19-1205 Thursday “Daily Bugle”

19-1205 Thursday “Daily Bugle”

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Thursday, 5 December

[No items of interest today.]
  1. Items Scheduled for Publication in Future Federal Register Editions
  2. Commerce/BIS: (No new postings.)
  3. Justice: “Former U.S. Navy Contractor and its President Sentenced for Scheme Related to Transfer of U.S. Navy Submarine Rescue Technology”
  4. State/DDTC: (No new postings.)
  5. UK ECJU Updates Open General Licenses
  1. Inside Defense: “Top DOD Policy Official Wants Export Control Reform to Allow Greater Tech Transfer with U.S. Allies”
  1. AMD: “Navigating Export Regulations”
  2. Arent Fox: “US Opens A New Front in Trade Wars with Proposed France Duties
  3. IFRI: “The Sanctions Policy of the European Union: Multilateral Ambitions Versus Power Politics”
  4. SIPRI: Detecting, Investigating and Prosecuting Export Control Violations: European Perspectives on Key Challenges and Good Practices
  1. ECTI Presents 2019: The Export Control Year in Review Webinar: December 18, 2019
  2. Full Circle Compliance Presents: Export Compliance Training Seminars in 2020
  1. Bartlett’s Unfamiliar Quotations
  2. Are Your Copies of Regulations Up to Date? Find the Latest Amendments Here!
  3. Weekly Highlights of the Daily Bugle Top Stories 

Are You Keeping Up to Date with the Latest Regulations?

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[No items of interest today.] 
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. Items Scheduled
for Publication in Future Federal Register Editions

(Source: Federal Register)

* Commerce/BIS: NOTICES; Order Denying Export Privileges: Mahan Airways, et al. [Pub. Date: 6 Dec 2019.]
* Commerce/BIS: RULES; Addition of Entities to the Entity List, Revision of an Entry on the Entity List, and Removal of Entities from the Entity List [Pub. Date: 6 Dec 2019.] 

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. Commerce/BIS: (No new postings.)

(Source: Commerce/BIS)

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. Justice: “Former U.S. Navy Contractor and its President Sentenced for Scheme Related to Transfer of U.S. Navy Submarine Rescue Technology”
(Source: Justice, 4 Dec 2019.) [Excerpts.]
Former U.S. Navy Contractor, Canada-based OceanWorks International Cooperation (“OceanWorks”) was sentenced on December 2, 2019, for a scheme to falsify facts in a disclosure to the Department of Commerce and the company’s president, Glen Omer Viau, 52, of British Columbia, Canada, was sentenced for unauthorized use of government property.  
On September 10, 2019, OceanWorks pled guilty to a one-count information charging it with knowingly and willfully falsifying, concealing, and covering up a material fact, in violation of Title 18, United States Code, Section 1001, in the U.S. District Court for the District of Columbia. OceanWorks’ President, Glen Omer Viau, pleaded guilty to conveying, without authority, U.S. Navy technical data to an unauthorized party. The Honorable Coleen Kollar-Kotelly sentenced OceanWorks to a fine of $84,000 and Viau to time served and a $25,000 fine. 
According to the government’s evidence, the OceanWorks scheme, which started in 2016, involved misrepresenting to and concealing from, the Office of Export Enforcement within the Department of Commerce, the true nature and extent of the transfer of U.S. Navy technical data to China. The scheme was performed in connection with a proposal by OceanWorks and an unindicted company based in China (“the Chinese Company”) to the People’s Liberation Army (PLA) Navy for the design and construction of remotely-operated submarine rescue vehicles.
OceanWorks was the prime contractor for the U.S. Navy’s Submarine Rescue Diving and Recompression System (“SRDRS”). One component of the SRDRS was the submarine rescue system, a tethered, remotely-operated vehicle that included a Pressurized Rescue Module (“PRM”). The Department of Commerce issued a formal determination that the PRM and its technical data could not be exported to China without a license and were controlled under U.S. regulations. …

