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19-0212 Tuesday “Daily Bugle'”

19-0212 Tuesday “Daily Bugle”

Tuesday, 12 February 2019

  1. DHS/CBP Changes Location for “The 21st Century Customs Framework” Public Meeting on 1 March
  2. Justice/ATF Starts Information Collection Concerning Voluntary Magazine Questionnaire for Agencies/Entities Who Store Explosive Materials
  3. State Starts Information Collection Concerning Annual Brokering Report
  4. State Starts Information Collection Concerning Brokering Prior Approval
  5. State Starts Information Collection Concerning USML Categories I, II and III
  1. Items Scheduled for Publication in Future Federal Register Editions
  2. Commerce/BIS: (No new postings.)
  3. DHS/CBP Announces Harmonized System Update 1901
  4. DHS/CBP Updates CATAIR and Error Dictionary
  5. State/DDTC: (No new postings.)
  6. Australian Government Publishes Legislation Concerning South Sudan Sanctions
  1. South China Morning Post: “Trump Signs Order Prioritizing Artificial Intelligence Research Amid Looming China Ambitions”
  2. ST&R Trade Report: “Legislative Update: Tariffs, Ports of Entry, Arms Exports, Trade Preferences”
  1. J.E. Smith, J.P. Carlin & N.J. Spiliotes: “OFAC Has Been Talking About Compliance Through Enforcement” (Part II of II)
  2. M. Volkov: “New U.S. Sanctions Against Nicolás Maduro Place Venezuelan Oil Squarely in the Crosshairs”
  3. The FAQ of the Day: “Itemizing USML Cat VIII Aircraft System Exports”
  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 (12 Feb 2019) 
  3. Weekly Highlights of the Daily Bugle Top Stories 

EXIMITEMS FROM TODAY’S FEDERAL REGISTER

EXIM_a11. 
DHS/CBP Changes Location for “The 21st Century Customs Framework” Public Meeting on 1 March 

(Source: Federal Register, 12 Feb 2019.) [Excerpts.] 
 
84 FR 3477-3478: Announcing Change of Location for Public Meeting: 21st Century Customs Framework 
 
* AGENCY: U.S. Customs and Border Protection (CBP), Department of Homeland Security (DHS).
* ACTION: Notice of change of location for public meeting.
* SUMMARY: U.S. Customs and Border Protection (CBP) is announcing a change in location for “The 21st Century Customs Framework” public meeting to be held on Friday, March 1, 2019. The public meeting will be held at the U.S. Department of Commerce, Herbert Hoover Auditorium. CBP is also re-opening the registration links to allow for additional participation. Participants who have previously registered do not need to re-register.
* DATES: 
  – Meeting: The meeting to discuss “The 21st Century Customs Framework” will be held on Friday, March 1, 2019, from 9:00 a.m. to 5:00 p.m. EST.
  – Pre-registration: Members of the public wishing to attend the meeting whether in-person or via teleconference must register as indicated in the ADDRESSES section. Participants who have previously registered do not need to re-register. Registration will remain open until the venue reaches capacity.
  – Cancellation of pre-registration: Members of the public who are pre-registered to attend in-person or via teleconference and later need to cancel, please do so by 5:00 p.m. EST, February 22, 2019.
* ADDRESSES: 
  – Meeting: The meeting will be conducted in-person and via teleconference. The in-person meeting will be held at the U.S. Department of Commerce, Herbert Hoover Auditorium, 1401 Constitution Avenue NW, Washington, DC 20230. The teleconference number will be provided to all registrants by 5:00 p.m. EST on February 28, 2019. For information on services for individuals with disabilities or to request special assistance at the meeting, contact Mr. Brandon Lord, Office of Trade, U.S. Customs & Border Protection, at (202) 325-6432 or email, 21CCF@cbp.dhs.gov as soon as possible.
  – Pre-registration: Meeting participants may attend either in-person or via teleconference after pre-registering using one of the methods indicated below. All in-person attendees must pre-register; on-site registration is not permitted.
  For members of the public who plan to attend the meeting in-person, please register online here.
  For members of the public who plan to participate via teleconference, please register online here
  Participants who have previously registered do not need to re-register. Registration will remain open until the venue reaches capacity. Please feel free to share this information with other interested members of your organization or association.
  – Members of the public who are pre-registered to attend and later need to cancel, please do so by 5:00 p.m. EST, February 22, 2019, utilizing the following links: here to cancel an in-person registration or here to cancel a teleconference registration.
  – Docket: For access to the docket or to read background documents or comments, go to http://www.regulations.gov and search for Docket Number USCBP-2018-0045.
* FOR FURTHER INFORMATION CONTACT: Mr. Brandon Lord, Office of Trade, U.S. Customs and Border Protection, 1331 Pennsylvania Avenue NW, Suite 950N, Washington, DC 20229; telephone (202) 325-6432 or email 21CCF@cbp.dhs.gov
* SUPPLEMENTARY INFORMATION: … 
 
