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19-0612 Wednesday “Daily Bugle'”

19-0612 Wednesday “Daily Bugle”

Wednesday, 12 June 2019

TOP
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 Seeks Comments on License Exemptions and Exclusions 
  2. State Maintains Shining Path’s FTO Designation 
  1. Items Scheduled for Publication in Future Federal Register Editions 
  2. Commerce/BIS: (No new postings.)
  3. Justice: “Morris County Woman Admits Conspiring with Iranian National To Illegally Export Aircraft Components To Iran”
  4. State/DDTC: (No new postings.)
  5. Germany/BAFA Posts May & June 2019 Newsletter
  6. UK Parliament Publishes Report on UK’s Sanctions Policy
  1. Al Jazeera: “US Imposes Sanctions on Syrian Mogul for ‘Supporting’ Assad'”
  2. AP: “US Imposes Sanctions on Iraq-Based Affiliate of Iran’s Guard”
  3. Financial Times: “Deutsche Bank Finds Serious Failings in Payments Screening”
  4. SCMP: “China Rolls Out Rules to Guide Development of SpaceX-Style Commercial Rocket Research in the Country”
  5. RFE/RL: “EU Ambassadors Agree to Extend Crimea Sanctions for Another Year”
  1. K. Johnson & L. Seligman: “How China Could Shut Down America’s Defenses”
  2. M. Volkov: “OFAC’s New Sanctions Compliance Training and Testing Requirements (Part IV of IV)”
  3. T. Rauf: “Kazakhstan’s Chairmanship of The Nuclear Suppliers Group in 2019-2020”
  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 Seeks Comments on License Exemptions and Exclusions
(Source: Federal Register, 12 June 2019.) [Excerpts.]
 
84 FR 27240: Submission for OMB Review; Comment Request
 
The Department of Commerce will submit to the Office of Management and Budget (OMB) for clearance the following proposal for collection of information under the provisions of the Paperwork Reduction Act (44 U.S.C. Chapter 35).
 
* Agency: Bureau of Industry and Security.
* Title: License Exemptions and Exclusions.
– Form Number: N/A.
– OMB Control Number: 0694-0137.
– Type of Review: Regular submission. …
 
* Needs and Uses: Over the years, BIS has worked with other Government agencies and the affected public to identify areas where export licensing requirements may be relaxed without jeopardizing U.S. national security or foreign policy. Many of these relaxations have taken the form of licensing exceptions and exclusions. Some of these license exceptions and exclusions have a reporting or recordkeeping requirement to enable the Government to continue to monitor exports of these items. Exporters may choose to utilize the license exception and accept the reporting or recordkeeping burden in lieu of submitting a license application. These exceptions and exclusions have allow exporters to ship items quickly, without having to wait for license approval.
 
These collections are designed to reduce export licensing burden. It is up to the individual company to decide whether it is most advantageous to continue to submit license applications or to comply with the reporting or recordkeeping requirements and take advantage of the licensing exception or exclusion.
 
– Affected Public: Non-profit institutions; State, local, or tribal government; business or other for-profit organizations.
– Frequency: On Occasion.
– Respondent’s Obligation: Voluntary.
 
This information collection request may be viewed at reginfo.gov http://www.reginfo.gov/public/. Follow the instructions to view Department of Commerce collections currently under review by OMB. Written comments and recommendations for the proposed information collection should be sent within 30 days of publication of this notice to OIRA_Submission@omb.eop.gov.
 
Sheleen Dumas,
 
Departmental Lead PRA Officer, Office of the Chief Information Officer.

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EXIM_a2
2.
State Maintains Shining Path’s FTO Designation

(Source: Federal Register, 12 June 2019.) [Excerpts.]
 
84 FR 27390: Review of the Designation as a Foreign Terrorist Organization of Shining Path (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.
 
This determination shall be published in the Federal Register.
 
Dated: May 23, 2019.
 
John J. Sullivan, Deputy Secretary of State, Department of State.

