| LATEST EXPORT CONTROLS AND COMPLIANCE UPDATEAugust 2016 |
This newsletter is a listing of the latest changes in export control regulations through August 31, 2016. The newsletter is provided as a complimentary service to assist exporters with their ITAR and EAR export compliance responsibilities. It provides a summary of recent changes to export control regulations or other regulatory matters of interest that may impact your company’s international trade and export compliance functions. Call us at 703-847-5801 or email info@fdassociates.net with questions or comments.
See also our “Latest Sanctions Fines & Penalties” section below for an update on companies and persons denied export privileges by the United States Government.
REGULATORY UPDATES
DEPARTMENT OF COMMERCE
Two New Items Added to the EAR Catch-All ECCN 0Y521
Aug. 8, 2016 – 81 Fed. Reg. 52326: The Bureau of Industry and Security (BIS) amended the Export Administration Regulations (EAR, 15 CFR Parts 730-774) by adding two entries to the Commerce Control List (EAR Part 774, Supplement No. 1): “targets made of or containing lithium “specially designed” for the production of tritium by insertion in the core of a nuclear reactor” under Export Control Classification Number (ECCN) 0A521, and “technology” required for the “development” or “production” of these items under ECCN 0E521. These items are controlled for Regional Stability (RS) Column 1 reasons and require a license to all destinations except Canada. License Exception GOV will be the only exception available. Like all 0X521 controls, this is a unilateral classification that will be valid for only one year unless it is extended by the U.S. Government or adopted by a multilateral export control regime. This interim final rule was effective Aug. 8, 2016, but comments will be accepted until Oct. 7, 2016.
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BIS Amends EAR Destination Control Statement, Harmonizing with ITAR
Aug. 17, 2016 – 81 Fed. Reg. 54721: As part of the President’s Export Control Reform (ECR) Initiative, BIS revised the language and some of the regulatory requirements of the Destination Control Statement (DCS) mandated by EAR Sec. 758.6 for exports of commodities regulated by the EAR. The changes are intended to harmonize the DCS requirements of the EAR with the DCS requirements for exports of military items under the International Traffic in Arms Regulations (ITAR, 22 CFR Parts 120-130). The same DCS will now be used for exports of both EAR and ITAR regulated items, and it will be required only on the commercial invoice. The DCS will be required for all exports of tangible items subject to the EAR except exports of EAR99 items and items exported under License Exception BAG or GFT. Also, the ECCN for 9x515 or ‘‘600 series’’ items exported in tangible form must be provided as an integral part of the commercial invoice. Effective date for these changes will be Nov. 15, 2016. (See State Department section below for concurrent action on DCS requirements for exports of military items.)
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Ten Persons Added to BIS Entity List
Aug. 23, 2016 – 81 Fed. Reg. 57451: BIS added 10 persons to the Entity List (EAR Part 744, Supplement No. 4) based on determinations that 9 of them had provided logistical and material support to the Islamic State of Iraq and the Levant (ISIL) and one had been indicted for illegal sales of military and dual-use items to the Philippines. For exports involving any of these entities, there will be a license requirement for all items subject to the EAR with a presumption of denial, and no license exceptions will be available. The 10 entities (under 14 entries) are:
Iraq
(1) Abd Al Hakim Luqman Jasim Muhammad, Mosul;
(2) Ag Yildiz Insaat Gayrimenkul Tasimacilik Pazarlama lthalat Ihracat ve Ticaret Ltd. Sirketi, a.k.a., the following four aliases:
—Ag Yildiz Cargo;
—Ag Yildiz Gayrimenkul;
—Yildiz Company; and
—Yildiz Shipping Company,
Irbil and Mosul (See alternate addresses under Syria and Turkey); and
(3) Sekirin Tekstil Ithalat Ihracat le ve Dis Ticaret Limited Sirketi, a.k.a., the following seven aliases:
—Sekirin Textiles Export Import Limited Company;
—Al Shakirin International Transport Company;
—Shakirin Company;
—Shakrin Company;
—Sekirin Ticaret;
—Al Shakirin Company; and
—Sekirin Company,
Mosul (See alternate addresses under Syria and Turkey).
