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18-1016 Tuesday “Daily Bugle”

18-1016 Tuesday “Daily Bugle”

Tuesday, 16 October 2018

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  1. State/DDTC Seeks Comments on Form DS-4294, Brokering Prior Approval (License) 
  1. Items Scheduled for Publication in Future Federal Register Editions
  2. Commerce/BIS: (No new postings.)
  3. Justice: “Chinese Intelligence Officer Charged with Economic Espionage Involving Theft of Trade Secrets from Leading U.S. Aviation Companies”
  4. Justice: “Suburban Chicago Man Guilty of Trying to Illegally Export Guns and Ammunition to Haiti”
  5. State/DDTC Requests Industry to Test New Registration and Advisory Opinion Applications
  6. EU Publishes New Chemical Weapons Sanctions Regime
  7. UK/ECJU Posts Strategic Export Controls Licensing Data for Apr – Jun 2018
  8. Singapore Customs Posts Changes to the Prohibition of Imports, Exports, Transshipments and Goods in Transit from or to North Korea
  1. Defense News: “Saudi Arabia Is Losing Lindsey Graham, a Key Ally of Us Arms Sales”
  2. Deutsche Welle: “EU Paves Way for Russia Sanctions over Chemical Weapons”
  3. Reuters: “India to Raise Import Tariffs on Electronic and Communication Items”
  4. ST&R Trade Report: “GSP Eligibility of Various Countries Subject of 29 Nov Hearing”
  1. G.M. Cinelli, K.J. Nunnenkamp & S.P. Mahinka: “CFIUS Scratches the FIRMMA Itch – Pilot Programs Begin Early Implementation”
  2. M. Lester: “What Will UK Sanctions Look like If There Is No Brexit Deal by March 2019?”
  3. R. Broadhurst: “Downloading Firearms”
  1. Bartlett’s Unfamiliar Quotations 
  2. Are Your Copies of Regulations Up to Date? Latest Amendments: ATF (15 Jan 2016), Customs (19 Sep 2018), DOD/NISPOM (18 May 2016), EAR (26 Sep 2018), FACR/OFAC (29 Jun 2018), FTR (24 Apr 2018), HTSUS (11 Oct 2018), ITAR (4 Oct 2018) 
  3. Weekly Highlights of the Daily Bugle Top Stories 

EXIMITEMS FROM TODAY’S FEDERAL REGISTER

EXIM_a1

1. State/DDTC Seeks Comments on Form DS-4294, Brokering Prior Approval (License)

(Source: Federal Register, 16 Oct 2018.) [Excerpts.]
 
83 FR 52298-52299: 60-Day Notice of Proposed Information Collection: Brokering Prior Approval (License)
* ACTION: Notice of request for public comment. …
* DATES: The Department will accept comments from the public up to December 17, 2018.
* ADDRESSES: You may submit comments by any of the following methods:
  – Web: Persons with access to the internet may comment on this notice by going to www.Regulations.gov. You can search for the document by entering “Docket Number: DOS-2018-0043” in the Search field. Then click the “Comment Now” button and complete the comment form.
  – Regular Mail: Send written comments to: Directorate of Defense Trade Controls, Attn: Andrea Battista, 2401 E St. NW, Suite H-1205, Washington, DC 20522-0112.
   You must include the subject (PRA 60 Day Comment), information collection title Brokering Prior Approval (License), and OMB control number (1405-0142) in any correspondence.
* FOR FURTHER INFORMATION CONTACT: Direct requests for additional information regarding this collection to Andrea Battista, who may be reached at BattistaAL@state.gov or 202-663-3136.
* SUPPLEMENTARY INFORMATION:
  – Title of Information Collection: Brokering Prior Approval.
  – OMB Control Number: 1405-0142. …
  – Originating Office: Directorate of Defense Trade Controls (DDTC).
  – Form Number: DS-4294. …
  – Abstract of Proposed Collection: In accordance with part 129 of the International Traffic in Arms Regulations (ITAR), U.S. and foreign persons who wish to engage in ITAR-controlled brokering activity of defense articles and defense services must first register with DDTC. Brokers must then submit a written request for approval to DDTC and must receive DDTC’s consent prior to engaging in such activities unless exempted. This information is currently used in the review of the brokering request submitted for approval and to ensure compliance with defense trade statutes and regulations. It is also used to monitor and control the transfer of sensitive U.S. technology. …
 
  Anthony M. Dearth, Chief of Staff, Directorate of Defense Trade Controls, U.S. Department of State.

