19-0404 Thursday “Daily Bugle'”

19-0404 Thursday “Daily Bugle”

Thursday, 4 April 2019

[No items of interest noted today.] 

  1. Items Scheduled for Publication in Future Federal Register Editions 
  2. Commerce/BIS: (No new postings.)
  3. Commerce/Census: “The Automated Export System (AES) Compliance Review Program”
  4. State/DDTC: (No new postings.)
  5. UK DIT Closes Import Export Licensing Blog
  1. Financial Times: “MIT Cuts Partnerships With China’s Huawei and ZTE Over Risks”
  2. New Hampshire Public Radio: “SIG Sauer, Already the Largest U.S. Firearms Exporter, Could Grow Bigger with Rule Change”
  3. [Reserved.]
  4. ST&R Trade Report: “Improper Classification Aids Imports in Avoiding Section 232 Tariffs, Petition Alleges
  1. M. Camello: “Cooperation Between Customs and Export Control Authorities: A Necessary Common Classification of Goods?
  2. P. DiVeccio: “Signing the Line on Compliance Commitment”
  3. S. Mann & R.L. Denton: “Export Controls and Sanctions: Preparing for the Impact of a No-Deal Brexit”
  1. ECS Presents “ITAR/EAR Bootcamp: Achieving Compliance” on 8-9 Jul in Seattle, WA
  2. ICPA Presents “2019 EU Conference”, 15-17 May in London
  1. Bartlett’s Unfamiliar Quotations 
  2. Are Your Copies of Regulations Up to Date? Latest Amendments: DHS/Customs (12 Mar 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 (14 Mar 2018), DOS/ITAR (19 Mar 2018), DOT/FACR/OFAC (15 Mar 2018), HTSUS (2 Apr 2019) 
  3. Weekly Highlights of the Daily Bugle Top Stories 


[No items of interest noted today.] 
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OGS_a11. Items Scheduled for Publication in Future Federal Register Editions
(Source: Federal Register)


* DHS/CBP; RULES; Civil Monetary Penalty Adjustments for Inflation [Pub. Date: 5 Apr 2019.]
* Justice; RULES; Civil Monetary Penalties Inflation Adjustment [Pub. Date: 5 Apr 2019.]

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Commerce/BIS: (No new postings.)

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OGS_a33. Commerce/Census: “The Automated Export System (AES) Compliance Review Program”

The AES Compliance Review Program is our annual outreach effort to visit noncompliant companies and provide filing resources, training and expertise tailored to those companies who need it most.
The goals of the program are to:
– Help noncompliant companies understand the export reporting requirements.
– Work with companies to develop and implement best practices to ensure compliance and reporting accuracy.
– Help companies avoid costly encounters with government enforcement agencies due to noncompliance.
– The AES Compliance Review Program’s proactive approach is designed to combat noncompliance with the Foreign Trade Regulations (FTR), which can result in fines, penalties, seizures or cargo delays at the port.
How Are Companies Identified as Noncompliant?
Noncompliance can be caused by many factors. With that in mind, companies can be identified as noncompliant for a multitude of reasons. The justifications include but are not limited to:
– Poor Filing Practices – Low monthly AES compliance rate, late filing or failing to resolve fatal errors.
– Misclassification – Filing incorrect Schedule B or Harmonized Tariff Schedule (HTS) numbers, filing with foreign currency, filing with incorrect units of measure, or failing to verify information with a commodity analyst.

– Violating the FTR – Failure to file a Voluntary Self-Disclosure is noncompliance with the FTR.

Impact on AES Compliance

The AES Compliance Review Program works to correct compliance problems before intervention from enforcement agencies, while providing companies direct contact with subject-matter experts. As a result, companies are able to determine who to work with and how to resolve their issues quickly, leading to an increase in their AES compliance rate. While not all factors are incorporated into its calculation, a 100 percent AES compliance rate should be a standing goal for all AES filers. The historical data below illustrates this program’s direct impact on AES compliance rates. …

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OGS_a55. UK DIT Closes Import Export Licensing Blog

UK DIT Blog, 4 Apr 2019.)
The Import and Export Licensing team has been using different channels to communicate its work, so we will no longer be updating this blog.
If you have subscribed to this blog your email address will be removed from the system.

