Archive for the ‘EAR’ Category

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

Wednesday, November 15th, 2017 by Danielle McClellan

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

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

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

Wednesday, July 19th, 2017 by Danielle McClellan

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

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

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

Thursday, May 11th, 2017 by Danielle McClellan

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

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

Tuesday, 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

New Changes to EAR and ITAR Related to Military Aircraft and Gas Turbine Engines

Tuesday, December 20th, 2016 by Danielle McClellan

On November 21, 2016, DDTC published a final rule revising USML paragraphs VII(h)(29) and XIX (f) (12). This rule mainly affects a narrow range of articles related to next-generation platforms that were previously subject to the Export Administration Regulations (EAR) and will soon become subject to the International Traffic in Arms Regulations (ITAR) as of December 31, 2016.

It’s important to remember the following related to this rule beginning December 31, 2016:

  • Articles subject previously to the EAR but now subject to the ITAR under this rule, any unshipped balance under a Department of Commerce authorization will be null and void
  • The ITAR will regulate the reexport or retransfer of articles subject previously to the EAR but now subject to the ITAR under this rule

ITAR regulation Changes:

  • VIII(h)(29) Any of the following equipment if specially designed for a defense article described in paragraph (h)(1): (i) Scale test models; (ii) Full scale iron bird ground rigs used to test major aircraft systems; or (iii) Jigs, locating fixtures, templates, gauges, molds, dies, or caul plates.
    (i) Technical data (see § 120.10 of this subchapter) and defense services (see § 120.9 of this subchapter) directly related to the defense articles described in paragraphs (a) through (h) of this category and classified technical data directly related to items controlled in ECCNs 9A610, 9B610, 9C610, and 9D610 and defense services using classified technical data. (See § 125.4 of this subchapter for exemptions.) (MT for technical data and defense services related to articles designated as such.)
  • XIX (f)(12) Any of the following equipment if specially designed for a defense article described in paragraph (f)(1): Jigs, locating fixtures, templates, gauges, molds, dies, caul plates, or bellmouths.
    (g) Technical data (see § 120.10 of this subchapter) and defense services (see § 120.9 of this subchapter) directly related to the defense articles described in paragraphs (a) through (f) of this category and classified technical data directly related to items controlled in ECCNs 9A619, 9B619, 9C619, and 9D619 and defense services using the classified technical data. (See § 125.4 of this subchapter for exemptions.) (MT for technical data and defense services related to articles designated as such.)

The Bureau of Industry and Security (BIS) simultaneously published a rule related to this rule that adds clarifying text to the descriptions of the types of military aircraft controlled by the CCL (items subject only to the anti-terrorism reason for control). T

BIS Changes:

