18-0316 Friday “Daily Bugle”

18-0316 Friday “Daily Bugle”

Friday, 16 March 2018

TOPThe 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. DHS/CBP Announces ACE Production Scheduled Maintenance, 17-18 Mar
  4. DHS/CBP Posts ACE Deployment G Reminder
  5. GAO: “Committee on Foreign Investment in the United States: Treasury Should Coordinate Assessments of Resources Needed to Address Increased Workload”
  6. State/DDTC: (No new postings.) 
  1. Reuters: “European Powers Propose New Iran Sanctions to Meet Trump Ultimatum”
  2. Seattle PI: “Indictment: Men Smuggled $2.3m in Parts to Iran Oil Firms”
  3. ST&R Trade Report: “Dates and Deadlines: Trusted Trader, Steel Tariffs, Duty-Free Samples, Classification”
  4. Stuff: “Pacific Aerospace ‘Indisputably’ Knew of Illegal Exports to North Korea”
  5. WorldECR News Alert of 15 Mar
  1. A.J. Grotto: “U.S. Policy Toolkit for Kaspersky Labs”
  2. E.C. Emerson, T.J. Trendl & J.D. Kaufman: “Impending Steel and Aluminum Tariffs: Opportunities for Exemptions and Exclusions” 
  3. J.E. Bartlett: “Commerce/Census Posts New FTR Letter; New Edition of BAFTR Available” 
  4. M. Volkov: “Connecting with Your Employees – What is Your Company’s Purpose?” 
  5. Gary Stanley’s EC Tip of the Day 
  1. List of Approaching Events – 17 New Events Listed 
  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.]

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. Items Scheduled for Publication in Future Federal Register Editions

Federal Register)

* Treasury; Foreign Assets Control Office; RULES; Inflation Adjustment of Civil Monetary Penalties [Publication Date: 19 March 2018.]

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OGS_aa23. DHS/CBP Announces ACE Production Scheduled Maintenance, 17-18 Mar
(Source: CSMS #18-000227, 15 Mar 2018.)
There will be ACE PRODUCTION Scheduled Maintenance Saturday evening, March 17, 2018 from 2200 ET to 0400 ET Sunday, March 18, 2018.

ACE will perform infrastructure maintenance activities and the following ACE Deployments during this time:

ACE Accounts Portal   – Importer Account –> Add Drawback Privilege screen: Revoke Date field will no longer pre-populate with a default date.

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CSMS #18-000229, 16 Mar 2018.)
On March 17, 2018, U.S. Customs and Border Protection (CBP) will deploy two new universes and nine new standard reports to support reconciliation and liquidation capabilities deployed to the Automated Commercial Environment (ACE) on February 24, 2018, with ACE Deployment G. 

CBP will also be deploying the Harmonized Tariff Schedule (HTS) universe on March 17, 2018.  

On April 14, 2018, the Authorized Data Extracts will be retired, effective this date, all reports capabilities will reside in ACE Reports. 

For more information, please review the ACE Deployment G Reports Information Notice for Trade posted here.

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What GAO Found
The Committee on Foreign Investment in the United States (CFIUS) has experienced an increased workload in recent years, and member agency officials have expressed concerns that CFIUS staff levels may not be sufficient to complete committee functions. Officials attribute the increased workload to an increase of over 50 percent in the volume of transactions reviewed from 2011 to 2016 and the complexity of those reviews in terms of technology, transaction structure, and national security concerns, compared to a modest increase in the number of staff assigned to CFIUS. Member agency officials stated that CFIUS is able to review all transactions that have been submitted to the committee. However, officials and external experts expressed concerns that agencies were limited in their ability to complete other functions, such as identifying transactions about which they have not been voluntarily notified but that may pose a risk. Standards for Internal Control in the Federal Government states that management should establish the organizational structure necessary to achieve its objectives and periodically evaluate this structure. Treasury-the agency that leads CFIUS- has not coordinated member agencies’ efforts to better understand the staffing levels needed to address the current and future workload associated with core functions of the committee. Without this information, CFIUS may be limited in its ability to fulfill its objectives and address national security concerns.
Officials from CFIUS member agencies and selected nonmember agencies, as well as external experts, expressed a range of views on the potential benefits and drawbacks to possible changes to CFIUS. GAO organized the possible changes into three categories: (1) altering the structure of CFIUS, (2) redefining which transactions should be considered for CFIUS review, and (3) expanding the factors CFIUS considers when evaluating the impacts of a foreign transaction on national security. Agency officials were generally satisfied with CFIUS’ structure, such as the committee’s chair and membership. Views among officials and experts varied on redefining which transactions should be considered for review, such as requiring CFIUS to review all transactions covered by its authority regardless of notification. Officials and experts generally did not support expanding the list of national security factors CFIUS considers, such as by adding a net economic benefit test. Agency officials and experts agreed that one trade-off related to some possible changes is a likely increase to the CFIUS workload, which they noted is already straining agencies’ staff resources.
Why GAO Did This Study
The United States economy has historically been the largest recipient of foreign direct investment in the world-receiving $373 billion in 2016, according to U.S. government statistics. Ensuring that these foreign investments do not harm national security can be a challenge. CFIUS is an interagency group that reviews transactions under its authority-certain foreign acquisitions or mergers of U.S. businesses-to determine their effects on U.S. national security, while maintaining an open investment climate. If CFIUS identifies concerns, it may work with parties to the transaction to mitigate them. In rare cases, CFIUS may recommend that the President block or suspend a transaction.
GAO was asked to review the CFIUS process and possible changes to that process. This report (1) examines changes in CFIUS’s workload and staffing from 2011 through 2016, and (2) provides information on stakeholder views on potential changes to CFIUS. GAO analyzed CFIUS information on staffing levels and transactions reviewed, and interviewed officials from member agencies, selected nonmember agencies that have CFIUS-related expertise, and knowledgeable external experts, such as think tanks.
What GAO Recommends
Treasury, as CFIUS lead, should coordinate member agencies’ efforts to better understand the staffing levels needed to address the current and projected CFIUS workload associated with core committee functions. Treasury concurred.
