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Greetings!
Welcome to the February 2008 edition of Global Trade Expertise's newsletter, the Global Trader. Highlights from this month's news include: Extensions of Comment Period for CBP's "First Sale" and "10+2" Proposals, OFAC Issues Guidance on SDN List, BIS Announces Steps Toward Implementing DEAC Recommendations, Industry and University Groups Issue Letters Critical of DEAC Recommendations, DHS Sued Over Traveler Searches, and the House Ways and Means Subcommittee on Trade Requests Comments on Miscellaneous Trade Bills. As always, we would appreciate any comments or suggestions you may have to improve this newsletter either by email to info@globaltradeexpertise or via our feedback survey link in our left column. Thank you for reading! Jennifer Kessinger & Tammie Goldstein Krauskopf
globaltradeexpertise
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BIS Announces Steps to Implement Deemed Export Advisory Committee Recommendations
First Steps Outlined
 On February 6, 2008, the Department of Commerce's Bureau of Industry and Security (BIS) announced that it had completed its review of the Deemed Export Advisory Committee's (DEAC) report. BIS states that the Department has begun to work with its U.S. government partners, including the Departments of Defense, State, and Energy, to "consider the report's analysis and recommendations as a basis for reforming current deemed export policy."
A "deemed export" is the transfer of controlled dual-use technology to a foreign national while in the United States. BIS stated that, "Given the significant role that foreign nationals play in the U.S. research system, deemed export policy has significant implications for U.S. national security and economic competitiveness."
Mario Mancuso, Under Secretary of Commerce for Industry and Security, stated, "U.S. deemed export policy must account for the variety of risks we face. While our rules should not permit the transfer of sensitive U.S. technology to a real or potential adversary, they must ensure the United States remains the most innovative and competitive economy in the world."
While certain proposals under active consideration will require interagency support, Under Secretary Mancuso has directed BIS to immediately:
· Create an Emerging Technologies Advisory Committee, composed of representatives from leading research universities, government research labs, and industry to make recommendations to BIS regarding emerging technologies on a regular basis; and
· Improve outreach and engagement efforts to the academic and technology communities about the progress and scope of the deemed export policy efforts.
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Industry & University Groups Oppose DEAC Recommendations
12 Industry and 2 University Associations Submit Letters to Commerce with Initial Reactions to DEAC Report
 On February 15, 2008, twelve industry groups (listed below) issued a letter to the Secretary of Commerce offering their "preliminary reaction" to the report by the Deemed Export Advisory Committee (DEAC) issued on December 20, 2007. The signatories to the letter were: the American Electronics Association (AeA), American Council on International Personnel, Association for Manufacturing Technology (AMT), Coaltion for Employment Through Exports, Computer and Communications Industry Association, Emergency Committee for American Trade, Information Technology Industry Council, International Safety Equipment Association, National Council on International Trade Development, National Foreign Trade Council, and U.S.-China Business Council.
In the letter, the groups note a "marked disparity between the DEAC's analysis of the difficulties of regulating the transfer of technological knowledge in a globally interconnected world," an analysis they largely endorse, and the specific recommendations for a new approach to controlling the transfer of controlled information to foreign nationals while in the U.S. -- which they believe would be "difficult to translate into regulations, burdensome for U.S. companies' compliance programs and ultimately counterproductive to the U.S. national interest."
Specifically, the groups claimed that:
- Controlled technologies would not be refined
- More foreign nationals would be subject to controls
- Recommendations would harm U.S. technological leadership
In conclusion, the groups stated, "We urge the Department to go back to the drawing board and work closely with industry in developing an approach that will produce a more balanced result."
Similarly, on February 20, 2008, the Association of American Universities (AAU) and the Council on Governmental Relations (COGR) submitted a letter to the Secretary of Commerce expressing their views on the findings and recommendations of the DEAC report. The groups stated that they strongly agree with the DEAC's principal conclusion that ". . . the existing Deemed Export Regulatory Regime no longer effectively serves its intended purpose and should be replaced with an approach that better reflects the realities of today's national security needs and global economy."