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OGSOTHER GOVERNMENT SOURCES

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

[No items of interest today.]

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

OGS_a24
.
Commerce/BIS (No new postings.)

(Source: Commerce/BIS)

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OGS_a35.
Justice: “Morris County Woman Admits Conspiring with Iranian National To Illegally Export Aircraft Components”
(Source: Justice, 11 June 2019.) [Excerpts.]
 
A Morris County, New Jersey, woman today admitted her role in a scheme to illegally smuggle millions of dollars’ worth of aircraft parts from the United States to Iran, U.S. Attorney Craig Carpenito announced.
 
Joyce Eliabachus, a/k/a “Joyce Marie Gundran Manangan,” 52, of Morristown, New Jersey, pleaded guilty before U.S. District Judge Madeline Cox Arleo to an information charging her with one count of conspiracy to violate the International Emergency Economic Powers Act (IEEPA) in connection with her role in an international procurement network that smuggled over $2 million worth of aircraft components to Iran.
 
In addition to the guilty plea, a complaint was unsealed today in New Jersey against Peyman Amiri Larijani, 33, a citizen and resident of Iran charging him with one count each of conspiracy to violate Iranian Transactions and Sanctions Regulations (ITSR), conspiracy to commit money laundering, and conspiracy to smuggle goods from the United States. Larijani was also charged in U.S. District Court for the District of Columbia in two separate indictments unsealed June 4, 2019. …
 
Eliabachus, Larijani and others were part of an international procurement network that surreptitiously acquired large quantities of aircraft components from United States-based manufacturers and vendors and unlawfully exported them to entities in Iran using freight-forwarding companies in the United Arab Emirates (UAE) and Turkey.
 
Eliabachus was the principal officer and operator of Edsun Equipments LLC, a purported New Jersey-based aviation parts trading company run out of her Morristown residence. Larijani was the owner of an Iran-based procurement firm and served as operations and sales manager of a network of supply and engineering companies in Tehran, Iran, and Istanbul, Turkey.
 
From May 2015 through October 2017, Eliabachus, Larijani, and their conspirators facilitated at least 49 shipments containing 23,554 license-controlled aircraft parts from the United States to Iran, all of which were exported without the required licenses. …
 
In order to obscure the extent of the network’s procurement activities, Eliabachus routinely falsified the true destination and end-user of the aircraft components she acquired. She also falsified the true value of the components being exported in order to avoid filing export control forms, which further obscured the network’s illegal activities from law enforcement. …
 
The count of conspiracy to violate IEEPA, to which Eliabachus pleaded guilty, carries a maximum potential of five years in prison and a $250,000 fine. Sentencing is scheduled for Sept. 24, 2019. …

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OGS_a57.
Germany/BAFA Posts May & June 2019 Newsletter

(Source:
German BAFA, 11 June 2019.)
 
The German Bundesamt für Wirtschaft und Ausfuhrkontrolle (“BAFA”) has posted its May and June 2019 newsletter on its website. The newsletter (in German) can be found here.

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OGS_a68.
UK Parliament Publishes Report on UK’s Sanctions Policy

(Source:
UK Parliament, 12 June 2019.) [Excerpts.]
 
The United Kingdom’s House of Commons Foreign Affairs Committee published its 17th Report entitled “Fragmented and incoherent: the UK’s sanctions policy”.
 
Summary
 
A robust, effective and coherent sanctions policy is indispensable to the UK as a global actor. The centrality of sanctions to UK foreign policy, national security and the functioning of the rules-based international system cannot be overstated. As it prepares to leave the EU, the UK must be ready to take responsibility for designing, implementing and enforcing its own sanctions.
 
Yet the Government does not have a clear strategy for sanctions. Little high-level thought appears to have been given to UK priorities for post-Brexit sanctions. Moreover, the Government’s failure to establish a clear legal view on whether the UK can independently sanction human rights abusers while still an EU member state, and its obfuscation on this issue in response to the Committee’s questioning, risk signalling that the UK is reluctant to use those powers. The Government must rectify this mistake by agreeing on a clear legal position and publishing it before the end of June.
 
