Archive for the ‘BIS’ Category

Census Bureau Announces Tips for Correcting AES Fatal Errors

Wednesday, December 6th, 2017 by Danielle McClellan

2013/03/04

By: John Black

If you submit your Electronic Export Information (EEI) through the Automated Export System (AES) and you get a “fatal error,” that means your submission is dead and you cannot proceed with the export until you correct the fatal error. The Census Bureau announced on its website fixes to two common fatal errors:

Fatal Error Response Code 004

  • Narrative: Filer/Transmitter Not Authorized To Send
  • Reason: The Filer/Transmitter combination was not recognized by AES.
  • Resolution: The combination of Filer ID, Transmitter ID, and Communication Password reported defines a pre-established AES filer/transmitter. The Filer/Transmitter combination must be authorized to file in AES. Verify the Filer ID and Transmitter ID reported, correct the shipment and resubmit.

Fatal Error Response Code 666

  • Narrative: ECCN Must Be From Approved List
  • Reason: The Export Control Classification Number (ECCN) reported is not on the list of codes allowed for the License Code/License Exemption reported.
  • Resolution: See Appendix F – License and License Exemption Type Codes and Reporting Guidelines for a list of approved ECCN codes for the License Code/License Exemption reported. Verify the ECCN and License Code/License Exemption correct the shipment and resubmit.

Whirlpool Europe Srl (Italy)/Whirlpool Corporation to Pay Civil Settlements to Settle Alleged Antiboycott Violations

Wednesday, November 15th, 2017 by Danielle McClellan

2017/11/15

By: Ashleigh Foor (Source: Commerce/BIS)

On September 25, 2017, Whirlpool Europe Srl (Italy) was charged with three violations of 15 CFR 760.2(a), refusal to do business, ten violations of 15 CFR 760.2(d), furnishing information about business relationships with boycotted countries or blacklisted persons, and eight violations of 15 CFR 760.5, failing to report the receipt of a request to engage in a restrictive trade practice or foreign boycott against a country friendly to the United States (Case No: 14-02(A)). A civil settlement of $72,450, if paid as agreed, will keep Whirlpool from being debarred or suspended from export transactions.

Related case number 14-02(B) involves Whirlpool Corporation. The company received a civil settlement of $9,000 for three violations of 15 CFR 760.2(d), furnishing information about business relationships with boycotted countries or blacklisted persons. No debarment or suspension will be placed if penalty is paid as agreed.

Miltech, Inc. of Northampton, MA Receives 18 Charges of Alleged Export Violations

Wednesday, November 15th, 2017 by Danielle McClellan

2017/11/15

By: Ashleigh Foor

On September 25, 2017, Miltech, Inc. of Northampton, MA was charged a civil penalty of $230,000 due to engaging in conduct prohibited by the EAR when it exported items subject to the EAR from the United States to China and Russia without the required BIS Licenses. On eighteen separate occasions between, on, or around October 14, 2011 and July 14, 2014, Miltech exported active multiplier chains, items classified under Export Control Classification Number (“ECCN”) 3A001.b.4 and valued in total at approximately $364,947, without seeking or obtaining the licenses required for these exports pursuant to section 742.4 of the EAR. These items are controlled on national security and anti-terrorism grounds.

Miltech received 18 charges of 15 C.F.R. § 764.2(a) for engaging in prohibited conduct. $180,000 of the $230,000 penalty must be paid within 30 days, and the remaining $50,000 will be suspended and waived after two years if Miltech fulfills the terms of its settlement agreement and this order.  The company will not be debarred if penalty is paid as agreed and Miltech complies with other terms of this settlement.

BIS Revises CCL and Corresponding EAR Parts to Implement WA 2016 Plenary Agreements

Monday, October 16th, 2017 by Danielle McClellan

2017/10/16

By: Ashleigh Foor

A final ruling by the Bureau of Industry and Security (BIS) revises the Commerce Control List (CCL) and corresponding parts of the Export Administration Regulations (EAR) to implement changes made to the Wassenaar Arrangement List of Dual-Use Goods and Technologies (WA List). The CCL identifies certain items subject to Department of Commerce jurisdiction and is maintained, as part of its EAR, by the BIS. These changes were agreed to by governments participating in the Wassenaar Arrangement on Export Controls for Conventional Arms and Dual-Use Goods and Technologies at the December 2016 WA Plenary meeting. The objective of The Wassenaar Arrangement is to improve regional and international security and stability by implementing effective export controls on strategic items. This rule revises the Export Control Classification Numbers (ECCNs), controlled for national security reasons in each category of the CCL, to match the CCL with the agreements reached at the 2016 Plenary meeting. Any associated changes were also made to the EAR.

As of August 15, 2017, the following is to be expected:  (1) The effective date for amendatory instruction 30 (ECCN 4A003 in Supplement No. 1 to part 774) is September 25, 2017; and (2) the effective date for amendatory instruction 2 (Sec.  740.7 of the EAR) is November 24, 2017.

Background:

The Wassenaar Arrangement on Export Controls for Conventional Arms and Dual-Use Goods and Technologies is a group of 41 governments that believe in promoting responsibility and transparency in the global arms trade, and want to prevent destabilizing accumulations of arms. As a Participating State, the United States has committed to controlling for export all items on the WA control lists. The lists were first created in 1996 and have been reviewed and updated annually thereafter. Proposals for changes to the WA control lists that generate consensus are approved by Participating States at annual Plenary meetings. Participating States are expected to abide by the agreed list changes as soon as possible after approval. By implementing the WA list changes, the US ensures they have a level playing field with their competitors in other WA Participating States.

