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Greetings!
We hope you are enjoying Spring Break! March's import/export highlights include: PEC urges President Obama to create a single shipment information window for both import and export; a proposed ITAR rule amends licensing requirements for replacement parts; BIS clarifies its authority to revise, suspend and revoke licenses; BIS posts public comments on STA license exception and revisions to CCL; and enforcement news. As always, thank you for reading! Jennifer Kessinger, Tammie Krauskopf
& Ruta Riley
globaltradeexpertise
info@globaltradeexpertise.com
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President's Export Council Urges Establishment of Automated Single Shipment Information Window
Single body system urged
 On March 11, 2011, the President's Export Council (PEC) posted a letter to President Obama in which it urges "to fully establish an automated single shipment information window, that works with equal efficiency for both imports into and exports from the United States and is aligned with international data standards." The goal of this process automation is to "comply with essential National Security controls, but expedite the clearance of all other goods so the U.S. can compete in the competitive, global environment."
The PEC predicts that a single system that allows traders to lodge information with a single body to fulfill all import or export related regulatory requirements would reduce a major barrier to U.S. exports and deliver immediate benefits. Based on the World Bank estimate that it takes an average of six days to move goods to or from the U.S., the PEC predicts that a one day improvement in time, by means of a single system, could increase U.S. trade by almost $29 billion and would help create thousands of new U.S. jobs.
Some progress on the development and implementation of a single system has already been made. In 2001, Customs and Border Protection (CBP) began a process to modernize their customs information systems, and created the Automated Commercial Environment (ACE) as the single online access point that connects CBP, the trade community, and other government agencies.
A key feature of the ACE project is the he International Trade Data Systems (ITDS) program. ITDS will allow traders to provide electronic international trade and transportation data to all Federal agencies that have import/export responsibilities. Ultimately, the goal is "a single window into the Federal government that will facilitate commerce and increase compliance with trade laws."
Until recently, the ACE/ITDS program has focused primarily on U.S. import data. However, in 2010, ITDS Report to Congress recommends that export functionality be given priority: export agencies should work the ITDS Board of Directors to quickly identify ways to provide an export single window. According to the PEC, the absence of a single, automated system for export clearance increases costs for U.S. exporters, unnecessarily adding expense and time-in-transit to business transactions.
Accordingly, the PEC recommends that Obama's Administration work with the various stakeholders, including the DHS/CBP, USTR, Treasury, ISDA/FAS, and DoC/ITA to enable the creation of a single window to streamline the export process.
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Proposed ITAR Rule Amends Licensing Requirements for Replacement Parts and Incorporated Articles
Comments to the DDTC are due before April 14, 2011.
On March 15, 2011, the Department of State proposed to amend Parts 123 and 126 of the International Traffic in Arms Regulations (ITAR) to reflect new policies regarding coverage of replacement parts/components and incorporated articles.
The current rule regarding parts and components requires additional licenses for licensed end-users and end-uses for systems and components already vetted in earlier licenses. The proposed rule adds a new section (§123.28) that eliminates the requirement for a license for parts and components for systems approved in a previous license. This proposed exemption applies only to exporters specifically identified in a previously approved authorization to export the end-item in question. It would not be applicable to upgrades of capabilities of the original end-item.
With respect to ITAR treatment of incorporated articles, the proposed new section of the ITAR (§126.19) lists three conditions under which a DDTC license is not required for the export or re-export of defense articles incorporated into an end-item that is subject to the EAR: (1) where the end-item would be "rendered inoperable" by the removal of the defense articles; (2) where no technical data for development or production are transferred with the defense article; and (3) where the incorporation of the defense article does not provide (or is not related to) a military application.
In addition, under the proposed rule, no license is required for the export or re-export of a defense article when that article would be rendered inoperable by removal form the end-item. A license would be required for the export of defense articles that are spare or replacement parts when they are embedded into a larger assembly such that they can be removed without destroying the defense articles.
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BIS Clarifies Its Authority to Revise, Suspend and Revoke Licenses
On March 7, 2011, the Bureau of Industry and Security (BIS) amended the Export Administration Regulations (EAR) to clarify the Application Processing, Issuance, and Denial provisions regarding BIS's authority to revise, suspend or revoke licenses.
Part 750 of the EAR provides for the revision, suspension or revocation of licenses whenever it is known that the violation of the EAR has or is about to occur. The final rule revises revocation or suspension of licenses at §750.8 by removing the phrase "whenever it is known that the EAR have been violated or that a violation is about to occur."
This change will clarify BIS's authority to revise, suspend, or revoke licenses and will harmonize §750.8(a) of the EAR, concerning licenses, with an analogous provision in §740.2(b) regarding the revision, suspension or revocation of license exceptions under the EAR.
The change in Part 750 is expected to make it clear that the United States' ability to revoke or suspend a license is not limited to those cases where the EAR have been violated or where a violation is about to occur. The authority to revoke or suspend a license also extends to cases where BIS seeks to prevent licensed export transactions in which the U.S. may subsequently have an interest, including a foreign policy interest.
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Defense Contractor Charged with ITAR Violations
U.S. Permanent Resident Found with ITAR-Controlled Documents on Computer After Flight From China
 On March 4, 2011, Sixing "Steve" Liu was indicted with illegally exporting technical data in violation of the International Traffic in Arms Regulations (ITAR) without the required Department of State, Directorate of Defense Trade Controls (DDTC) license.
The complaint alleges that Liu, a 47-year-old Chinese national who is a permanent resident of the U.S, was detained by the U.S. Customs officials on November 29, 2010, at Newark Liberty International Airport when he was returning from China.
