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18-0911 Tuesday “Daily Bugle”

18-0911 Tuesday “Daily Bugle”

Tuesday, 11 September 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 Posts Interim Final Rule on Submissions of Exclusion Requests and Objections to Submitted Requests for Steel and Aluminum
  2. Commerce/BIS Seeks Comments on Submitting Requests for Expedited Relief from Quantitative Limits–Existing Contract: Section 232 National Security Investigations of Steel Imports
  1. Items Scheduled for Publication in Future Federal Register Editions
  2. Commerce/BIS: (No new postings.)
  3. DoD/DSS Reschedules “Applied Research on Exfiltration and Security” Speaker Series
  4. State/DDTC: (No new postings.)
  1. Global Trade News: “The 2018 Trade Symposium: Understanding CBP’s Key Areas of Focus”
  2. ST&R Trade Report: “U.S. Hints at Trade Agreement with EU, Seeks Deal on Technical Barriers This Year”
  1. M. Lester: “SocGen Expects €1.1bn Penalty Over U.S. Sanctions Violations”
  2. M. Volkov: “State Department Announces Additional Sanctions Against Russia”
  1. ECS Presents “Seminar Level II: Managing ITAR/EAR Complexities” in Scottsdale, AZ on 26-27 Mar 2019
  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 (4 Sep 2018), FACR/OFAC (29 Jun 2018), FTR (24 Apr 2018), HTSUS (14 Aug 2018), ITAR (30 Aug 2018) 
  3. Weekly Highlights of the Daily Bugle Top Stories 

EXIMITEMS FROM TODAY’S FEDERAL REGISTER

EXIM_a1

1. Commerce/BIS Posts Interim Final Rule on Submissions of Exclusion Requests and Objections to Submitted Requests for Steel and Aluminum
(Source: Federal Register, 11 Sep 2018.) [Excerpts.]
 
83 FR 46026-46065: Submissions of Exclusion Requests and Objections to Submitted Requests for Steel and Aluminum
* AGENCY: Office of Technology Evaluation, Bureau of Industry and Security, U.S. Department of Commerce.
* ACTION: Interim final rule.
* SUMMARY: On March 8, 2018, President Trump issued Proclamations 9704 and 9705 (referred to henceforth as the “Proclamations”), imposing duties on imports of aluminum and steel. The Proclamations also authorized the Secretary of Commerce (referred to henceforth as the “Secretary”) to grant exclusions from the duties if the Secretary determines the steel or aluminum article for which the exclusion is requested is not “produced in the United States in a sufficient and reasonably available amount or of a satisfactory quality” or should be excluded “based upon specific national security considerations.”
   On March 19, 2018, the Department issued an interim final rule (referred to henceforth as the “March 19 rule”), setting forth the requirements a directly affected party located in the United States must satisfy when submitting exclusion requests. The March 19 rule also set forth the requirements that U.S. parties must meet when submitting objections to exclusion requests. The March 19 rule amended the National Security Industrial Base Regulations to add two new supplements.
   The rule published today by BIS, on behalf of the Secretary, revises the two supplements added by the March 19 rule. The revisions are informed by the comments received in response to the March 19 rule and the U.S. Department of Commerce’s (referred to henceforth as “the Department”) experience with managing the exclusion and objection process. The Department understands the importance of having a transparent, fair and efficient exclusion and objection process. The publication of today’s rule should make significant improvements in all three respects, but due to the scope of this new process, BIS is publishing today’s rule as an interim final rule with request for comments.
* DATES:
   – Effective date: This interim final rule is effective September 11, 2018.
   – Comments: Comments on this interim final rule must be received by BIS no later than November 13, 2018.
   – See SUPPLEMENTARY INFORMATION section for information on submitting exclusion requests, objections thereto, rebuttals, and surrebuttals.
* ADDRESSES: All comments on this interim final rule must be submitted by one of the following methods:
   – By the Federal eRulemaking Portal. Comments on this interim final rule may be submitted to regulations.gov docket number BIS-2018-0016.
   – By email directly to publiccomments@bis.doc.gov. Include RIN 0694-AH55 in the subject line.
   – By mail or delivery to Regulatory Policy Division, Bureau of Industry and Security, U.S. Department of Commerce, Room 2099B, 14th Street and Pennsylvania Avenue NW, Washington, DC 20230. Refer to RIN 0694-AH55.
* FOR FURTHER INFORMATION CONTACT: Brad Botwin, Director, Industrial Studies, Office of Technology Evaluation, Bureau of Industry and Security, U.S. Department of Commerce (202) 482-5642, Steel232@bis.doc.gov regarding provisions in this rule specific to steel exclusion requests and (202) 482-4757, Aluminum232@bis.doc.gov regarding provisions in this rule specific to aluminum exclusion requests.
* SUPPLEMENTARY INFORMATION: …
   On March 19, 2018, the Department issued an interim final rule, setting forth the requirements U.S. businesses must satisfy when submitting exclusion requests. On behalf of the Secretary, BIS published the March 19 rule, Requirements for Submissions Requesting Exclusions from the Remedies Instituted in Presidential Proclamations Adjusting Imports of Steel into the United States and Adjusting Imports of Aluminum into the United States; and the filing of Objections to Submitted Exclusion Requests for Steel and Aluminum (83 FR 12106). The March 19 rule also set forth the requirements that U.S. parties must meet when submitting objections to exclusion requests. The March 19 rule amended the National Security Industrial Base Regulations to add two new supplements, Supplements No. 1 (for steel exclusion requests) and No. 2 (for aluminum exclusion requests) to part 705. The Department started this process with the publication of the March 19 rule and is continuing that process to make various improvements with the publication of today’s rule.
 
