18-0828 Tuesday “Daily Bugle”

18-0828 Tuesday “Daily Bugle”

Tuesday, 28 August 2018

The Daily Bugle is a free daily newsletter from Full Circle Compliance, containing changes to export/import regulations (ATF, DOE/NRC, Customs, NISPOM, EAR, FACR/OFAC, FAR/DFARS, FTR/AES, HTSUS, and ITAR), plus news and events.  Subscribe 
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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/DDTC: “Registration for 19 Sep In-House Seminar Closes on Friday”
  1. Bloomberg: “Judge Extends 3-D Printed Gun Ban Pending State Challenge”
  2. Global Trade News: “India Announces Tariff Hike – U.S. and Chinese Imports to Be Impacted”
  3. ST&R Trade Report: “Forced Labor Risk Management Principles Recommended for Importers”
  1. A. De Busk, M.L. Duffy & S. Kane: “U.S. Moves Cautiously to Impose Mandated Sanctions Against Russia, While Congress Mulls Further Measures”
  1. ECS Presents “ITAR/EAR Symposium & Boot Camp” in Annapolis, MD on 11-13 Sep
  2. FCC to Present U.S. Export Controls Awareness Training Course for Non-U.S. Organizations, 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 Aug 2018), FACR/OFAC (29 Jun 2018), FTR (24 Apr 2018), HTSUS (14 Aug 2018), ITAR (14 Feb 2018) 
  3. Weekly Highlights of the Daily Bugle Top Stories 



[No items of interest noted today.] 

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

* Commerce/BIS; NOTICES; Agency Information Collection Activities; Proposals, Submissions, and Approvals: Chemical Weapons Convention Provisions of Export Administration Regulations [Publication Date: 29 Aug 2018.]
* Justice/ATF; NOTICES; Agency Information Collection Activities; Proposals, Submissions, and Approvals: Application for Explosives License or Permit [Publication Date: 29 Aug 2018.]

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State/DDTC, 28 Aug 2018.) 
Registration for The Directorate of Defense Trade Controls (DDTC) In-House Seminar for Wednesday, September 19th, 2018 opens August 10th and closes August 31st. Attendees will be identified on a first-come, first-serve basis. Preference will be given to new registrants and small-businesses. A completed registration form must be sent to the DDTC In-House Seminar email, as an attachment, DDTCInHouseSeminars@state.gov.
For more information, please visit the DDTC Outreach Programs page and click the “In-House Seminars” tab.

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Bloomberg: “Judge Extends 3-D Printed Gun Ban Pending State Challenge”

Bloomberg, 27 Aug 2018.) [Excerpts.] 
A U.S. judge extended a ban on publishing blueprints for 3-D printed guns online, handing a procedural victory to states and gun-control groups that argue the practice will make it easy for criminals and terrorists to get their hands on untraceable firearms.
The injunction against Austin, Texas-based Defense Distributed was issued Monday by U.S. District Judge Robert Lasnik in Seattle, where 19 states and the District of Columbia sued to block it from making technical plans for an array of guns available globally on the internet with the government’s blessing. The injunction will remain in place until the suit is resolved.
The 3-D printing of guns gained urgency after Defense Distributed reached a surprise settlement with President Donald Trump’s administration resolving a 2015 government challenge. Former President Barrack Obama’s administration had sued the firm on national-security grounds, alleging the publishing of gun schematics violated the federal Arms Export Control Act. … 

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Global Trade News: “India Announces Tariff Hike – U.S. and Chinese Imports to Be Impacted” 

Integration Point Blog, 27 Aug 2018.) [Excerpts.] 
India’s Tariff Hike on the United States  
On June 20, 2018 India proposed a retaliatory tariff on certain goods imported in significant proportion from the U.S. The decision was reached in response to the increased tariff on steel and aluminum imposed by the U.S. in March to protect its national security. According to the notification released on August 3, 2018 by India’s Ministry of Finance (Department of Revenue), the increased tariff which was to come into effect on August 4, 2018 will now come into force on September 18, 2018.
On June 14, 2018 India informed the World Trade Organization (WTO) that it would impose additional duty on 30 commodities imported from the U.S. In the revised notification submitted to the WTO Council for Trade in Goods, India argued that the suspension of concessions or other obligations on these commodities was on par to the losses India would incur due to the safeguard measures adopted by the U.S. earlier this year.
By implementing this measure India would breach the WTO mandated bound tariff rates, the rate which is applied to all the WTO member states under the most favored nation scheme. … 
India’s Tariff Hike on China 

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Trade Report: “Forced Labor Risk Management Principles Recommended for Importers”

