The Daily Bugle Weekly Highlights: Week 36 (4-8 Sep 2017)

Every Monday 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. Commerce/BIS: Narender Sharma and Hydel Engineering Products of Rampur Bushar, India, to Pay $100,000 to Settle Alleged Export Violations, The Daily Bugle, Wednesday, 6 September 2017, ITEM #3;
    2. Commerce/Census: “Becoming Familiar with Automated Export System Downtime Procedures,” The Daily Bugle, Thursday, 7 September 2017, ITEM #4;
    3. E. Bartlett: Notes from Today’s DTAG Public Meeting, The Daily Bugle, Friday, 8 September 2017, ITEM #5;
    4. DoD/DSS Posts Report “Targeting U.S. Technologies: A Trend Analysis of Cleared Industry Reporting,” The Daily Bugle, Friday, 8 September 2017, ITEM #6;
    5. Justice: “CEO of International Metallurgical Company Sentenced to 57 Months in Prison for Conspiring to Export Specialty Metals to Iran, The Daily Bugle, Friday, 8 September 2017, ITEM #7.

 

Highlight 1

Commerce/BIS: Narender Sharma and Hydel Engineering Products of Rampur Bushahr, India, to Pay $100,000 to Settle Alleged Export Violations

(Source: Commerce/BIS) [Excerpts.]

* Respondent: Narender Sharma and Hydel Engineering Products of Rampur Bushahr, India

* Charges: 15 C.F.R. § 764.2(d) – Conspiracy to Export Items from the United States to Iran, Including to an Iranian Government Entity, without the Required U.S. Government Authorization:

Beginning no later than in or around May 2009, and continuing through in or around January 2012, Hydel/Sharma conspired and acted in concert with others, known and unknown, to violate the Regulations and to bring about an act or acts that constitutes a violation of the Regulations. The purpose of the conspiracy was to evade the long-standing and well-known U.S. embargo against Iran in order to sell and export U.S.-origin waterway barrier debris systems and related components to Iran via transshipment through third countries, including to Mahab Ghodss, an Iranian Government entity, without the required U.S. Government authorization.

The conspiracy led to the attempted export of a waterway barrier debris system, an item subject to the Regulations, designated EAR99,3 and valued at $420,256, from the United States to Mahab Ghodss in Iran, via transshipment through the United Arab Emirates (“UAE”). This item also was subject to the Iranian Transactions Regulations (“ITR”), administered by the U.S. Department of the Treasury’s Office of Foreign Assets Control (“OFAC”). …

* Penalty:

– A civil penalty in the amount of $100,000 for which they are jointly and severally liable

– Narender Sharma and Hydel Engineering Products may not, directly or indirectly, participate in any way in any transaction involving any commodity, software or technology exported or to be exported from the United States that is subject to the Regulations, or in any other activity subject to the Regulations. … The five-year denial period set forth above shall be suspended during a probationary period of five years under this Order, and shall thereafter be waived, provided that Hydel and Sharma have made full and timely payment as set forth above, have otherwise complied with the terms of the Settlement Agreement and this Order, and have committed no other violation of the Act or the Regulations or any order, license, or authorization issued thereunder.

* Debarred: Not if penalty is paid as agreed.

* Date of Order: 31 August 2017.

Highlight 2

Commerce/Census: “Becoming Familiar with Automated Export System Downtime Procedures”

(Source: Global Reach Blog

Are you aware of the procedures if the Automated Export System (AES) or Automated Commercial Environment (ACE) AESDirect program is down? To help clarify the process during an unscheduled outage, we created the following scenario to highlight the steps involved.

While attempting to file his shipment in ACE AESDirect, Mike noticed an issue with the system. He wasn’t able to transmit his Electronic Export Information (EEI). Instead, he needs to wait for guidance from the U.S. Census Bureau and U.S. Customs and Border Protection (CBP) regarding system status and the possible use of the AES Downtime Policy.

The AES Downtime Policy provides uniform procedures when the AES or the ACE AESDirect program is unavailable for transmission. During this time, the Census Bureau and CBP will work together to determine the cause and resolution for the problem. If the issue is not fixed within two hours, the Census Bureau and CBP will evaluate and determine if the use of the AES Downtime Policy is appropriate. If the AES Downtime Policy is jointly approved, Mike will be notified through a nationwide email broadcast.

Automated Export System Unscheduled Outage

The outage is effective immediately.

AES filers may submit shipments under the AES Downtime Policy. State Department licensable shipments cannot be exported under the AES Downtime Policy and must be held until the connection is restored and an Internal Transaction Number (ITN) is received. Once connection is brought back on-line after the outage, all shipments that were exported under the AES Downtime Policy must be filed along with any new AES transactions.

If you use the AES Downtime Policy for export, please contact the port from which you will be exporting. In lieu of the AES Proof of Filing citation, please use the AES Downtime citation, which consists of the phrase AESDOWN, your individual company’s Filer ID, followed by the date.

For example: AESDOWN 123456789 09/01/2017

Please see the CBP website for further information on the AES Downtime Policy.

The broadcast message will include the AES Downtime Citation, a statement used in place of the AES Proof of Filing Citation to move cargo. However, it can only be used once the AES Downtime Policy has been enacted by the Census Bureau and CBP and the nationwide email broadcast has been issued.

