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19-0306 Wednesday “Daily Bugle'”

19-0306 Wednesday “Daily Bugle”

Wednesday, 6 March 2019

  1. Commerce/BIS Seeks Comments on National Security and Critical Technology Assessments of the U.S. Industrial Base
  2. State Maintains Kurdistan Workers’ Party’s FTO Designation
  1. Items Scheduled for Publication in Future Federal Register Editions
  2. Commerce/BIS: (No new postings.)
  3. State/DDTC: (No new postings.)
  4. Treasury/OFAC Announces Temporary Extension of Ukraine-related General Licenses
  5. UK DIT/ECJU Posts Guidance on Exporting Controlled Goods after EU Exit
  1. American Shipper: “BIS Pockmarked by Vacancies”
  2. Defense One: “We’ll Soon Learn Whether You Can Post 3D-Gun Plans Online”
  3. ST&R Trade Report: “GSP Eligibility for India, Turkey to be Terminated”
  1. The Export Compliance Journal: “Cement Company Fined Over $500,000 For Violating U.S. Sanctions on Iran”
  2. G. Farnsworth: “Who’s Liable for What? Transport Contracts Under the Microscope”
  3. J. Abramson: “U.S. Firearms Export Changes Meet Challenges”
  4. J. Morey: “Third Wave of Section 301 Tariff Increases Officially Delayed”
  1. ECTI Presents “CFIUS Update: New Requirements to Meet, New Industries Affected” Webinar on 16 Apr
  1. New Edition of Bartlett’s Annotated ITAR (“BITAR”) Available 
  2. Bartlett’s Unfamiliar Quotations 
  3. 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 (27 Feb 2019) 
  4. Weekly Highlights of the Daily Bugle Top Stories 

EXIMITEMS FROM TODAY’S FEDERAL REGISTER

(Source:
Federal Register, 6 Mar 2019.) [Excerpts.]
 
84 FR 8074-8075: Proposed Information Collection; Comment Request; National Security and Critical Technology Assessments of the U.S. Industrial Base
* AGENCY: Bureau of Industry and Security.
* ACTION: Notice. …
* DATES: Written comments must be submitted on or before May 6, 2019.
* ADDRESSES: Direct all written comments to Jennifer Jessup, Departmental Paperwork Clearance Officer, Department of Commerce, Room 6616, 14th and Constitution Avenue NW, Washington, DC 20230 (or via the internet at PRAcomments@doc.gov).
* FOR FURTHER INFORMATION CONTACT: Requests for additional information or copies of the information collection instrument and instructions should be directed to Mark Crace, BIS ICB Liaison, (202) 482-8093, mark.crace@bis.doc.gov.
   This link clarifies the policies and procedures of the Bureau of Industry and Security (BIS) for conducting surveys to obtain information in order to perform industry studies assessing the U.S. industrial base to support the national defense pursuant to the Defense Production Act of 1950, as amended.
* SUPPLEMENTARY INFORMATION:
  – Abstract: The Department of Commerce, in coordination with the Department of Defense and other Federal agencies, conducts survey assessments of U.S. industrial base sectors deemed critical to U.S. national security. The information gathered is necessary to determine the health and competitiveness as well as the needs of these critical market segments in order to maintain a strong U.S. industrial base.
  – Comments are invited on:
   (a) Whether the proposed collection of information is necessary for the proper performance of the functions of the agency, including whether the information shall have practical utility;
   (b) the accuracy of the agency’s estimate of the burden (including hours and cost) of the proposed collection of information;
   (c) ways to enhance the quality, utility, and clarity of the information to be collected; and
   (d) ways to minimize the burden of the collection of information on respondents, including through the use of automated collection techniques or other forms of information technology. …
 
  Sheleen Dumas, Departmental Lead PRA Officer, Office of the Chief Information Officer, Commerce Department.
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(Source:
Federal Register, 6 Mar 2019.) [Excerpts.]
 