  • This rule updates the text of ECCN 9A610.w to reflect amendments made to that paragraph since the February 9 rule was published by adding references to ‘‘pneumatic’’ and ‘‘fly-by-light’’ flight control systems (see 81 FR 19026, April 4, 2016). These additions were made to align the descriptions in ECCN 9A610.w with the description of such systems in the current Equipment, Software And Technology Annex Technology Annex of the MTCR.
  • Section 770.2 is amended by adding paragraph (n)
  • ECCN 0A604—[Amended] 4. In in Supplement No. 1 to part 774, ECCN 0A604, remove Note 1 to 0A604.x and redesignate Note 2 to 0A604.x as Note to 0A604.x.
  • ECCN 0A614—[Amended]
  •  In ECCN 0A614, remove Note 3 to 0A614.
  • In ECCN 3A611, in the ‘‘List of Items Controlled’’ section, ‘‘Items’’ paragraph, revise paragraph .x and revise paragraph .y, introductory text
  • In ECCN 8A992, revised the related controls paragraph
  • Revise ECCN 9A115
  • In ECCN 9A604, remove Note 1 to 9A604.x and redesignate Note 2 to 9A604.x as Note to 9A604.x.
  • In ECCN 9A610, revise the ‘‘Control(s)’’ table in the ‘‘License Requirements’’ section and the ‘‘List of Items Controlled”
  • In ECCN 9A619, the List of Items Controlled section is amended by:
    • Revising the ‘‘Related Controls’’ paragraph;
    •  Revising the ‘‘Related Definitions’’ paragraph;
    • Removing the note that immediately follows paragraph .e in the ‘‘Items’’ paragraph;
    • Revising paragraph .x in the ‘‘Items’’ paragraph; and
    • Revising paragraph .y in the ‘‘Items’’ paragraph.
  • In ECCN 9A620, remove the note to 9A620.b that immediately follows paragraph .x.
  • In ECCN 9B610, revise the ‘‘Related Controls’’ paragraph in the List of Items Controlled section
  • In ECCN 9B619, revise the ‘‘Related Controls’’ paragraph in the List of Items Controlled section
  • In ECCN 9C610, revise the heading, and the ‘‘Items’’ paragraph of the ‘‘List of Items Controlled’’ section
  • In ECCN 9C619, revise the heading, and the ‘‘Items’’ paragraph of the ‘‘List of Items Controlled’’ section
  • In ECCN 9E610, in the ‘‘List of Items Controlled’’ section, the ‘‘Items’’ paragraph is amended by:
    • Removing the word ‘‘or’’ from the end of paragraph .b.13;
    • Removing the period from the end of paragraph .b.14 and adding in its place a semicolon followed by the word ‘‘or’’; and
    • Adding paragraph .b.15.
  • In ECCN 9E619, the ‘‘List of Items Controlled’’ section is amended by revising the ‘‘Related Controls’’ paragraph, and in the ‘‘Items’’ paragraph:
    • Revising the Note that immediately follows paragraph .a;
    • Removing the word ‘‘or’’ from the end of paragraph .b.8;
    • Removing the period from the end of paragraph .b.9 and adding in its place a semicolon followed by the word ‘‘or’’;  and
    • Adding paragraph b.10.

State Federal Register Notice: http://pmddtc.state.gov/documents/1400_AD89.pdf

BIS Federal Register Notice: https://www.gpo.gov/fdsys/pkg/FR-2016-11-21/pdf/2016-27777.pdf

New Changes to EAR and ITAR Related to Military Aircraft and Gas Turbine Engines

Tuesday, December 20th, 2016 by Danielle McClellan

On November 21, 2016, DDTC published a final rule revising USML paragraphs VII(h)(29) and XIX (f) (12). This rule mainly affects a narrow range of articles related to next-generation platforms that were previously subject to the Export Administration Regulations (EAR) and will soon become subject to the International Traffic in Arms Regulations (ITAR) as of December 31, 2016.

It’s important to remember the following related to this rule beginning December 31, 2016:

  • Articles subject previously to the EAR but now subject to the ITAR under this rule, any unshipped balance under a Department of Commerce authorization will be null and void
  • The ITAR will regulate the reexport or retransfer of articles subject previously to the EAR but now subject to the ITAR under this rule

ITAR regulation Changes:

  • VIII(h)(29) Any of the following equipment if specially designed for a defense article described in paragraph (h)(1): (i) Scale test models; (ii) Full scale iron bird ground rigs used to test major aircraft systems; or (iii) Jigs, locating fixtures, templates, gauges, molds, dies, or caul plates.
    (i) Technical data (see § 120.10 of this subchapter) and defense services (see § 120.9 of this subchapter) directly related to the defense articles described in paragraphs (a) through (h) of this category and classified technical data directly related to items controlled in ECCNs 9A610, 9B610, 9C610, and 9D610 and defense services using classified technical data. (See § 125.4 of this subchapter for exemptions.) (MT for technical data and defense services related to articles designated as such.)
  • XIX (f)(12) Any of the following equipment if specially designed for a defense article described in paragraph (f)(1): Jigs, locating fixtures, templates, gauges, molds, dies, caul plates, or bellmouths.
    (g) Technical data (see § 120.10 of this subchapter) and defense services (see § 120.9 of this subchapter) directly related to the defense articles described in paragraphs (a) through (f) of this category and classified technical data directly related to items controlled in ECCNs 9A619, 9B619, 9C619, and 9D619 and defense services using the classified technical data. (See § 125.4 of this subchapter for exemptions.) (MT for technical data and defense services related to articles designated as such.)

