ITDS) initiatives set forth in section 405 of the Security and Accountability for Every Port Act of 2006 and Executive Order 13659 of February 19, 2014, Streamlining the Export/lmpofl Process for America’s Businesses. It is CBP’s intent to move export manifesting from the current paper-based system to an electronic system over the next several years.
The Foreign Trade Regulations (FTR), sections 30.7 and 30.45, require evidence of the proof of filing, post departure filing citation, AES downtime citation, exemption or exclusion legend on the bill of lading, air waybill, or other commercial loading documents. These annotations must also appear in the electronic manifest submitted to CBP. Since filers use many variations to annotate loading documents (i.e. NOEEI 30.37(a), No EEI 30.37(A), etc.), the Census Bureau, CBP and the trade have developed guidance to ensure that a standard format is reported in the electronic manifest. On June 2, 2018 the codes in the chart are the only acceptable codes to be used in the electronic manifests. You must submit the code exactly as it appears in the chart below. For filers who are submitting paper manifests, the current annotation identified in the FTR remains appropriate. Since the bill of lading and air waybill are paper documents, the codes identified in the chart may be preceded with AES (i.e. AES 37A) for clarity purposes if the current annotation (i.e. NOEEI 30.37(a)) is not used.
If you have questions regarding this letter or the FTR, please contact the Trade Regulations Branch at 1-800-549-0595, Option 3, or e-mail itmd.askregs@census.gov.
CBP Descriptions
Annotation for
Electronic Manifest
AES Proof of Filing Citation (Internal Transaction Number)
AES Postdeparture Citation – USPPI (PDF USPPI EIN)
AES Postdeparture Citation – Agent (PDF USPPI EIN-Filer ID)
AES Downtime Citation-Use only when AES or AESDirect is unavailable (AED Filer ID mm/dd/yyyy)
AED123456789 01/01/2018
Annotation for
Electronic Manifest
30.36 – Exemption for shipments destined to Canada.
30.37(a) -Exemption for commodities where the value of the commodities shipped from one USPPI to one consignee on a single exporting conveyance classified under an individual Schedule B Number or HTSUSA commodity classification code is $2,500 or less. Exports of commodities where the value of the commodities shipped from one USPPI to one consignee on a single exporting conveyance, classified under an individual Schedule B number or HTSUSA commodity classification code is $2,500 or less. This exemption applies to individual Schedule B numbers or HTSUSA commodity classification codes regardless of the total shipment value. In instances where a shipment contains a mixture of individual Schedule B numbers or HTSUSA commodity classification codes valued at $2,500 or less and individual Schedule B numbers or HTSUSA commodity classification codes valued over $2,500, only those Schedule B numbers or HTSUSA commodity classification codes valued over $2,500 are required to be reported. If the filer reports multiple items of the same Schedule B number or HTSUSA commodity classification code, this exemption only applies if the total value of exports for the Schedule B number or HTSUSA commodity classification code is $2,500 or less. Items of domestic and foreign origin under the same commodity classification number must be reported separately and EEI filing is required when either is over $2,500. For the reporting of household goods see §30.38.
Note: this exemption does not apply to the export of vehicles. The export information for vehicles must be filed in AES regardless of value or country of destination.
30.37(b) – Exemption for tools of trade and their containers that are usual and reasonable kinds and quantities of commodities and software intended for use by individual USPPIs or by employees or representatives of the exporting company in furthering the enterprises and undertakings of the USPPI abroad. Commodities and software eligible for this exemption are those that do not require an export license or that are exported as tools of the trade under a license exception of the EAR (15 CFR 740.9), and are subject to the following provisions:
  (1) Are owned by the individual USPPI or exporting company.
  (2)  Accompany the individual USPPI, employee, or representative of the exporting company.
  (3) Are necessary and appropriate and intended for the personal and/or business use of the individual USPPI, employee, or representative of the company or business.
  (4)  Are not for sale.
