19-0116 Wednesday “Daily Bugle'”

19-0116 Wednesday “Daily Bugle”

Wednesday, 16 January 2019

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 Announces ACE Maintenance for 17 Jan
  4. State/DDTC: (No new postings.)
  5. UK/ECJU Updates Collaborative Project Typhoon OGEL
  1. Bloomberg: “EU Said to Consider Extension of Many Months: Brexit Update” 
  2. Expeditors News: “USTR Implements Contingency Plan for Government Shutdown” 
  3. Global Trade News: “A Brexit Timeline: Key Dates and Players” 
  4. ST&R Trade Report: “First Sale Rule Enforcement Increasing in Section 301 Environment” 
  1. M. Volkov: “Assessing Your Hotline System”
  1. ECS Presents “Boot Camp: Achieving ITAR/EAR Compliance” on 10-11 Jul in Seattle, WA
  1. Bartlett’s Unfamiliar Quotations 
  2. Are Your Copies of Regulations Up to Date? Latest Amendments: DHS/Customs (14 Jan 2019), DOC/EAR (20 Dec 2018), DOC/FTR (24 Apr 2018), DOD/NISPOM (18 May 2016), DOE/AFAEC (23 Feb 2015), DOE/EINEM (20 Nov 2018), DOJ/ATF (26 Dec 2018), DOS/ITAR (4 Oct 2018), DOT/FACR/OFAC (15 Nov 2018), HTSUS (19 Dec 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)


[No items of interest noted today.]  

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Commerce/BIS: (No new postings.)


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CSMS #19-000010, 16 Jan 2019.)
Maintenance will be performed on the ACE system Thursday January 17th from 0500 – 0700 which may cause brief delays in truck EDI processing.


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UK/ECJU, 16 Jan 2019.)
The open general export license military goods: collaborative project Typhoon has been updated to include Qatar as a permitted destination (effective 17 January 2019).
This follows Qatar’s agreement to purchase 24 Typhoon jets, read
more about this development on GOV.UK.
The updated OGEL comes into force at 9:30am on Thursday 17 January 2019.

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NWS_a16. Bloomberg: “EU Said to Consider Extension of Many Months: Brexit Update”
(Source: Bloomberg, 16 Jan 2019.) [Excerpts.]
Key Developments
  – Parliament’s confidence vote in May’s government at 7 p.m.
  – EU discussing an extension to Brexit deadline beyond July
  – May says a general election would delay exit day
  – May to speak to EU leaders tomorrow, person familiar says
  – Pro-Brexit Tory hardliners pledge to back May in confidence vote
May to Speak to Leaders as EU Plots Extension (5:10 p.m.)
The European Union is willing to delay Brexit well into the second half of 2019, diplomats said, as governments examine ways of preventing the U.K. crashing out of the bloc without a deal.
The EU is likely to approve any U.K. request to extend the Article 50 negotiation period beyond March 29 and the extension could go well beyond the first sitting of a newly elected European Parliament at the start of July, three diplomats said. One said September was a possible new deadline.
However, there isn’t complete agreement among EU member states, with some thinking the best strategy is still to insist that the U.K. leaves on the original date, or with only an extension of a few weeks to enable the British Parliament to pass necessary legislation, a fourth diplomat said. Approval for a delay needs the unanimous support of all 27 remaining EU governments.
May said on Wednesday that it was still her plan to leave the EU on March 29 but didn’t rule out a possible extension. The prime minister is planning to speak to EU leaders tomorrow about her Brexit strategy, according to another person familiar with the situation. …

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NWS_a27. Expeditors News: “USTR Implements Contingency Plan for Government Shutdown”
Expeditors News
, 15 Jan 2019.)
According to a statement published on January 14, 2019, the Office of the U.S. Trade Representative (USTR) implemented its “lapse in appropriations contingency plan.”
According to the Office of Management & Budget (OMB) contingency plan, the USTR will have 74 staff members continue to work, with the majority of their staff furloughed.
The press release may be found here.
The OMB contingency plan may be found here.