The Bureau of Industry and Security (BIS) simultaneously published a rule related to this rule that adds clarifying text to the descriptions of the types of military aircraft controlled by the CCL (items subject only to the anti-terrorism reason for control).

BIS Changes:

  • This rule updates the text of ECCN 9A610.w to reflect amendments made to that paragraph since the February 9 rule was published by adding references to ‘‘pneumatic’’ and ‘‘fly-by-light’’ flight control systems (see 81 FR 19026, April 4, 2016). These additions were made to align the descriptions in ECCN 9A610.w with the description of such systems in the current Equipment, Software And Technology Annex Technology Annex of the MTCR.
  • Section 770.2 is amended by adding paragraph (n)
  • ECCN 0A604—[Amended] 4. In in Supplement No. 1 to part 774, ECCN 0A604, remove Note 1 to 0A604.x and redesignate Note 2 to 0A604.x as Note to 0A604.x.
  • ECCN 0A614—[Amended]
  •  In ECCN 0A614, remove Note 3 to 0A614.
  • In ECCN 3A611, in the ‘‘List of Items Controlled’’ section, ‘‘Items’’ paragraph, revise paragraph .x and revise paragraph .y, introductory text
  • In ECCN 8A992, revised the related controls paragraph
  • Revise ECCN 9A115
  • In ECCN 9A604, remove Note 1 to 9A604.x and redesignate Note 2 to 9A604.x as Note to 9A604.x.
  • In ECCN 9A610, revise the ‘‘Control(s)’’ table in the ‘‘License Requirements’’ section and the ‘‘List of Items Controlled”
  • In ECCN 9A619, the List of Items Controlled section is amended by:
    • Revising the ‘‘Related Controls’’ paragraph;
    •  Revising the ‘‘Related Definitions’’ paragraph;
    • Removing the note that immediately follows paragraph .e in the ‘‘Items’’ paragraph;
    • Revising paragraph .x in the ‘‘Items’’ paragraph; and
    • Revising paragraph .y in the ‘‘Items’’ paragraph.
  • In ECCN 9A620, remove the note to 9A620.b that immediately follows paragraph .x.
  • In ECCN 9B610, revise the ‘‘Related Controls’’ paragraph in the List of Items Controlled section
  • In ECCN 9B619, revise the ‘‘Related Controls’’ paragraph in the List of Items Controlled section
  • In ECCN 9C610, revise the heading, and the ‘‘Items’’ paragraph of the ‘‘List of Items Controlled’’ section
  • In ECCN 9C619, revise the heading, and the ‘‘Items’’ paragraph of the ‘‘List of Items Controlled’’ section
  • In ECCN 9E610, in the ‘‘List of Items Controlled’’ section, the ‘‘Items’’ paragraph is amended by:
    • Removing the word ‘‘or’’ from the end of paragraph .b.13;
    • Removing the period from the end of paragraph .b.14 and adding in its place a semicolon followed by the word ‘‘or’’; and
    • Adding paragraph .b.15.
  • In ECCN 9E619, the ‘‘List of Items Controlled’’ section is amended by revising the ‘‘Related Controls’’ paragraph, and in the ‘‘Items’’ paragraph:
    • Revising the Note that immediately follows paragraph .a;
    • Removing the word ‘‘or’’ from the end of paragraph .b.8;
    • Removing the period from the end of paragraph .b.9 and adding in its place a semicolon followed by the word ‘‘or’’;  and
    • Adding paragraph b.10.

