BIS Removes Certain Nuclear Nonproliferation Column 2 Controls

January 31st, 2017 by Danielle McClellan

This rule removes remove nuclear nonproliferation (NP) Column 2 license requirements from certain pressure tubes, pipes, fittings, pipe valves, pumps, numerically controlled machine tools, oscilloscopes, and transient recorders on the Commerce Control List (CCL).

As a result of the changes made by this rule, some of these items are no longer listed under an Export Control Classification Number (ECCN) on the CCL. However, such items remain subject to the EAR under the designation EAR99. This rule also creates four new ECCNs to maintain anti-terrorism (AT) controls on certain affected commodities and related ‘‘software’’ and ‘‘technology.’’ All items subject to the EAR, regardless of whether they are listed on the CCL, may require a license for reasons described elsewhere in the EAR (e.g., license requirements based on end-user/end-use controls, embargoes, or other special controls).

The Bureau of Industry and Security (BIS) published this final rule on November 25, 2016, however, ‘software’’ ‘‘specially designed’’ for the ‘‘development,’’ ‘‘production,’’ or ‘‘use’’ of items previously controlled under ECCN 3A292 will continue to be classified and licensed by BIS under the designation EAR99 through January 31, 2017. As of February 1, 2017, such ‘‘software’’ will be classified and licensed by BIS under ECCN 3D991.

Federal Register: https://www.gpo.gov/fdsys/pkg/FR-2016-11-25/pdf/2016-28039.pdf

ITAR Corrected and Additions to Parts 120, 121, 122, 124, 126 and 127

January 31st, 2017 by Danielle McClellan

Effective December 5, 2016, the Department of State has amended the International Traffic in Arms Regulations (ITAR) to clarify recent revisions due to Export Control Reform (ECR), the scope of disclosure of information submitted to the Directorate of Defense Trade Controls (DDTC), the policies and procedures regarding statutory debarments, as well as correcting administration and typographical errors.

The following changes have been made following this final rule:

  • A definition of ‘‘classified’’ is moved from § 121.1(e) to § 120.46;
  • The structure of § 121.1(a)–(e) is realigned, with paragraphs (a) and (b) revised to clarify the existing requirements for United States Munitions List (USML) controls, and paragraphs (c), (d) and (e) removed;
  • Thirteen USML categories are amended to clarify that commodities, software, and technology subject to the Export Administration Regulations (EAR) and related to defense articles in a USML category may be exported or temporarily imported on the same license with defense articles from any category, provided they are to be used in or with that defense article;
  • In three places within the USML, the word ‘‘enumerated’’ is replaced with the word ‘‘described’’ to make the language consistent with changes directed in the Final Rule published at 79 FR 61226, Oct. 10, 2014;
  • Section 122.4(c)(4) is revised to permit the Directorate of Defense Trade Controls (DDTC) to approve an alternative timeframe, not less than 60 days, to the current 60-day requirement for registrants to provide a signed amended agreement;
  • Section 124.2(c)(5)(v) is revised to correct errors to the USML category references for gas turbine engine hot sections, from VI(f) and VIII(b) to Category XIX;
  • Section 124.12 is amended in paragraph (a)(9) to update the name of the Defense Investigative Service to Defense Security Service;
  • Section 126.9 on Advisory Opinions and Related Authorizations is amended to correct paragraph (a);
  • Paragraph (b) of § 126.10 is amended to clarify the scope of control and disclosure of information, however, notwithstanding the changes to paragraph (b) it is the Department’s policy not to publicly release information relating to activities regulated by the ITAR except as required by law or when doing so is otherwise in the interest of the United States Government; and;
  • Section 127.7(b) is amended to clarify the policies and procedures regarding statutory debarments (addressing inadvertent omissions resulting from a prior amendment to that section), and § 127.11 is amended to make conforming revisions to paragraph (c) omitted from prior amendment to that section.

Federal Register: https://www.gpo.gov/fdsys/pkg/FR-2016-12-05/pdf/2016-28406.pdf

BIS Adds 23 Russian Entities to Entity List & Explains License Review Policy

January 31st, 2017 by Danielle McClellan

On December 27, 2016 the Bureau of Industry and Security published a final rule adding 23 Russian Entities to the Entity list and revises the licensing policy in three sections of part 742 of the EAR to clarify that BIS’s review of license applications for exports, reexports and transfers (in- country) to Russia.

