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Greetings!
We hope you all had a happy new year!
This month's import/export news highlights include: FCPA indictments for military and security company executives; BIS launches online export tracking system; President Obama pledges to advance export control reforms; BIS adds a new VEU for China; 4-year sentence for a chemical engineer for Iran OFAC violations; USITC publishes the 2010 HTSUS; and CBP begins full enforcement of ISF on 1/26/10. As always, we would appreciate any comments or suggestions you may have to improve this newsletter either by email or via our feedback survey link in our left column.Thank you for reading! Jennifer Kessinger & Tammie Goldstein Krauskopf
globaltradeexpertise
info@globaltradeexpertise.com
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Executives of Military and Security Product Companies Indicted in Foreign Bribery Scheme
 On January 19, 2010, the U.S. Department of Justice (DOJ) announced that twenty-two executives working in the military and security industries were arrested and charged with conspiracy to bribe an African defense minister in violation of the Foreign Corrupt Practices Act (FCPA).
The indictments are a result of the largest single investigation and prosecution against individual defendants in the history of DOJ's enforcement of FCPA. The indictments allege that the defendants engaged in a scheme to bribe an African defense minister and agreed to pay a 20% "sales commission" to someone they believed was the minister's representative in order to win a portion of a $15 million contract to outfit the country's presidential guard. The defense minister's representative, who in fact was an undercover FBI agent, told the defendants that the "sales commission" would be paid directly to the minister of defense.
The defendants allegedly agreed to engage in a small test deal to show the minister of defense that he would personally receive the bribe, and to create two price quotations in connection with the deal: one representing the true cost of the goods, and another representing the cost of the goods plus the 20% commission.
Each of the indictments alleges that the defendants conspired and violated the Foreign Corrupt Practices Act (FCPA) and conspired to engage in money laundering.
The defendants face five years imprisonment for the conspiracy count and for each FCPA count. The indictments in this case also seek criminal forfeiture of the defendants' gains.
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BIS Launches Online Export Tracking System
On January 11, 2010, the Bureau of Industry and Security (BIS) launched an online version of its System for Tracking Export License Applications (STELA). STELA allows users to check the status of their export and re-export license applications, classification requests and agricultural license exception (AGR) notifications. To access export data, STELA users must input their application control number (ACN) assigned by BIS.
With the launch of an online system, BIS plans to eventually phase out the phone-based STELA.
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President Obama Advances Reform of U.S. Export Controls
Administration reform recommendations are due January 29, 2010
 Space News reported that in a presidential directive signed on December 21, 2009, President Barack Obama has directed his administration to provide a comprehensive set of recommendations to create a new U.S. export control regime.
The recommendations, which are due on January 29, 2010, must be based on the findings of interagency review of U.S. regulations that govern exports of unclassified military and dual use technologies and that was announced by the White House on August 13, 2009. In his directive, the President requires that the recommendations include statutory and regulatory steps necessary for implementation.
The review is being conducted by a joint task force established by National Security Adviser and National Economic Council Director, and includes staff members of the National Security Council. The establishment of the review on August 13, 2009, was the first official indication that Obama would develop export control reform.
Some U.S. industries may benefit from a complete transformation of the current export controls system. The U.S. space industry's market share declined since increased restrictions on U.S. commercial communications satellite exports in 1999, when Congress made all commercial satellites subject to International Traffic in Arms Regulations (ITAR) following allegations that China's military was benefiting from launches of U.S. spacecraft. Prior to this legislation, the Commerce Department had export licensing authority over all commercial communications satellites, with the exception of the most sophisticated ones.
Defense News reported that 19 industry lobbying groups, representing hundreds of U.S. companies from warplane manufacturers to software encoders, have relaunched a campaign for export controls reform.
Specifically, the groups seek to de-emphasize current reliance on munitions and dual use technology lists, and instead want to base export decisions on factors such as whether an item can be bought from a foreign country, whether it is widely used outside of defense industry and whether the buyer is a trusted partner.
A key factor in the reform would be consideration of "foreign availability" in deciding whether an item can be exported. According to the lobbyists, if weapons technology can be bought from other countries, there may be little gain in terms of security by restricting U.S. export of those items or technology.
Furthermore, the groups seek that export rules be more specific: e.g., unarmed unmanned aerial vehicles (UAVs) and blimps should not be controlled in the same way that missiles are. Similarly, commercial satellites should not be treated as munitions.