84 FR 8150: Review of the Designation as a Foreign Terrorist Organization (FTO) of the Kurdistan Workers’ Party (and Other Aliases)
   Based upon a review of the Administrative Record assembled pursuant to Section 219(a)(4)(C) of the Immigration and Nationality Act, as amended (8 U.S.C. 1189(a)(4)(C)) (“INA”), and in consultation with the Attorney General and the Secretary of the Treasury, I conclude that the circumstances that were the basis for the designation of the aforementioned organization as a Foreign Terrorist Organization have not changed in such a manner as to warrant revocation of the designation and that the national security of the United States does not warrant a revocation of the designation.
   Therefore, I hereby determine that the designation of the aforementioned organization as a Foreign Terrorist Organization, pursuant to Section 219 of the INA (8 U.S.C. 1189), shall be maintained. …
 
   Dated: February 5, 2019.
Michael R. Pompeo, Secretary of State.
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OGSOTHER GOVERNMENT SOURCES

OGS_a13. Items Scheduled for Publication in Future Federal Register Editions
(Source: Federal Register)

 

* Commerce; Industry and Security Bureau; NOTICES; Agency Information Collection Activities; Proposals, Submissions, and Approvals: License Exemptions and Exclusions [Pub. Date: 7 Mar 2019.]
 
* President; ADMINISTRATIVE ORDERS; Venezuela; Continuation of National Emergency (Notice of March 5, 2019) [Pub. Date: 7 Mar 2019.]

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

OGS_a2
4. 
Commerce/BIS: (No new postings.)

(Source: 
Commerce/BIS)

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(Source:
Treasury/OFAC, 6 Mar 2019.)    
 
Today OFAC extended the expiration date of two general licenses related to GAZ Group by issuing General License No. 13K – Authorizing Certain Transactions Necessary to Divest or Transfer Debt, Equity, or Other Holdings in Certain Blocked Persons, and General License No. 15E – Authorizing Certain Activities Necessary to Maintenance or Wind Down of Operations or Existing Contracts.

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(Source:
UK DIT/ECJU
, 6 Mar 2019.)
 
Leaving the EU with a deal remains the UK government’s top priority. This has not changed. However, the government is continuing with no deal preparations to ensure the country is prepared for every eventuality.
 
Controlled goods
 
Controlled goods are regulated through a system of export licensing and include:
  – military items
  – dual-use items (items with both civil and military uses)
  – firearms
  – items that can be used for torture or capital punishment
 
The Export Control Joint Unit (ECJU) is responsible for the exporting control and licensing of these items.
 
Exporting military items
 
There will be no changes to controls on the export of military items from the UK other than minor legislative fixes.
You will need to continue to apply for licences as you do now.
 
Exporting firearms to the EU
 
You will no longer be able to take personal firearms to the EU using the European Firearms Pass because this will no longer be available in the UK.
 
The exemption that currently applies to the temporary export of firearms as personal effects to the rest of the world will now cover exports to the EU.
 
If you want to take firearms as personal effects to an EU country, you will need to make sure that the destination country would also permit the import and re-export of the firearm.
 
If you are a dealer or exporter of firearms, you will need to continue to apply for licences.
 
Exporting dual-use items
 
The overall framework of controls for dual-use exports will not change, but there will be changes to some licensing requirements.
 
From the UK to the EU and the Channel Islands
 
You will need a new export licence if you are exporting dual-use items from the UK to the EU or the Channel Islands, issued by the UK.
 
ECJU has published the Open General Export Licence (OGEL) for exports of dual-use items to EU countries. This licence also covers exports to the Channel Islands.
 
This new export licence will remove the need for you to apply for individual licences and can be used immediately after 29 March 2019, following registration on SPIRE, the online export licensing system.
 
From the UK to a non-EU country
 
If you already have a licence to export dual-use items to a non-EU country issued by the UK, it will remain valid for export from the UK. This includes registrations for Open General Export Licences and General Export Authorisations, which will still operate as UK licences.
 
An export licence issued by one of the 27 EU countries will no longer be valid for export from the UK.
 
From the EU to a non-EU country
 
You will need a new licence, issued by an EU member state, for exporting dual-use items from EU member states to a non-EU country.
 
An export licence issued in the UK will no longer be valid to export dual-use items from an EU member state
 
From the EU to the UK
 
You will need a new licence, issued by an EU member state, for exporting dual-use items from EU member states to the UK.
 
The European Council has proposed to add the UK as a permitted destination to Union General Export Authorisation (GEA) EU001, to minimise any additional licensing burden for those exporting dual-use items from the EU to the UK.
 
