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Greetings!
Happy Halloween! We hope you are enjoying the fall weather and have a fun time tonight with your families. Next month, GTE will be attending the Fall Advanced Conference for the Society for International Affairs and we hope to have the latest ITAR and DDTC updates to provide you in our next newsletter.
This month's highlights include: DOJ's announcement of increases in export control prosecutions; Changes to the EAR; North Korea is Again Removed from State Sponsors of Terrorism List; Eritrea Added to ITAR Prohibited List; 2008 Customs Trade Symposium Materials are Posted Online; CBP Issues Liquidated Damages Guidelines; WCO-Commissioned Study Assesses Economic Impact of U.S. 100% Container Scanning Law; 3PLs to Participate in C-TPAT; and CBP Re-Opens the Comment Period for its Proposed Rules of Origin.
Finally, we would like to again thank our legal intern, Ruta Riley, for all her hard work in helping us prepare our newsletters and assisting us with both Customs and export control projects. If you are in Southern California and in need of a hard-working and brilliant trade attorney, please let us know and we'll put you in contact with Ruta, who is finishing her LLM at John Marshall Law School this year. 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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Prosecution of Export Controls Violations Increased in the Past Year DOJ Announces Criminal Charges Filed Against 145 Defendants in Past Fiscal Year
 On October 28, 2008, the U.S. Department of Justice issued a statement in which it announced that the National Export Enforcement Initiative (NEEI), a multi-agency effort to combat illegal exports of restricted military and dual-use technology, has led to criminal charges against more that 145 defendants in the past fiscal year.
The NEEI was established in October 2007 and is designed to increase coordination among agencies involved in export controls, to enhance prosecution of these crimes, and to deter illicit exports. The 145 defendants in export controls and embargo cases in FY 2008 are an increase from the 110 charged in FY 2007. Charges brought in these cases include violations of the Arms Export Control Act (AECA), the International Emergency Economic Powers Act (IEEPA), the export control provision of the Patriot Reauthorization Act (PRA), the Trading with the Enemy Act (TEA), and other statutes.
About 43 percent of the defendants charged in FY 2008 were charged in export control or embargo cases that involved munitions or other restricted technology that were bound for Iran or China. Iran ranked as the leading destination for illegal exports of restricted technology in the prosecutions brought in both FY 2007 and FY 2008.
The illegal exports bound for Iran have involved such items as missile guidance systems, Improvised Explosive Device (IED) components, military aircraft parts, and night vision systems. The illegal exports to China have involved rocket launch data, space shuttle technology, missile technology, naval warship data, Unmanned Aerial Vehicle or "drone" technology, thermal imaging systems, military night vision systems and other materials. A significant portion of the cases in FY 2007 and FY 2008 involved illegal exports to Mexico. These prosecutions primarily involved illegal exports of firearms and large quantities of ammunition destined for Mexico.
The most recent indictment under the NEEI was returned on October 28, 2008, against three individuals in the District Court of Minnesota, charging them with conspiring to illegally export to China controlled carbon-fiber material with applications in rockets, satellites, spacecraft, and uranium enrichment process.
The U.S. Military items, dual-use equipment, and technological expertise may not be exported without the U.S. government approval. Foreign procurement networks rarely target complete weapons systems, but often focus on components to obtain their own weapons systems.
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BIS Implements Wassenaar Arrangement Changes to EAR Items Exported After December 15, 2008 Are Subject to the New Regulations
On October 14, 2008, the U.S. Department of Commerce's Bureau of Industry and Security (BIS) issued a final rule in the Federal Register revising the Export Administration Regulations (EAR) to implement changes made to the Wassenaar Arrangement's List of Dual Use Goods and Technologies and Munitions (Wassenaar List).
The Wassenaar List is maintained and agreed to by governments participating in the Wassenaar Arrangement on Export Controls for Conventional Arms and Dual Use Goods and Technologies (Wassenaar Arrangement).
This final rule revises the EAR by amending certain entries that are controlled for national security reasons. Specifically, entries in Categories 1, 2, 3, 5 Part I (telecommunications), Category 5 Part II (information security), and Categories 6, 7, and 9 were amended, and new entries were added to the Commerce Control List (CCL).
