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18-0712 Thursday “Daily Bugle”

18-0712 Thursday “Daily Bugle”

Thursday, 12 July 2018

TOP
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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[No items of interest noted today.]  

  1. Items Scheduled for Publication in Future Federal Register Editions 
  2. Commerce/BIS: (No new postings.) 
  3. State Department Settles Defense Distributed’s 3-D Printer Gun Lawsuit
  4. State/DDTC: (No new postings.) 
  5. EU Amends Restrictive Measures Concerning Iraq 
  1. Reuters: “China’s ZTE Clears Hurdle to Lifting U.S. Ban”
  1. B. Doherty: “The Government Will Allow Cody Wilson’s Defense Distributed to Distribute Gun-Making Software”
  2. Global Trade News: “Weise Wednesday: Growing Friction Between the United States and Its Key Trading Partners”  
  3. Orchid Advisors: “Export Control Reform and the Ammunition Industry” 
  4. R.C. Burns: “Aspirin and Terrorism in Sudan” 
  1. Full Circle Compliance Presents “Awareness Course U.S. Export Controls: ITAR & EAR from a Non-U.S. Perspective “, 2 Oct in Bruchem, the Netherlands 
  1. Bartlett’s Unfamiliar Quotations 
  2. Are Your Copies of Regulations Up to Date? Latest Amendments: ATF (15 Jan 2016), Customs (12 Jun 2018), DOD/NISPOM (18 May 2016), EAR (6 Jun 2018), FACR/OFAC (29 Jun 2018), FTR (24 Apr 2018), HTSUS (8 Jun 2018), ITAR (14 Feb 2018) 
  3. Weekly Highlights of the Daily Bugle Top Stories 

EXIMITEMS FROM TODAY’S FEDERAL REGISTER

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OGSOTHER GOVERNMENT SOURCES

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

[No items of interest noted today.]

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OGS_abc22. 
Commerce/BIS: (No new postings.)
(Source: 
Commerce/BIS)

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Plaintiffs Defense Distributed, Second Amendment Foundation, Inc., and Conn Williamson, represented by attorney Matthew A. Goldstein, agreed with defendants employed by U.S. Department of State to settle claims against defendants in the case Defense Distributed, et al. v. Dep’t of State, et al., in return for payment of $39,581.00 and numerous administrative actions described in the below excerpts of the Settlement Agreement.  A copy of the full settlement agreement is available from Mr. Goldstein or may be viewed HERE
 
SETTLEMENT AGREEMENT
 
Defense Distributed (“DD”), Second Amendment Foundation, Inc. (“SAF”), and Conn Williamson (collectively, “Plaintiffs,”) and the United States Department of State (“State”), the Secretary of State, the Directorate of Defense Trade Controls (“DDTC”), the Deputy Assistant Secretary, Defense Trade Controls, and the Director, Office of Defense Trade Controls Policy (collectively, “Defendants”), out of a mutual desire to resolve all of the claims in the case captioned Defense Distributed, et al. v. Dep’t of State, et al., Case No. 15-cv-372-RP (W.D. Tex.) (the “Action”) without the need for further litigation and without any admission of liability, hereby stipulate and agree as follows:
 
Plaintiffs and Defendants do hereby settle all claims, issues, complaints, or actions described in the case captioned, and any and all other claims, complaints, or issues that have been or could have been asserted by Plaintiffs against Defendants in accordance with the following terms and conditions:
 
