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Greetings!
Welcome to the March 2008 edition of Global Trade Expertise's newsletter, the Global Trader. Highlights from this month's news include: BIS' 2008 Export Control Forum in Newport Beach, CA Highlights; BIS Announces Online Training Room; China and US Begin C-TPAT Validations in China; US and EU Adopt Joint Roadmap Towards Mutual Recognition of Supply Chain Security Programs; and Update on First Sale Re-Interpretation. 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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Highlights from BIS' Export Control Forum
March 17-18, 2008 in Newport Beach, CA
 The Bureau of Industry and Security (BIS) held its 3rd Annual Export Control Forum in Newport Beach, CA on March 17, 2008. BIS, Census and Office of Foreign Assets Control (OFAC) provided updates to the trade. Global Trade Expertise attended and in case you missed it, we'll recap the highlights here.
· In a presentation by Gerry Horner, Senior Trade and Industry Analyst, Office of Technology Evaluation, Mr. Horner stated that BIS has been measuring EAR compliance by comparing data elements in AES and license approvals. For example, BIS is comparing approved licenses to licensed exports, comparing license values to licensed export values, and comparing countries on license with licensed exports. BIS is also scrutinizing license exception uses and EAR99 classifications.
· Alex Lopes, Director of BIS' Deemed Exports and Electronics Division, gave a presentation and a half-day seminar on Deemed Exports. Mr. Lopes set forth 2 general findings of the Deemed Export Advisory Committee (DEAC) Report as: (1) strengthening and streamlining deemed export policy and process; and (2) expanding BIS' outreach. With regard to the second recommendation, BIS will be updating its website, providing more frequent webinars, and tailoring outreach. In fact, BIS will be having a webinar on Deemed Exports on April 15, 2008.
· With regard to implementing the first recommendation: strengthening and streamlining deemed export policy and process, Mr. Lopes set forth the following steps:
- BIS announced in February the establishment of the Emerging Technologies and Research Advisory Committee (ETRAC), which will work on creating a list of technologies that should be regulated for deemed export purposes;
- BIS is creating a license exception for intra-company transfers (ICT) of both commodities and technology that is currently being reviewed by other government agencies;
- BIS is seeking to establish objective licensing criteria when reviewing dual nationals;
- BIS is in the process of redesigning its website to simply and clarify regulatory language and online guidance; and
- BIS is undertaking a comprehensive review of the CCL.
· Darryl Jackson, Assistant Secretary of Commerce for Export Enforcement, stated that the fourth export enforcement priority is now Antiboycott Compliance (after Weapons of Mass Destruction Proliferation, Terrorism and State Sponsorship of Terror, and Diversions to Unauthorized Military End-Use).
· Mr. Jackson also revealed for the first time the 9 Factors to an Effective Compliance Program that would be entitled to great weight mitigation, which will be posted on the BIS website: (1) whether a company has performed a meaningful risk analysis; (2) the existence of formal written compliance program; (3) whether appropriate senior company officials are responsible for overseeing the export compliance program; (4) whether adequate training is provided to employees; (5) whether the company adequately screens its customers and transactions; (6) whether company meets recordkeeping requirements; (7) the existence and operation of an internal system for reporting export violations; (8) the existence and results of internal or external reviews or audits (with associated updates of the EMCP); and (9) whether remedial activity has been taken in response to export violations.
· Todd Willis, Assistant Director, Office of Enforcement Analysis gave an update on BIS' end-use checks. In 2008, BIS will begin conducting end-use checks (EUC) on software and technology. Mr. Willis provided information that BIS will look for during end use checks, which elicited questions from the audience regarding how much control BIS expects exporters to exert over foreign customers and what the effects of an unfavorable EUC will have on future license applications.
If you have any questions about BIS' Export Control Forum, please contact us at info@globaltradeexpertise.com.
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California Engineer Sentenced to 24 Years in Prison for ITAR Violations
Conviction Capped 18-Month Long Investigation
 The Los Angeles Times reported on March 25, 2008 that a Chinese-born, naturalized U.S. citizen was sentenced to 24 years and five months in federal prison and fined $50,000 for conspiring to export ITAR-controlled technology to China. Chi Mak, 67, was a former electrical engineer at Power Paragon, Inc. of Anaheim, CA, which handled Navy contracts. Mak was convicted of conspiracy to violate export control laws, attempting to violate export control laws, acting as an unregistered agent of China, and lying to the FBI.