21st Century Customs Framework Initiative Overview
 
CBP is cognizant of the need to stay modern in order to meet the challenges of an evolving trade landscape. New Start Printed Page 3478actors, industries, and modes of conducting business have emerged, disrupting the traditional global supply chain. To continue to effectively fulfill CBP’s mission, CBP is pursuing an initiative titled “The 21st Century Customs Framework.” “The 21st Century Customs Framework” will seek to address and enhance numerous aspects of CBP’s trade mission to better position the agency to operate in the 21st century trade environment.
  Through preliminary efforts, CBP has identified key themes for which CBP seeks public input: (1) Emerging Roles in the Global Supply Chain; (2) Intelligent Enforcement; (3) Cutting-Edge Technology; (4) Data Access and Sharing; (5) 21st Century Processes; and (6) Self-Funded Customs Infrastructure. For brief descriptions of each theme please refer to the December 21, 2018 public meeting announcement in the Federal Register (83 FR 65703).
 
  Dated: February 7, 2019.
Brenda B. Smith, Executive Assistant Commissioner, Office of Trade.

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

EXIM_a22. J
ustice/ATF Starts Information Collection Concerning Voluntary Magazine Questionnaire for Agencies/Entities Who Store Explosive Materials

(Source: Federal Register, 12 Feb 2019.) [Excerpts.]
 
84 FR 3489-3490: Agency Information Collection Activities; Proposed eCollection eComments Requested; Extension Without Change of a Currently Approved Collection Voluntary Magazine Questionnaire for Agencies/Entities Who Store Explosive Materials 
 
* AGENCY: Bureau of Alcohol, Tobacco, Firearms and Explosives, Department of Justice.
* ACTION: 60-Day notice.
* SUMMARY: The Department of Justice (DOJ), Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF), will submit the following information collection request to the Office of Management and Budget (OMB) for review and approval in accordance with the Paperwork Reduction Act of 1995.
* DATES: Comments are encouraged and will be accepted for 60 days until April 15, 2019.
* FOR FURTHER INFORMATION CONTACT: If you have additional comments, regarding the estimated public burden or associated response time, suggestions, or need a copy of the proposed information collection instrument with instructions, or additional information, please contact: Anita Scheddel, Program Analyst, Explosives Industry Programs Branch, either by mail at 99 New York Ave NE, Washington, DC 20226, or by email at eipb-informationcollection@atf.gov or by telephone at 202-648-7158.
* SUPPLEMENTARY INFORMATION: 
 
Overview of This Information Collection
 
 – Type of Information Collection: Extension, without change, of a currently approved collection.
  – The Title of the Form/Collection: Voluntary Magazine Questionnaire for Agencies/Entities Who Store Explosive Materials. … 
  – Form number (if applicable): None.
  – Component: Bureau of Alcohol, Tobacco, Firearms and Explosives, U.S. Department of Justice. … 
  – Abstract: This information collection is used to identify the number and locations of public explosives storage faculties (magazines), which will enable ATF to respond properly to local emergencies such as natural disasters. … 
 
If additional information is required contact: Melody Braswell, Department Clearance Officer, United States Department of Justice, Justice Management Division, Policy and Planning Staff, Two Constitution Square, 145 N Street NE, 3E.405A, Washington, DC 20530.
 
  Dated: February 6, 2019.
Melody Braswell, Department Clearance Officer for PRA, U.S. Department of Justice.

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

EXIM_a33.

State Starts Information Collection Concerning Annual Brokering Report

(Source: 
Federal Register, 12 Feb 2019.) [Excerpts.] 
 
84 FR 3530-3531: 30-Day Notice of Proposed Information Collection: Annual Brokering Report 
 
* ACTION: Notice of request for public comment and submission to OMB of proposed collection of information.
* SUMMARY: The Department of State has submitted the information collection described below to the Office of Management and Budget (OMB) for approval. In accordance with the Paperwork Reduction Act of 1995 we are requesting comments on this collection from all interested individuals and organizations. The purpose of this Notice is to allow 30 days for public comment.
* DATES: Submit comments directly to the Office of Management and Budget (OMB) up to March 14, 2019.
* ADDRESSES: Direct comments to the Department of State Desk Officer in the Office of Information and Regulatory Affairs at the Office of Management and Budget (OMB). You may submit comments by the following methods:
 – Email: 
oira_submission@omb.eop.gov. You must include the DS form number, information collection title, and the OMB control number in the subject line of your message.
 – Fax: 202-395-5806. Attention: Desk Officer for Department of State.
* FOR FURTHER INFORMATION CONTACT: Direct requests for additional information regarding the collection listed in this notice, including requests for copies of the proposed collection instrument and supporting documents, to Andrea Battista who may be reached on 202-663-3136 or at 
battistaal@state.gov
* SUPPLEMENTARY INFORMATION:  
  – Title of Information Collection: Annual Brokering Report.
  – OMB Control Number: 1405-0141.
  – Type of Request: Extension of a Currently Approved Collection.
  – Originating Office: Directorate of Defense Trade Controls (DDTC).
  – Form Number: No Form.
  –  Respondents: Respondents are any person/s who engages in the United States in the business of manufacturing or exporting or temporarily importing defense articles. … 
  – Abstract of Proposed Collection: In accordance with part 129 of the ITAR, U.S. and foreign persons required to register as a broker shall provide annually a report to DDTC enumerating and describing brokering activities by quantity, type, U.S. dollar value, purchaser/recipient, and license number for approved activities and any exemptions utilized for other covered activities. This information is currently used in the review of munitions export and brokering license applications and to ensure compliance with defense trade statutes and regulations. As appropriate, such information may be shared with other U.S. Government entities. 
  – Methodology: Brokering Reports are submitted annually with Statement of Registration renewals.
 