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OGSOTHER GOVERNMENT SOURCES

OGS_a12. Items Scheduled for Publication in Future Federal Register Editions
(Source: Federal Register)

* U.S. Customs and Border Protection; NOTICES; Agency Information Collection Activities; Proposals, Submissions, and Approvals: Application for Extension of Bond for Temporary Importation [Publication Date: 17 October 2018.]  
* * * * * * * * * * * * * * * * * * * *

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(Source:
Justice, 10 Oct 2018.) [Excerpts.]
 
A Chinese Ministry of State Security (MSS) operative, Yanjun Xu, aka Qu Hui, aka Zhang Hui, has been arrested and charged with conspiring and attempting to commit economic espionage and steal trade secrets from multiple U.S. aviation and aerospace companies. Xu was extradited to the United States yesterday. …
 
  “This indictment alleges that a Chinese intelligence officer sought to steal trade secrets and other sensitive information from an American company that leads the way in aerospace,” said Assistant Attorney General Demers. “This case is not an isolated incident. It is part of an overall economic policy of developing China at American expense. We cannot tolerate a nation’s stealing our firepower and the fruits of our brainpower. We will not tolerate a nation that reaps what it does not sow.” …
 
Yanjun Xu is a Deputy Division Director with the MSS’s Jiangsu State Security Department, Sixth Bureau. The MSS is the intelligence and security agency for China and is responsible for counter-intelligence, foreign intelligence and political security. MSS has broad powers in China to conduct espionage both domestically and abroad.
 
Xu was arrested in Belgium on April 1, pursuant to a federal complaint, and then indicted by a federal grand jury in the Southern District of Ohio. The government unsealed the charges today, following his extradition to the United States. The four-count indictment charges Xu with conspiring and attempting to commit economic espionage and theft of trade secrets.
According to the indictment:
 
Beginning in at least December 2013 and continuing until his arrest, Xu targeted certain companies inside and outside the United States that are recognized as leaders in the aviation field. This included GE Aviation. He identified experts who worked for these companies and recruited them to travel to China, often initially under the guise of asking them to deliver a university presentation. Xu and others paid the experts’ travel costs and provided stipends. …
 
Attachment(s): 

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(Source:
Justice, 12 Oct 2018.) [Excerpts.]
 
A suburban Chicago man has admitted in federal court that he tried to illegally export nearly two dozen guns and ammunition to Haiti from Illinois.
 
PATRICK GERMAIN, 45, of Evanston, Ill., pleaded guilty to one count of knowingly and fraudulently attempting to export firearms contrary to the laws and regulations of the United States. In a written plea agreement, Germain admitted that in 2016 he planned to illegally export 16 handguns, five shotguns, a rifle and ammunition from Evanston to Haiti by way of Miami, Fla. Germain built a plywood container, filled it with the guns and ammunition, and then hid it inside a cargo van, the plea agreement states. The van was then delivered to a shipping company in Miami but law enforcement seized it before it could be transported to Haiti. …
 
According to the plea agreement, Germain in June 2016 purchased the firearms and ammunition from dealers in Illinois. Germain also purchased three vehicles, including the cargo van that he would later use to transport the concealed firearms and ammunition. He then hired an Illinois company to deliver the three vehicles to Miami, where Germain had arranged for a Florida shipping company to transport the vehicles to Haiti.
 
When asked by the Illinois company why the cargo van appeared to be overweight, Germain represented to the driver that the added weight was due to furniture in the backseat. Germain also misled the Florida shipping company by not notifying them that the cargo van was filled with guns and ammunition, according to the plea agreement.
 
Attachment(s): 

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(Source:
State/DDTC, 15 Oct 2018.)
 
Test versions of DDTC’s new Registration and Advisory Opinion (AO) applications, housed on the cloud-based Defense Export Control and Compliance System (DECCS), will be available for industry testing and feedback starting October 16th through mid-November 2018. If you are interested in participating in testing, please contact the DDTC Test Support Team at the number or email below to sign up and receive further guidance. Please note that in order to participate each individual tester will be required to sign a DECCS UAT Terms of Use document to ensure users understand the testing process and guidelines.
 