Mak's conviction was the culmination of an 18-month long investigation of Mak's family that ended in October 2005 when he and four other family members were arrested by the FBI and charged with a scheme to illegally send military information to China. Mak's wife, brother, sister-in-law, and nephew have all pleaded guilty and agreed to jail terms or probation.
The government's case centered around three encrypted computer disks that the family had tried to take with them on a flight to China. Two of the disks contained information about an electrically powered propulsion system for warships and a solid-state power switch for ships. The third disk contained a Powerpoint presentation on the future of power electronics. Witnesses during the trial testified that some of these materials were available for purchase on the website of the American Society of Naval Engineers until the government put a stop to it. In addition, Mak's attorney stated that information contained on one of the disks was discussed at an international conference attended by Chinese engineers and the FBI.
Mak's attorney stated that Mak was "sentenced as a trophy rather than a human being" and the case against Mak was unwarranted. Mak will serve his sentence in a low security federal prison.
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BIS Announces Online Export Training
Online Training Room Contains Presentations & Webinars
 On March 19, 2008, the Department of Commerce's Bureau of Industry and Security (BIS) announced the creation of an BIS Online Training Room. In its announcement, BIS stated:
As part of its ongoing efforts to improve outreach, BIS will continue to create and supplement the materials regularly. The initial launch includes the first half of the Essentials of Export Controls seminar that BIS currently offers around the country, as well as five pre-recorded webinars covering a variety of topics. The training modules are presented in a video streaming format. The pre-recorded BIS webinars were conducted over the past year and focus on specific export control issues.
The Online Training Room currently provides 3 training modules:
1. Export Control Basics
2. Classifying Your Item and Determining If You Need a License
3. General Prohibitions including Prohibited End-Users and End-Uses & Activities
Also included in the Online Training Room are BIS' previously conducted webinars:
1. Reexport Controls (March 12, 2008)
2. An Introduction to Commercial Export Licensing Requirements (Spanish) (October 18, 2007)
3. Intermediate Deemed Exports (August 29, 2007)
4. Update to China Export Control Policy (June 20, 2007)
5. An Introduction to Commercial Export Licensing Requirements (May 15, 2007)
BIS states, "We wll continue to create and update content for the online training room, and would welcome your suggestions for how to further improve our outreach efforts."
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BIS Requests Comments on EAR Crime Control License Requirements
Comments must be received no later than June 17, 2008
 On March 19, 2008, the Department of Commerce's Bureau of Industry and Security (BIS) published a notice of inquiry in the Federal Register requesting public comments on the crime control export and reexport license requirements in the Export Administration Regulations (EAR). BIS is seeking comments on whether the scope of items currently subject to crime control license requirements should be revised to add or remove items and is also seeking comments on whether the destinations to which crime control license requirements apply should be revised.
The Notice of Inquiry can be found here.
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Minnesota Company Fined $400,000 for Export Violations
Failing to Provide Information Regarding Knowledge of Prohibited End-Use Cited
 MTS Systems Corp. of Eden Prairie, MN, pleaded guilty and was sentenced on March 12, 2008 in connection with submitting false export license applications to the U.S. Department of Commerce for proposed shipments to India. (The DOJ news release can be found here.) MTS Systems Corp. was sentenced to two years probation and a $400,000 fine. Pursuant to the plea agreement, the court also ordered MTS to implement and maintain a model export compliance program and to sponsor an export compliance conference to be held at a future date.
The government alleged that MTS submitted a false export license application when it omitted any corporate knowledge of a possible nuclear end-use for seismic testing equipment to be shipped to India. Assistant Secretary of Commerce for Export Enforcement Darryl W. Jackson stated, "Omitting material information to a licensing official about the intended end-use of a controlled technology item is a serious offense. In this case, the omission clearly was an attempt to disguise the end-use of testing structural components of nuclear-power plants."
The case was the result of an investigation by BIS and ICE. |
US and EU Adopt Joint Roadmap Towards Mutual Recognition of Supply Chain Security Programs
Mutual Recognition of C-TPAT and AEO Expected by 2009
 On March 27, 2008, U.S. Customs and Border Protection announced the adoption of the U.S.-EU Joint Customs Cooperation Committee (JCCC) Roadmap towards Mutual Recognition of Trade Partnership Programs. Mutual Recognition of the U.S.'s Customs-Trade Partnership Against Terrorism (C-TPAT) and the EU's Authorized Economic Operator (AEO) supply chain security programs would allow companies to receive benefits similar to those conferred on companies participating in the other country's program.