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State/DDTC: (No new postings.)
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UK ECJU Updates Open General Licenses
, 5 Dec 2019.) [Excerpts.]
Following the Secretary of State’s statement to Parliament on 26 September 2019 about inadvertent breaches of the Order made by the Court of Appeal and the commitment given to Parliament on 20 June 2019, we have reviewed open general export licences (OGELs) and open general trade control licences (OGTCLs) permitting exports to Saudi Arabia and its coalition partners carrying out military operations in Yemen.
Until further notice, it will not be possible to register for a number of OGELS and OGTCLs for exports and brokering to Saudi Arabia, Bahrain, Egypt, Jordan, Kuwait, Sudan and United Arab Emirates (listed below).
In addition, following the recent incursion by the Turkish military in north east Syria, we are monitoring the situation in Syria very closely and considering the licensing position. No further export licences to Turkey for items which might be used in military operations in Syria will be granted while we do so.
In light of this, we have reviewed OGELs and OGTCLs where exports or brokering to Turkey have been permitted. Until further notice, it will not be possible to register for a number of OGELS and OGTCLs for Turkey (listed below). …

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Inside Defense: “Top DOD Policy Official Wants Export Control Reform to Allow Greater Tech Transfer with U.S. Allies”
(Source: Inside Defense, 4 Dec 2019.) [Excerpts.]
The Pentagon’s top policy official said today he favors some of the proposals being promoted by current and former government officials who seek to establish a new technology transfer oversight regime for the United States and its most trusted allies. “Partnering with allies and building their capabilities in addition to ours is critical,” John Rood, the Under Secretary of defense for policy, told reporters at a breakfast in Washington. …

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AMD: “Navigating Export Regulations”
(Source: Aerospace Manufacturing & Design, 27 Nov 2019.)
The aerospace and defense (A&D) market demands product development efficiency, quality, technological innovation, and regulatory compliance. Many A&D products are subject to export regulations, including International Traffic in Arms Regulations (ITAR) and Export Administration Regulations (EAR), requiring compliance in technical data handling and access.
Regulations stipulate that any technical data deemed controlled by ITAR or EAR must not be exported during design, production, or sustaining activities unless covered under an export license. [FN/1]
In practical terms:
– ITAR-, EAR-regulated data must remain in the U.S.; be accessible only to U.S. persons
– In-transit, at-rest data must be encrypted
– Platforms containing regulated product data must control and restrict access to only U.S. persons
These regulations ensure companies have tight control over all regulated technical data, including controlled unclassified information (CUI). The registered manufacturer defines what technical data in the product record is under export control based on the product, how the government classifies the product, and what product features are of interest to the U.S. government.  
Technical data can include file names, component descriptions, engineering drawings, specifications, test procedures, and bills of materials. All restricted data must be tightly controlled by standard policies and procedures for access, audit history, and incident reporting.
Regulations refer to any method of access: operating systems, applications, IT assistance, and/or system maintenance where restricted data is stored. All information sharing methods require control, including email, faxes, and physical deliveries.
Complex products, development
Increasing complexity – mechanical products becoming electro-mechanical, electro-mechanical products embedding software and Internet of Things (IoT), artificial intelligence (AI), and machine learning – makes regulatory compliance more difficult.
Of the top 10 business threats to the A&D industry identified by Ernst & Young [FN/2], four relate directly to product complexity in compliance, strategy, and operations – creating supply chain management burdens, innovation challenges, quality and time-to-market stresses, and overall performance stresses. A&D companies must prioritize product data control, transparency, and availability to overcome these challenges.
Digitizing the complete product record can advance intelligence, improve manufacturing, and increase quality. However, companies won’t experience those benefits until they control the product record in one digital form. This digital copy allows all design, release, and service activities to flow from the same view across all products.
Managing export-controlled data
Legacy business software solutions, developed before modern security advancements, don’t support complex product work needed for efficiency, speed, and quality. Homegrown desktop apps, spreadsheets, and local file servers can suffice for a time, but none enable scaling business, optimizing processes, or exceeding quality and market goals. Most of them can’t adequately address the security and location-based restrictions federal regulators demand without cost and additional risk.
ITAR and EAR regulations impact every tool and method of storing and accessing controlled technical data:
– Physical and logical layers, hardware, operating systems, networks, protocols
– Platforms, applications
– Product data structures
– Data classification
– End-user controls
– Access management
Regulations stipulate specific requirements, and the responsible owner for each layer must ensure requirements are met, including policies and procedures, incident reporting, and maintenance activities.
De-mystifying ITAR, EAR
Management should confer with compliance officers and legal counsel to determine:
– Does product require registration for ITAR, EAR, both
– What in the product data is under export control
– Which requirements, beyond specific regulations, must also be met
– Determine how the requirement is being met and who is responsible for that requirement
Security controls have the highest priority when adopting or changing product lifecycle management (PLM) systems or digitizing complete product records. Modern systems allow regulatory compliance and improve business operations by offering collaboration functions.
Technologies and practices have progressed to the point that U.S. government agencies use various secure cloud tools for everyday business such as Cloud First, Cloud Smart, and GovCloud initiatives.[FN/3] Regulatory bodies have recognized this technological maturity, updating regulations to account for more collaborative cloud options.
[FN/1] ITAR and EAR regulations are complex, and the author is not offering any legal advice or counsel for any reader, nor should you take this article as guidance to supersede your responsibilities to comply with these regulations.
[FN/2] “Top 10 risks in aerospace and defense (A&D).” Ernst & Young, 2017. https://tinyurl.com/yf8upvsc

