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Greetings!
We hope you're enjoying your summer! July's import/export highlights include: BIS posts Update 2011 Conference Presentations; BIS Seeks Comments on EAR amendments re: items that no longer warrant ITAR control; DDTC now posting status of CJs online; BIS adds new state of South Sudan; enforcement actions involving managing directors & CEOs; OFAC amends Libyan Sanctions Regulations; and CBP issues instructions re: post-importation preference claims & classification changes. As always, thank you for reading! Jennifer Kessinger, Tammie Krauskopf
& Ruta Riley
globaltradeexpertise
info@globaltradeexpertise.com
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BIS Posts Session and Panel Presentations from Update 2011 Conference
 The Bureau of Industry and Security (BIS) posted on its website session and panel presentations from Update 2011 Conference on Export Control & Policy that detail the status of Export Control Reform implementation.
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BIS Seeks Comments on Proposed Revisions to EAR re: Control of Items that No Longer Warrant ITAR Control Under the USML
Comments are due to BIS by September 13, 2011
On July 15, 2011, the Bureau of Industry and Security (BIS) issued a rule in the Federal Register proposing a new regulatory construct for the transfer of items on the USML that, in accordance with section 38(f) of the Arms Export Control Act (AECA), the President determines no longer warrant control under the AECA and that would be controlled under the Export Administration Regulations (EAR) Commerce Control List (CCL) once the congressional notification requirements of section 38(f) and corresponding amendments to the International Traffic in Arms Regulations (ITAR) and its USML and the EAR and its CCL are completed.
This rule also proposes amending the EAR to establish a process by which certain items moving from the USML to the CCL would be made eligible for License Exception Strategic Trade Authorization (STA), and proposes EAR amendments related to movement of USML items to the CCL, such as new definitions of relevant terms, including "specially designed," "end items," "parts," and "components." The proposed rule also establishes a new holding Export Control Classification Number (ECCN) in which items that warrant a significant level of control, but are not otherwise classified on the CCL, may be temporarily placed.
Finally, the rule proposes the transfer of an initial tranche of items from USML Category VII (Tanks and Military Vehicles) to the CCL.
Comments to BIS are due September 13, 2011.
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DDTC Now Posting the Status of Commodity Jurisdiction Cases
The U.S. Department of State's Directorate of Defense Trade Controls (DDTC) is now weekly posting the processing status of commodity jurisdiction (CJ) requests. Users can look up the status of their case by the commodity jurisdiction case number via the CJ Status Spreadsheet.
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BIS Adds the New State of the Republic of South Sudan
 On July 13, 2011, the Bureau of Industry and Security (BIS) amended the Export Administration Regulations (EAR) adding controls on exports and reexports of U.S.-origin dual-use items to a new nation, the Republic of South Sudan.
In January 2011, the region of Southern Sudan held a referendum to determine whether that region would remain part of Sudan or become a separate, independent nation. On February 7, 2011, the referendum commission announced that the region of Southern Sudan had voted to become a separate nation, effective July 9, 2011.
On February 7, 2011, recognizing this development in the implementation of the Comprehensive Peace Agreement (CPA), President Obama announced the intention of the U.S. to formally recognize the Republic of South Sudan as a sovereign state in July, 2011.
BIS amended the EAR to reflect the July 9, 2011 formal recognition by adding the new nation, the Republic of South Sudan, to the Commerce Country Chart. The new country is included in Country Group B, which will render the destination eligible for certain export and reexport License Exceptions. The controls that continue to apply to "Sudan" under the EAR will not apply to the Republic of South Sudan.
This rule is effective July 9, 2011. |
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Former Managing Director of PPG Paints Trading (Shanghai) Co., Ltd., Charged with IEEPA and EAR Violations
On July 8, 2011, the Bureau of Security and Security (BIS) announced that Xun Wang, a former Managing Director of PPG Paints Trading (Shanghai) Co., Ltd., a wholly-owned Chinese subsidiary of U.S.-based PPG Industries, Inc., has been charged with conspiring to violate the International Emergency Economic Powers Act (IEEPA) and the Export Administration Regulations (EAR), and other related offenses.
Specifically, Wang, 51, is accused of conspiring to export and reexport, and exporting and reexporting specially designed, high-performance epoxy coatings to the Chashma 2 Nuclear Power Plant (Chashma II) in Pakistan, a nuclear reactor owned and/or operated by the Pakistan Atomic Energy Commission. This entity is on the list of prohibited end users under the EAR.
Wang was arrested on the indictment on June 16, 2011, at Atlanta Hartsfield-Jackson Airport and transferred to the District of Columbia. She is a Chinese national and lawful permanent resident of the United States. The United States is seeking to have her held without bond pending trial.
The indictment against Wang is related to the December 21, 2010, guilty plea of PPG Paints Trading (Shanghai) Co., Ltd. (PPG Paints Trading), to a four-count information in the U.S. District Court for the District of Columbia. Together, PPG Paints Trading and its parent company, PPG Industries, Inc., paid $3.75 million in criminal and administrative fines and over $32,000 in restitution. The combined amount of criminal and civil fines represented one of the largest monetary penalties for export violations in the BIS history.
