The Daily Bugle Weekly Highlights: Week 20 (14-18 May 2018)

Every week we post the highlights out of last week’s FCC Export/Import Daily Update (“The Daily Bugle”). Send out every business day to approximately 8,000 readers of changes to defense and high-tech trade laws and regulations, The Daily Bugle is a free daily newsletter from Full Circle Compliance, edited by James E. Bartlett III, Alexander P. Bosch, Vincent J.A. Goossen, and John W. Bartlett.

We check the following sources daily: Federal Register, Congressional Record, Commerce/AES, Commerce/BIS, DHS/CBP, DOE/NRC, DOJ/ATF, DoD/DSS, DoD/DTSA, FAR/DFARS, State/DDTC, Treasury/OFAC, White House, and similar websites of Australia, Canada, U.K., and other countries and international organizations.  Due to space limitations, we do not post Arms Sales notifications, Denied Party listings, or Customs AD/CVD items. To subscribe, click here.

Last week’s highlights of The Daily Bugle included in this edition are:

  1. Commerce/BIS Publishes Proposed Rule Concerning Shift of USML Categories I, II, and III to CCL; The Daily Bugle; Tuesday, 15 May 2018, ITEM #4;
  2. State/DDTC Publishes Notice Concerning Proposed Shift of USML Categories I, II, and III to CCL; The Daily Bugle; Tuesday, 15 May 2018, ITEM #5;
  3. UK Government Posts Guidance Concerning Iran; The Daily Bugle; Tuesday, 15 May 2018, ITEM #7; and,
  4. DHS/CBP Seeks Comments on Forms 214, 214A, 214B, 214C, and 216, Application for Foreign-Trade Zone Admission and/or Status Designation, and Application for Foreign-Trade Zone Activity Permit; The Daily Bugle; Friday, 18 May 2018, ITEM #1; and
  5. Dutch Government Publishes Report Concerning Arms Export Control Policy 2017; The Daily Bugle; Friday, 18 May 2018, ITEM #8.

Highlight 1

Commerce/BIS Publishes Proposed Rule Concerning Shift of USML Categories I, II, and III to CCL

(Source: Commerce/BIS, 15 May 2018.) [Excerpts.]

This proposed rule [available in PDF here][/available] describes how articles the U.S. President determines no longer warrant control under United States Munitions List (USML) Category I – Firearms, Close Assault Weapons and Combat Shotguns; Category II – Guns and Armament; and Category III – Ammunition/Ordnance would be controlled under the Commerce Control List (CCL). This proposed rule is being published simultaneously with a proposed rule by the Department of State that would revise Categories I, II, and III of the USML to describe more precisely the articles warranting continued control on that list. …

In this proposed rule, items that are currently controlled in Category II of the USML would be controlled on the CCL under four new “600 series” ECCNs. Placement of the items currently in USML Category II into the CCL’s 600 series would be consistent with existing BIS practice of using 600 series ECCNs to control items of a military nature.

Items currently controlled in Categories I and III of the USML would be controlled in new ECCNs in which the third character is a “5.” These items are not appropriate for 600 series control because, for the most part, they have civil, recreational, law enforcement, or other non-military applications. As with 600 series ECCNs, the first character would represent the CCL category, the second character would represent the product group, and the final two characters would represent the WAML category that covers items that are the same or similar to items in the ECCN.

This proposed rule does not de-regulate the transferred items. BIS would require licenses to export or reexport to any country a firearm or other weapon currently on the USML that would be added to the CCL by this proposed rule. BIS would also require licenses for the export or reexport of guns and armament that would be controlled under new ECCN 0A602, such as guns and armaments manufactured between 1890 and 1919 to all destinations except Canada.

As compared to decontrolling firearms and other items, in publishing this proposed rule, BIS, working with the Departments of Defense and State, is trying to reduce the procedural burdens and costs of export compliance on the U.S. firearms industry while allowing the U.S. Government to enforce export controls for firearms appropriately and to make better use of its export control resources. BIS encourages comments from the public on this aspect of the proposed rule. …

Highlight 2

State/DDTC Publishes Notice Concerning Proposed Shift of USML Categories I, II, and III to CCL

(Source: State/DDTC, 15 May 2018.) 

The Department of State proposes to amend the International Traffic in Arms Regulations to revise Categories I (firearms, close assault weapons and combat shotguns), II (guns and armament) and III (ammunition and ordnance) of the U.S. Munitions List (USML) to describe more precisely the articles warranting export and temporary import control on the USML. Items removed from the USML would become subject to the Export Administration Regulations (EAR). See Cat I-III Combined PR – FRN FINAL.PDF

The Department of Commerce proposes to amend the Export Administration Regulations to describe how the items that transfer to the EAR will be controlled. See 05.4.18 Signed Commerce firearms proposed rule for sending to OFR for publication.

Highlight 3

UK Government Posts Guidance Concerning Iran

(Source: UK DIT/EJCU, 15 May 2018.) [Excerpts.]