  (1) Consideration: In consideration of Plaintiffs’ agreement to dismiss the claims in the Action with prejudice as described in paragraph 2, below, Defendants agree to the following, in accordance with the definitions set forth in paragraph 12, below:
    (a) Defendants’ commitment to draft and to fully pursue, to the extent authorized by law (including the Administrative Procedure Act), the publication in the Federal Register of a notice of proposed rulemaking and final rule, revising USML Category I to exclude the technical data that is the subject of the Action.
    (b) Defendants’ announcement, while the above-referenced final rule is in development, of a temporary modification, consistent with the International Traffic in Arms Regulations (ITAR), 22 C.F.R. § 126.2, of USML Category I to exclude the technical data that is the subject of the Action. The announcement will appear on the DDTC website, www.pmddtc.state.gov, on or before July 27, 2018.
    (c) Defendants’ issuance of a letter to Plaintiffs on or before July 27, 2018, signed by the Deputy Assistant Secretary for Defense Trade Controls, advising that the Published Files, Ghost Gunner Files, and CAD Files are approved for public release (i.e., unlimited distribution) in any form and are exempt from the export licensing requirements of the ITAR because they satisfy the criteria of 22 C.F.R. § 125.4(b)(13). For the purposes of 22 C.F.R. § 125.4(b)(13) the Department of State is the cognizant U.S. Government department or agency, and the Directorate of Defense Trade Controls has delegated authority to issue this approval.
    (d) Defendants’ acknowledgment and agreement that the temporary modification of USML Category I permits any United States person, to include DD’s customers and SAF’s members, to access, discuss, use, reproduce, or otherwise benefit from the technical data that is the subject of the Action, and that the letter to Plaintiffs permits any such person to access, discuss, use, reproduce or otherwise benefit from the Published Files, Ghost Gunner Files, and CAD Files.
    (e) Payment in the amount of $39,581.00.  This figure is inclusive of any interest and is the only payment that will be made to Plaintiffs or their counsel by Defendants under this Settlement Agreement. Plaintiffs’ counsel will provide Defendants’ counsel with all information necessary to effectuate this payment.
 
The items set forth in subparagraphs (a) through (e) above constitute all relief to be provided in settlement of the Action, including all damages or other monetary relief, equitable relief, declaratory relief, or relief of any form, including but not limited to, attorneys’ fees, costs, and/or relief recoverable pursuant to 2 U.S.C. § 1302, 2 U.S.C. § 1311, 2 U.S.C. § 1317, 22 U.S.C. § 6432b(g), 28 U.S.C. § 1920, Fed. R. Civ. P. 54(d), and the Local Rules.
 
  (2) Dismissal with Prejudice: At the time of the execution of this Settlement Agreement, Plaintiffs agree to have their counsel execute and provide to Defendants’ counsel an original Stipulation for Dismissal with Prejudice pursuant to Fed. R. Civ. P. 41(a)(1)(A)(ii) and 41(a)(1)(B).  Counsel for Defendants agree to execute the stipulation and file it with the Court in the Action, no sooner than 5 business days after the publication of the announcement described in Paragraph 1(b) of this Settlement Agreement and issuance of the letter described in Paragraph 1(c) of this Settlement Agreement. A copy of the Stipulation for Dismissal with Prejudice is attached hereto.
 
  (3) Release: Plaintiffs, for themselves and their administrators, heirs, representatives, successors, or assigns, hereby waive, release and forever discharge Defendants, and all of their components, offices or establishments, and any officers, employees, agents, or successors of any such components, offices or establishments, either in their official or individual capacities, from any and all claims, demands and causes of action of every kind, nature or description, whether currently known or unknown, which Plaintiffs may have had, may now have, or may hereafter discover that were or could have been raised in the Action.
 
  (4) No Admission of Liability: This Settlement Agreement is not and shall not be construed as an admission by Defendants of the truth of any allegation or the validity of any claim asserted in the Action, or of Defendants’ liability therein. Nor is it a concession or an admission of any fault or omission in any act or failure to act. Nor is it a concession or admission as to whether the monetary or equitable relief, attorneys’ fees, costs, and expenses sought by Plaintiffs in the Action, are reasonable or appropriate. None of the terms of the Settlement Agreement may be offered or received in evidence or in any way referred to in any civil, criminal, or administrative action other than proceedings permitted by law, if any, that may be necessary to consummate or enforce this Settlement Agreement. The terms of this Settlement Agreement shall not be construed as an admission by Defendants that the consideration to be given hereunder represents the relief that could be recovered after trial.  Defendants deny that they engaged in ultra vires actions, deny that they violated the First Amendment, Second Amendment, or Fifth Amendment of the United States Constitution, and maintain that all of the actions taken by Defendants with respect to Plaintiffs comply fully with the law, including the United States Constitution.
 