We encourage you to begin the testing process as early in the test period as possible. Additional applications will be available for testing in the coming weeks and will require a test account and a complete test registration in order to access them.
 
DDTC Test Support Team:
  – Email: PM-DDTC-DECCS@state.gov
  – Phone: (202) 663-1282 / (202) 663-2838 
 
The DDTC Test Support Team will be available during the week from 10am to 4pm.

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(Source:
Official Journal of the European Union, 16 Oct 2018.)
 
Regulations:
* Council Regulation (EU) 2018/1542 of 15 October 2018 concerning restrictive measures against the proliferation and use of chemical weapons
 
Decisions:
* Council Decision (CFSP) 2018/1544 of 15 October 2018 concerning restrictive measures against the proliferation and use of chemical weapons
 

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(Source:
UK/ECJU, 16 Oct 2018.)
 
The Strategic Export Controls Licensing Data for April – June 2018 can be found
here.

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(Source:
Singapore Customs, 16 Oct 2018.)
 
Under Regulation 6(1)(b) of the Regulation of Imports and Exports Regulations, the importation into, exportation from, or transshipment or transit through Singapore of any goods which will contravene the decisions of the United Nations Security Council (UNSC) in resolutions made under Chapter VII of the United Nations Charter, are prohibited.
 
With the adoption of the UNSC Resolution 2397 (2017), Singapore has updated the Seventh Schedule, read with Regulation 6(2)(d) of the Regulation of Imports and Export Regulations to allow traders to more easily refer to the various trade prohibitions imposed by the decisions made by the UNSC.
 
The updated prohibitions have been published in the Regulation of Imports and Exports (Amendment) Regulations 20181. These Regulations take effect on 17 Oct 2018.
 
Permit Applications for Items Imported from, Exported to, Transshipped or Brought in Transit from or to the DPRK through Singapore
 
Traders are reminded that the import, export, transshipment, and transit of any goods that are for the purposes of trade with any person in the Democratic People’s Republic of Korea (DPRK) continue to be prohibited under the Seventh Schedule, read with Regulation 6(2)(d) of the Regulation of Imports and Exports Regulations.
 
For goods which are not for the purposes of trade, which are imported from, exported or re-exported to the DPRK, traders would need to apply for a TradeNet® permit at least 3 working days before the intended date of shipment. Supporting documents should include documents to show that the shipment is non-commercial in nature (e.g.a letter of authorization issued by a United Nations (UN) body). Please be reminded to comply with all the conditions stipulated in the approved permits.
 
Penalties
 
Under the Regulation of Imports and Exports Act (RIEA), any person who contravenes any of these prohibitions shall be guilty of an offence and shall be liable to –
 
  (a) a fine of not exceeding S$100,000 or 3 times the value of the goods in respect of which the offence was committed, whichever is the greater, or to imprisonment for a term not exceeding 2 years or to both, on the first conviction; and
  (b) a fine of not exceeding S$200,000 or 4 times the value of the goods in respect of which the offence was committed, whichever is the greater, or to imprisonment for a term not exceeding 3 years or to both, on the second or subsequent conviction
More Information
 
Details on the UNSC sanctions can be found at:
www.customs.gov.sg/ > Businesses > United Nations Security Council Sanctions.
 
You may view the subsidiary legislation at Singapore Statutes Online: sso.agc.gov.sg.

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NWSNEWS

(Source:
Defense News, 16 Oct 2018.) [Excerpts.]
 
Sen. Lindsey Graham, a key defender of U.S. arms sales to Saudi Arabia, has vowed never to work with the kingdom so long as Crown Prince Mohammed bin Salman is in charge – a strong sign of the political tide is taking a swift turn.
 
On Tuesday morning’s “Fox and Friends,” Graham said of bin Salman, nicknamed MBS: “This guy has got to go. Saudi Arabia, if you’re listening, there are a lot of good people you can choose, but MBS has tainted your country and tainted himself.”
 
  “I can never do business with Saudi Arabia again until we get this behind us,” said Graham, R-S.C. “I’m not going back to Saudi Arabia as long as this guy’s in charge.”
 