Updates & Improvements to Section 232 Steel and Aluminum Exclusion Request and Objection Processes
 
   The rule published today by BIS, on behalf of the Secretary, makes changes to the two supplements added in the March 19 rule: Supplement No. 1 to Part 705–Requirements for Submissions Requesting Exclusions from the Remedies Instituted in Presidential Proclamation 9705 of March 8, 2018 Adjusting Imports of Steel Articles into the United States; and to Supplement No. 2 to Part 705–Requirements for Submissions Requesting Exclusions from the Remedies Instituted in Presidential Proclamation 9704 of March 8, 2018 to Adjusting Imports of Aluminum into the United States.
   The rule published today also makes needed changes to the two supplements to address the directives included in the Presidential Proclamations 9777 and 9776 of August 29, 2018, whereby President Trump directed that as soon as practicable, the Secretary of Commerce shall issue procedures for requests for exclusions described in clause 1 and clause 2 of these two proclamations to allow for exclusion requests for countries subject to quantitative limitations. Today’s rule makes changes to add clause 1. The Department has already created a separate exclusion process for clause 2 on the Commerce website at www.bis.doc.gov/index.php/232-steel, so no changes are made in today’s rule to address the directive included in clause 2 of Proclamation 9777. The rule published today will fulfill the Presidential directives included in the two most recent Proclamations, as well as the earlier Proclamations that directed the Secretary to create an exclusion process to ensure users of steel and aluminum in the United States would continue to have access to the steel and aluminum that they may need.
   The changes to the exclusion processes in this rule are informed by both the comments received in response to the March 19 rule and the Department’s experience with managing the exclusion process. The comments identified a number of areas where transparency, effectiveness and fairness of the exclusion and objection process could be improved, including adding a rebuttal and surrebuttal process. The Department has incorporated changes based on many of those comments and has also included other process improvements. The publication of today’s rule should make significant improvements in all three respects, but because of the scope of this new process, BIS is publishing today’s rule as a second interim final rule with request for comments.
   Since March 19, the Department has worked to develop its exclusion process to ensure that the duties and quantitative limitations protect our national security while also minimizing undue impacts on downstream U.S. industries. Two specific Commerce components have worked closely in this effort: BIS and the International Trade Administration (ITA). BIS is the lead agency deciding whether to grant steel and aluminum tariff exclusion requests, and ITA is analyzing requests and objections to evaluate whether there is domestic production available to meet the requestor’s product needs, as provided in the exclusion requests.
   Since March 19, the Department has diligently worked to develop its exclusion process to ensure that the duties and quantitative limitations protect critical U.S. national security while minimizing undue impacts on downstream U.S. industries. The Department has already taken several steps to improve the exclusion process, including expediting the grant of properly filed exclusion requests that receive no objections and present no national security concerns, as well as increasing and organizing the Department’s staff to efficiently process exclusion requests. The publication of today’s rule provides an exclusion process for steel and aluminum articles subject to quantitative limitations and is an important step in further improving the exclusion request and objection process, including through the addition of a rebuttal and surrebuttal process.
   As of August 20, the Department had received more than 38,000 exclusion requests and more than 17,000 objections. To streamline the exclusion review process, the Department has already taken steps to expedite the granting of properly filed exclusion requests which receive no objections and present no national security concerns. The Department has also worked to increase and organize its staff to efficiently process exclusion requests. The publication of today’s rule is an important step in improving the exclusion and objection process.
 
