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19-0605 Wednesday “Daily Bugle'”

19-0605 Wednesday “Daily Bugle”

Wednesday, 5 June 2019

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The Daily Bugle is a free daily newsletter from Full Circle Compliance, containing changes to export/import regulations (ATF, DOE/NRC, Customs, NISPOM, EAR, FACR/OFAC, FAR/DFARS, FTR/AES, HTSUS, and ITAR), plus news and events. Subscribe here. Contact us for advertising 

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  1. Commerce/BIS Amends EAR, Restricts Export of Aircraft and Vessels to Cuba 
  2. Treasury/OFAC Amends Cuban Assets Control Regulations 
  3. U.S.-China Economic and Security Review Commission Announces Public Hearing on 20 Jun in Washington DC 
  1. Items Scheduled for Publication in Future Federal Register Editions 
  2. Commerce/BIS: (No new postings.)
  3. Justice: “Two Indictments Unsealed Charging Iranian Citizen with Violating U.S. Export Laws and Sanctions against Iran”
  4. State/DDTC: (No new postings.)
  5. EU Council Negotiates Mandate Dual-Use Goods
  6. Dutch Government Releases National Sanctions List Concerning Terrorism
  7. French Ministry of Armed Forces Publishes Parliamentary Report on Exports of Arms 2019
  1. Deutsche Welle: “Can China Stop Rare Earths Exports to the US?”
  2. ST&R Trade Report: “Mexico Tariffs Could Hit 10 Percent or More but Details Remain Scarce”
  1. S. Alam, P. Bayz & J. Carlin: “For Russia, Sanctions Are Coming (Part I of II)”
  2. C. Jones: “Defense Industry and the Cloud-Managing IT Security Requirements and Export Control Challenges”
  3. W. Segall, N.C.I. Nweke & M. J. Schwartz: “New Cuba Sanctions Measures Prohibit ‘People to People’ Travel to Cuba and Restrict Use of Commercial Aircraft and Recreational and Passenger Vessels”
  1. ECTI Presents A Practical Guide to Screening: 19 Jun 2019
  2. FCC Presents “The ABC of FMS”, 28 Nov in Bruchem, the Netherlands
  1. Bartlett’s Unfamiliar Quotations 
  2. Are Your Copies of Regulations Up to Date? Latest Amendments: DHS/Customs (5 Apr 2019), DOC/EAR (5 Jun 2019), 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 Apr 2018), DOT/FACR/OFAC (5 Jun 2018), HTSUS (4 Jun 2019) 
  3. Weekly Highlights of the Daily Bugle Top Stories 

EXIMITEMS FROM TODAY’S FEDERAL REGISTER

EXIM_a1
1. Commerce/BIS Amends EAR, Restricts Export of Aircraft and Vessels to Cuba

(Source:
Federal Register, 5 June 2019.) [Excerpts.]
 
84 FR 25986-25989:
Restricting the Temporary Sojourn of Aircraft and Vessels to Cuba
 
* AGENCY: Bureau of Industry and Security, Commerce.
* ACTION: Final Rule.
* SUMMARY:In this final rule, the Bureau of Industry and Security (BIS) further limits the types of aircraft that are Start Printed Page 25987authorized to fly to Cuba and the types of vessels that are authorized to sail to Cuba on temporary sojourn. Specifically, this rule amends License Exception Aircraft, Vessels and Spacecraft (AVS) in the Export Administration Regulations (EAR) to remove the authorization for the export or reexport to Cuba of most non-commercial aircraft and passenger and recreational vessels on temporary sojourn. Additionally, this rule amends the licensing policy for exports and reexports to Cuba of aircraft and vessels on temporary sojourn to establish a general policy of denial absent a foreign policy or national security interest as determined by the U.S. Government. Consequently, private and corporate aircraft, cruise ships, sailboats, fishing boats, and other similar aircraft and vessels generally will be prohibited from going to Cuba. BIS is making these amendments to support the Administration’s national security and foreign policy decision to restrict non-family travel to Cuba to prevent U.S. funds from enriching the Cuban regime, which continues to repress the Cuban people and provides ongoing support to the Maduro regime in Venezuela. These amendments are consistent with the National Security Presidential Memorandum on Strengthening the Policy of the United States Toward Cuba. signed by the President on June 16, 2017.
* DATES:
This rule is effective [today] June 5, 2019.
* FOR FURTHER INFORMATION CONTACT: Alan Christian, Foreign Policy Division, Office of Nonproliferation and Treaty Compliance, Bureau of Industry and Security, by email at 
Alan.Christian@bis.doc.gov
, or by phone at (202) 482-4252.
* SUPPLEMENTARY INFORMATION: … On April 17, 2019, the White House announced that the Administration is holding the Cuban regime accountable for repressing the Cuban people and supporting the Maduro regime in Venezuela through multiple actions, including by restricting non-family travel to Cuba, or in other words, “veiled tourism.” Consequently, BIS is amending License Exception Aircraft, Vessels and Spacecraft (AVS) in §740.15 of the EAR and the licensing policy for Cuba in §746.2 to generally prohibit non-commercial aircraft from flying to Cuba and passenger and recreational vessels from sailing to Cuba.
 
Amendments To License Exception Aircraft, Vessels and Spacecraft (AVS)
 
Consistent with the embargo of Cuba, BIS authorization in the form of a license or license exception is required for the export or reexport to Cuba of all items subject to the EAR. §746.2(a)(1) of the EAR identifies the license exceptions, or portions thereof, that are available for exports and reexports to Cuba, including paragraphs (a) and (d) of License Exception AVS in §740.15 for, respectively, certain aircraft and vessels on temporary sojourn. Paragraph (a)(2) of License Exception AVS contains the terms and conditions that are specific to U.S. registered aircraft. This rule removes Cuba from eligibility for paragraph (a)(2)(ii), making general aviation (
e.g., private and corporate aircraft) and certain other aircraft ineligible for License Exception AVS when destined for Cuba. The only civil aircraft of U.S. registry that remain eligible for License Exception AVS when destined for Cuba are commercial aircraft operating under Air Carrier Operating Certificates or certain other Federal Aviation Administration certificates or specifications identified in paragraph (a)(2)(i). Making non-commercial aircraft ineligible for License Exception AVS when destined for Cuba supports the President’s policy to restrict non-family travel to Cuba.
 