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NWS_a16. Financial Times: “MIT Cuts Partnerships With China’s Huawei and ZTE Over Risks”

(Source: Financial Times, 4 Apr 2019.) [Excerpts.]
Massachusetts Institute of Technology, one of the world’s top universities, is cutting ties with Chinese telecoms groups Huawei and ZTE and ramping up its screening process for research and other collaboration proposals from China in a move that includes Hong Kong.
Several elite universities in the US, Australia and the UK, including Stanford and Oxford, have already stopped taking funding from Huawei after the US government accused the company of stealing American technology and breaking US sanctions against Iran. These concerns have spilled over into wider fears in Washington of intellectual property theft, espionage and China’s growing tech capability. …

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7. New Hampshire Public Radio: “SIG Sauer, Already the Largest U.S. Firearms Exporter, Could Grow Bigger with Rule Change”

(Source: New Hampshire Public Radio, 3 Apr 2019.) [Excerpts.]
Earlier this year, Newington-based SIG Sauer announced the latest in a string of sizeable contracts: the Indian Army agreed to pay the gun maker a reported $72 million for 72,400 rifles for its infantry soldiers.
The guns will be manufactured in New Hampshire, where SIG Sauer has rapidly expanded its operations in recent years. That growth is fueled by deals with the U.S. Army and domestic law enforcement agencies, as well as lucrative contracts with police and military forces in 80 countries.
Those international deals have turned SIG Sauer, which is owned by a German conglomerate, into the U.S.’s largest exporter of small arms. In 2017, SIG Sauer shipped more than 179,000 pistols and rifles around the globe, accounting for more than one-third of all firearms exports, according to ATF statistics.
Now, a proposed regulatory change backed by the Trump administration could push SIG Sauer’s export business even higher, and mean millions of dollars more in international sales. The change would also be good news for another major New Hampshire-based weapons maker, Sturm Ruger, which exported 30,000 rifles and revolvers in 2017. The two companies have helped turn New Hampshire into the 12th largest exporter of weapons and ammunition the country, and the largest in the northeast. …

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8. [reserved] 
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9. ST&R Trade Report: “Improper Classification Aids Imports in Avoiding Section 232 Tariffs, Petition Alleges” 

A recent petition seeking the reclassification of an imported product could signal a new strategy that domestic companies could use to seek higher tariffs on goods from foreign competitors.
U.S. Customs and Border Protection is seeking comments by May 3 on a petition filed on behalf of a U.S. steel product manufacturer requesting the reclassification of steel special profiles from the United Kingdom and Germany. These goods are imported for use in manufacturing forklift masts or carriages and in ruling NY N293371 are referred to as incomplete steel mast rails and finger bars.
In that ruling CBP described the profiles as either (1) cut to a fixed length in accordance with customer instructions or (2) in lengths designed to fit within the transporting cargo container, adding that in their condition as imported they are not ready for direct use in forklifts. CBP applied General Rule of Interpretation 2(a) to classify the goods as blanks for parts of forklifts under HTSUS 8431.20.00.
However, the petitioner contends that the profiles must undergo extensive manufacturing after importation to make them suitable for use in the mast or carriage of a forklift and therefore do not have the essential character of forklift truck parts. In addition, the petitioner maintains that use of GRI 2(a) is inappropriate because the goods meet the definition of an angle shape or section in Note 1(n) to HTSUS Chapter 72. As a result, the petitioner states, the profiles should be classified under HTSUS 7216.50.00 as hot-rolled non-alloy steel profile shapes.
The petitioner also argues that due to their current classification the profiles are avoiding the application of the Section 232 additional 25 percent duty on steel products. While both the HTSUS subheadings under consideration are currently duty-free, steel products of the UK and Germany under HTSUS 7216.50.00 are currently subject to the Section 232 tariff while products of those countries classified under HTSUS 8431.20.00 are not.

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10. M. Camello: “Cooperation Between Customs and Export Control Authorities: A Necessary Common Classification of Goods?”
, 28 Mar 2019.) [Excerpts. Unofficial translation by Alexander Witt.]


* Author: Maria Camello, Researcher,
Groupe de Recherche et D’information Sur La Paix et La Sécurité (GRIP),
, +32 483 362 893. 


Co-operation between customs and export control authorities for arms and dual-use goods is fundamental to ensure the practical implementation of decisions taken at national, European and UN levels. However, the two institutions have different purposes and do not use the same definitions and product identification codes.