Amid allegations Saudi Arabia killed and dismembered Washington Post columnist Jamal Khashoggi when he visited the Saudi Consulate in Istanbul two weeks ago, there’s a been a bipartisan call in Congress to respond. …
 
While suspending arms sales, leveling sanctions and cutting off military aid to the Saudi-led intervention have all been raised, President Donald Trump has touted the denials of Saudi leaders and repeatedly said potential arms sales are too valuable to the U.S. economy to be halted.
 
Asked what Trump should do, Graham said, “It’s up to him,” adding: “I know what I’m going to do, I’m going to sanction the hell out of Saudi Arabia.” …

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(Source:
Deutsche Welle, 15 Oct 2018.)
A new framework to allow sanctions over chemical weapon use could see restrictions placed on Russia over the poisoning of former spy Sergei Skripal. Potential sanctions could involve travel bans and asset freezes.
 
The European Union on Monday unveiled a legal framework to allow sanctions against the use of chemical weapons.
 
The framework gives the EU the power to place restrictive measures on people or entities identified as being involved in the development or deployment of chemical weapons, regardless of their location or nationality, EU foreign ministers said in a press release.
 
It is important “to make clear that something like this can’t be left unpunished,” said German Foreign Minister Heiko Maas.
 
The measure would also apply to anyone helping or encouraging chemical weapons attacks, and includes the ability to impose travel bans, freeze assets, and ban EU citizens or groups from making money available to anyone on the sanctions list.
 
  “This decision contributes to the EU’s efforts to counter the proliferation and use of chemical weapons which poses a serious threat to international security,” the ministers’ statement said.
 
Russia could be held to account
 
The new legal framework would allow the EU to sanction Russia for its reported role in a near-fatal nerve agent attack on former Russian spy Sergei Skripal and his daughter Yulia in the British city of Salisbury in March.
 
Britain, along with countries such as Germany, France, Canada and the US, has blamed the attack on Russia, and in September, the UK accused two Russian intelligence officers of being responsible for the poisonings.
 
Russian officials have denied involvement in the poisoning and the spat saw the
UK and supporting countries expel Russian diplomats,
a move Russia quickly reciprocated.
 
British prosecutors charged the two suspects in absentia with conspiracy to murder and possession of a chemical weapon.
 
These restrictions could also be applied against Syria for its reported
attack on the rebel-held city of Douma in April.

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(Source:
Reuters, 11 Oct 2018.)
 
India said on Thursday it will raise import tariffs on several electronic items and communication devices, in another move to rein in imports and bolster a falling rupee.
 
The tariff hike, the second such move by India in a two-week span, was announced late on Thursday by New Delhi as it attempts to raise import barriers to curtail the import of goods it deems as “non-essential” items.
 
The latest set of increased tariffs could ratchet up trade tensions with the United States and China, among other countries and hurt the likes of network equipment makers such as Cisco Systems Inc, Huawei Technologies Co, ZTE Corp, Ericsson, Nokia and Samsung Electronics.
 
The gambit is part of a plan to contain a slide in the rupee, which has weakened more than 14 percent against the U.S. dollar this year, hit by an rout in emerging markets and other domestic factors such as a widening current account deficit.
 
It was not immediately clear how much of a tariff increase is being levied on each specific item, but the Indian government listed several items that could be impacted including wearables like smart watches, Voice over Internet Protocol equipment and phones, and ethernet switches, among other items.
 
The plan, which becomes effective on Friday, will potentially also hurt Indian telecoms carriers such as Reliance Jio Infocomm, Bharti Airtel and Idea, said Neil Shah of tech research firm Counterpoint.
 
  “This will slow down the roll out of high-speed broadband which uses optical fiber and LTE networks,” Shah told Reuters, adding however that it could help local telecom equipment makers like Tata Teleservices that manufacture some of this equipment locally.
 
The move is the Prime Minister Narendra Modi government’s latest tilt toward protectionism, as it promotes its ‘Make in India’ program.
 
India announced higher import tax on electronics products such as mobile phones and television sets in December, and then on 40 more items in the budget in February. These included goods as varied as sunglasses, juices and auto components.
 
Last month, it raised import tariffs on 19 “non-essential items,” including air conditioners, refrigerators, footwear, speakers, luggage and aviation turbine fuel, among other items.

