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18-1106 Tuesday “Daily Bugle”

18-1106 Tuesday “Daily Bugle”

Tuesday, 6 November 2018

TOP
The Daily Bugle is a free daily newsletter from Full Circle Compliance, containing changes to export/import regulations (ATF, DOE/NRC, Customs, NISPOM, EAR, FACR/OFAC, FAR/DFARS, FTR/AES, HTSUS, and ITAR), plus news and events.  Subscribe 
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[No items of interest noted today.]

  1. Items Scheduled for Publication in Future Federal Register Editions
  2. Commerce/BIS: (No new postings.)
  3. DHS/CBP Releases Updated Drawback Error Dictionary
  4. DHS/CBP: “Summary Order of Reporting for Multiple HTS in ACE”
  5. DoD/DSCA Releases New Policy Memos
  6. State/DDTC: (No new postings.)
  7. EU Renews Venezuela Sanctions for 1 Year
  1. 9NEWS: “Arms Exports: Australian Government Tight-Lipped Over Permits”
  2. CNN: “Why this Idaho Chipmaker Is Suddenly at the Center of the U.S.-China Trade War”
  3. The Guardian: “European ‘Clearing House’ to Bypass U.S. Sanctions Against Iran”
  4. ST&R Trade Report: “Tariff Exclusion Request Process to be Audited by DOC”
  1. G.R. Talati: “Penalties for Failing to Make Mandatory CFIUS Declaration Filings Become a Reality in Just Days: Is Your Transaction Impacted?”
  2. O. Gonzalez: “Consider Filing a Prior Disclosure to CBP If You Change Classification, Value, Or Country Of Origin”
  3. R. Whitten: “Iran Sanctions Are Back On: Can Business Continue?”
  1. ECS Presents “Seminar Level I – Boot Camp: Achieving ITAR/EAR Compliance”, 6-7 Feb 2019 in Orlando
  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 (1 Nov 2018), FACR/OFAC (5 Nov 2018), FTR (24 Apr 2018), HTSUS (2 Nov 2018), ITAR (4 Oct 2018) 
  3. Weekly Highlights of the Daily Bugle Top Stories 

EXIMITEMS FROM TODAY’S FEDERAL REGISTER

EXIM_a1

[No items of interest noted today.]

* * * * * * * * * * * * * * * * * * * * 

OGSOTHER GOVERNMENT SOURCES

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

* DHS/CBP; NOTICES; Customs Broker User Fee Payment for 2019 [Pub. Date: 7 Nov 2018.]

* * * * * * * * * * * * * * * * * * * *

OGS_a2
2. 
Commerce/BIS: (No new postings.)

(Source: 
Commerce/BIS)

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OGS_a33. 
DHS/CBP Releases Updated Drawback Error Dictionary

(Source: 
CSMS# 18-000658, 6 Nov 2018.) 
 

An updated Drawback Error dictionary (V11) was posted and can be found here.

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OGS_a44
DHS/CBP: “Summary Order of Reporting for Multiple HTS in ACE”

(Source: 
CSMS# 18-000657, 5 Nov 2018.)
 
INFORMATION: UPDATE – Entry Summary Order of Reporting For Multiple Harmonized Tariff System (HTS) Classifications in the Automated Commercial Environment (ACE) 
 
  – Related CSMS: 18-000296, 18-000307, 18-000409, 18-000419, 18-000493, 18-000498, 18-000554, 18-000575, 18-000606 and 18-000621
 
BACKGROUND: 
  The purpose of this message is to outline the order of reporting in ACE for multiple HTS on the same entry summary line, when a Chapter 98 or 99 HTS is required. ACE is the system of record for all entry summaries. 
  
This message has been updated to include duty reporting instructions.
 
GUIDANCE:
  When submitting an entry summary in which a heading or subheading in Chapter 98 and/or 99 is claimed on imported merchandise, the following instructions will apply for the order of reporting the HTS on an entry summary line.
 