For more information, contact Kimberly Gianopoulos at (202) 512-8612 or gianopoulosk@gao.gov or Marie Mak at (202)-512-4841 or makm@gao.gov.
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Reuters, 16 Mar 2018.) [Excerpts.]
Britain, France and Germany have proposed fresh EU sanctions on Iran over its ballistic missiles and its role in Syria’s war, according to a confidential document, in a bid to persuade Washington to preserve the 2015 nuclear deal with Tehran.
The joint paper, seen by Reuters, was sent to European Union capitals on Friday, said two people familiar with the matter, to sound out support for such sanctions as they would need the support of all 28 EU member governments.
The proposal is part of an EU strategy to save the accord signed by world powers that curbs Tehran’s ability to develop nuclear weapons, namely by showing U.S. President Donald Trump that there are other ways to counter Iranian power abroad.
Trump delivered an ultimatum to the European signatories on Jan. 12. It said they must agree to “fix the terrible flaws of the Iran nuclear deal” – which was sealed under his predecessor Barack Obama – or he would refuse to extend U.S. sanctions relief on Iran. U.S. sanctions will resume unless Trump issues fresh “waivers” to suspend them on May 12.
  “We will therefore be circulating in the coming days a list of persons and entities that we believe should be targeted in view of their publicly demonstrated roles,” the document said, referring to Iranian ballistic missile tests and Tehran’s role backing Syria’s government in the seven-year-old civil war. …
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Seattle PI, 15 Mar 2018.)
Three men accused of smuggling industrial equipment into Iran in violation of U.S. sanctions have been indicted by a grand jury in Seattle.
Federal prosecutors claim the men — Mehran Ghanouni, his father Bahram Ghanouni, who is also known as Ben Anderson, and Peiman Basiri – exported $2.3 million worth of parts used in oil production to Iran’s government-owned oil firms.
A Canadian citizen, Mehran Ghanouni made an initial court appearance Thursday afternoon in U.S. District Court at Seattle. Bahram Ghanouni, who is also Canadian, and Basiri, who is believed to be based in Iran, are not yet in U.S. custody.
As investigators describe it, the smuggling scheme centered on companies associated with the Ghanounis.
Basiri is described as a manager with Yavar Sanaye Isfahan, an Iran-based petrochemical supply company founded by Bahram Ghanouni in 1997. The firm, also known as YSI, regularly does business with Iran’s government-owned oil companies.
Ghanouni and his coconspirators sent $2.3 million to Iran falsely claiming they were destined for companies in Kuwait, Iraq and the United Arab Emirates. Prosecutors claim the men attempted to illegally export the equipment on 35 different occasions.
  “The violation of export control requirements undermines our national security,” U.S. Attorney Annette L. Hayes said in a statement.
Iran has faced economic sanctions from the United States and others since the 1979 revolution that resulted in the Islamic republic. Sanctions have limited Iranian access to equipment produced aboard, including parts for the oil industry that underpins Iranian economy.
The indictment unsealed Thursday offered details on five transactions investigators claim violate several U.S. laws. According to the indictment, four of the shipments went to Kala Naft, a subsidiary of the National Iranian Oil Company. Both organizations have been sanctioned by the European Union.
Describing the apparent beginning of the investigation into the Ghanounis, a Homeland Security Investigations special agent said in court papers that Mehran Ghanouni was stopped on Oct. 9, 2014 at the Linden border crossing in northwest Washington state.
According to the agent’s statement, the 29-year-old told Customs and Border Protection officers he was headed to nearby Blaine to mail “power switches” to the United Arab Emirates. Mehran Ghanouni explained he was a sales manager for his father’s company, Integrated Control Solutions, also known as ICS. The British Columbia-based company is a distributor of industrial equipment.
Investigators followed Mehran Ghanouni to the Mailbox International facility in Blaine, where they searched a package he had arranged to mail, the special agent said in court papers. According to the agent’s statement, investigators found the box was destined for a firm with an address in Erbil, Iraq, and contained three industrial pressure switches made by an Oregon firm. Investigators claim they were destined for Iran.
Investigators identified three companies alleged to have been used by the Ghanounis and others to move sanctioned goods into Iran.
The Ghanounis traveled to the United States together the following month and were again questioned at the border. Writing the court, the Homeland Security agent said he saw documents referencing an “Iran office” of the Ghanounis’ company and other correspondence pointing to a relationship with Iran.
According to the agent’s account, investigators recovered a 2011 business plan for Bahram Ghanouni’s Iran-based firm describing the “use of ICS abilities for supplying the products which are under sanction.” The plan purportedly included a graphic depicting relationships between Ghanouni’s various U.S. and Canadian companies.
The men have been indicted on a single count of conspiracy to violate the International Emergency Economic Powers Act. The Ghanounis have each been charged with making false statements to investigators.
The indictment was issued under seal on Feb. 14. It was unsealed Thursday with Mehran Ghanouni’s arrest.
Mehran Ghanouni is expected to return to court Monday for a preliminary hearing. He remains jailed.
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Following are highlights of regulatory effective dates and deadlines and federal agency meetings coming up in the next week.
  – 19 Mar: deadline for comments to DOC on proposed trusted trader program for seafood
  – 19 Mar: deadline for applications for export trade show aid programs
  – 20 Mar: meeting of U.S. Investment Advisory Council
  – 20 Mar: deadline for comments to ITC on potential IPR import restrictions on LED lighting devices
  – 22 Mar: deadline for comments to ITC on proposed import restrictions on UV curable coatings
  – 22 Mar: deadline for comments to USDA on lifting restrictions on imports of pork from Japan
  – 23 Mar: deadline for comments to CBP on proposed revocation or modification of classification rulings
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Stuff, 16 Mar 2018.)
Pacific Aerospace claims it did not understand UN sanctions when it knowingly exported aircraft parts to North Korea.
The Hamilton-firm broke both United Nations sanctions and New Zealand law when it indirectly sent $6700 worth of aircraft parts to fulfil a warranty in 2016.

