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18-0531 Thursday “Daily Bugle”

18-0531 Thursday “Daily Bugle”

Thursday, 31 May 2018

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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 
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  1. Commerce/BIS: RPTAC to Meet on 12 Jun in Wash DC 
  2. State Renews DTAG Charter 
  1. Items Scheduled for Publication in Future Federal Register Editions
  2. Commerce/BIS: (No new postings.)
  3. State/DDTC: (No new postings.)
  4. Treasury/OFAC Posts Ukraine-/Russia-Related General License 13B
  5. President Approves Section 232 Tariff Modifications
  6. EU Posts Implementation Regulation Concerning the Combined Nomenclature
  1. The Daily Beast: “He Said He Was Just a Plasma Scientist. They Said He Was a Chinese Spy” (Part 3 of 3)
  2. The Guardian: “US Hits Allies with Steel Tariffs to Spark Trade War with EU, Canada and Mexico”
  3. Reuters: “Japan Says it Has Detected Apparent Chinese Ship Breaking North Korea Sanctions”
  1. J. Pangaro: “Industry Insider: My Bill of Lading Does What?
  2. M. Volkov: “Compliance and the Reckoning”
  3. R. Phipps: “Smoking Hot: Proposed Changes to USML Categories I, II, and III”
  1. ECS Presents “ITAR/EAR Boot Camp (Seminar Level I)” on 12-13 Sep in Annapolis, MD 
  1. Bartlett’s Unfamiliar Quotations 
  2. Are Your Copies of Regulations Up to Date? Latest Amendments: ATF (15 Jan 2016), Customs (12 Apr 2018), DOD/NISPOM (18 May 2016), EAR (17 May 2018), FACR/OFAC (19 Mar 2018), FTR (24 Apr 2018), HTSUS (4 May 2018), ITAR (14 Feb 2018) 
  3. Weekly Highlights of the Daily Bugle Top Stories 

EXIMITEMS FROM TODAY’S FEDERAL REGISTER

EXIM_a1

1. Commerce/BIS: RPTAC to Meet on 12 Jun in Wash DC
(Source: Federal Register, 31 May 2018.) [Excerpts.]
 
83 FR 24971-24972: Regulations and Procedures Technical Advisory Committee; Notice of Partially Closed Meeting
  The Regulations and Procedures Technical Advisory Committee (RPTAC) will meet June 12, 2018, 9:00 a.m., Room 3884, in the Herbert C. Hoover Building, 14th Street between Constitution and Pennsylvania Avenues NW, Washington, DC. The Committee advises the Office of the Assistant Secretary for Export Administration on implementation of the Export Administration Regulations (EAR) and provides for continuing review to update the EAR as needed.
 
Agenda
 
Public Session
  (1) Opening remarks by the Chairman
  (2) Opening remarks by the Bureau of Industry and Security
  (3) Presentation of papers or comments by the Public
  (4) Export Enforcement update
  (5) Regulations update
  (6) Working group reports
  (7) Automated Export System update
 
Closed Session
  (8) Discussion of matters determined to be exempt from the provisions relating to public meetings found in 5 U.S.C. app. 2 Sec. Sec. 10(a)(1) and 10(a)(3).
 
   The open session will be accessible via teleconference to 25 participants on a first come, first serve basis. To join the conference, submit inquiries to Ms. Yvette Springer at Yvette.Springer@bis.doc.gov no later than June 5, 2018. …
   For more information, call Yvette Springer at (202) 482-2813.
 
Yvette Springer, Committee Liaison Officer.

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EXIM_a2

2. State Renews DTAG Charter
(Source: Federal Register, 31 May 2018.)
 
83 FR 25102: Renewal of Defense Trade Advisory Group Charter
* AGENCY: Department of State.
* ACTION: Notice.
* SUMMARY: The Department of State announces the renewal of the Charter for the Defense Trade Advisory Group (DTAG). The DTAG advises the Department on its support for and regulation of defense trade to help ensure the foreign policy and national security of the United States continue to be protected and advanced, while helping to reduce unnecessary impediments to legitimate exports in order to support the defense requirements of U.S. friends and allies. It is the only Department of State advisory committee that addresses defense trade related topics. The DTAG will remain in existence for two years after the filing date of the Charter unless terminated sooner.
* FOR FURTHER INFORMATION CONTACT: Mr. Anthony Dearth, Alternate Designated Federal Officer, Defense Trade Advisory Group, Directorate of Defense Trade Controls, Department of State, Washington, DC 20520, telephone: (202) 663-2836 or email DearthAM@state.gov.
* SUPPLEMENTARY INFORMATION: The DTAG is authorized by 22 U.S.C. 2651a and 2656 and the Federal Advisory Committee Act, 5 U.S.C. Appendix.
 