State Federal Register Notice: http://pmddtc.state.gov/documents/1400_AD89.pdf

BIS Federal Register Notice: https://www.gpo.gov/fdsys/pkg/FR-2016-11-21/pdf/2016-27777.pdf

BIS revises License Exceptions Related to Cuba

Tuesday, November 15th, 2016 by Danielle McClellan

This rule amends a license exception to allow cargo aboard aircraft to transit Cuba when that cargo is bound for destinations other than Cuba. This rule also authorizes export and reexport of certain items sold directly to individuals in Cuba under a license exception. Finally, this rule revises the lists of ineligible Cuban officials for purposes of certain license exceptions. BIS is publishing this rule to further implement the administration’s policy of increasing engagement and commerce that benefits the Cuban people.

This final ruling is in conjunctions with OFAC (Office of Foreign Assets Controls) recent amendments to the Cuban Assets Control Regulations (CACR) (31CRF Part 515). Although the changes below revise the licensing policy for certain types of exports, the United States continues to maintain a comprehensive embargo on trade with Cuba. The export and reexport to Cuba of all items subject to the EAR still requires a BIS license, unless authorized by a license exception specified in §746.2(a)(1) of the EAR or exempted from license requirements in §746.2(a)(2) of the EAR.

The following changes will be made:

PART 740

  • Section 740.12 is amended by revising paragraphs (a)(2)(v)(A) and (B) to read as follows: § 740.12    Gift parcels and humanitarian donations (GFT).

(a) *  *  *

(2) *  *  *

(v) *  *  *

(A) No gift parcel may be sent to any member of the Council of Ministers or flag officer of the Revolutionary Armed Forces.

(B) No gift parcel may be sent to any member of the Politburo.

  • Section 740.15 is amended by revising the introductory text and paragraph (d)(6), removing the second (duplicate) ‘‘note to paragraph (d),’’ redesignating paragraph (e) as paragraph (f), and adding a new paragraph (e) to read as follows:
    • § 740.15    Aircraft, vessels and spacecraft (AVS). This License Exception authorizes departure from the United States of foreign registry civil aircraft on temporary sojourn in the United States and of U.S. civil aircraft for temporary sojourn abroad; the export of equipment and spare parts for permanent use on a vessel or aircraft; exports to vessels or planes of U.S. or Canadian registry and U.S. or Canadian Airlines’ installations or agents; the export or reexport of cargo that will transit Cuba on an aircraft or vessel on temporary sojourn; and the export of spacecraft and components for fundamental research. Generally, no License Exception symbol is necessaryfor export clearance purposes; however, when necessary, the symbol ‘‘AVS’’ may be used.
    •  (d) *  *  *
    • (6) Cuba, eligible vessels and purposes. Only the types of vessels listed in this paragraph (d)(6) departing for Cuba for the purposes listed in this paragraph (d)(6) may depart for Cuba pursuant to this paragraph (d). Vessels used to transport both passengers and items to Cuba may transport automobiles only if the export or reexport of the automobiles to Cuba has been authorized by a separate license issued by BIS (i.e., not authorized by license exception).
    • (i) Cargo vessels for hire for use in the transportation of items;
    • (ii) Passenger vessels for hire for use in the transportation of passengers and/ or items; and
    • (iii) Recreational vessels that are used in connection with travel authorized by the Department of the Treasury, Office of Foreign Assets Control (OFAC).
    • Note to paragraph (d)(6)(iii): Readers should also consult U.S. Coast Guard regulations at 33 CFR part 107 Subpart B— Unauthorized Entry into Cuban Territorial Waters.
    • (e) Intransit cargo. Cargo laden on board an aircraft or vessel may transit Cuba provided:
      • (1) The aircraft or vessel is exported or reexported on temporary sojourn to Cuba pursuant to paragraph (a) or (d) of this section or a license from BIS; and
      • (2) The cargo departs with the aircraft or vessel at the end of its temporary sojourn to Cuba, is not removed from the aircraft or vessel for use in Cuba and is not transferred to another aircraft or vessel while in Cuba.