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NWS_a38. Global Trade News: “A Brexit Timeline: Key Dates and Players”
(Source: Integration Point Blog, 15 Jan 2019.)
The United Kingdom is scheduled to leave the European Union on March 29, 2019. UK Prime Minister Theresa May has been scrambling to draft and pass a withdrawal agreement that would prevent a costly and diplomatically destructive exit from the EU without a deal. At the conclusion of a five-day debate, the British legislative House of Commons rejected May’s deal and increased the likelihood of a “no-deal” Brexit. Here are the key dates and players that have led up to the January 15 vote by the members of Parliament.
June 23, 2016 – The UK voted to withdraw from the EU by a margin of 52% to 48%. “Leave” won the majority of votes in England and Wales, while every council in Scotland saw “Remain” majorities. The vote prompted then-Prime Minister David Cameron to step down, replaced by the conservative party leader Theresa May.
March 29, 2017 – May triggers Article 50 of the Lisbon Treaty, which allows a member of the EU to exit the bloc. This starts the two-year deadline of negotiating an exit deal.
March 19, 2018 – The first withdrawal agreement daft is published, bringing up points of contention such as the Irish “backstop,” which would eventually draw a hard border between Ireland and Northern Ireland.
November 25, 2018 – A 585-page draft withdrawal agreement is published after unanimous approval by the EU, but the terms of the backstop to prevent a hard border in Ireland spark anger among Brexiteers and Brexit dissenters alike.
December 10, 2018 – Though a vote on the withdrawal agreement was set for December 11, it became clear that the deal would fail in the House of Commons. May pulls the vote and postpones it until the week of January 14, 2019. EU Commissioner Jean-Claude Juncker expresses that “there is no room whatsoever for renegotiation.”
December 13, 2018 – May survives a vote of “no-confidence” invoked by her own Conservative Tory party.
December 19, 2018 – The European Commission starts implementing its “no deal” Contingency Action Plan  which covers 14 areas where UK withdrawal without a deal would create “major disruption for citizens and businesses” in the remaining 27 EU states.
January 15, 2019 – After five days of debate, May’s withdrawal agreement is rejected by the members of Parliament by a margin of 432 votes against the deal to 202 votes in favor. It is the largest defeat in the House of Commons since 1924. Jeremy Corbyn of the opposition Labour party calls for a second vote of no-confidence set for Wednesday, January 16.
If you would like to read more about the Brexit timeline of events and potential outcomes, please visit
Euractiv, or
Yahoo Finance.

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NWS_a49. ST&R Trade Report: “First Sale Rule Enforcement Increasing in Section 301 Environment”
The use of the first sale rule has increased dramatically over the past several months as companies seek to lessen the impact of the additional Section 301 tariffs on imports from China. At the same time, U.S. Customs and Border Protection is scrutinizing imports that use this valuation methodology more closely as part of a broader increase in enforcement efforts. Importers should therefore review transactions taking advantage of the first sale rule to ensure they are consistent with CBP requirements.
Under the first sale rule, the entered value of a qualifying transaction may be based on the purchase price between the middleman/vendor and the manufacturer rather than the importer and the middleman/vendor. This rule was established in litigation by ST&R over 30 years ago, and its legality and importance to the U.S. economy and trade community was reaffirmed by legislation first proposed by ST&R and enacted in 2008. At a time when volatility in trade policy has left some traditional methods of lowering costs unavailable and is threatening to eliminate others, importers are continuing to use the first sale rule to save millions of dollars in import duties each year.
Importers have scrambled to mitigate the Section 301 duties of up to 25 percent on goods from China using a variety of methods, including first sale valuation. The speed at which these additional duties were imposed has forced many companies to quickly implement a first sale program, often without sufficient time to perform an adequate review of the underlying transactions. Knowing this, CBP (which has always had an uneasy relationship with the first sale rule and has attempted several times to eliminate it or make it more difficult to use) is targeting the use of first sale for goods subject to Section 301 tariffs to verify that companies using this methodology are doing so properly.
  “For example,” said ST&R Member Mark Tallo, “CBP is now targeting the use of first sale by industries that have previously been subject to very low or no duty and focusing on the proper transfer of title and risk of loss to ensure middleman companies are bona fide buyers and sellers of imported goods. CBP is also continuing to scrutinize related party pricing to confirm that any first sale price between related parties is not influenced by that relationship and is otherwise conducted at arm’s length.” Tallo said other issues frequently reviewed include assist valuation (i.e., validating that all declared first sale prices are “fully costed” and reflect the true value of the imported goods) and supplemental payments (i.e., ensuring that no such payments to the foreign seller are missing from the first sale price).
  “Despite this trend, companies can still have successful first sale programs,” said ST&R Member Mark J. Segrist. “The key is to take proactive steps to ensure that multi-tiered transactions meet first sale requirements and that there are internal controls and procedures in place to sufficiently document compliance if and when CBP comes knocking.” Because information is often retained by different partners in the supply chain, Segrist said, “it is particularly important for importers to communicate with them to define their responsibilities for keeping and producing records, as the failure to meet first sale requirements may be construed as a lack of reasonable care and lead to penalties.”