  Anthony Dearth, Alternate Designated Federal Officer, Defense Trade Advisory Group, Department of State.

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OGSOTHER GOVERNMENT SOURCES

OGS_a13. Items Scheduled for Publication in Future Federal Register Editions
(Source: Federal Register)

* State; NOTICES; Designations as Global Terrorists: Al-Nusrah Front [Publication Date: 1 June 2018.] 

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(Source:
Commerce/BIS)
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(Source:
Treasury/OFAC, 31 May 2018.)
 
Today, the Department of the Treasury’s Office of Foreign Assets Control (OFAC) is issuing Ukraine-/Russia-related
General License 13B, which replaces and supersedes General License 13A in its entirety.  General License 13B extends the expiration date of the general license to 12:01 a.m. August 5, 2018.

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(Source:
The White House, 31 May 2018.)
 
Today, President Donald J. Trump signed two proclamations (found here and here), which note that measures are in place to address the impairment to the national security threatened by imports of steel and aluminum from Argentina, Brazil, and Australia.
 
At this time, similar measures are not in place with respect to steel or aluminum imports from Mexico, Canada, or the European Union. Therefore, as of June 1, 2018, tariffs will no longer be suspended for steel or aluminum imports from those countries. The Administration will continue discussions with them and remains open to discussions with other countries.
 
The Section 232 steel and aluminum tariffs have already had major, positive effects on steel and aluminum workers and jobs and will continue to do so long into the future. At the same time, the Trump Administration’s actions underscore its commitment to good-faith negotiations with our allies to enhance our national security while supporting American workers.
 
The Administration will continue to monitor steel and aluminum imports and adjust the measures in effect as necessary to protect the national security of the United States.
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(Source:
Official Journal of the European Union, 31 May 2018.)
 
Regulations
* Commission Implementing Regulation (EU) 2018/787 of 25 May 2018 concerning the classification of certain goods in the Combined Nomenclature (CN)
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NWSNEWS

(Source:
The Daily Beast, 27 May 2018.) [Excerpts.]
 
… Daniel Max Sherman was a student of Roth’s at UT before going into business with him. Now 47 and living in Chattanooga, Sherman exudes an unmistakable cynicism about the world.
 
Born in rural Dayton, Tennessee, to a mom who had turned 18 only a few days earlier, Sherman never met his father. He got his contact info a while back, but never actually got in touch.
 
  “I grew up with a long list of stepfathers, most of them with military backgrounds,” Sherman explained. “The first father I remember was a drill sergeant for the Army and he was not a nice man.”
 
Sherman, who is speaking publicly about the case for the first time, left home during his senior year of high school, primarily to escape his mother’s third husband, an alcoholic Marine Corps drill instructor. Sherman’s grandmother managed to cobble together enough money for him to attend UT, and one of his high school teachers gave him a few hundred bucks for textbooks.
 
Sherman was the director of plasma sciences at a small, publicly traded company in Knoxville called Atmospheric Glow Technologies (AGT). Roth was a minority partner. Located in a commercial park 20 minutes west of downtown Knoxville, the offices are less than a 10-minute drive from Reece Roth’s home.
 
AGT was spun off from UT to develop commercial applications for Roth’s plasma actuator design. In fact, Sherman, who co-owns the patent, says the actuator “in this particular form was a design that resulted during my Master’s in 1995. At that time, Dr. Roth was my advisor.” Roth reportedly offered to let Sherman take full credit, but Sherman, Roth, and a third collaborator are listed as co-inventors.
 
AGT existed with two basic funding mechanisms, Sherman explained. One followed the traditional commercial model, raising money from outside investors. The other came from the federal government. Sherman was the one who wrote the bulk of those proposals, generating most of the initial ideas after which he said other people’s names would inevitably also be “slapped on.”
 