Types of Comments the Department is Requesting on Today’s Rule
 
   The Department is not seeking comments on the duties and quantitative limitations or the exclusion and objection process overall, but rather on whether the specific changes included in this second interim final rule have addressed earlier concerns with the exclusion and objection process. Comments specific to the changes included in today’s rule will be the most helpful for the Department to receive, including comments on how the changes (e.g., the adding of a rebuttal and surrebuttal to the process) interact with the established exclusion and objection process and whether the commenters believe these changes improve the exclusion and objection process by making it more transparent, fair and efficient, as well as highlighting any unintended consequences of the changes made in today’s rule.
 
Public Comments and BIS Responses
 
   The public comment period on the March 19 rule closed on May 18, 2018. BIS received 67 public comments on the interim final rule. Most of the comments were well thought out and supported their positions with a great deal of specificity. Many commenters made comments on the imposition of duties and quantitative limitations and whether or not that was a good idea. Those comments are outside the scope of the March 19 rule that was focused on creating an exclusion and objection process, thus the Department is not summarizing or providing responses to those general comments on the duties and quantitative limitations. The Department is responding to comments regarding concerns on the downstream impacts of U.S. manufacturers that use steel and aluminum, which is directly relevant to whether the exclusion process created in the March 19 rule is efficient enough to mitigate those downstream end users’ concerns.
   Commenters were generally supportive and welcomed the idea of creating an exclusion process, but most of the commenters believed the exclusion process was not working well and needed to be significantly improved in order for it to achieve the intended purpose. The commenters covered a broad range of industries and included some of the largest companies in the world, along with small to mid-size (SME) enterprises expressing significant concern over the duties and quantitative limitations and the difficulties in managing the exclusion process. Several of the SMEs indicated that without an efficient exclusion process, it is likely they may not survive or will face significant cut backs in employment and business activities. Larger companies indicated that without an efficient exclusion process, it is likely that major projects that they may have otherwise undertaken will likely not be undertaken. Commenters from the oil and gas industries and petrochemical industries hit on these points.
   Many downstream manufacturers that use steel and aluminum were particularly concerned with suffering from higher input costs, while at the same time having to compete directly with foreign competitors in other countries; e.g., China, but also countries such as Canada and Mexico. Many commenters argued that the exclusion process was overly and unnecessarily restrictive and did not take into account how steel and aluminum are procured and used in the United States.
   Commenters supporting and opposing the duties and quantitative limitations submitted comments on what they thought needed to be changed in the exclusion and the objection process to make it more fair, efficient and effective. Commenters included references to arbitrary and capricious government action and laid out from their perspective how the exclusion and objection process could be legally challenged if not improved. …
   For any questions, call (202) 482-5642 (steel) or (202) 482-4757 (aluminum).
 
   Dated: September 5, 2018.
Wilbur L. Ross, Secretary of Commerce.

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EXIM_a2

2. Commerce/BIS Seeks Comments on Submitting Requests for Expedited Relief from Quantitative Limits–Existing Contract: Section 232 National Security Investigations of Steel Imports
(Source: Federal Register, 11 Sep 2018.) [Excerpts.]
 