This Issue Paper
examines attempts at cooperation between customs and export control authorities in the context of the arms and dual-use trade. It proposes some ideas for analyzing the main issues related to the linkage between the two main classification systems for war material and dual-use goods, namely the harmonized system used by customs and the classification system of export-controlled goods. …

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11. P. DiVeccio: “Signing the Line on Compliance Commitment”
(Source: American Shipper, 1 Apr 2019.) [Excerpts.]
* Author: Paul DiVecchio, Principla, DiVecchio & Associates, pauldivec@earthlink.net.
A common thread has emerged in recent months involving several high-profile Office of Foreign Assets Control (OFAC) violations settlement agreements. I’m referring to violations that were the result of rogue or arrogant managers in the offices of U.S. companies’ overseas affiliates and subsidiaries, who cast aside their responsibility to U.S. export control and sanctions for the sake of personal greed.
Although the U.S. companies voluntarily self-disclosed those violations to OFAC, they still paid dearly for those overseas operations’ indiscretions in terms of stiff penalties, significant legal fees, tied-up resources and negative publicity in the press.
On March 27, OFAC reached a $1.9 million settlement with New Britain, Conn.-based toolmaker Stanley Black & Decker for the U.S. sanctions violations caused by its Chinese subsidiary, Jiangsu Guoqiang Tools Co., Ltd. (GQ). …

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12. S. Mann & R.L. Denton: “Export Controls and Sanctions: Preparing for the Impact of a No-Deal Brexit”

(Source: Baker McKenzie, 1 Apr 2019.) [Excerpts.]
* Authors: Sunny Mann, Esq., sunny.mann@bakermckenzie.com, + 44 20 7919 1397; and Ross L. Denton, Esq., ross.denton@bakermckenzie.com, + 44 20 7919 1978; Both of Baker McKenzie.
Following the recent third rejection of the Brexit withdrawal agreement in the UK Parliament, a no-deal Brexit remains firmly on the agenda. This alert sets out some of the main sanctions and export controls issues arising from a no-deal Brexit which are likely to impact upon companies operating in the UK and EU, and provides guidance on what companies can do to prepare for this eventuality.
The status of EU law post no-deal Brexit
After a no-deal Brexit, the UK will be considered a ‘third country’ with respect to the EU. The European Union (Withdrawal) Act 2018, the central piece of Brexit legislation, provides that EU law would in effect be frozen at the date of the UK’s exit from the EU, and would be incorporated into UK law. Changes to retained EU law would be decided by the UK Parliament over time, and passed as new UK legislation. Conversely, we note that in the event that a withdrawal agreement is passed substantially similar to that negotiated between the UK and EU, then the current EU export controls and sanctions rules would continue to apply during the relevant transitional period. …

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TE_a113. ECS Presents “ITAR/EAR Bootcamp: Achieving Compliance” on 8-9 Jul in Seattle, WA

* What: ITAR/EAR Bootcamp:  Achieving Compliance; Seattle, WA
* When: July 8-9, 2019
* Where:
Sheraton Grande
* Sponsor: Export Compliance Solutions & Consulting (ECS)
* ECS Speaker Panel:  Suzanne Palmer, Mal Zerden
* Register here or by calling 866-238-4018 or e-mail

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TE_a214. ICPA Presents “2019 EU Conference”, 15-17 May in London 

* What: 2019 EU Conference
– Import and Export Track (click here for the agenda)

Professional Speakers
– Hot Industry Topics
* When: 15-17 May 2019
* Where: The Tower Hotel, London, United Kingdom.
* Sponsor: International Compliance Professionals Association (ICPA)

* Information & Registration: Click here

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* Margaret Oliphant (born Margaret Oliphant Wilson; 4 Apr 1828 – 20 Jun 1897; was a Scottish novelist and historical writer, who usually wrote as Mrs. Oliphant. Her fictional works encompass “domestic realism, the historical novel and tales of the supernatural”.)
   – “Temptations come, as a general rule, when they are sought.”
* Isoroku Yamamoto (4 Apr 4, 1884 – 18 Apr 1943; was a Japanese Marshal Admiral of the Navy and the commander-in-chief of the Combined Fleet during World War II until his death. He was the commander-in-chief during the early years of the Pacific War, and oversaw major engagements including the attack on Pearl Harbor and the Battle of Midway. He was killed when American code breakers identified his flight plans, enabling the Army Air Force to shoot down his plane. His death was a major blow to Japanese military morale during World War II.)
   – “Even though there wasn’t much damage, it’s a disgrace that the skies over the imperial capital should have been defiled without a single enemy plane being shot down. It provides a regrettably graphic illustration of the saying that a bungling attack is better than the most skillful defense.”

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. Are Your Copies of Regulations Up to Date?
(Source: Editor)


DHS CUSTOMS REGULATIONS: 19 CFR, Ch. 1, Pts. 0-199.  Implemented by Dep’t of Homeland Security, U.S. Customs & Border Protection.