Still, the question remains: Why would Roth risk his reputation, his career, and his freedom just to hire a couple of foreign graduate research assistants? Is it really that hard to find competent American Ph.D. candidates?
 
  “Dr. Roth’s lab was constantly filled with foreign nationals,” said Sherman. “His book had been translated into foreign languages and they respected him and most Americans couldn’t stand working for him, he was such an ass.”
 
Dan Golden, author of Spy Schools: How the CIA, FBI, and Foreign Intelligence Secretly Exploit America’s Universities, was the first person to interview Roth when he went to prison in 2012 and has written about the case extensively.
 
  “I think it flattered his vanity to have students who had admired him from afar and who could remind him about what a major figure he was in China, because he’s not a man without ego,” Golden told The Daily Beast. “So, that’s the specific reason. More broadly, there’s a plethora of foreign graduate students in American science departments.” (He also points out the ironic disconnect between UT’s vigilance in turning in Roth while at the same time seeming less alert to the myriad issues posed by hosting a Confucius Institute on campus.)
 
It was Sherman who ultimately acquiesced to Roth’s demand that Xin Dai, his Chinese student, be hired onto the drone project. However, he insisted that all restricted material be kept away from Dai and handled by an American student, Truman Bonds. A noble concept, but one that unfortunately did not work in practice, according to Sherman.
 
As Dai neared graduation and Roth announced that he wanted Nourgostar to take his place, Sherman finally put his foot down.
 
  “It had been made clear to me that it really wouldn’t be a good idea,” said Sherman. “As one of [my former colleagues] at Oak Ridge [National Laboratory] explained to me, ‘Daniel, I can’t send this pen to Iran.'”
 
When Sherman told Roth he would do whatever it took to block the hire, Roth sought support from the university’s supervisor of faculty research contracts. She advised Roth to speak to the school’s newly-hired export control officer, who was more than a little alarmed not only by the notion of hiring an Iranian national for a project that was very obviously subject to serious regulations, but also that a Chinese national had already spent a year illegally working on the project without anyone knowing it. Roth left for China, the export control officer called authorities, and that’s when everything began to collapse.
 
According to most everyone involved, Roth ignored multiple warnings from various people about his hiring of foreign students, insisting all the while that the university’s non-discrimination policy overrode federal export law.
 
During the trial, Roth flatly refused to consider negotiating a plea bargain, insisting he had done nothing wrong. The jury obviously thought otherwise, finding that Roth acted with the requisite intent.
 
  “The greatest damage, my friends would say, is that by the time I left prison, I had turned my back on invention”
 
Backed into a corner, Sherman agreed to plead guilty to one count of conspiracy to violate the Arms Export Control Act. The judge sentenced him to 14 months. He did his time as inmate #32207-074 at a federal prison camp in Florence, Colorado, alongside former Enron CFO Andy Fastow, who worked in the barbershop.
 
Sherman says he took the deal in hopes that he could “put this shitstorm behind me and try to eventually rebuild a life, which I haven’t.”
 
  “What does a felon do when they get out of jail?” he says when asked if he still practices physics. “They do construction. I do remodeling and construction, that pays the majority of my bills.”
 
Xin Dai got his Ph.D. in electrical engineering in 2006, and now works as a patent lawyer in Palo Alto. He did not respond to multiple requests for comment. Sirous Nourgostar is working as a researcher in the University of Wisconsin Madison’s Department of Nuclear Engineering. Truman Bonds is the president of a firm in Knoxville, which is successfully commercializing a carbon fiber oxidation project Sherman says he started back at Atmospheric Glow. Reached by email, Bonds declined to comment.
 
Atmospheric Glow was charged as a company, and pleaded guilty to 10 counts of conspiracy. On April 1, 2008, the firm declared bankruptcy. A few months later, AGT’s assets were
sold off to a Connecticut firm for $125,000 cash, plus $200,000 in stock.
 
In the end, Sherman fell just short of earning his doctorate. Once the federal investigation began, the Air Force stopped communicating with the AGT team. When the Ph.D. committee realized there would be no way for Sherman to publish his results, they told him it wasn’t worth going any further.
 
  “The greatest damage, my friends would say, is that by the time I left prison, I had turned my back on invention,” Sherman said. “I found a wealthy philanthropist here in town who wanted me to take on a high-tech project kind of as a hobby, and I did that for a little while until he passed away, and I haven’t done science since.”
 