In the letter, the groups endorsed and specifically highlighted the following points:
- Too many technologies are subject to deemed export controls and the list of covered technologies should be drastically reduced;
- Each technolgoy on the CCL should "sunset" automatically after a period of one year, unless there is explicit action to retain it on the list following a review process; and
- They agree wtih the DEAC recommendation to eliminate any distinction between research products and knowledge regarding equipment needed to conduct the research.
The letter then goes on to state the groups' serious concerns over the following DEAC recommendations:
- They urge Commerce to regject the deemed export decision process construct proposed in the report -- specifically, as with the industry groups, they disapprove of the proposed "loyalty" assessments, which they claim would raise very serious policy, practical, and legal issues for universities;
- They are concerned about the impact of loyalty assessments and broad-based background checks will have on reviews of deemed export license applications; and
- They reject the DEAC's proposal to change the definition of fundamental research.
In conclusion, they state that they find the report to be well-considered and contains many helpful findings, but they urge Commerce to seriously consider the concerns outlined.
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OFAC Issues Guidance on SDN List
Parties Controlling 50% or More of a SDN are Prohibited
 In mid-February 2008, the U.S. Department of Treasury's Office of Foreign Assets Control (OFAC) issued a guidance document entitled, "Guidance on Entities Owned by Persons Whose Property and Interests in Property are Blocked."
This guidance answers the frequently asked question of whether a U.S. person can do business with a company who is not on the specially designated nationals (SDN) list, even though one of its partners, shareholders, or members is on the SDN list. The guidance states that:
A person whose property and interests in property are blocked pursuant to an Executive order or regulations administered by OFAC (a "blocked person") is considered to have an interest in all property and interests in property of an entity in which it owns, directly or indirectly, a 50% or greater interest. The property and interests in property of such an entity are blocked regardless of whether the entity itself is listed in the annex to an Executive order or otherwise placed on OFAC's list of Specially Designated Nationals ("SDNs"). Accordingly, a U.S. person generally may not engage in any transactions with such an entity, unless authorized by OFAC.
OFAC cautions, however, that, "In certain OFAC sanctions programs (e.g., Cuba and Sudan), there is a broader category of entities whose property and interests in property are blocked based on, for example, ownership or control."
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OFAC Releases Enforcement Report
Report Lists Civil Penalties Against Entities & Individuals
On February 1, 2008, the Treasury Department's Office of Foreign Assets Control (OFAC) issued a report of civil penalties it has assessed (or settled) against entities and individuals. Here is a summary of the report:
La Salle Bank Midwest, N.A. of Chicago, IL, on behalf of Standard Federal Bank, remitted $5,500 to settle allegations of violations of the Iranian Transactions Regulations occurring on February 22, 2002.
BankAtlantic of Ft. Lauderdale, FL remitted $7,500 to settle allegations of possible violations of the Cuban Assets Control Regulations occurring in July 2004.
Key National Bank Association of Cleveland, OH remitted $200,000 to settle allegations of violations of the Iranian Transaction Regulations occurring between 2002 and 2004.
Buehler Ltd. of Lake Bluff, IL has remitted $20,000 to settle allegations of violations of the Iranian Transactions Regulations occurring between September 2002 and November 2003.
RMO, Inc. of Denver, CO has been assessed a $941 civil monetary penalty for its violation of the Cuban Assets Control Regulations occurring on or about June 22, 2005.
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New AES Reporting Requirements for BIS License Exceptions
BIS has issued new AES reporting requirements for BIS license exceptions. The notice can be found here.