Anthony M. Dearth, Chief of Staff, Directorate of Defense Trade Controls, Department of State.

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

State Starts Information Collection Concerning Brokering Prior Approval

(Source: 
Federal Register, 12 Feb 2019.) [Excerpts.]
 
84 FR 3529-3530: 30-Day Notice of Proposed Information Collection: Brokering Prior Approval (License) 
 
* ACTION: Notice of request for public comment and submission to OMB of proposed collection of information.
* SUMMARY: The Department of State has submitted the information collection described below to the Office of Management and Budget (OMB) for approval. In accordance with the Paperwork Reduction Act of 1995 we are requesting comments on this collection from all interested individuals and organizations. The purpose of this Notice is to allow 30 days for public comment.
* DATES:
Submit comments directly to the Office of Management and Budget (OMB) up to March 14, 2019.
* ADDRESSES: Direct comments to the Department of State Desk Officer in the Office of Information and Regulatory Affairs at the Office of Management and Budget (OMB). You may submit comments by the following methods:
  – Email: 
oira_submission@omb.eop.gov. You must include the DS form number, information collection title, and the OMB control number in the subject line of your message.
  – Fax: 202-395-5806. Attention: Desk Officer for Department of State.
FOR FURTHER INFORMATION CONTACT: Direct requests for additional information regarding the collection listed in this notice, including requests for copies of the proposed collection instrument and supporting documents, to Andrea Battista, who may be reached on 202-663-3136 or at 
battistaal@state.gov
* SUPPLEMENTARY INFORMATION:
 
  – Title of Information Collection: Brokering Prior Approval.
  – OMB Control Number: 1405-0142.
  – Type of Request: Extension of a Currently Approved Collection.
  – Originating Office: Directorate of Defense Trade Controls (DDTC).
  – Form Number: DS-4294.
  – Respondents: Respondents are U.S. and foreign persons who wish to engage in International Traffic in Arms Regulations (ITAR)-controlled brokering of defense articles and defense services. … 
  – 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.
  – Methodology: Currently submissions are made via hardcopy documentation. Applicants are referred to ITAR part 129 for guidance on information to submit regarding proposed brokering activity. Upon implementation of DDTC’s new case management system, the Defense Export Control and Compliance System (DECCS), a DS-4294 may be submitted electronically.
 
Anthony M. Dearth, Chief of Staff, Directorate of Defense Trade Controls, U.S. Department of State.

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

State Starts Information Collection Concerning USML Categories I, II and III

(Source: 
Federal Register, 12 Feb 2019.) [Excerpts.] 
 
84 FR 3528-3529: Notice of Information Collection Under OMB Emergency Processing; Three Information Collections Related to the United States Munitions List, Categories I, II and III
 
* ACTION: Notice of request for emergency OMB approval and public comment.
* SUMMARY: The Department of State has submitted the information collection request described below to the Office of Management and Budget (OMB) for review and approval in accordance with the emergency processing procedures of the Paperwork Reduction Act of 1995. The purpose of this notice is to allow for public comment from all interested individuals and organizations. Emergency processing and approval of this collection has been requested from OMB by April 1, 2019. If granted, the emergency approval is only valid for 90 days.
* ADDRESSES: Direct any comments on this emergency request to both the Department of State Desk Officer in the Office of Information and Regulatory Affairs at the Office of Management and Budget (OMB) and to PM/DDTC. All public comments must be received by February 24, 2019.
* You may submit comments to OMB by the following methods:
  – Email: 
oira_submission@omb.eop.gov. You must include the DS form number, information collection title, and OMB control number in the subject line of your message.
 – Fax: 202-395-5806. Attention: Desk Officer for Department of State.
  You may submit comments to PM/DDTC by 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-2018-0063” in the Search field. Then click the “Comment Now” button and complete the comment form.
  – Email: 
DDTCPublicComments@state.gov, You must include Emergency Submission Comment on “information collection title” in the subject line of your message.
  – Regular Mail: Send written comments to: PM/DDTC 2401 E Street NW, Washington, DC 20037 H1204-3.
  You must include the DS form number (if applicable), information collection title, and the OMB control number in any correspondence.
* FOR FURTHER INFORMATION CONTACT: Direct requests for additional information regarding the collection listed in this notice, including requests for copies of the proposed collection instrument and supporting documents to Andrea Battista who may be reached on 202-663-3136 or at 
battistaal@state.gov
* SUPPLEMENTARY INFORMATION:
 
  – Title of Information Collection: Application for Temporary Import of Defense Articles.
  – OMB Control Number: 1405-0013.
  – Type of Request: Emergency Processing.
  – Originating Office: PM/DDTC.
  – Form Number: DSP-61.
  – Respondents: Business, Nonprofit Organizations, and Individuals. … 
  – Obligation to Respond: Required in Order to Obtain or Retain Benefits. 
 