Both Sherman and Roth speak about their plasma research with noticeable pride, although they both say it has largely disappeared.
 
  “I will tell you that all the inventions that we came up with, to this day are still not being discussed in the public literature,” said Sherman. “The technology could literally be 100 times more electrically efficient and 10 times stronger, but no one talks about it.”
 
  “The technology in the U.S. has not advanced nearly as quickly and over as broad a range as I think it should have,” said Roth, who lists a number of civilian uses that haven’t yet been fully explored, including sterilization and decontamination in the medical and agricultural fields.
 
  “At the time I was jailed, there were a bunch of tests showing that plasma actuators could reduce the drag on [wind turbine blades] up to 30 percent,” Roth explained. “In aerodynamic terms, that’s a big decrease in drag. Over the last 50 years, they’ve been spending millions to get the drag on airfoils down just a few percent at a time.”
 
On the other hand, Tom McLaughlin of the Air Force Academy says Roth’s technology, which he describes not as a brand-new discovery, but a clever “tool” based on the dielectric barrier discharge plasma first reported by Ernst Werner von Siemens in 1857, had already reached what he considers to be its practical limits, at least for his purposes.
 
  “It was difficult to make it work at aerodynamic speeds of interest to us,” McLaughlin told The Daily Beast. “It would at very low speeds but the faster you got, the less effective it became. I don’t think the case led to the demise of the technology, we played out the technology and found it wasn’t doing everything we thought it would.”
 
Dan Golden appreciates the fact that Dai and Nourgostar have stayed to make lives in America, saying that this is precisely the point that people often overlook when they talk about the danger of espionage at U.S. universities: The great majority of Chinese (and other) students who come to the States and earn their Ph.D.s stay for at least five years after getting their doctorate. Some stay a lot longer than that, said Golden, meaning their inventions stay here, too.
 
  “If you cut off China, you lose the benefit of all the research they do when they’re here. If we can reduce the espionage and theft done by a small minority, we could get the benefit of the majority, who don’t.”
 
The experience has obviously left an indelible impression on Roth, whose wife Helen watches TV in the other room as he recounts events more than a decade in the past like they happened yesterday.
 
Today, Roth’s life tends toward the ludditistic. He has a cell phone, but if he wants to put something in writing, he sends a letter. He has refused to get online since leaving prison for fear of “the potential misrepresentation of any kind of message they happen to come up with through these dragnets that they perform on people’s correspondence.”
 
Roth views his case as having been “politically motivated,” and doesn’t think investigators had the necessary level of scientific sophistication to fully grasp the nuances involved. If they had, he doesn’t believe he ever would have been hauled into court in the first place.
 
“Some of those prosecutors were involved in pursuing people who were producing bootleg liquor and that was the kind of prosecution that they seemed to go after,” Roth says. “I think they attribute China’s technical success to their stealing our technology, when in fact the Chinese are perfectly capable of developing and originating their own.”
 
[Parts 1 and 2 of this article were published in the Daily Bugle of Monday and Tuesday, respectively.]

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(Source:
The Guardian, 31 May 2018.) [Excerpts.]
 
A full-scale trade war between Washington and Brussels is looming after the US announced that it was imposing tariffs on imported steel and aluminum from the EU.
 
The president of the European commission, Jean-Claude Juncker, promised swift retaliation after the US commerce secretary, Wilbur Ross, said EU companies would face a 25% duty on steel and a 10% duty on aluminum from midnight on Thursday.
 
Europe, along with Canada and Mexico, had been granted a temporary reprieve from the tariffs after they were unveiled by Donald Trump two months ago.
 
But Ross said insufficient progress had been made in talks with three of the US’s traditional allies to reduce America’s trade deficit and that the waiver was being lifted.
 
The move – which comes at a time when Trump is also threatening protectionist action against China – triggered an immediate response from Brussels.
 
Juncker called the US move “unjustified” and said that the EU had no choice but to hit back with tariffs on US goods and a case at the World Trade Organization in Geneva.
 
  “We will defend the Union’s interests, in full compliance with international trade law,” he added. Brussels has already announced that it would target Levi’s jeans, Harley Davidson motorbikes and bourbon whiskey.
 