 

  • Section 740.19 is amended by revising paragraphs (c)(2)(i) and (ii) to read as follows: § 740.19    Consumer communications devices (CCD).
    •  (c) *  *  *
    • (2) *  *  *
    • (i) Ineligible Cuban Government Officials. Members of the Council of Ministers and flag officers of the Revolutionary Armed Forces.
    • (ii) Ineligible Cuban Communist Party Officials. Members of the Politburo.
  • Section 740.21 is amended by:
    • a. Removing the word ‘‘or’’ from the end of paragraph (b)(2);
    • b. Removing the period from the end of paragraph (b)(3) and adding in its place ‘‘; or’’;
    • c. Adding paragraph (b)(4) and;
    • d. Revising paragraphs (d)(4)(ii) and (iii).
    • The addition and revisions read as follows: § 740.21    Support for the Cuban People (SCP).
      •  (b) *  *  *
      • (4) Items sold directly to individuals in Cuba for their personal use or their immediate family’s personal use, other than officials identified in paragraphs (d)(4)(ii) or (iii) of this section.
      • (d) *  *  *
      • (4) *  *  *
      • (ii) Members of the Council of Ministers and flag officers of the Revolutionary Armed Forces; and
      • (iii) Members of the Politburo.
  • Section 746.2 is amended by revising paragraph (a)(1)(x) to read as follows:
    •  § 746.2    Cuba.
      • (a) *  *  *
      • (1) *  *  *
      • (x) Aircraft, vessels and spacecraft (AVS) for certain aircraft on temporary sojourn; equipment and spare parts for permanent use on a vessel or aircraft, and ship and plane stores; vessels on temporary sojourn; or cargo transiting Cuba on aircraft or vessels on temporary sojourn (see § 740.15(a), (b), (d), and (e) of the EAR).

Federal Register Notice: https://www.gpo.gov/fdsys/pkg/FR-2016-10-17/pdf/2016-25034.pdf

For additional information, please review the rule, the Department of Commerce and Department of the Treasury’s joint fact sheet, and BIS’s updated Frequently Asked Questions, For any specific questions regarding exports or reexports to Cuba, please contact the Foreign Policy Division at (202) 482-4252.

Lebanon Company Fined $450,000 for Reexporting Items to Syria

Tuesday, November 15th, 2016 by Danielle McClellan

By: Danielle McClellan

Tecnoline SAL (Tecnoline )of Sin El Fil, Beirut, Lebanon pled guilty to 7 charges of Causing, Aiding, or Abetting a Violation of the Regulations and will pay a civil penalty of $450,000. Tecnoline reexported US-origin mass spectrometers, gas chromatographs and consumables, liquid chromatograph-mass spectrometer systems, and liquid chromatograph modules (ECCN 3A999), controlled for anti-terrorism reasons, to Syria. There is a long standing US Embargo against Syria which makes a BIS license required for all exports/reexports subject to the EAR with the only exception being food and certain medicines).

The items were manufactured by Agilent Technologies (Agilent), a US company, and Technoline was an authorized distributor and reseller of Agilent’s products. In 2004, Technoline signed an agreement with Agilent that acknowledged their awareness of US export control laws and regulations and agreed to comply with them as a reseller and distributor of controlled products. Between August 2009 and October 2010, Technoline negotiated price discounts on the items with Agilent and eventually ordered the items for the Syrian Government ministries or entities. Technoline falsely identified the ultimate destination of the items as being Iraq or Lebanon (BIS license not required) and on one or more occasions they failed to disclose the ultimate destination of the items. Agilent shipped the items to TEchnoline in Beirut, Lebanon via Agilent’s German subsidiary. Once Technoline received the items they transferred them to Syria, there they were installed at Syrian Government ministries within a month or so. There were never any authorizations from BIS to export the items from the US to Syria, or to reexport them from Germany to Syria.

View Order: https://efoia.bis.doc.gov/index.php/documents/export-violations/export-violations-2015/1080-e2474/file