(Source: Sandler, Travis & Rosenberg Trade Report, 28 Aug 2018.)
U.S. Customs and Border Protection has posted to its website a list of recommended business practices to address the risk of forced labor in global supply chains.
19 USC 1307 prohibits the importation of goods mined, produced, or manufactured, wholly or in part, in any foreign country by forced labor, including convict labor, forced child labor, and indentured labor. Such goods are subject to exclusion and/or seizure and may lead to criminal investigation of the importer. The Trade Facilitation and Trade Enforcement Act of 2015 closed a loophole in this law that had allowed imports of certain forced labor-produced goods if they were not produced domestically in such quantities as to meet consumptive demands. When information reasonably indicates that violative goods are being imported CBP may issue withhold release orders against those goods.
CBP encourages stakeholders to closely examine their supply chains to ensure that imported goods are not mined, produced, or manufactured, wholly or in part, with prohibited forms of labor; i.e., slave, convict, forced child, or indentured labor. To that end, the agency has recommended the Department of Labor’s Comply Chain principles for creating a social compliance system as a best business practice.
Comprehensive Supply Chain Profile
  – Does the U. S. importer have a comprehensive understanding of the natural supply chain from sourcing of raw materials to subcontracting manufacturing to the assembly of finished goods destined for the U.S.?
  – With respect to its products, has the U.S. importer conducted a comprehensive risk assessment of forced labor in the global supply chain and conducted onsite production visits to the factory, farm, or mine for high-risk countries?
  – Is the U.S. importer engaged with industry specific multi-stakeholder initiatives?
Written Code of Conduct
  – Has the U.S. importer developed and applied a formal written code of conduct for all international interactions associated with the sourcing of foreign goods?
  – Is the code of conduct shared with all suppliers in the global supply chain as a stand-alone document or as addendums to purchase orders, contracts, or letters of credit?
  – Does the code of conduct include specific language as to minimum labor standards as specified by the International Labor Organization, other intergovernmental organizations, or multi-stakeholder initiatives?
Robust Internal Control Process
  – Are the internal controls established according to professionally recognized objective audit standards?
  – Does the U.S. importer have sufficient internal controls in place to effectively deter and detect instances of noncompliance with the code of conduct and other best practices?
  – Does the U.S. importer conduct periodic compliance audits using in-house personnel or external audit professionals?
  – Does the U.S. importer’s internal control process cover every level of the product supply chain including relevant business documents?
  – Does the U.S. importer have adequate corrective action plans to address noncompliance and deter weak business practices?

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A. De Busk, M.L Duffy & S. Kane: “U.S. Moves Cautiously to Impose Mandated Sanctions Against Russia, While Congress Mulls Further Measures”

Dechert LLP, 27 Aug 2018.)
* Authors: Amanda DeBusk, Esq., 
amanda.debusk@dechert.com; Melissa L. Duffy, Esq.,  
All of Dechert LLP. 