HTS SEQUENCE:
  (1)Chapter 98 (if applicable)
  (2) Chapter 99 number(s) for additional duties 
  (3)For trade remedies, first report the Chapter 99 HTS for Section 301, followed by the Chapter 99 HTS for Section 232 or 201 duties (if applicable), followed by the Chapter 99 HTS for Section 201 or 232 quota (if applicable). 
  (4) Chapter 99 number(s) for REPLACEMENT duty or other use (i.e., MTB or other provisions)
  (5) Chapter 99 number for other quota (not covered by #3) (if applicable)
  (6) Chapter 1 to 97 Commodity Tariff 
 
ENTERED VALUE AND DUTY:
  
The entered value of the commodity being imported on the entry summary line should be reported on the Chapter 1-97 HTS classification for the commodity being imported. Except if Chapter 98 reporting provisions require the entered value to be reported differently.
  
Report the duty applicable to the Chapter 1-97 HTS classification with the corresponding Chapter 1-97 HTS, unless Chapter 98 reporting provisions require the duty to be reported differently. In instances where a trade remedy duty (Section 201, 232, or 301) applies, report the duty applicable to the remedy with the applicable chapter 99 number. 
 
FOR FURTHER INFORMATION: 
  Questions from the importing community concerning ACE entry filing and rejections should be referred to their Client Representative. 
 
  – Related CSMS No. 18-000621, 18-000606, 18-000575
 

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OGS_a55. 
DoD/DSCA Releases New Policy Memos 

(Source: 
DoD/DSCA, 6 Nov 2018.)
 
* DSCA Policy Memo 18-42: 
Case Tracking System (CTS) Modernization has been posted.
  As part of their process improvement efforts, the Directorate for Security Assistance (DSA) Case Writing Division (CWD) incorporated the Case Tracking System Modernization application in SCIP. Incorporation of this application in SCIP will reduce their manual tracking by email and improve the Letter of Offer and Acceptance (LOA) review process by allowing users to upload off-line documentation directly into the application. 
* DSCA Policy Memo 18-53: 
Special Billing Arrangements has been posted.

  This memo revises C9.10.2. Special Billing Arrangements (SBAs) to clarify and standardize how Special Billing Arrangements (SBAs) are established, managed, and terminated.   

* * * * * * * * * * * * * * * * * * * * 

OGS_a66. 
State/DDTC: (No new postings.)

(Source: 
State/DDTC)

* * * * * * * * * * * * * * * * * * * * 

OGS_a77. 
EU Renews Venezuela Sanctions for 1 Year

(Source: 
Council of the European Union, 6 Nov 2018.) 
 
In view of the continuing deterioration of the situation in Venezuela, the Council decided today to renew the targeted restrictive measures currently in place until 14 November 2019.
 
The Council put in place targeted restrictive measures on Venezuela on 13 November 2017. These included an embargo on arms and on equipment for internal repression as well as a travel ban and an asset freeze on 18 individuals (7 since 22 January and 11 since 25 June 2018) holding official positions and responsible for human rights violations as well as for undermining democracy and the rule of law in Venezuela.
 
These measures are intended to help encourage democratic shared solutions in order to bring political stability to the country and allow it to address the pressing needs of the population. These targeted measures are flexible and reversible and designed not to harm the Venezuelan population.
 
The EU has reiterated on numerous occasions its readiness to help find a democratic way out of the current multidimensional crisis through a meaningful and results-oriented negotiation, conducted in good faith, that includes all relevant Venezuelan political actors. EU foreign ministers discussed the situation in Venezuela and its impact in the region at their last meeting on 15 October and reaffirmed this position. Since the crisis can only be addressed through a political process, they agreed to explore the possibility of establishing a contact group which could, if conditions are met, help facilitate such a process.

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NWSNEWS

NWS_a0
8
. 
9NEWS: “Arms Exports: Australian Government Tight-Lipped Over Permits”
(Source: 
9NEWS
, 30 Oct 2018.) [Excerpts.] 

