The Daily Bugle Weekly Highlights: Week 31 (31 July – 4 August 2017)

At the beginning of each 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, and Vincent J.A. Goossen.

We check the following sources daily: Federal Register, Congressional Record, Commerce/AES, Commerce/BIS, DHS/CBP, DOJ/ATF, DoD/DSS, DoD/DTSA, 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. State/PM Rescinds Statutory Debarment of and Reinstates Pratt & Whitney Canada Corporation Pursuant to AECA and ITAR, The Daily Bugle, Wednesday, 14 June 2017, Item #3.
    2. Treasury Publishes List of Countries Requiring Cooperation with an International Boycott, The Daily Bugle, Wednesday, 2 August 2017, Item #4.
    3. German BAFA Publishes New Export Control Newsletters Concerning Amendments to AWV, Export Control List, General License No. 16, and Restrictive Measures of the EU, The Daily Bugle, Wednesday, 2 August 2017, Item #10.
    4. Commerce/BIS Enhances Electronic System for License Application Submissions, The Daily Bugle, Thursday, 3 August 2017, Item #5.
    5. UK/DIT Announces Name and Location Change of MoD Unit Managing Crown Exemption Letters, Publishes Related Guidance, The Daily Bugle, Thursday, 3 August, 2017, Item #10.
    6. Justice: “Texas Man Pleads Guilty to Conspiring to Illegally Export Radiation Hardened Integrated Circuits to Russia and China”, The Daily Bugle, Friday 4 August, 2017, Item #6.

 

Highlight 1

State/PM Rescinds Statutory Debarment of and Reinstates Pratt & Whitney Canada Corporation Pursuant to AECA and ITAR

(Source: Federal Register, 2 August 2017.) [Excerpts.]

82 FR 36068: Bureau of Political-Military Affairs; Rescission of Statutory Debarment and Reinstatement of Pratt & Whitney Canada Corporation Under the Arms Export Control Act and the International Traffic in Arms Regulations

* ACTION: Notice.

* SUMMARY: Notice is hereby given that the Department of State has rescinded the statutory debarment of, and reinstated Pratt & Whitney Canada Corporation, pursuant to the Department’s authorities under the Arms Export Control Act and the International Traffic in Arms Regulations.

* DATES: Rescission and reinstatement as of July 12, 2017. …

* SUPPLEMENTARY INFORMATION: Section 38(g)(4) of the AECA, 22 U.S.C. 2778(g)(4), prohibits the issuance of export licenses or other approvals for the export of defense articles or defense services where the applicant, or any party to the export, has been convicted of violating the AECA and certain other U.S. criminal statutes enumerated at section 38(g)(1) of the AECA. In addition, section 127.7(b) of the ITAR provides for the statutory debarment of any person who has been convicted of violating or conspiring to violate the AECA. Persons subject to statutory debarment are prohibited from participating directly or indirectly in the export of defense articles, including technical data, or in the furnishing of defense services for which a license or other approval is required.

In June 2012, Pratt & Whitney Canada Corporation pleaded guilty to violating the AECA (U.S. District Court, District of Connecticut, 12-CR-146-WWE). Based on this plea, Pratt & Whitney Canada Corporation was ineligible in accordance with section 120.1 of the ITAR and was statutorily debarred, with certain exceptions, pursuant to section 127.7(b) of the ITAR. Notice of debarment of Pratt & Whitney Canada Corporation, 1000 boul. Marie-Victorin, Longueuil, Quebec, Canada J4G 1A1 (and all other Pratt & Whitney Canada Corporation locations) was published in the Federal Register (77 FR 40140, July 6, 2012).

In accordance with section 127.7 of the ITAR, the statutory debarment may be rescinded after consultation with other appropriate U.S. agencies, after a thorough review of the circumstances surrounding the conviction, and a finding that appropriate steps have been taken to mitigate any law enforcement concerns. The Department of State has consulted with other appropriate U.S. agencies and has determined that Pratt & Whitney Canada Corporation has taken appropriate steps to address the causes of the violations and to mitigate any law enforcement concerns.

Therefore, in accordance with section 38(g)(4) of the AECA and sections 127.7(b) and 127.11(b) of the ITAR, Pratt & Whitney Canada Corporation is eligible to be involved in ITAR-regulated activities and the statutory debarment is rescinded, effective July 12, 2017. Pratt & Whitney Canada Corporation may participate directly or indirectly in any activities that are subject to the ITAR.

Tina S. Kaidanow, Acting Assistant Secretary, Bureau of Political-Military Affairs (PM).