Philippines
(1) Warren Sumaylo, Butuan City
Syria
(1) Ag Yildiz Insaat Gayrimenkul Tasimacilik Pazarlama lthalat Ihracat ve Ticaret Ltd. Sirketi, a.k.a. the following four aliases:
—Ag Yildiz Cargo;
—Ag Yildiz Gayrimenkul;
—Yildiz Company; and
—Yildiz Shipping Company,
Al Bab (See alternate addresses under Iraq and Turkey);
(2) Jamal Jum’ah al-Shawi, Al Bab;
(3) Muhammad ‘ulwan Al-Shawi, Al Bab; and
(4) Sekirin Tekstil Ithalat Ihracat le ve Dis Ticaret Limited Sirketi, a.k.a., the following seven aliases:
—Sekirin Textiles Export Import Limited Company;
—Al Shakirin International Transport Company;
—Shakirin Company;
—Shakrin Company;
—Sekirin Ticaret;
—Al Shakirin Company; and
—Sekirin Company,
Al Bab (See alternate addresses under Iraq and Turkey).
Turkey
(1) Ag Yildiz Insaat Gayrimenkul Tasimacilik Pazarlama lthalat Ihracat ve Ticaret Ltd. Sirketi, a.k.a., the following four aliases:
—Ag Yildiz Cargo;
—Ag Yildiz Gayrimenkul;
—Yildiz Company; and
—Yildiz Shipping Company,
Gaziantep (See alternate addresses under Iraq and Syria);
(2) Ala al-Shawi, a.k.a., the following one alias:
—Abu Cemal,
Gaziantep;
(3) Ali Guzel, Gaziantep;
(4) Luqman Yasin Yunus Shgragi, a.k.a., the following two aliases:
—Lkemanasel Yosef; and
—Luqman Sehreci,
Gaziantep;
(5) Sekirin Tekstil Ithalat Ihracat le ve Dis Ticaret Limited Sirketi, a.k.a., the following seven aliases:
—Sekirin Textiles Export Import Limited Company;
—Al Shakirin International Transport Company;
—Shakirin Company;
—Shakrin Company;
—Sekirin Ticaret;
—Al Shakirin Company; and
—Sekirin Company,
Gaziantep (See alternate addresses under Iraq and Syria); and
(6) Yunus Luqman Yasin Shgragi, a.k.a., the following one alias:
—Yunus Sehreci,
Gaziantep.
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BIS Proposes to Amend License Exception TMP To Increase Time Allowed for Temporary Exports to Mexico
Aug 23, 2016 – 81 Fed. Reg. 57505: BIS proposed to amend License Exception TMP (Temporary Imports, Exports, Reexports, and Transfers (In-country), EAR Sec. 740.9) to extend the time limit for temporary exports to Mexico for use in Mexico’s IMMEX (Decree for the Promotion of Manufacturing, Maquiladora and Export Services) program from one year to 4 years. This would match Mexico’s time limit of 4 years for imports under the IMMEX program. Comments are due by Oct. 24, 2016.
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BIS Extends General License for ZTE and ZTE Kangxun
Aug. 19, 2016 – 81 Fed. Reg. 55372: BIS extended until Nov. 28, 2016, the temporary general license for exports, reexports, and transfers to Zhongxing Telecommunications Equipment (ZTE) Corporation and ZTE Kangxun Telecommunications Ltd. that was originally scheduled to end on June 30, 2016, and subsequently extended until Aug. 30, 2016. (See March 2016 and June 2016 Regulatory Updates for additional details.)