Revisions to the Commerce Control List Related to WA 2016 Plenary Agreements:

Revises (50) ECCNs: 1A004, 1A007, 1B001, 1C007, 1C608, 1E001, 1E002, 2A001, 2B001, 2B005, 2B991, 2D992, 2E003, 3A001, 3A002, 3A991, 3B001, 3C001, 3E001, 3E002, 3E003, 4A003, 4D001, 4D993, 5A001, 5B001, 5E001, 5A002, 5A003, 5D002, 5E002, 6A001, 6A003, 6A005, 6A008, 6D003, 6E003, 7D003, 7D004, 7E001, 7E003, 7E004, 8A002, 8C001, 9A001, 9A004, 9A515, 9B002, 9B009 and 9E003.

License Exception eligibility additions: 3A001.b.12 to LVS, and 3A001.a.14 to GBS.

License Exception eligibility expansion: TSR and STA for ECCNs 4D001 and 4E001.

Saving Clause:

Shipments of items that were removed from license exception eligibility or eligibility for export, reexport, or transfer (in-country) without a license as a result of this regulatory action that were already en route aboard a carrier or on dock for loading on August 15, 2017 may proceed to that destination under the previous license exception eligibility or without a license as long as they have been exports, reexports, or transfers (in-country) before October 16, 2017.

Federal Register: https://www.gpo.gov/fdsys/pkg/FR-2017-08-15/pdf/2017-16904.pdf

BIS Implements Updates to Improve SNAP-R for License Application Submissions

Monday, October 16th, 2017 by Danielle McClellan

2017/10/16

By: Ashleigh Foor

Per the request of the export controls industry, BIS has designed new updates for the Single Network Application Process-Redesign (SNAP-R), BIS’s electronic system for the submission of license applications, commodity classification requests, License Exception AGR notifications, and License Exception STA eligibility requests. This will be the first in a series of updates meant to make SNAP­-­R more user-friendly and efficient. Additional updates will be implemented in the future.

Included in the new updates is the introduction of security questions. Before this update, SNAP-R users would have to request assistance from SNAP-R account administrators or BIS to reset login IDs and passwords and to receive a reminder of their company identification number (CIN). Starting now, all new SNAP-R registrants will be required to provide answers to four of ten security questions as part of the registration process. Moving forward, the security questions put into place will identify and help users retrieve information on their own. Existing users will be prompted to choose security questions and answers at their next login.

Other changes include:

  • Work Item Reference Numbers: SNAP-R account holders are no longer limited to the previously required format (i.e., AAA####) for Work Item reference numbers.
  • Line Item Value Calculation: When listing the information for an export item on a license application, SNAP-R account holders can now choose to calculate the value of the item by multiplying the unit value by the quantity of items or to enter the total price of the item independent of the item’s quantity and unit value.

Other SNAP-R Features: Did you know that SNAP-R:

  • Can be used on browsers other than Internet Explorer®?
  • Has a spell check function?
  • Allows a previously created Work Item (e.g., a license application) to be used again when preparing a new Work Item for submission?

The SNAP-R manual has been revised and updated to incorporate the changes above as well as to clarify the tools available to SNAP-R system users. (https://www.bis.doc.gov/snap-r-updates)

Revisions to EAR Parts 742, 744, 772, & 774

Thursday, August 3rd, 2017 by Danielle McClellan

2017/08/03

The Bureau of Industry and Security (BIS) is amending the Export Administration Regulations (EAR) to reflect changes to the Missile Technology Control Regime (MTCR) Annex that were agreed to by MTCR member countries back in October 2016.

Changes:

§ 742.5 (Missile technology)

  • In § 742.5 (Missile technology), this final rule revises the first sentence of paragraph (a)(2), which describes the definition of ‘‘missiles.’’ The term ‘‘missiles’’ is a defined term in § 772.1, but for ease of reference the first sentence of this paragraph (a)(2) restates the definition.

Conforming Change to § 742.5(a)(2)

  • This final rule makes conforming changes in paragraph (a)(2) of § 742.5, by replacing the term ‘‘ballistic missile systems’’ with the term ‘‘ballistic missiles’’ (MTCR Annex Change, Category I: Item 1.A.1., Luxembourg 2016 TEM), and by replacing the term ‘‘cruise missile systems’’ with the term ‘‘cruise missiles.’’ (MTCR Annex Change, Category I: Item 1.A.2., Luxembourg 2016 TEM).
  • This final rule also makes a conforming change by replacing the term ‘‘unmanned air vehicles’’ with the term ‘‘unmanned aerial vehicles.’’ (Conforming Change to MTCR Annex). Substantively, there is no difference between the old and revised terms, but this final rule makes these conforming changes to ensure consistent use of the terminology throughout the EAR. These conforming changes are described in more detail in the next three paragraphs, describing the changes that this final rule makes to the EAR definitions of ‘‘missiles’’ and ‘‘unmanned aerial vehicles.’’

Conforming Change to § 744.3

  • This final rule makes conforming changes in § 744.3 by changing the term ‘‘ballistic missile systems’’ to ‘‘ballistic missiles’’ (MTCR Annex Change, Category I: Item 1.A.1., Luxembourg 2016 TEM), and changing the term ‘‘cruise missile systems’’ to ‘‘cruise missiles.’’ (MTCR Annex Change, Category I: Item 1.A.2., Luxembourg 2016 TEM). These conforming changes are described in more detail in the next two paragraphs describing the changes that this final rule makes to the EAR definitions of ‘‘missiles’’ and ‘‘unmanned aerial vehicles.’’
  •  In addition, this final rule makes conforming changes in § 744.3 by replacing the term ‘‘unmanned air vehicles’’ with ‘‘unmanned aerial vehicles’’ wherever this term appears in this section. (Conforming Change to MTCR Annex). Substantively, there is no difference between the old and revised terms, but this final rule makes these conforming changes to ensure consistent use of the terminology throughout the EAR.
  • Lastly, this final rule removes the first reference to ‘‘and’’ in the section heading for the parenthetical phrase providing an illustrative list of examples of rocket systems. This ‘‘and’’ is removed because it is not needed to convey the meaning of the list of examples of rocket systems. These conforming changes are clarifications and will not change any scope of control. These changes are not expected to have any impact on the number of license applications received by BIS.