Judge John Bergseng heard sentcening

arguments detailing the company’s knowledge of the illicit exports at the Manukau District Court on Friday.
The company’s actions were first exposed in October 2016, when footage emerged of a New Zealand-made Pacific Aerospace P-750 XSTOL flying at the Wonsan Air Festival in North Korea.
In October 2017, Pacific Aerospace pleaded guilty to three charges for the subsequent indirect export of aircraft parts to North Korea and one charge of making an erroneous declaration on a customs export form.
It was not charged for the export of the aircraft itself, but charged with an erroneous declaration in the plane’s initial export from Hamilton – two medevac stretchers and a floor plug for survey equipment were undeclared.
Crown lawyer Jasper Rhodes said indisputable evidence, including plane tracking, showed Pacific Aerospace was aware of the plane’s presence in North Korea.
Rhodes, representing Customs, said Pacific Aerospace knowingly breached the sanctions regime to meet their warranty obligations for the plane.
The company provided aircraft parts, a banned luxury good under UN sanctions, to repair the aircraft in North Korea in three instances. The parts were a flap actuator used in take-off and landing, two cockpit indicators which display propeller speed and a fuel ejector.
Technicians to fix the aircraft were not sent, Rhodes said, knowing that this would contravene sanctions.
  “When we look at the list of luxury goods, it’s pretty extensive, it ranges from things like fountain pens to caviar … up to aircraft parts.
  “Aircraft parts must be, if not the most serious, near the most serious on that list. Bearing in mind military application.”
The plane wasn’t built for a military purpose, but was painted in North Korean military colours when flown at the airshow.
The P-750 aircraft also contained an American navigation system, and there was concern such technology could be used for military purposes.
Rhodes sought a strong sentence to both “send a message” to other companies and assure the international community that New Zealand was committed to the UN sanction regime.
Defence lawyer Emmeline Rushbrook stressed the exports were “indirect”, which sat at the lowest level of sanction breaches.
  “There is no evidence before the court that the plane is anything but a civilian aircraft. And there’s no evidence the actual aircraft or the parts have been used for a military purpose.”
The company admitted it knew the of the sanctions, but not the detail which included indirect exports, she said.
The parts were provided to a Chinese counterpart and the plane remained registered in China, though it was known to be in North Korea. This did not break China’s laws.
  “It knew the aircraft was temporarily in North Korea, which it understood was for tourism purposes.”
There was nothing covert or premeditated about the export, she said.
Judge Bergseng acknowledged Pacific Aerospace had complied with a UN Security Council investigation into the sanction breach. He reserved his decision to a later date.
The direct or indirect supply of aircraft, related parts and aerospace training to North Korea is a violation of UN Security Council Resolution 1718.
The 2006 resolution was agreed on by UN member states in response to North Korea testing a nuclear weapon.
Under New Zealand law, a company can be fined up to $100,000 for breaching a UN-mandated ban, and fined up to $5000 for making an erroneous declaration under the Customs and Excise Act.
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  (1) UK announces measures against Russia in poisoning case
  (2) EU seeks feedback on ‘specially designed for military use’
  (3) US sanctions North Korea for use of chemical weapons
  (4) Royce Bill would harden US sanctions against IRGC
  (5) Singaporean companies suspected of supplying luxury goods to North Korea
[Editor’s Note: Click on the source link below the item title to subscribe to WorldECR, the journal of export controls and sanctions.]
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Lawfare, 15 Mar 2018.)
* Author: Andrew J. Grotto, William J. Perry International Security Fellow at Stanford’s Center for International Security and Cooperation, a research fellow at the Hoover Institution, and a fellow in Stanford’s Cyber Initiative, grotto@stanford.edu, +1 650-723-9866.
In February, the White House attributed “the most destructive and costly cyberattack in history,” a summer 2017 attack affecting critical infrastructure and other victims around the world, to Russian intelligence services. The malicious code used in the attack, known as NotPetya, permanently encrypts the data on the computers that it has infected, essentially destroying them. Ground zero for the malware was Ukraine, but it self-propagated and quickly spread to Asia, Europe and the United States, costing its victims billions of dollars in damage.
Russia’s hand in the NotPetya attack ought to send a chill down the spine of anybody who uses products by the Moscow-based antivirus company Kaspersky Labs. Russian law and practice, as Andrei Soldatov and Irina Borogan have documented, grants Russian intelligence agencies virtually unfettered authority to compel any internet-facing business in Russia to support their operations. And Kaspersky antivirus software -as others have pointed out (here, here and here)- would furnish Russian intelligence with an extraordinarily powerful vector to hijack any computer running the software.
President Trump signed legislation in December 2017 banning Kaspersky products from use by Federal agencies. The legislation, Section 1634 of the National Defense Authorization Act for Fiscal Year 2018, codifies in law a somewhat narrower ban issued by the Department of Homeland Security (DHS) in September 2017. The Department of Homeland Security explained the ban as a consequence of its “concern[s] about the ties between certain Kaspersky officials and Russian intelligence and other government agencies, and requirements under Russian law that allow Russian intelligence agencies to request or compel assistance from Kaspersky and to intercept communications transiting Russian networks.”
Kaspersky has lodged legal challenges in federal court against both bans. The cases raise interesting questions of administrative and constitutional law, but also invite a separate question about the adequacy of the federal government’s toolkit for dealing with cyber risks of the sort posed by Kaspersky. The bans are limited in direct scope to federal agencies, but the risks of using Kaspersky are clearly much broader than that. After all, the federal government is neither the only provider of critical services to Americans, nor the only custodian of sensitive data. Indeed, most critical infrastructure in the United States is privately owned or operated, and many private companies possess sensitive data that Russian intelligence might find useful to steal or exploit. Use of Kaspersky software by these non-federal entities raises national security risks too.
The U.S. is not powerless against this, or similar, threats. It has many tools in reserve for potentially addressing the broader national security risks of Kaspersky software, and I present six of them below. These tools also incidentally illustrate that there is more to the cyber policy toolkit than “on-network” actions such as offensive cyber operations, hack-back, and network defense, which animate much of the public debate about cyber policy. The cyber policy toolkit can and should incorporate all tools of American power to achieve U.S. national security and foreign policy objectives.
Tool #1: Critical Infrastructure Authorities
According to press reports, the U.S. government has provided briefings to critical infrastructure and information technology companies alleging that use of Kaspersky software presents a national security risk, due to the company’s obligations under Russian law to enable Russian intelligence operations; its history of operational collaboration between the company and the Russian government; and other worrying behavior. DHS, the FBI, and their partner agencies have authorities under the Homeland Security Act, the Cybersecurity Act of 2015, and other relevant statutes, executive orders and presidential policy directives for supporting the cybersecurity efforts of U.S. critical infrastructure. This outreach enables the U.S. government to better assess the scope of the nation’s exposure to cyber threats from Russia and other actors; provide U.S. critical infrastructure with more tailored, actionable threat information, including relevant classified information if it has any; and more effectively partner with critical infrastructure and I.T. providers to develop defensive strategies.
Tool #2: Industry Survey Authority under the Defense Production Act
Of course, a critical infrastructure company could rebuff this outreach, or insufficiently implement agency recommendations. If outreach on voluntary terms failed to furnish the government with sufficient data about the threat or generate confidence that critical infrastructure is taking the threat seriously, the U.S. government could turn to a second tool: the authority granted by section 705 of the Defense Production Act (DPA) to the Bureau of Industry and Security (BIS)-an agency of the Department of Commerce-to “obtain information in order to perform industry studies assessing the capabilities of the United States industrial base to support the national defense.” The law and its implementing regulations require any recipient of an information request under this authority to produce the requested information or face civil and criminal penalties. The law also requires the government to abide by strict confidentiality and handling requirements about the data it acquires.
In 2015, BIS used this tool to initiate a “U.S. Biomedical Industry Cyber Security Assessment” on “the effect of cyber security threats on the U.S. biomedical industry.” The government could launch a similar survey of U.S. critical infrastructure’s use of Kaspersky software, in order to generate a more comprehensive threat assessment, inform mitigation strategies and send a strong signal to critical infrastructure about the significance of the threat.
Tool #3: U.S. Export Control Law
Russia has long been an avid pursuer of sensitive dual-use technologies through clandestine means. Indeed, key elements of the modern export control regime have their roots in Cold War-era efforts by the U.S. and its allies to constrain Soviet military power through the Coordinating Committee for Multilateral Export Controls.
BIS could issue an interpretation of its Export Administration Regulations (EAR) that a person or company is effectively exporting technology to Russia if it stores or processes controlled technology on a computer that uses Kaspersky software. BIS could argue that Kaspersky software enables a “foreign person“-namely, the Russian government-to undertake “visual or other inspection” of data on the computer, which would amount to a “release” of the data under EAR §734.15. Such a release, even if it occurs solely in the United States, constitutes a controlled “export” under EAR §734.13. If the data is the type of military, dual-use, or commercial data that cannot be exported to Russia without a license, the custodian of the data could not lawfully use Kaspersky software on a computer that can access the export controlled-data without first acquiring an export license from BIS.
Such an interpretation would also be consistent with the clear statement in §734.18 of the EAR that “sending, taking, or storing” unclassified export controlled-data overseas is considered an export, unless the data is encrypted end-to-end with strong encryption and is not intentionally stored in certain countries, including Russia. As applied to cloud computing, for example, this language has meant that unclassified export controlled-data cannot be sent, taken to, or stored on cloud resources in a foreign country unless these security requirements are met. The fact that Kaspersky software, as DHS explains, has “broad access to files and elevated privileges on the computers on which the software is installed, which can be exploited by malicious cyber actors to compromise those information systems,” raises identical concerns about foreign access to controlled data. Indeed, as BIS explains in the context of how §734.18 applies to cloud computing, the security requirements are:
intended to prevent exports of controlled data in unencrypted form resulting from defining security boundaries to include multiple countries. Any release of controlled data to non-U.S. nationals within the security boundary of a corporate intranet … would be treated as a deemed export requiring appropriate authorization, as is the case today.
Kaspersky products put Russian intelligence services squarely inside the security boundary of any company that uses them.