Additionally, this rule amends paragraph (a)(2)(i) of §740.15 to make air ambulances operating under 
14 CFR part 135 eligible for License Exception AVS. BIS routinely approved license applications for air ambulances to fly to Cuba on temporary sojourn before Cuba became eligible for paragraph (a)(2)(ii) in 2015. Given their use in evacuating individuals in medical distress with minimal advanced notice, air ambulances will remain eligible for the license exception when destined to Cuba.
 
Paragraph (d)(6) of License Exception AVS contains Cuba-specific terms and conditions for the temporary sojourn of vessels to Cuba. This rule amends paragraph (d)(6) to remove passenger and recreational vessels from eligibility for temporary sojourn to Cuba. Now only cargo vessels for hire for use in the transportation of separately authorized items are eligible for export or reexport to Cuba on temporary sojourn provided all of the other terms and conditions of License Exception AVS are met. This rule also simplifies and makes conforming changes to paragraph (d)(6) of License Exception AVS. Making passenger and recreational vessels ineligible for License Exception AVS when destined for Cuba also supports the President’s policy to restrict non-family travel to Cuba.
 
Amendment to Cuba Licensing Policy
 
When a license exception is not available, §746.2(b) of the EAR explains that license applications for the export or reexport of items to Cuba are subject to a general policy of denial unless otherwise specified in that paragraph. This rule redesignates paragraph (b)(3)(ii) as (b)(4) and revises the text of the new paragraph (b)(4) to explain that applications for the export or reexport of most aircraft or vessels on temporary sojourn to Cuba are subject to a general policy of denial unless the export or reexport is consistent with the foreign policy or national security interests of Start Printed Page 25988the United States. Applications for the temporary sojourn of aircraft operated by certificated air carriers or cargo vessels for hire that are not eligible for License Exception AVS will be reviewed on a case-by-case basis, such as cargo vessels that may need to remain in Cuba beyond the 14-day limit in paragraph (d) of License Exception AVS due to port congestion. A note to paragraph (b)(4) explains that applications for private and corporate aircraft, cruise ships, sailboats, fishing vessels, and other similar aircraft and vessels will generally be denied. As a licensing policy of denial indicates, BIS will only issue licenses for the temporary sojourn to Cuba of non-commercial aircraft or non-cargo vessels if such action is consistent with the national security and foreign policy interests of the United States, such as the temporary sojourn of vessels for use in oil spill response. Given the Administration’s stated objectives of holding the Cuban regime accountable for its repression of the Cuban people, including by restricting non-family travel to Cuba, such licenses will be issued only in extraordinary circumstances. Thus, non-commercial aircraft and non-cargo vessels generally will be prohibited from going to Cuba.
 
List of Subjects
 
– Administrative practice and procedure
– Exports
– Reporting and recordkeeping requirements
 
– Exports
– Reporting and recordkeeping requirements
 
  Dated: May 31, 2019.
 
Richard E. Ashooh, Assistant Secretary for Export Administration.

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EXIM_a2
2. 
Treasury/OFAC Amends Cuban Assets Control Regulations

(Source:
Federal Register, 5 June 2019.) [Excerpts.]
 
84 FR 25992-25993:
Cuban Assets Control Regulations
 
* AGENCY:Office of Foreign Assets Control, Treasury.
* ACTION:Final rule.
* SUMMARY:The Department of the Treasury’s Office of Foreign Assets Control (OFAC) is amending the Cuban Assets Control Regulations to implement portions of the President’s foreign policy toward Cuba. This amendment removes an authorization for group people-to-people educational travel and provides a “grandfathering” provision to authorize certain group people-to-people educational travel that previously was authorized where the traveler has already completed at least one travel-related transaction (such as purchasing a flight or reserving accommodation) prior to June 5, 2019.
* DATES:
Effective: June 5, 2019.
* FOR FURTHER INFORMATION CONTACT: OFAC: Assistant Director for Licensing, 202-622-2480, Assistant Director for Regulatory Affairs, 202-622-4855, Assistant Director for Sanctions Compliance & Evaluation, 202-622-2490; or the Department of the Treasury’s Office of the Chief Counsel (Foreign Assets Control), Office of the General Counsel, 202-622-2410.
*SUPPLEMENTARY INFORMATION:
… Public Participation
Because the amendments of the Regulations involve a foreign affairs function, the provisions of Executive Order 12866 and the Administrative Procedure Act (
5 U.S.C. 553) requiring notice of proposed rulemaking, opportunity for public participation, and delay in effective date, as well as the provisions of 
Executive Order 13771, are inapplicable. Because no notice of proposed rulemaking is required for this rule, the Regulatory Flexibility Act (
5 U.S.C. 601-612) does not apply.
 
Paperwork Reduction Act
 
The collections of information related to the Regulations are contained in 
31 CFR part 501 (the “Reporting, Procedures and Penalties Regulations”) and §515.572 of this part. Pursuant to the Paperwork Reduction Act of 1995 (
44 U.S.C. 3507), those collections of information are covered by the Office of Management and Budget under control numbers 1505-0164, 1505-0167, and 1505-0168. An agency may not conduct or sponsor, and a person is not required to respond to, a collection of information unless the collection of information displays a valid control number.
 
List of Subjects in 31 CFR Part 515
– Administrative practice and procedure
– Banking
– Blocking of assets
– Financial transactions
– Reporting and recordkeeping requirements
– Travel restrictions
 
  Dated: May 30, 2019.
 
Andrea Gacki, Director, Office of Foreign Assets Control.

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EXIM_a3
3. U.S.-China Economic and Security Review Commission Announces Public Hearing on 20 Jun in Washington DC

(Source:
Federal Register, 5 June 2019.) [Excerpts.]
 
84 FR 26184: Notice of Open Public Hearing
* AGENCY:U.S.-China Economic and Security Review Commission.
* ACTION: Notice of open public hearing.
* SUMMARY: Notice is hereby given of the following hearing of the U.S.-China Economic and Security Review Commission. The Commission is mandated by Congress to investigate, assess, and report to Congress annually on “the national security implications of the economic relationship between the United States and the People’s Republic of China.” Pursuant to this mandate, the Commission will hold a public hearing in Washington, DC on June 20, 2019 on “A `World-Class’ Military: Assessing China’s Global Military Ambitions.”
* DATES:The hearing is scheduled for Thursday, June 20, 2019 at 9:30 a.m.
* ADDRESSES: TBD, Washington, DC. A detailed agenda for the hearing will be posted on the Commission’s website at
 
www.uscc.gov.
 Also, please check the
 Start Printed Page 26185Commission’s website for possible changes to the hearing schedule.
 