Changes and Conforming Amendments in § 772.1 (Definitions of Terms as Used in the Export Administration Regulations (EAR))

  • In § 772.1, this final rule amends the definition of the term ‘‘missiles.’’ (MTCR Annex Change, Category I: Item 1.A.1., Luxembourg 2016 TEM). Under the definition of ‘‘missiles,’’ this final rule revises the term ‘‘ballistic missile systems’’ by removing the word ‘‘systems’’ and adding an ‘‘s’’ to ‘‘missile.’’
  • This final rule revises the definition of ‘‘missiles’’ to reflect changes in the description of complete rocket systems in the MTCR Annex. The final rule revises the term ‘‘ballistic missile systems’’ by removing the word ‘‘systems,’’ thus referring only to the flight vehicle.
  • This final rule makes this change to conform to the other items in the illustrative list of ‘‘missiles,’’ and to clarify that a missile is covered under these entries that use this control text, regardless of whether it is part of a larger system (e.g., a system including the flight vehicle and ground support equipment such as launch, recovery, and flight control equipment). This final rule also makes conforming changes to the same terms used in ECCNs 2B018 and 5A101, as described below.
  • This final rule also makes a conforming change in the ECCNs for the use of the term ‘‘unmanned air vehicles,’’ which this final rule replaces with ‘‘unmanned aerial vehicles.’’ (Conforming Change to MTCR Annex). Substantively, there is no difference between the two formulations of the term, but this final rule makes these conforming changes to ensure consistent use of the terminology throughout the EAR.
  •  Lastly, this final rule removes the last sentence of the definition and adds it as a note to the definition. This clarifying change is made because the sentence is more appropriately included as a note to the definition. These changes correspond with the U.S. interpretation of the controls, and will not change any scope of control. These changes are not expected to have any impact on the number of license applications received by BIS.

Revised Term for Unmanned Aerial Vehicle

  • In addition, in § 772.1, this final rule amends the definition of the revised term, ‘‘unmanned aerial vehicle.’’ (MTCR Annex Change, Category I: Item 1.A.2., Luxembourg 2016 TEM). Under the definition of ‘‘unmanned aerial vehicle,’’ this final rule revises the term ‘‘cruise missile systems’’ by removing the word ‘‘systems’’ and adding an ‘‘s’’ to ‘‘missile.’’
  • The definition of ‘‘unmanned aerial vehicles’’ has been updated to reflect changes in the description of unmanned aerial vehicles in the MTCR Annex. The term ‘‘Cruise missile systems’’ has been changed by removing the word ‘‘systems,’’ thus referring only to the flight vehicle. This change both conforms to the other items in the illustrative list of unmanned aerial vehicles, and clarifies that an unmanned aerial vehicle is covered under these entries that use this control text, regardless of whether or not it is part of a larger system (e.g., a system including the flight vehicle and ground support equipment such as launch, recovery, and flight control equipment).
  • This final rule also makes conforming changes to similar text used in ECCNs 2B018 and 5A101 described below. These changes correspond with the U.S. interpretation of the controls, and will not change any scope of control. These changes are not expected to have any impact on the number of license applications received by BIS.updated to reflect changes in the description of unmanned aerial vehicles in the MTCR Annex. The term ‘‘Cruise missile systems’’ has been changed by removing the word ‘‘systems,’’ thus referring only to the flight vehicle. This change both conforms to the other items in the illustrative list of unmanned aerial vehicles, and clarifies that an unmanned aerial vehicle is covered under these entries that use this control text, regardless of whether or not it is part of a larger system (e.g., a system including the flight vehicle and ground support equipment such as launch, recovery, and flight control equipment).
  • This final rule also makes conforming changes to similar text used in ECCNs 2B018 and 5A101 described below. These changes correspond with the U.S. interpretation of the controls, and will not change any scope of control. These changes are not expected to have any impact on the number of license applications received by BIS.

Amendments to the Commerce Control List (CCL)

ECCN 1C107

  • This final rule amends ECCN 1C107 by revising the introductory text of paragraph d. and adding a paragraph d.3 in the List of Items Controlled section.
  • This final rule also adds a Note and a Technical Note to ECCN 1C107.d.3 to clarify the scope of paragraph d.3. (MTCR Annex Change, Category II: Item 6.C.6., Busan 2016 Plenary). Specifically, in the introductory text of ECCN 1C107.d, this final rule removes the phrase ‘‘silicon carbide materials’’ and adds in its place the phrase ‘‘high-temperature materials.’’ This change is made because of the addition of certain bulk machinable ceramic composite materials that this final rule adds to ECCN 1C107 under new ‘‘items’’ paragraph d.3. Ultra High Temperature Ceramic Composites (UHTCC) are materials that combine Ultra High Temperature Ceramics (UHTC) with fiber reinforcement. The UHTCs can be used in environments that exhibit extremes in temperature, chemical reactivity, and erosive attack. The combination of the UHTC and fiber reinforcement can mitigate some of the traditional drawbacks associated with ceramics, including a tendency to fracture. Typical end uses for these composites are leading edges for hypersonic vehicles, nose tips for re- entry vehicles, rocket motor throat inserts, jet vanes, and control surfaces, which this final rule adds as examples in the new control text.
  • This final rule also adds a note to 1C107.d.3 to make clear that the UHTC materials that do not have fiber reinforcement are not caught under this control. Additionally, this final rule adds a technical note to 1C107.d to provide examples of UHTCs which are included. This change is expected to result in an increase of 1– 3 applications received annually by BIS. This very small increase is because this material is not widely used or exported, but specific to the end uses described in the control text.

