Training
All
effective compliance programs contain an element for
training. Don’t forget to train your new people
that are involved in the export process. DL Exports
will be hosting a series of trainings this fall, and
winter. Please note that we are adding classes in beautiful
Newport RI.
Visit:
http://www.dlexports.com/training.
Security
Encrypt
any removable devices, (i.e.: Flashdrives) if you have
ITAR data. Please see the following article from IT
Security Blog:
The IT Security Blog Roundup: http://roundup.scmagazineblogs.com/2007/05/02/youre-a-good-man-glen-frausto/
You’re a good man, Glen Frausto
Author: Frank Washkuch
There’s a truck driver in Texas with a full tank
of gas and a clear conscience.
According to a report in the Hartford Courant, which
came to the attention of SCMagazineBlogs.com via this
write up by mordaxus on the Emergent Chaos blog, a Lockheed
Martin employee dropped a USB flash drive at a gas station.
That pack-of-gum-sized drive contained details on the
Joint Strike Fighter aircraft, the nation’s most
expensive weapons program.
According to a Bloomberg news story, Glen Frausto took
the device home for a 20 minute investigation and turned
it over to authorities.
The U.S. Air Force completed its investigation last
month, according to authorities.
Boston
Globe article on same subject: http://www.boston.com/business/technology/articles/2007/04/19/fbi_checking_data_lost_by_lockheed/.
AES:
Compliance Reviews
The
Census Bureau has completed its “pretest”
of certain companies in the mid-Atlantic/DC area under
its new compliance review program, and has issued a
“best practices” manual to guide exporters.
Census is now expanding its review program nationwide,
focusing on companies with poor compliance records and
issues with the Automated Export System (AES). Once
reviewed, a company will be given 90 days to comply
with the agency’s recommendations or lose their
AES reporting privileges and be referred for enforcement.
Deemed
Exports Proposed Ruling
The
Commerce Department is considering expansion of the
deemed export rule, under which a release of technology
to a foreign national within the U.S. is deemed to be
an exportation to such foreign national's home country.
On March 28, 2005, a notice of proposed rule making
was published and the comment period was extended to
June 27, 2005. The ruling has not yet been established.
The Commerce Department has concluded that existing
policies could enable foreign nationals from countries
and entities of concern to access otherwise controlled
technology. The proposed rule extends the definition
of "use" under the deemed export rule and
requires a U.S. person to use a foreign national's country
of birth as a criterion for the deemed export rule.
Thus, a U.S. person will apply for a deemed export license
for employees or visitors who are foreign nationals
and have access to dual-use controlled technology if
they were born in a country where the technology transfer
in question would require an export license, regardless
of the foreign national's citizenship or residence.
BIS
has held a number Technical Advisory Committee (TAC)
meetings as this change could have major impact with
industry and universities, especially in the area of
university research. Of special concerns are the guidelines
set forth on usage of controlled technology by students.
Under the ruling, usage of some technology, i.e.: large
scale computers, would become off limits to some students
depending upon their nationality.
BIS
final rule for the People's Republic of China
BIS
published the final rule that contains revisions and
clarifications of export and reexport controls for the
People's Republic of China pertaining to 31 categories
of low level foreign-policy controlled items that are
exported for military end-use.Exporters must review
these 31 ECCNs and either obtain an end-use statement
that the items will not be used for military use combined
with due diligence research, or will need to obtain
an export license. The BIS plans to create a preferred
list of Chinese companies that are purely commercial
that exporters and check and then export these items
under a VEU authorization.
- The
rule creates a validated end-use (VEU) program which
authorizes the export and export of eligible items
for commercial use only.
- The
rule pertains only to foreign-policy controlled items
and not EAR99 items.
- Bureau
of Industry and Security's Deputy Assistant Secretary
Matt Borman will respond to questions and these are
attached. China
Rule Qs and As
Encryption
Exporters
are reminded that encryption software and hardware are
required to submit their products for commodity classification.
