Archive for the ‘Commerce Dept’ Category

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.

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)

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.

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

Chinese National Pleads Guilty to Attempting to Export “Bananas”

Thursday, May 11th, 2017 by Danielle McClellan

2017/05/11

By: Danielle McClellan

For the past 6 years, 53 year old Fuyi Sun has attempted to purchase carbon fiber for the Chinese military (according to court records). A few years ago Sun contacted what he thought was a US company that distributed carbon fiber, but was, in fact, an undercover entity created by Homeland Security Investigations (HSI) and staffed by undercover agents. The company, “UC Company,” was asked by Sun to supply M60 Carbon Fiber which is a high-grade carbon fiber that is used in sophisticated aerospace and defense applications, specifically for drones and other government defense applications. M60 Carbon Fiber requires a license for export to China for nuclear non-proliferation and anti-terrorism reasons.

During the course of the relationship between UC Company and Sun, he often suggested various security measures they should take to make sure they would both remain protected from the “U.S. Intelligence.” He instructed the undercover agents to use the word “banana” instead of “carbon fiber” in all communications…he inquired about purchasing 450 kilograms of banana in one email. He also instructed agents to remove identifying barcodes for the carbon fiber, prior to transshipment,  and instructed them to identify it as “acrylic fiber” in customs documentation.

On April 11, 2016, Sun traveled from China to New York to purchase the M60 Carbon Fiber from UC Company. On April 11th and 12th Sun met with undercover agents and suggested to them that the Chinese military was the ultimate end-user for the carbon fiber, he also explained that he personally worked in the Chinese missile program. He further asserted that he had a close relationship with the Chinese military, and would be supplying the M60 Carbon Fiber to the Chinese military or to institutions closely associated with it. He agreed to purchase two cases of the carbon fiber on the 12th from UC Company and provided them with $23,000 in cash for the carbon fiber and then provided an additional $2,000 as compensation for the risk that he believed they were taking to illegally export the carbon fiber to China without a license. Sun was arrested the next day.

Sun pled guilty to attempting to violate the International Emergency Economic Powers Act (IEEPA), which carries a maximum sentence of 20 years in prison. The maximum sentence in this case will be prescribed by Congress. Sun will be sentenced on July 26, 2017.

Details: https://www.justice.gov/opa/pr/chinese-national-pleads-guilty-attempting-illegally-export-high-grade-carbon-fiber-china

Exporting to Hong Kong? Don’t Forget Your Written Proof for Hong Kong!

Thursday, May 11th, 2017 by Danielle McClellan

2017/05/11

By: John Black

Effective April 19, 2017, the Bureau of Industry and Security (BIS) has new documentation requirements for export and reexports under licenses and license exceptions to and from Hong Kong.

BIS will  require persons planning on exporting and reexporting to Hong Kong any items subject to the Export Administration Regulations (EAR) and controlled on the Commerce Control List (CCL) for national security (NS), missile technology (MT), nuclear nonproliferation (NP column 1), or chemical and biological weapons (CB) reasons to obtain, prior to the export or reexport, a copy of a Hong Kong import license or a written statement from the Hong Kong Government that such a license is not required. The purpose of this change is to require that the Hong Kong Government issue an import license as an acknowledgement that sensitive EAR-controlled items are entering Hong Kong and as an agreement to prevent unauthorized reexport or transfer of those items to prohibited destinations. Interestingly, the prohibited destination that most concerns the US is the People’s Republic of China (PRC). The EAR treats Hong Kong as a separate “country” from the PRC even though the PRC, the United Nations, and nearly everybody else in the world considers Hong Kong to be part of the PRC because Hong Kong is part of the PRC.

Leaving behind the interesting point that the EAR treats Hong Kong as if it is not part of the PRC, there are a lot of details in this new rule. In addition what was described above, this rule will also require persons planning on reexporting from Hong Kong any item subject to the EAR and controlled for NS, MT, NP column 1, or CB reasons to obtain a Hong Kong export license or a statement from Hong Kong government that such a license is not required.

View full details of the rule at http://www.learnexportcompliance.com/News/The-Export-Control-Update-February-2017.aspx#EAR

BIS FAQs Related to Rule: https://bis.doc.gov/index.php/policy-guidance/foreign-import-export-license-requirements/hong-kong

Federal Register: https://www.gpo.gov/fdsys/pkg/FR-2017-01-19/pdf/2017-00446.pdf

BIS Extends Temporary General License for ZTE Corporations & ZTE Kangxun

Thursday, March 30th, 2017 by Danielle McClellan

2017/03/30

On February 21, 2017 the Bureau of Industry and Security (BIS) extended a temporary general license that restored, for a specified time period, the licensing requirements and policies under the EAR for exports, reexports, and transfers (in-country) to ZTE Corporation and ZTE Kangxun that were added to the Entity List on March 8, 2016. The rule extends the general license to March 29, 2017.