Because failure to comply with the EAR’s licensing requirements is subject to significant civil and criminal penalties, companies in the U.S. and abroad with controlled technology would have strong incentive to avoid Kaspersky products. The effects would be even stronger if other countries participating in global export control regimes followed the U.S. lead-though success in this regard could depend on whether the U.S. government has additional information about Kaspersky that it might be willing to share with key partners, such as European countries.
Tool #4: Department of Commerce Entity List
Fourth, the EAR also gives the U.S. government the authority to effectively blacklist a foreign company from the U.S. market. Specifically, under §744.16 of the EAR, BIS, in coordination with the departments of Defense, State and Energy, has the authority to impose license requirements on the export, re-export, and transfer of all U.S.-origin and other items subject to the EAR if the agencies “reasonably believe [the company] 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.” This list of around 1,000 foreign companies and individuals is known as the “Entity List.”
One of the most significant recent examples of Entity List use involves the Chinese telecommunications company ZTE, which was added in March 2016 for egregious efforts to evade U.S. export controls. BIS and its partner agencies removed the company from the Entity List in March 2017 after a year of negotiations. The company paid a record $1.19 billion fine, pled guilty to various criminal charges and overhauled its internal export control compliance regime.
The law does not define what constitutes “activities contrary to … national security or foreign policy,” so the scope of the authority on its face is very broad. In practice, the authority has been used primarily against entities that violate U.S. export control laws, are associated with terrorism, or are subject to various economic sanctions imposed by other agencies, such as those levied by Treasury’s Office of Foreign Assets Control. If BIS and its interagency partners were to determine that Kaspersky is involved, or poses a significant risk of being or becoming involved, in activities contrary to the national security interests of the United States, BIS could use the economic leverage created by denial of access to the U.S. market to pressure Kaspersky to take remedial actions that address U.S. national security concerns. If Kaspersky did so, BIS, in coordination with the other agencies, could remove it from the Entity List or modify the scope of the listing.
The effects of designating Kaspersky for inclusion on the Entity List would be two-fold. First, the designation could effectively shut Kaspersky out of the U.S. market by requiring any company or person, anywhere in the world, to acquire a license from BIS, pursuant to EAR §744.11 and §744.16, before conducting any meaningful business with designated Kaspersky entities. BIS has virtually unfettered discretion to determine its licensing policy. The license review policy for the vast majority of entities on the list is a presumption of denial.
Second, the designation would disrupt Kaspersky’s global business operations. The licensing requirement under EAR §744.11(a) is potentially sweeping in its scope. It could cover the export of nearly any item from U.S. soil, even if the item were produced elsewhere. It could cover items that originated from the U.S., regardless of their current location and how they got there. It could even cover an item manufactured overseas that never touched U.S. soil if it nevertheless contained U.S.-origin items or if the foreign manufacturing facility incorporated U.S.-origin technology.
The bureau holds persons that violate the licensing requirement strictly liable for their actions-ignorance is no defense, and the penalties can include civil and criminal sanctions. No prudent executive would profess to have perfect information about their immediate supply chain, their supplier’s supply chain, that supplier’s supply chain, and so on. If executives facing strict liability choose to do business with an entity on the Entity List without BIS approval, they will be rolling the dice with their company’s fortunes and potentially their own personal liberty. So for companies with a global supply chain such as Kaspersky, an Entity List designation chases away not only their customers, but their business partners and suppliers as well.
As a matter of practice, BIS prefers to disclose the factual predicate for a listing-as it did, for example, in the aforementioned case of ZTE, where it published the internal ZTE documents that established ZTE’s wrongdoing when it listed the company. For Kaspersky, this factual predicate could include publicly known facts about the nature of antivirus software generally and Kaspersky’s software specifically; Russia’s laws mandating that Russian companies support Russian intelligence operations on demand; and the extraordinary threat that Russian intelligence poses to U.S. national security. Collectively, this factual record would arguably establish a prima facie case that Kaspersky “pose[s] a significant risk of being or becoming involved, in activities contrary to the national security or foreign policy interests of the United States.” On the other hand, given the severity of the punishment and the largely circumstantial evidence about Kaspersky in the public record, a reasonable norm of proportionality might counsel against an Entity List designation at this time.
Tool #5: Federal Trade Commission Section 5(a) Authority
The Federal Trade Commission (FTC) has the authority under Section 5(a) of the FTC Act to investigate and initiate enforcement action against companies that have engaged in “unfair or deceptive acts or practices.” One of the FTC’s more prominent lines of enforcement activity under Section 5(a) has focused on companies failing to abide by their own terms of service and marketing claims. A company can run afoul of Section 5(a) by acting contrary to these claims, or by omitting material information about features and practices from them.
Antivirus software is inherently intrusive-it has to be, in order to identify and block threats. And while it is true that antivirus terms of service are therefore legitimately broad in scope, there is no obvious security need for Kaspersky’s apparent practice of exfiltrating harmless files from a customer’s computer. The practice arguably exceeds most consumers’ expectations about what their antivirus software is doing. For Kaspersky, this practice raises the specter of the FTC confronting it with a complaint that such a practice is a “material omission” about security- and privacy-related aspects of its software, and thus constitutes an unfair or deceptive act or practice.
It is worth noting that many states have similar consumer protection laws, and could potentially launch investigations of their own.
Tool #6: Treasury Sanctions
A sixth and final tool discussed is the Treasury Department’s authority under Executive Order (EO) 13694, “Blocking the Property of Certain Persons Engaging in Significant Malicious Cyber-Enabled Activities,” to impose sanctions on entities that engage in certain kinds of malicious cyber activity. The order lays out four categories of sanctionable conduct:
  – “[H]arming, or otherwise significantly compromising the provision of services by, a computer or network of computers that support one or more entities in a critical infrastructure sector” [EO 13694 §1(a)(i)(A)];
  – “[S]ignificantly compromising the provision of services by one or more entities in a critical infrastructure sector” [EO 13694 §1(a)(i)(B)];
  – “[C]ausing a significant disruption to the availability of a computer or network of computers” [EO 13694 §1(a)(i)(C)]; and
  – “[C]ausing a significant misappropriation of funds or economic resources, trade secrets, personal identifiers, or financial information for commercial or competitive advantage or private financial gain” [EO 13694 §1(a)(i)(D)].
If the U.S. government had specific facts establishing that Kaspersky entities in Russia or another foreign country had engaged in any of the conduct described above, or had conspired in some way with others who had engaged in the conduct under §1(a)(ii) of the order, then it could potentially sanction those entities. As with the Entity List, however, the government would have to be willing to disclose these specific facts publicly in court or in an administrative proceeding should Kaspersky sue the government to challenge the sanctions.
By now, some readers are no doubt protesting that it would be hypocritical for the U.S. government to use these tools against Kaspersky, on the grounds that Russian laws mandating that Kaspersky aid Russian intelligence operations are no different than the obligations imposed by the Foreign Intelligence Surveillance Act (FISA) on companies in the United States. That argument rests on a false equivalence: The United States, despite its blemishes, is not Russia, and that matters as a point of principle. Whatever one thinks about the various issues at stake in FISA-the boundaries of U.S. law governing surveillance, the role of Congress in authorizing and reauthorizing various elements of FISA, the effectiveness of congressional and judicial oversight of FISA, and the rights and responsibilities of private companies-these arguments are fundamentally about whether the current legal regime strikes a reasonable balance across many different and important equities. It is a given, however, that boundaries on surveillance authorities not only exist-U.S. intelligence operations are bound by the rule of law-but that the balance of equities captured by these boundaries is a topic of legitimate discussion and debate in our democracy.
None of this is true of Russia, whose intelligence services operate at the whim of President Vladimir Putin with no democratic accountability, independent oversight or meaningful transparency about normative and operational boundaries. These services have amassed an extraordinary track record of political assassination, human rights violations and attacks on democratic institutions, including interference with elections in the United States and Europe. It is immaterial from a threat perspective whether Kaspersky is an enthusiastic collaborator with Russian intelligence or a forced conscript. As long as Kaspersky’s business operations and personnel are vulnerable to coercion by Russian state actors, the company and its executives are virtually powerless to resist Russian demands.
So the problem with Kaspersky is not simply that it is a foreign company or even that it has a relationship with a foreign government. Rather, it is the fact that Kaspersky products furnish Russia-an authoritarian government that is openly and aggressively committed to destroying liberal democracy as we know it-with a turnkey cyber-attack platform. And it is manifestly not in the U.S. national security interest that Russia wield such a capability.


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

* Authors: Eric C. Emerson, Esq., eemerson@steptoe.com, +1 202-429-8076; Thomas J. Trendl, Esq., ttrendl@steptoe.com, +1 202-429-8055; and Joel D. Kaufman, Esq., jkaufman@steptoe.com, +1 202-429-6288. All of Steptoe & Johnson LLP.
As has been widely reported, on March 8, 2018, President Trump announced that the United States would be imposing additional tariffs on steel and aluminum imports as a result of an investigation into the national security impact of these imports under Section 232 of the Trade Expansion Act of 1962.
Although these tariffs will apply to a wide range of steel and aluminum products from all countries except Canada and Mexico, the United States Trade Representative (USTR) is considering whether to exempt other countries from this relief, and the Department of Commerce (DOC) will be issuing procedures shortly to hear requests from US parties for the exclusion of individual products.
In this client alert, we discuss these exclusion processes and also how countries have indicated they may respond if their exports are ultimately targeted by these tariffs. We also offer some thoughts on how affected companies can best manage their exposure to these rapidly evolving trade policy developments.
Summary of Tariffs to be Imposed
The following table summarizes the relief contained in the Presidential Proclamations published in the Federal Register:

Please note that while the product coverage as presented in the proclamations published in the Federal Register on March 15, 2018 nearly matches that contained in the presidential proclamations as released on March 8, 2018, slight changes in phrasing with regard to aluminum coverage may call into question whether a few specific additional products are covered. Parties should carefully review their imports and the March 15 proclamations to determine whether the products in which they have an interest are in fact covered.
Country Exemption Process
The presidential proclamations exempt Canada and Mexico from the tariffs, “at least at this time.” President Trump has suggested that these exemptions serve to advance NAFTA renegotiations towards a conclusion advantageous to the United States, though this is not explicitly stated in the proclamations. Instead, the proclamations highlight the strong economic and security relationships with Mexico and Canada and prioritize “ongoing discussions…to address the threat” to US national security posed by Canadian and Mexican steel and aluminum.