The cross-Whitehall structures underpinning sanctions policy-making, implementation and enforcement are highly fragmented, further undermining strategic coherence and enabling departments to avoid taking responsibility. The Government should address this by appointing a Senior Responsible Officer for sanctions policy who will be personally accountable to the National Security Council.
 
The Foreign and Commonwealth Office also seems unwilling to acknowledge that it has a vital role to play in helping to keep the UK and our allies safe by cracking down on the laundering of dirty money. As this Committee has said in previous Reports, dirty money is a national security issue, especially in the light of London’s importance in the global financial system. It is simply not good enough for the Minister of State to assert that financial crime is “not quite” the Foreign and Commonwealth Office’s “patch”.
 
The Government has spent the last two years running as fast as it can just to stay in the same place. The time is right for a major review of the Government’s approach to sanctions at every stage. Without such a review, the UK runs the risk of allowing its sanctions policy to be dictated by the decisions of others. The UK must now seize the opportunity to become a global leader in sanctions policy. We hope the Government will take this warning to heart.
 
Read the full report here.

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NWSNEWS

NWS_a19.
Al Jazeera: “US Imposes Sanctions on Syrian Mogul for ‘Supporting’ Assad'”

(Source: Al Jazeera, 11 June 2019.) [Excerpts.]
 
The United States has imposed sanctions on Samer Foz, a Syrian industrialist behind high-end developments, including the Four Seasons hotel in Damascus, for allegedly enriching President Bashar al-Assad. …
 
The US Treasury Department blacklisted properties of Foz and his Aman Holding Company including the Four Seasons, the high-end hotel that has stayed operational during Syria’s long-running civil war.

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NWS_a210.
AP: “US Imposes Sanctions on Iraq-Based Affiliate of Iran’s Guard”
(Source: Associated Press, 12 June 2019.) [Excerpts.]
 
The Trump administration on Wednesday imposed sanctions on an Iraq-based affiliate of Iran’s Revolutionary Guard, one more in a series of steps intended to pressure Tehran following President Donald Trump’s decision last year to withdraw from the landmark nuclear deal with the Islamic Republic.
 
The Treasury Department said the penalties target the South Wealth Resources Company in Baghdad and two of its registered agents. It said the company and the two men are linked to the Guard’s foreign wing, or Quds Force, and have trafficked hundreds of millions of dollars’ worth of weapons to Shiite militias in Iraq. …
 
The administration last month designed the Guard as a foreign terrorist organization, which makes providing it with material support illegal under U.S. law.
 
The new actions freeze any assets that the targets may have in U.S. jurisdictions and bar Americans from doing business with them. …

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NWS_a311.
Financial Times: “Deutsche Bank Finds Serious Failings in Payments Screening”
(Source:
Financial Times, 10 June 2019.) [Excerpts.]
 
Deutsche Bank has discovered serious failings in its anti-money laundering and sanctions controls that allowed cheques and high-value electronic payments to be processed without proper screening.
 
The weaknesses lasted years, internal auditors found, in the latest compliance problem for the embattled German lender. …
 
The latest discoveries add to the litany of compliance woes at Germany’s largest bank. Deutsche has paid hundreds of millions of dollars in fines for breaching money laundering and sanction rules and is still being investigated by authorities around the world for alleged wrongdoing in the area. …

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NWS_a412.
SCMP: “China Rolls Out Rules to Guide Development of SpaceX-Style Commercial Rocket Research in the Country”
(Source:
South China Morning Post, 12 June 2019.) [Excerpts.]
 
China has rolled out its first rules to regulate the manufacture of commercial space rockets and test flights in a move to guide healthy development of the commercial space sector, mirroring similar moves by the US in recent years. …
 
The new rules also require a confidentiality system to be established among commercial rocket companies and asks them to follow state export control regulations when in doubt about whether they can provide overseas services and products.
 