The notice states that as of April 28, 2008, the following reporting change will be implemented:
The Export Control Classification Number (ECCN) will be required for License Exceptions reportable under the following License Exception codes: C38-TSR, C41-RPL, C42-GOV, C43-GFT, C44-TSU, C45-BAG, C46-AVS, C47-APR, C48-KMI, C49-TAPS, C50-ENC
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Civil Liberties Groups Sue DHS Over Searches and Harassment at U.S. Borders
Suit Seeks Access to Records on Questioning and Searching Travelers at Borders
 On February 7, 2008, the Electronic Frontier Foundation and the Asian Law Caucus, both civil liberty groups based in San Francisco, filed suit against the U.S. Department of Homeland Security (DHS) for denying access to public records on the questioning and searches of travelers at U.S. borders. Filed under the Freedom of Information Act (FOIA), the suit claims to respond to growing complaints by U.S. citizens and immigrants of excessive or repeated screenings by U.S. Customs and Border Protection (CBP) agents. The complaint can be found here.
ALC states that it has received more than 20 complaints from Northern California residents last year who said they were grilled about their families, religious practices, volunteer activities, political beliefs, or associations when returning to the United States from travels abroad. In addition, customs agents examined travelers' books, business cards collected from friends and colleagues, handwritten notes, personal photos, laptop computer files, and cell phone directories, and sometimes made copies of this information. When individuals complained, they were told, "This is the border, and you have no rights."
"When the government searches your books, peers into your computer, and demands to know your political views, it sends the message that free expression and privacy disappear at our nation's doorstep," said Shirin Sinnar, staff attorney at ALC. "The fact that so many people face these searches and questioning every time they return to the United States, not knowing why and unable to clear their names, violates basic notions of fairness and due process."
ALC and EFF asked DHS to disclose its policies on questioning travelers on First Amendment-protected activities, photocopying individuals' personal papers, and searching laptop computers and other electronic devices. The agency failed to meet the 20-day time limit that Congress has set for responding to public information requests, prompting the lawsuit.
"The public has the right to know what the government's standards are for border searches," said EFF Staff Attorney Marcia Hofmann. "Laptops, phones, and other gadgets include vast amounts of personal information. When will agents read your email? When do they copy data, where is it stored, and for how long? How will this information follow you throughout your life? The secrecy surrounding border search policies means that DHS has no accountability to America's travelers."
Interesting news articles on the suit have appeared in the Washington Post and the San Francisco Chronicle. Both of these articles regard the search and seizure of electronics. The search and possible seizure of laptops and other computer devices without suspicion or any articulated explanation is particularly troublesome to business travelers. The question of whether Customs inspectors have a right to search laptops and electronic devices without reasonable suspicion of a crime has already been under review in both the Fourth and Ninth Circuits. (See, United States v. Ickes, 393 F. 3d 501 (4th Cir. 2005) (did not directly address the level of suspicion required to search laptops but did rule that laptops fall within border search authority); United States v. Arnold, 454 F. Supp. 2d 999 (N.D. Cal. 2006) (reasonable suspicion required to search computers)).
Border searches are a well-recognized and long established exception to the probable cause and warrant requirements of the Fourth Amendment. Even so, the conduct of such searches, as with any search, must be reasonable. Sections 482 and section 1582, Title 19 of the United States Code authorize Customs officers to search and seize (detain) persons at the border. Removal of an outer coat such as a sport jacket or suit coat or the examination of a handbag are not considered searches of the person and are treated as searches of containers. Section 1496, Title 19 of the United States Code authorizes the examination of baggage of any person "arriving in the United States" without any suspicion.
Reasonable suspicion means that the facts known to the customs agents at the time of the search, combined with the agent's reasonable inferences from those facts, provides the agent with a particularized and objective basis for suspecting that the search will reveal contraband or a crime. (United States v. Montoya de Hernandez, 473 U.S. 531, 105 S.Ct. 3304 (1985)).
In recent years, CBP has argued that its authority to protect the country's border extends to looking at information stored on electronic devices such as laptops without any suspicion of a crime. CBP is taking the position that a laptop is the equivalent of a suitcase or container with the information stored on the laptop as the equivalent of physical merchandise packed in luggage. The question is whether the Courts will agree. We will follow this issue and keep you updated of any developments.
