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19-0710 Wednesday “Daily Bugle'”

19-0710 Wednesday “Daily Bugle”

Wednesday, 10 July 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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[No items of interest noted today.] 

  1. Items Scheduled for Publication in Future Federal Register Editions 
  2. Commerce/BIS: (No new postings.)
  3. State/DDTC: (No new postings.)
  1. Commerce: Remarks by DOC Secretary Ross at the BIS Annual Conference
  2. Reuters: “U.S. Sanctions Three Hezbollah Leaders, Including Two Lebanon Parliament Members”
  3. ST&R Trade Report: “Trade Deficit Jumps Despite Growing Number of Trade Restrictions”
  1. A. Schmidt: “What Do You Do When You’re Doing Business with Someone the U.S. Government Decides Is an Enemy? For Some U.S. Citizens, the Answer May Be To Sue the Government”
  2. J. Clark & S. Duddington: “A Chance to Avoid Reinventing the Wheel — How PB Tankers was Delisted in Record Time”
  1. ECTI Presents The New “Framework for OFAC Compliance Commitments — What You Need to Know,” 24 July 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 June 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 June 2018), HTSUS (13 Jun 2019) 
  3. Weekly Highlights of the Daily Bugle Top Stories 

OGSOTHER GOVERNMENT SOURCES

OGS_a11. Items Scheduled for Publication in Future Federal Register Editions
(Source: Federal Register, 10 July 2019.)

   
* Treasury/OFAC; RULES; North Korea Sanctions
[Pub. Date: 11 July 2019.]

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OGS_a22
. 
Commerce/BIS: (No new postings.)

(Source:
Commerce/BIS)

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NWSNEWS

NWS_a14
Commerce: Remarks by DOC Secretary Ross at the BIS Annual Conference

(Source:
DOC Public Affairs Office, 9 July 2019.) [Excerpts.]
 
July 9, 2019.  Remarks by U.S. Commerce Secretary Wilbur L. Ross at the Bureau of Industry and Security Annual Conference on Export Controls and Security in Washington, DC. …
 
BIS has been extremely busy tackling some of the most vexing and conspicuous national security issues facing the country in decades. Economic security is essential to national security, and the intersection between the dual uses of technology is especially where BIS operates.  Its task is not easy, since the boundaries between civilian and military technologies become ever more narrow as technologies are increasingly omnipresent. But it is our job to protect the long-term interests of our country by maintaining and strengthening our advantage in leading-edge technologies. …
 
The Bureau of Industry and Security staff works across the entire spectrum of national security and technology agencies to identify and control the most sensitive technologies – including emerging and foundational ones – under new mandates of the ECRA, the Export Control Reform Act of 2018.  This important law was part of last year’s National Defense Authorization Act, and it clearly describes threats to U.S. security arising from: The proliferation of weapons of mass destruction; Potential acts of terror; The rise of destabilizing foreign militaries; The vulnerabilities of our infrastructure; And an increasing number of counterattacks on companies, government agencies, and even citizens.
 
ECRA also clearly states that the United States must remain globally competitive in science, technology, engineering and – specifically – “manufacturing sectors.” It directs agencies like BIS to continually evaluate the impact of export controls on U.S. scientific and industrial leadership in order to “avoid negatively affecting such leadership.” If new export controls seem necessary, the Department seeks public input, and strives for multilateral agreements so important controls are universally applied.
 
We are establishing an Emerging Technology Technical Advisory Committee to help review those technologies. Members of this Committee will be announced soon, and they will get to work immediately to help modernize our controls on important technologies. We are also aggressively investigating export control violations. Since the start of 2017, BIS has initiated 2,284 export control investigations, a 21 percent increase in the number of cases opened from the previous two-and-a-half years.
 
Since 2017, we have added 182 companies to the Entity List, including 49 Chinese companies, 49 Russian ones, and 20 Pakistanis. On May 16 of this year, BIS added Huawei Technologies – the largest telecommunications equipment producer in the world – and 68 affiliates, to Commerce’s Entity List. Four days later, on May 20th, BIS issued a 90-day General License allowing customers time to arrange new suppliers, and for Commerce to determine the appropriate long-term measures for American and foreign telecom providers currently relying on Huawei for critical services.
 
To implement the President’s G-20 Summit directive two weeks ago, Commerce will issue licenses where there is no threat to U.S. national security. Within those confines we will try to make sure that we don’t just transfer revenue from the U.S. to foreign firms. Huawei itself remains on the Entity List, and the announcement does not change the scope of items requiring licenses from the Commerce Department, nor the presumption of denial.
 