  (5)  Are returned to the United States no later than one (l) year from the date of export.
  (6) Are not shipped under a bill of lading or an air waybill.
30.37(c) – Exemption for shipments from one point in the United States to another point in the United States by routes passing through Canada or Mexico.
30.37(d) – Exemption for shipments from one point in Canada and Mexico to another point in the same country by routes through the United States.
30.37(f) – Exemption for exports of technology and software as defined in 15 CFR 772 of the EAR that do not require an export license are exempt from filing requirements.
30.37(g) – Exemption for shipments of books, maps, charts, pamphlets, and similar articles to foreign libraries, government establishments, or similar institutions.
30.37(h) – Exemption for shipments as authorized under License Exception GFT for gift parcels and humanitarian donations as (15 CFR 740.13(a) and (b)).
30.37(i) – Exemption for shipments of diplomatic pouches and their contents.
30.37(j) – Exemption for shipments of human remains and accompanying appropriate receptacles and flowers.
30.37(k) – Exemption for shipments of interplant correspondence, executed invoices and other documents, and other shipments of company business records from a U S. firm to its subsidiary or affiliate. This excludes highly technical plans, correspondence, etc. that could be licensed.
30.37(l) – Exemption for shipments of pets as baggage, accompanied or unaccompanied, of persons leaving the United States, including members of crews on vessels and aircraft.
30.37(m) – Exemption for carrier’s stores, not shipped under a bill of lading or an air waybill (including goods carried in ships aboard carriers for sale to passengers), supplies and equipment for departing vessels, planes, or other carriers, including usual and reasonable kinds and quantities of bunker fuel, deck engine and steward department stores, provisions and supplies, medicinal and surgical supplies, food stores, slop chest articles, and saloon stores or supplies for use or consumption on board and not intended for unlading in a foreign country, and including usual and reasonable kinds and quantities of equipment and spare parts for permanent use on the carrier when necessary for proper operation of such carrier and not intended for unlading in a foreign country. Hay, straw, feed, and other appurtenances necessary to the care and feeding of livestock while en route to a foreign destination are considered part of carriers’ stores of carrying vessels, trains, planes, etc.
30.37(n) Exemption for dunnage not shipped under a bill of lading or an air waybill, of usual and reasonable kinds and quantities necessary and appropriate to stow or secure cargo on the outgoing or any immediate return voyage of an exporting carrier, when exported solely for use as dunnage and not intended for unlading in a foreign country.
30.37(o) – Exemption for shipments of aircraft parts and equipment; food, saloon, slop chest, and related stores; and provisions and supplies for use on aircraft by a U.S. airline to its own installations, aircraft, and agents abroad, under EAR License Exception AVS for aircraft and vessels (see 15 CFR 740.150).
30.37(p) – Exemption for baggage and personal effects, accompanied or unaccompanied, of persons leaving the United States including members of crews on vessels and aircraft, when they are not shipped as cargo under a bill of lading or an air waybill or other commercial loading documents and do not require an export license.
30.37(q) – Exemption for temporary exports, except those that require licensing, whether shipped or hand carried, (e.g., carnet) that are exported from and returned to the United States in less than one ear (12 months) from the date of export.
30.37(r) – Exemption for goods previously imported under a Temporary Import Bond for return in the same condition as when imported including: goods for testing, experimentation, or demonstration; goods imported for exhibition; samples and models imported for review or for taking orders; goods imported for participation in races or contests, and animals imported for breeding or exhibition; and goods imported for use by representatives of foreign governments or international organizations or by members of the armed forces of a foreign country. Goods that were imported under bond for processing and re-exportation are not covered by this exemption.
30.37(s) – Exemption for shipments of issued banknotes and securities and coins in circulation exported as evidence of financial claims.
