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Greetings!
We hope you had a Happy Halloween! Last month's import/export highlights include: CBP amends regulations regarding the use of sampling methods in audits and prior disclosures; DDTC Updates Pakistan Policy; several export enforcement actions - including the settlement of a $2.5M penalty; TSA abandoning 12/31/11 deadline for 100% cargo screening; Mexico to lift retaliatory tariff for Mexican trucking access to U.S.; GSP/TAA reinstated and free trade programs with S. Korea, Colombia, and Panama signed into law by President Obama; OFAC authorizes certain exports to Iran and Sudan; and CBP proposes raising informal entry limit to $2,500 and removing a formal entry requirement. As always, thank you for reading! Jennifer Kessinger, Tammie Krauskopf
& Ruta Riley
globaltradeexpertise
info@globaltradeexpertise.com
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DDTC Updates Pakistan Policy
Exporters are advised not to submit license requests for major defense equipment
On October 1, 2011, the U.S. Department of State Directorate of Defense Trade Controls issued an update to Pakistan exports policy. Section 203 of the Enhanced Partnership with Pakistan Act of 2009 prohibits for fiscal years 2012-2014 the issuance of export licenses for major defense equipment as defined in 22 U.S.C. 2794(6) to be exported to Pakistan absent an appropriate certification or waiver has been issued under Section 203 in the fiscal year.
As no certification or waiver has been issued for fiscal year 2012, DDTC advises exporters not to submit such license requests to DDTC. In the event of a waiver or certification in fiscal 2012, a new notice will be issued.
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| Texas Firm To Pay $2.5 Million to Settle Charges of Unlicensed Exports
Unlicensed EAR Exports and OFAC Violations Settled
On October 3, 2011, Bureau of Industry and Security (BIS) reported that Flowserve Corporation of Irving, TX, and ten of its foreign affiliates have agreed to pay a civil penalty totaling $2.5 million to settle 288 charges for violating the Export Administration Regulations (EAR). Specifically, BIS alleges that Flowserve exported and reeexported pumps, valves and related components to Iran, Syria and other countries without the required licenses.
Flowserve is a supplier of goods and services to the oil, gas, chemical, and other industries. BIS alleged that between 2002 and 2008, Flowserve and six of its foreign affiliates exported items classified under ECCN 2B350 of the Commerce Control List (CCL) to various countries, including China, Singapore, Malaysia and Venezuela, without the required licenses. In addition, BIS alleged that six of Flowserve's foreign affiliates transshipped EAR99 items to Iran and/or reexported EAR99 items to Syria without the required U.S. Government authorization.
Flowserve voluntarily disclosed the violations and its cooperation with the investigation significantly reduced the penalty amount, according to BIS. In addition to the civil penalty, Flowserve and its affiliates will be required to conduct external audits of their compliance programs and submit the results to BIS.
In a related case, the Department of Treasury's Office of Foreign Assets Control (OFAC) settled charges with Flowserve for a total of 58 alleged violations of OFAC's Iranian, Cuban and Sudanese sanctions programs. Flowserve agreed to pay a $502,408 penalty to settle the OFAC charges.
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OFAC Posts Q&A Regarding Syria Sanctions
The U.S. Department of State's Directorate of Defense Trade Controls (DDTC) posted questions and answers regarding Syria sanctions, including questions related to OFAC Syria General License No. 4: exports or reexports to Syria of items subject to the Export Administration Regulations, and Syria General License No 6: personal remittances.
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OFAC Authorizes Exports of Food, Use of Diplomatic Funds, and the Transportation of Human Remains to Sudan and Iran
 On October 12, 2011, the Department of the Treasury's Office of Foreign Assets Control (OFAC) posted a final rule in the Federal Register amending the Sudanese Sanctions Regulations, 31 CFR part 538 (SSR), and the Iranian Transactions Regulations, 31 CFR part 560 (ITR), by issuing general licenses that authorize, with some exceptions, exports and reexports of food to individuals and entities in an area of Sudan other than the Specified Areas of Sudan and in Iran, as well as use of diplomatic funds, and the transportation of human remains to Sudan and Iran.
Exports of agricultural commodities that do not fall within the definition of food in SSR and ITR, food intended for military or law enforcement purchasers or importers, medicine, and medical devices destined for Sudan and Iran still require specific licenses.