Exporting civil nuclear material
 
If you export civil nuclear material you can find out what other conditions will apply besides export controls. They include:
 
Exporting goods that could be used for torture or capital punishment
 
Strict controls apply to the export of goods that could be used for torture or capital punishment. The overall framework of the strict controls on these goods will not change, except that exports to EU countries will be treated in the same way as exports to non-EU destinations are treated now.
 
This means that you will:
  – be prohibited from exporting items in Annex II of Council Regulation 2016/2134 to EU member states
  – be prohibited from providing brokering, training or advertising services relating to items in Annex II of Regulation 2016/2134 to any person or entity in an EU member state
  – need a licence to export items in Annexes III and IIIA of Regulation 2016/2134 to EU member states
 
What you can do next
 
You should:
  – check if you need an export licence for exports to EU countries on OGEL and goods checker tools, using as a guide the licensing provisions in current legislation for a ‘third country’ (a non-EU country) to understand what controls would apply for exports to EU countries
  – refer to guidance links on OGEL and goods checker tools to apply for a licence
  – remember, it’s your responsibility to comply with the export control regulations, and breaching export controls is a criminal offence
 
For further information you could:
  – find out more about export controls and licensing
 
You can contact the Department for International Trade if you still have a question about exporting controlled goods after EU Exit.

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NWSNEWS

NWS_a18. American Shipper: “BIS Pockmarked by Vacancies”
(Source:
American Shipper, 5 Mar 2019.) [Excerpts.]
 
Nazak Nikakhtaris, assistant secretary for industry and analysis at the Commerce Department’s BIS, also will perform “nonexclusive duties” of the agency’s undersecretary for industry and security post.
 
Nikakhtar, who was nominated by President Trump to become the assistant secretary for industry and analysis, was confirmed by the U.S. Senate on March 19, 2018.
 
In this role, she serves as the Commerce Department’s primary liaison with U.S. industry and trade associations to help address industry concerns and support American competitiveness. She also heads the division that conducts research and analysis on manufacturing, services, travel and tourism, textiles and apparel, global trade, investment and economic trends that impact the International Trade Administration’s mission. …

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NWS_a29. Defense One: “We’ll Soon Learn Whether You Can Post 3D-Gun Plans Online”

(Source: Defense One, 6 Mar 2019.)
 
A proposed export-rules change has snagged over the question: is publishing such designs a boon to U.S. business or foreign terrorists?
 
It’s approaching high noon for a showdown
between the Trump administration and Congress over 3D-printed guns.
 
The Trump administration notified Congress last month that it intended to move jurisdiction for most commercial firearms exports from the State Department to the Commerce Department, a seemingly arcane bureaucratic move that has ignited a firestorm of controversy. Critics say Commerce’s laxer export rules will allow criminals, terrorists, and human rights abusers access to a host of new weapons – including metal-free “ghost guns” manufactured on 3D printers.
 
Congress had 30 days to object to the rules change. Sen. Bob Menendez, D-N.J., on Feb. 26 issued a hold on the proposal, in part, he argued in associated legislation with other Senate Democrats, because it would allow for the “unfettered proliferation of untraceable, virtually undetectable, 3D printable guns that threaten public safety.”
 
On Tuesday, that 30 days ran out. It’s not clear whether the Trump administration will honor Menendez’s objection, or move to implement the change anyway. The executive branch is not legally required to comply with the hold, although past administrations have traditionally heeded such congressional strictures. The top Republican on the Senate Foreign Relations Committee, Sen. Jim Risch, R-Idaho, has said that he opposes any “further delays in the process.”
 
But administration officials have been marshalling their arguments. Last year, the Commerce Department said it was a “myth” that the transfer would deregulate the export of firearms, saying in a fact sheet that “the U.S. Government is not considering removing the export authorization requirements for any firearms regardless of which agency has licensing jurisdiction or the proposed destination.” It also claims that “as a result [of the change], foreign manufacturers will enjoy a greater opportunity to source from small U.S. companies” because “export licensing requirements and process implemented by the Department of Commerce will be calibrated both to the sensitivity of the item and the proposed destination.”
 
A bizarre legal drama has made 3D guns one key sticking point in what otherwise might have been an under-the-radar change originally conceived under the Obama administration. (The broader plan to reform export controls was shelved after the 2012 shooting in Newtown, Conn. killed 26 people, mainly children.)
 