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Arent Fox: “US Opens A New Front in Trade Wars with Proposed France Duties”
Arent Fox International Trade Alerts
, 4 Dec 2019.)

* Principal Author: Kay C. Georgi, Esq., Arent Fox, LLP; 202-857-6293;

On December 2, 2019, the United States Trade Representative (USTR) announced that it had determined France’s Digital Services Tax is unreasonable or discriminatory and burdens or restricts US commerce, and that it is proposing additional ad valorem duties of up to 100 percent on products from France, under Section 301 of the Trade Act of 1974 (19 U.S.C. § 2411). Potential products subject to the additional duties are provided in a preliminary list of 63 Harmonized Tariff Schedule (HTS) subheadings with an estimated import trade value of approximately $2.4 billion. Parties seeking changes to the proposed list of tariff subheadings or to lower duties should take advantage of this comment period.
Why is USTR proposing additional duties on French imports?
Under Section 301, USTR can take retaliatory action, if it determines that an act, policy or practice is unreasonable or discriminatory and that it burdens or restricts US commerce. Section 301 action against France is aimed at countering the 3 percent Digital Services Tax (DST) signed into law this summer. The DST is on revenue from some online activities, such as data collection and web advertising. USTR found that the tax targeted large US multinational corporations.
USTR initiated an investigation into the French DST in July 2019. On December 2, USTR issued a report on its investigation into the French DST and made a finding that the French DST is actionable because it discriminates against US companies, is inconsistent with prevailing principles of international tax policy, and is unusually burdensome for affected US companies. Specifically, USTR’s investigation found that the French DST discriminates against US digital companies.
This Section 301 finding is specific to France and is separate from the Section 301 determination USTR made for China because of China’s acts, policies, and practices related to technology transfer, intellectual property, and innovation. Product exclusions obtained for the duties imposed under the Chinese Section 301 action will not apply to these duties.
What is USTR proposing and what products will be impacted?
USTR published a list of 63 tariff subheadings on which it is proposing additional duties, but additional tariff subheadings may be added in the final determination. USTR did not list the proposed duty on each proposed tariff subheading but did state that the duties could be up to 100 percent.
Among other products, the proposed tariff subheadings include yogurt, whey protein concentrates, butter, several varieties of cheese and cheese substitutes, sparkling wine, various beauty products, handbags, and porcelain products.
In addition, USTR is considering imposing fees or restrictions on services from French providers in the United States. According to the press release, USTR is also exploring whether to open Section 301 investigations into the digital services taxes of Austria, Italy, and Turkey. British Prime Minister Boris Johnson indicated that Britain is also considering implementing a digital services tax.
When will the additional duties be effective?
USTR did not announce the effective date for the tariffs, but it could be any time after January 14, 2020, the due date for submitting post-hearing rebuttal comments.
When are requests to appear at hearings and comments due?
Below are the deadlines for the French DST Section 301 determination:
– December 30, 2019: Due date for submission of a request to appear at the public hearing and a summary of testimony.
– January 6, 2020: Due date for written comments.
– January 7, 2020: The Section 301 Committee will convene a public hearing in the main hearing room of the US International Trade Commission, 500 E Street SW, Washington DC 20436 beginning at 9:30 am.
– January 14, 2020: Due date for submission of post-hearing rebuttal comments.
What information is USTR seeking in the comments?
USTR requested comments on whether the action is appropriate, and if so, the appropriate action to be taken. USTR is seeking comments on the proposed tariffs and whether to take additional actions, including imposition of fees or restrictions on services of France. Specifically, USTR is seeking public comments on the level of harm to the US economy caused by the DST, including DST payments owed by US companies, the annual growth rate of such payments, and other effects, such as compliance costs.
For the proposed additional duties, USTR invited comments regarding the following topics:
– The specific products to be subject to increased duties, including whether products listed in the proposed list should be retained or removed, or whether products not currently on the list should be added.
– The level of the increase, if any, in the rate of duty.
– The level of the burden or restriction on the US economy resulting from the DST.
– The appropriate aggregate level of trade to be covered by additional duties.
When providing comments on the inclusion or removal of a particular product, USTR requested that commenters specifically address whether:
– Imposing increased duties on a particular product would be practicable or effective to obtain the elimination of France’s acts, policies, and practices; and
– whether imposing additional duties on a particular product would cause disproportionate economic harm to US interests, including small-or medium-size businesses and consumers.
Parties should also consider providing comments on whether the same quality of products can be sourced from other countries, including, but not limited to, the US.
For potential actions in the form of fees or restrictions on services of France, USTR is seeking comments on:
– Which services would be covered by a fee or restrictions.
– If a fee is imposed, the rate (flat or percentage) of the fee, and the basis upon which any fee would be applied.
– If a restriction is imposed, the form of such a restriction.
– Whether imposing fees or restrictions on services of France would be practicable or effective to obtain the elimination of France’s acts, policies, and practices. It is likely that USTR is seeking to affect $2.4 billion in trade with France as a result of this action; therefore, when submitting comments on the removal of products from the proposed list of tariff subheadings parties should analyze how their proposed exclusion impacts this goal.
Although USTR instituted an exclusion process of the Chinese Section 301 duties after they were implemented, USTR is not required to do so and in the past has elected not to institute an exclusion process for retaliatory actions. Whether a party should submit comments is largely dependent on the level of impact of the duties. However, please be advised that this may be your only opportunity to submit comments. The request to appear at a hearing is due in 26 days and the comments are due in 33 days.