The rule is effective October 12, 2011.
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OFAC Posts Recent Penalty Information
In October, Office of Foreign Assets Control (OFAC) posted on its web site information on recent OFAC enforcement actions:
On October 14, 2011, Sunrise Technologies and Trading Corporation of Flushing, NY, and its principal owner (Sunrise) have agreed to settle administrative charges made by the OFAC arising from violations of the Iranian Transactions Regulations (ITR), which are administered by OFAC. OFAC alleged that between 2007 and 2011, Sunrise exported computer-related goods indirectly from the United States through Dubai, United Arab Emirates, to Iran without the required export licenses. OFAC initiated the inquiry into these matters and referred the case to criminal law enforcement authorities for further investigation. Sunrise and OFAC agreed to a settlement in the amount of $1,661,672 with respect to apparent violations of the ITR by Sunrise.
This settlement with OFAC is related to criminal plea agreements reached by Sunrise and the Office of the United States Attorney for the District of Columbia, as well as settlement agreements between Sunrise and the U.S. Department of Commerce's Bureau of Industry and Security (BIS). OFAC's settlement with Sunrise has been deemed satisfied by their acceptance of criminal responsibility, the criminal forfeiture of assets, and the restrictions imposed by BIS against Sunrise and its principal owner.
Sunrise and its principal owner each pleaded guilty in the U.S. District Court for the District of Columbia to one count of criminal conspiracy to violate the International Emergency Economic Powers Act (IEEPA) and the ITR after an indictment arising from the same conduct was filed by the U.S. Department of Justice. In addition to the forfeiture of a money judgment in the amount of $1,250,000, Sunrise also accepted BIS Export Denial Orders which prohibit them from exporting any goods from the United States for a ten-year period. The BIS Export Denial Orders were suspended in their entirety provided Sunrise remains in compliance with the terms of their Settlement Agreements with BIS.
For the violations that OFAC considered to be an egregious case, Sunrise did not voluntary disclose these matters to OFAC.
On October 27, 2011, Zurigo Trading, Inc. (Zurigo) of Weston, FL, was assessed a penalty of $7,000 for violating the Iranian Transactions Regulations (ITR). Specifically, in September 2006, Zurigo attempted to export goods valued at $7,168 to Iran on behalf of its foreign customer. OFAC determined that Zurigo did not voluntarily self-disclose the violation to OFAC and that the violation constituted a non-egregious case. The base penalty amount for the violation was $10,000. The assessed penalty amount reflects OFAC's consideration of the fact that Zurigo had knowledge or reason to know that the goods were destined for Iran; Zurigo did not have an OFAC compliance program in place at the time of the violation; Zurigo has not been the subject of an OFAC enforcement action in the five years preceding the transaction at issue; and, some of the goods Zurigo attempted to ship appear to have been eligible for an OFAC license had an application been submitted to OFAC.
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Singapore Nationals and Companies Indicted in a Conspiracy Involving Illegal Exports
On October 25, 2011, the Department of Justice (DOJ) announced that five individuals and four of their companies have been indicted as part of a conspiracy to defraud the U.S. that allegedly caused thousands of radio frequency modules to be illegally exported from the United States to Iran, at least 16 of which were later found in unexploded improvised explosive devices (IEDs) in Iraq. Some of the defendants are also charged in a fraud conspiracy involving exports of military antennas to Singapore and Hong Kong.
On October 24, 2011, authorities in Singapore arrested defendants Wong Yuh Lan (Wong), Lim Yong Nam (Nam), Lim Kow Seng (Seng), and Hia Soo Gan Benson (Hia), all citizens of Singapore, in connection with a U.S. request for extradition. The United States is seeking their extradition to stand trial in the District of Columbia. The remaining individual defendant, Hossein Larijani, is a citizen and resident of Iran who remains at large.The indictment also names defendants' companies based in Iran, Singapore, and China.
Specifically, DOJ alleges that Wong, Nam, Seng and Hia conspired to defraud the United States by impeding U.S. export controls relating to the shipment of 6,000 radio frequency modules from a Minnesota company through Singapore to Iran, some of which were later found in unexploded IEDs in Iraq. Seng and Hia are also accused of conspiring to defraud the United States relating to the shipment of military antennas from a Massachusetts company to Singapore and Hong Kong. Singapore has agreed to seek extradition for Wong and Nam on the charge of conspiracy to defraud the United States relating to the components shipped to Iran, and to seek extradition for Seng and Hia on the charge of conspiracy to defraud the United States relating to the military antenna exports.