In 2013, Cody Wilson, a law student and gun activist, posted the blueprints online to assemble a plastic gun from parts made on a 3D printer. The Directorate of Defense Trade Controls, the State Department office that controls firearms exports, took the position that publicly posting that information was the legal equivalent of emailing it to a foreign government – an “export.” Wilson’s company, Defense Distributed, took down the plans but sued the State Department.
 
Last summer brought a surprise twist: the State Department settled the case for around $40,000 and allowed the plans black online. Hours before they were to be available again, a federal judge granted a request from eight states and the District of Columbia to temporarily block the settlement from taking effect. The State Department gave no rationale for its abrupt reversal, but the Trump administration was pursuing the rule change to shift the authority for the technology to the Commerce Department at the time.
 
Onlookers believe that moving the authority for online plans for 3D guns to the Commerce Department would effectively moot the judge’s restraining order.And the Commerce Department has signaled that it doesn’t intend to place any licensing restrictions on the kinds of plans Wilson sought to post online, of the kind that State originally sought to enforce. In its May Federal Registrar notice announcing the proposed change, it said that “if a gun manufacturer posts a firearm’s operation and maintenance manual on the Internet, making it publicly available to anyone interested in accessing it and without restrictions on further dissemination, the operation and maintenance information included in that published operation and maintenance manual would no longer be “subject to the [Export Administration Regulations].”
 
A handful of Democrats have sought to use any tool at their disposal to stymie the move. In addition to the Menendez hold, Sen. Ed Markey, D-Mass., has blocked indefinitely the nomination of Clarke Cooper to run the office in the State Department that oversees the Directorate of Defense Trade Controls. Cooper himself appears uncontroversial, and because of the ongoing interagency process, the State Department can’t unilaterally give Markey what he wants to release the hold – specifically that the administration maintain its prohibition on publishing the 3D gun blueprints online – leaving a senior post with a myriad of international responsibilities vacant with no clear resolution in sight.
 
Blocking the rule change permanently would require an act of Congress. Democratic lawmakers are weighing a number of pieces of legislation to address the matter – including blocking the authority transfer in statute and expressly banning posting 3D plans online – but their fate in a Republican-controlled Senate is murky. The change is supported by the firearms industry, traditionally backed by congressional Republicans favorable to more permissive gun laws. Manufacturers believe it will ease regulations and help them boost sales of smalls arms overseas.
 
Supporters argue the change keeps control of military-grade weapons at the State Department while moving widely available commercial weapons, like semi-automatic pistols, assault-style rifles, sniper rifles and ammunition, to a more natural home at the Commerce Department. The Defense Department and the State Department “will remain active” in vetting and approving exports, the Commerce Department said in its fact sheet, claiming that “foreign manufacturers will enjoy a greater opportunity to source from small U.S. companies.”
 
 “This is good for: U.S. manufacturing, the defense industrial base, security of supply to the U.S. military, and interoperability with allies, to name but a few benefits.”
 
Some legal experts and arms control advocates argue that trying to regulate plastic guns as an export was never the ideal way to keep them out of the hands of criminals and terrorists at home. While the court blocked Wilson from posting his plans on the internet for free, it expressly permitted him to email or otherwise security transmit them as long as he verifies that the recipient is within the U.S.
 
  “There are genuine issues raised by plastic guns, but they need to be addressed directly, not through export laws designed to keep U.S. guns out of foreigners’ hands without State Department approval,” wrote Clif Burns, an attorney who specializes in export controls.

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NWS_a310. ST&R Trade Report: “GSP Eligibility for India, Turkey to be Terminated”
 
President Trump announced March 4 his intent to terminate the eligibility of India and Turkey as beneficiary developing countries under the Generalized System of Preferences. These changes will not take effect until at least May 3 and will be enacted by a presidential proclamation. Once that proclamation takes effect, thousands of products imported from these two countries will no longer be eligible for duty-free treatment under GSP.
 
The president said India is being terminated from GSP because it has not assured the U.S. that it will provide equitable and reasonable access to its markets. A note from the Office of the U.S. Trade Representative explains that India has implemented a wide array of trade barriers that “create serious negative effects on U.S. commerce.” These include tougher rules on e-commerce marketplaces, efforts to force foreign companies to store data in India, and higher import tariffs on electronic products in apparent violation of India’s commitments under the World Trade Organization’s Information Technology Agreement. However, Trump said he will continue to assess this factor, suggesting that India’s eligibility could be reinstated if sufficient progress is met.
 