The Roadmap outlines six areas that the U.S. and the EU will address to achieve the goal of implementing Mutual Recognition: political, administrative, legal, policy, technical/operational, and evaluation. The Roadmap sets forth key benchmarks for measuring progress in each area.
The U.S. and EU began working towards implementing Mutual Recognition of C-TPAT and AEO in 2007. The initial steps consisted of completing an in-depth comparison of both the U.S. and EU programs and conducting a pilot program in which CBP observed security components of the EU's AEO audit process. The Roadmap was drafted and endorsed based on the conclusions drawn from the initial U.S.-EU effort.
CBP states that, "Throughout the upcoming year, the U.S. and EU will:
· Establish guidelines regarding information exchanges, including the exchange of validation/audit results and legalities associated with the disclosure of membership details
· Perform joint verifications to determine remaining gaps between AEO/C-TPAT and resolve any discrepancies
· Explore and test an export component for C-TPAT
· Exchange best practices through joint visits and conferences
· Continue dialogue on legal and policy developments under the respective administrations
· Endorse and sign a Mutual Recognition Arrangement
· Evaluate Mutual Recognition benefits for AEO/C-TPAT members
Although a number of tasks remain, both the U.S. and EU are optimistic about eventual achievement of Mutual Recognition in 2009."
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China and U.S. Launch Trade Security Pilot Program
China Customs Validated Security Measures of 3 C-TPAT Participants
 On March 24, 2008, U.S. Customs and Border Protection (CBP) announced the start of a validation pilot program in China made possible by cooperation between CBP and the General Administration of China Customs. The pilot program involved three Customs-Trade Partnership Against Terrorism (C-TPAT) importer partners whose supply chains predominately originate in China.
CBP states that the U.S. companies were invited to participate based upon several factors including volume, product type, and location of their supply chains in China. The companies voluntarily agreed to participate in the pilot program with the concurrence of both administrations.
China Customs led the validations based on C-TPAT minimum security criteria as a guide and with CBP supply chain specialists providing technical assistance. Prior to the validations, the companies were receiving minimal C-TPAT benefits due to CBP's inability to validate their security procedures in China. However, the information gathered during the validation will now allow CBP the ability to assess whether greater C-TPAT benefits are warranted. Both CBP and China Customs will evaluate the success of the pilot program and determine next steps.
C-TPAT Director Brad Skinner stated, "It took several months of intense discussions to get to this point and we look forward to continuing this effort as we explore future cooperation. It is a win-win for all. CBP and China Customs have the knowledge that all parties involved have good security practices in place and the companies can benefit by receiving fewer exams." |
Update on Proposed Re-Interpretation of "First Sale" Valuation
18 Comments have been filed to date
 Comments for the proposed interpretation of the "First Sale" rule are due on April 23, 2008. To date, 18 comments have been posted. Two of the comments have been filed by attorneys which support the proposed change. Comments against the proposed interpretation include Boeing, Wicked Fashions Inc., RG Barry Corporation, Northern Tool and Equipment Co., Inc., The New Zealand Manufacturers and Exporters Association and COAC. In addition, there is a filing from AAFA (American Apparel and Footwear Association) with over 95 signatures from companies and associations against the proposed changes.
U.S. Customs and Border Protection ("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 Sales."
Comments in support of the proposed changes cite administrative ease in applying the rule indicating that "it also brings some consistency and clarity to the process." Comments against the proposal cite the existing case law. Several comments indicate that the term "sold for exportation to the United States" has a clearly established meaning and that the proposal will be inconsistent with this meaning and with 19 U.S.C. 1401a(f)(2)(B). In addition, the proposals indicate that "The timing of the proposal is especially troubling considering the current state of the U.S. economy. At a time when the Administration and Congress are working together to expedite an economic stimulus package that will promote more consumer spending to avert a possible recession, it is incomprehensible that CBP would now be proposing a new tax to U.S. Consumers." (See comments from R.G. Barry Corporation). Other comments believe that the timing, process and manner that CBP employed to publish its position violates the integrity of partnership between the government and business and undercuts the goal of the economic stimulus package.