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Volkov Law Group Blog, 15 Jan 2019. Reprinted by permission.) [Excerpts.]
* Author: Michael Volkov, Esq., Volkov Law Group,
mvolkov@volkovlaw.com, 240-505-1992.
Employee hotlines are – sorry about this – a “hot” topic these days in compliance.
NAVEX Global’s recent study (here) confirmed the importance of an effective hotline system. Companies that implement robust and widely-used internal reporting systems are more effective in identifying and responding to potential problems. Such an impact improves overall business performance as measured by return on assets, fewer material lawsuits, lower litigation costs, and fewer external whistleblower reports.
Companies should use this correlation in performance and implement a robust hotline assessment program. Such an assessment should be based on regular analysis of hotline data. A company has to conduct such an assessment to ensure that the company: promotes a culture that supports employees who raise concerns; effectively communicates with employees to encourage such reporting; and promptly and effectively investigates employee concerns.
Over the last few years, overall employee reporting volumes have increased. From 2010 to 2017, the rate of employee reporting has increased when all forms of reporting (e.g. hotline, walk-ins) are calculated – a 56 percent increase where the median reports was 0.9 reports per 100 employees in 2010, to a media of 1.4 reports per 100 employees in 2017.
Interestingly, the substantiation rate for reported cases increased by 10 percent, from 40 percent in 2016 to 44 percent in 2017, reaching the highest level recorded by NAVEX Global. The highest increase in substantiation rates occurred with respect to Human Resources, Diversity and Workplace Respect issues – from 38 to 44 percent.
In general, companies are receiving more employee reports and higher quality complaints, resulting in higher overall substantiation rates.
Employee reports received from sources other than a hotline had a significantly higher substantiation rate of 64 percent overall. This result suggests that managers have improved their ability to receive and respond to employee concerns.
The number of internal reports of retaliation against employees raising concerns dropped but the substantiation rate increased significantly from 26 percent to 32 percent. Companies need to remain vigilant in rooting out and preventing potential retaliation or harassment against employees who raise concerns. …

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TE_a111. ECS Presents “Boot Camp: Achieving ITAR/EAR Compliance” on 10-11 Jul in Seattle, WA
(Source: Suzanne Palmer, spalmer@exportcompliancesolutions.com)
* What: Boot Camp: Achieving ITAR/EAR Compliance; Seattle, WA
* When: 10-11 July 2019
* Sponsor: Export Compliance Solutions (ECS)
* ECS Speaker Panel:  Suzanne Palmer, Mal Zerden
* Register here or by calling 866-238-4018 or e-mail spalmer@exportcompliancesolutions.com

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Dizzy Dean (Jay Hanna “Dizzy” Dean; 16 Jan 1910 – 17 Jul 1974; was an American professional baseball player. He played in Major League Baseball as a pitcher for the St. Louis Cardinals, Chicago Cubs, and the St. Louis Browns. A brash and colorful personality, Dean was the last National League pitcher to win 30 games in one season.)
  – “It ain’t bragging if you can do it.”
  – “Let the teachers teach English and I will teach baseball. There is a lot of people in the United States who say isn’t, and they ain’t eating.”
* Robert W. Service (Robert William Service; 16 Jan 1874 – 11 Sep 1958; was a British-Canadian poet and writer who has often been called “the Bard of the Yukon”. He is best known for his poems “The Shooting of Dan McGrew” and “The Cremation of Sam McGee”, from his first book, Songs of a Sourdough.)
  – “I have some friends, some honest friends, and honest friends are few; My pipe of briar, my open fire, A book that’s not too new.”
  – “A promise made is a debt unpaid.”
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. Are Your Copies of Regulations Up to Date?
(Source: Editor)