BIS revised the CCL based controls sections of the EAR to clarify that it will review license applications to export or reexport to Russia items subject to the EAR and controlled for chemical and biological weapons proliferation (CB), nuclear nonproliferation (NP) or national security (NS) reasons under a presumption of denial, if the items proposed for export or reexport would make a direct and significant contribution to Russia’s military capabilities.

This final rules revises 742.2 and 742.3 of the EAR to clarify that license applications for items controlled for CB and NP reasons will be reviewed in accordance with the revised licensing policies in paragraph (b)(4) of both 742.2 and 742.3 and with the revised licensing policy in paragraph (b)(7) of 742.4 of the EAR. This rule revises 742.4(b)(7) of the EAR to clarify that license applications for items controlled for NS reasons will be reviewed under a presumption of denial if the items would make a direct and significant contribution to Russia’s military capabilities, including but not limited to, the major weapons systems described in Supplement No. 7 to part 742 of the EAR.

This final rule adds the following twenty-three entities to the Entity List:

Crimea Region of Ukraine:

  1. Crimean Ports, a.k.a., the following three aliases:
  • State Unitary Enterprise of the
  • Republic of Crimea ‘Crimean Ports’;
  • Sue RC ‘KMP’;
  • Sue RK ‘Crimean Ports’

28 Kirov Street, Kerch, Crimea Region of Ukraine 98312

 

  1.  Crimean Railway, a.k.a., the following three aliases:
  • Federal State Unitary Enterprise ‘Crimean Railway’;
  • Krymzhd;
  • The Railways of Crimea

34 Pavlenko Street, Simferopol, Crimea Region of Ukraine 95006.
Russia:

  1.  DJSC Factory Krasnoe Znamya, a.k.a., the following five aliases:
  • OJSC Factory Krasnoe Znamya;
  • OAO Zavod Krasnoe Znamya;
  • AO Krasnoye Znamya;
  • Krasnoye Znamya Plant OAO;
  • Krasnoye Znamya Plant JSC.

Shabulina Travel 2a, Ryazan, 390043, Russia

  1.  Ekran Scientific Research Institute, FSUE, a.k.a., the following one alias:
  • FGUP Ekran.

Kirov Avenue 24, Samara 443022, Russia; and Krzhizhanovskogo Street 20/30, Moscow, 117218, Russia;

  1. ElTom Research and Production Company, a.k.a., the following one alias:
  • NPP ElTom

Garshin Street 11, Tomilino, Lyuberetsky, Moscow, 140070, Russia

  1.  FSUE FNPC Nizhegorodsky Scientific Research Institute of Radiotechnics (NNIIRT),

Shaposhnikov Street 5, Nizhny Novgorod, 603950, Russia

  1.  Institut Stroiproekt, AO, a.k.a., the following six aliases:
  • Aktsionernoe Obshcestvo Institut Stroiproekt;
  • AO Institut Stroiproekt;
  • AO Institute Stroyproekt (f.k.a., Institut Stroiproekt Zakrytoe Aktsionernoe Obshchestvo);
  • Institute Stroyproect;
  • Stroyproekt;
  • Stroyproekt Engineering Group

D. 13 Korp. 2 LiteraA Prospekt Dunaiski, St. Petersburg 196158, Russia; and 13/2 Dunaisky Prospect, St. Petersburg 196158, Russia

  1. JSC GOZ Obukhov Plant, a.k.a., the following one alias:
  • GOZ Obukhov Plant

Prospekt Obukhovskoi Oboroni 120, Saint Petersburg, 192012, Russia

  1. JSC Institute of Instrumentation— Novosibirsk Plant Comintern (NPO NIIP–NZIK), Planetnaya Street 32, Novosibirsk, 630015, Russia
  2.  JSC Scientific Research Institute of Aircraft Equipment (NIIAO), a.k.a., the following three aliases:
  • SRIAE;
  • NIIAO;
  • Aviation Instrument Scientific Research Institute