Pursuant to the criminal actions against the defendants, the Commerce Department announced the addition of 15 persons located in China, Hong Kong, Iran and Singapore to the Commerce Department's Entity List. In addition to the five individual defendants in this case, the Commerce Department named additional companies and individuals associated with this conspiracy. In placing these parties on the Entity List, the Commerce Department is imposing a licensing requirement for any item subject to Commerce regulation with a presumption that such a license would be denied.
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TSA Abandons December 31, 2011 Deadline for 100% of Screening of Inbound Cargo
 On October 7, 2011, Bloomberg News reported on the U.S. Transportation Security Administration's (TSA) decision to postpone the requirement to screen 100% of U.S.-bound cargo on international passenger aircraft by December 31, 2011.
The decision for 100% screening came after the October 2010 discovery of explosives in packages sent from Yemen to the U.S., and was met with opposition from the airline industry who argued the new requirement would cause flight delays and added operational costs.
The TSA, which has yet to issue an official statement regarding this matter, did not set a new deadline. The agency is working with U.S. Customs and Border Protection (CBP) and the air cargo industry on a pilot program to process information about cargo and shippers before packages are sent to the U.S.
While the screening of all U.S.-bound cargo has been postponed, TSA continues to require screening of all cargo on flights departing U.S. airports and all "high-risk" deliveries coming into the U.S.
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Mexico to Lift Retaliatory Tariffs as U.S. Approves First Cross-Border Permit for a Mexican Trucking Company
 On October 14, 2011, Bloomberg News reported that Mexico promised to lift tariffs on 99 U.S. commodities following the approval for the first cross-border permit for a Mexican trucking company based on the agreement reached in March. Mexico had lifted 50% of tariffs affecting $2.4 billion of goods after the U.S. agreement to implement the permit program and now will eliminate the remaining half. The tariffs applied to apples, grapes, pears, potatoes, port and other products.
The U.S. Department of Transportation (DOT) granted the permit to Transportes Olympic, based in Monterrey, Mexico, after an "exhaustive review" of the company's operation in Mexico to ensure that it meets U.S. standards.
The permit program resolves a conflict that dates back to December 1995 when the U.S. cited safety concerns to block North American Free Trade Agreement (NAFTA) rules allowing Mexican trucks to cross beyond a 25-mile border zone.
Under the program, Mexican trucks can take cargo to a U.S. city and pick up a load and return to Mexico, similar to rules for Canadian trucks. However, Mexican trucks cannot deliver cargo between U.S. cities. U.S. trucks will receive the same treatment in Mexico.
As for the safety concerns, Mexican trucks must comply with all Federal Motor Vehicle Safety Standards and have monitoring systems to track hours on the road.
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GSP/TAA Reinstated; U.S. Free Trade Agreements with South Korea, Colombia and Panama Signed Into Law
 On October 21, 2011, President Obama signed into law:
* H.R. 2832, the "Trade Adjustment Assistance Extension Act of 2011," which extends the Generalized System of Preferences (GSP program through July 31, 2013, and reauthorizes the Trade Adjustment Assistance (TAA) program through December 31, 2013;
* H.R. 3080, the "United States-Korea Free Trade Agreement Implementation Act," which implements the United States-Korea Free Trade Agreement (FTA);
* H.R. 3078, the "United States-Colombia Trade Promotion Agreement Implementation Act," which implements the United States-Colombia Trade Promotion Agreement and extends the Andean Trade Preference Act; and
* H.R. 3079, the "United States-Panama Trade Promotion Agreement Implementation Act," which implements the United States-Panama Trade Promotion Agreement.
The GSP/TAA program, renewed retroactively to January 1, 2011, will remain in force through July 31, 2013. Along with the program, the Merchandise Processing Fee (MPF) was increased from 0.21% to 0.3464%. The increase applies to entries from October 1, 2011 to June 30, 2021.
The minimum MPF rate of $25 and the maximum MPF of $485 were not changed. However, at the old rate importers reached the maximum MPF with an entry valued over $230,952. Under the new rate, the maximum $485 MPF will be reached with an entry valued over $140,011.