Reservations are not required to attend the hearing.
* FOR FURTHER INFORMATION CONTACT: Any member of the public seeking further information concerning the hearing should contact Leslie Tisdale Reagan, 444 North Capitol Street NW, Suite 602, Washington, DC 20001; telephone: 202-624-1496, or via email at
 
lreagan@uscc.gov. Reservations are not required to attend the hearing.
* SUPPLEMENTARY INFORMATION:… This is the sixth public hearing the Commission will hold during its 2019 report cycle. In his report to the 19th Congress of the Chinese Communist Party, General Secretary Xi Jinping declared that China would complete the modernization of its armed forces by 2035 and transform them into “world-class forces” by the middle of the 21st century. Xi’s vision for the composition and mix of capabilities that would allow the People’s Liberation Army to be judged to be a “world-class” military is unknown. Will it be a force with global expeditionary capability, mimicking the United States, or an overwhelming regional force reminiscent of Imperial Japan in 1941? Or, as the two are not necessarily mutually exclusive, could it be both? This hearing will explore what the implications of a world-class Chinese military might be for the United States and its allies and partners, with the goal to begin a public dialogue on this topic and develop recommendations for Congress on how the United States might best protect its interests in the face of a highly-capable Chinese competitor. The hearing will be co-chaired by Commissioner Kenneth Lewis and Commissioner Michael McDevitt. Any interested party may file a written statement by June 20, 2019 by mailing to the contact above. A portion of each panel will include a question and answer period between the Commissioners and the witnesses. …
 
Dated: May 31, 2019.
 

Daniel W. Peck, Executive Director, U.S.-China Economic and Security Review Commission.

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

OGSOTHER GOVERNMENT SOURCES

OGS_a14. Items Scheduled for Publication in Future Federal Register Editions
(Source: Federal Register)

* Commerce/BIS; NOTICE; Reporting for Calendar Year 2018 on Offsets Agreements Related to Sales of Defense Articles or Defense Services to Foreign Countries or Foreign Firms
[Pub. Date: 6 June 2019.]
 
* State Department; NOTICE;Statutory Debarment under the Arms Export Control Act and the International Traffic in Arms Regulations
[Pub. Date: 6 June 2019.]

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

OGS_a25
.
Commerce/BIS (No new postings.)

(Source: Commerce/BIS)

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

OGS_a36. Justice: “Two Indictments Unsealed Charging Iranian Citizen with Violating U.S. Export Laws and Sanctions against Iran”

(Source:
Justice, 4 June 2019.)
 
Peyman Amiri Larijani, 33, a citizen of Iran and former resident of Istanbul, Turkey, was charged in the United States District Court for the District of Columbia in two separate indictments. The announcement was made by Assistant Attorney General for National Security John C. Demers, U.S. Attorney Jessie K. Liu for the District of Columbia and Assistant Secretary Nazak Nikakhtar of the U.S. Department of Commerce.
 
A 34-count indictment returned on April 22, 2015, charges Larijani and a Turkish based company, Kral Havacilik IC VE DIS Ticaret Sirketi (Kral Aviation), with conspiracy to acquire U.S. origin aircraft parts and goods to supply to entities and end-users in Iran, to conceal from United States companies and the U.S. government that the U.S.-origin goods were destined for Iranian aviation business end users, to make financial profit for defendants and other conspirators, and to evade the regulations, prohibitions, and licensing requirements of the International Emergency Economic Powers Act (IEEPA), the Iranian Transactions and Sanctions Regulations (ITSR), and the Export Administration Regulations (EAR).
 
“The Department is committed to vigorous enforcement of the sanctions placed on Iran for its oppressive and destabilizing behavior,” said Assistant Attorney General Demers. “The indictment charges the defendant with conspiring to equip an Iranian airline that has been designated for supporting the Islamic Revolutionary Guard Corp, a key instrument of the Iranian regime’s belligerent activity. Sanctions evasion weakens the power of sanctions to change Iran’s behavior and makes us all less safe.”
 
“Our export laws are in place to prevent the shipment of goods to hostile countries and to keep items out of the hands of people who intend to harm the United States,” said U.S. Attorney Jessie K. Liu. “We will continue to aggressively prosecute those who violate our export control laws to protect the national security of the United States.”
 
“The Trump Administration will apply maximum pressure on Iran to end its promotion of instability and terrorism worldwide,” said Assistant Secretary Nikakhtar. “Mahan Air represents a continuing significant threat against United States and its allies. We will use all of the tools at our disposal to bring to justice those who threaten our way of life and violate our laws.”
 
According to the indictment, beginning around December 2010 through July 2012, Larijani was the Operations Manager for Kral Aviation. Larijani and his co-conspirators purchased U.S.-origin aircraft parts and accessories from U.S. companies. Larijani and his co-conspirators wired money to banks in the United States as payment for these parts and concealed from U.S. sellers the ultimate end use and end users of the purchased parts. Larijani and his co-conspirators caused these parts to be exported from the United States to Istanbul, Turkey, before shipping to airlines in Iran including Mahan Air, Sahand Air, and Kish Air.
 
Mahan Air has been designated by the U.S. Department of the Treasury as a Specially Designated National (SDN) for providing financial, material and technological support to Iran’s Islamic Revolutionary Guard Corps-Qods Force. The Department of Commerce has placed Mahan on its Denied Parties List and Kral Aviation on the Entity List.
 
On March 15, 1995, the President, pursuant to IEEPA, issued Executive Order No. 12957, finding that “the actions and policies of the Government of Iran constitute an unusual and extraordinary threat to the national security, foreign policy, and economy of the United States” and declaring “a national emergency to deal with the threat.” In subsequent Executive Orders, the President imposed economic sanctions, including a trade embargo, on Iran. The Executive Orders and the ITSR prohibit the exportation, re-exportation, sale, or supply, directly or indirectly, to Iran of any goods, technology, or services from the United States or by a United States person without prior authorization or license from the United States Department of the Treasury, the Office of Foreign Assets Control, located in Washington, D.C.
 
A four-count indictment returned on Oct. 6, 2016, charges Larijani along with Mahan Air, Kral Havacilik IC VE DIS Ticaret Sirketi (Kral Aviation), Toufan Amiri Larijani, Javad Rajabi, Mehdi Bahrami, and Ghodratollah Zarei with conspiracy to export U.S. goods to Iran, specifically U.S. origin commercial aircraft engines, and provide services to a Mahan Air, a SDN, and to defraud the United States; and the U.S. Department of the Treasury and the U.S. Department of Commerce; unlawful exports and attempted exports to embargoed country and provision of services to an SDN; willful violation of denial order; and conspiracy to commit money laundering for purchasing a U.S. origin aircraft engine to supply to Mahan Air in Iran without obtaining an export license.
 
