18-1018 Thursday “Daily Bugle”

18-1018 Thursday “Daily Bugle”

Thursday, 18 October 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 Posts FAQs on Product Exclusions for Section 232 Steel and Aluminum Tariffs
  3. DHS/CBP Updates Cargo Release Condition Codes
  4. State/DDTC: (No new postings.)
  5. Dutch Government Posts Answers on Arms Exports to Ukraine Questions
  1. Expeditors News: “China’s Government Published a Notice on Increasing Export VAT Refund Rates”
  2. ST&R Trade Report: “TFTEA Drawback Regulations Ordered to Take Effect by Dec. 17”
  1. J. Gould: “Will Congress Really Cancel Us-Saudi Arms Deals? It’s Complicated, but Let Us Explain”
  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 




[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; Industry and Security Bureau; NOTICES; Denial of Export Privileges: Luis Antonio Urdaneta Pozo [Publication Date: 19 October 2018.] 

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Commerce/BIS, 18 Oct 2018.)
On what basis will a product exclusion be granted?
A product exclusion will be granted if the article is not produced in the United States: (1) in sufficient and reasonably available amount; (2) satisfactory quality; or (3) there is a specific national security consideration warranting an exclusion.
What is the process for reviewing product exclusion requests?
The Department of Commerce reviews each request for conformance with the submission requirements. Those requirements are set forth in the Federal Register Notice of March 19, 2018
Once a request is posted, there is a 30 day comment period. If there are no objections to a request, the Department of Homeland Security/Customs and Border Protection (CBP) reviews the Harmonized Tariff Schedule of the United States (HTSUS) code cited in the submission for accuracy. If CBP determines the code is inaccurate, the request is denied and the requester provided CBP contact information. If CBP determines the HTSUS is accurate, the request is approved if there are no national security concerns and the decision posted on
If objections are submitted, the Department of Commerce reviews each objection for conformance with the submission requirements. If an objection is posted, the Department reviews the request and the objection(s) to the request and determines whether the item is produced in the United States in a sufficient and reasonably available amount of satisfactory quality, or if there is a specific national security consideration warranting an exclusion.
How will I know if my product exclusion request has been granted or denied?
All product exclusion decisions will be posted on
Will the Department of Commerce identify the reason for the decision?
For each Exclusion Request the Department of Commerce will post a Decision Memo identifying whether the request is granted or denied. If the request is denied due to an incorrect HTSUS classification, the Decision Memo provides information how on to obtain a correct HTSUS classification from CBP.
If the request was denied for other reasons, the Decision Memo will state the reason.
How are requesters notified once a final determination has been made?
Decision documents will be posted on regulations.gov, as a document attached to the initial Exclusion Request.
Where can I find the decision documents?
Decision Memos will be posted on regulations.gov as a document attached to the initial Exclusion Request. The title of the original Exclusion Request on regulations.gov will also be changed to reflect the status of the request.
How do I use my granted product exclusion?
CBP has provided detailed instructions on using your granted product exclusion. Please consult
CSMS #18-000378 for further instructions.
Am I eligible for retroactive refund?
If you have been granted an exclusion, you are eligible for a retroactive refund. Granted product exclusions are retroactive to the date the request for exclusion was posted for public comment at regulations.gov.
How do I get a retroactive refund?
CBP has provided detailed instructions on how to receive a retroactive refund. Please consult
CSMS #18-000378 for further instructions on receiving retroactive relief if available.
What if a company disagrees with a denial?
If the denial is based on an inaccurate HTSUS classification, the requester should contact CBP for the correct classification. The company may then submit a request with the correct HTSUS classification. The request should note it is a resubmission with a revised HTSUS classification and attach the CBP determination.
If the denial is based on an objection, the requester may file a new exclusion request and include information documenting the reason why the new request should be granted notwithstanding the prior objection(s). This information could include, for example, the documentation of the inability or refusal of the objector(s) to provide the product.
How long is my granted product exclusion effective?
Generally, an exclusion is granted for one year from the date of signature. Please see your Decision Memo for this information.
May approved Exclusion Requests be transferred to other internal or external organizations?
No. The use of an Exclusion by any entity other than the organization that filed the original Exclusion Request is prohibited.
If my organization receives a product exclusion, is there a chance that it could be revoked?
Generally, granted product exclusions will be valid for one year. The Department of Commerce will not move to revoke granted product exclusions unless it has been determined that submitted information was falsified.
Can I request a product exclusion from countries that are exempt from tariffs (such as through quotas)?
No. The Department of Commerce cannot grant exclusion requests for products imported from a country subject to a quota. Under the authority granted by the President, an exclusion request may only be granted for aluminum or steel imported from a country subject to a tariff.
I have additional questions about the exclusion process, who do I contact?
For questions about the exclusion form or objection form, please email or call:
Aluminum232@bis.doc.gov or 202-482-4757 for aluminum-related inquiries and
Steel232@bis.doc.gov or 202-482-5642 for steel-related inquiries.
How do I notify CBP of my granted exclusion?
CBP will receive a notification from the Department of Commerce of any specific company and product to be excluded from the applicable tariff. You will be required to provide CBP with your granted Exclusion Request number that is provided by the Department of Commerce.
When does my exclusion become effective?
If you are granted an exclusion, it will be effective five days after the decision has been posted on
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CSMS #18-000617, 18 Oct 2018.)
The new Cargo Release Condition/Error Codes document has been posted here.