The Australian Government has signaled it wants to be a major player in the arms race, but the Department of Defense refuses to say what’s being exported, by whom, and to where. 
9NEWS asked Defense a series of questions about arms exports in what would prove to a pointless exercise in transparency.
The Department of Defense said it does not keep records of current export permits and it would only confirm 2628 export permits were issued over 12 months for “military and dual-use goods”. 
Greens Leader Richard Di Natale raised concerns over arms sales to Saudi Arabia, after the United Nations accused the country of carrying out war crimes in Yemen. … 

* * * * * * * * * * * * * * * * * * * * 

(Source: 
CNN, 5 Nov 2018.) [Excerpts.] 
 
Micron, a company in Boise that makes memory chips, has been locked in bitter trade secrets dispute with a state-backed Chinese rival called Fujian Jinhua. Now it has the US government in its corner.
 
Last week, the Trump administration targeted Fujian Jinhua in a major escalation of its push against alleged economic espionage. On Thursday, the
Justice Department charged Fujian Jinhua, along with a Taiwanese company and three Taiwanese individuals, with conspiracy to steal trade secrets from Micron. The charges move the government’s attack on Chinese intellectual property theft beyond tariffs and tough talk.
 
The charges, along with 
a ban on American companies from doing business with Fujian Jinhua, gives Micron the “upper hand” in its tangle with the Chinese company, said Mehdi Hosseini, a semiconductor analyst at Susquehanna International Group. 
 
 “They now have more ammunition to make sure the memory industry in China is marginalized,” he said. … 

 

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NWS_a2
10. 
The Guardian: “European ‘Clearing House’ to Bypass U.S. Sanctions Against Iran”

(Source: 
The Guardian, 6 Nov 2018.) [Excerpts.] 
 
France or Germany possible hosts for SPV as EU looks to reward Tehran for nuclear deal.
 
A special clearing house designed to allow European companies that trade with Iran to bypass newly reimposed US sanctions will be set up in Europe within months, possibly in France or Germany.
 
The clearing house, known as a special purpose vehicle (SPV), is seen as critical to reassuring Tehran that the EU genuinely wishes to reward Iran for signing the 2015 deal on its nuclear program by expanding business with the country.
 
Under the terms of the deal, Iran agreed to limit its nuclear activities and submit to international inspections in return for the lifting of economic sanctions. … 
 
The SPV would serve as a barter exchange neither connected to the US dollar-denominated international financial system nor requiring monetary transfers between EU countries and Iran. An Iranian firm selling into Europe would accumulate credits that could be then used to buy a product from a different European firm. … 

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NWS_a3
11
ST&R Trade Report: “Tariff Exclusion Request Process to be Audited by DOC” 

(Source: 
Sandler, Travis & Rosenberg Trade Report, 6 Nov 2018.)
 
The processes and procedures used to review and adjudicate requests to exclude specific products from the Section 232 additional tariffs on imported steel and aluminum will be subject to an audit by the Department of Commerce. The DOC said the objectives of its audit are to determine whether the processes and procedures in place for reviewing these requests are being adhered to and whether decisions are reached in a consistent and transparent manner.
 
In September, the Bureau of Industry and Security issued an 
interim final rule modifying the Section 232 tariff exclusion request process in an effort to make it more transparent, fair, and efficient after receiving many more requests than it had anticipated. According to a recent letter to Commerce Secretary Wilbur Ross from Sen. Elizabeth Warren, D-Mass., as of Oct. 22 BIS had posted more than 30,000 steel tariff exclusion requests online for public comment and issued more than 11,000 approvals and close to 4,400 denials.
 
However, Warren said a review by her staff of the 909 decisions posted by BIS in the first 30 days that responses were made available raised concern that “the majority of the tariff exemptions have gone to foreign-owned companies seeking exemptions for their U.S. subsidiaries.” For example, Warren said, despite President Trump’s repeated complaints about unfair trade tactics by Japanese and Chinese firms, companies headquartered in Japan received nearly 52 percent of the exemptions granted during this period and were successful in 84 percent of their requests, while the numbers for U.S. subsidiaries of Chinese-owned firms were 27 percent and 94 percent, respectively. By contrast, BIS only approved 25 percent of the requests submitted by U.S. companies.
 