  (5) Merger Clause: The terms of this Settlement Agreement constitute the entire agreement of Plaintiffs and Defendants entered into in good faith, and no statement, remark, agreement or understanding, oral or written, which is not contained therein, shall be recognized or enforced. Plaintiffs acknowledge and agree that no promise or representation not contained in this Settlement Agreement has been made to them and they acknowledge and represent that this Settlement Agreement contains the entire understanding between Plaintiffs and Defendants and contains all terms and conditions pertaining to the compromise and settlement of the disputes referenced herein. Nor does the Parties’ agreement to this Settlement Agreement reflect any agreed-upon purpose other than the desire of the Parties to reach a full and final conclusion of the Action, and to resolve the Action without the time and expense of further litigation.
 
  (6) Amendments: This Settlement Agreement cannot be modified or amended except by an instrument in writing, agreed to and signed by the Parties, nor shall any provision hereof be waived other than by a written waiver, signed by the Parties.
 
  (7) Binding Successors: This Settlement Agreement shall be binding upon and inure to the benefit of Plaintiffs and Defendants, and their respective heirs, executors, successors, assigns and personal representatives, including any persons, entities, departments or agencies succeeding to the interests or obligations of the Parties.
 
  (8) Consultation with Counsel: Plaintiffs acknowledges that they have discussed this Settlement Agreement with their counsel, who has explained these documents to them and that they understand all of the terms and conditions of this Settlement Agreement. Plaintiffs further acknowledge that they have read this Settlement Agreement, understand the contents thereof, and execute this Settlement Agreement of their own free act and deed. The undersigned represent that they are fully authorized to enter into this Settlement Agreement.
 
  (9) Execution: This Settlement Agreement may be executed in one or more counterparts, each of which shall be deemed an original, and all of which together constitute one and the same instrument, and photographic copies of such signed counterparts may be used in lieu of the original.
 
  (10) Jointly Drafted Agreement: This Settlement Agreement shall be considered a jointly drafted agreement and shall not be construed against any party as the drafter.   
               
  (11) Tax and Other Consequences: Compliance with all applicable federal, state, and local tax requirements shall be the sole responsibility of Plaintiffs and their counsel. Plaintiffs and Defendants agree that nothing in this Settlement Agreement waives or modifies federal, state, or local law pertaining to taxes, offsets, levies, and liens that may apply to this Settlement Agreement or the settlement proceeds, and that Plaintiffs are executing this Settlement Agreement without reliance on any representation by Defendants as to the application of any such law.
 
  (12) Definitions: As used in this Settlement Agreement, certain terms are defined as follows: …

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(Source:
Official Journal of the European Union, 12 July 2018.)
 
Regulations:
* Commission Implementing Regulation (EU) 2018/979 of 11 July 2018 amending Council Regulation (EC) No 1210/2003 concerning certain specific restrictions on economic and financial relations with Iraq

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NWSNEWS

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. Reuters: “China’s ZTE Clears Hurdle to Lifting U.S. Ban”

(Source:
Reuters, 11 July 2018.) [Excerpts.]
 
The United States said on Wednesday that it signed an agreement with ZTE Corp that paves the way for the Chinese tech company to resume operations after a nearly three-month ban on doing business with American suppliers.
 
The ban on China’s No. 2 telecommunications equipment maker will be removed once the company deposits $400 million in an escrow account, the U.S. Commerce Department said in a statement announcing that an escrow agreement had been signed.
 
The ban, which was imposed in April and caused ZTE to cease major operations, has been a source of friction between Washington and Beijing, which are engaged in an escalating trade dispute. …
 
The escrow agreement is part of a $1.4 billion settlement ZTE reached with the Commerce Department last month to regain access to U.S. suppliers, whose components it relies on for its smartphones and networking gear.
 