Products that are classified 5A002 or 5D002 must have
export reported bi-annually to BIS and NSA. January
to June sales must be reported by August 1st, July to
December sales must be reported by February first in
electronic format (Recommended file formats for electronic
submission include spreadsheets, tabular text or structured
text) by email to BIS at crypt@bis.doc.gov
and to the ENC Encryption Request Coordinator at enc@nsa.gov.
If you have not submitted your product for classification,
DL Exports can provide this service to you. Please call
or write us.
Changes
in Harmonized and Schedule B Codes for 2007
On
December 27, 2006, President George W. Bush signed Presidential
Proclamation 8097 implementing the 2007 changes to the
Harmonized Tariff Schedule of the United States (HTSUS),
and it was published in the Federal Register on January
4, 2007. (http://a257.g.akamaitech.net/7/257/2422/01jan20071800/edocket.access.gpo.gov/2007/pdf/07-00004.pdf)
The
new tariffs went into effect on February 3, 2007, U.S.
Customs and Border Protection (CBP) has stated it will
give importers an additional 15-day grace period before
enforcing the new 10-digit tariff classifications as
well as other rules for certain goods. The grace period
would allow importers to refile entries rejected due
to classification errors resulting from changes mandated
by the World Customs Organization (WCO).
The
International Trade Commission (ITC) has posted, at
the full 10-digit level, the U.S. Harmonized Tariff
Schedule changes on its Web site, located at http://www.usitc.gov/tata/hts/bychapter/index.htm.
The WCO changes affect 83 HTS chapters and more than
240 headings of the HTSUS, as well as over 1,600 eight-digit
HTSUS classifications.
DDTC,
D-Trade, and SNAP-R
Directorate
of Defense Trade Controls has a new web address, http://pmddtc.state.gov.
Users of D-Trade are advised to go onto the D-Trade
website and always use the latest viewer and forms.
D-Trade will not accept old form submissions.
BIS
has implemented Simplified Network Application Process
Redesign (SNAP-R) includes enhanced security, the ability
to attach supporting documentation electronically, user
access rights, and the ability for BIS Licensing Officers
to view work items and supporting documents electronically.
SNAP has been retired as of December 2006, and documents
from SNAP have been transferred to SNAP-R.
Users
of D-Trade are advised to go onto the D-Trade website.
Additional
Restrictions on North Korea
In
accordance with recent United Nations (UN) Security
Council resolutions and the foreign policy interests
of the United States, the United States Government is
imposing restrictions on exports and reexports of luxury
goods to the Democratic People's Republic of Korea (North
Korea), and is continuing to restrict exports and reexports
of nuclear or missile-related items and other items
included on the Commerce Control List (CCL). To this
end, the Bureau of Industry and Security (BIS) is amending
the Export Administration Regulations (EAR) to impose
license requirements for the export and reexport of
virtually all items subject to the EAR to North Korea,
except food and medicines not listed on the CCL.
BIS
will generally deny applications to export and reexport
luxury goods, e.g., luxury automobiles; yachts; gems;
jewelry; other fashion accessories; cosmetics; perfumes;
furs; designer clothing; luxury watches; rugs and tapestries;
electronic entertainment software and equipment; recreational
sports equipment; tobacco; wine and other alcoholic
beverages; musical instruments; art; and antiques and
collectible items including but not limited to rare
coins and stamps.
OFAC
has also imposed additional restrictions; prohibiting
States persons are prohibited from registering vessels
in North Korea, or from otherwise obtaining authorization
for a vessel to fly the North Korean flag.
BIS
Proposes Changes for Exporting High-Tech Goods to China
The
U.S. Commerce Department has proposed requiring U.S.
companies that export high-tech goods to China to verify
that their products will not aid China’s military.
David
McCormick, under secretary of Commerce, said the proposed
rule would achieve two objectives: “supporting
American companies in competing in the vast Chinese
market for civilian technology while preventing the
export of technologies that contribute to China’s
military modernization.”