Federal Register: https://www.gpo.gov/fdsys/search/pagedetails.action?granuleId=2017-03664&packageId=FR-2017-02-24&acCode=FR&collectionCode=FR

Florida Company Fined $27 Million for 150 Intentional EAR Violations

Thursday, March 30th, 2017 by Danielle McClellan

2017/03/30

By: Danielle McClellan

Access USA Shipping, LLC (Access) of Sarasota, Florida was charged with 150 violations beginning in April 2011 and spanning to February 2013. The company went out of its way to conceal the fact that foreign customers were purchasing products through them without their US merchants knowing who the end users of their items were. Access mis-described, undervalued, and destroyed and/or altered export control documents to conceal the illegal exports. They also made sure that their foreign customers had a direct employee to order through to avoid any export scrutiny. They went as far as allowing foreign customers to send “wish lists” to Access employees who would then purchase the products from their US merchants with US credit cards and PayPal accounts in the name of Eric Baird, Access’s founder and then-owner and CEO or cards opened in the name of the employee making the order. The foreign customer would then reimburse Access or the employee; there were even situations when the shipments were delivered to the homes of Access employees to ensure that the US merchants would not become suspicious of the order and the end user.

Access also exported (or attempted to) items classified as ECCN 0A987 which are controlled for Crime Control reasons to Argentina, Austria, Hong Kong, Indonesia, Libya, South Africa, and Sweden without a BIS export license. It was also found that the company exported (or attempted to) items classified as ECCN 5A990 and controlled for anti-terrorism reasons as well as EAR99 items to Transsphere Oy, a company on the Entity List.

The company is ordered to pay $10 million right away and the other $17 million will be suspended for two years and waived if the company does not commit any violations during the two year probationary period.

Charging Letter: https://efoia.bis.doc.gov/index.php/documents/export-violations/export-violations-2015/1102-e2490/file

AES Changes Impacted by Export Control Reform Implementation Rules

Thursday, March 30th, 2017 by Danielle McClellan

2017/03/30

(Source: census@subscriptions.census.gov, 22 February 2017.)

On July 28, 2016 and October 12, 2016, the Department of Commerce, Bureau of Industry and Security published final rules (available at here and here) that became effective December 31, 2016. As a result of these rules, the following changes were made to the Automated Export System (AES) in order for exporters and authorized agents to successfully report electronic export information in the AES.
(1) The Addition of “600 series” Export Control Classification Numbers (ECCN)

600-series ECCNs 1A607, 1B607, 1C607, 1D607, 1E607, 6B619, 6D619, 6E619, 7A611, 7B611, 7D611, and 7E611 were added to the AES ECCN reference table. See the following instructions to determine which “600 series” ECCNs are eligible for certain license types. By using any of the License Exceptions or “No License Required” (NLR), you are certifying that the terms, provisions, and conditions described in the EAR have been met.

  • C30 (BIS license), C40 (TMP), C41 (RPL), C42 (GOV), and C59 (STA) – All “600 series” ECCNs listed above are eligible to the extent permitted under part 740 of the EAR.
  • C33 (NLR) – All “600 series” ECCNs listed above are eligible only if exported to Canada. Some of these “600 series” items were previously authorized under an International Traffic in Arms Regulations (ITAR) Canadian exemption (SCA).
  • C35 (LVS) – The following “600 series” ECCNs are eligible: 1B607, 6B619, 7A611, and 7B611.
  • C44 (TSU) – The following “600 series” ECCNs are eligible: 1D607, 1E607, 6D619, 6E619,7D611, and 7E611.

 

If the “600 series” ECCNs are reported under any other license type, AES will generate a fatal error (FATAL ERR 666-ECCN MUST BE FROM APPROVED LIST) back to the filer. Please note that under 758.1 of the EAR, an AES filing is required for exports of items classified under “600 series” ECCNs, regardless of the value of the item or destination.
(2) Items subject to the EAR, including “600 series” ECCNs that are licensed by the State Department under the International Traffic in Arms Regulations (ITAR)

Under a delegation of authority, the State Department may license an item subject to the EAR on an ITAR license pursuant to new section 120.5(b) of the ITAR. If this occurs, the AES filer must report the ECCN (including “600 series” ECCNs) or the EAR99 designation in the ECCN field in AES, even if the license type is S05 (DSP-5). All other fields associated with license type S05 are required, such as registration number, significant military equipment indicator, DDTC eligible party certification indicator, USML category code, DDTC unit of measure and DDTC quantity.

A complete list of all of the AES License Type codes and reporting instructions for these types can be found at here.

For questions regarding these upcoming AES changes, please contact the Bureau of Industry and Security by email at ECR_AES@bis.doc.gov or at one of the phone numbers below.

  • Office of Technology Evaluation (located in Washington, DC): (202) 482-4933
  • Outreach and Educational Services Division (located in Washington, DC): (202) 482-4811
  • Western Regional Office (located in Irvine, CA): (949) 660-0144
  • Northern California branch (located in San Jose, CA): (408) 998-8806