 – Title of Information Collection: Application/License for Temporary Export of Unclassified Defense Articles.
 – OMB Control Number: 1405-0023.
 – Type of Request: Emergency Processing.
 – Originating Office: PM/DDTC.
 – Form Number: DSP-73.
 – Respondents: Business, Nonprofit Organizations, and Individuals. 
  – Obligation to Respond: Required in Order to Obtain or Retain Benefits.
 
  – Title of Information Collection: Application/License for Permanent/Temporary Export or Temporary Import of Classified Defense Articles and Related Classified Technical Data.
  – OMB Control Number: 1405-0022.
  – Type of Request: Emergency Processing.
  – Originating Office: PM/DDTC.
  – Form Number: DSP-85.
  – Respondents: Business, Nonprofit Organizations, and Individuals. … 
  – Obligation to Respond: Required in Order to Obtain or Retain Benefits. … 
 
  – Abstract of Proposed Collection: The export, temporary import, and brokering of defense articles, including technical data, and defense services are authorized by The Department of State, Directorate of Defense Trade Controls (DDTC) in accordance with the International Traffic in Arms Regulations (“ITAR,” 22 CFR parts 120-130) and section 38 of the Arms Export Control Act. Those who manufacture, broker, export, or temporarily import defense articles, including technical data, or defense services must register with the Department of State and obtain a decision from the Department as to whether it is in the interests of U.S. foreign policy and national security to approve covered transactions. Also, registered brokers must submit annual reports regarding all brokering activity that was transacted, and registered manufacturers and exporter must maintain records of defense trade activities for five years.
  
1405-0013, Application/License for Temporary Import of Unclassified Defense Articles: In accordance with part 123 of the ITAR, any person who intends to temporarily import 
unclassified defense articles must obtain DDTC authorization prior to import. “Application/License for Temporary Import of Unclassified Defense Articles” (Form DSP-61) is the licensing vehicle typically used to obtain permission for the temporary import of unclassified defense articles covered by USML. This form is an application that, when completed and approved by PM/DDTC, Department of State, constitutes the official record and authorization for the temporary commercial import of unclassified U.S. Munitions List articles, pursuant to the Arms Export Control Act and the International Traffic in Arms Regulations.
  
1405-0022, Application/License for Permanent/Temporary Export or Temporary Import of Classified Defense Articles and Related Classified Technical Data: In accordance with part 123 of the ITAR, any person who intends to permanently export, temporarily export, or temporarily import classified defense articles, including classified technical data must first obtain DDTC authorization. “Application/License for Permanent/Temporary Export or Temporary Import of Classified Defense Articles and Related Classified Technical Data” (Form DSP-85) is used to obtain permission for the permanent export, temporary export, or temporary import of classified defense articles, including classified technical data, covered by the USML. This form is an application that, when completed and approved by PM/DDTC, Department of State, constitutes the official record and authorization for all classified commercial defense trade transactions, pursuant to the Arms Export Control Act and the International Traffic in Arms Regulations.
  
1405-0023, Application/License for Temporary Export of Unclassified Defense Articles: In accordance with part 123 of the ITAR, any person who intends to temporarily export unclassified defense articles must DDTC authorization prior to export. “Application/License for Temporary Export of Unclassified Defense Articles” (Form DSP-73) is the licensing vehicle typically used to obtain permission for the temporary export of unclassified defense articles covered by the USML. This form is an application that, when completed and approved by PM/DDTC, Department of State, constitutes the official record and authorization for the temporary commercial export of unclassified U.S. Munitions List articles, pursuant to the Arms Export Control Act and the International Traffic in Arms Regulations.
Methodology
  This information collection may be sent to the Directorate of Defense Trade Controls via the following methods: Electronically or mail.
 
  – Additional Information: The aforementioned collections may be impacted by a proposed rule published in the Federal Register on May 24, 2018 (83 FR 24198) (RIN 1400-AE30). If the rule becomes final, changes will be made to the forms’ drop down menus to allow for the updated USML subcategories to be selected by an applicant.
 
Anthony M. Dearth, Chief of Staff, Directorate of Defense Trade Controls, Department of State.

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

OGSOTHER GOVERNMENT SOURCES

OGS_a16. Items Scheduled for Publication in Future Federal Register Editions
(Source: Federal Register)


* State; NOTICES; Agency Information Collection Activities; Proposals, Submissions, and Approvals: Statement of Registration [Pub. Date: 13 Feb 2019.]

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

OGS_a2
7. 
Commerce/BIS: (No new postings.)