30.37(t) – Exemption for shipments of documents used in international transactions, documents moving out of the United States to facilitate international transactions including airline tickets, internal revenue stamps, liquor stamps, and advertising literature.
30.37(u) – Exemption for exports of technical data and defense service exemptions as defined in 22 CFR 123.22(b)(3)(iii) of the ITAR.
30.37(v) – Exemption for vessels, locomotives, aircraft, rail cars, trucks, other vehicles, trailers, pallets, cargo vans, lift vans, or similar shipping containers not considered “shipped” in terms of the regulations in this part, when they are moving, either loaded or empty, without transfer of ownership or title, in their capacity as carriers of goods or as instruments of such carriers.
30.37(w) – Exemption for shipments to Army Post Office, Diplomatic Post Office, Fleet Post Office.
30.37(x) – Exemption for shipments exported under license exception BAG.
30.37(y)(1) -Shipments of published books, software, maps, charts, pamphlets, or any other similar media available for general distribution, as described in 15 CFR 734.7 to foreign libraries, or similar institutions, destined to Country Group E: 1 and E:2 as set forth in Supplement No. I to 15 CFR art 740.
30.37(y)(2) -Shipments to U.S. government agencies and employees that are lawfully exported under License Exception GOV (15 CFR 740.11(b)(2)(i) or (ii)) valued at $2500 or less per Schedule B Number, destined to Country Group E: I and E:2 as set forth in Supplement No. 1 to 15 CFR art 740.
30.37(y)(3) -Personal effects as described in 15 CFR 740.14(b)(1) being lawfully exported under License Exception BAG (15 CFR 740.14), destined to Country Group E: I and E:2 as set forth in Supplement No. 1 to 15 CFR art 740.
30.37(y)(4) -Individual gift parcels and humanitarian donations being lawfully exported under License Exception GFT (15 CFR 740.12(a) and (b)), destined to Country Group E: I and E:2 as set forth in Supplement No. 1 to 15 CFR art 740.
30.37(y)(5) -Vessels and aircraft lawfully leaving the United States for temporary sojourn to or in a Country Group E: I or E:2 country under License Exception AVS (15 CFR 740.15), destined to Country Group E: 1 and E:2 as set forth in Supplement No. 1 to 15 CFR part 740.
30.37(y)(6) -Tools of trade that will be used by a person traveling to a Country Group E: 1 or E:2 destination, that will be returned to the United States within one year and that are lawfully being exported to a Country Group E: 1 or E:2 destination under License Exception BAG (15 CFR 740.14) or License Exception TMP (15 CFR 740.9(a))
30.39 – Exemption for shipments to the U.S. Armed Services.
30.40(a) – Exemption for office furniture, office equipment, and office supplies shipped to and for the exclusive use of U.S. government offices.
30.40(b) – Exemption for household goods and personal property shipped to and for the exclusive and personal use of U.S. government employees.
30.40(c) – Exemption for food, medicines, and related items and other commissary supplies shipped to U.S. government offices or employees for the exclusive use of such employees, or to U.S. government employee cooperatives or other associations for subsequent sale or other distribution to such employees.
Annotation for
Electronic Manifest
30.2(d)(1) – Exclusion for goods shipped under CBP bond through the United States, Puerto Rico, or the U.S. Virgin Islands from one foreign country or area to another where such goods do not enter the consumption channels of the United States.
30.2(d)(2) – Exclusion for goods shipped from the U.S. territories (except for Puerto Rico and U.S. Virgin Islands), and goods shipped between the United States and these territories.
30.2(d)(3) – Exclusion for electronic transmissions and intangible transfers.
30.2(d)(4) – Exclusion for goods shipped to Guantanamo Bay Naval Base in Cuba from the United States, Puerto Rico, or the U.S. Virgin Islands and from Guantanamo Bay Naval Base to the United States, Puerto Rico, or the U.S. Virgin Islands.
30.2(d)(5) – Exclusion for goods licensed by a U.S. federal government agency where the country of ultimate destination is the United States or goods destined to international waters where the person(s) or entity assuming control of the item(s) is a citizen or permanent resident alien of the United States or a juridical entity organized under the laws of the United States or a jurisdiction within the United States.