It is unclear at this time what NAFTA outcomes USTR will demand in exchange for maintaining an exemption for Mexico and Canada. Further, the duration of this exemption remains uncertain.     
In addition to Canada and Mexico, the presidential proclamations state that countries “with which [the US has] a security relationship” can discuss with USTR the possibility of obtaining a complete or partial exemption from the steel and aluminum tariffs with respect to their exports.
In addition to this “security relationship,” USTR will reportedly consider the following factors in considering whether to exempt a country in whole or in part:
  (1) whether the country seeking exemption protects its home market from underpriced imports;
  (2) the country’s level of support for US positions in trade remedy cases at the WTO;
  (3) the country’s participation in the Organisation for Economic Cooperation and Development (OECD) forum on steel overcapacity, and
  (4) bilateral steel and aluminum trade patterns with the country in question.
Countries satisfying these criteria might be able to receive a full exemption or a partial exemption via an import quota.
However, as a condition of receiving an exemption, a country must develop a “satisfactory alternative means” of eliminating the threat to US national security posed by that country’s steel and aluminum exports. The administration has not elaborated on the meaning of “alternative means,” but this may entail something like a voluntary restraint agreement through which the country’s steel and aluminum exports to the United States would be limited.
Details of USTR’s timeframe for exemption efforts remain unclear, but it seems likely that this process will extend past the tariffs’ implementation on March 23, 2018. USTR is expected to circulate its guidelines for exemptions in the coming days.
Notwithstanding the lack of clear guidance, some countries are already actively seeking exemptions. On March 12, 2018, Australian Prime Minister Malcolm Turnbull announced that he received a commitment from President Trump for an Australian exemption. South Korea, Brazil, Argentina, Japan, and the European Union (including the UK) are currently seeking exemptions from the tariffs. President Trump has suggested that tariffs applied to the EU could be lifted if the EU removes certain tariffs on US exports in exchange.
International Responses and Potential Retaliation
Several countries – including countries actively seeking exemptions from these duties – have publicly announced (or have at least strongly signaled) their intent to retaliate against the United States if their imports are affected.
The European Union has publicly stated, on several occasions, its intention to impose countermeasures against US imports should it be subjected to the steel and aluminum tariffs. According to EU documents, retaliatory tariffs could target certain US steel products, motorcycles, bourbon, boats, apparel, and various fruits and grains, among other products. Several of these products have been selected to maximize the political pressure on the Trump Administration.
China has consistently threatened to respond to the steel and aluminum tariffs and could retaliate against sensitive US agricultural exports. After the recent US measures on imports of solar cells and panels and washing machines, China opened antidumping and countervailing duty (AD/CVD) investigations into US sorghum exports, and began evaluating a potential AD/CVD investigation into US soybeans.
Finally, several of the United States’ trading partners have expressed their intention to take the matter to the World Trade Organization (WTO) for consultations.
Product Exclusion Process
In addition to the country exemption process, the presidential proclamations direct the DOC to establish a process by which affected US parties can seek exclusions for specific steel and aluminum products. The DOC is authorized to grant an exclusion based on a determination that a product is not “produced in the United States in a sufficient and reasonably available amount or of a satisfactory quality” or “upon specific national security considerations.” Since the proclamations specify that only “directly affected” parties “located in the United States,” can seek exclusions, foreign companies seeking product exclusions will require the initiative of a US stakeholder.
The proclamations indicate that the DOC will issue these procedures by March 18, 2018 (which is a Sunday). The DOC will oversee the process in coordination with relevant White House officials and agencies including USTR, the Department of State, the Department of Defense, and the Treasury Department. The DOC has significant discretion in setting the timeline and specific procedures for this process.
Recent press accounts suggest that these exclusions will be few in number and narrow in scope, though it remains to be seen how the DOC will apply these exclusion provisions in practice. Moreover, while the DOC’s Section 232 reports released in February noted that the DOC would rule on exclusion requests within 90 days, the presidential proclamations contain no such timeframe. Perhaps the DOC’s procedures, to be released next week, will provide additional guidance on issues like timing and – as some lawmakers are seeking – the potential retroactivity of exclusion determinations made after the tariffs have gone into effect on March 23, 2018.
Next Steps for Affected Companies
Events regarding these Section 232 proceedings are developing rapidly, so parties potentially affected by these tariffs would be wise to stay abreast of current developments.
Companies that are considering seeking product exclusions should begin the process of data gathering now, even before the DOC issues its procedures early next week. We believe it likely that at a minimum, the DOC’s procedures will require a clear and concise definition of the product to be excluded, and evidence either that the product is not produced in sufficient quantity or of sufficient quality by US producers, or is necessary for national security. These points should be supported by documentary evidence, such as (for example) communications with US mills indicating that they are unwilling or unable to produce the product needed, or documentation demonstrating the specific national security end use of the imported product.
We also believe it is critical for affected US companies to ensure that their representatives on Capitol Hill are made aware of the impact of these Section 232 tariffs, in order to secure necessary support in the exclusion process. We would also counsel companies to reach out to their contacts at the other agencies involved in the exclusion process, to ensure that their case and their concerns are clearly heard.
* * * * * * * * * * * * * * * * * * * *

(Source: Editor)
The Commerce Department’s Bureau of Census yesterday posted Foreign Trade Regulations Letter No. 10, “Annotating the Electronic Manifest for U.S. Customs and Border Protection,” which provides guidance on the annotations to be used when submitting export manifest data electronically.  CBP plans 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, Census, CBP and the trade poste guidance in FTR Letter 10 showing a standard format to use in the electronic manifest. FTR Letter 10 includes a chart with the codes for use with the electronic manifests, and on June 2, 2018, the codes in the chart will be mandatory.

However, an independent publication, Bartlett’s Annotated Foreign Trade Regulations™ (“The BAFTR”) contains the full text of the U.S. Foreign Trade Regulations, plus numerous features added by the author, James E. Bartlett III, including a Table of Contents, nearly 250 footnotes showing amendment dates, errors in the official version, section histories, cases, a huge Index, and Annexes containing government guidance, and user aides.  The latest edition of the BAFTR (16 March 2018) is available now in searchable Word version by annual subscription from www.FullCircleCompiance.eu.  Subscribers will receive a revised edition, in searchable Microsoft Word version, every time the FTR is revised, plus numerous updates during the year when new FTR letters or other guidance is added.  Subscribers to Bartlett’s Annotated International Traffic in Arms Regulations (the “BITAR”), are eligible for a 25% discount on BAFTR subscriptions.  Government employees (including military) and employees of universities are eligible for a 50% discount on both publications at www.FullCircleCompiance.eu  
* * * * * * * * * * * * * * * * * * * *

Volkov Law Group Blog, 15 Mar 2018. Reprinted by permission.)
* Author: Michael Volkov, Esq., Volkov Law Group, mvolkov@volkovlaw.com, 240-505-1992.
Companies are getting on the bandwagon – corporate culture matters.  Business ethics is important.  My worry is whether this new acknowledgement is viewed as a short-cut for compliance investment.
CEOs and the board are troubled by (and even resisting) the resources needed to implement an effective compliance program.  Unfortunately, this attitude reflects a fundamental misunderstanding of the importance of an ethical culture and robust compliance controls working, in tandem, to promote an effective ethics and compliance program.
With that initial understanding, let’s turn to the fundamental question – how do you define a culture that aligns with, and inspires, your employees?  Let’s go back to the fundamental question every company has to answer – what is our purpose?
I am always inspired here by Simon Sinek, a motivational speaker, who explains the importance of defining your company’s mission.  See Here and Here.
Frankly, Sinek’s message applies to much of life and helps to focus attention on purpose and inspiration.
A company has to define its mission beyond just making good products or providing efficient services. Instead, companies have to inspire managers, employees and other stakeholders with defining a purpose beyond simple commercial activities. Such inspiration is essential for the marketplace and for defining a culture.
A company’s culture reflects its values, its moral fabric and the reason its exists. I know this sounds like mumbo jumbo, but corporate culture reflects the company’s ability to bring individuals together for a common purpose.
Harvard Business School Professor James Heskett has written about the importance of business culture in his seminal book, The Culture Shock: How to Shape Unseen Force That Transforms Performance, (here) in which he estimates that a positive corporate culture can account for a 20 to 30 percent difference in corporate performance.
As Heskett explains, the culture cycle begins with the communication of shared values and behaviors and includes the development of realistic expectations in employees and meeting them in ways that establish trust, engagement and ownership; policies and practices that lead to an innovative organization; and measurement of the results in terms of employee retention and referrals, returns to labor, and relationships with customers as well as financial results.
A company’s culture can be defined in six categories:
  – Vision: a culture starts with a vision or mission statement which captures the company’s purpose.
  – Values: a company’s values should be concise and simple.
  – Conduct: the company leadership has to demonstrate its commitment to its culture with conduct not with words.
  – People: the company has to infuse its recruitment process to hire personnel who are consistent with culture.
  – Narrative (Story-Telling): the company has to develop a unique and powerful narrative to reinforce and promote its culture. A unique narrative can be a short-story that is frequently retold and referenced by corporate leaders, incorporated into publications and communications, and added to the company’s sustainability objectives.
  – Environment: The company’s offices, architecture, working environment and space should be consistent with its culture and used as a means to reinforce its culture.
Bringing employees together through a consistent and motivational message is critical in today’s marketplace to improve corporate performance. No longer can companies rely on quarterly financial reporting goals to define and incentivize its workforce. Long-term sustainable growth while minimizing risk is the preferred strategy for corporate growth and economic success. Such an approach is the best way to harness employee innovation and productivity.