(Source: 
Commerce/BIS)

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

OGS_a38. 
DHS/CBP Announces Harmonized System Update 1901  

(Source: 
CSMS# 19-000062, 12 Feb 2019.

Harmonized System Update (HSU) 1901 was created on February 11, 2019 and contains 397 ABI records and 89 harmonized tariff records.

  Changes made include those mandated by Presidential Proclamation 9834, To Take Certain Actions Under the African Growth and Opportunity Act and for Other Purposes. This proclamation can be found in the Federal Register dated January 7, 2019 Vol. 84, No. 4, page 35. It can be retrieved using 
this link.

  This update also contains adjustments made as a result of the USTR’s Notice of Modification to Section 301 Action: China’s Acts Policies, and Practices Related to Technology Transfer, Intellectual Property, and Innovation. The Notice can be found in the Federal Register dated December 28, 2018, Vol. 83 No. 248, page 67463. It can be retrieved using 
this link

  Modifications required by the verification of the 2019 Harmonized Tariff Schedule (HTS) are included as well.

  The modified records are currently available to all ABI participants and can be retrieved electronically via the procedures indicated in the CATAIR. For further information about this process, please contact your client representative. For all other questions regarding this message, please contact Jennifer Keeling via email at 
Jennifer.L.Keeling@cbp.dhs.gov.  

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

OGS_a49
DHS/CBP Updates CATAIR and Error Dictionary

(Source: 
CSMS# 19-000060, 11 Feb 2019.
)

An updated version of the Importer/Consignee Create/Update (TP/TT) CATAIR is now posted on 
CBP.GOV at the following location: 
here.

  Additionally, the Importer/Consignee Create/Update Error Dictionary is now posted on 
CBP.GOV at the following location under the ‘Supporting Documents’ tab: 
here.

  A follow-up notification will be sent out when an updated deployment to the CERTIFICATION environment is made. Any additional questions should be directed to 
5106@cbp.dhs.gov.

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

OGS_a510
State/DDTC: (No new postings.)

(Source: State/DDTC)

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

OGS_a611.
Australian Government Publishes Legislation Concerning South Sudan Sanctions

(Source: 
Australian Government, 7 Feb 2019.)
 
This legislation, dated 7 February 2019, amends the South Sudan Sanctions, and is available 
here

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

NWSNEWS

NWS_a112
South China Morning Post: “Trump Signs Order Prioritizing Artificial Intelligence Research Amid Looming China Ambitions” 

(Source: 
South China Morning Post, 12 Feb 2019.) [Excerpts.] 
 
President Donald Trump signed an 
executive order on Monday directing the U.S. government to prioritize artificial intelligence in its research and development spending, the White House said.
 
The order, which comes amid concerns about China’s ambitions to dominate the sector and the likelihood of disruption for workers as the technology automates millions of jobs, doesn’t outline specific funding goals, but says it aims to ensure that AI develops in a manner that reflects U.S. values and to push training for the future workforce. … 
 
The order doesn’t cover intellectual property protections or export controls, which the administration has sought to use to constrain China in other areas, but aims to open markets for U.S. companies. … 

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

NWS_a213
ST&R Trade Report: “Legislative Update: Tariffs, Ports of Entry, Arms Exports, Trade Preferences”

(Source: 
Sandler, Travis & Rosenberg Trade Report, 12 Feb 2019.)
 
Tariffs. The Trade Security Act (H.R. 1008 and S. 365, both introduced Feb. 6) would require the Department of Defense (rather than the Department of Commerce, as is the case currently) to justify the national security basis for any new import tariffs under Section 232 of the Trade Expansion Act of 1962. If a threat is found and the president wants to respond, the DOC (in consultation with the DoD and the Office of the U.S. Trade Representative) would develop recommendations and the president would decide whether or not to act on them. These bills would also expand the ability of Congress to disapprove of a Section 232 action by passing a joint resolution, which is currently limited to actions on oil imports.
 
These measures are seen as less strict than the 
Congressional Trade Authority Act, which would limit future Section 232 actions to specific types of goods and give Congress the final say on whether to impose tariffs or other restrictions.
 
The U.S. Chamber of Commerce issued a statement supporting the Trade Security Act, noting that the use of Section 232 to increase tariffs on imports of steel and aluminum “has inflicted substantial harm on U.S. industry and consumers in every state” and “undermined U.S. efforts to build an international coalition of like-minded countries to combat the use of unfair trade practices.”
 
Ports of Entry. The Trade Facilitation and Security Enhancement Act (S. 414, introduced Feb. 7 by Sen. Heinrich, D-N.M.) would increase the daily commercial hours of operation at designated ports of entry along the U.S.-Mexico border. The bill would also direct U.S. Customs and Border Protection and the General Services Administration to conduct a study of designated POEs to identify improvements to redesign, modernize, and improve efficiency.
 
Arms Exports. The Prevent Crime and Terrorism Act (H.R. 1134, introduced Feb. 8 by Rep. Torres, D-Calif.) would prohibit the president from removing any items from the U.S. Munitions List. A press release from Torres’ office notes that this bill would block a pending proposal to transfer the regulation of exports of firearms under USML category I, II, or III from the State Department to the Commerce Department.
 