Citing other problems with the exclusion request process, including reports that it is “plagued by political influence and favoritism,” Warren demanded that by Nov. 13 Ross explain these numbers and how they are “consistent with President Trump’s claims that the tariffs and the tariff exemption process were designed to help American steel producers and users.”
 
According to an 
Inside US Tradearticle, the DOC responded that 99.8 percent of the exclusions it has granted to date received no objections from U.S. companies. In addition, the article states, the department said that “only entities located in the United States can apply for exclusions and … we cannot control when a particularly company with particular ownership seeks an exclusion for a product from a given country.”

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COMMCOMMENTARY

COMM_a0
12. 
G.R. Talati: “Penalties for Failing to Make Mandatory CFIUS Declaration Filings Become a Reality in Just Days: Is Your Transaction Impacted?”

(Source: 
Kilpatrick Townsend, 5 Nov 2018.) 
 
* Author: Gunjan R. Talati, Esq., 
gtalati@kilpatricktownsend.com. Kilpatrick Townsend, Washington DC. 
 
A few months ago, we informed you about the Foreign Investment Risk Review Modernization Act of 2018 (“FIRRMA”) and its changes to the Committee on Foreign Investment in the United States (“CFIUS”) process.
[
Government Contracts ConneKTion Blog/August 2018
] One of FIRRMA’s biggest changes to the CFIUS process was making CFIUS declarations mandatory in certain instances. Until FIRRMA, CFIUS had been-at least in theory-a voluntary process. FIRRMA changes that and in October, the Department of Treasury published interim regulations implementing a pilot program that now requires declarations for transactions subject to the pilot program. Failing to comply can result in civil monetary penalties equaling the amount of the transaction. The pilot program commences on November 10, 2018, so if you have a transaction in progress or contemplated, the time to evaluate these changes is now.
 
What Transactions Are Subject to the Pilot Program?
 
There are two types of transactions the pilot program applies to: (1) Any transaction resulting in “control” by a foreign person of a pilot program U.S. business; and (2) Any “pilot program covered transactions.” While these terms seem simple enough, there’s much more beneath the surface.
 
What is a Pilot Program U.S. Business?
 
A “pilot program U.S. business” is defined in the regulations as “any business that produces, tests, manufactures, fabricates, or develops a critical technology that is: (a) utilized in connection with the U.S. business’s activity in one or more pilot program industries; or (b) designed by the U.S. business specifically for use in one or more pilot program industries.”
 
A “critical technology” is defined as any of the following:
 
  • Defense articles or defense services included on the U.S. Munitions List as set forth in the International Traffic in Arms Regulations;
  • Items included on the Commerce Control List set forth in Supplement No. 1 to part 774 of the Export Administration Regulations and controlled: (i) pursuant to multilateral regimes, including for reasons relating to national security, chemical and biological weapons proliferation, nuclear nonproliferation, or missile technology; or (ii) reasons relating to regional stability or surreptitious listening;
  • Nuclear facilities, equipment, and material covered by 10 C.F.R. part 110 (relating to exporting and importing nuclear equipment and material);
  • Select agents and toxins covered by specific parts of the C.F.R.; and
  • Emerging and foundational technology controlled pursuant to the Export Control Reform Act of 2018. The technology covered here will be defined in the near future by the Department of Commerce.
 
A “pilot program industry” is either one or a combination of 27 industries identified by their specific North American Industry Classification System (“NAICS”) codes. The full list of industries identified by their description and associated NAICS code is included below.
 
What About Non-Controlling Investments by Foreign Investors?
 
Whereas CFIUS has traditionally been concerned with transactions where a foreign party controls-or has the ability to control-a U.S. business, FIRRMA expands CFIUS’s jurisdiction to cover non-controlling investments by foreign investors in certain instances. The pilot program covers this expansion and non-controlling investments are covered if it gives the foreign investor:
 
  • Access to any “material nonpublic technical information” in the possession of the target U.S. business. “Material nonpublic technical information” is information that is “not available in the public domain” and is “necessary to design, fabricate, develop, test, produce, or manufacture critical technologies, including processes, techniques, or methods.” The definition excludes financial information regarding the performance of an entity;
  • Membership or observer rights on the board of directors or equivalent governing body of the U.S. business, or the right to nominate an individual to a position on the board of directors or equivalent governing body; or
  • Any involvement (besides voting of shares) in substantive decision making of the U.S. business regarding the use, development, acquisition, or release of critical technology.
 