On August 24, 2018, the U.S. Department of State announced a new but limited export licensing policy for defense and national security-sensitive goods and technology to Russia, effective August 27, 2018. The export licensing policy, as well as other restrictions related to arms sales and foreign assistance, were required by law following the Trump Administration’s finding of Russian culpability for the March 2018 chemical poisonings in the United Kingdom. However, the State Department did not go as far as the Chemical and Biological Weapons Control and Warfare Elimination Act of 1991 (the CBW Act) would have allowed; the State Department invoked its waiver authority to limit the scope of several provisions and focus the restrictions on Russian government entities, as well as state-owned and state-funded enterprises.
The licensing policy essentially formalizes current export control policies already in effect toward Russia. Although the CBW Act requires the imposition of additional sanctions in 90 days unless certain conditions are met, the limited nature of this action suggests the Administration will seek to limit the scope of further measures. Not to be deterred, however, Congress is weighing two bills that could significantly escalate financial and trade sanctions against Russia, signaling bipartisan frustration with the Administration’s use of existing authorities to counter Russia’s alleged interference in U.S. elections.
CBW Act Sanctions
On March 4, 2018, former Russian military officer and U.K. intelligence agent Sergei Skripal and his daughter fell victim to an apparent poisoning in Salisbury, England. A U.K. investigation revealed the use of a Novichok nerve agent and attributed the attack to Russia, and U.S. government officials announced their support of the U.K. government’s position. Congress then submitted a request to the President under the CBW Act seeking a determination as to whether Russia had used chemical or biological weapons in violation of international law. Under the CBW Act, the President had 60 days to respond, and if he so determined or did not respond within 60 days, sanctions automatically would be triggered.
On August 6, 2018, the State Department made its formal finding, triggering a 15-day congressional notification period that ended on August 22, 2018.
On August 24, 2018, the Department of State published guidance on its imposition of sanctions under the CBW Act, which will remain in effect for at least one year. The initial sanctions include:
  – The termination of foreign assistance except for urgent humanitarian assistance and food or other agricultural commodities or products – the Administration has entirely waived this provision, thus that sanction is not being implemented;
  – The termination of foreign military sales and an export licensing ban on defense articles;
  – The termination of foreign military financing;
  – The denial of U.S. government financial assistance, including through the Export-Import Bank of the United States; and
  – A licensing policy of denial for exports of national security-sensitive goods and technology (meaning, dual-use items that would require a license or exception for Russia) to the Russian government and state-owned or funded enterprises.
The last of these measures was expected to be the most impactful. However, the Department of State invoked a national security waiver under the CBW Act to substantially narrow the scope of that provision, essentially continuing a pre-existing export licensing policy depending on the end-use and end-user. Moreover, the licensing policy does not add new licensing requirements or impact items that would not require a license for export to Russia (e.g., EAR99 items). For transactions requiring a license, exceptions are still valid for the following types of exports: U.S. government and international organization end users, certain encryption item transactions, repairs and replacements of previously authorized products, personal baggage, temporary exports (e.g., tools of trade), limited-use software and technology, certain previously authorized re-exports, civilian end users, and aviation/vessel related end uses. [FN/1]
For the following types of transactions, currently licensed exports of dual-use items are unaffected, and new license requests will be subject to the case-by-case licensing policy in place before August 27, 2018:
  – Exports and reexports to wholly-owned U.S. subsidiaries in Russia;
  – Exports and reexports for civil fixed-wing passenger aviation safety;
  – Deemed exports and reexports of technology to Russian nationals;
  – Exports and reexports in support of government space cooperation and commercial space launches;
  – Exports and reexports for commercial end users and civil end uses in Russia.
Exports of all defense articles and services are subject to a formal licensing policy of denial, with a narrow carve-out for case-by-case license approval for space cooperation activities. Dual-use products and technology requiring a license for Russia are subject to a formal licensing policy of denial for the Russian government and state-owned or state-funded enterprises. This essentially is a continuation of the existing licensing policy already implemented informally by the U.S. government for sensitive exports to Russia.
Russia will face additional sanctions under the CBW Act unless President Trump certifies to Congress within three months of August 22 that Russia is no longer using chemical or biological weapons in violation of international law, has committed to ceasing such practices in the future, and is willing to allow inspections by the United Nations or other observers. If Russia does not meet these requirements, then the CBW Act requires the U.S. government to impose three or more of the following sanctions (which may similarly be subject to waivers):
  – A prohibition on all exports other than food and agricultural commodities;
  – Restrictions on the import of Russian goods;
  – A ban on Russian government-owned air carriers traveling to or from the United States;
  – Halting the provision of loans or credit by U.S. banks to the Russian government (except for the purchase of food or agricultural commodities);
  – Opposition by the U.S. government to any provision by international financial institutions of financial or technical assistance to Russia; or
  – A downgrading of diplomatic relations between the United States and Russia.
Some of these measures could result in a significant escalation of U.S. sanctions against Russia-most prominently, by authorizing a near-comprehensive trade embargo against Russia. However, the Administration could also meet the requirements of the CBW Act by choosing three less impactful measures-such as a downgrading of diplomatic relations, opposition to international financial institution assistance, and the prohibition on loans or credit issued to the Russian government, measures that are largely in place already. The Administration could further soften the blow by issuing additional waivers under the CBW Act, or by invoking contract sanctity provisions that would limit the impact of sanctions on existing business. Based upon the initial application of measures under the CBW Act, it does not appear the Administration is keen to significantly and indiscriminately escalate sanctions against Russia. However, it may feel compelled to take some action in the coming months in order to alleviate pressure it is facing from Congress.
Pending Sanctions Legislation
The U.S. Congress is weighing two bills that could expand further sanctions against Russia for its alleged role in U.S. election hacking and other acts of cybercrime. During hearings on August 21, 2018, members of the Senate Foreign Relations and Banking Committees emphasized the need to strengthen existing sanctions against Russia.
Defending American Security from Kremlin Aggression Act of 2018 
A bipartisan coalition of Senators submitted legislation in August that would establish sanctions against a wide range of Russian individuals and entities. Under the Defending American Security from Kremlin Aggression Act of 2018 (DASKAA), the President would be required to expand existing sanctions to target a wide range of Russian entities and individuals.
Specifically, the legislation would mandate sanctions against political figures, oligarchs, parastatal entities, and affiliates who facilitate illicit or corrupt activities on behalf of President Vladimir Putin. It would also require the President to impose new sanctions targeting investments in Russian energy and oil projects and Russian sovereign debt issuances, and it would block the assets of one or more key Russian financial institutions. In implementing the latter provisions, the President would be required to prescribe regulations prohibiting U.S. persons from dealing in any way with a variety of financial instruments-including bond issuances, foreign exchange swap agreements, or any other financial instruments determined to be Russian sovereign debt-with a maturity of more than 14 days.
Defending Elections from Threats by Establishing Redlines Act of 2018
The U.S. Senate is also considering the Defending Elections from Threats by Establishing Redlines Act of 2018 (the DETER Act), which would require the Office of the Director of National Intelligence (DNI) to assess, within 30 days after any U.S. election, whether a foreign government interfered with the election in any manner and to report its findings to Congress. The bill would establish specific penalties only if the DNI finds that the Russian government interfered in an election. In such cases, the U.S. government would block the assets of a variety of Russian entities and individuals, including financial institutions, energy companies, defense and intelligence firms, state-owned entities, and political figures and oligarchs. The severity of the measures that would be automatically triggered in such an event appears to make the DETER Act less likely to gain adequate support in Congress.
In addition to establishing potential penalties against Russia, the bill would also require certain reporting by the President, who would be tasked with (1) briefing appropriate congressional committees on any governments likely to engage in election interference every 90 days and (2) submitting a report on appropriate deterrence strategies against the governments of China, Iran, North Korea, and other countries determined by the President to be likely to engage in election interference.
Although the Administration has taken a relatively cautious approach to the administration of sanctions under the CBW Act, it will face political pressure to move more aggressively against Russia in the coming months, especially if it seeks to head-off new legislation from Congress that would bind its hands even further. Under the circumstances, companies should expect an additional tightening of sanctions on Russia in the coming months, whether it is imposed under executive authorities or through new legislation.
  [FN/1] The waiver permits continued use of License Exceptions GOV, ENC, RPL, BAG, TMP, TSU, APR, CIV, and AVS. See 15 C.F.R. Part 740.