Tupoleva 18, Zhukovsky, Moscow, 140182, Russia

  1.  Kaluga Scientific Research Radio Technology Institute (KRRTI), a.k.a., the following two aliases:
  • KNIRTI;
  • KRRTI

Lenin Street 2, Zhukov, Kaluga Oblast, 249192, Russia

  1.  Karst, OOO, a.k.a., the following four aliases:
  • Construction Holding Company Old City—Karst;
  • Karst Ltd.;
  • LLC Karst;
  • Obshcestvo S Ogranichennoi Otvetstvennostyu Karst

D. 4 Litera A Pomeshchenie 69 ul. Kapitanskaya, St. Petersburg 199397, Russiaand 4 Kapitanskaya Street, Unit A, Office 69–N, St. Petersburg 199397, Russia

  1. LLC Ruschemtrade, St. Mashinostroitelnyj, 3, Rostov-on- Don 344090, Russia; and 86/1, Temryuk, Krasnodar 353500, Russia
  2.  OAO All-Russia Research Institute of Radio Equipment (JSC VNIIRA), a.k.a., the following three aliases:
  • OJSC VNIIRA;
  • OAO All-Russia Research Institute of Radio Technology;
  • All-Russian Scientific Research Institute of Radio Equipment

Shkipersky Protok 19, V.I. St. Petersburg, 199106, Russia

  1.  OJSC Ural Production Company Vector (UPP Vector), a.k.a., the following two aliases:
  • JSC ‘SCP’ Vector;
  • JSC PPM Vector

Gagarin Street 28, Ekaterinburg, 620078, Russia

  1.  Olid Ltd., a.k.a., the following one alias:
  • OOO Solid

ul Mira 4, Novorossiysk, Krasnodarskiy kray 630024, Russia

  1.  Research and Production Association KVANT, a.k.a., the following one alias:
  • NPO Kvant

Bolshaya Saint Petersburg 73, Velikii- Novgorod 173003, Russia

  1.  Research and Production Association M.V. Frunze, a.k.a., the following two aliases:
  • NNPO Frunze;
  • NZIF

Gagarin Prospect 174, Nizhny Novgorod, 606950, Russia

  1.  Ryazan State Instrument Enterprise (RSIE), a.k.a., the following two aliases:
  • RSIE;
  • GRPZ

Seminarskaya Street 32, Ryazan, 390000, Russia

  1.  Scientific and Production Association ‘‘Lianozovo Electromechanical Plant’’ (NPO LEMZ), a.k.a., the following four aliases:
  • JSC LEMZ R&P Corporation;
  • OAO Design Bureau Lianozovsky Radars Moscow;
  • Lianozovsky Electromechanical factory;
  • OAO Design Bureau Lianozovsky

Radars Moscow. Dmitrovskoye Shosse 110, Moscow, 127411, Russia

  1.  Svyaz Design Bureau, OJSC, a.k.a., the following one alias:
  • KB Svyaz. Prospect Sokolova 96

Rostov-on-Don 344010, Russia

  1.  Trans-Flot JSC, a.k.a., the following one alias:
  • JSC Trans-Flot

ul Ventseka 1/97, Samara 443099, Russia

  1.  Transpetrochart Co. Ltd., Prospekt Engelsa 30, St. Petersburg 194156, Russia.

 

Federal Register: https://www.gpo.gov/fdsys/pkg/FR-2016-12-27/pdf/2016-31124.pdf

BIS Amends EAR Concerning Burma

January 31st, 2017 by Danielle McClellan

In Executive Order 13742 of October 7, 2016, President Obama terminated the national emergency declared in Executive Order 13047 and revoked that Executive Order and the five additional Burma-related Executive Orders, including Executive Orders 13310, 13448 and 13464. Consistent with the President’s action, in this final rule, BIS removes and reserves § 744.22 of the EAR.

Effective December 27, 2016, the Bureau of Industry and Security (BIS) has removed the license requirements and other restrictions on exports, reexports or transfers (in country) of items subject to the EAR made to person whose property and interests in property were blocked pursuant to three Burma-related Executive Orders  that were revoked on October 7, 2016. This rule also moves Burma from Country Group D:1 to Country Group B, a less restrictive country group placement.