The final rule also increases unilateral U.S. export controls on certain items to make them consistent with the amendments made to implement the Wassenaar Arrangement's decisions.
Although this rule is effective immediately, shipments that were on dock prepared for loading or those that were en route to a port of export on October 14, 2008, may proceed to that destination under the previous license requirements as long as they are exported from the United States before December 15, 2008. Items not exported before the December 15, 2008 deadline will require a license under the new regulations.
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North Korea Removed from State Sponsors of Terrorism List No real changes for exporters at this time
On October 14, 2008, the U.S. Department of State announced that the U.S. has removed North Korea from its list of State Sponsors of Terrorism after the North Korean government agreed to resume dismantling of its nuclear facilities at Yongbyon.
On October 13, 2008, North Korea lifted its ban on United Nations (UN) inspections of the Yongbyon plutonium processing plant it used to develop nuclear test explosion. The core discharge activities at the nuclear reactor were to resume on October 14, 2008.
North Korea had been on the State Sponsors of Terrorism list since 1987 after the bombing of a South Korean passenger jet. However, the country remains subject to numerous other sanctions that were a result of North Korea's 2006 nuclear test, its proliferation activities with other nations, its human rights violations and its status as a communist state.
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State Dept. Amends ITAR to Include Eritrea on Prohibited Exports List Effective October 3, 2008
On October 6, 2008, the U.S. Department of State published a final rule amending the International Traffic in Arms Regulations (ITAR) with respect to Eritrea. The U.S. Department of State has added Eritrea to its regulations on prohibited exports and sales to certain countries as a result of Eritrea's designation as country not cooperating fully with antiterrorism efforts.
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Reuse of Shipment Reference Numbers Prohibited in AES Following Disbanding of Illegal Iranian Procurement Scheme
On September 26, 2008, U.S. Department of Commerce Economics and Statistics Administration's U.S. Census Bureau (Census Bureau) issued a memorandum, which clarifies the Foreign Trade Regulations (FTR) requirement for the shipment reference number reported in the Automated Export System (AES). A shipment reference number is a unique identification number assigned by the filer that allows the shipment to be identified in the filer's system. Under current regulations, the shipment reference number must be unique for five years.
Some AES filers attempted to reuse the shipment reference numbers after the five-year period had expired. An analysis of the AES revealed that the system was not designed for the shipment reference numbers to be reused. To add the reuse of the shipment reference numbers feature, the system would require complete redesign.
Therefore, the Census Bureau has decided to prohibit the reuse of the shipment reference numbers. Once the number has been assigned to a shipment, the filer cannot assign the same shipment reference number to future shipments.
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New CBP Posts 2008 Trade Symposium Materials Online
 U.S. Customs and Border Protection (CBP) hosted its 2008 Trade Symposium in Washington, D.C. on October 29 - 31, 2008. CBP posted remarks by CBP Commissioner W. Ralph Basham and event materials on its website. The agenda for the symposium is also available.
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CBP Issues Guidelines For Assessment & Mitigation of Claims for Liquidated Damages
 On October 17, 2008, the U.S. Customs and Border Protection (CBP) issued a general notice announcing guidelines for the assessment of liquidated damages claims as an alternative sanction to counter late payment of entry duties and fees.
Under the current procedure, if a bond principal fails to pay Periodic Monthly Payment Statement estimated duties in a timely fashion, CBP requires the bond principal to file entry summary documentation with estimated duties and fees attached before its merchandise may be released from any CBP port.
Under the new guidelines, when a Periodic Monthly Statement estimated duty payment is not paid in full on or before the 15th of the working day after the month in which the entry or release of the merchandise has occurred, CBP has the authority to jointly and severally assess liquidated damages against the bond principal and surety.
Before issuing any claims for liquidated damages, CBP will notify the statement filer electronically or by paper notice on or before the first day of the month following the month that the payment was due that those estimated duties and fees have not been paid. The statement filer will have two working days from the date of notification to pay the estimated duties and fees or correct the situation. If the late fees are not paid after the two-working day period, the CBP will issue a liquidated damages claim to bond principals and sureties, jointly and severally, for non-payment of the estimated duties and fees.