Trade Preferences. H.R. 991 (introduced Feb. 6 by Reps. Sewell, D-Ala., and Wenstrup, R-Ohio) would reauthorize the Caribbean Basin Trade Partnership Act, which allows for the duty- and quota-free import of apparel products made with U.S. yarns, fabrics, and threads from Caribbean countries, until 2030. Eligible CBTPA countries include Barbados, Belize, Curacao, Guyana, Haiti, Jamaica, St. Lucia, and Trinidad and Tobago.
 
Trade Policy Advisors. The following members of the Senate Finance Committee have been appointed as congressional advisers on trade policy and negotiations to international conferences, meetings, and negotiation sessions relating to trade agreements: Charles Grassley, R-Iowa; Mike Crapo, R-Idaho; Pat Roberts, R-Kansas; Ron Wyden, D-Ore.; and Debbie Stabenow, D-Mich.

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COMMCOMMENTARY

COM_a114
J.E. Smith, J.P. Carlin & N.J. Spiliotes: “OFAC Has Been Talking About Compliance Through Enforcement” (Part II of II)

(Source: 
Morrison Foerster, 5 Feb 2019.) 
 
* Authors: John E. Smith, Esq., 
johnsmith@mofo.com; John P. Carlin, Esq., 
jcarlin@mofo.com; and Nicholas J. Spiliotes, Esq., 
nspiliotes@mofo.com. All of Morrison Foerster. 
 
[Part I was published in yesterday’s Daily Bugle.]
 
10. Merger due diligence can save the day . . . or ruin it. In 
Cobham, the apparent sanctions violations were only identified during negotiations by the U.S. company to sell its subsidiary, when the purchaser identified the shipments to the subsidiary of a sanctioned party. The purchaser ultimately avoided a penalty that, instead, befell the seller.
 
11. Stripping doesn’t pay. As 
Société Générale and a long line of prior cases demonstrate, stripping the names of sanctioned parties or countries through payment messages sent through the United States will result in a finding of egregiousness by OFAC, significantly enhancing the ultimate penalty. The 
Ericsson case involved a somewhat novel, “speak no evil” form of the same conduct. Ericsson’s U.S. employee told his Swedish counterparts not to send emails that mentioned Sudan by name, noting that “Ericsson can get fined and I can get fired,” but the U.S. employee continued to cooperate with Swedish company colleagues so long as the name of the country was not used in further communications.
 
12. Audit, audit, audit. Under Secretary Mandelker highlighted the need for companies to engage in “testing and auditing, both on specific elements of a sanctions compliance program and across the organization, to identify and correct weaknesses and deficiencies.” In 
e.l.f Cosmetics, OFAC credited the company’s remedial efforts that included “supply chain audits that verify the country of origin of goods and services used in ELF’s products” and “an enhanced supplier audit that included verification of payment information related to production materials and the review of supplier bank statements.” Similarly, OFAC noted that the 
Jereh Group action “highlights the importance of the implementation of audits, reviews, and control measures to ensure compliance with U.S. export controls and sanctions regulations.”
 
13. Establishing and documenting policies and procedures. Under Secretary Mandelker emphasized the need for “[d]eveloping and deploying internal controls, including policies and procedures, in order to identify, interdict, escalate, report, and maintain records pertaining to activity prohibited by OFAC’s regulations.” The 
Jereh Group‘s remediation efforts included the preparation and circulation of a Sanctions and Export Compliance manual and the implementation of trade and sanctions compliance policies and procedures. Similarly, in 
Cobham, the company circulated a “lessons learned bulletin” to all U.S.-based international trade compliance personnel. (
Again, we at MoFo are available to assist. Just sayin’.)
 
14. Train, train, and train again. Under Secretary Mandelker emphasized as a core need that companies ensure that “all relevant personnel, particularly those in high-risk areas or business units, are provided tailored training on OFAC obligation[s] and authorities in general and the compliance program in particular.” From her lips to OFAC’s ears. Virtually every recent OFAC enforcement case has highlighted training as part of companies’ remedial efforts:
  – 
e.l.f. Cosmetics “[e]ngaged outside counsel to provide additional training for key employees in the United States and in China regarding U.S. sanctions regulations and other relevant U.S. laws and regulations” and “[h]eld mandatory training on U.S. sanctions regulations for employees and suppliers in China and implemented additional mandatory trainings for new employees, as well as, regular refresher training for current employees and suppliers based in China”;
  – 
Zoltek created a “learning academy” to train all new and current employees on U.S. sanctions and export controls;
  – The 
Jereh Group hired an “external organization with specialized experience in U.S. economic and trade sanctions and export control laws and regulations” to provide “detailed, technical, and operational training to the Jereh Group’s employees and senior executives regarding, among other items, the company’s legal obligations with respect to the laws and regulations administered by OFAC and other U.S. Government Departments”;
  – 
Société Générale “implemented a more comprehensive training regime for employees across the group and various business lines, including a group-wide general training program. Group Sanctions Compliance has also developed targeted, in-person training for employees with a higher risk exposure to sanctions-related transactions.”
  – 
JP Morgan “enhanced employee training and used these apparent violations as a case study for training purposes.” 
(
Again, we at MoFo are available to assist. Just sayin’.
)
 
15. Certify. In 
e.l.f. Cosmetics, OFAC credited the company with adopting “new procedures to require suppliers to sign certificates of compliance stating that they will comply with all U.S. export controls and trade sanctions.” In the 
Jereh Group, OFAC noted that the company contacted its suppliers and issued sanctions compliance certifications requiring that these customers “not sell, transfer, re-export, or divert any Jereh Group products to countries subject to U.S. economic and trade sanctions programs.”
 