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NWS_a413
. ST&R Trade Report: “GSP Eligibility of Various Countries Subject of 29 Nov Hearing”

 
The Office of the U.S. Trade Representative will hold a hearing Nov. 29 in its reviews of whether various countries are complying with the eligibility criteria of the Generalized System of Preferences. USTR is currently evaluating whether (1) Bolivia, Georgia, Iraq, Thailand, and Uzbekistan are affording workers internationally recognized worker rights, (2) Ecuador is recognizing as binding or enforcing applicable arbitral awards, and (3) Indonesia and Uzbekistan are providing adequate protection of intellectual property rights. USTR is also conducting a review of whether Laos should be newly designated as a GSP beneficiary.
 
Comments, pre-hearing briefs, and requests to appear at the hearing are due Nov. 13. Post-hearing briefs are due by Dec. 17.

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COMMCOMMENTARY

(Source:
Morgan, Lewis & Bockius LLP, 11 Oct 2018.) [Excerpts.]
 
* Authors: Giovanna M. Cinelli, Esq.,
giovanna.cinelli@morganlewis.com, +1 202-739-5619; Kenneth J. Nunnenkamp, Esq.,
kenneth.nunnenkamp@morganlewis.com, +1 202-739-5618; and Stephen P. Mahinka, Esq.,
stephen.mahinka@morganlewis.com, +1 202-739-5205. All of Morgan, Lewis & Bockius LLP.
 
The August 2018 enactment of the Foreign Investment Risk Review Modernization Act (FIRRMA) came after more than two years of debate over the appropriate scope of jurisdiction for the Committee on Foreign Investment in the United States (CFIUS). Much has already been written about FIRRMA and its potentially ambitious reach, as well as about the interest by certain parties, including members of Congress, to keep CFIUS away from some transactions. The result was a law that amended a number of provisions defining CFIUS jurisdiction, both expanding and narrowing key parts of the Committee’s reach.
 
To manage the many changes included in FIRRMA, Congress made some of its provisions effective immediately upon enactment, while leaving many of the more important and/or controversial provisions to become effective when CFIUS issued new regulations or established pilot programs to test the viability of certain provisions. To that end, and in an effort to better inform the Committee regarding how certain sections of FIRRMA would impact both the government and investors, CFIUS has invoked a lesser-discussed provision to begin implementing those authorities immediately. Using the pilot program authority in Section 1727(c), CFIUS has announced the immediate implementation of two important parts of the authority granted by FIRRMA:
 
  (1) The pilot program expands the scope of transactions subject to review by CFIUS to include certain investments involving foreign persons and critical technologies
  (2) The pilot program implements FIRRMA’s mandatory declarations provision for all transactions that fall within the specific scope of the pilot program.
 
The pilot programs become effective November 10, 2018, and will end no later than March 5, 2020 (or presumably sooner if the full regulations issue before then).
 
Background on FIRRMA’s Implementation Schedule
 
While certain provisions of FIRRMA, included in Section 1727(a), were effective immediately upon enactment of the law on August 13, 2018, Section 1727(b) delayed the effective date of any provision of FIRRMA not listed in Section 1727(a) until the
earlier of February 13, 2020 (defined in the statute as 18 months after the effective date); or 30 days after publication in the
Federal Register by CFIUS that the regulations, organizational structure, personnel, and other resources necessary to administer the new provisions are in place. Section 1727(c) authorizes CFIUS to implement “pilot programs” that can begin 30 days after notice and procedures are published in the
Federal Register. The Committee’s action starts that 30-day clock.
 
Although the interim rules are posted for comment, they are not subject to the notice and comment requirements of the Administrative Procedure Act (APA), and therefore can enter into effect immediately after the 30-day period required by FIRRMA expires-November 10, 2018. The CFIUS notice nonetheless allows an “immediate opportunity for public comment” on the interim rule and indicates that CFIUS will consider and address any comments in the process of promulgating any final rule. This approach “appropriately balances the urgency of the pilot program with the need for public participation in the formulation of any final rule.” Under the Defense Production Act, of which FIRRMA is a part, CFIUS may forego the full APA notice and comment period if it finds that there are “urgent and compelling circumstances” requiring immediate implementation of the interim rule. CFIUS concludes that these circumstances exist because delay in implementing the pilot program will allow foreign “threat actors with time to harm U.S. national security by quickly acquiring U.S. critical technologies.” The Committee determined that there is an imminent danger that foreign entities intend to engage in “foreign investment into certain U.S. businesses that produce, design, test, manufacture, fabricate, or develop one or more critical technologies.”
 