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House Committee Requests Comments on Miscellaneous Tariff and Duty Suspension Bills
Comments Must be Submitted by April 10, 2008
 On February 25, 2008, Chairman Sander M. Levin (D-MI) and Ranking Member Wally Herger (R-CA) of the Subcommittee on Trade jointly announced that the Subcommittee is requesting written comments for the record from all parties interested in miscellaneous duty suspension proposals and corrections to the trade laws.
The Committee on Ways and Means has jurisdiction over legislation to amend the U.S. tariff schedule and to make corrections to trade legislation. On November 1, 2007, Chairman Levin and Ranking Member Herger requested that all Members who planned to introduce tariff legislation or miscellaneous corrections to the trade laws do so by December 14, 2007. Chairman Levin and Ranking Member Herger are now requesting public comment on those bills listed here and are requesting budget scoring estimates from the Congressional Budget Office. The deadline for the public to submit written comments to the Committee is Thursday, April 10, 2008.
After the comment period, the Subcommittee will review all comments and determine which bills should be included in a miscellaneous tariff bill (MTB) package. The Subcommittee will consider the extent to which the bills create a revenue loss, operate retroactively, attract controversy, or are not administrable. The Subcommittee states that,
The primary purpose of the bill is to help U.S. manufacturers compete at home and abroad by temporarily suspending or reducing duties on intermediate products or materials that are not made domestically, or where there is no domestic opposition. Such reductions or suspensions reduce the costs for U.S. businesses and ultimately increase the competitiveness of their products. The process will look carefully for domestic production and opposition to proposed modifications to the U.S. Harmonized Tariff Schedule.
Instructions for submitting written comments can be found here.
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CBP Extends Comment Period for Proposed Interpretation re: "First Sale" Valuation
Comments are Now Due by April 23, 2008
 On February 7, 2008, the U.S. Customs and Border Protection ("CBP") published a notice in the Federal Register extending by 30 days the comment period for its proposed interpretation of the phrase "sold for exportation to the United States" for purposes of applying the transaction value method of appraisement when a series of sales exist prior to importation into the U.S.
CBP is proposing that the transaction value (or price paid or payable) for imported goods in a series of sales is the price paid or payable in the last sale occurring prior to the goods' importation into the United States, rather than the price in the first or earlier sale. CBP states that this is based on its proposed revised interpretation of the phrase "when sold for exportation to the United States" such that CBP no longer believes that the first (or earlier) sale qualifies as a sale for exportation to the United States. CBP states that this proposed interpretation is in line with the conclusions of the Technical Committee on Customs Valuation as set forth in Commentary 22.1, entitled, "Meaning of the Expression 'Sold for Export to the Country of Importation' in a Series of Sale."
On January 24, 2008, CBP published a notice in the Federal Register setting forth its proposed interpretation with a comment period to expire on March 24, 2008. CBP received correspondence requesting an extension of the comment period. Accordingly, CBP has decided to allow an additional 30 days for comments. Comments are now due on or before April 23, 2008.
For further information, contact: Lorrie Rodbart, Valuation and Special Programs Branch, Regulations and Rulings, Office of International Trade; Phone: (202) 572-8740.
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CBP Extends Comment Period for Proposed "10+2" Rule
Comments are Now Due by March 18, 2008
On February 1, 2008, U.S. Customs and Border Protection (CBP) published a notice in the Federal Register extending the comment period for its proposed "10+2" filing requirement for ocean cargo by 15 days until March 18, 2008. It is expected that many interested parties will be filing comments on the proposed rule.
On January 2, 2008, U.S. Customs and Border Protection (CBP) published a proposed rule regarding importer security filing and additional carrier requirements, also known as the "10+2" rule. The proposed rule will require that importers and carriers to submit additional information regarding cargo before the cargo is brought into the U.S. by vessel. The information must be provided 24 hours prior to loading of the cargo on the vessel and via a CBP-approved electronic data interchange system.