The detailed regulations come as the number of private companies engaged in the commercialisation of China’s space industry increased to almost 100 in 2018 from 30 a year earlier, and as Beijing puts more emphasis on private sector involvement to boost its space ambitions. …

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NWS_a513.
RFE/RL: “EU Ambassadors Agree to Extend Crimea Sanctions for Another Year”
(Source: Radio Free Europe/Radio Liberty, 12 June 2019.) [Excerpts.]
 
European Union ambassadors have agreed to extend the bloc’s investment ban on the Crimean Peninsula by another year.
 
Sources familiar with the matter, speaking on condition of anonymity, told RFE/RL on June 12 that the sanctions will officially be prolonged at ministerial level within the next two weeks.
 
The EU sanctions were introduced in 2014 as a response to Russia’s seizure of Ukraine’s Crimea region in March 2014.
 
The measures include an EU-wide ban on imports from Crimea unless they have Ukrainian certificates, a ban on cruise ships flying the flag of an EU member state or controlled by a member state to call at ports in Crimea, and a prohibition of the purchase by EU companies of property and companies there. …

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COMMCOMMENTARY

COM_a114.
K. Johnson & L. Seligman: “How China Could Shut Down America’s Defenses”
(Source:
Foreign Policy Magazine, 11 June 2019.) [Excerpts.]
 
* Author: Keith Johnson, Senior Staff Writer; and Lara Seligman, Staff Writer, both of Foreign Policy Magazine.
 
President Donald Trump has often argued that China has much more to lose than the United States in a trade war, but critics say his administration has failed to address a major U.S. vulnerability: Beijing maintains powerful leverage over the warmaking capability of its main strategic rival through its control of critical materials.
 
Every advanced weapon in the U.S. arsenal-from Tomahawk missiles to the F-35 fighter jet to Aegis-equipped destroyers and cruisers and everything in between-is absolutely reliant on components made using rare-earth elements, including critical items such as permanent magnets and specialized alloys that are almost exclusively made in China. Perhaps more worrisome is that the long-term U.S. supply of smart bombs and guided munitions that would have to be replenished in a hurry in the event of U.S. conflict in Syria, Iran, or elsewhere are essentially reliant on China’s acquiescence in their continued production.
 
Chinese threats to cut off U.S. supplies of rare earths, first floated by Beijing in late May, haven’t abated. Over the weekend, Chinese state media suggested that high-end, finished products using rare earths that the U.S. defense industry requires could be included in China’s technology-export restrictions, themselves a response to U.S. pressure on the telecoms giant Huawei. “China is capable of impacting the US supply chain through certain technical controls,” said an editorial in China’s Global Times that pointedly referred to processed rare earths. … 

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COM_a2
15
.
M. Volkov: “OFAC’s New Sanctions Compliance Training and Testing Requirements (Part IV of IV)”
(Source:
Volkov Law Group Blog, 6 June 2019. Reprinted by permission.)
 
* Author: Michael Volkov, Esq., Volkov Law Group, mvolkov@volkovlaw.com, 240-505-1992.
 
When providing compliance program guidance, the Justice Department and OFAC, like every compliance practitioner, will pay homage to the relatively obvious point that there is no one-size-fits-all compliance solution. In other words, as is often repeated, a company’s compliance program will vary depending on a variety of factors, including the company’s size, sophistication, products and services, and geographic configuration.
 
These factors eventually form the basis for a company’s risk profile, which informs every aspect of a company’s compliance program. A company’s risk profile is the DNA foundation for a company’s business and ultimately its ethics and compliance program.
 
As the company’s risk profile changes, so should its compliance program. This is why monitoring, testing and auditing functions are so important. But this is where compliance technology, data and other fast-evolving tools promise real and significant change.
 