Turkey is being terminated based on its level of economic development, the president said, pointing to Turkey’s increases in gross national product per capita, declining poverty rates, and export diversification since being named a GSP beneficiary in 1975. Given this reason, there appears to be little possibility of a reinstatement.
 
According to press sources, U.S. imports under GSP in 2017 totaled $5.7 billion from India, making it the largest user of the program, and $1.7 billion from Turkey.
 
USTR announced in October 2017 that GSP beneficiaries would be subject to heightened scrutiny to help “ensure that countries that are not playing by the rules do not receive U.S. trade preferences.” USTR said it would review each beneficiary’s compliance with the 15 GSP eligibility criteria every three years and that if a review raises compliance concerns for a particular country the U.S. may launch a full country practice review.
 
The first assessment period focused on BDCs in Asia, and in October 2017 USTR received petitions requesting the removal or suspension of GSP benefits for India based on (a) lack of equitable and reasonable market access for medical devices and (b) unreasonable barriers to imports of U.S. dairy products. In August 2018 USTR launched a review of Turkey based on its imposition of additional tariffs on $1.78 billion worth of U.S. imports in response to the United States’ Section 232 additional tariffs on imports of steel and aluminum products.

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COMMCOMMENTARY

 
The United States Treasury Department’s Office of Foreign Assets Control (OFAC) 
announced on February 21, 2019 that ZAG IP LLC, a U.S.-based multinational producer of cement, must pay $506,250 in fines to settle potential civil liabilities associated with violations of U.S. sanctions on Iranian entities, and goods and services originating in Iran.
 
The sanctions in question prohibit trade-related transactions with Iran for goods, technology, or services. Between July 2014 and January 2015, it is alleged that ZAG purchased over 250,000 metric tons of cement clinker (a type of cement used in construction) worth $14.5M USD, while having full knowledge that it was Iranian in origin. The goods were then resold and transported to a company in Tanzania.
 
But It Could Have Been Worse

While ZAG was aware of the U.S. sanctions on Iran, they relied on an Alternative Supplier based in the United Arab Emirates who misrepresented that “cement clinker was not subject to U.S. economic sanctions on Iran.” As a result (and under immense pressure to fulfil the order or lose the contract altogether), ZAG eventually purchased the Iranian-sourced material.
All told, the potential monetary penalties could have run as high as $29,000,000 USD, however, OFAC determined the violations in question constituted a non-egregious case. Among the extenuating factors OFAC considered when making its assessment of the situation were:
 
  – ZAG’s self-disclosure of the violations,
  – Cooperating with the investigation by providing relevant information when requested,
  – Conducting a thorough internal investigation to identify the cause of the compliance failures, and
  – Implementing multiple remedial measures to help prevent a recurrence.
 
What to Take Away from This Case

 

Like many cases involving an OFAC violation, ZAG’s sanctions contraventions highlight the importance of doing your due-diligence, and having strong compliance procedures and mechanisms in place. This is especially the case for companies that trade and transact internationally.
 
It also demonstrates that companies should not ignore common sense warning signs. For instance, knowing that the cement was of Iranian origin should have caused ZAG to look into the transaction further rather than trusting the word of a third party-in this case their UAE-based Alternative Supplier.
 
Finally, this case demonstrates the importance of self-disclosure and cooperating with OFAC. The fact that ZAG voluntarily disclosed the violation themselves and cooperated with OFAC’s investigation are directly cited as mitigating factors in OFAC’s final judgement of the situation.

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(Source:
Holding Redlich
, 5 Mar 2019.)
 
* Author: Geoff Farnsworth, Esq.,
geoff.farnsworth@holdingredlich.com
. Of Holding Redlich, Sydney.
 
It is a truth universally acknowledged that transport operators will have no liability for any loss or damage to the goods they carry (unless they are ocean carriers in which case different rules may apply much to the chagrin of the said ocean carriers). 
 
This Golden Rule is not contained in any statute, though it is worth making the point that under the Australian Consumer Law as it applies to small business, it is likely that non-negotiable exclusion clauses in standard form contracts may be considered to be unfair and therefore unenforceable. 
 
The exemptions from liability are to be found in transport contracts themselves, often in what is known as the fine print. The clause will usually say (in effect) that the carrier is not liable for anything, ever. It may go on to say that if the carrier is sued by anyone claiming loss or damage (a third party negligence claim, for example) the contracting party will indemnify the carrier. 
 