The
proposed amendments include a revision to the licensing
review policy for items controlled on the Commerce Control
List (CCL) for reasons of national security, including
a new control based on knowledge of a military end-use
on exports to the PRC of certain CCL items that otherwise
do not require a license to the PRC. The items subject
to this license requirement will be set forth in a list.
This rule further proposes to revise the licensing review
policy for items controlled for reasons of chemical
and biological proliferation, nuclear nonproliferation,
and missile technology for export to the PRC, requiring
that applications involving such items be reviewed in
conjunction with the revised national security licensing
policy.
This
rule proposes the creation of a new authorization for
validated end-users in certain destinations, including
the PRC, to whom certain, specified items may be exported
or reexported. Such validated end-users would be placed
on a list in the EAR after review and approval by the
United States Government.
Finally,
this rule proposes to require exporters to obtain an
End-User Certificate, issued by the PRC Ministry of
Commerce, for all items that both require a license
to the PRC for any reason and exceed a total value of
$5,000. The current PRC End-Use Certificate applies
only to items controlled for national security reasons.
This rule also proposes to eliminate the current requirement
that exporters submit PRC End-User Certificates to BIS
with their license applications but provides that they
must retain them for five years.
For
details, please see the July 7, 2006 notification in
the Federal Register. DL Exports provides a service
that will automatically send you pertinent export compliance
articles from the Federal Register and other Federal
Government sites, contact us for more details.
Phase
out of ELLIE and D-Trade Training
Beginning
October 12, 2006, ELLIE and ROBB will no longer accept
electronic DSP-5 forms (for permanent export of defense
articles). Industry users will be required to submit
all DSP-5 forms through D-Trade. As this deadline approaches,
DDTC is making a concerted effort to ensure that industry
users have the necessary preparation and tools to submit
export applications to D-Trade.
In
the weeks leading up to October 12, DDTC will conduct
free D-Trade training and usage seminars in the District
of Columbia (July 20), New York (August 3), California
(August 16), Florida (August 30), and Illinois (September
12) to educate industry representatives on the use and
benefits of D-Trade. These seminars will offer all industry
users the opportunity to explore the benefits of D-Trade,
learn about upcoming D-Trade initiatives, and view a
demonstration of the new D-Trade amendment forms. D-Trade
experts will be on-hand after each session to answer
questions regarding the transition to D-Trade, and to
assist attendees in learning how to use the D-Trade
system.
For
more information on registering for one of these events
go to: http://www.pmdtc.org/memorandum.htm.
BIS
Announces Significant Change in Computer Ratings
BIS
announced on April 24, 2006 to revise the formula for
calculating computer performance from Composite Theoretical
Performance (CTP) measured in Millions of Theoretical
Operations Per Second (MTOPS) to Adjusted Peak Performance
(APP) measured in Weighted TeraFLOPS (Trillion Floating
point Operations Per Second) (WT). This rule also establishes
new control levels in Category 4 of the Commerce Control
List (CCL) expressed in WT. In addition, this rule renames
License Exception CTP to License Exception APP (Adjusted
Peak Performance) to correspond to the new formula.
This rule also makes eligibility of License Exception
APP.
This
rule also moves Bulgaria from Computer Tier 3 to Computer
Tier 1, removes High Performance Computer (XP) and Missile
Technology (MT) controls from certain Export Control
Classification Numbers (ECCNs) in Category 4 of the
CCL, and removes the section of the EAR dedicated to
various requirements for high performance computers.
Patriot
Act Reauthorization Increases in Penalties for EAR and
IEEPA Violations
Signing
of the Patriot Improvements and Reauthorization Act
of 2005 (H.R. 3199) on March 9, 2006 by President Bush,
the basic civil penalty for violation of the sanctions
under the International Emergency Economic Powers Act
(IEEPA), has been raised from $11,000 to $50,000 per
violation. Since the lapse of the Export Administration
Act, the President extended the authority of BIS to
regulate exports under the IEEPA as an emergency measure
In
addition the sentence for individuals convicted of willful
violations of the law has been increased from a maximum
of 10 to a maximum of 20 years in prison. :
Specific
wording in the act:
SEC.