The FTAs between the U.S. and South Korea, Panama, and Colombia were negotiated more than four years ago. The FTAs include provisions concerning protecting U.S. intellectual property, guaranteeing market access for the U.S. manufacturers, the environment, and labor rights.
The U.S. International Trade Commission estimates that, pursuant to the South Korean FTA, the reduction of Korean tariffs and tariff-rate quotas on goods alone will add $10 billion to $12 billion to annual U.S. Gross Domestic Product and around $10 billion to annual merchandise exports to Korea.
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CBP Issues Instructions for Duty Refunds Pursuant to Renewed GSP Program
On October 24, 2011, U.S. Customs and Border Protection (CBP) issued a memorandum with instructions for obtaining duty refunds following renewal of the Generalized System of Preferences (GSP) program on October 21, 2011.
On October 21, 2011, President Obama signed H.R. 2832, which extends the GSP program through July 31, 2013. The GSP program, which lapsed on December 31, 2010, has been retroactively renewed allowing for a refund of all duties paid on GSP-eligible merchandise that was entered or withdrawn from warehouse for consumption during the period from January 1, 2011 through November 4, 2011.
According to the CBP memorandum, filers will be entitled to file GSP-eligible entry summaries, utilizing the Special Indicator (SPI) "A," without the payment of duty for shipments entered or withdrawn from warehouse for consumption effective November 5, 2011.
CBP will begin processing refunds immediately for entries filed via the Automated Broker Interface (ABI) with the SPI "A," for duties deposited on GSP-eligible goods during the period from January 1, 2011 through November 4, 2011.
GSP refund filing instructions are further detailed in the memorandum.
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CBP Amends Regulations re: Use of Sampling Methods and Offsetting of Overpayments and Over-Declarations
Comments are due by December 27, 2011
 On October 28, 2011, U.S. Customs and Border Protection (CBP) posted a notice in the Federal Register proposing to amend CBP regulations to increase the informal entry limit from $2,000 to $2,500. The current limit of $2,000 was established in 1998 and while the dollar amount has not been changed, inflation over the years has reduced the value of that amount in real terms.
Accordingly, CBP proposes to raise the current informal entry amount to its maximum statutory limit of $2,500 and thereby reduce the administrative burden on importers and other entry filers.
In addition, CBP proposes to remove the language requiring formal entry for certain articles, because with the elimination of absolute quotas under the Agreement on Textiles and Clothing, CBP no longer needs to require formal entries for these articles.
Comments to CBP are due December 27, 2011.
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CBP Proposes Increasing Informal Entry Limit to $2,500 and Removing a Formal Entry Requirement
Comments are due by December 27, 2011
On October 28, 2011, U.S. Customs and Border Protection (CBP) posted a notice in the Federal Register proposing to amend CBP regulations to increase the informal entry limit from $2,000 to $2,500. The current limit of $2,000 was established in 1998 and while the dollar amount has not been changed, inflation over the years has reduced the value of that amount in real terms.
Accordingly, CBP proposes to raise the current informal entry amount to its maximum statutory limit of $2,500 and thereby reduce the administrative burden on importers and other entry filers.
In addition, CBP proposes to remove the language requiring formal entry for certain articles, because with the elimination of absolute quotas under the Agreement on Textiles and Clothing, CBP no longer needs to require formal entries for these articles.
Comments to CBP are due December 27, 2011.
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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:
EAR and OFAC Fundamentals: Export Control of Dual-Use Equipment, Technology and Services - Federal Publications Seminars
November 17 - 18, 2011 - Las Vegas, NV
Complying with U.S. Export Controls - Bureau of Industry and Security
November 29 - 30, 2011 - Austin, TX - $425
2nd Advanced China Forum on Import Compliance- American Conference Institute (ACI)
November 29-30, 2011 - Shanghai, China
OFAC Boot Camp - American Conference Institute (ACI)
December 1 - 2, 2011 - New York, NY
Complying with U.S. Export Controls - Bureau of Industry and Security
December 6 - 7, 2011 - Newark, NJ - $430/$480
Complying with U.S. Export Controls - Bureau of Industry and Security
December 7 - 8, 2011 - Salt Lake City, UT - $350
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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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