Note, however, that Burma will remain in Country Group D:3 (countries raising proliferation concerns related to chemical and biological weapons). Burma will also remain in Country Group D:5 (U.S. Arms Embargoes), consistent with § 126.1 of the International Traffic in Arms Regulations, 22 CFR 120–130. Therefore, the country is subject to the general license exception restrictions described in section 740.2(a)(12) of the EAR that apply to 9×515 or ‘‘600 series’’ items destined to, shipped from, or manufactured in a destination listed in Country Group D:5, except as narrowly provided in subparagraphs (a)(12)(i) and (ii). Further, Burma will remain in Computer Tier 3 in part 740 (License Exceptions) pending additional consideration. Finally, as a general matter, exports and reexports to Burma, and transfers (in country), remain subject to EAR part 744 end user and end-use based controls.

Federal Register: https://www.gpo.gov/fdsys/pkg/FR-2016-12-27/pdf/2016-31208.pdf

Man Pleads Guilty to Stealing Sensitive Military Documents from United Technologies and Exporting Them to China

January 31st, 2017 by Danielle McClellan

By: Danielle McClellan

Yu Long, 38, a citizen of China and permanent resident of the US, plead guilty on December 19, 2016 to one count of conspiracy to engage in the theft of trade secrets as well as one count of unlawful export and attempted export of defense articles from the US. Long worked as a Senior Engineer/Scientist at United Technologies Research Center (UTRC) from May 2008 to May 2014 where he worked on F119 and F135 engines. During this time Long always intended to return to China to work on research projects at state-run universities in China using the knowledge and materials he was acquiring at UTRC. During 2013 and 2014, Long was recruited by Shenyang Institute of automation (SIA), of China, where he substantiated claims that he could provide documents from his work at UTRC and examples of projects on which he worked.

On May 30, 2014, Long left URTC and began travelling back and forth between the US and China with a UTRC external hard drive that he unlawfully retained after his employment ended. On November 7, 2014, Long was arrested, two days after he attempted to board a plane to China with sensitive, proprietary and export controlled documents from Rolls Royce, not URTC. His checked baggage was inspected by CBP officer in Newark, NJ, where the hard drive was found with all of the proprietary, export controlled information.

After his digital media was seized it was found that he had voluminous files protected by the ITAR and EAR, as well as files proprietary to UTRC, Pratt, and Rolls Royce. UTRC confirmed that the hard drive that he stole and accessed in China contained not only documents and data from projects long worked on, but also from projects that he did not work on. It was found that he obtained Pratt and Rolls Royce proprietary information from a project that the US Air Force had convened a consortium of major defense contractors to work together to see if they could collectively lower the costs of specific metals used.

A sentencing date has not been set but Long faces a maximum term of imprisonment for 15 years for the theft of trade secrets charge and 20 years of imprisonment for violated the Arms Export Act.

More Information: https://www.justice.gov/opa/pr/chinese-national-admits-stealing-sensitive-military-program-documents-united-technologies

BIS Amends ECCN 2B229, 2B206 and 2A203 after 2016 Australia Group (AG) Meeting

January 31st, 2017 by Danielle McClellan

Effective December 16, 2016 the following changes have been made to the Commerce Control List (CCL) to reflect the February 2016 Intersessional Implementation Meeting recommendations that were adopted by the Australia Group (AG).

ECCN 2B206—Amended To Conform the NP Controls on Linear Displacement Measuring Systems With the NSG Annex (as Updated To Reflect the 2016 NSG Plenary Changes)