83 FR 45882-45883: Submitting Requests for Expedited Relief from Quantitative Limits–Existing Contract: Section 232 National Security Investigations of Steel Imports
* AGENCY: Bureau of Industry and Security, Commerce.
* ACTION: Notice. …
* DATES: To ensure consideration, written comments must be submitted on or before November 13, 2018.
* ADDRESSES: Direct all written comments to Jennifer Jessup, Departmental Paperwork Clearance Officer, Department of Commerce, 1401 Constitution Avenue NW, Room 6616, Washington, DC 20230 (or via the internet at docpra@doc.gov.)
* FOR FURTHER INFORMATION CONTACT: Requests for additional information or copies of the information collection instrument and instructions should be directed to Mark Crace, BIS ICB Liaison, (202) 482-8093 or at mark.crace@bis.doc.gov.
* SUPPLEMENTARY INFORMATION: …
   In the Proclamation of August 29, President Trump directed that as soon as practicable, the Secretary of Commerce shall issue procedures for requests for exclusions described in clause 2 to allow for exclusion requests for countries subject to quantitative limitations. The U.S. Department of Commerce will create an exclusion process for clause 2 by posting the newly created form on the Commerce website. Requesters will complete this form and send the form, the required certification, and any needed attachments to the U.S. Department of Commerce at the email address steel232-exp@bis.doc.gov. The posting of this exclusion procedure on the Commerce website will fulfill the Presidential directive included in the most recent Proclamation, as well as the earlier Proclamations that directed the Secretary of Commerce to create an exclusion process to ensure users of steel in the United States would continue to have access to the steel that they may need.
   “The Secretary shall, on an expedited basis, grant relief from the quantitative limitation set forth in Proclamation 9740 and Proclamation9759 and their accompanying annexes for any steel article where (i) the party requesting relief entered into a written contract for production and shipment of such steel article before March 8, 2018; (ii) such contract specifies the quantity of such steel article that is to be produced and shipped to the United States consistent with a schedule contained in such contract; (iii) such steel article is to be used to construct a facility in the United States and such steel article cannot be procured from a supplier in the United States to meet the delivery schedule and specifications contained in such contract.” …
 
  Sheleen Dumas, Departmental Lead PRA Officer, Office of the Chief Information Officer.

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OGSOTHER GOVERNMENT SOURCES

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

* President; ADMINISTRATIVE ORDERS; Trading With the Enemy Act; Continuation of Certain Authorities (Presidential Determination No. 2018-11 of September 10, 2018) [Included in the Daily Bugle of 11 Sep 2018; Publication date: 12 Sep 2018.]
 
* Commerce/BIS; RULES; Entity List; Additions, Revisions, Removals [Initially scheduled for today’s Federal Register; Publication Date: 12 Sep 2018.]
 
* NRC; NOTICES; Agency Information Collection Activities; Proposals, Submissions, and Approvals [Concerns information collection entitled, “NRC Form 7, Application for NRC Export/Import License, Amendment, Renewal or Consent Request(s)”; Publication Date: 12 Sep 2018.]
 
* Treasury/OFAC; NOTICES; 
  – Blocking or Unblocking of Persons and Properties; and 
  – Sanctions Actions [Publication Dates: 12 Sep 2018.]

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OGS_a35. 
DoD/DSS Reschedules “Applied Research on Exfiltration and Security” Speaker Series
(Source: DoD/DSS, 11 Sep 2018.)
 
Due to the unpredictable track of Hurricane Florence and it is possible impact along the east coast, the Center for Development of Security Excellence is rescheduling the “Applied Research on Exfiltration and Security” Speaker Series, originally set for Thursday, September 13, 2018. Stay tuned for updates on the new date for this Speaker Series.

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OGS_a4
6. State/DDTC: (No new postings.)

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NWSNEWS

NWS_a17
. Global Trade News: “The 2018 Trade Symposium: Understanding CBP’s Key Areas of Focus” 

(Source: Integration Point Blog, 11 Sep 2018.)
 
On August 14-15, 2018, U.S. Customs and Border Protection (CBP) hosted its 2018 Trade Symposium in Atlanta, GA. During the conference, the agency provided insight on its current trade strategy as well as emerging priorities and trends, which will be the agency’s focus in the coming year. Below are several key areas of concentration.
 
Compliance Challenges With Ecommerce 
 
With the rapid growth of ecommerce trade, CBP is seeing a shift from the traditional methods of larger containerized shipments to small, low-value packages. The small, just-in-time packages of the ecommerce world can pose the same health, safety, and economic security risks as containerized shipments. And yet visibility to data elements that could assist in identifying high risk shipments is limited.
 
The growth of ecommerce isn’t showing any signs of slowing down. The number of small parcel shipments actually doubled between 2016 and 2017, a stark jump in growth compared to the incremental increases of the past. It will be critical for CBP to deal with the ecommerce boom through the modernization of regulatory and legal requirements, both in the U.S. and abroad.
 