Scope of the Pilot Program
 
The pilot program encompasses two main objectives:
 
  (1) It implements a requirement for mandatory declarations “for certain transactions involving investments by foreign persons in certain U.S. businesses that produce, design, test, manufacture, fabricate, or develop one or more critical technologies;” and
  (2) It implements definitions that have the effect of including transactions that fall within specific portions of the “other investments” definition found in FIRRMA. Interestingly, the Committee chose to exclude from the program transactions involving sensitive personal data at this time. The rule defines “pilot program US business” to include:
 
“any U.S. business that produces, designs, tests, manufactures, fabricates, or develops a critical technology that is either utilized in connection with the U.S. business’s activity in one or more pilot program industries, or designed by the U.S. business specifically for use in one or more pilot program industries. For purposes of the pilot program, this definition has been narrowly scoped to allow CFIUS to assess and address the foreign investment transactions most likely to raise concerns regarding the technological superiority of the United States in industries of national security importance.”
 
The program is designed to address two key concerns:
 
  (1) “The ability and willingness of some foreign persons to obtain equity interests in U.S. businesses in order to affect certain decisions regarding, or to obtain certain information relating to, critical technologies;” and
  (2) The rapid pace of technological change in certain U.S. industries.”
 
In addition, the pilot program currently includes all countries (i.e., excludes no country) from the mandatory declaration process. According to the
Federal Register preamble, this approach is expected to better inform CFIUS of the nature and focus of foreign direct investment and thereby improve the final regulations. The interim regulations do not change the definition of critical technologies, except for the addition of technologies to be identified by BIS as “emerging and foundational.” The pilot program currently does not include transactions involving critical infrastructure that do not involve critical technology and these transactions will continue, for now, to be governed by the existing rules.
 
Types of Other Investments Covered by the Pilot Program
 
The pilot program is focused on certain specific types of transactions, without regard to the country of the acquiring entity, that CFIUS can review under FIRRMA-transactions that give the following to the foreign investor:
 
  (1) Access to any material nonpublic technical information in the possession of the target US business
  (2) Membership or observer rights on the board of directors (or an equivalent governing body) of the US business
  (3) The right to nominate an individual to a position on the board of directors (or equivalent governing body) of the US business
  (4) Any involvement, other than through voting of shares, in substantive decisionmaking of the US business regarding the use, development, acquisition, or release of critical technology
 
The pilot program also identifies 27 critical industries, defined by NAICS codes, which it includes as “Pilot Program Industries.” According to CFIUS, this list was “carefully developed” based on the government’s determination that these are “industries for which certain strategically motivated foreign investment could pose a threat to U.S. technological superiority and national security.” The “Pilot Program Industries” currently includes the following industries and NAICS codes: …
 
A wide range of other industries have been mentioned previously by the government in other contexts as also constituting critical technologies for US national security or industrial competitiveness, including new energy vehicles and alternative energy generation (wind and solar), might be added in the future as the new program evolves. “Critical technologies” does not need to be new technologies. FIRRMA includes within critical technologies (as the interim rule confirms) existing technologies, including, for example, items on the US Munitions List and the Commerce Control List, in addition to “emerging and foundational technologies.”
 
While the interim rule identifies these areas as critical technologies, the Committee is not precluded from reviewing covered transactions that involve technologies other than those identified at this stage.
 
Establishment of Mandatory Declarations for Pilot Program Industry Transactions
 
The pilot program also adds a mandatory declaration requirement for any transaction for foreign transactions involving pilot program US businesses that are within CFIUS’s jurisdiction. Thus, if the transaction involves both “control” by the foreign investor and meets the definition of “other investments,” the parties will have to file either a full notice or the mandatory declaration.
 
  (1) Declarations must be filed at least 45 days prior to a transaction’s expected completion date. The Committee will have 30 days to take action.
  (2) Parties may choose to file a notice under CFIUS’s standard procedures rather than a declaration.
  (3) Parties that are required to file with CFIUS and do not do so can be assessed a civil monetary penalty up to the value of the transaction.