Britain, which has hopes of agreeing a trade liberalization deal with the US after Brexit, expressed alarm at Ross’s announcement.
 
  “We are deeply disappointed that the US has decided to apply tariffs to steel and aluminum imports from the EU on national security grounds,” a government spokesman said.
 
  “The UK and other European Union countries are close allies of the US and should be permanently and fully exempted from the American measures on steel and aluminum.” …

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(Source:
Reuters, 29 May 2018.)
 
Japan on Tuesday said it had detected what appeared to be a Chinese-flagged vessel, 350 km (218 miles) off Shanghai, conducting illegal transfers to a North Korean ship.
 
“Following a comprehensive assessment, the government of Japan strongly suspects that they conducted ship-to-ship transfers banned by UNSCR,” Japan’s Ministry of Foreign Affairs said in a press release, referring to U.N. Security Council resolutions.
 
A Japanese P-3 maritime patrol plane detected the vessels, which lay alongside each other connected by hoses, on May 19, with one of the ships flying what seemed like a Chinese flag, it said.
 
China has repeatedly said it is fully enforcing U.N. sanctions against North Korea and it would punish any Chinese company breaking them.
 
Japan’s decision to voice its suspicion comes as North Korean leader Kim Jong Un and U.S. President Donald Trump prepared for what may be a breakthrough summit as early as next month.
 
Japan is urging the United States and other countries to stick to a strict imposition of U.N. sanctions on North Korea until it abandons the development of nuclear weapons and ballistic missiles.
 
In April, the U.N. Security Council blacklisted dozens of ships and shipping companies over oil and coal smuggling by North Korea, including five based in China. The vessels are subject to a global port ban and must be deregistered.

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COMMCOMMENTARY

COMM_a0
12. J. Pangaro: “Industry Insider: My Bill of Lading Does What?

(Source: American Shipper, 29 May 2018.) [Excerpts.]
 
* Author: Joe Pangaro, Trial Attorney, Duane Morris,
jjpangaro@duanemorris.com.
 
Supply chain professionals would be wise to examine their bills of lading carefully as fine print like a forum selection clause can have a big impact in dispute resolution, according to attorney Joe Pangaro.
 
Anyone who works in the transportation, shipping or logistics sectors knows how even the small details – sometimes especially the small details – can have a major impact on supply chains.
 
I will never forget an interaction I saw when I worked as a supply chain analyst some years ago. A supervisor came up to the newest member of our team and informed him that instead of shipping a 40-foot container full of chemicals to the Netherlands, he had actually shipped it to the Netherlands Antilles, more than 4,000 miles away.
 
The new team member’s exasperated reaction was priceless: “How many Netherlands can there possibly be?” …

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COMM_a01
13. M. Volkov: “Compliance and the Reckoning”
(Source: Volkov Law Group Blog, 30 May 2018. Reprinted by permission.)
 
* Author: Michael Volkov, Esq., Volkov Law Group,
mvolkov@volkovlaw.com, 240-505-1992.
 
The compliance profession cannot rest on its achievements and become complacent. There are two significant events that are on the horizon and inevitably will occur.
 
Compliance professionals have grown in number and in influence. At the same time, compliance professionals are enjoying unprecedented independence and authority. As the compliance profession rises, however, so will accountability – fair or unfair, it is soon about to hit.
 
Companies that invest in compliance programs continue to suffer from a narrow understanding of compliance. I recently listened to a CEO speak to her compliance department and she emphasized over and over how important it is for the company to stay “compliant.” The CEO missed the mark – compliance has a broader function; compliance is not measured by whether or not the organization violates a law, regulation or its code of conduct.
 
When a company suffers a serious violation and enforcement action, everyone can expect the CEO and the board to turn to the CCO and ask, “what happened?” The CEO’s question will suggest that somehow the compliance program did not work, or that the CCO failed to do his or her job.
 
For the CCO, it is important to remember that when living on a pedestal, there is only way off the pedestal and that is down. Many in the corporate governance world – directors and CEOs – are under the mistaken belief that investing in a world-class ethics and compliance program prevents the occurrence of misconduct. Unfortunately, the world does not work that way, and the sooner CCOs prepare for this event, the better.
 