The interim regulations also have a significant carve out for “certain investment fund investments.” Specifically, indirect investment by a foreign investor in a pilot program U.S. business “through an investment fund that affords the foreign person…membership as a limited partner or equivalent on an advisory board or a committee of the fund shall not be considered a pilot program covered transaction” if the following conditions are satisfied:
  1. The investment fund is “managed exclusively by a general partner, a managing member, or an equivalent;”
  2. The investment fund’s general partner, managing member, or equivalent is not the foreign person;
  3. The advisory board or committee does not have the ability to approve, disapprove, or otherwise control the investment fund’s investment decisions or decisions by the general partner (or equivalent) regarding portfolio assets;
  4. The foreign person does not otherwise have an ability to control the fund;
  5. The foreign person does not have access to “material nonpublic technical information” as a result of its participation.
  6. The investment otherwise satisfies the requirements of “other investments” set forth in FIRRMA (meaning the investment is non-passive, non-controlling).
This carve out is far from clear and given the stiff potential penalties for failing to make a required declaration, investment funds should carefully evaluate whether they truly satisfy the requirements.
 
My Transaction is Covered Under the Pilot Program, What Do I Need to File with CFIUS?
 
Companies that find their transaction is subject to the pilot program must file either a joint voluntary notice or a “declaration.” The “declaration” process is new and intended to be the “CliffsNotes” of information that would be in a typical voluntary notice.
 
When Do I Need to File My Declaration?
 
When declarations need to be filed depends on when closing is anticipated:
 
  • For transactions that are expected to close between November 10, 2018, and December 25, 2018, declarations should be filed “on November 10, 2018 or promptly thereafter.”
  • For transactions that are expected to close after December 25, 2018, the declarations should be filed at least 45-days before closing.
 
What Do I Put in My Declaration?
 
The interim regulations provided detailed information about what has to be disclosed in a declaration including:
 
  • Identifying the parties;
  • A brief description of the transaction including percentages of voting and economic interest acquired, total transaction value, and sources of financing;
  • Description of the rights the foreign person will have in the business;
  • Information on the U.S. business’s government contracts and grants; and
  • Whether the parties, including parents and subsidiaries, have been convicted of a crime within the past 10 years in any jurisdiction.
 
I Filed a Declaration, Now What?
 
After a declaration is filed, CFIUS is required to “promptly” review it and either accept it or return it and advise of what additional information is necessary for the declaration to be accepted. “Promptly” is not defined in days in the regulations and it is likely that there will be some lag between when declarations are submitted and accepted.
 
Once the declaration is accepted and reviewed, CFIUS within 30 days can take any of the following actions:
  1. Request the parties submit a complete joint voluntary notice;
  2. Inform the parties that CFIUS cannot reach a decision based on the declaration and that the parties may submit a complete joint voluntary notice;
  3. Unilaterally review the transaction; or
  4. “Clear” the transaction.
CFIUS is not required to take the full 30 days to complete its review and reach its decision. As these regulations come into practice, there is optimism that CFIUS will “clear” transactions that are of lesser concern quicker than 30 days. If however CFIUS requests or the parties decide to submit a complete joint voluntary notice, the timelines associated with such a review will apply.
 
What Happens if I Don’t File a Declaration and it Was Required?
 
The interim regulations provide for potentially stiff penalties for failing to file a required declaration. CFIUS can issue a civil monetary penalty in an amount up to the value of the transaction. All of this is uncharted territory so whether CFIUS will come out swinging remains to be seen. The magnitude of penalties authorized though serves as a warning that CFIUS can and will pursue those that fail to make required declarations.
 