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(Source:
European Sanctions Blog, 15 Oct 2018.)
 
* Author: Maya Lester, Esq., Brick Court Chambers,
maya.lester@brickcourt.co.uk, +44 20 7379 3550.
 
The Government has published a
notice explaining how the UK will implement sanctions if the UK leaves the EU in March 2019 with no agreement as to the UK/EU future relationship. The notice says:
 
  – The UK will continue to implement UN sanctions in UK law.
  – The government will
“look to carry over all EU sanctions at the time of our departure”.
  – The UK will implement sanctions by regulations made under the Sanctions & AML Act 2018.
“Much of” the required legislation will be put before Parliament before March 2019 and any other EU regimes not covered by that legislation will continue as
“retained EU law under the EU (Withdrawal) Act 2018”.
  – The new regulations will include the purpose of sanctions, listing criteria and people & entities listed, details of the prohibitions, exemptions and enforcement, and information sharing.
  – After the UK leaves the EU, it will
“work with the EU and other international partners on sanctions where this is in our mutual interest”.

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COMM_a316. R. Broadhurst: “Downloading Firearms”

(Source: Policy Forum, [Australia] 16 Oct 2018.)
 
* Author: Roderic Broadhurst, Professor of Criminology, Australia National University College of Arts and Social Sciences, roderic.broadhurst@anu.edu.au.
 
In 2013 the digital blueprint of a single shot ‘Liberator’ 3D-printed plastic pistol was posted on the Internet by its creator, self-styled crypto-anarchist Cody Wilson, founder of the US non-profit gun-rights ‘wiki-weapons’ organisation Defense Distributed. Wilson’s controversial, undetectable 3D gun seemingly brought science fiction to reality.
 
The Liberator quickened interest in the auto-manufacture of novel or hybrid weapons, as well as government efforts to suppress do-it-yourself gun manufacture – even in ‘gun-friendly’ United States. In 2014, Defense Distributed subsequently released the ‘Ghost Gunner’, a Computer Numerical Control milling machine that makes untraceable, unserialised metal receivers or frames for the AR-15 and AR-308 rifles and the Browning M1911 pistol.
 
The US Undetectable Firearms Act of 1988 was consequently extended a further 10 years in 2013, however, attempts to criminalise the making of firearm frames without metal components failed.
 
In 2015 New South Wales amended its laws to outlaw the possession of digital blueprints for firearms and strengthen existing laws prohibiting the manufacture of weapons.
 
The technology has not yet advanced to allow the creation of a complete working weapon at the ‘press of a button’. However, the novelty plastic 3D-printed Liberator has served to distract from the more deadly parts-assembly hybrid models that home-made weapon tinkerers were creating.
 
Hybrid firearms that combine 3D-printed technologies with traditional tool-making have invigorated a new ‘cottage’ industry and crime service. For strong gun-control states such as Australia – where criminals pay a premium for difficult-to-obtain handguns and other firearms – the relative ease of importing a Ghost Gunner, or downloading 3D firearms files, provides alternative opportunities. It may also allow violent extremists disconnected from the wider criminal underworld to experiment with homemade gun-making.
 
Since 2015 Australian police have made a handful of seizures of 3D-printed firearms. A loaded 3D-printed handgun was seized by Queensland police in a raid on a methamphetamine lab allegedly associated with the Lone Wolf Outlaw Motorcycle Gang (OMCG). In December 2016, Victorian police seized a 3D printer, firearms, and drugs from properties raided in Melbourne. Cases have also been reported in Japan, the UK and the US where 3D-printed AR-15 rifles were used in two murder sprees reported in California.
 
The Liberator blueprint was downloaded over 100,000 times (and over 10,000 times by Australian IP addresses, according to Wilson) and was widely disseminated on The Pirate Bay, gunsmith websites and P2P torrent sites. The US State Department Directorate of Defense Trade Controls ordered the files to be removed from the Defence Distributed website. This was because the posting breached the Arms Export Control Act’s International Trafficking in Arms Regulations (ITAR), which restrict the export of defence and space-related technologies specified by the United States Munitions List.
 
Defence Distributed launched a crowd-funded legal challenge against the US State Department, claiming that the ITAR intervention was a breach of constitutional rights to free speech, as it sought to establish the right of anyone to have access to DIY firearms.
 