ECCN 1C111

  • This final rule amends ECCN 1C111 by revising paragraphs b.2 in the List of Items Controlled section to add a CAS (Chemical Abstract Service) Number. CAS Numbers are numerical identifiers assigned by the Chemical Abstracts Service (CAS) to every chemical substance described in open scientific literature, including organic and inorganic compounds, minerals, isotopes and alloys. The inclusion of CAS Numbers will make it easier to identify the materials controlled under this ‘‘items’’ paragraph of 1C111.
  • This final rule revises paragraph b.2 to add the CAS Number (CAS 69102–90–5) after the material ‘‘Hydroxy-terminated polybutadiene (including hydroxyl- terminated polybutadiene) (HTPB).’’ (MTCR Annex Change, Category II: Item 4.C.5.b., Busan 2016 Plenary). This change is not expected to have any impact on the number of license applications received by BIS.

ECCN 2B018

  • This final rule amends ECCN 2B018 by revising the ‘‘MT’’ paragraph in the table in the License Requirements section by revising the term ‘‘ballistic missile systems’’ to remove the term ‘‘systems’’ and add an ‘‘s’’ to the term ‘‘missile.’’ (MTCR Annex Change, Category I: Item 1.A.1., Luxembourg 2016 TEM).
  • In addition, in the same ‘‘MT’’ paragraph, this final rule revises the term ‘‘cruise missile systems’’ to remove the term ‘‘systems’’ and add an ‘‘s’’ to the term ‘‘missile.’’ (MTCR Annex Change, Category I: Item 1.A.2., Luxembourg 2016 TEM).
  • Lastly, this final rule makes conforming changes in the same ‘‘MT’’ paragraph by replacing the term ‘‘unmanned air vehicles’’ with ‘‘unmanned aerial vehicles’’ wherever this term appears in this section. (Conforming Change to MTCR Annex). Substantively, there is no difference between the old and revised terms, but this final rule makes these conforming changes to ensure consistent use of the terminology throughout the EAR. These are conforming changes for the changes described above to the definitions of ‘‘missiles’’ and ‘‘unmanned aerial vehicles.’’ This is a clarification and will not change any scope of control. This change is not expected to have any impact on the number of license applications received by BIS.

ECCN 2B109

  • This final rule amends ECCN 2B109 by revising the list of examples included in the second technical note. This final rule expands the list of examples to include interstages, because interstages can also be manufactured using the flow forming machines described in ECCN 2B109. (MTCR Annex Change, Category II: Item 3.B.3., Busan 2016 Plenary). This change is not expected to have any impact on the number of license applications received by BIS, because this is only a change to the list of examples of products that can be made by this type of machine, and it does not change the scope of control.

ECCN 5A101

  • This final rule amends the heading of ECCN 5A101 by revising the term ‘‘ballistic missile systems’’ to remove the word ‘‘systems’’ and add an ‘‘s’’ to ‘‘missile.’’ (MTCR Annex Change, Category I: Item 1.A.1., Luxembourg 2016 TEM).
  • The final rule revises the heading by revising the term ‘‘cruise missile systems’’ to remove the word ‘‘systems’’ and add an ‘‘s’’ after ‘‘missile.’’ (MTCR Annex Change, Category I: Item 1.A.2., Luxembourg 2016 TEM). These are conforming changes for the changes described above to the definitions of ‘‘missiles’’ and ‘‘unmanned aerial vehicles.’’
  • In addition, this final rule revises the heading of ECCN 5A101 to create a separate parenthetical phrase for the illustrative list of examples that are unmanned aerial vehicles. This final rule does this by removing the examples of ‘‘cruise missiles, target drones, and reconnaissance drones’’ from the list of examples that followed the terms ‘‘unmanned aerial vehicle or rocket systems’’ in the heading and adding those examples immediately after the term unmanned aerial vehicle. This final rule retains the rest of the examples from the parenthetical that follows the term ‘‘rocket systems,’’ which will make it clearer that this parenthetical list is an illustrative list of ‘‘rocket systems.’’ (Conforming Change to MTCR Annex). These are clarifications and will not change any scope of control. These changes are not expected to have any impact on the number of license applications received by BIS.

ECCN 7A103

  • This final rule amends ECCN 7A103 by adding a definition for ‘‘inertial measurement equipment and systems’’ for purposes of ECCN 7A103. In addition, this final rule revises ‘‘items’’ paragraph a and adds Note 3 in the List of Items Controlled section. (MTCR Annex Change, Category II: Item 9.A.6., Luxembourg 2016 TEM).
  • This final rule makes these changes to remove the ambiguous term ‘‘other equipment.’’ Instead, the locally defined term ‘‘inertial measurement equipment or systems’’ that the final rule adds to ECCN 7A103, along with an illustrative list of such equipment and systems, clarifies which types of equipment containing the specified accelerometers or gyros are caught by this entry.
  • This final rule also removes the phrase ‘‘and systems incorporating such equipment’’ because this phrase has been removed from the MTCR Annex. The changes this final rule makes to ECCN 7A103 to increase the clarity of the control should make the control more precise and rule out items not strictly used for navigation purposes. This change is expected to result in a decrease of 3 to 5 license applications received annually by BIS.
  • Lastly, this final rule updates and amends ECCN 7A103 by removing Related Controls paragraph (2), which is no longer accurate after changes were made to the EAR to correspond with changes made to USML Category XII (especially for unmanned aerial vehicles (UAVs) ) that became effective December 31, 2016 (See October 12, 2016, (81 FR 70320) final rule). In addition, this paragraph (2) can be removed because the USML Order of Review and CCL Order of Review will provide sufficient guidance on where items that are subject to the ITAR are classified under the USML and where items that are subject to the EAR are classified in either the ‘‘600 series’’ or in other ECCNs in Category 7 of the CCL.
  • Lastly, as a conforming change to the removal of paragraph (2), this final rule redesignates Related Controls paragraph (3) as new Related Controls paragraph (2).