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

CSMS #18-000224, 15 Mar 2018.)
The following ACE Reconciliation item is deployed to the PRODUCTION environment late this morning, Thursday, March 15, 2018: 

  – Associated entry summary for rejected/resubmitted Reconciliation (RE) messages will not be validated for lateness.

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

CSMS #18-000225, 15 Mar 2018.)
A new ACE Monthly Trade Update is now available. This issue contains an update on the latest ACE deployment, a reports reminder on running the new ACE Statement Reports and setting up an account for your Broker, Importer or Carrier. 

Please go here to access the full version.

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

What GAO Found
Since renewing efforts to implement the Automated Commercial Environment (ACE) in 2013, U.S. Customs and Border Protection (CBP) has deployed a number of key ACE activities, processes, and functions that it terms core capabilities. After several delays, CBP reported that it had finished implementing these capabilities-other than a capability for revenue collections-in February 2018. CBP expects to decide how to proceed with collections by the end of March 2018, according to agency officials.
The 22 agencies CBP identified as requiring documentation to clear or license cargo are all authorized to access ACE, although GAO found considerable variation in their use of the system for import processing. For example, the Food and Drug Administration has integrated its systems with ACE and uses ACE data to review imports under its jurisdiction and target public health risks. In contrast, the Fish and Wildlife Service has not yet integrated ACE into its operations.
ACE users at CBP and partner agencies and in the trade-community told GAO that using ACE has reduced costs by making trade processing more efficient and has strengthened enforcement of trade laws and regulations. CBP has developed metrics for itself and the trade community and estimated savings that could result from the increased efficiency of some processes in ACE. CBP also reported efforts to expand its metrics to capture more ACE benefits-for example, to estimate the value of increased efficiencies for partner agencies.
CBP has not yet established an approach for the management of ACE after February 2018. The agency plans to enhance ACE to address shortcomings ACE users have identified-such as difficulty in transmitting messages and required information -but has not established a process for prioritizing all suggested enhancements. CBP also has not identified funding for continued ACE development, including enhancements, after fiscal year 2018. CBP is leading an interagency effort to develop an ACE management approach that includes processes for prioritizing enhancements and sharing costs, but this approach has not been finalized. Federal guidance calls for establishing the organizational structure necessary to operate effectively and for examining efforts as needed to adopt coordinated approaches. Until processes for prioritizing ACE enhancements and sharing costs are finalized, agencies and the trade community will not realize the system’s full potential benefits.
Why GAO Did This Study
CBP began work on ACE in 1994 to update the agency’s existing electronic trade processing system. In 2006, Congress broadened this effort by mandating creation of a “single portal” International Trade Data System to, among other things, efficiently regulate the flow of commerce and more effectively enforce laws and regulations relating to international trade. Performance problems halted implementation of ACE from 2010 to 2013. In 2014, the President set a deadline of December 31, 2016, for completing the system.
The Trade Facilitation and Trade Enforcement Act of 2015 included a provision for GAO to report on issues related to ACE implementation. In this report, GAO examines (1) CBP efforts to complete core ACE capabilities since 2013; (2) agencies’ access to ACE and use of the system to process imports; (3) any cost savings and trade enforcement benefits from using ACE; and (4) the approach that will be used to manage ACE after core capabilities are completed. GAO reviewed information from 22 agencies as well as importers, exporters, and brokers and interviewed agency and trade community representatives.
What GAO Recommends
The Secretary of Homeland Security should ensure that the Commissioner of CBP, in collaboration with partner agencies, finalizes an interagency approach to managing ACE that includes processes for prioritizing enhancements and sharing system costs. CBP concurred with GAO’s recommendation.
For more information, contact Kimberly Gianopoulos at (202) 512-8612 or gianopoulosk@gao.gov.
* * * * * * * * * * * * * * * * * * * * 

State/DDTC, 13 Mar 2018.)
Effective immediately, GKN plc has undergone an internal corporate reorganization combining the management of the Cowes, Filton, and Western Approach sites of GKN Aerospace Services Ltd. in the United Kingdom (“GKN Aero UK”) and Fokker Technologies Holding B.V. (“Fokker Holding”), as well as Fokker Holdings’ subsidiaries, without merging or dissolving these entities. As part of this internal reorganization, GKN Aero UK’s registered address (but not the address of the various GKN Aero UK sites) is changing from Ferry Road, East Cowes, Isle of Wight PO32 6RA, UK, to Ipsley House, Ipsley Church Lane, Redditch, Worchestershire B98 0TL, UK.
This internal reorganization will necessitate adding GKN Aero UK as a signatory to the various ITAR Part 124 agreements in which Fokker Holding or its operating subsidiaries in The Netherlands are a party so that personnel from GKN Aero UK can interact with U.S. signatories and have access to data under those agreements. Likewise, Fokker Holding and its operating subsidiary, Fokker Aerostructures B.V., will need to be added as signatories or sublicensees to the various ITAR Part 124 agreements in which GKN Aero UK is a party or sublicensee.
This internal corporate reorganization does not affect any current or pending ITAR licenses or reexport authorizations.
All currently approved agreements will require an amendment to be executed to reflect this internal corporate reorganization. The agreement holder will be responsible for amending its agreement. The executed amendment will be treated as a minor amendment per 22 CFR 124.1(d) and must be submitted as such. New DSP-83s must be executed as a result of this internal reorganization, as applicable.
Pending agreement applications that require amending must be brought to the attention of the assigned Agreements Officer by the agreement holder. The necessary changes will be made prior to issuance when the Agreements Officer has been notified.