Wilson’s views on firearm availability were summed up in a February 2015 interview with Vice: “I think the rifle is a birthright and I think it’s an instrument of political decision. As a last resort, you should always be able to murder your government.”
 
In July 2018, under a Trump administration sympathetic to gun rights groups, the US Department of State settled the dispute by allowing Defense Distributed to sell digital firearms blueprints online, given that AR-15 and other semi-automatic firearms under 0.50 calibre were to be removed from the United States Munitions List.
 
The full re-launch of Defcad.com, Wilson’s blueprint firearms repository open to anyone to upload digital files of firearms, however, has been delayed by the state of Washington’s legal challenge on the grounds of safety and ease of access by criminals or terrorists. Wilson announced via Twitter that the files were available for sale on Defcad.com within the US from August 28, 2018, except within the 16 states that have banned them.
 
Wilson’s arrest in September 2018 on Texas Penal Code sexual assault charges and his subsequent resignation from Defense Distributed has had little-to-no impact on the controversial marketing and promotion of DIY firearms. Websites that support ‘de-centralised communities’ like GrabCAD and FOSSCAD have also been promoting 3D-printable gun designs via torrent files continue to operate as P2P file sharing platforms.
 
Criminals are often early adopters and exploiters of new technology, and crime typically follows opportunities. This means that as the costs and difficulties recede with rapid improvements in 3D printing, we can expect more criminal interest.
 
The handful of Australian cases already noted will steadily grow – driven not by a ‘right to bear arms’ ideology as in the US, but by the vagaries of firearm supply and the incessant demand for weapons for criminal enterprises. Theft of firearms from licensed gun dealers, residences and rural properties has rapidly increased in the past decade.
 
Illicit crypto-markets or Tor darknets also provide another vector for weapon supply, facilitated by crypto-currencies and stealth packaging plus the separation of parts well-adapted to circumvent postal and customs inspections.
 
New South Wales laws that have prohibited possession of digital firearms blueprints need to be extended nationally. Despite the apparent futility of preventing the dissemination of digital firearm blueprints, possession offences may help to deter ‘lone wolf’ extremists as well as adding to the preventative toolbox of law enforcement.
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ENEDITOR’S NOTES

* William O. Douglas (William Orville Douglas; 16 Oct 1898 – 19 Jan 1980; was an American jurist and politician who served as an Associate Justice of the Supreme Court of the United States. Nominated by President Franklin D. Roosevelt, Douglas was confirmed at the age of 40, one of the youngest justices appointed to the court. His term, lasting 36 years and 211 days (1939-75), is the longest in the history of the Supreme Court. In 1975 Time magazine called Douglas “the most doctrinaire and committed civil libertarian ever to sit on the court”. Douglas was married five times, his last marriage to 22-year-old Cathleen Heffernan, whom he met while she was working as a waitress in a mountain wilderness lodge.”
  – “The Constitution is not neutral. It was designed to take the government off the backs of people.”
 
* Oscar Wilde (Oscar Fingal O’Flahertie Wills Wilde; 16 Oct 1854 – 30 Nov 1900; was an Irish poet and playwright.   Wilde became one of London’s most popular playwrights in the early 1890s. He is best remembered for his plays, Salomé and The Importance of Being Ernest, his novel, The Picture of Dorian Gray, and the circumstances of his imprisonment on morals charges, and early death.)
  – “A little sincerity is a dangerous thing, and a great deal of it is absolutely fatal.”
  – “Ridicule is the tribute paid to the genius by the mediocrities.”
  – “Moderation is a fatal thing. Nothing succeeds like excess.”

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EN_a318
. 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: 19 Sep 2018: 83 FR 47283-47284: Extension of Import Restrictions Imposed on Archaeological Material From Cambodia  

 
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: 26 Sep 2018: 83 FR 48532-48537: Addition of Certain Entities to the Entity List, Revision of an Entry on the Entity List and Removal of an Entity 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: 11 Oct 2018: 
Harmonized System Update 1816
, containing 6,042 ABI records and 1,516 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:
4 Oct 2018: 83 FR 50003-50007: Regulatory Reform Revisions to the International Traffic in Arms Regulations.

  – The only available fully updated copy (latest edition: 4 Oct 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_a0319
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 6,000 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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