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Rijksoverheid, 18 Oct 2018) [in Dutch.]
Foreign Affairs Secretary Blok, and Foreign Commerce and Development Secretary Kaag gave the Dutch House of Representatives (Tweede Kamer) their answers on questions concerning arms exports to Ukraine.
The answers (in Dutch) can be found here.

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Expeditors News, 17 Oct 2018.)
On September 5, 2018, China Ministry of Finance (MOF) and State Administration of Taxation (SAT) jointly announced Notice No. 93 of 2018, the measure on increasing export VAT refund rates for certain goods exported from China. This includes mechanical and electrical products, books and newspapers. The measure entered into effect on Sep 15, 2018.
A total of 397 HS headings of exported goods are eligible for an increased export VAT refund rate ranging from 9% to 16%, according to the attached commodity list.
  – Original Chinese notice may be found
  – Original Chinese Detailed commodity list may be found
  – Google translation for the notice; and
  – Google translation for the commodity list.

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Final regulations implementing the changes to drawback law made by the Trade Facilitation and Trade Enforcement Act (“TFTEA”) must be issued and become effective by Dec. 17 under a recent order by the Court of International Trade.
Drawback is the refund of up to 99 percent of certain duties, internal revenue taxes, and fees collected on imports when the imported product or a substitute product is exported or destroyed or used in manufacturing a finished product that is exported or destroyed. TFTEA made numerous changes to modernize the drawback law, including allowing substitution drawback claims based on goods within the same eight-digit HTSUS number as well as claims against imports and exports that are within five years of the date of the claim. TFTEA also standardized the time frames for filing claims and modernized recordkeeping requirements.
The TFTEA amendments took effect Feb. 24, 2018, beginning a one-year period during which claimants may file under either the amended provisions or the drawback law as it existed previously. However, U.S. Customs and Border Protection has refused to process TFTEA claims or pay them through accelerated payment, citing uncertainties about the calculation of drawback until final regulations are in place. As a result, claimants have not received any immediate benefits from TFTEA. This situation has become even more problematic as more companies consider applying for drawback to recapture the additional tariffs the Trump administration has imposed on imported goods in recent months.
When CBP missed the Feb. 24, 2018, deadline for issuing the TFTEA regulations, a number of companies filed suit. CBP eventually issued on Aug. 2 proposed regulations that not only set forth the TFTEA changes but also revise how CBP treats drawback of excise and other federal taxes.
In an Oct. 12 order, the CIT directed CBP to file final regulations with the Office of the Federal Register on or before Dec. 17. Those regulations must become effective as of the day of their filing, except that the provisions related to drawback of excise taxes may become effective 60 days after publication in the Federal Register.
The CIT order expressly allowed CBP to issue an abbreviated final rule as long as it addresses the provisions identified by the plaintiffs as necessary for calculating a claim and providing accelerated payment. There is no word yet as to whether the government will appeal the ruling.