The compliance profession’s accountability (whether fair or not) will extend into the political sphere as well. In response to the rampant corporate fraud in the early 2000s, Congress enacted Sarbanes-Oxley and transformed the auditing profession. Congress returned to reform the financial industry after the economic recession hit in 2008, and Dodd-Frank brought us SEC whistleblowers and major financial reforms.
 
Whenever the next financial bump in the road occurs, guess who will be the new savior? Yes, the compliance profession. Building on all of the standards, guidelines, and enforcement direction on compliance programs, Congress will enact and prescribe comprehensive ethics and compliance program requirements for companies. Congress will reach out to the most available solution, grab onto a few experts and start drafting legislative requirements for compliance.
 
Companies will be mandated to invest in compliance program requirements. Companies that fail to implement mandated compliance will be punished, and directors and senior executives will be required to certify under penalty of criminal prosecution as to the effectiveness and adequacy of a company’s compliance program. The seeds for all these ideas are being planted by prosecutors, regulators and politicians.
 
I am not trying to scare anyone – the compliance profession has overcome many more difficult challenges. After all, the compliance profession brings creativity, integrity and commitment to the task.
 
The two challenges, however, are distinct. CCOs have to spend more time training and explaining compliance functions to corporate boards and senior leadership. Education is critical in this area. Board members and CEOs think they understand compliance but in fact most have a very rudimentary understanding of a compliance program. In those cases where the board has a member with compliance expertise, the situation is different – the board member can help the other board members to understand how to conduct oversight and to monitor a compliance program. Such a knowledge base is invaluable and makes the CCOs job that much easier.
 
The compliance profession faces an even more daunting challenge when seeking to educate Congress on the compliance function. Congressional staff are not known for engaging in a deep dive on such subjects, especially given the press of business and other topics. Congress will rely on a small cadre of experts to help them develop legislation and such drafting will inevitably raise concerns. In the end, the compliance profession will need to develop a broader policy presence on Capitol Hill – it will eventually happen, and the sooner the better.

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COMM_a3
14. R. Phipps: “Smoking Hot: Proposed Changes to USML Categories I, II, and III”
(Source: CTP Compliance Solutions, 15 May 2018.)
 
* Author: Rick Phipps, Director, CTP Compliance Solutions, rphipps@ctp-inc.com.
 
On top of the background buzz regarding the ZTE zigzag, the latest shoe has dropped in the ongoing export control reforms. Three shoes actually, since we can now read about the proposed move of certain items controlled in Categories I, II, and III on the U.S. Munitions List (USML) over to the Commerce Control List (CCL). Long awaited by U.S. gun and ammunition manufacturers and exporters, these proposed rules describe how articles the President determines no longer warrant control under USML would be controlled on the CCL and by the Export Administration Regulations (EAR) and describe more precisely articles warranting export and temporary import control on the USML.
 
As part of export control reforms under the Obama administration, the executive branch completed transfers of items in the following categories from the USML to the CCL and created Category XIX (gas turbine engines):
 
  – Category IV (launch vehicles, guided and ballistic missiles, rockets, torpedoes, bombs, and mines);
  – Category V (explosives and energetic materials, propellants, incendiary agents, and their constituents);
  – Category VI (surface vessels of war and special naval equipment);
  – Category VII (ground vehicles);
  – Category VIII (aircraft and related articles);
  – Category IX (military training equipment and training);
  – Category X (personal protective equipment);
  – Category XI (military electronics);
  – Category XII (fire control, laser, imaging, and guidance equipment);
  – Category XIII (materials and miscellaneous articles);
  – Category XIV (toxicological agents, including chemical agents, biological agents, and associated equipment);
  – Category XV (spacecraft and related articles); 
  – Category XVI (nuclear weapons related articles);
  – Category XVIII (directed energy weapons); and
  – Category XX (submersible vessels and related articles). 
 
Left remaining were changes to Categories I-III (firearms, close assault weapons and combat shotguns, guns and armament, and ammunition/ordnance). 
 