The ban was imposed after ZTE broke an agreement reached after ZTE pleaded guilty in U.S. federal court last year for illegally shipping U.S. goods and technology to Iran, in violation of U.S. sanctions.
 
The new settlement includes a $1 billion penalty that ZTE paid to the U.S. Treasury last month and the $400 million in the escrow account that the United States could seize if ZTE violates the latest settlement. The $1 billion penalty is in addition to nearly $900 million ZTE paid last year.
 
Once the ban is lifted, ZTE, which employs around 80,000 people, is expected to restart major operations. The reprieve for ZTE coincides with a new Trump administration threat of 10 percent tariffs on $200 billion of Chinese goods. …
 
Members of the U.S. Senate last month urged Trump to reconsider the settlement, saying that ZTE posed “a significant threat” to national security.
 
The Senate paved the way for a showdown with Trump over the issue last month, when it passed an annual defense policy bill including an amendment attempting to reverse the deal. The measure could still be killed when Senate and House of Representatives meet in the coming weeks to forge a compromise version of the bill.

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COMMCOMMENTARY

(Source:
Reason, 10 July 2018.)
 
* Author: Brian Doherty, Senior Editor, Reason Magazine bdoherty@reason.com.
 
The Justice Department has reached a settlement with the Second Amendment Foundation and Defense Distributed, a collective that organizes, promotes, and distributes technologies to help home gun-makers. Under the agreement, which resolved a suit filed by the two groups in 2015, Americans may “access, discuss, use, reproduce or otherwise benefit from the technical data” that the government had previously ordered Defense Distributed to cease distributing.
 
Before this, the feds had insisted that Defense Distributed’s gun-making files violate the munitions export rules embedded in the International Traffic in Arms Regulations (ITAR). Defense Distributed’s suit claimed that this was was “censorship of Plaintiffs’ speech,” since the files in question consist of computer code and thus counted as expression. It also argued that “the ad hoc, informal and arbitrary manner in which that scheme is applied, violate the First, Second, and Fifth Amendments.” (The Second because the information in the computer files implicates weapons possession rights.)
 
In what is a very unusual move in ITAR actions, the government will pay more than $39,000 of the plaintiffs’ legal and administrative fees. Cody Wilson, chieftain of Defense Distributed, tells Wired that this is only about 10 percent of what they’ve spent.
 
That Wired story is mostly devoted to scaring the reader about what a world in which people are freer to use computer files to make weapons at home might mean. Wilson is open that as far as he’s concerned, he’s killed the cause of gun control by popularizing the home construction of weapons via computer instructions.
 
Wired
also speculates that the settlement is some sign of a Trump administration bending over backwards to satisfy a Second Amendment constituency. Alan Gura, one of the lawyers on the plaintiffs’ side-and the attorney who won both 2008’s Heller case and 2010’s McDonald, two major Supreme Court victories for gun rights-disagrees, noting the administration’s record in other ongoing Second Amendment cases.
 
  “This administration maintained the Obama DOJ’s cert petition in Binderup (denied 7-2), and has consistently opposed all other as-applied Second Amendment challenges, including Kanter (they won, Kanter appealed), Hatfield (they lost and just appealed), Medina (they won and Medina, repped by me on appeal, appealed, argument 9/11), and Reyes (being litigated now…),” Gura says in an email today. “They have also continued defending the appeal in Mance [regarding gun purchases across state lines]-they had over a year to change their mind, see the light, and admit that the district court was right, but they stuck to their appeal which unfortunately they won, and are defending against the currently-pending en banc petition. There are other cases they defend, some of course less meritorious, but any notion that Trump is pro-gun and having DOJ roll over would be fantasy.”
 
The more likely factor behind the settlement, Gura believes, is that the government “realized that not a single 5th Circuit judge offered that they were likely to succeed on the merits. To the contrary, the centerpiece of their victory was that they could somehow avoid the merits. When they could avoid the merits no longer, suddenly the national security threat faded away.”
 