ZTE is another example of BIS’s strong enforcement activities. Because of the Department’s action, ZTE is the most monitored corporation in BIS history.  Due to Criminal and Civil settlements, ZTE has a full-time Commerce monitor and a full-time court monitor policing its affairs, in addition to record-breaking fines. Beyond export controls, BIS works closely with Treasury and other agencies to address national security risks arising from foreign investments in U.S. technology companies. This is pursuant to the Foreign Investment Risk Review Modernization Act, or FIRRMA.  FIRMMA updates the rules governing the Committee on Foreign Investment in the United States.
 
We are working closely with other agencies to implement Pilot Program reviews of non-controlling interests in critical technology companies, and will fully implement the law by February. Since the start of 2017, Commerce has reviewed 662 CFIUS filings, including new declarations submitted under the Pilot Program. CFIUS investigations will rise as we address previously undisclosed investments in U.S. technology companies that may pose national security risks. Further, we look at the entire spectrum of foreign investments for trends indicating when an important nascent technology sector has been targeted. We will address vulnerabilities using our CFIUS authority or export control laws.
 
Another new initiative underway at BIS responds to the May 15, 2019, Executive Order by President Trump on “Securing the Information and Communications Technology and Services Supply Chain.” The Department will issue by mid-October interim regulations for making determinations under the Executive Order to ensure the viability of our IT and telecom providers. We will protect the security of the U.S. data infrastructure. The interim final rule will request input from the public, stakeholders in the private sector, government agencies, and academia. Most importantly, we must quickly identify the most significant vulnerabilities in our telecommunications supply chain and act swiftly to mitigate them.  …
 
I look forward to hearing your feedback about how we can improve further our existing activities and initiate new ones. I am especially interested in innovative ideas to make sure we continue to strike a proper balance between security needs and American commercial interests as this becomes more and more complex. …

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NWS_a25
Reuters: “U.S. Sanctions Three Hezbollah Leaders, Including Two Lebanon Parliament Members”

(Source:
Reuters, 10 July 2019.) [Excerpts.]
 
The U.S. Treasury added three top Hezbollah figures to its list of sanctioned individuals on Tuesday, including two members of the Lebanese Parliament and a security official responsible for coordinating between Hezbollah and Lebanon’s security agencies. 
 
The designations were part of U.S. efforts to counter the Iranian-backed Hezbollah’s “corrupting influence in Lebanon,” U.S. Secretary of State Mike Pompeo said in a statement. 
It was the first time the U.S. Treasury’s Office of Foreign Assets Control had designated a member of Lebanon’s Parliament under a sanctions list targeting those accused of providing support to terrorist organizations. Washington has designated Hezbollah as a terrorist group. 
 

OFAC said it had added Amin Sherri and Muhammad Hasan Ra’ad, both members of Lebanon’s Parliament, for acting on behalf of Hezbollah. In an unusual move, it also released photos of the individuals, including one in which Iranian Quds Force commander Qasem Soleimani has his arm around Sherri’s shoulder. …


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NWS_a36
ST&R Trade Report: “Trade Deficit Jumps Despite Growing Number of Trade Restrictions”

(Source:
Sandler, Travis & Rosenberg Trade Report, 10 July 2019.) [Excerpts.]


 
The U.S. trade deficit in goods and services rose 8.4 percent in May, according to trade statistics released July 3 by the Department of Commerce. The monthly deficit of $55.5 billion reflected a 2.0 increase in exports to $210.6 billion and a 3.3 percent increase in imports to $266.2 billion. Press reports noted that the latter figure was the largest such gain in more than four years and came in spite of an increasing number of import restrictions imposed by the Trump administration.
 
The deficit in goods trade rose 6.1 percent to $76.1 billion in May. Imports of goods were up 4.0 percent to $217.0 billion, including increases of $1.5 billion in passenger cars (to a record high), $1.3 billion in crude oil, and $1.4 billion in consumer goods. Exports of goods gained 2.8 percent to $140.8 billion, including increases of $700 million in soybeans, $600 million in automotive vehicles, parts, and engines, and $500 million in civilian aircraft. …

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COMMCOMMENTARY

COM_a17
A. Schmidt: “What Do You Do When You’re Doing Business with Someone the U.S. Government Decides Is an Enemy? For Some U.S. Citizens, the Answer May Be To Sue the Government”

(Source:
Kaiser Dillon, 9 July 2019.) [Excerpts.]
 
* Author: Amelia Schmidt, Esq.,
aschmidt@kaiserdillon.com, +1 202 869 1301, of Kaiser Dillon PLLC.
 
Imagine that you own or work for a U.S. company that does most of its business with international customers and/or business partners.  For years, you’ve worked hard to build those relationships, and your company is thriving.
 
Then, one day, you wake up and turn on the news and find out that the U.S. government has decided to sanction a country where your main customer base is located, or a group or individual you’ve heard has ties to a lot of your business partners.  What do you do?
 