Highlight 2

Treasury Publishes List of Countries Requiring Cooperation with an International Boycott

(Source: Federal Register, 2 August 2017.)

82 FR 36076: List of Countries Requiring Cooperation with an International Boycott

In accordance with section 999(a)(3) of the Internal Revenue Code of 1986, the Department of the Treasury is publishing a current list of countries which require or may require participation in, or cooperation with, an international boycott (within the meaning of section 999(b)(3) of the Internal Revenue Code of 1986).

On the basis of the best information currently available to the Department of the Treasury, the following countries require or may require participation in, or cooperation with, an international boycott (within the meaning of section 999(b)(3) of the Internal Revenue Code of 1986).

– Iraq
– Kuwait
– Lebanon
– Libya
– Qatar
– Saudi Arabia
– Syria
– United Arab Emirates
– Yemen

Dated: July 26, 2017.

Highlight 3

German BAFA Publishes New Export Control Newsletters Concerning Amendments to AWV, Export Control List, General License No. 16, and Restrictive Measures of the EU

(Source: German BAFA)

The German Federal Office for Economic Affairs and Export Control (BAFA) has published two new Export Control Newsletters (June/July Issue and August Issue, respectively) containing information on amendments to the Außenwirtschaftsverordnung (AWV or “Foreign Trade and Payments Ordinance”), the Export Control List, General License No. 16, and the EU’s Restrictive Measures.

Key sections are included below. To read the entire newsletters, including the sections on the EU’s restrictive measures, click here for the June/July Newsletter, and here for August Newsletter.

NATIONAL LAW

Update and Amendment of the AWV and of Part I Section A of the Export List

The 8th ordinance amending the Foreign Trade and Payments Ordinance of 27 April 2017 adapted the statutory provisions to impose administrative fines in section 82 AWV to the current EU legislation.

In addition, the Export List (Annex AL to Foreign Trade and Payments Ordinance) was revised. This is mainly due to amendments agreed for conventional armaments within the Wassenaar Arrangement in 2016, which were incorporated in Part I Section A. In addition there was an expansion of the range of goods to specific diesel motors controlled by the Export List by amending item 0009b No. 1 of Part I Section A of the Export List.  In this way, the efforts of the Federal government are taken into account to be able to impose restrictions on all deliveries of diesel motors intended for submarines that are relevant from the security policy point of view.

INSIDE BAFA

General Licence No. 16

As of 1 July 2017 the General Licence No. 16 was expanded until 31 March 2018 and supplemented by another condition for exclusion in Section II number 3.2. This expansion excludes the use of this General Licence in cases where goods with IT security functions under sect. 37 of Classified Information Directive (VSA) are to be exported, goods that are approved by BSI under VSA or for which an authorisation was applied for uses in connection with information classified as RESTRICTED or higher under sect. 4 (1) of the Act on Security Review Requirements and Procedure of the Federal Government (Security Review Act – SÜG).

There are no further amendments of the content of this General Licence. For your information a consolidated version of the General Licence No. 16 may be found at BAFA’s website.

Highlight 4

Commerce/BIS Enhances Electronic System for License Application Submissions

(Source: Commerce/BIS)

BIS is pleased to introduce the first in a series of updates to the Single Network Application Process – Redesign (SNAP-R), BIS’s electronic system for the submission of license applications, commodity classification requests, License Exception AGR notifications and License Exception STA eligibility requests. These updates, which BIS is implementing at industry’s request, are designed to make SNAP-R more user-friendly and efficient. Additional updates will be implemented in the future. This batch of updates includes the following:

Security Questions: BIS is introducing security questions to SNAP-R to allow individual SNAP-R users to reset their passwords and login IDs and to receive a reminder of their company identification number (CIN), by themselves, without having to request assistance from either company SNAP-R account administrators or BIS. Current SNAP-R users can chose to answer four of ten security questions, which BIS will use to verify the user’s identity and automate the resetting of passwords and login IDs and/or the sending of with the user’s CIN. Existing users who chose not to answer the questions will be prompted to do so at future logins and, in the interim, need to continue to work with their company SNAP-R account administrators or call or e-mail BIS for assistance. Starting today, all new SNAP-R registrants will be required to select security questions as part of the SNAP-R registration process.

Instructions for existing SNAP-R account holders to set up security questions are here.

Resetting Forgotten Passwords: SNAP-R account holders who have set up security questions and who remember their login ID and CIN will be able to reset forgotten passwords remotely, without help from company SNAP-R account administrators or calling or e-mailing BIS for assistance. Guidance on remotely resetting passwords is here.