In a press release, the Second Amendment Foundation notes its favorite aspect of the settlement:
 
Significantly, the government expressly acknowledges that non-automatic firearms up to .50-caliber-including modern semi-auto sporting rifles such as the popular AR-15 and similar firearms-are not inherently military.
 
“Not only is this a First Amendment victory for free speech, it also is a devastating blow to the gun prohibition lobby,” noted SAF founder and Executive Vice President Alan M. Gottlieb. “For years, anti-gunners have contended that modern semi-automatic sport-utility rifles are so-called ‘weapons of war,’ and with this settlement, the government has acknowledged they are nothing of the sort.
 
“Under this settlement,” he continued, “the government will draft and pursue regulatory amendments that eliminate ITAR control over the technical information at the center of this case. They will transfer export jurisdiction to the Commerce Department, which does not impose prior restraint on public speech. That will allow Defense Distributed and SAF to publish information about 3-D technology.”
 
Since this is a settlement and not a victory on the merits in court, the government is still officially insisting their actions did not violate any rights. But an optimistic Gura thinks the “courts might remember this episode the next time the government offers up a spurious national security claim.”
 
The government says the removal of these legal restrictions will be announced by July 27 on the Director of Defense Trade Controls’ website. In return for that action the plaintiffs agree to drop the lawsuit.
 
A ReasonTV interview with Wilson from February.

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8. Global Trade News: “Weise Wednesday: Growing Friction Between the United States and Its Key Trading Partners”

(Source: Integration Point Blog, 11 July 2018.)
 
Welcome to Weise Wednesday! Twice a month we will share a brief Q&A with the former U.S. Commissioner of Customs, Mr. George Weise. If you have questions, we encourage you to send them to
AskGeorge@IntegrationPoint.com.
 
Q. Can you fill us in on developments in the trade arena resulting from recent U.S. trade initiatives?
A. Recent developments on the global trade front have led to growing friction between the U.S. and many of its key trading partners.
 
Section 301 tariffs on China
 
On July 6, 2018, the 25% additional tariff the United States threatened to impose on a wide range of Chinese imports went into effect. On the same day, China implemented a retaliatory tariff of 25% on a number of U.S. imports. President Trump responded to this action by ordering the U.S. Trade Representative to identify 200 billion dollars of additional Chinese imports for potential counter retaliation as a result of the Chinese action. It seems that the trade war is on.
 
Section 232 action on steel and aluminum
 
You will recall that on March 11, 2018, the President issued a proclamation imposing a 25% additional tariff on designated steel products and 10% additional tariff on designated aluminum products. Temporary exemptions were provided for certain countries while bilateral negotiations took place. On May 31, 2018, those exemptions expired for the European Union (EU), Canada, and Mexico, and the additional tariffs for steel and aluminum from those countries went into effect. All three have now implemented retaliatory tariffs against the U.S., as has Turkey. Complaints have also been lodged against the U.S. actions at the World Trade Organization (WTO) by several countries, including the EU and Norway.
 
The EU also recently voted to launch a so-called safeguards investigation to determine if injury is resulting from steel imports flooding into the EU that would have been shipped to the U.S. had the U.S. not imposed the additional tariffs. The investigation is expected to take about nine months. An affirmative ruling could result in additional tariffs and/or quotas on steel products entering the EU. While the investigation is ongoing, international trade rules allow the EU to impose “provisional safeguard” tariffs for up to 200 days, if it concludes that increased imports have caused or may cause serious injury to its steel sector.
 
Section 232 action on automobiles
 
As reported in an earlier Weise Wednesday, President Trump initiated a new investigation on May 23, 2018, to determine if automobile imports are threatening the national security of the U.S. An affirmative finding could result in additional duties and/or quotas on imported automobiles. A public hearing on this matter will be held on July 19-20. It has been reported that the investigation is moving swiftly and could be completed as early as August of this year.
 