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Defense News, 18 Oct 2018.)
* Author: Joe Gould, Defense News, jgould@defensenews.com.
Have you been wondering whether U.S.-Saudi arms deals can survive allegations the Saudi government killed Washington Post writer Jamal Khashoggi?
Yeah, so are we.
A growing chorus of U.S. lawmakers, mostly Senate Democrats, say its time to cut the kingdom off. But President Donald Trump has repeatedly said that’s a no-go, with $110 billion in proposed deals hanging in the balance. (Of that total, Saudi Arabia has signed letters of offer and acceptance for $14.5 billion in “helicopters, tanks, ships, weapons, and training,” according to the Pentagon.)
The Senate Foreign Relations Committee’s top Democrat, Sen. Bob Menendez, D-N.J., has a months long hold on the proposed sale of U.S. precision-guided bomb kits to Saudi Arabia.
The committee’s chairman, Sen. Bob Corker, R-Tenn., has pointed the finger at the Saudi royal family in Khashoggi’s alleged death and said now’s not the time to ask Congress to approve U.S.-Saudi deals.
Sen. Bernie Sanders, I-Vt., is again proposing legislation to end U.S. involvement in Yemen. And in a sign of the shifting politics, the Senate Armed Services Committee’s top Democrat, Sen. Jack Reed, said Wednesday the U.S. should stop refueling jets the Saudis use to conduct airstrikes in Yemen – a switch after Reed voted against Sanders’ resolution months earlier.
Will this all blow over?
The answer is eventually, maybe, but it’s complicated. Pressure to punish Saudi Arabia is growing as more damning details become public, such as the alleged links between one of the suspects and Saudi Crown Prince Mohammed bin Salman and that Khashoggi was tortured to death.
First, some wonkery.
To advance a proposed arms sale, the U.S. State Department, by decades-old tradition, grants the “four corners” – the top Democrat and Republican on the House and Senate Foreign Relations committees – an informal review period.
During that time, those four lawmakers can pause a sale while the administration answers their questions and concerns. These holds are not typically made public, but in this case Menendez has been openly frustrated with civilian casualties caused by Saudi airstrikes and skeptical that the administration is sufficiently leveraging the sales to end the war through diplomacy.
Such holds can be elastic, but they’re not meant to be indefinite or a congressional veto. And after the review period, the State Department can advance a sale to the Senate. There, lawmakers have 30 days to seek answers from the executive branch.
Can Trump trump Congress?
Could the president blow through the hold? Technically, yes, but not only would it be extraordinary – it would risk the optics of conducting business as usual with a regime accused of killing a journalist, and it risks angering Menendez, who can use his position to slow State Department nominees or otherwise bedevil the administration. (An administration official said it’s not a step to be taken lightly, but it hasn’t been ruled out.)
If the sale is advanced to the full Senate, it could be subject to a joint resolution of disapproval under the 1976 Arms Export Control Act. Such a measure would be privileged in the Senate, which means it could be quickly brought to a floor vote.
Whether Congress then rejects a U.S.-Saudi arms deal may also depend on what’s being dealt. For instance, Reed said Wednesday he opposes precision-guided munition sales to the kingdom but added it has “legitimate defensive needs” like Patriot anti-missile batteries – a line of thinking that could extend to a pending $15 billion sale of the Terminal High Altitude Area Defense system.
Supposing Trump wants to muscle a sale past Congress, it’s unlikely that in this session either chamber could muster the two-thirds majorities needed to override a presidential veto, congressional observers say. Both chambers are under the control of the GOP, which has shown reluctance to challenge the president on a range of issues.
While it appears steam is building to halt arms sales, Congress is also discussing sanctions under the 2016 Global Magnitsky Act, a tough move in its own right that could quench lawmakers’ thirst for punitive action against Riyadh.