ECCNs 9A101, 9E101, and 9E102

  • This final rule amends ECCN 9E101 by revising the Related Controls paragraph in the List of Items Controlled section to make a conforming change for the use of the term ‘‘unmanned air vehicles,’’ which this final rule changes to ‘‘unmanned aerial vehicles.’’
  • In addition, this final rule amends ECCN 9E101 and 9E102 by revising the headings of these two ECCNs to make conforming changes for the use of the term ‘‘unmanned air vehicles,’’ which this final rule changes to ‘‘unmanned aerial vehicles.’’ Substantively, there is not a difference in the two formulations of the term, but for consistency with how the term is used in other parts of the EAR, this final rule makes these conforming changes. (Conforming Change to MTCR Annex). This is a clarification and will not change any scope of control. These changes are not expected to have any impact on the number of license applications received by BIS.

New ECCN 9B104 and Related Conforming Amendments to 9D101, 9E001, and 9E002

  • This final rule adds new ECCN 9B104 to control certain aerothermodynamic test facilities. The facilities controlled under this new ECCN 9B104 are those that are usable for rockets, missiles, or unmanned aerial vehicles capable of achieving a ‘‘range’’ equal to or greater than 300 km and their subsystems, and having an electrical power supply equal to or greater than 5 MW or a gas supply total pressure equal to or greater than 3 MPa.
  • This final rule adds this new ECCN 9B104 to complement the controls that already exist for aerodynamic test facilities in order to fully cover the types of ground test facilities necessary to reproduce the flight environments that occur during the reentry phase. Plasma arc jet and plasma wind tunnel facilities simulate the atmospheric reentry thermal effects due to high velocity around the vehicles and are key to the qualification of vehicle thermal protection subsystems. This final rule includes values for electrical power supply and gas supply total pressure in new ECCN 9B104 to exclude commercial systems of a similar nature from this new ECCN.

Related Definition as part of new ECCN 9B104 to define the term ‘‘aerothermodynamic test facilities’’

  • This definition specifies that these facilities include plasma arc jet facilities and plasma wind tunnels for the study of thermal and mechanical effects of airflow on objects. (MTCR Annex Change, Category II: Item 15.B.6., Luxembourg 2016 TEM). As a conforming change to the addition of ECCN 9B104, this final rule adds 9B104 to the heading of ECCN 9D101 and revises the ‘‘MT’’ paragraph in the table in the License Requirements section of ECCNs 9E001 and 9E002 to add 9B104. The headings of ECCNs 9E001 and 9E002 do not need to be revised to add technology for 9B104, because those two technology ECCNs apply to 9B ECCNs, except for those specifically excluded in the ECCN headings. These changes are expected to result in an increase of no more than 1 application received annually by BIS, because such systems and their software and technology are exported infrequently.

ECCN 9D104

  • This final rule amends ECCN 9D104 by adding a note to the List of Items Controlled section. This note clarifies that ECCN 9D104 also includes specific software for the conversion of manned aircraft to an unmanned aerial vehicle. (MTCR Annex Change, Category II: Item 1.D.2., Luxembourg 2016 TEM). This change is expected to result in an increase of 1 to 2 applications received annually by BIS, because, although this software was already controlled here, the note will clarify the scope of ECCN 9D104.

Savings Clause : Shipments of items removed from eligibility for a License Exception or export or reexport without a license (NLR) as a result of this regulatory action that were on dock for loading, on lighter, laden aboard an exporting or reexporting carrier, or enroute aboard a carrier to a port of export or reexport, on July 7, 2017, pursuant to actual orders for export or reexport to a foreign destination, may proceed to that destination under the previous eligibility for a License Exception or export or reexport without a license (NLR) so long as they are exported or reexported before August 7, 2017. Any such items not actually exported or reexported before midnight, on August 7, 2017, require a license in accordance with this rule.

Federal Register: https://www.gpo.gov/fdsys/pkg/FR-2017-07-07/pdf/2017-14312.pdf

House Budget Committee Proposes Moving BIS to State

Thursday, August 3rd, 2017 by Danielle McClellan

2017/08/03

(Source: U.S. House Budget Committee Report)

The following is an excerpt (pages 49-50) from the U.S. House Budget Committee, Building a Better America: A Plan for Fiscal Responsibility.

Building a Better America recommends a different path for the Department of Commerce.

Our budget supports the recent Presidential directives established by the Trump Administration to combat the regulatory burden placed on manufacturers and streamline the permitting review and approval processes. The Memorandum on Streamlining Permitting and Reducing Regulatory Burdens for Domestic Manufacturing (“Memorandum on Manufacturing”) provides for stakeholder engagement and feedback from the nation’s domestic manufacturers, in an effort to highlight unnecessary regulatory burdens and other administrative policies, practices, and procedures that inhibit economic growth and job creation. Our budget makes the following recommendations:

* Eliminate Corporate Welfare Programs in the Department of Commerce. Subsidies to businesses distort the economy, impose unfair burdens on taxpayers, and are especially problematic given the federal government’s fiscal situation. Programs under consideration for elimination could include the following:

  • The Hollings Manufacturing Extension Program. This program subsidizes a network of nonprofit extension centers that provide technical, financial, and marketing services for small and medium-size businesses. The private market generally provides these services. The program, which was supposed to be self-supporting, derives two-thirds of its funding from non-Federal sources.
  • The International Trade Administration [ITA]. This Department of Commerce agency provides trade-promotion services for U.S. companies. The fees it charges for its services do not cover the costs. Businesses can obtain similar services from state and local governments and the private market. Congress should eliminate the ITA or require it to charge for the full cost of these “Trade Promotion Authority” services.
  • The National Network for Manufacturing Innovation. This program, previously known as the Advanced Manufacturing Technology Consortia, provides federal grants to support research for commercial technology and manufacturing. As stated in the Heritage Foundation’s The Budget Book: “Businesses should not receive taxpayer subsidies; these long-lived and unnecessary subsidies increase federal spending and distort the marketplace. Corporate welfare to politically connected corporations should end.”