* DHS CUSTOMS REGULATIONS: 19 CFR, Ch. 1, Pts. 0-199.  Implemented by Dep’t of Homeland Security, U.S. Customs & Border Protection.
  – Last Amendment: 14 Jan 2019: 84 FR 112-116: Extension of Import Restrictions Imposed on Certain Archaeological and Ecclesiastical Ethnological Material from Bulgaria; and 84 FR 107-112: Extension of Import Restrictions Imposed on Certain Archaeological Material From China 

DOC EXPORT ADMINISTRATION REGULATIONS (EAR): 15 CFR Subtit. B, Ch. VII, Pts. 730-774. Implemented by Dep’t of Commerce, Bureau of Industry & Security.
  – Last Amendment: 20 Dec 2018: 83 FR 65292-65294: Control of Military Electronic Equipment and Other Items the President Determines No Longer Warrant Control Under the United States Munitions List (USML); Correction [Concerning ECCN 7A005 and ECCN 7A105.]
* DOC FOREIGN TRADE REGULATIONS (FTR): 15 CFR Part 30.  Implemented by Dep’t of Commerce, U.S. Census Bureau.
  – Last Amendment: 24 Apr 2018: 83 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 (1 Jan 2019) 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 website.  BITAR 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.   


  – 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.)
DOE ASSISTANCE TO FOREIGN ATOMIC ENERGY ACTIVITIES: 10 CFR Part 810; Implemented by Dep’t of Energy, National Nuclear Security Administration, under Atomic Energy Act of 1954.
  – Last Amendment: 23 Feb 2015: 80 FR 9359, comprehensive updating of regulations, updates the activities and technologies subject to specific authorization and DOE reporting requirements. This rule also identifies destinations with respect to which most assistance would be generally authorized and destinations that would require a specific authorization by the Secretary of Energy.
DOE EXPORT AND IMPORT OF NUCLEAR EQUIPMENT AND MATERIAL; 10 CFR Part 110; Implemented by Dep’t of Energy, U.S. Nuclear Regulatory Commission, under Atomic Energy Act of 1954.
  – Last Amendment: 20 Nov 2018, 10 CFR 110.6, Re-transfers.

* DOJ ATF ARMS IMPORT REGULATIONS: 27 CFR Part 447-Importation of Arms, Ammunition, and Implements of War.  Implemented by Dep’t of Justice, Bureau of Alcohol, Tobacco, Firearms & Explosives.
  – 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.  


DOS INTERNATIONAL TRAFFIC IN ARMS REGULATIONS (ITAR): 22 C.F.R. Ch. I, Subch. M, Pts. 120-130. Implemented by Dep’t of State, Directorate of Defense Trade Controls.
  – 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: 1 Jan 2019) 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.
* DOT FOREIGN ASSETS CONTROL REGULATIONS (OFAC FACR): 31 CFR, Parts 500-599, Embargoes, Sanctions, Executive Orders. 

Implemented by Dep’t of Treasury, Office of Foreign Assets Control.

  – Last Amendment: 15 Nov 2018: 83 FR 57308-57318: Democratic Republic of the Congo Sanctions Regulations
* USITC HARMONIZED TARIFF SCHEDULE OF THE UNITED STATES (HTS, HTSA or HTSUSA), 1 Jan 2018: 19 USC 1202 Annex. Implemented by U.S. International Trade Commission. (“HTS” and “HTSA” are often seen as abbreviations for the Harmonized Tariff Schedule of the United States Annotated, shortened versions of “HTSUSA”.)
  – Last Amendment: 19 Dec 2018: Harmonized System Update (HSU) 1820, containing 19,061 ABI records and 3,393 harmonized tariff records.
  – HTS codes for AES are available here.
  – HTS codes that are not valid for AES are available here.

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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 6,500 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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