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IFRI: “The Sanctions Policy of the European Union: Multilateral Ambitions Versus Power Politics”

(Source: IFRI, Oct 2019.)
* Author: Éric-André Martin, Chargé de mission auprès du directeur, French Institute of International Relations (Ifri), martin@ifri.org.
Restrictive measures are a major instrument of the European Union (EU)’s external action, which has emerged as one of the world’s leading sanctions emitters. The EU has thus leveraged the size of its market and its economic and financial clout (trade relations, aid policy and bilateral agreements).
Through its significant activity in the field of sanctions, the EU has been able to reinforce its image as a normative power and a global player, contributing actively to international peace and stability. The EU’s restrictive measures were adopted in a favorable international context, marked by the legitimacy that was conferred, most of the time, by United Nations resolutions, and by close coordination with the United States (US). This privileged period culminated with the management of the Iranian crisis and the conclusion of the 2015 Vienna Agreement. More recently, however, sanctions have tended to lose their function as an instrument contributing to shape a shared vision of the world order, and to become what they are in essence, namely an instrument of statecraft dedicated to the protection of States’ national interests. This trend is illustrated on the one hand by the affirmation of a unilateral United States policy on sanctions, which tends to extend the scope of coercion to third parties, including European entities, and on the other hand, by the increasing use of sanctions by powers like China and Russia as a geo-economic tool.
This new situation regarding sanctions places an emphasis on economic security and sovereignty and confronts the EU to its vulnerability within an international order that was conceived and dominated by the United States. But it also raises the EU’s incapacity to develop power politics, especially as regards economic statecraft. The forms of coercion to which the EU is and will be confronted should lead it to develop defensive tools at least, and consequently to adjust its trade policy as well as its rules regulating economic competition on its internal market. As for European companies, which are exposed to risks of prosecution by the US justice system, they have already developed compliance procedures in order to reduce their vulnerabilities.
Download the Paper here.

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SIPRI: “Detecting, Investigating and Prosecuting Export Control Violations: European Perspectives on Key Challenges and Good Practices”
* Principal Author: Dr Sibylle Bauer, Director of Studies, Armament and Disarmament, SIPRI.
The effective implementation of arms and dual-use export controls is reliant on the ability of states to detect, investigate and-when appropriate-prosecute any violations that take place. However, this aspect of export controls is also among the most challenging for states. This is even the case for European Union (EU) member states, many of which have only limited experience of investigating or prosecuting export control offences. Moreover, the challenges that states face in this area are becoming more complex, in particular because of the difficulties associated with implementing catch-all controls, the expansion of brokering activities, and the increased volume and importance of intangible technology transfers.
This SIPRI report highlights the broad and growing set of difficulties that EU member states need to overcome when seeking to detect, investigate and prosecute export control violations. In doing so, it details the range of approaches taken by states, outlines areas of good practice at the national level, and presents seven cases-and accompanying lessons learned-where export control violations have been detected, investigated and prosecuted. The report also includes a set of recommendations for steps that the EU could take to help to build national capacity and improve information sharing. However, given that many of the challenges and good practices identified are shared by all states, the report has wider relevance beyond the EU.
Download the Report here.