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ECS Presents “ITAR/EAR Symposium & Boot Camp” in Annapolis, MD on 11-13 Sep

(Source: S. Palmer, 
* What: The ECS ITAR/EAR Symposium & Boot Camp, Annapolis, MD
* When: September 11-13, 2018
* Sponsor: Export Compliance Solutions & Consulting (ECS)
* ECS Speaker Panel:  Timothy Mooney, Commerce/BIS; Matt Doyle, Lockheed; Matt McGrath, McGrath Law, Scott Jackson, Curtiss-Wright, Suzanne Palmer & Mal Zerden. 
* Register 
 for the three-day event or by calling 866-238-4018 or e-mail 

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FCC to Present U.S. Export Controls Awareness Training Course for Non-U.S. Organizations, 2 Oct in Bruchem, the Netherlands

(Source: Full Circle Compliance, events@fullcirclecompliance.eu.)
Our next academy course is specifically 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

Register before 2 September and get a 10% Early Bird discount on the course fee!

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Johann Wolfgang von Goethe (28 Aug 1749 – 22 Mar 1832; was a German writer and statesman. His works include four novels; epic and lyric poetry; prose and verse dramas; memoirs; an autobiography; literary and aesthetic criticism; and treatises on botany, anatomy, and color.)
  – “Knowing is not enough; we must apply. Willing is not enough; we must do.”
  – “Correction does much, but encouragement does more.”

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

The official versions of the following regulations are published annually in the U.S. Code of Federal Regulations (C.F.R.), but are updated as amended in the Federal Register.  The latest amendments to applicable regulations are listed below.
: 27 CFR Part 447-Importation of Arms, Ammunition, and Implements of War
  – Last Amendment: 15 Jan 2016: 81 FR 2657-2723: Machineguns, Destructive Devices and Certain Other Firearms; Background Checks for Responsible Persons of a Trust or Legal Entity With Respect To Making or Transferring a Firearm. 
: 19 CFR, Ch. 1, Pts. 0-199
  – Last Amendment: 12 Jun 2018: 83 FR 27380-27407: Air Cargo Advance Screening (ACAS)

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

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

  – Last Amendments: 3 Aug 2018: 83 FR 38021-38023: Revision of Export and Reexport License Requirements for Republic of South Sudan Under the Export Administration Regulations; and 83 FR 38018-38021: U.S.-India Major Defense Partners: Implementation Under the Export Administration Regulations of India’s Membership in the Wassenaar Arrangement and Addition of India to Country Group A:5

: 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 

: 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
  – 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.  
, 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 Aug 2018: Harmonized System Update 1812, containing 27 ABI records and 6 harmonized tariff records.

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

  – 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 

, 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.  

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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 

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* 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, Alex Witt. 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.

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