402. INCREASED PENALTIES FOR TERRORISM FINANCING.
Section
206 of the International Emergency Economic Powers
Act
(50 U.S.C. 1705) is amended—
(1)
in subsection (a), by deleting ‘‘$10,000’’
and inserting ‘‘$50,000’’; and
(2)
in subsection (b), by deleting ‘‘ten years’’
and inserting ‘‘twenty years’’.
To
read the Patriot Act in its entirety: http://frwebgate.access.gpo.gov/cgi-bin/getdoc.cgi?dbname=109_cong_bills&docid=f:h3199enr.pdf
In
addition, even more dramatic penalties have been proposed
by Rep. Henry Hyde under the Export Administration Renewal
Act of 2005 (H.R. 4572) which would increase civil penalties
for EAR and IEEPA violations to $500,000.
Eastern
Europe Countries Removed from D:1 Country Group
On
June 28, 2004, the Bureau of Industry and Security (BIS)
published an amendment to the EAR to remove certain
regional stability and crime control license requirements
to new NATO member countries. Seven countries acceded
to NATO on March 29, 2004: Bulgaria, Estonia, Latvia,
Lithuania, Romania, Slovakia and Slovenia. This final
rule amends the EAR to provide for these newer NATO
member states and for three other NATO member states,
Hungary, Iceland, and Poland, treatment consistent with
all other NATO member states respect to national security
license requirements (§ 742.2(a)) and Supplement
No. 1 to part 738 (Country Chart)). This final rule
also removes Bulgaria, Estonia, Latvia and Lithuania
from General Prohibition Eight, which concerns certain
in-transit transactions, (§ 736.2(b)(8)), and removes
restrictions on License Exceptions related to crime
control from Bulgaria, Czech Republic, Estonia, Hungary,
Latvia, Poland, Romania, Slovakia, and Slovenia (§
740.2). This final rules adds Bulgaria, Estonia, Latvia,
Lithuania and Romania to Country Group B, and removes
them from Country Group D:1 (Supplement No. 1 to part
740). Exports to these countries are now eligible for
certain license exceptions set forth in part 740, and
the national security licensing policy set forth in
§742.2(b) for Country Group D:1 countries no longer
applies.
Changes
in Iraq Export Policies
On
July 30, 2004, the President signed an Executive Order
terminating the national emergency declared in Executive
Order 12722, revoking it and certain related Executive
Orders. Among other things, the termination of the national
emergency ends the Department of the Treasury's authority
to maintain export controls pursuant to those Executive
Orders. By virtue of this action, export licensing jurisdiction
reverted from the Department of the Treasury’s
Office of Foreign Assets Control (OFAC) to BIS. Also
on July 30, 2004, BIS published a rule defining the
new licensing policy and requirements for Iraq. The
rule is designed to address two significant foreign
policy goals with respect to Iraq. In particular, the
rule furthers the goal of ensuring that exports and
reexports of controlled items destined to civil infrastructure
rebuilding do not suffer undue licensing delays. At
the same time, in furtherance of applicable UNSC Resolutions
and U.S. foreign policy interests, the rule revises
section 746.3 of the Export Administration Regulations
(15 CFR parts 730-799) (EAR) and retains substantial
restrictions on exports to Iraq destined for inappropriate
end-users or end-uses. In addition, the rule addresses
certain transactions involving the transfer of items
subject to the EAR within Iraq.
For
more information: http://www.bis.doc.gov/policiesandregulations/IraqSummary.htm#I
Changes
in rules for Libya
On
November 16, 2005, the Bureau of Industry and Security
(BIS), published an amendment to the Export Administration
Regulations (EAR) establishing a new license exception
to facilitate the export and reexport of certain items
subject to the EAR to U.S. persons in Libya. BIS published
the amendment specifically to facilitate U.S. persons
business activities, including humanitarian activities,
in Libya. The new license exception, "U.S. Persons
in Libya" (USPL) is found in Section 740.19 of
the EAR.