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DEPARTMENT OF STATE
DDTC Posts Name and Address Changes on DDTC Website
Aug. 10, 11, 18, 19, and 23, 2016: The Directorate of Defense Trade Controls (DDTC) posted the following name and/or address changes on its website at http://www.pmddtc.state.gov/licensing/name_change.html[OG1] :
- Change in Address of AeroParts Engineering & Fabrication;
- Change in Name of the following entities due to the acquisition of OHL (Ozburn-Hessy Logistics) by Geodis Wilson:
- OHL (S) Pte. Ltd. to Geodis Wilson Singapore Pte Ltd,
- OHL International Sdn. Bhd. to Geodis Wilson Freight Management Sdn Bhd,
- OHL (Hong Kong) Ltd. to Geodis Wilson Hong Kong Ltd,
- OHL (Xiamen) Co., Ltd to Geodis Wilson (China) Limited,
- OHL (Vietnam) Co., Ltd. to Geodis Wilson Vietnam Ltd,
- OHL (Taiwan) Limited to Geodis Wilson Taiwan Limited,
- Activair Australia Pty Ltd. to Geodis Wilson Australia Pty Ltd,
- Activair (UK) Ltd. to Geodis Wilson UK Ltd, and
- BarthcoDart Global Logistics (Europe) B.V. to Geodis Wilson Netherlands B.V.;
- Change in Address of Tactical Products Group, LLC;
- Change in Name of Thales-Raytheon Systems Company SAS to Thales Air Operations SAS due to acquisition;
- Change in Address of Diamond Office Service Co., Ltd.;
- Change in Name of Thales-Raytheon Systems Company LLC to Raytheon Command and Control Solutions LLC due to acquisition by Raytheon Company;
- Change in Name of A.C.M Composites (1993) Inc. to ACM Composites Inc. due to corporate rebranding; and
- Change in Name of Microturbo S.A.S. to Safran Power Units S.A.S. due to acquisition of Microturbo by Safran
Each announcement includes a link to a notice specifying the effects of the change on pending and currently approved authorizations involving the listed entity.
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DDTC Revises Agreement Guidelines
Aug. 11, 2016: DDTC published Revision 4.4 of the Guidelines for Preparing Agreements. Significant changes from the current Guidelines include –
- amendments to many sections to reflect ITAR amendments including new definitions of “export”, “reexport”, and “retransfer”;
- removal of country of birth as a consideration when vetting dual nationals and third-country nationals;
- updates in many required statements; and
- updates of the templates in Appendix A.
A summary of the changes is on the DDTC website at http://www.pmddtc.state.gov/licensing/documents/agreement_guidelines_preamblev4.4.pdf[OG2] . The full text of the new Guidelines is at http://www.pmddtc.state.gov/licensing/documents/agreement_guidelinesv4.4.pdf[OG3] . Effective date of the new guidelines is Sep. 1, 2016, coinciding with the effective dates of the relevant ITAR amendments.
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DDTC amends ITAR destination control statement
Aug. 17, 2016 – 81 Fed. Reg. 54732: Acting to implement the President’s ECR initiative, DDTC amended ITAR Sec. 123.9 to adopt new language harmonizing the DCS required for ITAR regulated items, with the DCS required for EAR regulated items. (See Commerce Department section above for concurrent action on DCS requirements for exports of dual-use items.) In addition to the DCS, which is now only required on the Commercial Invoice, the commercial invoice on shipments of ITAR-controlled items must include the country of ultimate destination, the name of the end user, and the license number or applicable exception. The rule also clarifies requirements applicable when EAR items are shipped with items subject to the ITAR. Effective date of this rule is Nov. 15, 2016.
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DEPARTMENT OF THE TREASURY
OFAC Issues General License for Iran Allowing Non-US Persons to Temporarily Re-export to Iran Fixed Wing Civil Aircraft with 10% or Greater US Content, Classified Under ECCN 9A991.b, and Registered in a Country Other than the US or Country Group E:1
July 29, 2016: The Office of Foreign Assets Control (OFAC) issued General License J under the Iranian Transactions and Sanctions Regulations (ITSR, 31 CFR Part 560), permitting non-US persons to temporarily re-export to Iran US-origin fixed-wing civil aircraft or non-US-origin fixed-wing civil aircraft having 10% or more US content that are classified under ECCN 9A991.b and are registered in a country other than the US or Country Group E:1 of EAR Part 740, Supplement No. 1. The maximum time of each such temporary sojourn is 72 hours, and several other restrictions also apply. The full text of General License J is on the OFAC website at https://www.treasury.gov/resource-center/sanctions/Programs/Documents/iran_glj.pdf[OG4] .
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Treasury Issues Quarterly List of Israel Boycotting Nations
Aug. 5, 2016 – 81 Fed. Reg. 51967: The Treasury Department published its quarterly list of countries that require or may require participation in, or cooperation with, an international boycott. The list remains unchanged since it was last published. It includes Iraq, Kuwait, Lebanon, Libya, Qatar, Saudi Arabia, Syria, the United Arab Emirates (UAE), and Yemen.