  • this rule amends ECCN 2B206 by adding a new paragraph .c, consistent with the description of the measuring systems in NSG Annex 1.B.3.b.3. New 2B206.c controls linear displacement measuring systems that contain a ‘‘laser’’ and that maintain, for at least 12 hours over a temperature range of ± 1 K around a standard temperature and a standard pressure, both: (1) A ‘‘resolution’’ over their full scale of 0.1mm or better; and (2) a ‘‘measurement uncertainty’’ equal to or better (less) than (0.2 + L/2000) mm (L is the measured length in millimeters).
  • This rule also adds a Control Note and a Technical Note for new 2B206.c. The Control Note to new paragraph .c indicates that 2B206.c does not control measuring interferometer systems, without closed or open loop feedback, that contain a ‘‘laser’’ to measure slide movement errors of machine tools, dimensional inspection machines, or similar equipment. The Technical Note to new paragraph .c states that ‘‘linear displacement,’’ for purposes of 2B206.c, means the change of distance between the measuring probe and the measured object.
  • There will be a new paragraph .c to ECCN 2B206: Specifically, paragraph .c.1 reads ‘‘Containing a laser,’’ which replaces the phrase ‘‘Contain a laser’’ that was previously used in 1.B.3.b.3.a on the NSG Annex.
  • In addition, paragraph .c.2 contains the phrase ‘‘Capable of maintaining,’’ which replaces the word ‘‘Maintain’’ that was previously used in 1.B.3.b.3.b on the NSG Annex. Amendments to other ECCNs on the CCL, based on the 2016 NSG Plenary understandings, will be published by BIS in a separate rule.
  • This rule also moves the ‘‘Control Notes to ECCN 2B206’’ and the ‘‘Technical Note to ECCN 2B206,’’ which were previously located at the end of this ECCN, to the beginning of the ‘‘Items’’ paragraph for ECCN 2B206 (i.e., immediately before 2B206.a), because these notes apply to the entire ECCN, unlike the aforementioned notes for new 2B206.c.
  • In addition, the ‘‘ECCN Controls’’ paragraphs, which were previously included under the ‘‘List of Items Controlled’’ for this ECCN, have been removed, because they duplicated the text of the ‘‘Control Notes to ECCN 2B206’’ and, as such, were redundant and potentially confusing.
  • In addition, this rule corrects two typographical errors in the ‘‘Items’’ paragraph of ECCN 2B206. First, the phrase ‘‘1.7 + 1/800 mm threshold’’ in the Technical Note to 2B206.a.2 is revised to read ‘‘1.7 + L/800 mm threshold’’ to conform with the threshold indicated in 2B206.a.2.
  • Second, the word ‘‘simultaneously’’ in the introductory text of 2B206.b is replaced with the word ‘‘simultaneous’’.

ECCN 2B229—Amended To Reflect 2015 NSG Plenary Changes

  • This final rule amends ECCN 2B229 (Centrifugal multiplane balancing machines) by revising paragraph .b.3 to update certain scientific terminology and clarify the technical parameters, therein, to read as follows: ‘‘A minimum achievable residual specific unbalance equal to or less than 10 g-mm/kg per plane.’’ This change reflects the 2015 NSG Plenary changes to the description of centrifugal balancing machines in NSG Annex 3.B.3.b and does not affect the scope of the NP controls on these machines. Instead, this rule revises the previous text in ECCN 2B229.b.3 (i.e., ‘‘Capable of balancing to a residual imbalance equal to or less than 0.01 kg × mm/kg per plane’’) only to update and clarify the controls described therein, without changing their scope.

ECCN 6A203—Amended To Correct Controls on Radiation-Hardened TV cameras

  • This rule amends ECCN 6A203 to correct an error in the technical parameters for radiation-hardened TV cameras described in 6A203.d. Specifically, this rule revises the phrase ‘‘total radiation dose greater than 50 × 104Gy (silicon)’’ to read ‘‘total radiation dose greater than 5 × 104Gy (silicon),’’ consistent with the description of these cameras in NSG Annex 1.A.2. Previously, as amended by BIS’s final rule published on September 5, 2014 (79 FR 52958), this technical parameter overstated the total radiation dose by a factor of ten (i.e., incorrectly indicating a multiple of ‘‘50,’’ instead of ‘‘5’’).

The changes made by this rule only marginally affect the scope of the EAR controls on the affected items in ECCN 2B206, 2B229, or 6A203. Specifically, the amendments in this rule are not the result of any change in the scope of the controls for these items on the NSG Annex. Therefore, the purpose of this final rule is not to increase the scope of the NP controls in these ECCNs beyond what should have been the case, previously, but merely to accurately reflect the controls on the affected items, consistent with the descriptions in NSG Annex 1.B.3.b.3, 3.B.b.3, and 1.A.2, respectively.