 

* Eliminate Overlap and Consolidate Necessary Department of Commerce Functions Into Other Departments. Since its establishment in 1903, the Commerce Department has expanded in size and scope to include many activities better suited at other agencies. The Department of Commerce and its various agencies and programs are rife with waste, abuse, and duplication. This budget recommends the following dissolution, delegation of authority, and consolidation measures:

  • Consolidate National Oceanic and Atmospheric Administration functions into the Department of the Interior;
  • Establish the U.S. Patent and Trademark Office as an independent agency;
  • Eliminate the International Trade Administration; o Delegate trade enforcement activities to the International Trade Commission;
  • Consolidate the Bureau of Industry and Security into the Department of State;
  • Eliminate the Economic Development Administration;
  • Consolidate trade adjustment activities within the Department of Labor, which has a duplicate program;
  • Consolidate the Minority Business Development Agency into the Small Business Administration;
  • Consolidate the National Institute of Standards and Technology and the National Technical Information Services within the National Science Foundation; o Consolidate the National Telecommunication and Information Administration into the Federal Communications Commission as an independent agency; and
  • Consolidate the United States Census Bureau and the Bureau of Economic Analysis into the Department of Labor’s Bureau of Labor Statistics.

Export and Recordkeeping Violations Nets $700,000 Fine for Axis Communications

Wednesday, July 19th, 2017 by Danielle McClellan

2017/07/19

By: Ashleigh Foor

On June 9, 2017 a total of 15 charges were brought against Chelmsford, MA company, Axis Communications, Inc, resulting in a $700,000 fine and a thorough audit of its entire export controls compliance program.

Thirteen of the charges were from exporting thermal imaging cameras without the required licenses on, around, or between the dates of March 16, 2011 and July 15, 2013. Axis exported thermal imaging cameras controlled by the Export Administration Regulations (EAR) from the United States to Mexico. Valued at $391,819, these exports required export license. Thermal imaging cameras, classified under Export Control Classification Number 6A003.b.4, are controlled for national security and regional stability reasons.

Axis also received two charges for failing to comply with EAR recordkeeping requirements. In mid-June of 2013, when these thermal imaging cameras were being shipped from the United States to Mexico, Axis allegedly did not keep the required documents and invoices connected to these exports. The EAR requires companies to retain these transaction documents. Axis’ failure to do so, in addition to its thirteen charges of exporting without a required license, resulted in a civil penalty of $700,000 and an order to undergo an external audit of the company’s export controls compliance program. Axis was required to hire an unaffiliated third-party consultant with an expertise in U.S. export control laws to conduct the audit. The order, given June 9, 2017, stated the company would be put on an export denial list unless fine is paid as arranged and audit is completed with results submitted.

Changes for the Implementation of the International Trade Data System

Thursday, May 11th, 2017 by Danielle McClellan

2017/05/11

After consideration of the comments received, the Census Bureau revised and added certain provisions to address the concerns of commenters and to clarify the requirements related to the implementation of the International Trade Data System (ITDS). These changes will be effective July 18, 2017. The changes made in this Final Rule are as follows:

  • Amend the proposed rule to remove the definition and filing requirement for the used electronics indicator.
  • Section 30.1(c) is amended to revise the definition of ‘‘Carrier’’ to include a Non Vessel Operating Common Carrier (NVOCC) as an example of a carrier because the Automated Export System Trade Interface Requirements allows the Standard Carrier Alpha Code of a NVOCC to be reported.
  • Section 30.1(c), is amended to add the definition of ‘‘U.S. Postal Service customs declaration form’’ to identify the shipment document used for exports by mail.
  • Section 30.1(c), is amended to revise the definition of ‘‘Commercial loading document’’ to include the U.S. Postal Service customs declaration form as an example of a commercial loading document.
  • The note to § 30.2(a)(1)(iv) is amended to add Country Group E:2 to ensure consistency with the Export Administration Regulations (EAR).
  • Section 30.2(c) is amended to clarify the application and certification process by dividing the section based on the filing method, AESDirect or methods other than AESDirect. As a result, the title was amended to read as ‘‘Application and Certification Process’’ as opposed to ‘‘Certification and Filing Requirements.’’
  • Section 30.3(e)(2) is amended to add language requiring the authorized agent to provide the filer name in addition to the Internal Transaction Number (ITN) and date of export as proposed in the NPRM, when requested by the U.S. Principal Party in Interest in a routed transaction.
  • Section 30.4(b)(2)(v) is amended to read ‘‘mail’’ rather than ‘‘mail cargo’’ and the phrase ‘‘filing citation or exemption legend’’ will be revised to read ‘‘proof of filing citation, postdeparture filing citation, AES downtime filing citation, exemption or exclusion legend.’’
  • Section 30.8(a) is amended to more accurately reflect U.S. Postal Service operations.
  • Section 30.16(d) is amended to add Country Group E:2 to ensure consistency with the EAR.
  • Section 30.28 is amended to add language removed from 30.28(c) to the opening paragraph.
  • Section 30.29(a)(2) is amended by clarifying that a license value is only required to be reported for shipments licensed by a U.S. Government agency.
  • Section 30.29(b)(2) is amended to replace the term ‘‘commercial document’’ with the defined term ‘‘commercial loading documents’’.
  • Section 30.37(y) is amended to add Country Group E:2 to ensure consistency with the EAR.
  • Delete Appendices B, C, E and F because the Appendices were initially created to assist the trade in transitioning from the Foreign Trade Statistics Regulations (FTSR) to the FTR and are no longer necessary. As a result of deleting Appendices B, C, E, and F, Appendix D is redesignated as Appendix B. Program Requirements In addition to the above changes the Census Bureau is amending relevant sections of the FTR in order to comply with the requirements of the Foreign Relations Act, Public Law 107–228. The following sections of the FTR are amended to revise or clarify export reporting requirements and are unchanged from the Notice of Proposed Rulemaking of March 9, 2016, titled Foreign Trade Regulations: Clarification on Filing Requirements (RIN 0607– AA55):
  • In § 30.1(c), revise the definition of ‘‘AES applicant’’ to remove the text ‘‘applies to the Census Bureau for authorization to’’ and ‘‘or its related applications’’ because the registration will no longer go through the Census Bureau. Rather, the registration will be submitted to CBP through its Web site or through ACE and will be processed by CBP. In addition, related applications will be eliminated.
  • In § 30.1(c), revise the definition of ‘‘AESDirect’’ to clarify the appropriate parties that can transmit Electronic Export Information (EEI) through the AES, clarify that all regulatory requirements pertaining to the AES also apply to AESDirect, and eliminate the reference to the URL.
  • In § 30.1(c), revise the definition of ‘‘AES downtime filing citation’’ to remove filing requirements from the definition.
  • In § 30.1(c), remove the definition of ‘‘AES participant application (APA)’’ because the APA is no longer used for filers to obtain access to the AES.
  • In § 30.1(c), revise the definition of ‘‘Annotation’’ to remove the word ‘‘placed’’ to eliminate the implication of a manual process and add ‘‘or electronic equivalent’’ to allow for an electronic process.
  • In § 30.1(c), add the definition of ‘‘Automated Commercial Environment (ACE)’’ to identify the system through which the trade community reports data.
  • In § 30.1(c), revise the definition of ‘‘Automated Export System (AES)’’ to clarify that AES is accessed through the Automated Commercial Environment.
  • In § 30.1(c), revise the definition of ‘‘Bill of lading (BL)’’ to distinguish between the responsibilities of the carrier and the authorized agent.
  • In § 30.1(c), revise the definition of ‘‘Container’’ to make the language consistent with Article 1 of the Customs Convention on Containers.
  • In §30.1(c), remove the definition of ‘‘Domestic exports’’ because this term is not used in the FTR and add the definition of ‘‘Domestic goods.’’
  • In § 30.1(c), revise the definition of ‘‘Electronic Export Information (EEI)’’ to reference the Shipper’s Export Declaration itself as opposed to the information collected on the SED.
  • In § 30.1(c), revise the definition ‘‘Fatal error message’’ by removing the following sentence to remove the regulatory requirements from the definition: ‘‘The filer is required to immediately correct the problem, correct the data, and retransmit the EEI.’’
  • In § 30.1(c), revise the term ‘‘Filers’’ to ‘‘Filer’’ and revise the definition to reduce redundancy.
  • In § 30.1(c), remove the definition of ‘‘Foreign exports’’ because this term is not used in the FTR and add the definition of ‘‘Foreign goods.’’
  • In § 30.1(c), remove the definition for ‘‘Non Vessel Operating Common Carrier (NVOCC)’’ because the term is not referenced in the FTR.
  • In § 30.1(c), revise the definition of ‘‘Proof of filing citation’’ by removing the word ‘‘placed’’ to eliminate the implication of a manual process and allow for an electronic process.
  • In § 30.1(c), remove the definition of ‘‘Reexport’’ because the term is not used for statistical purposes in the FTR.
  • In § 30.1(c), revise the definition of ‘‘Service center’’ to clarify the role of a service center as it pertains to the FTR.
  • In § 30.1(c), revise the term ‘‘Shipment reference number’’ to read as ‘‘Shipment Reference Number (SRN).’’
  • In § 30.1(c), revise the definition of ‘‘Split shipment’’ to incorporate the revised timeframes addressed in FTR Letter #6, Notice of Regulatory Change for Split Shipments.
  • In § 30.1(c), revise the term ‘‘Transportation reference number’’ to read as ‘‘Transportation Reference Number (TRN).’’
  • Revise § 30.2(a)(1)(iv)(A) to ensure consistency with the Department of Commerce, Bureau of Industry and Security regulations.
  • Revise § 30.2(a)(1)(iv)(C) to add language which notes that the filer must reference the Department of State regulations for exceptions to the filing requirements for goods subject to the ITAR.
  • Revise § 30.2(b)(3) to remove the reference to ‘‘30.4(b)(3)’’ and add ‘‘30.4(b)(4)’’ in its place.
  • Revise § 30.3(e)(2) to add paragraph (xv) ‘‘Ultimate consignee type’’ to clarify that the authorized agent is responsible for reporting the ultimate consignee type in a routed export transaction.
  • Revise § 30.4(b)(2)(v) to reference only mail shipments by removing the words ‘‘and cargo shipped by other modes, except pipelines’’ because all other modes are covered in paragraph (vi). In addition, revise language to replace ‘‘exporting carrier’’ with ‘‘U.S. Postal Service’’ and remove the reference to § 30.46 because pipeline language has been added to § 30.4(c)(2).
  • Revise § 30.4(b)(3) to indicate that the USPPI or authorized agent must provide the proof of filing citation, post departure filing citation, AES downtime citation, exemption or exclusion legend to the carrier.
  • Revise § 30.4(c) by removing the introductory text.
  • Revise § 30.4 by adding paragraphs (c)(1) to address current post departure filing procedures and (c)(2) to address pipeline filing procedures.
  • Revise the title of § 30.5 to be ‘‘Electronic Export Information filing processes and standards’’ to accurately reflect the information that remains in this section because the AES application and certification process are removed.
  • Revise § 30.5 to remove the introductory text and remove and reserve paragraphs (a) and (b) because the certification process is now addressed in § 30.2(c).
  • Remove § 30.5(d)(3) to remove outdated requirements.
  • Revise § 30.5(f) to amend outdated information.
  • In § 30.6, revise the introductory text to add language indicating that additional elements collected in ITDS are mandated by the regulations of other federal government agencies.
  • Revise § 30.6(a)(1) to include the definition of the USPPI for consistency with the format for other data elements.
  • Revise § 30.6(a)(1)(iii) to clarify the use of an Employer Identification Number (EIN) and include the Data Universal Numbering System (DUNS) number as an acceptable USPPI ID number.
  • Revise § 30.6(a)(1)(iv) to clarify whose contact information should be provided in the AES for the USPPI.
  • Revise § 30.6(a)(5)(i) to clarify the country of ultimate destination to be reported with respect to shipments under BIS and State Department export licenses.
  • Revise § 30.6(a)(5)(ii) and add paragraphs (A) through (C) to clarify the country of ultimate destination to be reported with respect to shipments not moving under an export license.
  • Revise § 30.6(a)(11) by removing paragraphs (i) and (ii) because domestic goods and foreign goods are now included in § 30.1(c) as definitions.
  • Revise § 30.6(a)(19) to conform with the revised term ‘‘Shipment Reference Number (SRN).’’
  • Revise the title of § 30.6(b)(14) to conform with the revised term ‘‘Transportation Reference Number (TRN).’’
  • Revise § 30.6(c) to add paragraph (3) to include the original ITN field. Adding the original ITN field will assist the export trade community and enforcement agencies in identifying that a filer completed the mandatory filing requirements for the original shipment and any additional shipment(s).
  • Remove § 30.10(a)(1) and (2) because the electronic certification notice is no longer provided.
  • In § 30.28, revise the introductory text to incorporate the revised timeframes addressed in FTR Letter #6, Notice of Regulatory Change for Split Shipments.
  • Revise § 30.28(a) to allow for an electronic process and incorporate the revised timeframes.
  • Revise § 30.28 by removing paragraph (c) because this information is included in the introductory text.
  • Revise § 30.29(a)(1) to remove the phrase ‘‘non-USML goods’’ and add the phrase ‘‘goods not licensed by a U.S. Government agency and not subject to the ITAR’’ in its place.
  • Revise § 30.29(a)(2) to remove the phrase ‘‘USML goods’’ and add the phrase ‘‘goods licensed by a U.S. Government agency or subject to the ITAR’’ in its place.
  • Revise § 30.29(b)(2) to remove the phrase ‘‘non-USML’’ and add the phrase ‘‘goods not licensed by a U.S. Government agency in its place.
  • Revise §30.29(b)(2) to remove the phase ‘‘USML shipments’’ and add the phrase ‘‘goods licensed by a U.S. Government agency in its place.
  • Revise § 30.36(b)(4) to ensure consistency with the Export Administration Regulations.
  • Revise the titles to Subpart E and § 30.45, revise paragraphs 30.45(a), (a)(1) and (b), remove and reserve paragraph 30.45(a)(2) and (a)(3), and remove 30.45(c) through 30.45(f) to ensure consistency with the CBP regulations.
  • Revise § 30.46 through 30.49 by removing and reserving these sections.
  • Revise the introductory text in § 30.50 to replace ‘‘Automated Broker Interface (ABI)’’ with ‘‘Automated Commercial Environment (ACE)’’.
  • Revise the introductory text in § 30.53 to provide more detail for classifying goods temporarily imported for repair and remove paragraphs 30.53(a) and 30.53(b).
  • Revise § 30.74 paragraph (c)(5) to indicate the new division name and revise the address.
  • Redesignate Appendix D as Appendix B. Revise the title to read ‘‘Appendix B to Part 30—AES Filing Citation, Exemption and Exclusion Legends’’ and remove ‘‘I. USML Proof of Filing Citation’’, ‘‘XII. Proof of filing citations by pipeline’’, and renumber remaining entries.
  • Revise new Appendix B numbers III and IV to clarify the dates listed in the examples are the dates of export.
  • Remove Appendices C through F because they are no longer needed to help transition the trade community from the Foreign Trade Statistics Regulations to the Foreign Trade Regulations.