The Export Control Joint Unit (EJCU) of the UK Department of International Trade (DIT) has published the following guidance on its website:

On 8 May 2018 the President of the United States confirmed that the US will begin the process of re-imposing all US sanctions previously waived under the Joint Comprehensive Plan of Action (JCPoA). Read more about this development.

The UK government fully supports expanding our trade relationship with Iran and encourages UK businesses to take advantage of the commercial opportunities that will arise. Department for International Trade (DIT) is in Tehran to support bilateral trade and investment. However, some sanctions remain in place so UK businesses should continue to ensure they are compliant with all sanctions regimes.

On 14 July 2015, the E3+3 (UK, France, Germany, Russia, China and USA) the EU and Iran reached a comprehensive agreement on Iran’s nuclear program. This concluded over a decade of negotiations between the international community and Iran. Through the successful implementation of this deal, Iran can demonstrate its commitment to an exclusively peaceful nuclear program. Most financial and economic sanctions against Iran have now been lifted, following the International Atomic Energy Agency’s verification that Iran had completed all necessary steps to reach Implementation Day (16 January 2016). Read the full text of the agreement and annexes. …

The UK government fully supports expanding our trade relationship with Iran. Iran has now received extensive economic and financial sanctions relief and will be able to trade more freely with the rest of the world. We want to help British businesses take advantage of the opportunities that economic re-engagement with Iran will bring.

UK Export Finance (UKEF), the UK’s export credit agency, has reintroduced cover in to support UK companies competing for business in Iran. Cover is now available on a case-by-case basis in Pounds Sterling and Euros. Within this, and in recognition of the UK’s place as a global center of excellence for financial and professional services, UKEF will make available an initial £50 million facility guaranteeing payments to UK professional advisory service providers advising the Government of Iran. UKEF will also consider applications for direct lending from purchasers of British exports to Iran. Find out more about UKEF’s cover for Iran here.

DIT will be engaging with UK businesses to provide support and assistance to help ensure UK business benefits from opportunities as they arise. UKTI based both in the UK and in the British Embassy in Tehran will play an important role in supporting trade and investment between our 2 countries.

Although most economic and financial sanctions have now been lifted, some sanctions will remain in place and are not affected by the deal. In particular sanctions related to human rights, proliferation and Iran’s support for terrorism remain in place. You will wish to consider in particular, if you are dealing with a designated person or entity, whether a certain trade product or material is restricted, and how and to whom payments will be made. UK companies will also want to consider whether their proposed activity is subject to US sanctions. It is important to ensure appropriate due diligence measures are undertaken before engaging in any activity. Iran will remain a difficult place to do business so if in doubt you should seek legal advice. 

More Information on Doing Business with Iran

– For more information on Doing Business with Iran see our Guide to Doing Business with Iran and FAQs

– Find out more about UKEF’s country cover for Iran here.

– The EU has published an information note on the EU Sanctions to be lifted under the JCPoA and it is available on the Europa website.

– The US Office of Financial Asset Control has issued guidance on Iran and it is available on the US Department of the Treasury website.

– The Export Control Organization has issued Notice to Exporters 2016/05 on this development.

Prohibited Activities

The following activities remain banned under the proliferation-related sanctions:

– sale, supply, transfer or export to Iran, of all military goods and technology as listed in the UK Military List

– sale, supply, transfer or export of missile-related goods and technology as listed in Annex III of Council Regulation (EU) 267/2012

– provision of technical assistance, brokering services and financial assistance related to the above

– import from Iran of military and missile-related goods and technology

– investment in Iranian enterprises engaged in manufacture of military goods, and a ban on investment by an Iranian person in a commercial activity related to production or use of missile-related goods

The following is prohibited under the sanctions imposed in view of the human rights situation in Iran as set out in Council Regulation (EU) 264/2012:

– sale, supply, transfer or export of equipment which might be used for internal repression as listed in Annex III of Council Regulation (EU) 264/2012

– provision of technical assistance, brokering services and financial assistance related to the above.

In addition, restrictive measures remain in place against individuals and entities who remain listed in Council Regulation 267/2012 and in Council Regulation 264/2012, as well as under EU terrorism and other EU sanctions regimes.

UK businesses should ensure they are compliant with all remaining sanctions regimes. It is important to conduct due diligence and ensure compliance with sanctions regimes before signing business contracts, as with any market.

Activities that Require a License

The following activities require a license under the proliferation-related sanctions:

– sale, supply, transfer or export of nuclear-related items as listed in Annex I of the Regulation

– provision of technical assistance, brokering services and financial assistance related to items listed in Annex I of the Regulation

– investment by an Iranian person, entity or body in a commercial activity related to uranium mining or the manufacture of items listed in Annex I of the Regulation

These nuclear-related activities can only be authorized if they have been approved in advance by the UN Security Council through the newly-established Procurement Channel. UK persons wishing to supply these goods or services to Iran, or to accept an investment by an Iranian person, must seek a license from the Export Control Organization (ECO) in the Department of DIT. The ECO will consider the application and where appropriate seek the required authorization from the UN. The ECO has published detailed guidance on the Procurement Channel.