Federal Register: https://www.gpo.gov/fdsys/pkg/FR-2016-12-27/pdf/2016-31120.pdf

U.S. Antiboycott Compliance: New Federal List Published

January 31st, 2017 by Danielle McClellan

By: Melissa Proctor, Polsinelli PC

Companies doing business in the Middle East take note: The Treasury Department recently published its quarterly list of countries that currently require participation or cooperation with an international boycott, such as the Arab League‘s boycott of Israel.

Even though many of these countries are WTO members and were required to shut down their Arab League offices as a condition of membership, many boycott-related requests are still being issued by government agencies and companies in these countries. The countries that are designated on this list, which by the way are the very same countries that were listed in the Third Quarter list, are:

  • Iraq
  • Kuwait
  • Lebanon
  • Libya
  • Qatar
  • Saudi Arabia
  • Syria
  • United Arab Emirates
  • Yemen

To view the list, click here.

If you are not familiar with U.S. antiboycott requirements, Part 750 of the Export Administration Regulations (EAR) prohibits U.S. companies and their foreign affiliates from complying with requests related to a foreign boycott that is not sanctioned by the U.S. Government. Specifically, U.S. companies and their overseas affiliates are prohibited from agreeing to:

  1. Refuse to do business with or in Israel or with blacklisted companies
  2. Discriminate against other persons based on race, religion, sex, national origin or nationality
  3. Furnish information about business relationships with or in Israel or with blacklisted companies, or
  4. Furnish information about the race, religion, sex, or national origin of another person

Foreign boycott-related requests can take many forms, and can be either verbal or written. They can appear in bid invitations, purchase agreements, letters of credit and can even be seen in emails, telephone conversations and in-person meetings. Some recent examples of boycott-related requests include:

  • “Provide a certificate of origin stating that your goods are not products of Israel.”
  • “Provide the religion and nationality of your officers and board members.” 
  • “Suppliers cannot be on the Israel boycott list published by the central Arab League.”  
  • “Provide a signed statement from the shipping company or its agent containing the name, flag and nationality of the carrying vessel and its eligibility to enter Arab ports “

In addition, implementing letters of credit that contain foreign boycott terms or conditions is also prohibited under the EAR.

Antiboycott compliance is a key issue for U.S. companies doing business in the Middle East, and personnel on the front lines with customers and supply chain partners in these countries should be trained to identify potential foreign boycott-related requests and escalate them to senior compliance personnel or in-house counsel to determine the applicable OAC and IRS reporting requirements.

Companies that receive boycott-related requests must submit quarterly reports to the Office of Antiboycott Compliance (OAC) unless an exemption applies. Failing to timely report a boycott request or complying with the request itself can lead to the imposition of civil penalties by the OAC. The IRS also requires U.S. taxpayers to report their operations in countries that require participation or cooperation with an international boycott on IRS Form 5713 (International Boycott Report) – the forms are submitted annually with U.S. tax returns.  Failure to comply with the Internal Revenue Code’s antiboycott requirements can lead to the revocation of certain international tax credits and benefits.

© Polsinelli PC, Polsinelli LLP in California

White House Posts Actions in Response to Russian Malicious Cyber Activity and Harassment

January 31st, 2017 by Danielle McClellan

(Source: White House) [Excerpts.]

(Former) President Obama authorized a number of actions in response to the Russian government’s aggressive harassment of U.S. officials and cyber operations aimed at the U.S. election in 2016. Russia’s cyber activities were intended to influence the election, erode faith in U.S. democratic institutions, sow doubt about the integrity of our electoral process, and undermine confidence in the institutions of the U.S. government. These actions are unacceptable and will not be tolerated.