16. Higher risks mean higher standards. OFAC characterized the 
e.l.f. Cosmetics case as “highlight[ing] the risks for companies that do not conduct full-spectrum supply chain due diligence when sourcing products from overseas, particularly in a region in which the DPRK, as well as other comprehensively sanctioned countries or regions, is known to export goods.” In 
Zoltek, OFAC noted the inherent compliance risks associated with a U.S. company’s overseas operations. In 
Cobham, OFAC said the case “demonstrates the importance of companies operating in high-risk industries (
i.e., defense) to implement effective, risk-based compliance measures, especially when engaging in transactions involving high-risk jurisdictions [in that case, Russia].”
 
17. Establish an early warning system. In 
Zoltek, an employee had warned a senior U.S. manager about a sanctions designation that implicated the purchase decisions being approved for the company’s overseas subsidiary, but the warning was ignored. OFAC noted that the case demonstrated that compliance programs must have “mechanisms designed to adequately respond to warning signs and raise sanctions-related issues to a sanctions compliance officer or point of contact.” In 
Cobham, OFAC noted that the company had established a system where personnel were urged to alert the compliance team whenever a sanctioned risk might be involved.
 
18. Centralize, where appropriate. As part of its remedial efforts, the 
Jereh Group established an international business compliance department and compliance committee to oversee sanctions compliance across all company business units, subsidiaries, and affiliates. In 
Société Générale, the bank created “a centralized sanctions compliance function, implemented key enhancements at the group level, and implemented enhancements within the business lines that were subject to the review.”
 
19. Segregate decision-making of overseas subsidiaries. OFAC noted that the 
Zoltek case – where U.S. managers reviewed and approved purchasing decisions of its overseas subsidiary – “highlights the need for U.S. parent companies to take care to segregate certain business operations of their overseas subsidiaries so that the U.S. parent and its employees do not violate U.S. sanctions regulations by facilitating the actions of its subsidiaries.”
 
20. Tough love may be necessary. In the 
Jereh Group case, OFAC emphasized that the company’s remediation efforts included terminating the employment of the individuals responsible for and involved in the knowing shipments of U.S.-origin goods to Iran.
 
Conclusion
 
Although the pace of its public enforcement actions slowed to a crawl during much of 2018, OFAC has now issued one or more enforcement cases during each of the past five months. The private sector should expect, now that OFAC has implemented “compliance commitments” into its enforcement cases template, the agency to continue with a steady stream of enforcement actions this year (barring, of course, another government shutdown). As always, we in Morrison & Foerster’s National Security Practice Group stand ready to provide counsel on actual or potential enforcement investigations and cases, as well as on the scope and sufficiency of corporate sanctions compliance programs and training.

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(Source: 
Volkov Law Group Blog, 10 Feb 2019. Reprinted by permission.) 
 
* Author: Michael Volkov, Esq., Volkov Law Group, 
mvolkov@volkovlaw.com, 240-505-1992. 
 
Noah Smith, an Associate at The Volkov Law Group, joins us for an interesting post on OFAC’s new Venezuela sanctions. Contact Noah at
 
Venezuela is undergoing a political upheaval. Since his rise to power in 2013, the embattled Venezuelan President Nicolás Maduro has precipitated a humanitarian crisis that has driven some 3 million Venezuelans to flee abroad. Widespread protests have erupted (yet again) against the country’s chronic violence, inflation, and shortages of basic goods, and the political winds are steadily shifting away from Maduro and towards self-proclaimed “Interim President” Juan Guaidó. As increasing support from the global community has further legitimized Guaidó’s claim to leadership, the United States has ramped up its economic sanctions against Maduro’s government to further pressure him to relinquish power.
 
On January 25, 2019, 
President Trump issued Executive Order 13857, which expanded previous sanctions against Venezuela to include “any person who has acted or purported to act directly or indirectly for or on behalf of . . . the Maduro regime.” Three days later, the Treasury Department’s Office of Foreign Assets Control (“OFAC”) added Petróleos de Venezuela S.A. (“PDVSA”), the state-owned oil company that is one of Maduro’s most important sources of revenue, to its list of Specially Designated Nationals and Blocked Persons (“SDN List”). This action effectively forbids U.S. persons from dealing with PDVSA or any companies that are majority-owned by PDVSA. The targeting of Venezuela’s oil sector marks a substantial shift in U.S. foreign policy, as the U.S. had long sought to avoid rising gas prices and further harm to the Venezuelan people. PDVSA’s addition to the SDN List, however, comes in response to a worsening political crisis and is intended to help compel Maduro’s surrender.
 