New
License Exception USPL authorizes the export and reexport
of certain items controlled on the Commerce Control
List (CCL) in Part 774 of the EAR for anti-terrorism
(AT) reasons only when shipped for the exclusive use
of U.S. persons in Libya and their employees, within
the scope of their employment. Items exported or reexported
under License Exception USPL are intended to facilitate
normal business activities, including humanitarian activities.
The definition of "U.S. Person" found in part
772 of the EAR applies in the context of new License
Exception USPL.
Items
exported or reexported to Libya under License Exception
USPL must remain under the control and supervision of
a U.S. person. They are not eligible for transfer to
a non-U.S. person in Libya. Items exported or reexported
under License Exception USPL and not destroyed or consumed
in the ordinary course of business may be returned to
the United States without BIS authorization or reexported
to a third country consistent with BIS’s license
requirements for such reexports.
For
more information: http://www.bis.doc.gov/PoliciesAndRegulations/LibyaGuidance11_16_05.htm
Mandatory
AES Reporting for all SEDs Expected by Year-End
The
Census Bureau proposed on 2/17/05 to require mandatory
filing of export information through the Automated Export
System (AES) or through the AESDirect, for all
shipments where an SED is currently required. AES is
stalled over Homeland Security concerns and will not
be implemented until interagency concerns are resolved.
All
exporters will need to receive training and be signed
up on the AESDirect system. In fact, in order
to be authorized to file shipment information through
AESDirect a company representative must pass
the AESDirect or AESPcLink Certification
Quiz. Training sessions are available online, as well
as through local organization such as the Mass Export
Center.
Additional
information can be found on the AESDirect website
at: http://www.aesdirect.gov/.
Changes
in Deemed Export Controls Proposed
The
BIS is reviewing recommendations from the Office of
Inspector General which addresses the fact that current
controls may not be stopping the transfer of technology
to foreign nationals in the US. Interpretations of the
current language regarding the “use” of
equipment by foreign nationals have led to potential
releases of technology, particularly at US academic
and research institutions which routinely have used
the fundamental research exemption available under the
EAR.
Current
regulations also are based only on a foreign nationals’
most recent country of permanent residence or citizenship.
There is concern that foreign nationals originally from
countries of concern are not being scrutinized. The
recommendation is that the BIS require companies to
apply for a deemed export license for employees &
visitors with access to dual-use controlled technology
if they were born in a country where the technology
transfer would require an export license, regardless
of their most recent citizenship or permanent residency.
Changes
in the Countries Subject to CBW End-Use/End-User Controls
The
BIS has amended the EAR to expand the country scope
to any destination worldwide for restrictions
on certain chemical and biological weapons (CBW) end-uses
for controlled products. Prior to the amendment, the
restrictions applied only to countries of concern for
CBW reasons (Country Group D:3 in Supp. 1 to part 740
of the EAR). The new rule expands this license requirement
to all countries, including those in Country Group A:3
(the Australia Group-participating countries).
Revisions
in Export Restrictions to Libya
Prior
regulations prohibited the servicing or any other activities
involving items originally exported or re-exported to
Libya illegally by third parties (referred to as “installed
base” items). The BIS has replaced this prohibition
with the division of activities into two categories,
defined as follows:
- Those
that require a report to the BIS, but not a license.
This includes items subject to the EAR but not on
the CCL, items on the CCL that are now authorized
for export under a License Exception, and items on
the CCL controlled only for NS and AT reasons and
not on the Wassenaar Arrangement’s Sensitive
or Very Sensitive Lists
- Those
that require a license. All other activities involving
installed base items listed on the CCL.
A
general policy of denial applies to Libyan access to
5D002 software. A further amendment removes the general
policy of denial for perforators classified under ECCN
1C992, and allows for case-by-case review of these exports.