As companies make better use of real-time data, the old model for continuous change, based on testing against rules and auditing for compliance with rules, will be replaced with new capabilities for data analysis and management using artificial intelligence, super-computer processing and analytics and eventually blockchain distributed ledger technology.
 
In the meantime, however, most companies are relying on existing testing and audit programs.
 
With respect to training, OFAC outlined a number of general principles, already known and hopefully followed by compliance professionals. In particular, a training program should be “tailored to an entity’s risk profile and all appropriate employees and stakeholders.” And a training program has to be accessible to foreign language employees.
 
But OFAC did not stop there – instead OFAC mandated an annual training requirement for relevant employees on sanctions compliance. Companies have to conduct training for relevant employees and personnel on a periodic basis (and at a minimum, annually). Such training has to be updated to reflect identified deficiencies in the SCP.
 
In the testing and audit area, however, OFAC offered general principles, which already should be known and implemented by companies in carrying out their audit and testing functions. OFAC noted that an organization’s testing and audit operations should be “comprehensive and objective” and that program weaknesses and deficiencies, as well as compliance gaps, should be remediated.
 
For example, OFAC stated that companies should:
 
Assess the effectiveness of current processes and check for inconsistencies between these and day-to-day operations.
 
Testing and auditing can be conducted on a specific element of an SCP or at the enterprise-wide level.
 
On the prescriptive level, OFAC explained that testing and audit functions should:
 
– Be accountable to senior management, independent of audited activities, and possess the requisite skills to conduct relevant tests and audits;
 
– Have sufficient authority, resources and authority within the organization.
 
While these requirements should not be surprising, there are still a small number of organizations where auditing and testing results are viewed as “suggestions” rather than required changes with the full-blown support of senior management and the audit committee. In most cases, internal audit receives greater attention, authority and resources than an ethics and compliance operation. Hopefully, this will change in the future but for now, testing and auditing of a sanctions compliance program should be added to the list of compliance program elements requiring monitoring and auditing.

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COM_a3
16
.
T. Rauf: “Kazakhstan’s Chairmanship of The Nuclear Suppliers Group In 2019-2020”
(Source:
The Astana Times, 12 June 2019.)
 
* Author: Tariq Rauf, Director of Disarmament, Arms Control and Non-proliferation Programme, +46 76 026 1213, Stockholm International peace Research Institute (SIPRI).
 
In June 2019, Kazakhstan takes over the Chairmanship of the 48-member Nuclear Suppliers Group (NSG) from the current chair Latvia.
 
The 2019 session of the NSG Plenary will be held on June 20-21 in Nur-Sultan under the chairmanship of the Republic of Kazakhstan.
 
The 48 “Participating Governments” (PGs) in the NSG are: Argentina, Australia, Austria, Belarus, Belgium, Brazil, Bulgaria, Canada, China, Croatia, Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Iceland, Ireland, Italy, Japan, Kazakhstan, Republic of Korea, Latvia, Lithuania, Luxembourg, Malta, Mexico, Netherlands, New Zealand, Norway, Poland, Portugal, Romania, Russian Federation, Serbia, Slovakia, Slovenia, South Africa, Spain, Sweden, Switzerland, Turkey, Ukraine, United Kingdom, and United States.
 
Some of the key issues before the NSG, among others, are: controlling intangible transfer of nuclear technology and know-how; further strengthening nuclear export controls and verification by the IAEA; and criteria for membership of countries not party to the Nuclear Non-Proliferation Treaty (NPT) – in 2016, India followed by Pakistan tendered applications for membership in the NSG.
 
Origins of Nuclear Export Controls
 
From the beginning of the age of nuclear technology in the 1940s, it was understood that transfers of nuclear technology and materials would need to be controlled to prevent the further proliferation of nuclear weapons. Some of the early attempts to prevent nuclear proliferation, such as the UN Atomic Energy Commission (UNAEC) and the Baruch Plan relied on policies of denying access to nuclear materials and technology. However, after the initial nuclear proliferation by the US in 1945, followed by the USSR in 1949 and then by the UK in 1952, it was clear that the policy of secrecy and denial would not work and a new system would need to be set up to utilize the myriad benefits of nuclear energy while ensuring that its use remained exclusively peaceful. This led to the “Atoms for Peace” proposal by US President Eisenhower at the United Nations in December 1953 to set up an International Atomic Energy Agency to facilitate sharing of peaceful nuclear technology. The IAEA was established in 1957, Kazakhstan became the 120th Member State of the Agency in February 1994.
 