A copy of this website notice must be maintained by the license holder and presented with the relevant license to U.S. Customs and Border Protection at time of shipment.
* * * * * * * * * * * * * * * * * * * * 

Treasury/OFAC) [Excerpts.] 
Today, the Department of the Treasury’s Office of Foreign Assets Control (OFAC) is amending Cyber General License No. 1, “Authorizing Certain Transactions with the Federal Security Service” (GL 1), and reissuing it as Cyber General License No. 1A (GL 1A) in connection with the designation of the Federal Security Service (a.k.a. Federalnaya Sluzhba Bezopasnosti) (a.k.a. FSB) under Section 224 of the Countering America’s Adversaries Through Sanctions Act (CAATSA).  The changes to GL 1 are limited to adding CAATSA authorities.  OFAC is also publishing four updated FAQs relating to GL 1A and one updated CAATSA-related FAQ relating to today’s action. In addition, OFAC has added/updated the following names on its SDN List. …
* * * * * * * * * * * * * * * * * * * * 


9. American Shipper: “Lawmakers Push Bill to Codify Export Control Reform”
(Source: American Shipper, 15 Mar 2018.) [Excerpts.]
The bipartisan leadership of the House Foreign Affairs Committee during a Wednesday hearing pushed for advancement of a February-introduced bill that would re-codify control of dual-use and some military items licensed for export by the Commerce Department, and repeal the “Cold War-era” Export Administration Act (EAA) of 1979, according to a legislative summary.   

Introduced Feb. 15 by committee Chairman Ed Royce, R-Calif., and co-sponsored by committee ranking member Eliot Engel, D-N.Y., the Export Control Reform Act of 2018 would, among other things, require the President to establish a regular interagency review of both executive branch export control lists, and for Commerce to regularly update the lists to ensure proper adjustments and control of new items. H.R. 5040 remains pending in the committee. …

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

10. Expeditors News: “USTR Issues Joint Statement from meeting of the US, EU, and Japan in Brussels”
(Source: Expeditors News, 14 Mar 2018.)
On March 10, 2018, the U.S. Trade Representative (USTR), Robert Lighthizer, the European Union (EU) Commissioner for Trade, Cecilia Malmstrom, and the Minister of Economy, Trade, and Industry of Japan, Hiroshige Seko met in Brussels to discuss non-market oriented policies and practices that lead to overcapacity, unfair competition, and hinder innovation.
The officials agreed to several joint actions to address the concerns, such as:
  – Developing stronger rules regarding industrial subsidies;
  – Enforcing existing WTO rules;
  – Working within the WTO towards improving the effectiveness and efficiency of the WTO monitoring function;
  – Intensifying information-sharing on trade-distortive practices.
The officials plan to meet again in Paris to discuss their progress.
The USTR press release may be found here.

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

11. ST&R Trade Report: “Tariff Hike on Imports from China Could be Next Trade Move for Trump”
President Trump could announce within the next few weeks higher tariffs on more than 100 goods imported from China, according to several press sources. The import duties would be the culmination of a section 301 investigation launched last summer on China’s acts, policies, and practices related to technology transfer, intellectual property, and innovation.
According to a Politico article, U.S. Trade Representative Robert Lighthizer recently presented to the president “a package of tariffs that would target the equivalent of $30 billion a year in Chinese imports.” However, the article said, Trump “urged Lighthizer to aim for an even bigger number,” which some sources have put at $60 billion or more. Other press articles said the potential tariffs could impact a wide range of goods, including electronics, telecommunications equipment, furniture, toys, apparel, and footwear.
There is concern that a decision to impose higher tariffs on imports from China could prompt a response in kind from Beijing, which could affect U.S. exports of agricultural goods in particular. A Reuters article quoted Chinese foreign ministry spokesman Lu Kang as saying that “China resolutely opposes any kind of unilateral protectionist trade measures” and will “have to take measures to firmly protect our legitimate rights” if the U.S. acts to harm China’s interests.   

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


12. M. Volkov: “Compliance and the Attorney-Client Privilege”
(Source: Volkov Law Group Blog, 14 Mar 2018. Reprinted by permission.)
* Author: Michael Volkov, Esq., Volkov Law Group, mvolkov@volkovlaw.com, 240-505-1992.
Chief compliance officers have to work closely with the chief legal officer or general counsel on a number of important issues.  In certain circumstances, CCOs have to be mindful of the importance of the company’s ability to assert the attorney-client privilege.  While CCOs tend to lean in favor of disclosure and transparency as an important principle in promoting a company’s compliance program, there are a number of situations when compliance requires protection of the attorney-client privilege.
Let’s be honest – lawyer can be blowhards and in litigation circumstances, lawyers can fail to see the big picture.  In recent years, litigators have sought to claim expansive interpretations of the attorney-client privilege.  Federal judges are expressing frustration at these broad claims of privilege and beginning to cut back on such claims by reminding attorneys that blanket claims of privilege by the presence of an attorney in a meeting or the listing of an attorney on an email are not going to be sustained.
Lawyers and compliance officers need to pay close attention to the attorney-client privilege, and make sure they take proper steps to protect and promote the use of privilege in appropriate circumstances.  When conducting serious internal investigations or reviewing significant compliance issues, a company’s ability to cloak such determinations with the privilege is critical to the review, the company’s decision and the remediation of the issue, if warranted.
To review the basics, the attorney-client privilege applies to:
  – Communications between an individual and an attorney (or someone acting at the direction of an attorney); and
  – Communications between a compliance officer and an in-house counsel can qualify for the attorney-client privilege so long as it is intended to seek, obtain or provide legal guidance or services.
Compliance officers frequently consult in-house attorneys for guidance on the law, development of compliance policies, and day-to-day discussion of legal implications of compliance issues.