Forgotten Login ID: SNAP-R account holders who have set up security questions and who remember their CIN will be able to request and receive their login ID remotely, without calling or e-mailing BIS for assistance. Guidance on the remote receipt of login IDs is here.

Forgotten CIN: SNAP-R account holders who have set up security questions and who remember their login ID will be able to request and receive their CIN remotely, without help from company SNAP-R account administrators or calling or e-mailing BIS for assistance. Guidance on the remote receipt of CINs is here.

Work Item Reference Numbers: SNAP-R account holders are no longer limited to the previously required format (i.e., AAA####) for Work Item reference numbers. Additional information on this change is here.

Line Item Value Calculation: When listing the information for an export item on a license application, SNAP-R account holders can now choose to calculate the value of the item by multiplying the unit value by the quantity of items or to enter the total price of the item independent of the item’s quantity and unit value. Guidance on this change is here.

Other SNAP-R Features: Did you know that SNAP-R:

– Can be used on browsers other than Internet Explorer®?
– Has a spell check function?
– Allows a previously created Work Item (e.g., a license application) to be used again when preparing a new Work Item for submission?

Information on these features may be found here, as well as in the SNAP-R manual.

Updated SNAP-R Manual: The SNAP-R manual has been revised and updated to incorporate the changes above as well as to clarify the tools available to SNAP-R system users. The revised SNAP-R manual is here.

Highlight 5

UK/DIT Announces Name and Location Change of MoD Unit Managing Crown Exemption Letters, Publishes Related Guidance

(Source:  UK/DIT ECO)   

The Export Control Organisation (ECO) of the UK Department of International Trade (DIT) has published the following notice.

Following the establishment of the Export Control Joint Unit, the team managing Crown exemption letters for the MOD has changed name and location.

The UK Crown is not bound by the provisions of the Export Control Act 2002 for goods specified by schedule 2 of the Export Control Order 2008 (ie the UK Military List which forms part of the UK Strategic Export Control Lists).

Where the Crown owns the controlled military goods, technology or software being exported, and at all times hold disposal rights, then an exporter may carry out the export on behalf of the MOD without a licence. This Crown exemption for goods, technology or software owned by MOD UK/UK armed forces is subject to the issuing of an approval letter. Crown exemption does not apply if the goods are owned privately.

The MOD team in the Export Control Joint Unit is the only entity which is authorised to issue Crown exemption letters on behalf of the UK MOD. Their contact details are:

Export Control Joint Unit – MOD Team
Department for International Trade
2nd floor
3 Whitehall Place
London SW1A 2AW
Email: ECJU-MODTeam@mod.uk

  Action for Exporters

Exporters should familiarise themselves with the changes to the MOD body which issues Crown exemption letters.

Read the following guidance on GOV.UK: Crown exemption for controlled military list equipment and technology owned by the UK MOD.

Highlight 6

Justice: “Texas Man Pleads Guilty to Conspiring to Illegally Export Radiation Hardened Integrated Circuits to Russia and China”

(Source: Justice, 3 August 2017.) [Excerpts.]

Peter Zuccarelli, 62, of Plano, Texas pleaded guilty today to conspiring to smuggle and illegally export from the U.S., radiation hardened integrated circuits (RHICs) for use in the space programs of China and Russia, in violation of the International Emergency Economic Powers Act (IEEPA). …

Zuccarelli pleaded guilty to engaging in a conspiracy to smuggle and illegally export from the U.S. items subject to IEEPA, without obtaining licenses from the Department of Commerce. According to the allegations contained in the Information filed against Zuccarelli and statements made in court filings and proceedings, including today’s guilty plea:

Between approximately June 2015 and March 2016, Zuccarelli and his co-conspirators agreed to illegally export RHICs to China and Russia. RHICs have military and space applications, and their export is strictly controlled.

In furtherance of the conspiracy, Zuccarelli’s co-conspirator received purchase orders from customers seeking to purchase RHICs for use in China’s and Russia’s space programs. Zuccarelli received these orders from his co-conspirator, as well as payment of approximately $1.5 million to purchase the RHICs for the Chinese and Russian customers. Zuccarelli placed orders with U.S. suppliers, and used the money received from his co-conspirator to pay the U.S. suppliers. In communications with the U.S. suppliers, Zuccarelli certified that his company, American Coating Technologies was the end user of the RHICs, knowing that this was false. Zuccarelli received the RHICs he ordered from U.S. suppliers, removed them from their original packaging, repackaged them, falsely declared them as “touch screen parts,” and shipped them out of the U.S. without the required licenses. He also attempted to export what he believed to be RHICs. In an attempt to hide the conspiracy from the U.S. government, he created false paperwork and made false statements. …

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