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

COMM_a516. Gary Stanley’s EC Tip of the Day
(Source: Defense and Export-Import Update; 16 Mar 2018. Available by subscription from
* Author: Gary Stanley, Esq., Global Legal Services, PC, (202) 352-3059,

Items subject to temporary Commerce Control List controls are classified under the ECCN 0Y521 series (i.e., 0A521, 0B521, 0C521, 0D521, and 0E521) pursuant to § 742.6(a)(7) of the EAR while a determination is made as to whether classification under a revised or new ECCN, or an EAR99 designation, is appropriate.
* * * * * * * * * * * * * * * * * * * *


List of Approaching Events – 17 New Events Listed
(Sources: Editor and Event Sponsors)

Published every Friday or last publication day of the week. Please, send event announcements to 
jwbartlett@fullcirclecompliance.eu, composed in the below format:


#” New or updated listing this week  

Continuously Available Training:
* E-Seminars: “US Export Controls” / “Defense Trade Controls“; Export Compliance Training Institute; danielle@learnexportcompliance.com 

* Webinar: ”
Company-Wide US Export Controls Awareness Program“; Export Compliance Training Institute;

* E-Seminars: “ITAR/EAR Awareness“; Export Compliance Solutions;
* On-Demand Webinar; “Is Your Organization Ready for the Challenges of Global Trade?“; Amber Road 
*Online: “Simplified Network Application Process Redesign (SNAP-R)“; Commerce/BIS; 202-482-2227
* E-Seminars: “Webinars On-Demand Library“; Sandler, Travis & Rosenberg, P.A.
* Online: “International Trade Webinars“; Global Training Center
Online: “On-Demand Webinars“; “General Training“; Center for Development of Security Excellence; Defense Security Service (DSS)
* Online: “ACE Reports Training and User Guide“; DHS/CBP

* Online: ”
Increase Your International Sales – Webinar Archive;” U.S. Commercial Service

* Web Form: “Compliance Snapshot Assessment“; Commonwealth Trading Partners (CTP) 
Training by Date:

* Mar 11-14: San Diego, CA; “
ICPA Annual Conference“; International Compliance Professionals Association; wizard@icpainc.org

* Mar 12-14: Las Vegas, NV; ”
2018 General Audit Management Conference;” Institute of Internal Auditors
* Mar 13: Hook, UK; ”
General Counsel Connect“; C5 Group
* Mar 13: Webinar; ”
Canada’s Non-Resident Importer Program“; U.S. Commercial Service

* Mar 13: London, UK; “International Documentation & Customs Compliance“; IOEx

* Mar 14: “Wednesday Webinar: Due Diligence for Exports;” Reeves & Dola LLP

* Mar 14; London, UK; “Letters of Credit“; IOEx
* Mar 14: Birmingham, UK; “Intermediate Seminar“; UK Department for International Trade; denise.carter@trade.gsi.gov.uk 

* Mar 14: Las Vegas, NV; ”
Women in Internal Audit Leadership“; Institute of Internal Auditors

* Mar 14-15: Austin, TX; “Establishing an ITAR/EAR Export Compliance Program“; Export Compliance Solutions; spalmer@exportcompliancesolutions.com; 866-238-4018

* Mar 14: Birmingham, UK; ”
Intermediate Seminar“; 
UK Department for International Trade

* Mar 15: Birmingham, UK; “Beginners Workshop“; UK Department for International Trade; denise.carter@trade.gsi.gov.uk 
* Mar 15: Birmingham, UK; “Licences Workshop“; UK Department for International Trade; denise.carter@trade.gsi.gov.uk 
* Mar 15: Birmingham, UK; “Control List Classification – Combined Dual Use and Military“; UK Department for International Trade; denise.carter@trade.gsi.gov.uk 
* Mar 15-16: Geneva, Switzerland;Fraud, Asset Tracking, & Recovery;” C5 Group
* Mar 15-16: McLean, VA; “ITAR Fundamentals“; FD Associates 

Mar 19: Tysons Corner, VA; “
Import 5-Day Boot Camp
“; Global Trade Academy

* Mar 20: London, UK; “Board Engagement for Ethics and Compliance Buy-In“; NAVEX Global
* Mar 20: Webinar; ”
Sending Temporary Workers to Canada“; U.S. Commercial Service
* Mar 20: Webinar; ”
Tax Avoidance in the U.S. – Lessons for Canada“; The Conference Board of Canada

* Mar 20: Zurich, Switzerland; “Anti-Corruption in Switzerland“; TRACE Anti-Bribery Compliance Solutions
* Mar 20: London, UK; “An Introduction to Importing“; IOEx
* Mar 20: London, UK; “UK & US Export Controls: A Basic Understanding“; IOEx
* Mar 20-21: San Diego, CA; “ITAR/EAR Beyond the Basics Establishing A Rock Solid Export Compliance Program“; Export Compliance Solutions, spalmer@exportcompliancesolutions.com; 866-238-4018

* Mar 20-21: Nashville, TN;
 “Complying with US Export Controls“; Bureau of Industry and Security
# Mar 21: Washington, D.C.; “Navigating the CFIUS Landscape“; The Association of Women in International Trade
* Mar 21: Webinar; “Regulatory Rollback Under President Trump“; Arent Fox
* Mar 21-22: London, UK; “Women in Compliance Conference“; C5 Group 
* Mar 22: Long Beach, CA; ”
The Ins & Outs of ATA Carnets“; Foreign Trade Association
* Mar 22: Nashville, TN; “How to Build an Export Compliance Program“; Bureau of Industry and Security

* Mar 22: Free Webinar; “Creating an Effective Export Compliance Program and Actions to Take if an Export Violation Occurs“; U.S. Census Bureau; Dial-In: 1-(800)-369-1749; Passcode: 8836707

# Mar 22: Free Webinar; “Brexit: The Volatile Phase“; Integration Point
* Mar 23; Nashville, TN; “How to Build an Export Compliance Program“; Bureau of Industry and Security
* Mar 25-28: Frankfurt, Germany; “6th Annual European Compliance & Ethics Institute“; Society of Corporate Compliance and Ethics

March 26: TaxWatch Webcast; “
The Short and Long Game On Section 232 Tariffs

* Mar 26: East Rutherford, NJ; “Advanced Classification of Plastics and Rubber“; Global Trade Academy

* Mar 27: Webinar; ”
Classification in the Schedule B“; Foreign Trade Association

* Mar 27: London, UK; “Brexit – Customs, Sanctions and Export Controls“; TechUK
* Mar 27: Webinar; “The ABCs of Embargoes and Sanctions – Part II“; ECTI;

* Mar 27-28: San Francisco, CA; “
8th Advanced Industry Forum on Global Encryption, Cloud, and Cyber Export Controls
“; American Conference Institute

* Mar 27-28: Brussels, Belgium; ”
Global Customs Compliance Forum“; C5 Group

* Mar 27-28: Santa Clara, CA; “Export Control Forum“; Bureau of Industry and Security
# Mar 28: Webinar; “
Export Compliance for Sales and Marketing
“; Export Compliance Training Institute

* Apr 2-5: San Diego, CA; “Best Customs Broker Exam Course“; GRVR Attorneys

* Apr 
4-5: Des Moines, IA; “
Complying with US Export Controls
“; Bureau of Industry and Security 
# Apr 5: Westborough, MA; “Fundamentals of International Traffic in Arms Regulations (ITAR)“; Massachusetts Export Center
# Apr 6: Webinar; “Minimizing Risk in Routed Export Transactions“; Massachusetts Export Center
* Apr 9: Toronto, Canada; “Certified Classification Specialist (CCLS)“; Amber Road
* Apr 10: Webinar; “Letters of Credit“; U.S. Commercial Service
* Apr 11: “Wednesday Webinar: Anatomy of a Compliance Program;” Reeves & Dola LLP
* Apr 11-12: Denver, CO; “Complying with US Export Controls“; Bureau of Industry and Security

# Apr 13: Webinar; “The Export Control Reform Act of 2018: What You Need to Know“; Massachusetts Export Center
* Apr 16-17: Los Angeles, CA; “APBO Conference, 2018“; Asia Pacific Business Outlook
* Apr 16-19: Las Vegas NV; “ITAR Defense Trade Controls / EAR Export Controls Seminar“; ECTI;
jessica@learnexportcompliance.com; 540-433-3977

* Apr 16-20: Washington, D.C.; ”
Excellence in Anti-Corruption – ISO Standards 37001 and 19600“; ETHIC Intelligence

* Apr 17-19: Kansas City, MO;
NNSA Export Control Coordinators Org Annual Training; Kimberly.galloway@pnnl.gov; 509-372-6184

Apr 18: Ottowa, Canada; ”
U.S. Ocean Tech Innovation Showcase“; U.S. Embassy in Canada

* Apr 18: Melbourne, Australia; ”
Australia/North Asia FTA Training Session for SMEs: Cultural Awareness – Negotiating Business in South Korea“; Victorian Chamber of Commerce and Industry