Pilot Program Industries (Description – Associated NAICS Code) 

  • Aircraft Manufacturing – 336411 
  • Aircraft Engine & Engine Parts Manufacturing – 336412 
  • Alumina Refining & Primary Aluminum Production – 331313 
  • Ball & Roller Bearing Manufacturing – 332991 
  • Computer Storage Device Manufacturing – 334112 
  • Electronic Computer Manufacturing – 334111 
  • Guided Missile & Space Vehicle Manufacturing – 336414 
  • Guided Missile & Space Vehicle Propulsion Unit & Propulsion Unit Parts Manufacturing – 336415 
  • Military Armored Vehicle, Tank, and Tank Component Manufacturing – 336992 
  • Nuclear Electric Power Generation – 221113 
  • Optical Instrument & Lens Manufacturing – 333314 
  • Other Basic Inorganic Chemical Manufacturing – 325180 
  • Other Guided Missile & Space Vehicle Parts & Auxiliary Equipment Manufacturing – 336419 
  • Petrochemical Manufacturing – 325110 
  • Powder Metallurgy Part Manufacturing – 332117 
  • Power, Distribution, and Specialty Transformer Manufacturing – 335311 
  • Primary Battery Manufacturing – 335912 
  • Radio & Television Broadcasting & Wireless Communications Equipment Manufacturing – 334220 
  • Research & Development in Nanotechnology – 541713 
  • Research & Development in Biotechnology (except Nanobiotechnology) – 541714 
  • Secondary Smelting & Alloying of Aluminum – 331314 
  • Search, Detection, Navigation, Guidance, Aeronautical, & Nautical System & Instrument Manufacturing – 334511 
  • Semiconductor & Related Device Manufacturing – 334413 
  • Semiconductor Machinery Manufacturing – 333242 
  • Storage Battery Manufacturing – 335911 
  • Telephone Apparatus Manufacturing – 334210 
  • Turbine & Turbine Generator Set Units Manufacturing – 333611

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COMM_a01
13. 
O. Gonzalez: “Consider Filing a Prior Disclosure to CBP If You Change Classification, Value, Or Country Of Origin”

(Source: Author, 5 Nov 2018.) 
 
* Author: Oscar Gonzalez, Esq., Gonzalez, Rolon, Valdespino, & Rodriguez, LLC, 
oscarg@exportimportlaw.com, +1 (800) 256-2013)
 
So, you are trying to figure out how to get beyond the reach of Section 232 or 301 tariffs. You tinker with country of origin, value, classification, among other things, related to your imported products. You do this because you know that you are well within your rights to seek out and take full advantage of any and all duty savings opportunities as long as you are upfront and as long as you don’t break the law. 
 
If successful, your tinkering results in better and more accurate declaration of country of origin, value, or classification. Suddenly the duties that you owe under Section 232 or Section 301 are greatly reduced or completely eliminated. Congratulations. However, your work is not over. Thanks to your change in course, you probably now have a record of entry errors to contend with. If CBP discovers those errors, even if there is no loss of duties, it most certainly will penalize you in amounts that far exceed the Section 232 or Section 301 tariffs. 
 
The danger of being caught and penalized is probably greater with Section 232 and Section 301 tariffs. CBP knows that countless importers are desperately trying to find a way to avoid the Section 232 and Section 301 tariffs. The agency is on high alert for violators, of which there will be plenty. It will make an example of many importers to dissuade the rest.   
 
Consider filing a prior disclosure (“PD”) with CBP under 19 U.S.C. § 1592. A PD allows you to fess up about your mistakes before CBP finds out about them. A PD only works if you file (this can be done in two steps) before CBP launches an investigation, if the prior disclosure is complete and honest in detail, and only if you tender all duties owed. The law and regulations require that the penalties be greatly reduced, and CBP usually accepts the prior disclosure, plus any tender, as a final settlement of the matter. 

See CBP’s “The ABC’s of Prior Disclosure” HERE

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COM_a3
14. 
R. Whitten: “Iran Sanctions Are Back On: Can Business Continue?”

(Source: 
Global Trade Law Blog, 5 Nov 2018.)
 
* Author: Reid Whitten, Esq., 
rwhitten@sheppardmullin.com, Sheppard Mullin LLP. 
 