At the time Liu was detained, he worked as a senior staff engineer for a New Jersey-based division of a technology company (Company) that develops precision navigation devices and other innovative components for the U.S. Department of Defense (DoD). Due to highly sensitive nature of the technology projects developed at the Company where Liu worked, most employees, including Liu, were forbidden from removing work product from the Company's corporate facility.
On November 29, 2010, Liu arrived at Newark Liberty International Airport on a commercial airline flight from Shanghai and was selected for secondary inspection by Customs officers. When asked, Liu stated that the only purpose of his visit to China was to visit his family. An inspection of Liu's baggage revealed an access card that had "ICMAN 2010, The 4th Annual International Workshop on Innovative and Commercialization of Micro & Nano Technologies, November 22-24, 2010" inscribed on it. Liu explained that it was a small conference that was not formal.
Investigation of ICMAN by the FBI revealed that the annual conference is organized and sponsored by various Chinese government entities. Its stated goal is to "gather people related with micro and nanotechnologies from all over the world, including the renowned researchers in the field, chief administrators and senior engineers from industries, research agencies and inventors, as well as venture capital and government representatives."
The FBI also discovered that the schedule of events for the ICMAN 2010 forum included presentations and remarks given by China's government entities. Liu was one of the presenters as well as the co-chair for ICMAN 2010.
Upon inspection of Liu's belongings on November 29, 2010, Customs officers found a folder containing multiple pages of technical language, pictures of military weapons systems, and documents written in Chinese. Liu also had a non-Company issued laptop computer and other electronic storage devices and media, which contained hundreds of documents belonging to the Company he worked for, including internal communications, analyses, data, test results, schematics, images, and security protocols.
Numerous documents on Liu's computer included prominent markings indicating that the contents contain export-controlled technical data under the Arms Export Control Act (AECA) and ITAR. One such documents is titled "Summary of Simulation Analysis for [Technology Program No. 1]" and pertains to a precision navigation/positioning system that the company where Liu worked, developed for the DoD. Each page of the documents is prominently marked "ITAR Controlled."
On February 10, 2011, the DDTC certified that the document contains technical data that is covered by the USML Category XII. Accordingly, export of that document from the U.S. to China is prohibited by any person who is unlicensed to do so.
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BIS Posts Comments Received in Response to Proposed Regulations
The Bureau of Industry and Security (BIS) posted public comments in response to: (1) the proposed rule regarding Strategic Trade Authorization (STA) license exception, and (2) the proposed rule regarding revising descriptions of items and foreign availability.
BIS issued the proposed rule on the Strategic Trade Authorization license exception on December 9, 2010. It adds a new license exception to the Export Administration Regulations (EAR). The exception allows exports, reexports and transfer (in-country) of specified items to destinations that pose little risk of unauthorized use of those items. To prevent diversion to unauthorized destinations, transactions under this license exception would be subject to notification, destination control statement and consignee statement requirements.
With regard to amending the EAR, BIS sought public comments on how descriptions of items controlled on the Commerce Control List (CCL) of the EAR could be more clear and positive and "tiered" in a manner consistent with the control criteria the Administration has developed as part of the export control reform effort.
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PA Company Fined for Export Violations
On March 15, 2011, the Bureau of Industry and Security (BIS) reported that TW Metals, Inc. of Exton, PA, has agreed to pay a $575,000 civil penalty to settle allegations that it violated the Export Administration Regulations (EAR) by exporting on numerous occasions titanium alloy and aluminum bar to China and Israel without the required export licenses.
Specifically, BIS alleged that from April 2004 to August 2007, TW Metals made 48 exports of titanium alloy to China through Canada without the required Department of Commerce licenses. Titanium alloy is controlled for reasons of nonproliferation. In addition, TW Metals violated the EAR in 2007 by exporting aluminum bar, also controlled for reasons of nuclear nonproliferation, from the U.S. to Israel via Canada without the required Department of Commerce license.
TW Metals voluntarily disclosed the violations and cooperated fully with the investigation.
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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:
Complying with U.S. Export Controls - Bureau of Industry and Security
April 6 - 7, 2011 - Denver, CO - $450
Complying with U.S. Export Controls - Bureau of Industry and Security
April 12 - 13, 2011 - Minneapolis, MN - $450
Technology Controls - Bureau of Industry and Security
April 14, 2011 - Minneapolis, MN - $225
Complying with U.S. Export Controls - Bureau of Industry and Security
April 27 - 28, 2011 - Santa Clara, CA - $410
Complying with U.S. Export Controls - Bureau of Industry and Security
April 27 - 28, 2011 - Miami, FL - $400
Complying with the ITAR - Bureau of Industry and Security
April 29, 2011 - Miami, FL - $200
Complying with U.S. Export Controls - Bureau of Industry and Security
May 4 - 5, 2011 - Newport Beach, CA - $325
Complying with U.S. Export Controls - Bureau of Industry and Security
May 10-11, 2011 - Louisville, KY - $475
Technology Controls - Bureau of Industry and Security
May 12, 2011 - Louisville, KY - $135
AAEI's 90th Annual Conference & Expo - American Association of Exporters and Importers
June 5-7, 2011 - New York, NY
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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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Thanks again for your interest in our newsletter!
Sincerely,
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Jennifer Kessinger, Tammie Krauskopf & Ruta Riley
Attorneys & Consultants
jk@globaltradeexpertise.com
Tel. 925.876.1381 (Jennifer Kessinger)
tk@globaltradeexpertise.com
Tel. 708.707.4087 (Tammie Krauskopf)
rr@globaltradexpertise.com
Tel. (630) 862-8123
www.globaltradeexpertise.com
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