The agency is concerned about how to handle low-value shipments under the $800 de minimis level and how to secure partners along the supply chain. CBP needs data, and advanced data at that, in order to find solutions that reduce risk. They are also considering emerging technologies such as blockchain and AI to address ecommerce challenges. Additionally, CBP continues its work with the World Customs Organization (WCO) on the eCommerce Working Group in an effort to identify global solutions to this challenge in a more standardized manner.
 
A key concern for the agency is how to educate and support small and midsize businesses, which are the core of ecommerce. These are the partners in the supply chain who generate and purchase ecommerce shipments, but may not understand what’s required of them to be compliant. CBP intends to provide information online, create targeted pamphlets, and offer suggestions on solutions that work for their size of business. Educating this audience will help CBP lower the overall risk of ecommerce shipments in the U.S.
 
This fall, CBP will also publish and share its eCommerce Roadmap outlining how CBP will accomplish their ecommerce goals.
 
Possible New Entry Type For Ecommerce Shipments
 
In order to automate and better administer ecommerce shipments, CBP is proposing an entry type 86 in ACE, designed for small, Section 321 de minimis shipments regulated by partner government agencies (PGAs). They are hoping to test in early fiscal 2019 for CBP. For the prototype, they are considering the following possible data elements: the shipper, unique identifier, consignee, country of origin, quantity, retail value, 10-digit Harmonized Tariff Schedule number, and the importer of record (IOR) number. The Filer must have the ability to do so in ABI/ACE. This initiative is the number one priority for CBP under the current ACE funding budget.
 
CBP is looking for input from the trade as they work through this prototype. Several points are still under discussion, such as where the legal responsibility for the entry lies. Mail facilities pose a particular challenge because they are unable to perform document reviews for every parcel that comes through the system. The agency is also struggling with privacy laws, as it impacts their ability to identify high risk shipments and entities.
 
Priority Concerns In The Regulatory Audit Process
 
CBP plans to modernize its regulatory audit process in the following three areas.
 
  – Section 232/301 Trade Remedies. The Section 232 and 301 trade remedies have had a big impact not only on the trade but also on CBP. The increased duties on specific commodities added another area of focus to the regulatory audit process. CBP is taking a progressive approach with respect to this risk and will be incorporating the Centers of Excellence and Expertise (CEE) for an informed compliance approach initially. Pamphlets providing guidance will be distributed, followed by potential site visits. Monitoring your transactions and paying close attention to valuation will be important. These trade remedy “safeguards” are viewed like existing Priority Trade Issues (PTIs), so if your goods fall within the trade remedies, and you are already subject to antidumping duties, your risk increases dramatically. Be aware that if you receive a notice for a Focused Assessment, CBP will not only audit your import operations but also investigate whether your commodities fall into the categories of the Section 301/232 tariffs. The agency will check compliance to see if you’re declaring properly, using the right HS number, and paying the proper duties.
  If you have HS numbers affected by the tariffs, then your risk profile for an audit is increased substantially. It’s imperative that you have excellent processes in place to ensure that your products are properly classified, that you’re capturing the necessary HS and supplementary data, and that you’re auditing post-entry.
  – Forced Labor. Forced labor is another area that CBP is working into the regulatory audit process. If you receive an inquiry from CBP about your controls for forced labor or about your social responsibility program, then make sure you respond. You may also want to include your legal department.
  An automated solution, with built-in data on forced labor, child labor, and/or indentured labor by country, can help identify areas of potential risk. Additionally, a denied party screening solution can help you determine if your business partners have CBP Withhold Release Orders in place, indicating that the merchandise being imported is suspected of being made with forced labor. It will be important that your company has a process in place to assess business partners on their controls regarding fair labor practices. Lastly, a supply chain compliance solution would allow you to create questionnaires for your suppliers with regard to forced labor and social responsibility practices.
  – Ecommerce. At this time, CBP isn’t taking specific actions regarding ecommerce. Because regulations are still being formulated, a wait-and-see approach is being taken. However, as regulations are established in the future, you can expect ecommerce to be tied into the regulatory audit process.
 
2019 Rollout Of Trusted Trader Program
 
The rollout of the Trusted Trader program is due to begin in CBP’s fiscal year 2019. The program will combine the security component of CTPAT and the trade compliance component of the Importer Self-Assessment (ISA) program. Integration Point is hosting a public webcast on this topic on September 25, 2018. You can click here to register.
 