Federal Register: https://www.gpo.gov/fdsys/pkg/FR-2017-04-19/pdf/2017-07646.pdf

Pay the Government on Time…or Pay Even Sooner

Thursday, May 11th, 2017 by Danielle McClellan

2017/05/11

By: Danielle McClellan

In September 2015, Streit USA Armoring, LLC entered into a Settlement Agreement with the Bureau of Industry and Security (BIS) that imposed a civil penalty of $1.6 million ($850 million in installment payments and $750,000 suspended). The company violated the regulations after it reexported armored vehicles to Iraq, Nigeria, and the Philippines. Full article available at http://learnexportcompliance.bluekeyblogs.com/2015/10/01/bis-nails-mid-and-high-level-company-officials-but-not-export-administrator-in-addition-to-company/.

During settlement negotiations Streit USA specifically sought for the ability to pay the $850,000 in installment payment of $170,000. Under this plan, the company was required to make all payments on time; it was found that their November 2016 payment was not made in a timely fashion so the Final Order has been amended to move the due date forward for the final two remaining payments. Streit USA will now owe its final payment son May 2017 and September 2017 compared to the original June 2017 and January 2018.

Amended Order: https://efoia.bis.doc.gov/index.php/documents/export-violations/export-violations-2015/1111-e2498/file