The exclusion clause often begins with the mysterious incantation: “The Carrier is not a Common Carrier and will have no liability as such.” Despite the fact that the incantation is repeated (figuratively) every time a transport contract is entered into, it is doubtful that either party knows what it means. 
To understand the status and meaning of Common Carrier, one must go back in time, around 200 years, to the days of horse and carriage, and before the railroads. 
 
At that time carriers, usually illiterate, operated on usual routes. Let’s say London to Bristol, and return. In those days, if you wanted your chest to go to Bristol, you would approach a Common Carrier who worked that route, and ask him (it would almost invariably have been a man) to take your chest to Bristol. You would probably agree on a price, and that was basically that. 
 
Because there was no written contract the common law described the obligations of the Common Carrier (the word common in this context referring to the fact that the carrier carried goods for many different people, rather than his social class).  
 
Despite the fact that written contract terms will generally prevail over any common law duties as a Common Carrier, the phrase continues to be used. 
 
A large part of the significance of the law of Common Carrier related to his or her liability for loss of or damage to the goods carried. Despite its antiquity, it was considered in a recent decision of the UK Supreme Court (formerly known as the House of Lords, the UK’s highest court), in the case of Volcafe v Compania Sud Americana De Vapores SA [2018] UKSC 61. 
That case concerned carriage of goods by sea, so the facts are not relevant here. However Lord Sumption traversed liability regimes for bailees of goods, which includes the common carrier. 
 
He said:
 
The characteristic feature of a common carrier was that he held himself out as accepting for carriage the goods of all comers on a given route, subject to capacity limits. As such, he was strictly liable at common law for loss of or damage to the cargo subject only to exceptions for acts of God and the Queen’s enemies. The absence of negligence was irrelevant. But although the position of common carriers is commonly referred to by way of background in the case law, as it was in the judgments below, it is no longer a useful paradigm for the common law liability of a shipowner. Common carriers have for many years been an almost extinct category. For all practical legal purposes, the common law liability of a carrier, unless modified by contract, is the same as that of bailees for reward generally.
 
The UK Supreme Court has helpfully restated that:
 
   – a common carrier is strictly liable for loss and damage (unless caused by an Act of God or Queen’s Enemies)
   – a bailee for reward is not an insurer and his or her obligation extends only to taking reasonable care of the goods (though he or she must also prove the absence of negligence)
   – in any event, the terms of written contracts of carriage will modify and prevail over these common law relationships. 
 
Some Common Issues
 
While claims under transport contracts might be relatively straightforward (ie the carrier has no liability, for anything, ever), this might be a little more complicated when a third party is involved. 
 
A common example is where third party asks a Freight Forwarder to arrange for the delivery of goods from the wharf or warehouse to the third party’s premises. The Forwarder will often contract with a Carrier (a transport company or courier). If the goods are damaged while in the care of the Carrier, the third party may make a claim in bailment (as per the second point above) on the basis that the third party is not bound by the terms of the contract between the Forwarder and the Carrier. This can give rise to complicated legal issues relating to Himalaya Clauses and Sub-Bailment on Terms, but also (as mentioned above) the terms of the contract may require the Forwarder to indemnify the Carrier in relation to any claims. 
 
The other complicating factor can be insurance. Transit insurance is common but there may be issues around who’s policy applies (someone has to pay for the policy, plus wear any deductible that might apply to any claim). 
 
It is also common for Carriers to give an assurance that they have insurance. While this is almost always true, it is potentially misleading and will depend on what form of insurance the Carrier has. While the Carrier may indeed have liability insurance (for example), if the Carrier’s terms and conditions exclude liability, the insurer has no obligation to pay because the Carrier has no liability.
 
And if the Carrier has transit insurance, there may be an issue as to whether the Carrier has an insurable interest in the goods.  
 
Conclusion
 
Transport contracts are all about clearly defining the parties’ obligations and liabilities, who does what, and who is liable for what. Once that is clear the parties can manage the relationship appropriately, through pricing and/or insurance.  
 
While it is tempting to leave “barnacle” clauses in contracts (such as reference to Common Carrier) because they’ve always been there, they have the potential to confuse relationships and potentially lead to avoidable disputes.  

 
back to top
 

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COM_a313. J. Abramson: “U.S. Firearms Export Changes Meet Challenges”
(Source:
Arms Control Association
, Mar 2019.)
 