The lobbyists argue that the U.S. Munitions List should be edited to remove items no longer controlled, and a more concrete process should be established for qualifying goods as defense items. One of the lobbying groups seeks that the Commerce Department's dual-use technology list would be completely erased, after which the Commerce Department would provide reasons for why any one item should be placed on the list.
The groups also recommend that export controls should be switched from a transaction-based approach to a trusted partner process. Accordingly, licenses would not be required for each sale if items were sold to companies and countries that are designated trusted partners.
Current push for reform is likened to a group effort in 2007 to convince Bush administration to reform U.S. export control regime. As a result of the 2007 process, licensing procedures were improved and waiting periods for export licenses were greatly decreased.
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BIS Publishes Final Rule Adding a Validated End-User for the PRC
Grace Semiconductor Manufacturing Corporation Added as a VEU
On January 15, 2010, the Bureau of Industry and Security (BIS) published a final rule to add an entity to the list of validated end-users for the Peoples' Republic of China (PRC) approved to receive exports, reexports, and transfers of certain items under Authorization Validated End-User (VEU). Specifically, this rule amends the EAR to add one additional validated end-user and identifies eligible items for export and reexport and transfer (in-country) to one facility in the PRC.
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Chemical Engineer Sentenced To 4 Years Imprisonment for Violating Iran Sanctions
On January 12, 2010, Philadelphia Daily News reported that Ali Amirnazmi (Amirnazmi), a chemical engineer that had a dual U.S. and Iranian citizenship, was sentenced to four years in federal prison for violating Iran sanctions.
According to the prosecution, Amirnazmi, who owned TranTech Consultants, an Exton, PA company that specialized in databases for chemical companies, conspired and from 1996 to July 2008 transferred a chemical-procurement software system he developed, ChemPlan, to Iran to train Iranians to close technological gaps between Iran and its adversaries.
Amirnazmi also "worked with and at the express direction of" Iranian President Mahmoud Ahmadinejad to support Iran's petrochemical industry. Amirnazmi entered into contracts with Iranian officials creating partnerships that would obtain large quantities of chemicals to be used in large chemical manufacturing plants in Iran. Some of the chemicals had serious dual-use potential, including use in the manufacture of solid-phase rocket propellants.
At his sentencing hearing, Amirnazmi was defiant and maintained that he never intended to break any U.S. laws and stated he had no reason to lie.
In addition to four-year sentence, the U.S. District Judge ordered Amirnazmi to serve five years of supervised release once he leaves prison, make restitution of $17,227 to a bank he defrauded and forfeit $81,277.
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Export Agencies Update Online Guidance
Guidance for Freight Forwarders and Firearms Updated
On January 19, 2010, the Directorate of Defense Trade Controls (DDTC) updated its firearm guidance.
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USITC Publishes 2010 Version of HTSUS
Census Posts List of Invalid Tariff Numbers for AES
 The 2010 version of the Harmonized Tariff Schedule of the United States (HTSUS) that took effect on January 1, 2010, has been published on the U.S. International Trade Commission (ITC) website. Tariff information from previous years can be accessed on the Harmonized Tariff Schedule of the United States Annotated (HTSA), which provides applicable tariff rates and statistical categories for all merchandise imported into the U.S.
In addition, the U.S. Census Bureau (Census) has posted a list of tariff numbers that are invalid for use in the Automated Export System (AES) as of January 1, 2010. The list is exclusive of HTSUS Chapter 98 codes, none of which may be used in AES.
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CBP To Begin Full Enforcement of ISF on January 26, 2010
 On January 26, 2010, U.S. Customs and Border Protection (CBP) began full enforcement of Importer Security Filing (ISF), also known as 10+2. The new policy requires maritime importers and vessel operating ocean carriers to provide CBP with advance notification for all U.S.-bound ocean vessel cargo. CBP will conduct gradual enforcement of ISF during 2010, with the beginning of new quarter marking a new phase of enforcement.
During the first quarter of 2010, CBP will monitor the flow of ISF filings, including completeness and accuracy of the ISF filings, as well as noting which importers are not filing the 10+2. Importers that are not filing can expect their imports to be subject to deeper scrutiny, with CBP requesting document review, non-intrusive inspections or intensive examinations of the cargo. CBP will notify importers who are not filing and those that have errors in their filing and work with them to bring the imports into compliance.