Sanctioning Malicious Russian Cyber Activity

In response to the threat to U.S. national security posed by Russian interference in our elections, the President has approved an amendment to Executive Order 13964. As originally issued in April 2015, this Executive Order created a new, targeted authority for the U.S. government to respond more effectively to the most significant of cyber threats, particularly in situations where malicious cyber actors operate beyond the reach of existing authorities. The original Executive Order focused on cyber-enabled malicious activities that:

  • Harm or significantly compromise the provision of services by entities in a critical infrastructure sector;
  • Significantly disrupt the availability of a computer or network of computers (for example, through a distributed denial-of-service attack); or
  • Cause a significant misappropriation of funds or economic resources, trade secrets, personal identifiers, or financial information for commercial or competitive advantage or private financial gain (for example, by stealing large quantities of credit card information, trade secrets, or sensitive information).

The increasing use of cyber-enabled means to undermine democratic processes at home and abroad, as exemplified by Russia’s recent activities, has made clear that a tool explicitly targeting attempts to interfere with elections is also warranted. As such, the President has approved amending Executive Order 13964 to authorize sanctions on those who:

  • Tamper with, alter, or cause a misappropriation of information with the purpose or effect of interfering with or undermining election processes or institutions.

Using this new authority, the President has sanctioned nine entities and individuals: two Russian intelligence services (the GRU and the FSB); four individual officers of the GRU; and three companies that provided material support to the GRU’s cyber operations. …

Read full Release: https://www.whitehouse.gov/the-press-office/2016/12/29/fact-sheet-actions-response-russian-malicious-cyber-activity-and

New Portal for Declaring Imports and Exports to CBP

January 31st, 2017 by Danielle McClellan

The Department of State issued a final rule which has amended the International Traffic in Arms Regulations (ITAR) to enable US Customs and Border Protection (CBP) to implement the International Trade Data System (ITDS). This system will allow importers and exporters to create only a single set of data for each import and export and they will have access the system thru an integrated web portal that will be hosted by CBP. Users may visit https:// www.cbp.gov/trade/automated for more information on the single portal. The final rule was published January 3, 2017, but was effective on December 31, 2016.

The rule makes the following changes to the ITAR (22 CRF parts 120-130):

  • Section 120.28—Listing of Forms Referred to in This Subchapter
    • Section 120.28 is revised to strike the reference to the Automated Export System and add, in its place, ‘‘U.S. Customs and Border Protection’s electronic system(s)’’.
  • Section 120.30—The Automated Export System (AES)
    • Section 120.30 is removed and reserved.
  • Section 123.4—Temporary Import License Exemptions
    • Section 123.4(d)(2) is revised to strike the reference to the Automated Export System (AES) and add, in its place, instructions to electronically file information with CBP.
  • Section 123.5—Temporary Export Licenses
    • Section 123.5(b) is revised to update certain reporting procedures and to clarify that license information will be submitted to CBP electronically.
  • Section 123.16—Exemptions of General Applicability
    • Sections 123.16(b)(4) and (5) are revised to clarify that certifications will be sent to CBP electronically and not via hard copy.
  • Section 123.17—Exports of Firearms, Ammunition, and Personal Protective Gear
    • All references to AES in § 123.17 are struck and, in their place, instructions to electronically file with CBP are inserted. Additionally, § 123.17(g)(2) and (h) are revised to update certain documentation procedures.
  • Section 123.22—Filing, Retention, and Return of Export Licenses and Filing of Export Information
    • Section 123.22 of the ITAR is revised by making certain grammatical changes and to clarify procedures for the electronic reporting of exports and temporary imports of defense articles, services, and technical data pursuant to a license or other approval. All references to AES in § 123.22 are struck and, in their place, instructions to electronically file with CBP are inserted.
    • Section 123.22(a) is revised to clarify electronic reporting procedures for exports. Paragraphs (a)(1) and (a)(2) are also revised for clarification of certain procedures.
    • Section 123.22(b)(2) is revised to clarify that emergency shipment data shall no longer be required to be sent directly to DDTC, but rather be electronically declared to CBP, which will make the data available to DDTC via an electronic data exchange.
    • Section 123.22(b)(3)(iii) is revised to update electronic reporting procedures for technical data and defense service exemptions.
    • Section 123.22(c) is revised to strike a provision relating to the return of licenses and to reorder the sub- paragraphs.
  • Section 123.24—Shipments by U.S. Postal Service
    • Section 123.24 is revised to strike references to AES and insert, in their place, instructions to electronically file with CBP. The underlying content of this section is not affected by this change.
  • Section 126.4—Shipments by or for United States Government Agencies
    • Section 126.4(d) is amended by revising the first sentence to account for electronic reporting, and by striking the second sentence.
  • Section 126.6—Foreign-Owned Military Aircraft and Naval Vessels, and the Foreign Military Sales Program
    • Section 126.6(c) is revised to clarify certain procedures relating to the declaration of information to CBP, and to remove references to form DSP–94.
    • Section 126.6(c)(5)(iii) is revised to require that the exporter provide CBP with a copy of the transportation plan under the Department of Defense National Industrial Security Program Operating Manual for shipments of classified defense articles exported pursuant to a Foreign Military Sale Letter of Offer and Acceptance. Section 126.6(c)(6)(iii) is revised to correct a punctuation error made in a previous rulemaking.
  • Section 126.16—Exemption Pursuant to the Defense Trade Cooperation Treaty Between the United States and Australia
    • Section 126.16(l) is revised to strike references to the Automated Export System and insert, in their place, instructions to electronically file with CBP. The underlying content of this section will not be affected by this change.
  • Section 126.17—Exemption Pursuant to the Defense Trade Cooperation Treaty Between the United States and the United Kingdom
    • Section 126.17(l) is revised to strike references to the Automated Export System and insert, in their place, instructions to electronically file with CBP. The underlying content of this section will not be affected by this change.