New Minimum Security Criteria For CTPAT
 
CBP recently began the process of sharing the new Minimum Security Criteria (MSC) for the Customs Trade Partnership Against Terrorism (CTPAT) program. The new MSC have been in the works for two years, and this is the first revision since they were created sixteen years ago. The draft versions are being shared with existing CTPAT members for feedback and comment by mid-October 2018, along with workshops and webcasts designed to provide outreach to as many stakeholders as possible. All feedback will be reviewed and taken into consideration before publishing the new MSC. In early 2019, the new MSC will be rolled out in a phased approach, while taking the necessary time to educate the trade and prioritize feasibility.
 
Conclusion
 
CBP certainly has a large number of objectives to accomplish, and this blogpost provides a snapshot of the most prominent issues that the agency must oversee now and in the future. As trade compliance professionals, you should stay up-to-date on these issues, especially considering the current trade environment where regulations can change rapidly.

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NWS_a28. 
ST&R Trade Report: “U.S. Hints at Trade Agreement with EU, Seeks Deal on Technical Barriers This Year” 

 
The U.S. is hoping to reach an agreement on technical barriers to trade with the European Union in November as an “early harvest” in an ongoing effort to improve bilateral trade relations, according to a statement by the Office of the U.S. Trade Representative following talks Sept. 10 between USTR Robert Lighthizer and EU Trade Commissioner Cecilia Malmström. USTR said it will also begin consultations with Congress under the trade promotion authority law “to facilitate negotiations on longer-term outcomes.”
 
The U.S. agreed in July not to impose further tariffs on imports from the EU based on a mutual commitment to work toward (a) zero tariffs, zero non-tariff barriers, and zero subsidies on non-auto industrial goods; (b) lower barriers and increased trade in services, chemicals, pharmaceuticals, and medical products; (c) greater U.S. exports to the EU of soybeans and liquefied natural gas; (d) a dialogue on standards to ease trade, reduce bureaucratic obstacles, and lower costs; (e) reform of the World Trade Organization; and (f) resolution of the U.S. additional tariffs on steel and aluminum and the EU’s retaliatory tariffs on U.S. goods.
 
An executive working group was established to advance these efforts and identify short-term measures to facilitate commercial exchanges and assess existing tariff measures. USTR states that at the initial meeting of that working group Sept. 10, Lighthizer and Malmström addressed each of the above topics and said they would meet again at the end of September to continue discussions. Professional staff will hold further talks in October on identifying and reducing tariff and non-tariff barriers to trade, followed by a ministerial meeting in November to finalize outcomes in a number of areas, including a TBT agreement.
 
According to a Bloomberg article, USTR’s note about seeking TPA authority from Congress suggests that “the two sides are hoping to make substantial changes to their commercial relationship” that would require “major changes to U.S. law.” AFP quoted an unnamed European source as adding that an agreement on a framework document could come “perhaps by the end of the year.”

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COMMCOMMENTARY

COMM_a09. 
M. Lester: “SocGen Expects €1.1bn Penalty Over U.S. Sanctions Violations”
(Source: 
European Sanctions Blog, 10 Sep 2018.) 
 
* Author: Maya Lester, Esq., Brick Court Chambers,
maya.lester@brickcourt.co.uk, +44 20 7379 3550.
 
French multinational bank Société Générale issued a 
statement last week that it had 
“entered into a phase of more active discussions” with U.S. authorities with a view to reaching a resolution in the coming weeks over allegations that it had processed U.S. dollar transactions for persons subject to US sanctions. In consequence, SocGen has allocated approximately €1.1 billion to the matter, and expects the U.S. penalty to be 
“almost entirely covered” by that amount.

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(Source: 
Volkov Law Group Blog, 10 Sep 2018. Reprinted by permission.) 
 
* Author: Michael Volkov, Esq., Volkov Law Group, 
mvolkov@volkovlaw.com, 240-505-1992. 
 
Okay, I have to admit – it is getting hard to keep up with all the changes to the Russia Sanctions Program.  The Treasury Department, Office of Foreign Asset Control’s imposition of the Oligarch Sanctions (
here) and Congress’ passage of the Countering America’s Adversaries Through Sanctions Act (“CAATSA”) (
here) has made life difficult.  There is no way anyone can really follow the bouncing ball in this area.
 