Under the proposed rules published by BIS and the State Department, a number of new ECCNs are created to address transferred items and the relevant USML categories are revised to describe more precisely the articles warranting continued control on the USML. The interagency review process focused on identifying items that were either (i) inherently military and otherwise warranted control on the USML, or (ii) if of a type common to non-military firearms applications, possessed parameters or characteristics that provide a critical military or intelligence advantage to the U.S., and are almost exclusively available from the U.S. If one or both points were met, the article remained on the USML.  Essentially, commercial items widely available for purchase and less sensitive military items were transferred in the proposed rules. Links to the proposed rules are as follows: State Department and Commerce Department
 
There will be a 45-day period following publication in the Federal Register in which the agencies will accept comments regarding the proposed rules. Exporters and manufacturers of articles currently controlled under USML Categories I-III should review the proposed rules to consider how they may be impacted. Comments may be submitted via the Federal eRulemaking Portal: http://www.regulations.gov or via email to DDTCPublicComments@state.gov with the subject line, “ITAR Amendment – Categories I, II, and III.” 

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TEEX/IM TRAINING EVENTS & CONFERENCES

TE_a1
15. ECS Presents “ITAR/EAR Boot Camp (Seminar Level I)” on 12-13 Sep in Annapolis, MD

(Source: Suzanne Palmer,
spalmer@exportcompliancesolutions.com.)
 
* What: Seminar Level I: ITAR/EAR Boot Camp, Annapolis, MD
* When: September 12-13, 2018
* 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. 

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ENEDITOR’S NOTES

 

* Niccolo Machiavelli (Niccolò di Bernardo dei Machiavelli; 3 May 1469 – 21 Jun 1527, was an Italian diplomat, politician, historian, philosopher, humanist, and writer of the Renaissance period. He wrote comedies, carnival songs, and poetry. He wrote his most well-known work The Prince (Il Principe) in 1513. “Machiavellian” is widely used as a negative term to characterize unscrupulous politicians of the sort Machiavelli described most famously in The Prince, describing immoral behavior, such as dishonesty and the killing of innocents, as being normal and effective in politics.)
– “There is nothing more difficult to take in hand, more perilous to conduct, or more uncertain in its success, than to take the lead in the introduction of a new order of things.”
– “When you disarm the people, you commence to offend them and show that you distrust them either through cowardice or lack of confidence, and both of these opinions generate hatred.

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EN_a317
. 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: 12 Apr 2018: 83 FR 15736-15740: CBP Decision No. 18-04; Definition of Importer Security Filing Importer (ISF Importer)
 
DOD NATIONAL INDUSTRIAL SECURITY PROGRAM OPERATING MANUAL (NISPOM): DoD 5220.22-M

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


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

  – Last Amendment: 17 May 2018: 83 FR 22842-22846: Revisions to the Unverified List (UVL)

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

  – Last Amendment: 19 Mar 2018:
83 FR 11876-11881: Inflation Adjustment of Civil Monetary Penalties 

 
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FOREIGN TRADE REGULATIONS (FTR)
: 15 CFR Part 30
  – Last Amendment: 24 Apr 2018: 3 FR 17749-17751: Foreign Trade Regulations (FTR): Clarification on the Collection and Confidentiality of Kimberley Process Certificates
  – HTS codes that are not valid for AES are available
here.
  – The latest edition (30 Apr 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 websiteBITAR 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.  
 
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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: 4 May 2018: Harmonized System Update 1807, containing 289 ABI records and 60 harmonized tariff records.
  – HTS codes for AES are available 
here.
  – HTS codes that are not valid for AES are available 
here.

 
INTERNATIONAL TRAFFIC IN ARMS REGULATIONS (ITAR): 22 C.F.R. Ch. I, Subch. M, Pts. 120-130.

  – Last Amendment: 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: 25 Apr 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
 
website
. BAFTR subscribers receive a 25% discount on subscriptions to the BITAR, please
contact us

to receive your discount code. 

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EN_a0318
Weekly Highlights of the Daily Bugle Top Stories

(Source: Editor) 

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

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EPEDITORIAL POLICY

* The Ex/Im Daily Update is a publication of FCC Advisory B.V., compiled by: Editor, James E. Bartlett III; Assistant Editors, Alexander P. Bosch and Vincent J.A. Goossen; and Events & Jobs Editor, John Bartlett. The Ex/Im Daily Update is emailed every business day to approximately 8,000 readers of changes to defense and high-tech trade laws and regulations. We check the following sources daily: Federal Register, Congressional Record, Commerce/AES, Commerce/BIS, DHS/CBP, 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.


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