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Danielle Hatch
* What: 2019: The Export Control Year in Review
* When: December 18, 2019; 1:00 p.m. (EST)
* Where: Webinar
* Sponsor: Export Compliance Training Institute (ECTI)
* ECTI Speaker: Scott Gearity
* Register
Danielle Hatch
, 540-433-3977.

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TE_a212. Full Circle Compliance Presents: Export Compliance Training Seminars
(Source: Full Circle Compliance)

U.S. and EU Sanctions & Embargoes

Tuesday, 4 February 2020 in Amsterdam

Designing an ICP for Export Controls & Sanctions

Tuesday, 3 March 2020 in Amsterdam

Implementing an ICP for Export Controls & Sanctions

Wednesday, 4 March 2020 in Amsterdam


EN_a113. Bartlett’s Unfamiliar Quotations

(Source: Editor)

* Christina Rossetti
(Christina Georgina Rossetti; 5 Dec 1830 – 29 Dec 1894; was an English poet who wrote a variety of romantic, devotional, and children’s poems. She wrote the words of two Christmas carols well known in the British Isles: “In the Bleak Midwinter”, and “Love Came Down at Christmas”.)
  – “Better by far you should forget and smile that you should remember and be sad.”
* Walt Disney
(Walter Elias Disney; 5 Dec 1901 – 15 Dec 1966; was an American entrepreneur, animator, voice actor and film producer. As a film producer, Disney holds the record for most Academy Awards earned by an individual, having won 22 Oscars from 59 nominations. Disneyland opened in Anaheim, California, in 1955. Disney was a heavy smoker throughout his life, and died of lung cancer in December 1966 before his Orlando projects, Walt Disney World and EPCOT center, were completed.)
  – “All the adversity I’ve had in my life, all my troubles and obstacles, have strengthened me… You may not realize it when it happens, but a kick in the teeth may be the best thing in the world for you.”

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EN_a214. Are Your Copies of Regulations Up to Date?

(Source: Editor)

The official versions of the following regulations are published annually in the U.S. Code of Federal Regulations (C.F.R.), but are updated as amended in the Federal Register.  The latest amendments are listed below.
Latest Update 
DHS CUSTOMS REGULATIONS: 19 CFR, Ch. 1, Pts. 0-199.  5 Apr 2019:  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.  13 Nov 2019: 84 FR 61674-61676Addition of Entities to the Entity List, Revision of an Entry on the Entity List, and Removal of Entities from the Entity List.
DOC FOREIGN TRADE REGULATIONS (FTR): 15 CFR Part 30.   Last Amendment: 24 Apr 2018: 83 FR 17749-17751: Foreign Trade Regulations (FTR): Clarification on the Collection and Confidentiality of Kimberley Process Certificates 
DOD NATIONAL INDUSTRIAL SECURITY PROGRAM OPERATING MANUAL (NISPOM): DoD 5220.22-M. Implemented by Dep’t of Defense.  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.)  

comprehensive updating of regulations, updates the activities and technologies subject to specific authorization and DOE reporting requirements.  

25 Nov 2019: 84 FR 64740-64754: Rules of Practice in Explosives License and Permit Proceedings; Revisions Reflecting Changes Consistent With the Homeland Security Act of 2002
DOJ ATF ARMS IMPORT REGULATIONS: 27 CFR Part 447-Importation of Arms, Ammunition, and Implements of War.  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.  30 Aug 2019: 84 FR 45652-45654, Adjustment of Controls for Lower Performing Radar and Continued Temporary Modification of Category XI of the United States Munitions List.

DOT FOREIGN ASSETS CONTROL REGULATIONS (OFAC FACR): 31 CFR, Parts 500-599, Embargoes, Sanctions, Executive Orders.
22 Nov 2019:

84 FR 64415-64417: Venezuela Sanctions Regulations


1 Jan 2019: 19 USC 1202 Annex. 


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


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