All of this started when Russia annexed Crimea, moved into the Ukraine, and shot down the Malaysia Airlines passenger plane in July 2014.  From there, controversies have continued to broil into the Trump administration (as we all know).
 
Just to make everything a little bit more difficult, on August 9, 2018, the State Department announced (
here) new sanctions against Russia for the use of a “Novichok” nerve agent in an attempt to assassinate UK citizen Sergei Skripal and his daughter Yulia Skripal, based on its August 6, 2018, determination under the Chemical and Biological Weapons Control and Warfare Elimination Act of 1991 (“CBW Act”) that the Russian Government has used chemical or biological weapons in violation of international law.  The CBW Act requires the President to impose sanctions on a foreign country with respect to which such a determination has been made.
 
The new sanctions took effect on August 27, 2018 and will be in place for one year. (
Here)  Under the CBW, the State Department is required to implement comprehensive sanctions covering a broad array of items, unless specific exceptions or waivers are made based on national security interests.
 
These measures shall be implemented by the responsible departments and agencies of the United States Government and will remain in place for at least one year and until further notice.
Trade compliance officers will face new challenges and wrinkles from the State Department’s actions, especially for those companies seeking licenses for exports from the State Department’s DTCC for ITAR-related items and the Commerce Department for dual-use items.
 
Arms Sales and Space Program Exception: The State Department announced the termination of (a) sales to Russia of defense articles, defense services, or design and construction services subject to ITAR, and (b) licenses for the export to Russia of any item on the ITAR’s United States Munitions List. However, the State Department waived these sanctions with respect to the issuance of licenses in support of government space cooperation and commercial space launches.  Licenses for such items and activities will be issued on a case-by-case basis consistent with the export licensing policy for Russia.
 
Arms Sales Financing:  The State Department terminated all foreign military financing for Russia.
 
Government Credits and Financial Assistance:  The State Department announced the termination of all credit, credit guarantees, or other financial assistance by any department, agency, or instrumentality of the US Government, including by the Export-Import Bank of the United States.
 
Prohibition on Exports of Goods and Technology Subject to National Security Controls and Waivers: The State Department prohibited all exports and reexports to Russia of goods and technology subject to National Security (“NS”) controls on the Commerce Control List (“CCL”) contained in Supplement No. 4 to Part 774 of the Export Administration Regulations (15 C.F.R. Part 730 
et seq., “EAR”), except the following waivers:
 
Exports or reexports made pursuant to certain EAR license exceptions contained are allowed, including but not limited to exports or reexports under License Exception ENC, which applies to certain encryption-related items.
 
Certain Exports/Reexports Under New Licenses Permitted: The “new” license waiver applies only to licenses issued after the enactment of the CBW Act sanctions (i.e., issued after August 24, 2018). The State Department has not issued guidance on this point thus far.   The new license exception will apply to the following:
 
  – Exports and reexports necessary for flight safety of civil fixed-wing passenger aviation.
  – Exports and reexports for deemed exports and reexports to Russian nationals.
  – Exports and reexports to wholly-owned Russian subsidiaries of US companies.
  – 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.

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TECEX/IM TRAINING EVENTS & CONFERENCES

 
* What: Seminar Level II: Managing ITAR/EAR Complexities; Scottsdale, AZ
* When: March 26-27, 2019
* Sponsor: Export Compliance Solutions (ECS)
* ECS Instructors:  Suzanne Palmer; Lisa Bencivenga
* Register here or by calling 866-238-4018 or e-mail spalmer@exportcompliancesolutions.com

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ENEDITOR’S NOTES

D. H. Lawrence (David Herbert Lawrence; 11 Sep 1885 – 2 Mar 1930; was an English writer and poet, best known for his novels Sons and Lovers, The Rainbow, Women in Love and Lady Chatterley’s Lover.)
  – “Life is ours to be spent, not to be saved.”
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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: 4 Sep 2018: 83 FR 44821-44828: Addition of Certain Entities to the Entity List, Revision of Entries on the Entity List and Removal of Certain Entities From the Entity List

  
*
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: 14 Aug 2018: Harmonized System Update 1812, containing 27 ABI records and 6 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: 30 Aug 2018:
83 FR 44228-44229
, USML Chapter XI(c).

  – The only available fully updated copy (latest edition: 30 Aug 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, 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.

* 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.


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