* Author: Jeff Abramson, Esq., Senior Fellow for arms control and conventional arms transfers at the Arms Control Association.
 
The Trump administration proposed changes in February to how the United States approves exports of certain firearms, a move that triggered quick responses from some congressional leaders who argued that the approach would be dangerous and reduce oversight. They warned that semiautomatic and military-style weapons, as well as 3D-printed “ghost” guns, would more easily end up in the hands of criminals, terrorists, and human rights abusers if the rules were to take effect.
 
Under the proposed rules, semiautomatic and nonautomatic firearms and their ammunition are deemed to “no longer warrant control under the United States Munitions List (USML),” a State Department-administered list of weapons. Instead, they would be transferred to a list administered by the Commerce Department, the Commerce Control List, an indication of the administration’s view that these are “essentially commercial items widely available in retail outlets and less sensitive military items.”
Sen. Bob Menendez (D-N.J.) sponsored legislation Feb. 12 that rejected the rationale for the change and would prohibit the transfer to Commerce Department oversight. The proposed new rules would “defy common sense,” Menendez said in a statement. He added, “Small arms and associated ammunition are uniquely lethal. They are easily spread and easily modified and are the primary means of injury, death, and destruction in civil and military conflicts throughout the world.”
 
The Senate measure also focused on the danger of 3D gun printing, with Menendez saying, “Every terrorist and criminal that wants to hijack an airplane with Americans onboard will more easily be able to smuggle 3D-printed, virtually undetectable guns aboard.” Because online plans for 3D-printed guns currently controlled by the USML are deemed an export, a move to the Commerce Department would likely deregulate their control. The Commerce Department is not expected to impose licensing restrictions on what 3D print advocates are trying to make open-source information. An administration decision last year to allow the organization Defense Distributed to publish 3D plans online met an outcry and has been delayed in ongoing court cases.
 
On Feb. 26, Menendez sent a letter to U.S. Secretary of State Mike Pompeo placing a hold on the proposed rules change, but whether the administration will honor the hold remains to be seen. It could choose to publish the final rules this month, when the 30-day clock for congressional review that began Feb. 4 expires. Such changes typically then have a six-month implementation phase-in period.
 
House Foreign Affairs Committee Chairman Eliot Engel (D-N.Y.) co-sponsored a measure with Rep. Norma Torres (D-Calif.) on Feb. 9 that would also block the change. In his statement about the rules, Engel warned that Congress would lose its oversight role, which is needed “so we can step in and make sure these weapons aren’t sent to bad actors, including terrorists, drug cartels, human rights abusers or violent criminals.”
 
In 2002, Congress amended notification requirements so it would be informed of potential commercial sales of firearms under USML Category I when they were valued at just $1 million, but no such notifications exist for items on the Commerce Control List.
 
Data compiled by the Security Assistance Monitor indicates that the Trump administration requested Congress to approve at least $746 million in firearms sales to a total of 14 countries in 2018, more than two-thirds of which was for Saudi Arabia. The value of transfers that would be subject to the new rule is not clear as that data cannot be disaggregated from the automatic and other firearms that would remain on the USML.
 
The rules were considered during the Obama administration as part of a broader export control effort that transferred portions of the larger USML to Commerce Department control. Changes to firearms and ammunition in the first three USML categories were never formerly introduced, in part due to a different sensibility related to gun violence.
 
The Trump administration first introduced the rules for public comment in May 2018, garnering thousands of public responses. (See ACT, June 2018.)
 
These military-style weapons, although more tightly controlled in many other countries, have been sold domestically and used in many mass shootings, including at Sandy Hook Elementary School in Newtown, Conn.; the Pulse nightclub in Orlando, Fla., and Stoneman Douglas High School in Parkland, Fla. Human rights and gun control groups have backed the legislative efforts to stop the change. Kris Brown, president of the Brady Campaign, stated on Feb. 8, “While the corporate gun lobby is no doubt thrilled to be able to take their products to a wider audience, we need to be taking steps to reduce gun violence at home, rather than exporting it.”

 
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COM_a414. J. Morey: “Third Wave of Section 301 Tariff Increases Officially Delayed”
(Source:
Trade and Manufacturing Monitor
, 5 Mar 2019.)
 