According to the indictment, beginning around April 2012 through September 2012, Larijani and his co-conspirators attempted to acquire U.S. origin aircraft engines to supply to Mahan Air in Iran without obtaining a license or other authorization from the United States. Larijani and his co-conspirators caused the shipment of an aircraft engine from the United States with the express purpose of re-exporting the aircraft engine to Iran.
 
If convicted, Larijani faces a maximum of 20 years imprisonment.
 
The investigation was conducted by special agents from the U.S. Department of Commerce, Bureau of Industry and Security Office of Export Enforcement, Miami Field Office/Atlanta Resident Office and Washington Field Office.
 
The details contained in an indictment are mere allegations. All defendants are presumed innocent unless and until proven guilty in a court of law.

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

OGS_a58EU Council Negotiates Mandate Dual-Use Goods

(Source:
Council of the European Union, 5 June 2019.) [Excerpts.]
 
The EU wants to modernize the current EU regime for the control of exports, transfer, brokering, technical assistance and transit of dual-use items. The objective is to further strengthen the non-proliferation of weapons of mass destruction and their means of delivery, regional peace, security and stability as well as respect for human rights and international humanitarian law.
 
EU ambassadors today agreed the Council’s negotiating position on a proposed recast of the regulation setting up a regime for the controls of exports, brokering, technical assistance, transit and transfer of dual-use items. On the basis of this mandate, the Council Presidency will start negotiations with the European Parliament.
 
The new rules will introduce a number of changes to the EU export control system of dual-use items to adapt it to the changing technological, economic and political circumstances. They will also simplify and improve the current rules and optimize the EU licensing architecture.
 
In particular, new provisions include:
– further 
harmonizing licensing processes, through the introduction of new general export authorizations (EU GEAs), which are authorizations for exports to certain countries of destination available to all exporters who respect the conditions;
– harmonization of 
the control of supplying the technical assistance related to sensitive items
– a new mention of 
cyber surveillance items highlighting that the competent authorities have the possibility to control such items using the current regulation as for all non-listed dual-use items that could be used for directing or committing serious violation of human rights. …

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

OGS_a69. Dutch Government Releases National Sanctions List Concerning Terrorism

(Source:
Rijksoverheid, 5 June 2019.)
 
Dutch Government has released the National Terrorism Sanctions List. The list can be downloaded
here (in Dutch).

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

OGS_a710. French Ministry of Armed Forces Publishes Parliamentary Report on Exports of Arms 2019

(Source: 
Ministère des Armées, 4 June 2019.) 
 
The French Ministry of Armed Forces published its Parliamentary Report for 2019 on Arms Exports.
Download the Full Report 
here (in French).

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

NWSNEWS

NWS_a111. 
Deutsche Welle: “Can China Stop Rare Earth Exports to the US?”

(Source:
Deutsche Welle, 5 June 2019.) [Excerpts]
 
As China looks for ways to retaliate against the US amid an escalating trade row between the two giants, speculation is rife that Beijing could slash the export of rare earth metals as a counterstrike to US tariffs.
 
The increasingly 
rancorous trade dispute between the world’s two largest economies has now turned the spotlight on a group of metals known as rare earth elements.  
 
US Commerce Secretary Wilbur Ross said on Tuesday that a new report designates 35 elements and compounds as “critical to the economic and national security” of America, including uranium, titanium, and rare earths (REE).
 
“These critical minerals are often overlooked but modern life without them would be impossible,” Ross said. “Through the recommendations detailed in this report, the Federal government will take unprecedented action to ensure that the United States will not be cut off from these vital materials.” …
 
It comes after China’s top economic planner said it is studying whether to impose export controls on the materials.
 
“According to expert suggestions… We must strengthen export controls and establish a traceability and review mechanism for the entire process of rare earth exports,” the National Development and Reform Commission (NDRC) said in a report.
The measures are aimed at reducing unlicensed mining and smuggling of the critical materials, and to help China’s rare earth industry move up the value chain, the NDRC added. …
 
Important Strategic Resource
 
Given its stranglehold on the global supply of rare earths, some in China seem to view the metals as a bargaining chip in the ongoing US-China trade spat. In recent days, reports have appeared in Chinese media imploring Beijing to consider curbing exports of rare earths to the US. 
 
China’s 
People’s Daily said recently that it isn’t hard to answer the question whether China will use the elements as retaliation in the trade war. “Will rare earths become a counter weapon for China to hit back against the pressure the United States has put on for no reason at all? The answer is no mystery,” the ruling Communist Party’s newspaper said.
 
Another Chinese newspaper, 
Global Times, said last week an export ban on rare earths “is a powerful weapon” if used in the trade war. “Nevertheless, China will mainly use it for defense. It is not the first choice of China’s offensive weaponries,” it added.
 
Visiting rare earth-related businesses in southeastern Jiangxi province last month, Chinese President Xi Jinping called the elements “an important strategic resource.”
 
Since Xi’s trip to the facility, the export prices of an array of rare earth elements have rallied strongly. …
 
Observers say any Chinese restrictions on exports of rare earths could potentially create supply chain disruption for some key manufacturing industries. But they also add that Beijing may be reluctant to resort to this move as supply disruptions could cast doubt on China’s reliability as a supplier and prompt countries worldwide to accelerate moves to diversify the sources of their rare earth supply.
 
Moreover, the restrictions may prove ineffective to do much damage to the US economy. “The US government has built up strategic stockpiles of critical rare earths for its defense industry, and private sector firms also maintain some inventories of such critical rare earths materials,” Rajiv Biswas, APAC Chief Economist at IHS Markit, told DW. “Over a 1-to-2-years timeframe, new rare earth projects can be brought into production in other countries if Chinese rare earths supply disruptions persist,” he added. 
 
Revival of US rare earth industry?
 
The fear of losing access to these critical materials already appears to push the US to revive its rare earth industry.
 
In December 2017, US President Donald Trump signed an executive order – entitled “A Federal Strategy to Ensure Secure and Reliable Supplies of Critical Minerals” – to reduce the country’s dependence on external sources of critical minerals, including rare earths.
 