Zangger Committee
 
Export controls were formalized in the NPT which entered into force in March 1970 and required its States parties to only supply nuclear material to non-nuclear-weapon States under IAEA-NPT safeguards. Under the chairmanship of Dr Claude Zangger, a Swiss nuclear scientist, a committee was set up to develop a list of nuclear materials whose export to non-nuclear-weapon States would require or “trigger” IAEA-NPT safeguards. The “Zangger Committee” (ZAC), first met on 11 March 1971 and established a list of nuclear items that required safeguards, known as the “Trigger List”, and also defined the procedures and conditions under which nuclear exports should be licensed. These understandings of the ZAC were first published in September 1974 as IAEA document INFCIRC/209, and the Trigger List since then has been amended and updated several times. To be clear, unlike the NSG, from the beginning the Zangger Committee required NPT-IAEA, or “full-scope safeguards” on the export of trigger list items to non-nuclear-weapon States in accordance with the NPT.
 
Unlike the NSG, the Zangger Committee has had and continues to have a direct link between NPT export controls and the IAEA because of its responsibility for the Trigger List and the recognition by the NPT States parties as the “faithful interpreter” of NPT mandated export controls. This particular point unfortunately is still not well understood by many States and perhaps at a later date when Kazakhstan can take up the chairmanship of the Zangger Committee it can help better explain the relationship between the ZAC and the NSG.
 
Nuclear Suppliers Group establishment
 
Under the US “Atoms for Peace” programme and under its Soviet equivalent, nuclear technology for peaceful applications was transferred to more than 30 countries, subject to both IAEA and national US/USSR safeguards. In May 1974, India detonated a so-called “peaceful nuclear explosion” using plutonium derived from Canadian supplied uranium irradiated in a US supplied “CIRUS” research reactor.
 
Both Canada and the US considered India’s action to be in violation of peaceful use commitments and thus they took the lead with the support of France, Germany, Japan, UK and USSR to set up a group of nuclear exporters, known as the “London Club” to regulate the export of both nuclear materials and technologies and also to include two of the then non-NPT States – France and Japan.
 
Meeting in London in 1975, the seven countries (listed above), reached an ad referendum understanding on export control conditions for nuclear materials and technology that was published in January 1978 in IAEA document INFCIRC/254, called the “Nuclear Suppliers Guidelines”. These guidelines included physical protection of nuclear material and the principle of exercising “restraint: in the transfer of sensitive nuclear technologies – uranium enrichment and reprocessing of plutonium – as well as restrictions on the replication of nuclear facilities using transferred equipment. Ostensibly this was to prevent India from illegally copying the Canadian supplied CANDU heavy water power reactor, but this was not successful as India went on to commission and operate heavy water reactors based on the CANDU design. Unlike, the Zangger Committee, the NSG did not require full-scope safeguards on nuclear exports, only IAEA safeguards (which could be either NPT-IAEA safeguards or pre-NPT IAEA “item specific” safeguards).
 
Following the discovery in 1991 of Iraq’s clandestine nuclear weapon acquisition programme, 26 nuclear exporting countries met in The Hague and formed the “Nuclear Suppliers Group” as the successor of the London Club. In 1994, the NSG adopted a “Non-Proliferation Principle,” whereby a supplier, notwithstanding other provisions in the NSG Guidelines, should authorise a transfer only when satisfied that the transfer would not contribute to the proliferation of nuclear weapons. By 1995, the NSG guidelines included “dual use” goods.
 