The implications for U.S. companies with business in Venezuela are significant. Recognizing this, however, 
OFAC issued a series of “General Licenses”, which allow U.S. companies a period of time to finish up their preexisting dealings with PDVSA. These General Licenses are designed to help ease the transition and minimize the sanctions’ impact on the broader U.S. economy by authorizing certain categories of otherwise prohibited transactions. Entities subject to OFAC rules must ensure that any dealings with PDVSA are concluded before the appropriate deadlines.
 
OFAC’s most broadly-applicable authorization is General License 12(b), which allows U.S. companies to engage in transactions that are necessary to wind down their business dealings with PDVSA until 12:01 a.m. on February 27, 2019. Under this provision, U.S. companies can temporarily continue to export or import most goods, services, and technology to and from PDVSA before this specified deadline, as long as those business dealings stem from contracts or operations that were in place prior to PDVSA’s placement on the SDN List. General License 12(a) also provides a broader timeframe, until 12:01 a.m. on April 28, 2019, for finishing up preestablished deals that facilitate the import of petroleum products into the U.S. Here, we can see OFAC’s intent to soften the blow on U.S. gas prices by ensuring that the oil supply from Venezuela is not cut off too rapidly. For the time being, any payments that are made to PDVSA under these exceptions must be paid into a blocked, interest-bearing account that is maintained separately within the U.S.
 
Several other General Licenses help mitigate some of the sanctions’ practical consequences on U.S. interests. Under General License 10, for instance, U.S. persons who are physically located within Venezuela are permitted to purchase gasoline and other petroleum products from PDVSA for personal use. General License 14 allows transactions with PDVSA for the purpose of conducting official U.S. government business. General License 8 authorizes several large U.S. oil companies with extensive Venezuela-based operations additional time, until 12:01 a.m. on July 27, 2019, to transition out of Venezuela.
 
Due to the ongoing and evolving political crisis in Venezuela, the state of U.S. sanctions targeting Venezuela is subject to change rapidly. In the meantime, U.S. intentions have been clear. Further measures are not off the table, especially if Maduro continues to resist. 
OFAC has advised that “the path to sanctions relief for PDVSA and its subsidiaries is through the expeditious transfer of control of the company to Interim President Juan Guaidó or a subsequent, democratically-elected government that is committed to taking concrete and meaningful actions to combat corruption, restore democracy, and respect human rights.” 
As Treasury Secretary Steven Mnuchin put it, “the United States is holding accountable those responsible for Venezuela’s tragic decline and will continue to use the full suite of its diplomatic and economic tools to support Interim President Juan Guaidó, the National Assembly, and the Venezuelan people’s efforts to restore their democracy.”

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COM_a316. 
The FAQ of the Day: “Itemizing USML Cat VIII Aircraft System Exports”
(Source: 
State/DDTC, 27 Apr 2018.)
 
Q: If I am exporting an aircraft that is controlled under Category VIII(a), regardless of whether it is a bomber, fighter, or attack helicopter, must I individually itemize all of the inclusive systems (
e.g., electronics, folding wings, batteries, weapons, etc.) in Blocks 9 through 12 as separate items on the DSP 5 license?
 
A: Not for items physically (mechanically, electronically, etc.) incorporated into the aircraft. This excludes separate spare parts, components, etc., that accompany the aircraft during shipment, as these items must be accounted for separately as their own unique line items.

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ENEDITOR’S NOTES


Abraham Lincoln (12 Feb 1809 – 15 Apr 15, 1865; was an American lawyer and politician. He served as the 16th president of the United States from 1861 until his assassination in April 1865. Lincoln led the nation through the Civil War, its bloodiest war and its greatest moral, constitutional, and political crisis. He preserved the Union, abolished slavery, strengthened the federal government, and modernized the economy.)
  – “America will never be destroyed from the outside. If we falter and lose our freedoms, it will be because we destroyed ourselves.”
 

Charles Darwin (Charles Robert Darwin, 12 Feb 1809 – 19 April 1882; was an English naturalist, geologist, and biologist, best known for his contributions to the science of evolution. In a joint publication with Alfred Russel Wallace, he introduced his scientific theory that the branching pattern of evolution resulted from a process that he called natural selection, in which the struggle for existence has a similar effect to the artificial selection involved in selective breeding.)
  – “Ignorance more frequently begets confidence than does knowledge: it is those who know little, and not those who know much, who so positively assert that this or that problem will never be solved by science.”

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EN_a318
. 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.   

 

DOD NATIONAL INDUSTRIAL SECURITY PROGRAM OPERATING MANUAL (NISPOM): DoD 5220.22-M. Implemented by Dep’t of Defense.
  – 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 2019: 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 Update: 12 Feb 2019: 
Harmonized System Update 1901 [contains 397 ABI records and 89 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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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 6,500 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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