It has resulted in accelerated exploration and development of rare earths production in the US. Australian rare-earth mining firm Lynas announced in May that it would be expanding into the US market by setting up a rare earths processing plant through a joint venture with Texas-based Blue Line Corporation. The companies said the facility will be the only large-scale producer of separated medium and heavy rare earths outside China.
 
The US’s only rare earths mine, the Mountain Pass mine in California, is already mining rare earths but ships 50,000 tons of rare earths to China for processing and separation, said Biswas. “Processing facilities are currently being built at Mountain Pass and should be completed by 2020.”
 
The expert cited Japan as an example of how countries may try to diversify their sources of rare earths supply. Japan has been reducing its dependence on rare earths from China since a bilateral diplomatic tiff in 2010 led to some temporary supply disruptions. Tokyo is also channeling money into finding substitutes.
 
“Japan has reduced its reliance on China from around 80% of total rare earths imports in 2010 to around 50% by 2018,” said Biswas.

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NWS_a212. ST&R Trade Report: “Mexico Tariffs Could Hit 10 % or More but Details Remain Scarce”

 
Importers should be prepared for President Trump’s recently announced tariffs on imports from Mexico to go to ten percent and possibly higher, says Nicole Bivens Collinson, president of international trade and government relations for trade and customs law firm Sandler, Travis & Rosenberg. In the meantime potential responses are under consideration, from retaliatory tariffs on U.S. exports to legal and legislative action to curtail the president’s trade powers, as affected parties await more details.
 
Negotiations
 
President Trump said last week that in an effort to push Mexico to address a surge in immigration across the U.S.-Mexico border he would impose a five percent tariff on goods from that country effective June 10. If Mexico’s response is not deemed sufficient, tariffs will be increased to 10 percent on July 1, 15 percent on Aug. 1, 20 percent on Sept. 1, and 25 percent on Oct. 1.
 
Senior Mexican officials are meeting with their U.S. counterparts this week to seek a resolution. Trump said June 3 that he thinks “it’s more likely that the tariffs go on,” but Mexican Foreign Minister Marcelo Ebrard expressed confidence that “we will be able to reach an agreement.” Acting White House Chief of Staff Mick Mulvaney acknowledged June 2 that the White House has not set a “specific target” Mexico has to hit to avoid the tariffs but said “things have to get dramatically better and they have to get better quickly.”
 
Action in Congress
 
Both Republican and Democratic members of Congress are discussing possible steps to short-circuit the tariffs. One reason is that, given the extensive trade relationship between the U.S. and Mexico, higher tariffs would raise costs for many U.S. companies and possibly consumers of their products as well. The tariffs would also dim the prospects for congressional approval of the U.S.-Mexico-Canada Agreement, despite Trump administration officials’ assertions that the two issues are unrelated. The White House sent a draft statement of administrative action to implement the USMCA last week, meaning a final text could be submitted in as little as 30 days, but Senate Finance Committee Chairman Chuck Grassley, R-Iowa, has signaled that he will not bring up the agreement for consideration if the Mexico tariffs are imposed.
 
However, it is unclear how quickly Congress may be able to act. According to Collinson, Senate leaders are making the argument that Trump will need to issue a new emergency declaration to impose the Mexico tariffs and cannot use the border-related declaration issued in February. Both the Senate and the House of Representatives would have to pass a resolution of disapproval to overturn the declaration and thus halt the tariffs. However, with the Senate anticipating that a declaration will not be sent until late June 9, the initial five percent tariff is likely to take effect before the Senate can act. It is also unclear at the moment whether there are sufficient votes in each chamber to override the expected presidential veto of a disapproval resolution.
 
If Congress fails to act quickly the tariffs could increase to ten percent on July 1 and remain in effect for much of that month. If there is a further delay tariffs could go to 15 and then 20 percent because Congress is scheduled to be out of session Aug. 3 through Sept. 8. Even once Congress returns it will have to deal with debt limit and spending bills, which could result in the tariffs reaching 25 percent on Oct. 1.
 
Other Possible Actions
 
In the meantime, business groups are considering litigation to halt the tariffs. One of the arguments in a potential case could be that Trump has erroneously cited the International Emergency Economic Powers Act of 1977, which has previously been utilized to implement economic sanctions and regulate exports, as the statutory authority for the tariffs.
 
In addition, Mexico is reportedly considering ways it might respond, including by imposing retaliatory tariffs on U.S. goods.
 
Implementation Questions
 
Finally, there is continuing uncertainty about how the tariffs will be administered because no official notices from the Office of the U.S. Trade Representative or U.S. Customs and Border Protection have yet been issued. It is thus unclear, for example, whether the tariffs will apply to all imports from Mexico, including those produced in maquiladoras, or be limited to certain categories such as those whose country of origin under NAFTA rules is Mexico.

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COMMCOMMENTARY

COM_a113
S. Alam, P. Bayz & J. Carlin: “For Russia, Sanctions Are Coming (Part I of II)”

 
* Authors: Saqib Alam, Esq.,
saqibalam@mofo.com, +44 20 79204177; Panagiotis Bays, Esq.,
akibayz@mofo.com, +1 202 887 8796; and John Carlin, Esq.,
jcarlin@mofo.com, +1 202 463 1000, all of Morrison & Foerster LLP.
 
Back in February, we told you about the 
Defending American Security from Kremlin Aggression Act, or “DASKA,” a bipartisan effort to impose new sanctions on Russia. Interest in action against the Kremlin has only increased following the Mueller Report’s release, with Congress now considering no fewer than five Russia-focused sanctions bills. The latest of the bunch explicitly threatens the Nord Stream 2 gas pipeline project, sanctions against which U.S. Energy Secretary Rick Perry says are inevitable:
 
“The opposition to Nord Stream 2 is still very much alive and well in the United States,” Perry said during a visit to Kiev on May 21, 2019, according to 
media reports. “The United States Senate is going to pass a bill, the House is going to approve it, and it’s going to go to the President, and he’s going to sign it, that is going to put sanctions on Nord Stream 2.”
 
That threat in particular is sending shockwaves across Europe, as German Chancellor Angela Merkel has publicly supported Nord Stream 2 as vital to Germany’s energy security. This is not the first time Nord Stream 2 has been in congressional crosshairs; in 2017, Congress passed the 
Countering America’s Adversaries Through Sanctions Act (CAATSA), which included a provision that allows the Administration to target certain high-value investments or sales for the construction of Russian energy export pipelines. That authority, however, is discretionary, and its implementing agency, the U.S. State Department, subsequently issued 
guidance indicating that only projects initiated after CAATSA’s enactment would be subject to sanctions, thereby effectively excluding Nord Stream 2 and easing tensions with Germany and others. The latest bill, which calls for mandatory sanctions, leaves no room for similar diplomatic maneuvering.
 