Conclusion
 
All of these developments have made it extremely challenging to be engaged in global trade today and created a great deal of uncertainty as to what the future holds for global traders. A recent press report even suggests that President Trump is looking at possible draft legislation to circumvent WTO rules and facilitate the imposition of higher tariffs on U.S. imports. Such a move would be quite controversial, however, and would require congressional action.
Global traders need to continue to stay actively engaged in monitoring new developments like these and continue to make your views known to government decision makers.  

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9. Orchid Advisors: “Export Control Reform and the Ammunition Industry”

(Source: Orchid Advisors, 10 July 2018.)
 
When Export Control Reform (ECR) takes effect in 2019, sporting ammunition will accompany non-automatic and semi-automatic firearms on their journey from the International Traffic in Arms Regulations’ (ITAR) to the Export Administration Regulations (EAR). Ammunition that is primarily non-military in nature will be classified under Export Control Classification Number (ECCN) 0A505 of the Commerce Control List (CCL), rather than Category III of the United States Munitions List (U.S.M.L.).
 
What will that change mean for exporters of ammunition (other than the need to learn new acronyms)?
 
Two consequences of ECR for ammunition exporters stand out. First, U.S. exporters of sporting ammunition will be able to ship to 34 countries without a license. That’s the good news. The second major consequence, the not-so-good news, is that determining which ammunition is controlled by the EAR and which by the ITAR will involve some analysis and may sometimes require an official government determination.
 
Ship ammunition and components to 34 countries without a license!
 
Exporters of ammunition that migrates from the ITAR to the EAR will enjoy one big benefit that exporters of firearms will not. Ammunition exporters will not need any export license at all to export ammunition or components to the following countries:
 
Australia
Estonia
Ireland
Netherlands
Slovenia
Austria
Finland
Italy
New Zealand
Spain
Belgium
France
Japan
Norway
Sweden
Bulgaria
Germany
South Korea
Poland
Switzerland
Croatia
Greece
Latvia
Portugal
Turkey
Czech Republic
Hungary
Lithuania
Romania
United Kingdom
Denmark
Iceland
Luxembourg
Slovakia
 
 
In contrast, exporters of firearms will require an export license for exports to all countries. Exports of firearm components will generally require an export license, too, with exceptions for low value shipments ($500 of less) of most parts and a few other exceptions.
 
So, how is it that ammunition will be exempted from licensing for these 34 countries, but firearms will not? Just as the ITAR contain certain limited exemptions from licensing requirements, the EAR contain what the EAR refer to as “exceptions” to licensing requirements. EAR exceptions are different from ITAR exemptions so one of the headaches associated with transitioning from the ITAR to the EAR will be learning how EAR exceptions affect exports that otherwise would require a license.
 
The affect that the Strategic Trade Authorization (STA) exception has on licensing requirements for ammunition and components demonstrates that it will often be worthwhile to endure the headaches. The STA exception is quite complex, with many limitations and conditions, but what it does is carve out a list of countries with respect to which the otherwise applicable requirement for a license does not apply. The countries listed above are referred to in the EAR (along with Canada and Argentina) as “Country Group A-5.”
 
Exporters of ammunition and ammunition components who rely on the STA exception to export product to these destinations without licenses are required to comply with detailed conditions with respect to which there will be a one-time learning curve, but it will be worth it. The ability to export without a license is a big deal.
 
License exception STA can be found in §740.20 of the EAR. The most important conditions are contained in subsections §740.20 (c) and (d). All applicable conditions and limitations must be complied with to use this license exception.
 
Some readers may be wondering why Canada is not on the list. Canada and Argentina actually are included in Country Group A-5 but license exception STA cannot be used for exports of ammunition and components to those countries because Canada and Argentina are parties, as is the United States, to a treaty among members of the Organization of American States that requires an export license. That treaty takes precedence over exception STA.
 
Determining whether ammunition is controlled by the ITAR or EAR may not always be easy
 
To take advantage of license exception STA and the other benefits of the EAR export-control regime, exporters will first have to be sure the ammunition they plan to export has in fact migrated from the ITAR to the EAR.
 
That may take some work.
 