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OFAC Issues General License Authorizing Certain Transactions with Panamanian Mall and Associated Complex and Other Related Parties
Aug. 19, 2016: OFAC published General License 4D, “Authorizing Certain Transactions involving the Panamanian Mall and Associated Complex, Soho Panama, S.A. (a.k.a. Soho Mall Panama),” replacing General License 4C in its entirety. OFAC also amended three https://www.treasury.gov/resource-center/faqs/Sanctions/Pages/faq_other.aspx#472">Frequently Asked Questions regarding General Licenses 4D, 5B, and 6B. General License 4D is on the OFAC website at https://www.treasury.gov/resource-center/sanctions/Programs/Documents/kingpin_gl4d.pdf[OG5] . The revised FAQs are at https://www.treasury.gov/resource-center/faqs/Sanctions/Pages/faq_other.aspx#narco[OG6] .
| LATEST SANCTIONS FINES & PENALTIES |
This section of our newsletter provides information on the latest sanctions, fines and penalties for export violations or matters of non-compliance with the ITAR or EAR issued by the US government enforcement
agencies. It is provided as a service to exporters to remind them of the importance of extreme due diligence in all international trade and export compliance matters, particularly those involving exports subject to the ITAR or the EAR. Don’t let this happen to you or your company! Call us with questions or concerns at 703-847-5801 or email info@fdassociates.net.
SANCTIONS
DEPARTMENT OF COMMERCE
Aug. 19, 2016 – 81 Fed. Reg. 55430: BIS denied the export privileges of Walter Anders and Terand, Inc., both of Huntersville, NC, based on a settlement of charges that they had caused, aided, and/or abetted the export of 6,577 kilograms of T300 carbon fiber controlled for nuclear proliferation reasons under ECCN 1C210 to Singapore without the required authorization. Terand/Anders agreed that Terand would falsely serve as exporter of record for these exports in return for a commission after an export license granted to another exporter for exports of this product to Singapore was revoked by BIS due to concerns regarding the recipients of the items.
Fines and Penalties
Aug. 11, 2016: RHDC International, LLC, of Houston, TX, agreed to pay a civil penalty of $9,000 to settle charges by BIS that it had violated the EAR by failing to report the receipt of requests to engage in a restrictive trade practice or foreign boycott against a country friendly to the United States. The violations occurred when RHDC failed to report 5 occasions involving sales and/or transfers to Kuwait, Lebanon, Qatar, and the UAE, when it received a request to take an action which would have the effect of furthering or supporting a restrictive trade practice or unsanctioned foreign boycott.
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Aug. 19, 2016: Wenxia Man, aka Wency Man, of San Diego, CA, was sentenced in U.S. District Court for the Southern District of Florida to 50 months in prison based on her conviction of violating the Arms Export Control Act (AECA, 22 USC Sec. 2778) by conspiring to export and causing the export of fighter jet engines, an unmanned aerial vehicle, and related technical data to China without the required authorization. (See additional information in June 2016 Regulatory Update.)
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Aug. 23, 2016: Charles Shearon, of Goodlettsville, TN, Elmer Hill, of Brentwood TN, Michael Curlett, of Wixom, MI, and Arnold See, Jr., of Murfreesboro, TN, all former executives of Sabre Defence Industries LLC, a defense contractor formerly based in Nashville, TN, were sentenced to prison terms ranging from 13 to 18 months for violating the AECA by conspiring to export and attempting to export firearms and firearm components without the required authorization. All four entered guilty pleas in 2011. In attempting to conceal Sabre’s illegal exports, they used falsified shipping documents and shipping crates with false bottoms. Sabre, which filed for bankruptcy in 2011, also maintained fictitious business records to conceal its unlawful shipments of firearm parts, lied about the value of items on shipping documents, and illegally imported firearm silencers.
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Aug. 22, 2016: Spectrolab, Inc., of Sylmar, CA, agreed to pay a civil penalty of $60,000 to settle charges by BIS that it violated the EAR by acting with knowledge of a violation when it sold and transferred a Large Area Pulsed Solar Simulator (LAPSS II) to Pakistan with knowledge or reason to know that the intended end user was Pakistan's Space and Upper Atmosphere Research Commission ("SUPARCO"), an entity that was included in the Entity List. The LAPSS II was classified as EAR99. Although the procurement agent had not identified SUPARCO as a participant in the transaction, Spectrolab was aware of SUPARCO’s involvement because the procurement agent provided its address in Karachi, and a SUPARCO engineer who visited Spectrolab’s facilities and participated in inspection and training at Spectrolab’s facilities wore a badge identifying himself as a SUPARCO employee.