A compliance officer may use legal advice from in-house counsel to provide guidance and respond to an employee question, enforce the company’s compliance policies and procedures, conduct investigation, take corrective actions, and provide reports to corporate leaders.
Courts are imposing increasing burdens on companies that broadly assert attorney-client privilege to compliance activities.  An example of this trend is a 2012 district court decision, U.S. ex.rel Baklid-Kunz v. Halifax Hospital Medical Center, Case No. 6:09-cv-1002, 2012 U.S. Dist. LEXIS 158944 (M.D. Fla. Nov. 6, 2012) (Copy Here).  Every compliance officer should be familiar with this case.
In a False Claims Act context, the magistrate judge addressed the application of the attorney-client privilege to emails and other communications, including the determination of whether compliance documents were prepared by or directed to in-house counsel and compliance staff.
The magistrate judge ruled that communications to an in-house counsel and corporate employees are not entitled to a presumption of privilege.
Specifically, the magistrate judge held that the following communications were not privileged: (1) compliance logs; (2) emails from in-house counsel and compliance personnel; (3) audits and fair market value communications by compliance, finance and case management departments.
A specific issue addressed by the court is important to remember – copying an in-house counsel on internal email will not entitle the company to assert the privilege over the communication.  To be privileged, the communications must directly involve the in-house counsel and for the purpose of seeking or providing legal advice.  Companies have to be mindful of this important limitation when communicating about legal and compliance issues.

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

The Conversation, 14 Mar 2018.)
* Author: Riccardo Labianco, PhD Candidate, SOAS, University of London, 632364@soas.ac.uk.
The nerve agent, Novichok, used to attack a former Russian spy Sergei Skripal and his daughter in Salisbury is similar to substances such as soman or sarin used to produce chemical weapons. International law bans chemical weapons through the 1992 Chemical Weapons Convention, which requires its 192 state signatories to refrain from using, producing and stockpiling them.
So, with this ban in place, how is it possible that someone could use a nerve agent to attack two people?
The convention defines chemical weapons as toxic chemical substances employed in an unlawful way, contrary to the convention. It aims to prohibit the use, production and possession of chemical weapons, and also requires the destruction of chemical weapons and their production facilities.
Toxic chemical substances are not prohibited per se: it is their association with a forbidden purpose that makes them a chemical weapon, subject to the regulations of the convention. Despite the fact that toxic chemicals could be used to make chemical weapons, they are not subject to the same strict regulations as chemical weapons, such as the prohibition of their use or transfer. Instead, they are subject to verification measures and to limits on their production and storage.
An inherent paradox
The convention perfectly mirrors the paradox behind chemical weapons. These powerful weapons are made up of substances that are often easy to produce. Some, such as chlorine, contained in drugs as hydrochloric acid, are even used in medicine, agriculture or industry. For instance, toxic chemicals can be found during research for new pesticides. This means that what makes the difference between a toxic chemical substance and a chemical weapon is the purpose behind its use.
This logic can also apply to more ordinary objects, such as a knife or drug. A person can use a knife to slice some bread, while a doctor can administer a drug to treat a patient. However, if those items fall into the wrong hands, they can be used to kill or seriously harm someone. In light of the dual use of these items, the law cannot completely ban knives and drugs. What it can do is to establish precautions that minimise the risk of knives and drugs being used in an unlawful way. The same logic applies to the use of toxic chemical substances.
According to Theresa May’s statement to MPs on March 12, the substance used in the Salisbury attack – Novichok – was a nerve agent similar to toxic substances that are already regulated by the Convention on Chemical Weapons, but it is not banned under it. The prime minister said the substance belongs to a category of toxic chemical, which she termed a “military-grade nerve agent of a type developed by Russia”.
Getting around the law
The rules of the convention regarding toxic chemical substances do not apply in this case, due to the fact that there was nothing to regulate.
This just shows how important international cooperation and transparency among countries on this issue is. International legal instruments on weapons cannot function without constant updates regarding chemical production and new technological developments. The convention requires states to share the details about any production of chemicals with the Organisation for the Prohibition of Chemical Weapons, the body in charge of the enforcement of the convention. States must declare information including the type of chemical that will be produced and the quantity. Such a declaration should have been done before Novichok was produced.
After the discovery of a new chemical, the convention provides guidelines for updating its lists of chemicals, along with a speedy procedure to amend the relevant section of the convention.