  – Last Amendment: 12 Mar 2019: 84 FR 8807-8809: Extension of Import Restrictions Imposed on Archaeological and Ecclesiastical Ethnological Material From Honduras

DOC EXPORT ADMINISTRATION REGULATIONS (EAR): 15 CFR Subtit. B, Ch. VII, Pts. 730-774. Implemented by Dep’t of Commerce, Bureau of Industry & Security.
  – Last Amendment: 20 Dec 2018: 83 FR 65292-65294: Control of Military Electronic Equipment and Other Items the President Determines No Longer Warrant Control Under the United States Munitions List (USML); Correction [Concerning ECCN 7A005 and ECCN 7A105.]
* DOC FOREIGN TRADE REGULATIONS (FTR): 15 CFR Part 30.  Implemented by Dep’t of Commerce, U.S. Census Bureau.
  – Last Amendment: 24 Apr 2018: 83 FR 17749-17751: Foreign Trade Regulations (FTR): Clarification on the Collection and Confidentiality of Kimberley Process Certificates
  – HTS codes that are not valid for AES are available here.
  – The latest edition (1 Jan 2019) of Bartlett’s Annotated FTR (“BAFTR”), by James E. Bartlett III, is available for downloading in Word format. The BAFTR contains all FTR amendments, FTR Letters and Notices, a large Index, and approximately 250 footnotes containing case annotations, practice tips, Census/AES guidance, and explanations of the numerous errors contained in the official text. Subscribers receive revised copies in Microsoft Word every time the FTR is amended. The BAFTR is available by annual subscription from the Full Circle Compliance website.  BITAR subscribers are entitled to a 25% discount on subscriptions to the BAFTR. Government employees (including military) and employees of universities are eligible for a 50% discount on both publications at www.FullCircleCompiance.eu.   


  – Last Amendment: 18 May 2016: Change 2: Implement an insider threat program; reporting requirements for Cleared Defense Contractors; alignment with Federal standards for classified information systems; incorporated and cancelled Supp. 1 to the NISPOM (Summary here.)
DOE ASSISTANCE TO FOREIGN ATOMIC ENERGY ACTIVITIES: 10 CFR Part 810; Implemented by Dep’t of Energy, National Nuclear Security Administration, under Atomic Energy Act of 1954.
  – Last Amendment: 23 Feb 2015: 80 FR 9359, comprehensive updating of regulations, updates the activities and technologies subject to specific authorization and DOE reporting requirements. This rule also identifies destinations with respect to which most assistance would be generally authorized and destinations that would require a specific authorization by the Secretary of Energy.
DOE EXPORT AND IMPORT OF NUCLEAR EQUIPMENT AND MATERIAL; 10 CFR Part 110; Implemented by Dep’t of Energy, U.S. Nuclear Regulatory Commission, under Atomic Energy Act of 1954.
  – Last Amendment: 20 Nov 2018, 10 CFR 110.6, Re-transfers.

* DOJ ATF ARMS IMPORT REGULATIONS: 27 CFR Part 447-Importation of Arms, Ammunition, and Implements of War.  Implemented by Dep’t of Justice, Bureau of Alcohol, Tobacco, Firearms & Explosives.
  – Last Amendment: 14 Mar 2019: 84 FR 9239-9240: Bump-Stock-Type Devices 


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: 19 Mar 2019: 84 FR 9957-9959: Department of State 2019 Civil Monetary Penalties Inflationary Adjustment. 
  – The only available fully updated copy (latest edition: 19 Mar 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 Mar 2019: 84 FR: 9456-9458: List of Foreign Financial Institutions Subject to Correspondent Account or Payable-Through Account Sanctions (CAPTA List) 
* 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: 2 Apr 2019: Harmonized System Update (HSU) 1905 [contains 792 ABI records and 176 harmonized tariff records]. 

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

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Weekly Highlights of the Daily Bugle Top Stories

(Source: Editor) 

Review last week’s top Ex/Im stories in “Weekly Highlights of the Daily Bugle Top Stories” published 

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* The Ex/Im Daily Update is a publication of FCC Advisory B.V., compiled by: Editor, James E. Bartlett III; Assistant Editors, Vincent J.A. Goossen and Alexander Witt; and Events & Jobs Editor, Sven Goor. The Ex/Im Daily Update is emailed every business day to approximately 7,000 readers of changes to defense and high-tech trade laws and regulations. 
We check the following sources daily: Federal Register, Congressional Record, Commerce/AES, Commerce/BIS, DHS/CBP, DOE/NRC, DOJ/ATF, DoD/DSS, DoD/DTSA, FAR/DFARS, State/DDTC, Treasury/OFAC, White House, and similar websites of Australia, Canada, U.K., and other countries and international organizations.  Due to space limitations, we do not post Arms Sales notifications, Denied Party listings, or Customs AD/CVD items.

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* 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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