* Author: Joshua Morey, Esq., Kelley Drye,
jmorey@kelleydrye.com
 
On March 5, 2019, the Office of the United States Trade Representative (“USTR”) published a 
notice in the Federal Register
 officially postponing the date on which the rate of Section 301 duties on $200 billion of Chinese goods (i.e., List 3 items) will increase from 10% to 25%.
 
USTR’s notice follows President Trump’s announcement of his decision to delay the March 2, 2019 deadline for increasing tariffs on List 3 items due to “substantial progress” in his administration’s talks with China, as well as Ambassador Lighthizer’s 
testimony
 before the House Ways and Means Committee concerning the same issue.
 
The 10% percent duties, which took effect on September 24, 2018, were initially set to increase to 25% on January 1, 2019, but that deadline was delayed to March 2, 2019 pursuant to a 
December 19, 2018 Federal Register notice
.  USTR’s March 5, 2019 notice does not establish a new deadline for an increase in duties, but instead leaves the possibility of an increase open.
 
As Ambassador Lighthizer indicated in his testimony to the House Ways and Means Committee, there has been no agreement to remove the current 10% tariff on List 3 items, though the removal of such tariffs is a negotiating objective of the Government of China.  We will continue to monitor further developments regarding the Trump Administration’s Section 301 tariffs and trade negotiations with China.

 
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TEEX/IM TRAINING EVENTS & CONFERENCES

TE_a215. ECTI Presents “CFIUS Update: New Requirements to Meet, New Industries Affected” Webinar on 16 Apr

(Source: Danielle Hatch, danielle@learnexportcompliance.com)
 
* What: CFIUS Update: New Requirements to Meet, New Industries Affected
* When: April 16, 2019 1:00 p.m. (EDT)
* Where: Webinar
* Sponsor: Export Compliance Training Institute (ECTI)
* ECTI Speaker: Thaddeus McBride
* Register: Here or Danielle Hatch, 540-433-3977, danielle@learnexportcompliance.com.

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ENEDITOR’S NOTES

(Source: Editor)
 
A revised edition of the BITAR was published yesterday, 5 March.  Although there have been no amendments to the official ITAR text since October 4, 2018, the 5 March 2019 BITAR edition contains the following changes:
 
* Added footnotes to the sections:
  –  120.11(a)(7), re Stagg v. State Dep’t.
  – 120.25(a), re DDTC Consent Agreement, Matter of R.E. Darling Industries, Inc. (Feb 26, 2019)
  – 124.2(c)(5)(v), indicating the error in (v), which “Gas turbine engine hot sections covered by Category XIX(f).”  All gas turbine engine hot section components are controlled in XIX(f)(2).
  – 129.9 re DDTC, Advisory Opinions notice.
* Added “(b) [Reserved]” to § 129.4.
* Added DDTC Consent Agreement, Matter of R.E. Darling Industries, Inc. (Feb 26, 2019) to Appendix E.
* Added Stagg v. State Dep’t case to list of cases in Index.
 

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* Stanislaw Jerzy Lec (6 Mar 1909 – 7 May 1966; born Baron Stanis Jerzy de Tusch-Letz, was a Polish aphorist and poet. Often mentioned among the greatest writers of post-war Poland, he was one of the most influential aphorists of the 20th century, known for lyrical poetry and skeptical philosophical-moral aphorisms, often with a political subtext.)
  – “Youth is the gift of nature, but age is a work of art.”
 
* Michelangelo (Michelangelo di Lodovico Buonarroti Simoni; 6 Mar 1475 – 18 Feb 1564; was an Italian sculptor, painter, architect, and poet of the High Renaissance, who exerted an unparalleled influence on the development of Western art. Considered by many the greatest artist of his lifetime, and by some the greatest artist of all time, his artistic versatility was of such a high order that he is often considered a contender for the title of the archetypal Renaissance man, along with his rival, the fellow Florentine and client of the Medici, Leonardo da Vinci.)
  – “The greater danger for most of us lies not in setting our aim too high and falling short; but in setting our aim too low, and achieving our mark.”
  – “There is no greater harm than that of time wasted.”

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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: 5 March 2019) of the ITAR with all amendments is contained in Bartlett’s Annotated ITAR (“BITAR”), by James E. Bartlett III. The BITAR is a 361-page Word document containing 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 download, 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 Amendment:
27 Feb 2019: Harmonized System Update 1902 [contains 40 ABI records and 11 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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