In 1995, NPT States parties agreed to the principle of the requirement of full-scope safeguards as a condition of supply for new supply agreements as well as internationally legally binding commitments not to acquire nuclear weapons or other nuclear explosive devices.
 
NSG “Guidelines” are published at the request of NSG PGs by the IAEA as document INFCIRC//254 that is regularly revised or updated. The NSG Part 1 Guidelines (Trigger List Items) govern the export of items that are especially designed or prepared for nuclear use, including: (i) nuclear material; (ii) nuclear reactors and equipment therefor; (iii) non-nuclear material for reactors; (iv) plants and equipment for the reprocessing, enrichment and conversion of nuclear material and for fuel fabrication and heavy water production; and (v) technology (including software) associated with each of the above items. The NSG Part 2 Guidelines govern the export of nuclear-related dual-use items and technologies, that is, items that can make a major contribution to an unsafeguarded nuclear fuel cycle or nuclear explosive activity; but that have non-nuclear uses as well, for example in civilian industry. A full history of the NSG can be found in the latest version of IAEA document INFCIRC/539.
 
The NSG website lists the “factors” that are taken into account for participationor membership that include the following:
 
a) the ability to supply items (including items in transit) covered by the Annexes to Parts 1 and 2 of the NSG Guidelines;
 
b) adherence to the Guidelines and action in accordance with them;
 
c) enforcement of a legally based domestic export control system which gives effect to the commitment to act in accordance with the Guidelines;
 
d) adherence to one or more of the NPT, the Treaties of Pelindaba, Rarotonga, Tlatelolco, Bangkok, Semipalatinsk or an equivalent international nuclear non-proliferation agreement, and full compliance with the obligations of such agreement(s); and
 
e) Support of international efforts towards non-proliferation of weapons of mass destruction and of their delivery vehicles.
 
Despite these specified “factors”, in 2005 the US authorized full nuclear cooperation with India without requiring India to fulfil these criteria. And in 2008, under strong pressure from the US, the NSG approved a “waiver” for India, thus permitting its members to engage in full civilian nuclear cooperation with India. These actions became highly controversial and are considered by many experts as counter to understandings reached in the NPT review process in 1995 and 2000, and also contrary to certain provisions in some nuclear-weapon-free zone treaties.
 
Over the past several years, India has engaged in high pressure diplomacy to be accorded membership in the NSG. Not to be outdone, Pakistan also has been pressing its case for membership. Membership criteria for non-NPT States parties remains one of the most vexing and controversial issues before the NSG.
 
Implementation of Nuclear Export Controls
 
It should be clearly understood that both the Nuclear Suppliers Group and the Zangger Committee are two arrangements that administer multilateral nuclear export controls as agreed by their respective member States, and not by the international community. These arrangements remain informal and are not legally binding on the part of their respective member States; but they represent a binding policy commitment on the part of each of the participating governments.
 
Also, it is claimed by the member States that neither the NSG nor the Zangger Committee themselves deny exports neither do they approve exports. Any export licence approvals or denials by member States are based on their national export control laws or policies and/or on the basis of common principles and conditions of supply agreed by them through the NSG and the ZAC.
 
As all States except for India, Israel, Pakistan, North Korea and Southern Sudan are parties to the NPT, some experts are of the view that the Zangger Committee and the Nuclear Suppliers Group should be superseded by an international nuclear export control treaty or arrangement. This because, all States except for the five named above, are bound by the NPT and its review process to require export controls and thus the international legitimacy and credibility of nuclear export controls can be enhanced and formalized rather than being implemented by self-selected groups of States.
 
Kazakhstan’s Chairmanship of the NSG
 
Kazakhstan ascends to the chairmanship of the Nuclear Suppliers Group at a critical juncture in international politics where multilateralism and pacta sunt servanda (the principle that agreements must be honoured) remain under threat. The consensus in the NPT review process on nuclear disarmament has frayed to near breaking point. And, unlike Kazakhstan, countries that never joined the NPT and have exploded and possess nuclear weapons are vying for NSG membership-thus giving them access to civilian nuclear technology and material in the absence of any internationally legally binding commitments to nuclear non-proliferation and nuclear disarmament.
 