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Passenger Screening at Airports to be Reviewed by DHS
Review will take place over next 30-45 days
 In an interview with Homeland Security Secretary Michael Chertoff on March 3, 2008 stated that the Department of Homeland Security will be undertaking a review of passenger screening at airports to explore ways to ease hassles and possibly paying more attention to screening private jets from overseas. Mr. Chertoff stated, "We are going to take a look at the whole system of screening at the airport in the next month and we're going to see if we can maybe make a couple of significant changes to remove some of the burden. We may be able to make some significant changes to the system that may actually be welcomed by the travelers."
USA Today reported that the review of passenger screening procedures will occur in the next 30 to 45 days. Chertoff has directed Transportation and Security Administration (TSA) chief Kip Hawley to "look at the system" of passenger screening and determine "are there things we can do to reduce hassle." USA Today reports that Chertoff stated that "some screening requirements may be unnecessary because of improvements in aviation security, such as hardened cockpit doors, a growing number of pilots carrying handguns and the deployment of hundreds of TSA screeners who scan airport crowds looking for people who are acting oddly and may pose a security threat."
To protect the U.S. from a private jet carrying a nuclear bomb, a dirty bomb, or biological weapons into the country, it was reported that DHS will issue new rules that will require crews and passengers to provide their names, birth dates, and other personal information one hour before taking off for the U.S. This time will allow authorities to check names against terrorist watch lists. Chertoff stated that the next step could be to require that private planes be scanned and passengers be screened and processed through Customs overseas.
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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:
HMS-Host - Atlanta, GA
Medline - Mundelein, IL
Lowe's - Wilkesboro, NC
General Dynamics - Silicon Valley, CA
SureFire LLC - Fountain Valley, CA
Arctic Cat, Inc. - Thief River Falls, MN
Intermatic - Spring Grove, IL
Tyco Electronics - Redwood City, CA
Bayer - Berkeley, CA
Glidewell - Newport Beach, CA
Coach - New York, NY
Kimco Technology Group - West L.A., CA
Thales Communication - Clarksburg, MD
Toys R Us - Wayne, NJ
ATMI - Austin, TX
Shure, Inc. - Niles, IL
PPG - Allison Park, PA
DRS Technologies - Gaithersburg, MD
Network Global Logistics - Astoria, NY
Brocade Communications Systems, Inc. - San Jose, CA
ITT Industries - Van Nuys, CA
f5 Networks - Seattle, WA
Valero Energy Corporation - San Antonio, TX
Macy's - New York, NY
Under Armour - Baltimore, MD
Affymetrix - Santa Clara, CA
Adidas - Portland, OR
Fragomen, Del Rey, Bernsen & Loewey LLP - Washington, DC
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 April 2008:
Global Trade Management Systems: A How-To Guide - Women in International Trade - Northern California (WIT-NC)
April 2, 2008 - Palo Alto, CA $45 Member/$60 Non-Member
Complying with Export Controls - Bureau of Industry and Security (BIS)
April 2-3, 2008 - Denver, CO - $315 for members of The Rocky Mountain World Trade Center Institute & $345 for non-members
Business
Luncheon: USG Compliance Perspectives & Trends - Speaker David
Trimble, Director, Office of Defense Trade Controls Compliance -
Society for International Affairs (SIA)
April 3, 2008 - Washington, DC - $60 Members, $75 Non-Members, $35 Government
U.S. Reexport Controls Seminar - BIS
April 3 - 4, 2008 - Singapore - S$400
U.S. Reexport Controls Seminar - BIS
April 7-8, 2008 - Kuala Lumpur, Malaysia - RM 300
Complying with Export Controls - Bureau of Industry and Security (BIS)
April 8-9, 2008 - Atlanta, GA - $275/$350 (including Technology Controls on 4/10)
Technology Controls - Bureau of Industry and Security (BIS)
April 10, 2008 - Atlanta, GA - $125/$350 (including Complying with Export Controls)
U.S. Export Controls Seminar - Black, Sengers & Associates (BSA)
April 21-22, 2008 - Atlanta, GA - $975
How to Develop an Export Management and Compliance Program - BIS
April 29-30, 2008 - New Orleans, LA - $375
Complying with Export Controls - Bureau of Industry and Security (BIS)
April 16-17, 2008 - Chicago, IL - $365
Classification Under The Schedule B - Unz & Co.
April 22, 2008 - Stamford, CT - $675
Complying with Export Controls - Bureau of Industry and Security (BIS)
April 23-24, 2008 - Portland, OR - $350
Spring Advanced Conference - Society for International Affairs
April 28-29, 2008 - Seattle, WA - $700 Members, $800 Non-Members, $550 Government
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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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