With so many bills circulating and so much at stake for business interests around the world, your MoFo National Security team prepared a brief primer on each bill, with the caveats that additional bills and amendments are likely forthcoming and the legislative timeline remains unclear. Note that many of the bills contain overlapping features that would require sanctions against Russian energy projects, oligarchs, and newly issued sovereign debt – an indication that measures related to these sanctions targets will likely make it into whatever ultimately becomes law.
 
The 
Protecting Europe’s Energy Security Act of 2019 (PEESA) – filed on May 14, 2019 by Senators Cruz, Shaheen, Barrasso, and Cotton – would require the Secretary of State to issue a report within 60 days, and every 90 days thereafter, on (1) vessels that engaged in pipe-laying at depths of 100 feet or more below sea level for the construction of Russian energy export pipelines; and (2) foreign persons that have sold, leased, provided, or facilitated the provision of those vessels for the construction of such pipelines. As a result of being identified in any of the reports, the following sanctions would result:
– The assets subject to U.S. jurisdiction of any foreign persons (individuals or entities) identified in (2) above would be required to be blocked (or frozen);
– The corporate officers and principal shareholders of any company owning a vessel identified in (1) above, as well as any foreign persons identified in (2) above, would be denied visas and prohibited from entering the United States; and
– A menu of possible sanctions, including asset freezes, could be imposed on any foreign persons that provided underwriting services or insurance or reinsurance for a vessel identified in (1) above, as well as on the corporate officers of any such companies.
 
The bill would provide the Administration with authority to waive the application of sanctions based on national security considerations, but in the current political climate, such a waiver would be extremely difficult for the Administration to issue. The bill also calls for a report within six months and annually thereafter (1) listing all entities, including financial institutions, that directly or indirectly provided goods, services, or technology for the construction or repair of the Nord Stream 2 pipeline and (2) assessing whether such entities had knowingly engaged in a “significant transaction” with a sanctioned Russian party. Any positive assessment presumably would force the Administration into imposing sanctions against any such entity, given that CAATSA requires that such significant transactions result in mandatory secondary sanctions.
 
As with CAATSA, much of the bill is phrased neutrally in terms of “Russian energy export pipelines,” but the sponsors are clearly focused on Nord Stream 2. “Nord Stream 2 threatens Europe’s energy security,” Senator Cruz 
noted upon the bill’s filing. “The United States simply cannot allow Russia to dominate Europe’s energy future.”
 
The 
Defending Elections from Threats by Establishing Redlines Act of 2019 (DETER) – introduced April 8, 2019, by Senators Van Hollen and Rubio – would require (1) determinations and reports to Congress by the Director of National Intelligence (DNI) within 60 days of a U.S. election on whether, with a high level of confidence, a foreign government or agent of a foreign government knowingly interfered in the election; (2) annual reports to Congress providing information on Russian oligarchs, senior political figures, and parastatal entities; and (3) biannual reports to Congress on the wealth, sources of wealth, and use of wealth of such persons, including Russian President Putin. As sanctions watchers recall, it was
 a similar provision of CAATSA that resulted in the 
extraordinary sanctions against Russian oligarchs in April 2018 whose effects were (and continue to be) felt around the world.
 
If the DNI determines under (1), above, that Russia or a Russian agent interfered in an election, the United States must, within 30 days of that determination, impose the following sanctions:
– Blocking and/or correspondent account sanctions on at least two of the following major Russian banks: (1) Sberbank; (2) VTB Bank; (3) Gazprombank; (4) Vnesheconombank (VEB); and (5) Rosselkhozbank;
– Prohibitions on new investments in the Russian energy sector, including blocking sanctions on any foreign person (individual or entity) that makes a new investment in the Russian energy sector or a Russian energy company;
– Blocking and visa sanctions on Russian senior political figures and oligarchs determined by the DNI to have directly or indirectly contributed to the election interference;
– Blocking sanctions on entities that are part of, or operate on behalf of, the Russian defense or intelligence sectors; and
– Prohibitions on all transactions in (1) sovereign debt of the Russian government issued after the enactment of DETER and (2) debt of any entity owned or controlled by Russia issued after the enactment.
 
[Part II of this article will be posted in tomorrow’s Daily Bugle.]

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COM_a2
14

C. Jones: “Defense Industry and the Cloud – Managing IT Security Requirements and Export Control Challenges”

(Source:
Lexology, 2 June 2019.)
 
* Author: Christopher Jones, Dr.,
C.Jones@taylorwessing.com, +49 40 36803 0, of TaylorWessing.
Companies in the defense industry face several export control regulations. Certain data and information fall under these regulations as well. Storing and processing data in the cloud poses export control challenges that require particular IT security measures.
 
(1) The Cloud Brings Many Benefits to the Defense Industry
 
Digitalization is making steady progress in the defense industry. Electronic data transfers to and from online services are a key component of every company’s business operations. Data flows both within a company and externally to customers, suppliers, interested parties and public authorities.
 
Due to the sensitivity of the sector, the defense industry is rather reluctant to adopt cloud technology. However, the use of modern technologies is essential for the digitization process. Many standard software products that were traditionally offline desktop software have now implemented cloud elements, if not completely switched to cloud services. Universally used software, such as Microsoft Office, are now available as a cloud based service (Office 365). Manufacturers even deeply integrate cloud elements in modern operating systems, such as Windows 10. Cloud technology can hardly be avoided, at the very latest, when collaborating with external companies requires usage of commercially available cloud tools.
 
Cloud services encompass a wide range of services, from infrastructure as a service (IaaS), platforms as a service (PaaS) to software as a service (SaaS). Businesses use clouds to store and make accessible large amounts of data, process the information on powerful cloud servers, use commercially available online applications, and much more.
 
All these cloud services usually process data on complex server architectures. Cloud service providers often rely on infrastructure providers to increase server availability to customers worldwide. Many infrastructure providers, in turn, use hosting subcontractors with a distributed server network, spread across multiple countries. Some companies use a private cloud infrastructure, meaning the company stores and processes the cloud application on-premise. But even then, the data itself often flows without regard to national borders, enabling users to access the data worldwide.
 