* Apr 18-19: Miramar (Miami), FL; “
10th Maritime Logistics Training Course

; ABS Consulting; contact Albert Saphir, 954-218-5285

* Apr 17: London, UK; ”
Intermediate Seminar“; 
UK Department for International Trade
* Apr 18: London, UK; ”
Beginner’s Workshop“; 
UK Department for International Trade
* Apr 18: London, UK; ”
Licenses Workshop“; 
UK Department for International Trade
* Apr 18: London, UK; ”
Control List Classification – Combined Dual Use and Military“; UK Department for International Trade

* Apr 19: McLean, VA; “ITAR for the Empowered Official“; FD Associates
* Apr 23: Copenhagen, Denmark; “Anti-Bribery Roundtable“; TRACE Anti-Bribery Compliance Solutions

Apr 23-27: Dallas, Texas; “Best Customs Broker Exam Course“; GRVR Attorneys
* Apr 24: Los Angeles, CA; “Duty Drawback Specialist – Certification“; Global Trade Academy
* Apr 24-25: Dubai, UAE; “Trade Compliance in the Middle East“; NeilsonSmith
* Apr 25-26: Berlin, Gernamy; “Global Anti-Bribery In-House Network (GAIN)“; TRACE Anti-Bribery Compliance Solutions
* Apr 25-26: Costa Mesa, CA; “Complying with US Export Controls“; Bureau of Industry and Security

# Apr 25-26: Washington, D.C.; ”
11th Conference on Economic Sanctions Enforcement & Compliance“; American Conference Institute
* Apr 26: Webinar; ”
Export Control Reform“; Foreign Trade Association

* Apr 30-May 2: Kansas City, MO; “Discover Global Markets“; U.S. Department of Commerce
* May 2-3: Scottsdale, AZ; “Complying with US Export Controls“; Bureau of Industry and Security 

* May 3-4: Milan, Italy; ”
Trade Compliance Southern Europe“; C5 Group

* May 6-8: Toronto, Canada; “2018 ICPA Canadian Conference“; ICPA

* May 6-11: Miami, FL; ”
U.S. Commercial Service Trade Mission to the Carribean Region“; (Additional dates are available for B2B meetings in listed countries.)

* May 7-8: Denver, CO; “2018 Spring Advanced Conference“; Society for International Affairs (SIA)

* May 8: Webinar; “U.S. Harmonized Tariff Classification Numbers“; U.S. Commercial Service
* May 8: Mexico City, Mexico; “Anti-Bribery Workshop“; TRACE Anti-Bribery Compliance Solutions
* May 9: ”
Wednesday Webinar: Demonstrations and Plant Visits“; Reeves & Dola LLP

* May 9: London, UK; “Advanced Financing of International Trade“; IOEx
# May 10: North Reading; “Best Practices for Integrating Export Compliance Operations in a Global Organization“; Massachusetts Export Center

# May 11: Webinar; ”
Customs Valuation and Documentation for Tricky Transactions“; Massachusetts Export Center

* May 14-15: Washington, D.C.; “
BIS Update 2018 Conference on Export Controls and Policy
“; BIS
* May 15-16: Cleveland, OH; “Complying with US Export Controls“; Bureau of Industry and Security

# May 16: Webinar; ”
Russia Sanctions Update & Complying with the OFAC 50% Rule“; Massachusetts Export Center

* May 16-17: Amsterdam, Netherlands; “Digital Utilities Europe 2018“; American Conference Institute

* May 16-17: National Harbor, MD; “ITAR/EAR Compliance: An Industry Perspective“; Export Compliance Solutions


* May 16: Southampton, UK; ”
Intermediate Seminar“; 
UK Department for International Trade
* May 17: Southampton, UK; ”
Beginner’s Workshop“; 
UK Department for International Trade
* May 17: Southampton, UK; ”
Licenses Workshop“; 
UK Department for International Trade
* May 17: Southampton, UK; ”
Control List Classification – Combined Dual Use and Military“; UK Department for International Trade

# May 18: Fall River, MA; “Managing Export Operations & Compliance“; Massachusetts Export Center
* May 20-22: Portland, OR; “Spring 2018 Seminar;” National Association of Foreign Trade Zones (NAFTZ)

# Mar 22: Webinar; ”
Brexit Update: Implications for U.S. Exports to the U.K. and E.U. Webinar“; U.S. Commercial Service

* May 22-23: London, UK; “
Upstream Oil and Gas Legal Forum“; C5 Group

* May 22-24: Las Vegas, NV; ”
Licensing Expo 2018: The Meeting Place for the Global Licensing Industry“; U.S. Commercial Service

* May 23: London, UK; “Control List Classification – Combined Dual Use and Military“; UK Department for International Trade
* May 23-24: Berlin, Germany; ”
12th Annual Exporters’ Forum on Global Economic Sanctions“; C5 Group
* May 24: London, UK; “
Making Better License Applications
“; UK Department for International Trade
* May 29-31: Hong Kong; ”
Hong Kong Summit on Economic Sanctions and Compliance Enforcement“; American Conference Institute

* Jun 5-6: Chicago, IL; “
EAR Boot Camp
American Conference Institute

Jun 7: Chicago, IL; “
ITAR Boot Camp
“; American Conference Institute

* Jun 6-7: Seattle, WA; “Complying with US Export Controls“; Bureau of Industry and Security
* Jun 6-7: Munich, Germany; “US Trade Controls Compliance in Europe“; NielsonSmith
* Jun 6-7: Munich, Germany; “Pharma Patent Term Extensions“; C5 Group

* Jun 6-8: Baltimore, MD; ”
97th Annual AAEI Conference and Expo“; American Association of Importers and Exporters

* Jun 8: Stafford, VA; “Spring Golf Outing“; Society for International Affairs;

* Jun 12: Webinar; “Duty Drawback and Refunds“; U.S. Commercial Service

* June 12-13; Stockholm, Sweden; ”
Trade Compliance Nordics“; C5 Group

* Jun 13: San Diego, CA; “Made in America, Buy America, or Buy American: Qualify your Goods and Increase Sales“; Global Trade Academy

* Jun 13: Derby, UK; ”
Intermediate Seminar“; 
UK Department for International Trade
# Jun 14: Boston, MA; “Export Regulatory Compliance Update“; Massachusetts Export Center
* Jun 14: Webinar; “
ACE for Importers and Exporters
“; Foreign Trade Association
* Jun 14: Derby, UK; ”
Beginner’s Workshop“; 
UK Department for International Trade
* Jun 14: Derby, UK; ”
Licenses Workshop“; 
UK Department for International Trade
* Jun 14: Derby, UK; “
Control List Classification – Combined Dual Use and Military
“; UK Department for International Trade

* Jun 17-19: Amsterdam, Netherlands; “2018 ICPA European Conference“; International Compliance Professionals Association
* Jun 18: Los Angeles, CA; “Certified Classification Specialist (CCLS)“; Global Trade Academy

* Jun 20-21: McLean, VA; “
ITAR Fundamentals
“; FD Associates

* Jun 27: London, UK; “Control List Classification – Combined Dual Use and Military“; UK Department for International Trade

* Jun 27-28: London, UK; ”
12th Annual Conference on Anti-Corruption“; C5

* Jun 28: London, UK; “Making Better License Applications“; UK Department for International Trade 
* Jul 4: Cambridge, UK; ”
Intermediate Seminar“; 
UK Department for International Trade
* Jul 5: Cambridge, UK; ”
Beginner’s Workshop“; 
UK Department for International Trade
* Jul 5: Cambridge, UK; ”
Licenses Workshop“; 
UK Department for International Trade
* Jul 5: Cambridge, UK; ”
Control List Classification – Combined Dual Use and Military“; UK Department for International Trade

* Jul 10: Chicago, IL; “Duty Drawback Specialist – Certification“; Global Trade Academy
* Jul 10-11: Columbia, SC; “Complying with US Export Controls“; Bureau of Industry and Security

Jul 11-14: Laredo, Texas; “Best Customs Broker Exam Course“; GRVR Attorneys
* Jul 16-18: National Harbor, Maryland; “2018 Summer Basics Conference“; Society for International Affairs
* Jul 17: Los Angeles, CA; “Advanced Classification of Plastics and Rubber“; Global Trade Academy
* Jul 19: McLean, VA;ITAR for the Empowered Official“; FD Associates