Another issue concerns the military nature of the nerve agent used in Salisbury. Toxic chemicals can be produced and used for lawful purposes according to the convention, including for military, defence and protection reasons. It’s just the use of toxic chemicals as a method of warfare that is strictly prohibited.
If whoever produced Novichok had followed the provisions of the convention, and had disclosed details such as its name and the structural formula of the chemical, the nerve agent used in Salisbury would not actually have been banned. It would simply have been subjected to the limitations and the verification procedures of the convention that apply to other toxic substances. This is because the 1992 convention bans chemical weapons but does not prohibit the use of toxic chemical substances for peaceful or acceptable purposes.
It seems that whoever produced, and used Novichok to attack the Skripals, did not want to share information about this substance and the facilities able to produce it – in disregard of international law.
Good faith and transparency are essential for the functioning of the international law on chemical weapons – both of which currently appear to be lacking.

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

* Author: Gary Stanley, Esq., Global Legal Services, PC, (202) 352-3059,
Among the common errors that DDTC has identified in TAA/MLA/WDA applications are the following:
  – The first three characters of the Transaction Number must be “AG-” for the DTrade 2 system to recognize the submission as an agreement. The applicant can use any alpha-numeric label after the “AG-“.   
  – The Block 12 value must be correct. For new agreements and re-baselines (See Section 9 of DDTC’s Guidelines for Preparing Agreements), the value must reflect the total agreement value in the (a)(6) table of the transmittal letter. For amendments, the value must reflect the change in value added for that given amendment. If the value is $1 or less (e.g., no change or the amendment subtracts value), enter $1 in Block 12.   
  – Foreign ultimate end users must be identified in Block 14. End users who are not foreign licensees to the agreement must be listed in Block 14 of the DSP-5 vehicle with the foreign licensees.   
  – Company names entered in the DSP-5 vehicle (e.g., Blocks 14, 16, and 21) must be the legal names of the companies without using abbreviations or any additional clarifying language. This means no “subsidiary of” statements, partial address or location clarifiers, or go-by names in the name field unless it is part of the legal name of the company.   
  – The company names in the DSP-5 vehicle need to match the company names used in the agreement/amendment.   
  – Block 20 must provide a summary of the proposed agreement/amendment. The summary for an amendment should include the total scope of the agreement and not just what the amendment adds.

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


TE_a115. ECS Announces “ITAR/EAR Boot Camp” on 12-13 Sep in Annapolis, MD

(Source: Suzanne Palmer,
* What: ITAR/EAR Boot Camp, Annapolis, MD
* When: September 12-13, 2018
* Where: Chart House Restaurant on Spa Creek
* Sponsor: Export Compliance Solutions (ECS)
* ECS Speaker Panel:  Suzanne Palmer, Mal Zerden
* Register: Here or by calling 866-238-4018 or e-mail spalmer@exportcompliancesolutions.com 
* Discount: Daily Bugle subscribers get a 10% discount when they use the coupon code: ECS10PERBUGLE when registering for this event.
* * * * * * * * * * * * * * * * * * * *

TE_a216. ECTI Presents “Global Export Control Lists and Classification Update 2018” Webinar, 11 Apr

(Source: Danielle Hatch, danielle@learnexportcompliance.com)

* What: Global Export Control Lists and Classification Update 2018
* When: April 11, 2018; 1:00 p.m. (EDT)
* Where: Webinar
* Sponsor: Export Compliance Training Institute (ECTI)
* ECTI Speaker: Jay Nash
* Register: Here or Danielle Hatch, 540-433-3977, danielle@learnexportcompliance.com.
* * * * * * * * * * * * * * * * * * * *