(2) Companies Face Numerous Export Control Regulations
 
In order to determine which data or information may be subject to export controls, companies must primarily observe restrictions from three areas: national export control law, the European Dual-Use Regulation, and special embargoes.
 
Companies in Germany are subject to German national export control law. The German Foreign Trade Act (Außenwirtschaftsgesetz, AWG) and the German Foreign Trade and Payments Ordinance (Außenwirtschaftsverordnung, AWV) restrict free foreign trade on a national level. The National Export List in Annex 1 to the AWV is of particular importance. It contains military equipment in Section A, as well as nationally registered dual-use items in Section B.
 
At the European level, the Dual-Use Regulation (EC) No. 428/2009 applies. The European Commission recently updated the items listed in its Annexes in October 2018 (Regulation (EU) No. 2018/1922). EU legislators are currently revising a comprehensive update to the Dual-Use Regulation, expected to enter into force late 2019 or early 2020.
 
(3) Data and Information Can Fall Under Export Restrictions
 
Export restrictions apply not only to physical goods but also to software and certain data. In this context, export does not only mean the actual data transfer to third countries but also accessibility of such data from other countries. Regardless of actual data retrieval, the mere possibility of data access is sufficient.
 
For the cloud, this means that, if the cloud provider’s servers are located in another country, the use of this cloud for restricted data is an export-controlled process. However, if the cloud servers are in Germany and the data can be accessed from abroad, this comprises an export-controlled process as well.
 
The national and EU export regulations contain lists of specific restricted goods. Certain software is included in these lists. Likewise, certain dual-use goods, meaning goods that are usable for military purposes in addition to civilian purposes, including software and data, are subject to export restrictions.
 
An export of such software is subject to the same restrictions as physical goods. With regard to the cloud, this would apply to the cloud software itself, i.e. an SaaS application developed by the company, if it was developed for the stated purposes.
 
Restrictions also cover “technologies”. This includes the specific technical knowledge required to develop, manufacture or use a restricted good. This information is often stored or processed as data in clouds. This can happen through data transmissions via cloud infrastructures, or by further processing the data in SaaS applications. Such data flows can constitute an export under the export control regulations.
 
In addition, export regulations contain “catch-all clauses”, restricting non-listed items if they are intended for military use in “critical” countries in connection with NBC weapons. Restrictions based on specific embargoes of recipient countries or individuals should not be overlooked as well. In determining if their data may be subject to restrictions, companies should therefore not merely rely on checking the respective lists of restricted items, but carry out a comprehensive examination.
 
Small and medium-sized enterprises in particular need to be vigilant if they cannot themselves provide a private cloud infrastructure under their full control.
 
(4) Cloud Usage Leads to IT Security Requirements
 
To ensure compliance with export restrictions without obtaining special permits, defense industry companies face numerous IT security challenges if they choose to use cloud services.
 
First, companies must identify the extent to which they potentially own critical software, technology or information in the form of data. They must then determine which data might fall under the national export list or the dual-use regulation. Companies must evaluate any possible international transfers of such data, including if data stored locally is accessible internationally. For this purpose, companies must ensure that employees only use authorized cloud services for restricted data, and verify the actual location of data servers and data flows carefully.
 
Even if the company intends to use international cloud tools for non-critical data only, they must still undertake special measures to secure the transfers. In order to avoid export restrictions, they must ensure that the system architecture effectively separates the information not covered by export restrictions from the data relevant under export control law.
 
If companies make their cloud servers accessible internationally, for example for employees traveling abroad, access restrictions must ensure that only authorized personnel have access and only non-critical data is accessible. Appropriate security measures are required. Companies can solve this through access control schemes, for example, by implementing access control technologies that effectively restrict availability. Arguably, data encrypted under a well-implemented encryption scheme should not be subject to export controls as well.
 
Depending on the type of cloud application, such adequate security measures might not be possible at all. Many public cloud providers, for example, store and make available unencrypted user data across servers in multiple countries. Consequently, companies should not process any restricted data with such applications.
 
For any company dealing with potentially restricted data, it is advisable to introduce and maintain an “Internal Compliance Program” (ICP) in order to establish procedures and monitor compliance with export restrictions. The establishment of an ICP requires careful planning and diligent implementation. In light of several recent and imminent updates to the legal bases of export restrictions, constant updates to internal compliance efforts are essential.
 

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COM_a3
15

W. Segall, N.C.I. Nweke & M. J. Schwartz: “New Cuba Sanctions Measures Prohibit ‘People to People’ Travel to Cuba and Restrict Use of Commercial Aircraft and Recreational and Passenger Vessels”

 
* Authors: Wynn Segall, Esq., 
wsegall@akingump.com; Nnedinma C. Ifudu Nweke, Esq., 
nifudu@akingump.com; and Melissa J. Schwartz,
mjschwartz@akingump.com, of Akin Gump Strauss Hauer & Feld LLP.
 
In a June 4 announcement, the Trump administration further ratcheted up U.S. sanctions and export controls against Cuba by prohibiting group “people-to-people” travel to Cuba and the use of noncommercial aircraft and passenger and recreational vessels for travel to Cuba. The measures, which were foreshadowed in a foreign policy speech by U.S. National Security Advisor John Bolton in Miami on April 17, 2019 (see our previous client alert), represent a significant escalation of sanctions, as they eliminate authorizations that have permitted the largest numbers of U.S. travelers to visit Cuba in recent years. As a result, U.S. persons (including green card holders) can only travel to Cuba without a license if such travel falls in one of the remaining categories of authorized travel, including family visits, journalistic activities, professional research and professional meetings, humanitarian projects, and certain educational activities under the auspices of academic institutions.
 
Furthermore, the changes announced on June 4, 2019 effectively bar U.S.-origin cruise ships, sailboats, fishing vessels, and corporate and private airplanes from traveling to Cuba, further limiting available conduits for travel to the country.
 
Removal of “People-to-People” Travel Authorization
 
Effective June 5, 2019, the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) rescinded a general license under the Cuban Assets Control Regulations (CACR) that permitted U.S. persons to travel to Cuba to participate in educational exchanges to promote “people-to-people contact” under the auspices of a sponsoring organization. In recent years, the “people to people” authorization has provided the basis for the largest number of U.S. travelers to travel to Cuba. At the same time, critics of U.S. engagement with Cuba in Congress and within the Trump administration have increasingly criticized travel engaged under the “people to people” authorization, characterizing it as a form of “veiled tourism” that channels funds to the Cuban military, intelligence, and security services.
 