Federal Register: https://www.gpo.gov/fdsys/pkg/FR-2017-01-03/pdf/2016-31655.pdf

Understanding Routed Export Transactions

January 31st, 2017 by Danielle McClellan

(Source: Global Reach Blog)

Routed export transactions are a much discussed topic.  Therefore, we are revisiting this blog topic to give some helpful tips on remaining compliant if you’re involved in a routed export transaction. We’ll also take a look at an example.  For those not familiar with routed export transactions, it is when the Foreign Principal Party in Interest (FPPI) directs the movement of the goods out of the U.S. and authorizes a U.S. agent to file the Electronic Export Information (EEI) on their behalf.

Below are some helpful tips to keep in mind: 

  • Communication is key!  Having conversations with all parties involved before the transaction occurs will make a difference in understanding roles and responsibilities to prevent filing errors in the Automated Export System (AES);
  • Refer to Sections 30.3(e), (e)(1) and (e)(2) of the Foreign Trade Regulations (FTR) for the definition and more information on the responsibilities of the parties involved in a routed transaction;
  • Utilize the Census Bureau resources; and
  • View sample templates for the power of attorney and written authorization on our website here or here.

Routed Export Transaction Example:

A U.S. Principal Party in Interest (USPPI) sells two paintings to a FPPI located in Italy.  Keep in mind, the USPPI is defined as the person or legal entity in the U.S. that receives the primary benefit, monetary or otherwise, from the transaction. The FPPI instructs the USPPI to send the paintings to an agent located in Florida.  The FPPI authorizes the agent to file the EEI in the AES on their behalf and ship the goods to Italy.  In this example, each party has important responsibilities that are outlined below.

FPPI

  • Provides the agent, who is authorized to file the EEI, with a power of attorney or written authorization, the authorization comes after the FPPI provides the POA or written authorization.

USPPI

  • Provides the agent with the data elements, such as Schedule B number, value, quantity, etc., specified in Section 30.3(e)(1) of the FTR.
  • Retains documentation to support the information provided to the authorized agent for five years from the date of export.
  • Requests a copy of the data elements that were filed in the AES and the power of attorney or written authorization.

Authorized Agent

  • Ensures that a power of attorney or written authorization is received from the FPPI.
  • Files the EEI in the AES.
  • Provides the Internal Transaction Number or exemption code if filing is not required to the carrier.
  • Retains documentation pertaining to the shipment for 5 years.
  • If requested, provides the USPPI with a copy of the USPPI data elements that were filed in the AES and the power of attorney or written authorization from the FPPI. For further questions, please contact the Trade Regulations Branch (TRB) at 1-800-549-0595, option 3 or email us at itmd.askregs@census.gov