Twenty lawmakers, including Corker and Menendez, requested the Trump administration make a determination on whether Saudi officials violated the Global Magnitsky Act, which started a 120-day review clock. If the administration finds human rights violations occurred, it may apply sanctions prescribed by Global Magnistky or issue a waiver.
In the House, Foreign Affairs Committee Chairman Ed Royce, R-Calif., and ranking member Eliot Engel, D-N.Y., favored that track in an Oct. 12 letter to Trump. Arms sales weren’t mentioned.
The duo also asked Trump to take the intermediate steps of canceling Treasury Secretary Steven Mnuchin’s visit to an investment conference in Saudi Arabia next week, and of reviewing Saudi diplomatic and consular personnel and activities within the U.S.
House Speaker Paul Ryan, R-Wis., hinted Wednesday to CBS News that he favors the Global Magnitsky Act process, calling Khashoggi’s disappearance “really disturbing” and potentially problematic for the U.S.-Saudi relationship. But Ryan defended that relationship as “very important, and there is a lot to this relationship that that will persist no matter what.”
Senate Majority Leader Mitch McConnell, when asked whether the U.S. should halt arms sales to Riyadh, told Bloomberg he’s not ready to say which form of action he would take and called the allegations “extremely disturbing.”
  “Clearly we need to find out what happened before deciding what action should be taken,” McConnell, R-Ky., said Tuesday. “I can’t imagine if what we think happened, that we would take no action.”
To what end?
The Obama administration used arms-sale holds in an attempt to improve a customer nations’ behavior on human rights, but to limited effect, said Becca Wasser, a researcher with the think tank Rand.
  “You have to ask the question: What end is the hold supposed to achieve? Is it intended to condition a partner’s behavior or punish them?” Wasser said. “I have a healthy amount of skepticism on both counts.”
Wasser predicted that holding up arms sales is not going to massively impact the U.S. defense industry or bin Salman’s signature economic agenda, Vision 2030.
As for Magnitsky sanctions, Wasser argued they’re more effective in Russia, targeting businessmen in the oligarch class who have reach with the Kremlin.
  “It is less likely to be effective in Saudi, where the royal family and upper echelons of government that may be implicated are insulated,” she said.
What about midterms?
When the new Congress is seated in January, there likely will be a different status quo, and that could force a new calculus for lawmakers and the White House.
CNN projected last week that Democrats will take control of the House while the GOP will retain the Senate, but the margins will matter. Of the key players, Menendez is in a tight re-election battle, and both Corker and Ryan are leaving Congress at the end of the year either way.
For now, Congress isn’t taking any action because it will not be in session until after midterm congressional elections next month. But stay tuned.

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* Helen Hunt Jackson (18 Oct 1830 – 12 Aug 1885; was an American poet and writer who became an activist on behalf of improved treatment of Native Americans by the U.S. Government. She described the adverse effects of government actions in her history, A Century of Dishonor (1881). Her novel, Ramona (1884), dramatizing the mistreatment of Native Americans in Southern California, was so popular that it attracted many tourists to Southern California who wanted to see places from the book.)
  – “By all these lovely tokens September days are here, With summer’s best of weather And autumn’s best of cheer.”
* Thomas Love Peacock (18 Oct 1785 – 23 January 1866; was an English novelist, poet, and official of the East India Company. He was a close friend of Percy Bysshe Shelley and they influenced each other’s work. Peacock wrote satirical novels, each with the same basic setting: characters at a table discussing and criticizing the philosophical opinions of the day.)
  – “There are two reasons for drinking: one is, when you are thirsty, to cure it; the other, when you are not thirsty, to prevent it.”

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


  – 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 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

: 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: 11 Oct 2018: 
Harmonized System Update 1816
, containing 6,042 ABI records and 1,516 harmonized tariff records.

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