BIS
Expands Licensing Requirements to Entities Sanctioned
by the State Department
The
BIS has added a new Sec. 744.19 to the EAR stating that
it is the BIS’ policy to deny any export/reexport
license application if the applicant, other party authorized
to receive the license, purchaser, intermediate consignee,
ultimate consignee or end-user, is subject to a sanction
issued as part of:
- the
Iran-Iraq Arms Nonproliferation Act of 1992,
- the
Iran Nonproliferation Act of 2000, or
- the
Missile Technology Control Act of 1990.
Notices
of the imposition of sanctions under these three statutes
are published by the State Department in the Federal
Register.
Also,
new section 744.20 of the EAR provides that the BIS
may impose license requirements on entities sanctioned
by the State Department for exports of items subject
to the EAR. This will be facilitated by adding the State
Dept. sanctioned entity to the BIS Entity List, with
notations regarding the applicable license requirements,
any license exceptions available, and the licensing
policy.
March
2005 Revisions to the EAR Due to Changes in the Missile
Technology Control Regime (MTCR) Annex
The
EAR was updated to reflect the addition of Bulgaria
to the MTCR. Therefore, Bulgaria is now added to the
Country Group A:2 list in Supp. No. 1 to part 740. In
addition, changes were made to several ECCNs, which
will result in increased license applications for some
of them. Affected ECCNs include: 1C007, 1C107, 1C111,
1C116, 2A001, 2B104, 2B116, 9A106, 9A107, 9B106, and
9B117. This denotes a slight easing of high tech exports
to Bulgaria.
Four
Syrian Entities Added to the BIS Entity List
Effective
March 10, 2005, four Syrian entities were added to the
Entity List, which triggers a licensing requirement,
and general presumption of denial, to these parties.
They include: The Higher Institute of Applied Science
and Technology (HIAST), the Industrial Establishment
of Defense (IED), National Standards and Calibration
Laboratory (NSCL), and the Scientific Studies and Research
Center (SSRC). This is the first time that entities
from an embargoed country have been added. No exports
to Syria are permitted at this time.
DDTC to Review License Application Times
In National Security Presidential Directive--56, Defense Trade Reform, signed January 22, 2008, the Department of State was directed to complete the review and adjudication of license applications within 60 days of receipt, except in cases where national security exceptions apply. The President further directed that these exceptions be published. In accordance with that directive, the Directorate of Defense Trade Controls has implemented procedures to ensure that this 60 day requirement is affected, except when the following the national security exceptions are applicable:
(1) When a Congressional Notification is required: The Arms Export Control Act Section 36(c) and (d) and the International Traffic in Arms Regulations, 22 CFR 123.15, requires a certification be provided to Congress prior to granting any license or other approval for transactions, if it meets the requirements identified for the sale of major defense equipment, manufacture abroad of significant military equipment, defense articles and services, or the re-transfer to other nations. Notification thresholds differ based on the dollar value, countries concerned and defense articles and services.
(2) Required Government Assurances have not been received. These would include, for example, Missile Technology Control Regime Assurances, and Cluster Munitions assurances.
(3) End-use Checks have not been completed. (Commonly referred to as ``Blue Lantern'' checks. End-use checks are key to the U.S. Government's prevention of illegal defense exports and technology transfers, and range from simple contacts to verifying the bona fides of a transaction to physical inspection of an export.)
(4) Department of Defense has notified the Directorate of Defense Trade Controls that an overriding national security exception exists.
(5) Requires a Waiver of Restrictions. (For example, a sanctions waiver.)
BIS reviews Export Controls of High Premium Machine Tools
WASHINGTON, DC – The U.S. Department of Commerce’s Bureau of Industry and Security (BIS) has initiated a systematic industry study of the U.S. 5-axis simultaneous control machine tool industry. These high precision tools, which include mills, grinders, mill/turns, and machining centers, are used extensively in the aerospace, automotive, and shipbuilding industries, and have important national security dimensions.
“Assessing this critical industry and ensuring that U.S. export controls are up to date has important ramifications for our economic competitiveness and national security capabilities in high precision manufacturing,” said Under Secretary of Commerce Mancuso. “A vibrant U.S. machine tool industry is critical for our long-term national security interests.”
|