According to the indictment against Wang, in January 2006, PPG Industries sought an export license for the shipments of coatings to Chashma II. In June 2006, the Department of Commerce (DOC) denied that license application. Following that denial, Wang and her co-conspirators agreed upon a scheme to export and reexport the high-performance epoxy coatings from the U.S. to Chashma II, via a third-party distributor in People's Republic of China (PRC), without the required export license from the DOC.
The indictment further alleges that from June 2006 through March 2007, Wang and other co-conspirators intentionally concealed from PPG Industries that the paint would be delivered to Chashma II. Specifically, they falsely stated that the coatings were to be used at a nuclear power plant in China, the export of goods to which would not require a license from the DOC. The indictment alleges that, through these means, Wang and her co-conspirators took part in three shipments of coatings from the United States to Chashma 2 without the required license.
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North Carolina CEO Fined for Unauthorized Exports to Libya
On July 1, 2011, the Bureau of Industry and Security (BIS) announced that Mohammed El-Gamal, also known as Moe Zayed El-Gamal (Gamal), President and CEO of Applied Technology, Inc. (ATI) of Kenansville, NC, has agreed to pay a civil penalty of $340,000 to settle allegations that he violated the Export Administration Regulations (EAR) by exporting controlled networking equipment to Libya without the required export licenses.
BIS alleged that on three occasions during June and July of 2006, Gamal sent networking equipment, controlled for Anti-Terrorism reasons, to the General Electric Company of Libya, without the required Department of Commerce licenses. In connection to one of these shipments, agents searched an ATI employee flying from Detroit, MI to Libya and found three computer cards hidden in his carry-on luggage.
To settle the administrative case, Gamal agreed to conduct a compliance audit of ATI covering the first year of exports following the settlement, put in place a compliance program, attend BIS export compliance training, and complete an audit for past exports.
On February 14, 2011, Gamal also pleaded guilty in the District Court for District of Columbia to one count of Material False Statements made to agents in the course of investigation. On May 16, 2011, he was sentenced by United States District Judge to pay a fine of $5,000, to perform 100 hours of community service, and to serve two years supervised probation. The judge also ordered Gamal to provide monthly reports to the Department of Commerce regarding his export activities during the probationary period.
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OFAC Amends Libyan Sanctions Regulations
On July 1, 2011, the Department of the Treasury's Office of Foreign Assets Control (OFAC) issued the Libyan Sanctions Regulations, 31 C.F.R. § 570, to implement Executive Order 13566 dated February 25, 2011. The regulations have been published in abbreviated form at this time for the purpose of providing immediate guidance to the public. OFAC intends to supplement this part of the regulations in the future.
Effective July 1, 2011, sections 570.506 and 570.508 replace and supersede General License Nos. 3 and 2, respectively, which have been removed from OFAC's web site. General License Nos. 1B, 4, and 5, as well as certain statements of licensing policy, are not being incorporated into the Regulations at this time and remain available on OFAC's web site.
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CBP Issues Instructions re: Post-Importation Preference Program Claims with a Classification Change
 On June 23, 2011, U.S. Customs and Border Protection (CBP) issued instructions for the trade community regarding post-importation preference program claims under 19 U.S.C. § 1520(d) that involve a tariff classification change.
The instructions provide that if a preference claim is not made at the time of importation, post-importation preference claims can be made within one year from the date of importation. This statutory provision does not allow for other changes and/or amendments to an entry summary, therefore importers and brokers must use existing regulatory provisions to make corrections to an entry summary.
CBP instructions also state that, "when a post-importation preference program claim under 19 USC 1520(d) is presented on an unliquidated entry which also requires a Harmonized Tariff Schedule of the United States (HTSUS) classification change, the tariff change should be presented as a Post Entry Amendment (PEA) or Post Summary Correction (PSC) in the Automated Commercial Environment (ACE), simultaneously with the 520(d) submission."
PSC functionality was deployed in ACE effective June 4, 2011. Therefore, 520(d) claims should reference any PSC filed in ACE to ensure any classification changes are taken into account prior to the processing of the 520(d). For ACE entry summaries importers or filers should also add language to the PSC Filing Explanation Record that confirms the filing of the 520(d) claim.
When a post-importation preference program claim under 19 USC 1520(d) is presented on a liquidated entry which also requires a HTSUS classification change, the tariff change should be presented as a 19 USC 1514, protest, simultaneously with the 520(d) submission."
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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
August 10 - 11, 2011 - Universal City, CA - $430
Complying with U.S. Export Controls - Bureau of Industry and Security
September 13 - 14, 2011 - Smithfield, RI - $330
How to Develop an Export Management and Compliance Program - Bureau of Industry and Security
September 21-22, 2011 - Santa Clara, CA - $497.50
6th National Forum on International Technology Transfers & Deemed Export Compliance - American Conference Institute (ACI)
September 26 - 27, 2011 - Washington, DC
Basic ITAR Course- Federal Publications Seminars
October 24, 2011 - Arlington, VA
3rd International Forum on China Trade Compliance - American Conference Institute (ACI)
October 24 - 25, 2011 - San Francisco, CA
Advanced ITAR Workshop- Federal Publications Seminars
October 25, 2011 - Arlington, VA
ITAR Compliance: Disclosure and Audits - Federal Publications Seminars
October 26-27, 2011 - Arlington, VA
ITAR Boot Camp - American Conference Institute (ACI)
October 26 - 27, 2011 - Chicago, IL
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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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