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Who's Hiring?
A Summary of Current Trade Job Opportunities
 As a service to the international trade community, Global Trade Expertise compiles links to trade job opportunities from many different sources. New trade job listings are posted frequently on our website.
Companies with new listings this month include:
Eagle Global Logistics - Torrance, CA
Ingersoll Rand - St. Louis, MO
Lominger International - Minneapolis, MN
CNH America LLC - Racine, WI
Kimberly-Clark - Alpharetta, GA
ERSI - Redland, CA
MonaVie - South Jordan, UT
Schaeffler Group - Fort Mill, SC
DRS Sustainment Systems, Inc. - Cincinnati, OH
Northrup Grumman - Baltimore, MD
General Dynamics C4 Systems - CA
Gulfstream Aerospace Corporation - Savannah, GA
Deloitte - San Francisco, CA
Nokia - Irving, TX
Insitu, Inc. - Bingen, WA
Limited Brands - Columbus, OH
Agility Logistics - Jersey City, NJ
Nintendo - Bellevue & North Bend, WA
Rockwell Automation - Milwaukee, WI
Lockheed PAE - Arlington, VA
Nortel - Dallas, TX
ATK - Arlington, VA
SureFire LLC - Fountain Valley, CA
Abbott Laboratories - Milwaukee, WI & Abbott Park, IL
MKS Instruments - Wilmington, MA or Bouler, CO
Selex - Arlington, VA
APC - Billerica, MA
Converse, Inc. - Boston, MA
f5 Networks - Seattle, WA
Linens 'N Things - Clifton, NJ
Sony Electronics - San Diego, CA
OfficeTeam - Ontario, CA
Nike - Beaverton, OR
Macy's - New York NY
Varian Medical Systems - Palo Alto, CA
To sort the job opportunities by region, fields, or levels, click on the appropriate category or tag in the right column on our Trade Jobs webpage. |
Calendar of Events
Upcoming Industry Events & Seminars
 Our website has a comprehensive listing of import and export conferences held throughout the country, as well as Customs training, EAR training, ITAR training, and other training. Below is a small sampling of what's available in March 2008:
Winter Back to Basics Conference - Society for International Affairs (SIA)
March 3-8, 2008 - Miami, FL - $700 Member/$800 Non-Member/$500 Government
"Where the Rubber Meets the Road" Workshop - Society for International Affairs (SIA)
March 5-8, 2008 - Miami, FL - $350 Member/$400 Non-Member/$275 Government
Brown Bag Trade Meeting - Incoterms 2000 - Professional Association of Exporters and Importers (PAEI)
March 4, 2008 - San Jose, CA - Free to Members
Essentials of Export Controls - Bureau of Industry and Security (BIS)
March 4, 2008 - Huntsville, AL - $180
ITAR Part II: Advance ITAR Compliance Issues for High-Tech Companies - Women In International Trade-Northern California (WIT-NC)
March 5, 2008 - Palo Alto, CA - $40 Member/$55 Non-Member
Technology Controls - Bureau of Industry and Security (BIS)
March 5, 2008 - Huntsville, AL - $180
Seminar: Deemed Export Advisory Committee Report: A Discussion with BIS - AAEI
March 6, 2008 - Washington, D.C. - $150 AAEI Members/ $300 Non-Members
2008 Annual International Compliance Professionals Association (ICPA) Conference
March 9 - 13, 2008 - San Antonio, TX - $650/$795
Export Control Forum - Bureau of Industry and Security (BIS)
March 17, 2008 - Newport Beach, Ca - $325
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Thanks again for your interest in our newsletter!
Sincerely,
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Jennifer Kessinger & Tammie Krauskopf
Attorneys & Consultants
jk@globaltradeexpertise.com
Tel. 925.876.1381 (Jennifer Kessinger)
tk@globaltradeexpertise.com
Tel. 708.707.4087 (Tammie Krauskopf)
www.globaltradeexpertise.com
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