During the second and third quarters of 2010, ISF enforcement will tighten. CBP intends to delay and hold for examinations those imports that have no associated ISF or those that have serious discrepancies in them. However, with the exception of fraud, smuggling, or terrorism in connection with the ocean imports or egregious violations of ISF requirements, CBP does not intend to penalize or assess liquidated damages for ISF violations during the first three quarters of 2010 or for imports that occurred prior to January 26, 2010.
CBP will begin issuing liquidated damages at the start of a fourth quarter on October 1, 2010. Ports of entry will initiate proposed assessments of liquidated damages, and will forward them on to CBP Headquarters for review. CBP Headquarters making final decisions on damages will ensure uniform enforcement across the country. CBP Headquarters are authorized to approve the proposed assessment or send it back to the originating port recommending that the matter be disposed of in a different way. Those liquidated damage assessments that are approved by CBP headquarters will be forwarded on to importers.
CBP plans to use this method of instituting penalties for at least a year, after which it will either be extended or the ports of entry will be authorized to issue final penalty decisions.
Importers must also note that, beginning 26, 2010, they are required to have a bond as security for the ISF filing.
The bond must be secured 24 hours prior to vessel departure and will terminate when goods enter the port of entry if there is no ISF violation. In case of violations, most penalties will be issued within a year, however, Customs has 6 years to assess a liquidated damages claim.
If an importer elects to secure a continuous bond, it will cover the ISF. Those ISF importers that do not have a continuous bond on file with CBP are required to secure a single entry bond (SEB) in the amount of $10,000, which is the maximum penalty that can be imposed for a late, incomplete, or inaccurate ISF. SEBs should be used by importers with single or infrequent shipments.
The SEB must be created before ISF is transmitted, because the filing requires that bond reference number be included. When the ISF transaction number is received, it must be entered on the SEB and e-mailed in a pdf file to CBP at ISF_Bond@cbp.dhs.gov.
With the exception of surety companies that have stricter rules for late filings or not filing at all, SEBs for timely submission of ISF are readily available. Surety companies require a cash deposit for the full amount of the bond for transactions deemed to be at risk because of late filing of the ISF transmission. Surety companies will hold cash deposits for six years and will refund them to the importer of record when the bond obligation terminates.
More detail on ISF and associated bond requirements can be found in ISF Program's Frequently Asked Questions (FAQs).
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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.
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 the coming months:
Export Control Forum - Bureau of Industry and Security
February 22 - 23, 2010 - Irvine, CA - $525
ICPA Annual Conference - "Discovering the Treasures of Compliance" - International Compliance Professionals Association
March 14 - 18, 2010 - Orlando, FL - $600/$795
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Complying with U.S. Export Controls - Bureau of Industry and Security
February 2 - 3, 2010 - New Orleans, LA - $425
How to Develop an Export Management and Compliance Program- Bureau of Industry and Security
February 4, 2010 - New Orleans, LA - $224
9th Annual "Partnering for Compliance™" East Coast Training and Education Program - Partnering for Compliance
February 17 - 19, 2010 - Orlando, FL - $450
Export Control of Equipment, Technology and Services - Federal Publications Seminar
February 25 - 26, 2010 - Las Vegas, NV - $995
ITAR Boot Camp - American Conference Institute
February 24 - 25, 2010 - San Diego, CA - $1895 - 3395
Export Control of Equipment, Technology and Services - Federal Publications Seminar
February 25 - 26, 2010 - Las Vegas, NV - $995
Winter ITAR Basics - Society for International Affairs
February 22-23, 2010 - San Antonio, TX - $700-$800
"Where the Rubber Meets the Road" ITAR Workshop - Society for International Affairs
February 24, 2010 - San Antonio, TX $350-$400
9th Annual "Partnering for Compliance™" East Coast Training and Education Program - Partnering for Compliance
February 17 - 19, 2010 - Orlando, FL - $450
C-TPAT Certification Training Workshop - The World Academy
February 9, 2010 - Ft. Lauderdale, FL - $595
Managing Harmonized Tariff Schedule - The World Academy
February 10, 2010 - Ft. Lauderdale, FL - $595
INCOTERMS and Related Global Trade Issues - The World Academy
February 11, 2010 - Orlando, FL - $595
9th Annual "Partnering for Compliance™" East Coast Training and Education Program - Partnering for Compliance
February 17 - 19, 2010 - Orlando, FL - $450
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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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