If the estimated duties and fees are paid in an untimely manner, CBP may issue a liquidated damages claim or a broker penalty claim. Payment of the estimated duties and fees within the two-working day period does not relieve any charged party from incurring a claim for late payment of those estimated duties and fees.
Furthermore, CBP may exercise its authority to suspend any bond principal (the importer of record) from participating in the Periodic Monthly Payment Statement test and require that the bond principal pay estimated duties and fees on an entry-by-entry basis. CBP may also exercise its authority to require the bond principal to file entry summary documentation with estimated duties and fees attached before merchandise is released from any CBP port.
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Retroactive Filing of First Sale Declaration Extended Deadline Extended to October 17, 2008
On October 15, 2008, the U.S. Customs and Border Protection (CBP) issued a notice to extend the last filing date for retroactive First Sale declarations until October 17, 2008, which was effective August 20, 2008.
The First Sale declaration requires that importers of merchandise enter an "F" next to the declared value at the line level on CBP Form 7501, or the electronic filing equivalent, when the declared transaction value is based on the First Sale. Under the First Sale method, the value of imported merchandise is determined on the basis of the earlier than the last sale prior to the introduction of the merchandise into the U.S.
Due to the short notice of the implementation of the First Sale declaration requirement, CBP allowed the trade a 30-day grace period to comply with the first sale requirements, covering entries filed between August 20, 2008 and September 19, 2008. Importers were allowed to submit spreadsheets listing entry summary lines that needed an "F" indicator added or removed to the ports of entry where the entry summaries were filed. A sample spreadsheet can be found here.
These corrections, originally to be submitted to CBP no later than September 26, 2008, can now be submitted to CBP until October 17, 2008. The period covered remains August 20, 2008, through September 19, 2008.
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WCO-Commissioned Study Analyzes Economic Impact of U.S. 100% Container Scanning Economic Impact is Estimated at $500 Billion
 The World Customs Organization (WCO) study, Global Logistic Chain Security: Economic Impacts of the US 100% Container Scanning Law, prepared by the University of Le Havre in June 2008, analyzes the impact on global trade and shipping of the U.S. "100% scanning" law, or House Resolution 1 (H.R. 1). The "100% scanning" law is intended to protect the U.S. against terrorist risks and requires that 100% of the containers destined toward the U.S. be inspected. If this law enters into application on July 1, 2012, it is expected to affect operations of more than 600 points throughout the world, at an estimated $500 billion.
In 2005, 325 millions boxes were handled in around 600 ports around the world, of which 0.5% were scanned. Examination of the U.S.-bound container trade transactions reveals that the growth in the Americas, Africa and Oceania has been largely homogenous at around 70% over the past decade. The imports from Asia increased around 185% over the same period, led by China at 472% growth. Imports from Europe grew at 52% over the last decade. Thus, Asia today accounts for almost 75% of the U.S.-bound imports of maritime containers, and is the only continent to have gained market share over the period. The 75% of the containers represents almost 14 of the 18 million boxes imported in 2006.
If these asymmetrical continental dynamics continue, the study predicts that the "100% scanning" law would essentially be relevant to Asia. In other words, by 2012, the logistics process and corresponding port reorganization would almost exclusively concern the Pacific, specifically the key Asian and U.S. West Coast ports, and to a much lesser extent those of the East Coast of the U.S. and a few European megaports.
However, a new framework of standards may develop between now and 2012 and be modified or deterred, even if the trend for seaports would be to become 100% scanning (as it is for the airports).
According to the study, there also remains a question of financing these new infrastructures, primarily on U.S. territory. The study reminds of the U.S. aviation industry receiving a retroactive bill from the U.S. government for the expenditures required to upgrade airport terminals (six years after the upgrade), which suggests that it will be private actors who will have to pay a large part of the costs linked to the application of the "100% scanning" law. The operators are likely to pass on the cost of the scanning law implementation onto the final consumer, which may slow down international trade dynamics and consequently world growth.
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CBP To Permit Third Party Logistics Providers to Enroll in C-TPAT Enrollments to Begin in January 2009
On September 30, 2008, U.S. Customs and Border Protection (CBP) announced that it will permit Third Party Logistics Providers (3PLs) to enroll in the Customs-Trade Partnership Against Terrorism (C-TPAT) program starting in January 2009.