A license is also required for:

– sale, supply, transfer or export of nuclear-related items as listed in Annex II of the Regulation

– provision of technical assistance, brokering services and financial assistance related to items listed in Annex II of the Regulation

– investment by an Iranian person, entity or body in a commercial activity related to the items listed in Annex II of the Regulation

These items are not subject to the Procurement Channel process.

Sanctions imposed in view of the human rights situation in Iran are set out in Council Regulation (EU) 264/2012. The following requires a license:

– sale, supply, transfer or export of equipment which might be used for the monitoring or interception of internet or telephone communications as listed in Annex IV of the Regulation

– provision of technical assistance, brokering services and financial assistance related to items listed in Annex IV of the Regulation

– provision of telecommunication or internet monitoring or interception services of any kind to, or for the direct or indirect benefit of, Iran’s government, public bodies, corporations and agencies or any person or entity acting on their behalf or at their direction

Financial sanctions may still be relevant to your transaction, including interaction with those persons and entities that remain designated. It is your responsibility to ensure you comply with financial sanctions. For more information see the HM Treasury guidance relating to nuclear proliferation and human rights violations and please refer to the Treasury’s consolidated list which includes all Iranian individuals and entities listed under EU and UK sanctions regimes (including those listed for Counter Terrorism purposes or under the Syria regime).

– Financial sanctions, Consolidated List

End-use Controls

If your items are not listed specifically as a result of specific sanctions regulations, you may still need a license under so-called ‘end-use controls’. This aspect of export controls covers licensing of items that might potentially be used in a Weapons of Mass Destruction (WMD) program or military goods.

These controls are outlined in Article 4 of Council Regulation 428/2009 (the EU Dual-Use Regulation) and in the Export Control Order 2008.

For more information on end-use controls, see the guide on WMD End-Use Control and Military End-Use Control.

If you have any concerns about exporting to an end-user in Iran, you should consider seeking advice from the ECO End-User Advice Service. …

Highlight 4

DHS/CBP Seeks Comments on Forms 214, 214A, 214B, 214C, and 216, Application for Foreign-Trade Zone Admission and/or Status Designation, and Application for Foreign-Trade Zone Activity Permit

(Source: Federal Register, 18 May 2018.) [Excerpts.]

83 FR 23286-23287: Agency Information Collection Activities: Application for Foreign-Trade Zone Admission and/or Status Designation, and Application for Foreign-Trade Zone Activity Permit

* AGENCY: U.S. Customs and Border Protection (CBP), Department of Homeland Security.

* ACTION: 60-Day notice and request for comments; extension of an existing collection of information. …

* FOR FURTHER INFORMATION CONTACT: Requests for additional PRA information should be directed to Seth Renkema, Chief, Economic Impact Analysis Branch, U.S. Customs and Border Protection, Office of Trade, Regulations and Rulings, 90 K Street NE, 10th Floor, Washington, DC 20229-1177, Telephone number (202) 325-0056 or via email CBP_PRA@cbp.dhs.gov. Please note that the contact information provided here is solely for questions regarding this notice. Individuals seeking information about other CBP programs should contact the CBP National Customer Service Center at 877-227-5511, (TTY) 1-800-877-8339, or CBP website.

* SUPPLEMENTARY INFORMATION: …

– Title: Application for Foreign-Trade Zone Admission and/or Status Designation, and Application for Foreign-Trade Zone Activity Permit.

– OMB Number: 1651-0029.

– Form Numbers: 214, 214A, 214B, 214C, and 216. …

– Action: CBP proposes to extend the expiration date of this information collection with no change to the burden hours or to CBP Forms 214, 214A, 214B, 214C, and 216. …

– Abstract: Foreign trade zones (FTZs) are geographical enclaves located within the geographical limits of the United States but for tariff purposes are considered to be outside the United States. Imported merchandise may be brought into FTZs for storage, manipulation, manufacture or other processing and subsequent removal for exportation, consumption in the United States, or destruction. A company bringing goods into an FTZ has a choice of zone status (privileged/non-privileged foreign, domestic, or zone-restricted), which affects the way such goods are treated by Customs and Border Protection (CBP) and treated for tariff purposes upon entry into the customs territory of the U.S.

CBP Forms 214, 214A, 214B, and 214C, which make up the Application for Foreign-Trade Zone Admission and/or Status Designation, are used by companies that bring merchandise into an FTZ to register the admission of such merchandise into FTZs and to apply for the appropriate zone status. CBP Form 216, Foreign-Trade Zone Activity Permit, is used by companies to request approval to manipulate, manufacture, exhibit, or destroy merchandise in an FTZ.

These FTZ forms are authorized by 19 U.S.C. 81 and provided for by 19 CFR 146.22, 146.32, 146.39, 146.40, 146.41, 146.44, 146.52, 146.53, and 146.66. These forms are accessible here. …

Highlight 5

Dutch Government Publishes Report Concerning Arms Export Control Policy 2017

(Source: Rijksoverheid, 17 May 2018.)

The report (in Dutch) is available here.

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