The Prohibitions
 
On May 8, 2018, the United States withdrew from the Joint Comprehensive Plan of Action and reimposed all pre-JCPOA sanctions against Iran. We provide a detailed discussion of the reimposition in our 
article linked here (and 
linked here is our prediction, a year earlier, that it would happen). After a prescribed wind-down period, all U.S. sanctions on Iran are now in force. Effectively, U.S. sanctions on Iran now return to their pre-2016 levels, including secondary sanctions on non-U.S. companies transacting with the Government of Iran and many of Iran’s industries and financial institutions.
 
The Business That May Continue 
 
While the reimposition of economic sanctions on Iran significantly restricts what business can be done with the country, certain transactions will not raise the risk of sanctions liability for non-U.S. persons. Generally, if a transaction meets the following criteria, it is not likely to expose a non-U.S. company to sanctions liability:
  1. The transaction does not involve U.S. persons, including U.S. banks.
  2. The transaction does not involve any specially designated nationals or entities 50% or more owned by SDNs.
  3. The transaction does not involve an industry or activity in Iran subject to secondary sanctions.
We add three notes on the list above.
  – First, the list of industries and activities subject to secondary sanctions is more expansive for non-U.S. financial institutions (Foreign Financial Institutions or FFIs). FFIs are subject to the prohibition or limitation of their correspondent or payable-through accounts for certain transactions with a wide array of industries and activities as well as with the Central Bank of Iran and all major Iranian banks.
 – Second, we note that the list of industries and activities subject to secondary sanctions arises from a patchwork of statutes and regulations. For that reason, we recommend companies seek expert advice before proceeding with a transaction involving Iran or Iranian parties.
  – Third, it is likely that, in the wake of sanctions reimposition, U.S. enforcement officials will seek to demonstrate they are serious about Iran sanctions by making an example of a few high-profile sanctions violators. In the absence of a high-profile violator, the U.S. government may seek to make an Iran sanctions enforcement headline with the punishment of any violator. We recommend that companies interested in business in Iran take all possible steps to ensure they are acting in compliance U.S. regulations because the consequences for stepping outside the line, particularly in the first months of the reimposition, could be dire.
 
The Waivers
 
It appears that the United States will grant waivers to eight countries to allow them to continue buying Iranian oil and continue dealings with the Central Bank of Iran to finance those purchases. The names of all eight countries have not been officially reported, but we understand that the Republic of Korea, China, and India will receive waivers, and it has been reported that Japan, Turkey, Iraq and Italy may also be among the countries granted waivers.
 
We will update this report as soon as we receive the official announcement of those waivers.

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TEEX/IM TRAINING EVENTS & CONFERENCES

TE_a215ECS Presents “Seminar Level I – Boot Camp: Achieving ITAR/EAR Compliance”, 6-7 Feb 2019 in Orlando

(Source: S. Palmer, 
spalmer@exportcompliancesolutions.com.)
 
* What: Seminar Level I – Boot Camp:  Achieving ITAR/EAR Compliance; Orlando, FL
* When: February 6-7, 2019
* Sponsor: Export Compliance Solutions (ECS)
* ECS Speaker Panel: Suzanne Palmer, Mal Zerden
* Register 
here or by calling 866-238-4018 or email

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ENEDITOR’S NOTES


Robert Musil 
(6 Nov 1880 – 15 Apr 1942; was an Austrian philosophical writer. His unfinished novel, The Man Without Qualities (German: Der Mann ohne Eigenschaften) is generally considered to be one of the most important and influential modernist novels.)
 – “Progress would be wonderful – if only it would stop.”

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EN_a317
. 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: 2 Nov 2018: 
83 FR 55099: Wassenaar Arrangement 2017 Plenary Agreements Implementation [Correction to 24 Oct EAR Amendment Concerning Supplement No. 1 to Part 774, Category 3.]


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

  – Last Amendment: 5 Nov 2018: 
83 FR 55269-55271: Iranian Transactions and 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.  
 
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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: 1 Nov 2018: 
Harmonized System Update 1819, containing 1,200 ABI records and 245 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_a0318
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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