* Ruth Bader Ginsburg (born Joan Ruth Bader; 15 Mar 1933; is an Associate Justice of the Supreme Court of the United States. Ginsburg was appointed by President Bill Clinton and took the oath of office on August 10, 1993.)
 – “Reacting in anger or annoyance will not advance one’s ability to persuade.”
Cesare Beccaria (Cesare Bonesana-Beccaria, 15 Mar 1738 – 28 Nov 1794, was an Italian criminologist jurist, philosopher, and politician, who is widely considered as the most talented jurist and one of the greatest thinkers of the Age of Enlightenment.  He is well remembered for his treatise On Crimes and Punishments, which condemned torture and the death penalty.)
  – “False is the idea of utility that sacrifices a thousand real advantages for one imaginary or trifling inconvenience; that would take fire from men because it burns, and water because one may drown in it; that has no remedy for evils except destruction. The laws that forbid the carrying of arms are laws of such a nature. They disarm only those who are neither inclined nor determined to commit crimes.”
A few Chinese proverbs:

Dig the well before you are thirsty.
* When the winds of change blow, some people build walls, others build windmills.
* One who asks a question appears to be a fool for five minutes; one who does not ask a question remains a fool forever.
Paul Ehrlich (14 Mar 1854 – 20 Aug 1915) whom we listed in yesterday’s Unfamiliar Quotations, was a German physician and scientist.  He was not, however the Paul Ralph Ehrlich born May 29, 1932, whom we quoted yesterday.  Paul R. Ehrlich is still alive, and is a Professor of Population Studies of at Stanford University. It was he, not the German Paul Ehrlich, who published the 1968 book, The Population Bomb, which contained warnings of world-wide starvation of humans in the 1970s and 1980s due to overpopulation.  Thanks to reader Shawn Thompson, who found the quotation attributed to the deceased Paul Ehrlich unfamiliar, and brought it to our attention. — Editor

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

. 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.  The latest amendments to applicable regulations are listed below.
: 27 CFR Part 447-Importation of Arms, Ammunition, and Implements of War
  – Last Amendment: 15 Jan 2016: 81 FR 2657-2723: Machineguns, Destructive Devices and Certain Other Firearms; Background Checks for Responsible Persons of a Trust or Legal Entity With Respect To Making or Transferring a Firearm. 
: 19 CFR, Ch. 1, Pts. 0-199
  – Last Amendment: 22 Feb 2018: 83 FR 7608-7610: Technical Amendment to List of User Fee Airports: Name Changes of Several Airports and the Addition of Five Airports

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

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

  – Last Amendment: 
16 Feb 2018:
83 FR 6949-6956
: Russian Sanctions: Addition of Certain Entities to the Entity List [Addition of 21 Entities to Entity List.]

: 31 CFR, Parts 500-599, Embargoes, Sanctions, Executive Orders

  – Last Amendment: 5 Mar 2018:
83 FR 9182-9204: North Korea Sanctions Regulations

: 15 CFR Part 30
  – Last Amendment:
20 Sep 2017:
82 FR 43842-43844
: Foreign Trade Regulations (FTR): Clarification on Filing Requirements; Correction
  – HTS codes that are not valid for AES are available
  – The latest edition (1 Jan 2018) of Bartlett’s Annotated FTR (“BAFTR”), by James E. Bartlett III, is available for downloading in Word format. The BAFTR contains all FTR amendments, FTR Letters and Notices, a large Index, and footnotes containing case annotations, practice tips, Census/AES guidance, and to many errors contained in the official text. Subscribers receive revised copies every time the FTR is amended. The BAFTR is available by annual subscription from the Full Circle Compliance website.  BITAR subscribers are entitled to a 25% discount on subscriptions to the BAFTR.
, 1 Jan 2018: 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: 14 Mar 2018: Harmonized System Update 1803, containing 449 ABI records and 92 harmonized tariff records.

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


  – Last Amendment: 14 Feb 2018: 83 FR 6457-6458: Amendment to the International Traffic in Arms Regulations: Addition of South Sudan [Amends ITAR Part 126.] 

  – The only available fully updated copy (latest edition: 14 Feb 2018) of the ITAR with all amendments is contained in Bartlett’s Annotated 

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

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

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 

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


* 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, DOE/NRC, DOJ/ATF, DoD/DSS, DoD/DTSA, FAR/DFARS, 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, provided attribution is given to “The Export/Import Daily Bugle of (date)”. 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

* BACK ISSUES: An archive of Daily Bugle publications from 2005 to present is available

* TO UNSUBSCRIBE: Use the Safe Unsubscribe link below.

Scroll to Top