One benefit of today’s rules is that classifying ammunition for export control purposes is easy. Virtually all ammunition up to .50 caliber is controlled under Category III (a) of the U.S.M.L. and ammunition components are in Category III (d).
 
Under Export Control Reform, the Government has endeavored to distinguish between ammunition that “has little or no civil use or that is inherently military,” on the one hand, and ammunition that, on the other hand, “does not confer a military advantage on the United States” because it is widely available in the international market to both friendly and unfriendly countries. The result is a new, long list of characteristics that cause ammunition to remain on the ITAR and a second long list of ammunition components that remain on the ITAR. All other ammunition and components move by default to the EAR.
 
As will be the case for manufacturers and exporters of firearms, Export Control Reform will require that those who manufacture or export ammunition or components review their product lists carefully to determine whether any of their products will remain on the ITAR and, if so, their proper classification within the revised U.S.M.L. Category III. Items that are not covered by the revised U.S.M.L. Category III will fall into new ECCN 0A505, except for some items that will continue not to be controlled, as discussed later.
 
Going forward, after the effective date of ECR, ammunition manufacturers and exporters will want to be sure that all new ammunition and components they make or export are added to the product matrix and properly classified. It will not be possible to complete export documents properly without proper classification, nor will it be possible to use the STA exception without knowing for sure that the items in question are in fact in ECCN 0A505 rather than U.S.M.L. Category III.
 
Other consequences of ECR for manufacturers and exporters of ammunition and components
 
Manufacturers and exporters of ammunition and components that move to the EAR will enjoy, in addition to access to license exception STA, certain benefits of ECR we discussed previously in our previous post How to Make International Sales Happen Faster under Export Control Reform. In other words, (i) receipt of customer purchase orders will not be a precondition to applying for export licenses, (ii) other license supporting documents under the ITAR will no longer be needed (although exporters will need to be in possession of the customer’s import permit when an import permit is required by the destination country), and (iii) blanket licenses that authorize the maximum, but not the precise, quantity to be exported will be permitted for ammunition exports as for firearms.
 
On the negative side, the license exception for low-value shipments of ammunition components to countries not in Country Group A-5 will max out at $100 per shipment, as opposed to the new $500 exception that will apply to nearly all firearms components. There will be no exception for complete ammunition (as opposed to components), which rules out the possibility of small international retail sales of ammunition.
 
Shotgun ammunition and certain components, which are already on the EAR, will be classified together with ammunition for non-automatic and semi-automatic firearms, but will for the most part remain unchanged.
 
We have noted one other change that we have not had time to fully analyze as of the date of this piece. Under the ITAR, “muzzle loading (black powder) firearms” are expressly excluded from U.S.M.L. Category I and ammunition for muzzle loading firearms is therefore excluded from U.S.M.L. Category III. The muzzle loader exclusion under the new rules is narrower. Note 1 to proposed new ECCN for non-automatic and semi-automatic firearms, ECCN 0A501, affirms that muzzle loading black powder firearms are excluded, “except those designs based on centerfire weapons of a post 1937 design (emphasis added)”. What that means is that ammunition “specially designed” for muzzle loading firearms based on centerfire weapons of a post 1937 design will be subject to the controls of the EAR in ECCN 0A505.

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10. R.C. Burns: “Aspirin and Terrorism in Sudan”

(Source: Export Law Blog, 11 July 2018. Reprinted by permission.)
 
* Author: R. Clifton Burns, Esq., Bryan Cave LLP, Wash DC, Clif.Burns@bryancave.com, 202-508-6067).
 
In October 2017, OFAC started down the long and winding road of eliminating the sanctions on Sudan. As we noted in a post then, OFAC – rather oddly – did not just get rid of the Sudanese Sanctions Regulations but simply made effective section 538.540(a) which was a general license to do everything prohibited by the SSR. It also made effective section 538.540(b), which was a general license to export agricultural commodities, medicine and medical devices for one-year after signing a contract for the export of such goods.
 