A 3PL is a firm that provides outsourced or "third party" logistics services to some, or sometimes all of a company's supply chain management functions. 3PLs typically specialize in integrated warehousing and transportation services that can be customized to a customer's needs based on market conditions and the demands and delivery service requirement for their products and materials. Typical outsourced logistics functions include inbound freight, customs and freight consolidation, and warehousing.
C-TPAT will provide for an implementation period to accept applications. The automated application process will take approximately 90 days to be available on-line. 3PLs interested in applying for C-TPAT can review the minimum-security criteria here.
The regulated minimum-security criteria areas include:
· Business partner requirements (service provider screening; customer selection) · Security procedures · Container/trailer inspection, seals, storage, security (where applicable) · Physical security and access controls · Procedural security (document processing, manifesting, shipping & receiving) · Information Technology (IT) security · Security training and threat awareness
Effective January 1, 2009, these new minimum-security criteria establish the baseline level of security measures. All eligibility requirements must be met or exceeded for a 3PL to enroll in C-TPAT. CBP will continue to use validations to determine whether 3PLs have adopted these security criteria. Those 3PLs found to be deficient, may be suspended, or be removed from the program entirely.
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CBP Re-Opens Comment Period for Proposed Uniform Rules of Origin
Comments Are Now Due by December 1, 2008
On October 30, 2008, U.S. Customs and Border Protection (CBP) published a notice in the Federal Register re-opening the comment period for its proposed uniform rules of origin. As a result of modifications made to the Harmonized Tariff Schedule of the United States (HTSUS) in 2007, certain tariff provisions were added or removed, and certain goods have been transferred, for tariff classification purposes, to different or newly-created provisions.
CBP published a notice in the Federal Register on the same day, which sets forth technical corrections to §§ 102.20 and 102.21 in order to align the regulations with the current version of the HTSUS. CBP states that the technical corrections to the tariff shift rules will enable parties to properly evaluate the impact, if any, of the proposed rule on the country of origin of their goods. Accordingly, CBP states that in order to afford parties the opportunity to enhance their review of the proposed rule and provide meaningful comment in light of the technical corrections to §§ 102.20 and 102.21, the decision has been made to re-open the comment period on the proposed rule.
Comments are now due on or before December 1, 2008.
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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. Here are some of the new job listings from October:
Volvo Group - Boca Raton, FL The Mergis Group - Washington, DC University of Virginia - Charlottesville, VA Ball Aerospace - Broomfield, CO Limited Brands - Columbus, OH Southco - Concordville, PA Amtec Engineering - City of Industry, CA ESG Consulting - Santa Clara, CA Tyco Thermal Controls - Menlo Park, CA QLogic - Aliso Viejo, CA Advanced Medical Optics - Milpitas, CA Analog Devices - Wilmington, MA Mattson - Fremont, CA Calavo Growers, Inc. - Garland, TX Panasonic Electric Works - San Jose, CA DiaSorin - Stillwater, MN Barco, Inc. - North Atlanta, GA Ernst & Young - San Jose, CA University of Texas - Houston, TX
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. |
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Calendar of Events Upcoming Trade 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 November 2008:
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Fall Advanced Conference - Society for International Affairs November 13-14, 2008 - Washington, DC
Technology Transfer: Encryption Update - Women in International Trade - Northern California November 12, 2008 - Palo Alto, CA
U.S. Export Controls Seminar - Black, Sengers & Associates November 10 - 11, 2008 - Phoenix, AZ
Export Compliance and AES PcLink Workshop - U.S. Census Bureau & Los Angeles Customs Brokers & Freight Forwarders Association November 18 - 19, 2008 - Newport Beach, CA
The Basic ITAR Course - Federal Publication Seminars November 11, 2008 - Las Vegas, NV
Defense Trade Controls Seminar - Black, Sengers & Associates November 12 - 13, 2008 - Phoenix, AZ
Advanced ITAR Seminar - Federal Publication Seminars November 12 - 13, 2008 - Las Vegas, NV
ITAR Basics Seminar - Export Compliance Solutions (ECS) November 18 - 19, 2008 - Tempe, AZ
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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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