Jul 19-20: Torrance, CA; “
Customs Compliance For Import Personnel
“; Foreign Trade Assocaition
* Aug 1-3: Washington, D.C.; “NSSF and Fair Trade Import/Export Conference“; NSSF
* Aug 6: Detroit, MI; “Export Compliance and Controls“; Global Trade Academy
* Aug 7-9: Detroit, MI; “Export Controls Specialist – Certification“; Global Trade Academy
* Aug 14-15: Milpitas, CA; “Complying with US Export Controls“; Bureau of Industry and Security
* Aug 16: Milpitas, CA; “Encryption Controls“; Bureau of Industry and Security
* Sep 12-13: Springfield, RI; “Complying with US Export Controls“; Bureau of Industry and Security
* Sep 13-17: Galveston, TX (Cruise); “ICPA @ SEA!“; International Compliance Professionals Association (ICPA)
* Sep 16-19: Atlanta, GA; “2018 Annual Conference and Exposition“; National Association of Foreign Trade Zones (NAFTZ)
* Sep 17: Los Angeles, CA; “Import Compliance“; Global Trade Academy
* Sep 17-20: Columbus, OH; “University Export Controls Seminar at The Ohio State University in Columbus“; Export Compliance Training Institute (ECTI); jessica@learnexportcompliance.com; 540-433-3977
* Sep 17-21: Los Angeles, CA; “Import 5-Day Boot Camp“; Global Trade Academy  
* Sep 18: Los Angeles, CA; “Tariff Classification for Importers and Exporters“; Global Trade Academy 
* Sep 19: Los Angeles, CA; “NAFTA and Trade Agreements“; Global Trade Academy

* Sep 19-20: Rome, Italy; ”
Defense Exports 2018“; SMi

* Sep 20: Los Angeles, CA; “Country and Rules of Origin“; Global Trade Academy
* Sep 21: Los Angeles, CA; “Customs Valuation – The Essentials
“; Global Trade Academy

Sep 21-24: Detroit, Michigan; “Best Customs Broker Exam Course“; GRVR Attorneys

* Sep 26: McLean, VA; “
EAR Basics
“; FD Associates 

* Sep 26: Oxford, UK; ”
Intermediate Seminar“; 
UK Department for International Trade
* Sep 27: Oxford, UK; ”
Beginner’s Workshop“; 
UK Department for International Trade
* Sep 27: Oxford, UK; ”
Licenses Workshop“; 
UK Department for International Trade
* Sep 27: Oxford, UK; ”
Control List Classification – Combined Dual Use and Military“; UK Department for International Trade

* Oct 9-11:  Dallas, TX; ”
Partnering for Compliance West Export/Import Control Training and Education Program“; Partnering for Compliance

* Oct 12: Dallas TX; ”
Customs/Import Boot Camp“; Partnering for Compliance

* Oct 18-19: McLean, VA; “ITAR Fundamentals“; FD Associates
* Oct 21-23: Grapevine, TX; “2018 Fall Conference“; ICPA
* Oct 22-26:
 Dallas, Texas; “Best Customs Broker Exam Course“; GRVR Attorneys
* Oct 22-23: Arlington, VA; “2018 Fall Advanced Conference
“; Society for International Affairs (SIA)

* Oct 24: Leeds, UK; ”
Intermediate Seminar“; 
UK Department for International Trade
* Oct 25: Leeds, UK; ”
Beginner’s Workshop“; 
UK Department for International Trade
* Oct 25: Leeds, UK; “
Licenses Workshop
UK Department for International Trade
* Oct 25: Leeds, UK; ”
Control List Classification – Combined Dual Use and Military“; UK Department for International Trade

* Oct 29 – Nov 1: Phoenix, AZITAR Defense Trade Controls / EAR Export Controls Seminar“; ECTIjessica@learnexportcompliance.com; 540-433-3977
* Oct 30 – Nov 1: Seattle, WA; “Export Controls Specialist – Certification“; Global Trade Academy
* Nov 6: Detroit, MI; “Classification: How to Classify Parts“; Global Trade Academy
* Nov 7-9: London, UK; “TRACE European Forum, 2018“; TRACE Anti-Bribery Compliance Solutions
* Nov 7-9: Detroit, MI; “Advanced Classification for Machinery & Electronics
“; Global Trade Academy
* Nov 12-15: Washington, D.C.; “ITAR Defense Trade Controls / EAR Export Controls Seminar“; ECTIjessica@learnexportcompliance.com; 540-433-3977
* Nov 13: Tysons Corner, VA; “Made in America, Buy America, or Buy American: Qualify your Goods and Increase Sales“; Global Trade Academy

* Nov 14: Manchester, UK; ”
Intermediate Seminar“; 
UK Department for International Trade
* Nov 15: Manchester, UK; ”
Beginner’s Workshop“; 
UK Department for International Trade
* Nov 15: Manchester, UK; ”
Licenses Workshop“; 
UK Department for International Trade
* Nov 15: Manchester, UK; ”
Control List Classification – Combined Dual Use and Military“; UK Department for International Trade

* Nov 14-15: London, UK; “Economic Sanctions & Financial Crime“; C5 Group
* Nov 15: McLean, VA; “ITAR For the Empowered Official“; FD Associates
* Nov 27: Houston, TX; “Duty Drawback Specialist – Certification“; Global Trade Academy

* Dec 3-7: Tysons Corner, VA; “Certified Classification Specialist“; Global Trade Academy 

* Dec 4-5: Frankfurt, Germany; ”
US Defence Contracting and DFARS Compliance in Europe;” C5 Group
* Dec 5: London, UK; ”
Intermediate Seminar“; 
UK Department for International Trade
* Dec 5: London, UK; ”
Beginner’s Workshop“; 
UK Department for International Trade
* Dec 6: London, UK; ”
Licenses Workshop“; 
UK Department for International Trade
* Dec 6: London, UK; ”
Control List Classification – Combined Dual Use and Military“; UK Department for International Trade

* Dec 6: London, UK; “International Documentation and Customs Compliance
“; Institute of Export and International Trade
* Dec 6: Manchester, UK; “
Introduction to Export Controls and Licenses
* Dec 11: Manchester, UK;International Documentation and Customs Compliance“; Institute of Export and International Trade
* May 5-7: Savannah, GA; ”
2019 Spring Seminar
; National Association of Foreign Trade Zones (NAFTZ)
* Sep 8-11: Chicago, IL; “2019 Annual Conference and Exposition“; National Association of Foreign Trade Zones (NAFTZ)

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


. Bartlett’s Unfamiliar Quotations

(Source: Editor)
Henny Youngman (Henry Youngman 16 Mar 1906 – 24 Feb 1998, was an American comedian and violinist, famous for his mastery of the “one-liner”. His best-known one-liner was “Take my wife … please!”)
 – “A doctor gave a man six months to live. The man couldn’t pay his bill, so he gave him another six months.”
* James Madison (16 Mar 1751 – 28 Jun 1836, was an American statesman and Founding Father who served as the fourth President of the United States from 1809 to 1817, preceded by Thomas Jefferson and succeeded by James Monroe). He is hailed as the “Father of the Constitution” for his pivotal role in drafting and promoting the United States Constitution and the Bill of Rights.)
  – “The truth is that all men having power ought to be mistrusted.”

  – “The means of defense against foreign danger historically have become the instruments of tyranny at home.”
Friday funnies:
* Q.  What’s red and moves up and down?
   A.  A tomato in an elevator
* How Long is a Chinese man’s name. 
   That’s a statement, not a question.
* See this EpiPen?  My friend gave it to me when he was dying, so it must have been very important to him that I have it.

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

EN_a219. 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.

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: 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 


  – 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.]


FOREIGN ASSETS CONTROL REGULATIONS (OFAC FACR): 31 CFR, Parts 500-599, Embargoes, Sanctions, Executive Orders

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


Last Amendment: 
20 Sep 2017:
82 FR 43842-43844
: Foreign Trade Regulations (FTR): Clarification on Filing Requirements; Correction
  – HTS codes that are not valid for AES are available 
The latest edition (16 March 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 approximately 250 footnotes containing case annotations, practice tips, Census/AES guidance, and explanations of the numerous errors contained in the official text. Subscribers receive revised copies in Microsoft Word every time the FTR is amended.  The BAFTR is available by annual subscription from the Full Circle Compliance 
BITAR subscribers are entitled to a 25% discount on subscriptions to the BAFTR. Government employees (including military) and employees of universities are eligible for a 50% discount on both publications at www.FullCircleCompiance.eu
* HARMONIZED TARIFF SCHEDULE OF THE UNITED STATES (HTS, HTSA or HTSUSA), 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 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 
. 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 Daily Bugle Top Stories” posted here.

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

* 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 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 HERE.

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