Finally, a few days ago on June 29, OFAC took the momentous step of repealing the Sudan Sanctions Regulations in their entirety. Nothing in the Federal Register notice repealing the SSR indicates what had occurred since October 2017 that meant now – as opposed to last October – was a propitious time to repeal the SSR. But, as they say, better late than never.
 
In addition, the latest Federal Register notice moved the general license in section 538.540(b) for agricultural commodities, medicine and medical devices from the now defunct SSR to section 596.506 of the Terrorism List Governments Sanctions Regulations. This, of course, results in an odd situation where, due to the repeal of the SSR, you can send any and all EAR99 items to Sudan without needing to comply with a general license but aspirin requires you to comply with the terms of a general license.
 
This is the result of section 906(a)(1) of the Trade Sanctions Reform and Export Enhancement Act of 2000 (“TSRA”) which says that agricultural commodities, medicine and medical devices could only be exported to state sponsors of terrorism pursuant to a 1-year license. Of course, there is no way that Congress intended to impose more stringent controls on aspirin and tongue depressors than other EAR99 items like shoes (which can be made into bombs) and razor blades. The idea of TSRA was that where the President had comprehensively sanctioned a country, broader humanitarian reason would prohibit him or her from restricting exports of aspirin, tongue depressors and apples to the country. If the country was a state sponsor of terrorism then a license would be required. But there is no indication that Congress meant for section 906 to apply the license requirement to food and medicine when all other sanctions had been lifted. Not even Congress, well, not even most of Congress could imagine that aspirin is more useful to terrorists than shoes and razor blades.

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TECEX/IM TRAINING EVENTS & CONFERENCES

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Full Circle Compliance Presents “Awareness Course U.S. Export Controls: ITAR & EAR From a Non-U.S. Perspective “, 2 Oct in Bruchem, the Netherlands

(Source: Full Circle Compliance, events@fullcirclecompliance.eu.)
 
Our next academy course is designed for beginning compliance officers and professionals who want to enhance their knowledge on the latest ITAR/EAR requirements and best practices.  The course will cover multiple topics regarding U.S. export controls that apply to organisations outside the U.S., such as: the regulatory framework, including the latest and anticipated regulatory amendments, key concepts and definitions, classification and licensing requirements, handling (potential) non-compliance issues, and practice tips to ensure compliance with the ITAR and EAR.
 
* What: Awareness Course U.S. Export Controls: ITAR & EAR From a Non-U.S. Perspective 
* When: Tuesday, 2 Oct 2018, 9 AM – 5 PM (CEST)
* Where: Landgoed Groenhoven, Bruchem, the Netherlands
* Sponsor: Full Circle Compliance (FCC)
* Instructors: Ghislaine Gillessen, Mike Farrell, and Alexander P. Bosch 
* Information & Registration: HERE or via 
events@fullcirclecompliance.eu
 

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ENEDITOR’S NOTES

 

Henry David Thoreau (12 Jul 1817 – 6 May 1862; was an American essayist, poet, philosopher, abolitionist, naturalist, tax resister, development critic, surveyor, and historian. A leading transcendentalist, Thoreau is best known for his book Walden, a reflection upon simple living in natural surroundings, and his essay “Civil Disobedience” (originally published as “Resistance to Civil Government”), an argument for disobedience to an unjust state.)
  – “None are so old as those who have outlived enthusiasm.”
  – “Simplify, simplify.”

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EN_a313
. 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 Jun 2018: 83 FR 27380-27407: Air Cargo Advance Screening (ACAS)
 
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: 6 June 2018: 83 FR 26204-26205: Unverified List (UVL); Correction

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

  – Last Amendment: 29 June 2018: 83 FR 30541-30548: Global Magnitsky Sanctions Regulations; and 83 FR 30539-30541: Removal of the Sudanese Sanctions Regulations and Amendment of the Terrorism List Government Sanctions Regulations 

 
*
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.  
 
*
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:
8 Jun 2018: Harmonized System Update 1809, containing 901 ABI records and 192 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_a0314
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.  If you would to submit material for inclusion in the The Export/Import Daily Update (“Daily Bugle”), please find instructions here.

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


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

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

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