The last two weeks have now seen back-to-back civil complaints filed by U.S. citizens and companies who’ve found themselves in similar situations-and they’re suing the U.S. government, claiming that recent sanctions measures violate their Fourth and Fifth Amendment rights.
 
In 
US VC Partners GP LLC v. U.S. Dep’t of the Treasury et al
., a U.S. citizen, Andrew Intrater, is alleging that the Treasury Department’s Office of Foreign Assets Control (OFAC)’s seizure of his and his investment funds’ assets-because of his ties to two Russian citizens that OFAC recently sanctioned-violates the Fourth and Fifth Amendments.  And in 
FedEx Corp. v. Dep’t of Commerce et al
., FedEx is challenging the provision in the Export Administration Regulations (“EAR”) that holds U.S. carriers strictly liable for shipping packages to destinations or entities prohibited by U.S. law-even if FedEx accidentally misroutes the package, and regardless of the sender’s intent.  That’s not a new provision, but the suit comes on the heels of 
news reports that the Commerce Department’s 
new restrictions on Huawei and related entities have made it even more difficult for FedEx to comply with U.S. export control laws.  FedEx is alleging that this is unconstitutional under the Fifth Amendment. …

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COM_a2
8

J. Clark & S. Duddington: “A Chance to Avoid Reinventing the Wheel – How PB Tankers was Delisted in Record Time”

(Source:
Hill Dickinson, 8 July 2019.) [Excerpts.]
 
* Authors: Julian Clark, Esq.,
julian.clark@hilldickinson.com, +44 207 280 9363, Siiri Duddington, Esq.,
siiri.duddington@hilldickinson.com, +44 207 280 9193, both of Hill Dickinson.
 
In one of the fastest delistings in recent OFAC history, on 3 July 2019, the US Department of Treasury, Office of Foreign Asset Control (OFAC) delisted PB Tankers S.p.A (the Company) and their five owned and one managed vessels, removing them from the sanctions listing in relation to trade with Venezuela. 
 
The Company’s continued commitment to strong compliance policies and procedures, as well as the support of the Italian authorities and the quality of the information provided by the company and its professional advisors (
Julian Clark and 
Siiri Duddington and Matthew J Thomas of Blank Rome) were cited for the speedy resolution of the case.
 
By way of background, on 12 April 2019, the Company and its fleet was designated to the US Specially Designated Nationals (SDN) List, triggered by the delivery of oil products on one of their vessels, “SILVER POINT”, from Venezuela to Cuba during March 2019. When the sanctions were imposed on PDVSA, the vessel was on long-term time charter to Empresa Cubana Importadora de Combustibles y Lubricantes (Cubametales). At the time the Company and its fleet was designated, the Company was working to amend or cancel the charter, to require Cubametales to stop using the vessel for carriage of PDVSA-origin cargoes. The Company had no contracts or other commercial dealings with PDVSA itself and was acting in accordance with legal advice obtained in relation to the sanctions position. The Company sought to take those steps notwithstanding the fact that the text of E.O. 13850 did not bar non-US persons from transporting PDVSA-origin cargo, and there was no clear secondary sanctions regime banning non-US shipping from Venezuela.  Moreover, OFAC guidance indicated that non-US persons were not barred from dealing with PDVSA exports. …

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TEEX/IM TRAINING EVENTS & CONFERENCES

TE_a19. ECTI Presents The New “Framework for OFAC Compliance Commitments”: What You Need to Know: 24 July 2019 

(Source: Danielle Hatch, danielle@learnexportcompliance.com)
 
* What: The New “Framework for OFAC Compliance Commitments”: What You Need to Know
* When: 24 July 2019 1:00 p.m. (EDT)
* Where: Webinar
* Sponsor: Export Compliance Training Institute (ECTI)
* ECTI Speaker: Timothy O’Toole
or Danielle Hatch, 540-433-3977, danielle@learnexportcompliance.com.

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TE_a210. 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

 

*
William Blackstone (Sir William Blackstone; 10 Jul 1723 – 14 Feb 1780; was an English jurist, judge, and Tory politician of the eighteenth century. He is most noted for writing the 
Commentaries on the Laws of England and 
An Analysis of the Laws of England. William Searle Holdsworth, one of Blackstone’s successors as Vinerian Professor, argued that “If the Commentaries had not been written when they were written, I think it very doubtful that the United States, and other English speaking countries would have so universally adopted the common law.”
  – “The public good is in nothing more essentially interested, than in the protection of every individual’s private rights.”
  – 
“Free men have arms; slaves do not.”

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EN_a312
. 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: 27 June 2019:
84 FR 30593-30595: Revisions to the Unverified List 

 
* 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 – June 2019 Amendments to the 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: 26 June 2019: 
Harmonized System Update (HSU) 1912 
  – HTS codes for AES are available 
here.
  – HTS codes that are not valid for AES are available 
here.

 

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EN_a0313
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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