Kazakhstan brings the strongest credentials, among all of the 47 PGs to the NSG Chairmanship; indeed Kazakhstan’s actions in support of the global nuclear non-proliferation and nuclear disarmament regime are unparalleled.
 
In brief, in October 1990 then USSR President Mikhail Gorbachev, in response to the request by Mr Nursultan Nazarbayev, the first President of Kazakhstan, announced a moratorium on nuclear weapon tests at the Semipalatinsk nuclear test site in Kazakhstan where about 500 nuclear detonations had been carried out by the USSR since 1949.
 
Following independence in December 1991, Kazakhstan found itself in possession of the fourth largest nuclear weapons arsenal in the world after the Russian Federation, the United States and Ukraine. These nuclear forces included 104 SS-18 intercontinental ballistic missiles and 40 Tu-95 strategic bombers armed with air-launched cruise missiles, totalling approximately 1,410 nuclear warheads.
 
In an unprecedented move, the new Kazakhstan government renounced nuclear weapons and repatriated all nuclear warheads to the Russian Federation for dismantlement by April 1995. It also completely dismantled the nuclear weapon testing infrastructure at Semipalatinsk by July 2000; and earlier in 1994 approximately 600kg of weapon-grade highly enriched uranium (HEU) was removed from the Ulba Metallurgical Plant to the US, in addition 2,900kg of nuclear fuel (enriched up to 26% U-235) was removed from the Mangyshlak Atomic Energy Combine in Aktau to Ulba for down-blending into low enriched uranium for civilian nuclear applications under IAEA safeguards.
 
On February 14, 1994, Kazakhstan acceded to the NPT as a non-nuclear-weapon State. Kazakhstan signed its NPT-related comprehensive safeguards agreement (INFCIRC/504) with the IAEA on July 26, 1994, which entered into force on August 11, 1994. On February 6, 2004, Kazakhstan signed the additional protocol to its IAEA safeguards agreement, and it entered into force on May 9, 2007. Kazakhstan was one of the leaders in establishing a nuclear-weapon-free zone in Central Asia.
 
Besides several other initiatives, Kazakhstan signed the Comprehensive Nuclear-Test-Ban Treaty (CTBT) on September 30, 1996 and ratified it on May 14, 2002. Kazakhstan remains an unrelenting champion of the CTBT and has noted this treaty’s importance during its presidency of the UN Security Council. And, resisting significant pressure, Kazakhstan showed determination in signing the Treaty on the Prohibition of Nuclear Weapons (TPNW) on March 2, 2018.
 
Conclusion
 
During its chairmanship of the NSG, Kazakhstan would be well placed given its long record of significant achievements in promoting nuclear non-proliferation and nuclear disarmament, to guide the NSG in meeting its challenges in an open, fair and transparent manner.
 
Peaceful nuclear applications are in use in nearly every country in the world, some 30 States rely on electricity generated in nuclear power plants and some others are in the process of doing so, and nuclear technologies contribute to several of the UN’s sustainable development goals (SDGs). In all these areas, enhanced, fair and transparent cooperation in peaceful applications of nuclear energy can be facilitated by the member States of the NSG.
 
During Kazakhstan’s chairmanship of the NSG, the 50th anniversary of the NPT shall be commemorated in April-May 2020 at the NPT review conference in New York at the United Nations. This should provide a unique opportunity for NSG participating governments, under the leadership of Kazakhstan, to recommit to the NPT, promote the early entry into force of the CTBT and also make its ratification a “factor” for all present and future NSG member countries, and work collaboratively to find common ground on the TPNW.

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TEEX/IM TRAINING EVENTS & CONFERENCES

TE_a117. 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_a218. 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_a220
. 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_a0321
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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