In conjunction with OFAC’s elimination of the “people-to-people” authorization on June 5, OFAC issued a “grandfathering” provision to authorize certain group people-to-people travel that was authorized under the previous general license, provided that the traveler has already completed at least one travel-related transaction (such as purchasing a flight or reserving a hotel room) before June 5, 2019.
 
Importantly, OFAC did not rescind or alter any of the other general licenses in the CACR authorizing other categories of travel to Cuba. These remaining categories of authorized travel include, for example, family visits, journalistic activities, professional research and professional meetings, humanitarian projects, and certain educational activities under the auspices of academic institutions.
 
The changes to the CACR, which are effective on June 5, 2019, are available here. OFAC also released new FAQs regarding these changes.
 
Restrictions on Use of Noncommercial Aircraft and Passenger and Recreational Vessels to Cuba
 
In coordination with OFAC, on June 5, 2019, the U.S. Department of Commerce’s Bureau of Industry and Security (BIS) implemented changes to the Export Administration Regulations (EAR) to restrict noncommercial aircraft (e.g., corporate and private aircraft) and passenger and recreational vessels (e.g., cruise ships, sailboats, and fishing vessels) from traveling to Cuba. Importantly, these changes do not affect commercial aircraft (i.e., commercial aircraft operating under Air Carrier Operating Certificates or certain other Federal Aviation Administration certificates or specifications) or cargo vessels that are authorized to travel to Cuba.
 
Specifically, BIS removed noncommercial aircraft and passenger and recreational vessels from the scope of License Exception Aircraft, Vessels, and Spacecraft (AVS), meaning that any person seeking to export or reexport such U.S.-origin aircraft or vessels to Cuba must obtain a license from BIS. BIS will consider such license requests under a general policy of denial, absent a countervailing U.S. foreign policy or national security interest. These restrictions also apply to foreign aircraft and vessels that are “subject to the EAR,” including foreign aircraft and vessels with U.S.-origin content exceeding 25 percent.
 
Unlike the changes implemented by OFAC, BIS did not include a grandfathering clause with respect to these amendments to the EAR. Thus, even if a U.S. traveler booked a “people-to-people” trip to Cuba before June 5, 2019, as a practical matter, he or she would still be unable to travel to Cuba on a U.S.-origin cruise ship or other passenger or recreational vessel or noncommercial aircraft.
 
The June 5, 2019 amendments to the EAR are available here. BIS also released corresponding FAQs regarding these changes.
 
Conclusion
 
These modifications to U.S. sanctions on Cuba were consistent with public statements made in U.S. National Security Advisor Bolton’s speech in Miami in April. Though expected, these measures represent a significant escalation of U.S. sanctions on Cuba by the Trump administration, given the significant revenue that “people-to-people” travel and cruise ships visits have generated for Cuban entrepreneurs and the public sector. It remains to be seen the extent to which the changes will result in a further decrease in travel to Cuba from the United States, which could also lead to a decrease in the demand for and availability of commercial airline services to Cuba from the United States.
 
In the weeks ahead, it is foreseeable that the Trump administration will further tighten sanctions on Cuba to effect other policy statements made during National Security Advisor Bolton’s April 17 speech in Miami. These include statements indicating that the Trump administration will rescind the existing OFAC general license allowing U.S. banks to process “U-turn” transactions involving Cuba (i.e., transactions that originate and terminate outside the United States) and will impose a cap on personal family remittances to Cuba of $1,000 per person per quarter. But currently, the timing and specifics of the administration’s next steps on Cuba sanctions are uncertain.

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TEEX/IM TRAINING EVENTS & CONFERENCES

TE_a116. ECTI Presents A Practical Guide to Screening: June 19, 2019

(Source: Danielle Hatch,
danielle@learnexportcompliance.com
)
 
* What: A Practical Guide to Screening
* When: 19 Jun 2019; 1:00 p.m. (EDT)
* Where: Webinar
* Sponsor: Export Compliance Training Institute (ECTI)
* ECTI Speaker: Jonathan Young

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TE_a217. FCC Presents “The ABC of FMS”, 28 Nov in Bruchem, the Netherlands

 
This training course is specifically designed for compliance professionals and those in a similar role working for government agencies or companies (temporarily) obtaining U.S. export-controlled articles and technology procured through government-to-government Foreign Military Sales (FMS), and authorized by the Arms Export Control Act (AECA) (22 U.S.C. 2751,
et. seq.).
 
The course will cover multiple topics relevant for organizations outside the U.S. working with U.S. export-controlled articles and technology procured through FMS, including: the U.S. regulatory framework, with a special focus on the AECA, key concepts and definitions, and practical compliance tips to ensure the proper handling of FMS-acquired articles and technology. Participants will receive a certification upon completion of the training.
 
Details
* What: The ABC of Foreign Military Sales (FMS)
* When: Thursday, 28 Nov 2019
– Welcome and Registration: 9.00 am – 9.30 am
– Training hours: 9.30 am – 4.00 pm
* Where: Full Circle Compliance, Landgoed Groenhoven, Dorpsstraat 6, Bruchem, the Netherlands
* Information & Registration:
here or contact FCC at
events@fullcirclecompliance.eu or + 31 (0)23 – 844 – 9046
* This course can be followed in combination with “U.S. Export Controls: The International Traffic in Arms Regulations (ITAR) from a non-U.S. Perspective” (26 Nov 2019), and/or “U.S. Export Controls: The Export Administration Regulations (EAR) from a non-U.S. Perspective” (27 Nov 2019). Please, see the
event page for our combo deals.

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ENEDITOR’S NOTES

 
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EN_a219
. 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: 5 Apr 2019:
84 FR 13499-13513: Civil Monetary Penalty Adjustments for Inflation
 

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: 5 June 2019: 84 FR 25986-25989Restricting the Temporary Sojourn of Aircraft and Vessels to Cuba.  
 
* 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: 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 Apr 2019: 84 FR 16398-16402: International Traffic in Arms Regulations: Transfers Made by or for a Department or Agency of the U.S. Government   
  – The only available fully updated copy (latest edition: 19 Apr 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: 5 June 2019: 84 FR 25992-25993: Cuban Assets Control Regulations
 [amendment of 31 CFR Part 515] 
  
* 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: 4 June 2019:
Harmonized System Update (HSU) 1910  

  – HTS codes for AES are available here.

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

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EN_a0320
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; and Assistant Editors, Alexander Witt and 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.

* 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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