AESDOWN       FILER ID         DATE OF EXPORT

AESDOWN        123456789       09/01/2017

As established in the Foreign Trade Regulations 30.7 (b), Mike must include the AES Downtime Citation on either the bill of lading, air waybill or other commercial loading documents. Moreover, Mike will not be able to use the AES Downtime Citation for U.S. State Department licensable shipments.

After receiving the broadcast message from the Census Bureau, Mike will follow the instructions and use the approved AES Downtime Citation to move his cargo. However, he is not done yet. Mike must keep a log of all shipments exported while the AES Downtime Policy is in effect. Once the issue has been resolved, another nationwide email broadcast will be sent indicating that the AES Downtime Policy is deactivated and the AES or ACE AESDirect is operational.

AES Downtime Policy Has Been Deactivated

The AES Downtime Policy has been deactivated and the AES is now operational.

Please file all Electronic Export Information (EEI) for shipments that were exported under the AES Downtime Policy, along with any new AES transactions, to receive an Internal Transaction Number (ITN). Due to the high volume of shipments that are being processed at this time, please be patient in obtaining an AES response message. Do not submit shipments more than once.

At this time, Mike is required to transmit the shipments that were moved during downtime to AES for an Internal Transaction Number (ITN). Mike should retain all documentation pertaining to the shipments that were moved, including a copy of the broadcast message issued at that time, along with the ITNs.

If you have questions about the AES Downtime Policy, please contact the Data Collection Branch at 1-800-549-0595, using option 1 or email askaes@census.gov. If you are not receiving the email broadcast messages, you can subscribe by clicking the Get Email Updates button on our website.

 

Highlight 3

J.E. Bartlett: Notes from Today’s DTAG Public Meeting

(Source: James E. Bartlett)

The Defense Trade Advisory Group (DTAG) held a public meeting today, September 8th, in Washington, DC, attended by approximately 50 DTAG members, 30 members of the public, members of the staff of the Defense Directorate of Trade Compliance (DDTC), led by Brian Nilsson, Deputy Assistant Secretary of State for Defense Trade (DAS). Mr. Nilsson provided the following information about DDTC actions that can be expected in the coming months:

  • USML Categories I, II, and III are expected to move to the CCL for EAR control within the next year.
  • A change to ITAR 126.4 has been drafted and is being circulated for review.
  • A change to the ITAR 123.4 exemption for temporary imports for repair and return of articles would allow it to apply to non-US origin articles.
  • DDTC is performing a review of the UAV export policy.
  • DDTC is considering improvements to the Australian and UK ITAR authorization sections.
  • DDTC is planning a rewrite of the entire ITAR.
    • First rule would be limited to restructuring; no policy would be changed.
    • The second rule would be a section-by-section analysis of the regulations.
    • The ITAR will be shortened and simplified.
    • All definitions will be in one part of the ITAR.
    • DDTC will address whether the separate guidance currently posted on the DDTC website (e.g., licensing and agreements) will be incorporated into the ITAR.

Will be structured more like the EAR, with the intention of eventually being combined with the EAR to form the one regulation envisioned by Export Control Reform.

Highlight 4

DoD/DSS Posts Report “Targeting U.S. Technologies: A Trend Analysis of Cleared Industry Reporting”

(Source: DoD/DSS)

The DSS Counterintelligence Directorate announces the release of the 2017 edition of the unclassified publication, “Targeting U.S. Technologies: A Trend Analysis of Cleared Industry Reporting.” This report analyzes suspicious contact reports received from cleared industry in fiscal year 2016. It is currently available online. Hardcopy editions will be available in October from your servicing Industrial Security Representative or Counterintelligence Special Agent.

Highlight 5

Justice: “CEO of International Metallurgical Company Sentenced to 57 Months in Prison for Conspiring to Export Specialty Metals to Iran”

(Source: Justice) [Excerpts.]

Earlier today, at the federal courthouse in Brooklyn, New York, Erdal Kuyumcu, the chief executive officer of Global Metallurgy, LLC, based in Woodside, New York, was sentenced to 57 months in prison following his June 14, 2016 guilty plea to conspiracy to violate the International Emergency Economic Powers Act by exporting specialty metals from the United States to Iran.  The sentencing proceeding was held before Chief United States District Judge Dora L. Irizarry. …

According to court documents, Kuyumcu, a U.S. citizen, conspired to export from the United States to Iran a metallic powder primarily composed of cobalt and nickel, without having obtained the required license from the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC).  As established during a two-day presentencing evidentiary hearing, the metallic powder has potential military and nuclear applications.  Such specialized metals are regulated by the U.S. Department of Commerce to combat nuclear proliferation and terrorism, and exporting them without the required license is illegal.

In furtherance of the illegal scheme, Kuyumcu and others plotted to obtain more than 1,000 pounds of the metallic powder from a U.S.-based supplier.  To hide the true destination of the goods from the supplier, Kuyumcu arranged for the metallic powder to be shipped first to Turkey and then to Iran.  Kuyumcu used coded language when discussing shipment of the powder with a Turkey-based co-conspirator, such as referring to Iran as the “neighbor.”  Shortly after one of the shipments was sent from Turkey to Iran, a steel company in Iran sent a letter-sized package to Kuyumcu’s Turkey-based co-conspirator.  The Iranian steel company had the same address as an OFAC-designated Iranian entity under the Weapons of Mass Destruction proliferators sanctions program that was associated with Iran’s nuclear and ballistic missile programs.  …

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