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Greetings!
We hope you have a wonderful holiday. Last month's import/export highlights include: comments sought by State on ITAR Revisions to Category VIII (aircraft and related articles) and ITAR revisions related to treaties with Australia and the U.K.; comments sought by CBP on U.S.-Peru treaty; U.S. agrees to Russia joining the WTO; BIS aligns license requirements for Liechtenstein with those for Switzerland; and the President issues an Executive Order imposing additional sanctions on transactions with Iran.
As always, thank you for reading! Jennifer Kessinger, Tammie Krauskopf
& Ruta Riley
globaltradeexpertise
info@globaltradeexpertise.com
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State Seeks Comments on the Proposal to Amend ITAR to Revise Category VIII of the USML
On November 7, 2011, the Department of State issued a proposed rule in the Federal Register that amends the International Traffic in Arms Regulations (ITAR) to revise Category VIII (aircraft and related articles) of the U.S. Munitions List (USML) to describe more precisely the military aircraft and related defense articles warranting control of the USML.
Specifically, the proposed rule revises USML Category VIII, covering aircraft and related articles, to establish a clearer line between the USML and the Commerce Control List (CCL) regarding controls over military aircraft and related articles. The proposed narrows the types of aircraft and related items controlled on the USML to only those that warrant control under the stringent requirements of the Arms Export Control Act (AECA). Changes include moving similar articles currently controlled in multiple categories into a single category or subcategory. Other former Category VIII subcategories have been "reserved" because the Department is proposing to change the jurisdictional status of the items covered therein so that they would become subject to the EAR.
This proposed rule also revises Sec. 121.3 to more clearly define "aircraft" for purposes of the revised USML Category VIII.
The most significant aspect of this more positive, but not yet tiered, proposed USML category is that it does not contain controls on all generic parts, components, accessories, and attachments that are specifically designed or modified for a defense article, regardless of their significance to maintaining a military advantage for the United States. Rather, it primarily contains a positive list of specific types of parts, components, accessories, and attachments that continue to warrant control on the USML.
The Administration has also proposed revisions to the jurisdictional status of certain militarily less significant end items that do not warrant USML control, but the primary impact of this proposed change will be with respect to current USML controls on parts, components, accessories, and attachments that no longer warrant USML control.
Comments on the proposed rule are due December 21, 2011.
Department of State specifically requests input on the following: - Identifying any potential lack of coverage caused by the proposed rule for Category VIII contained in the Federal Register notice and the new Category ECCNs published separately by the Department of Commerce when viewed together; and
- On the aircraft controlled in paragraph (a) of Category VIII not defined based on objective parameters (e.g., unmanned aerial vehicles controlled under (a)(6) are simply described as "military"), the public is asked to comment on regulatory language that would control those with an objective description that precludes removal from the USML and does not inadvertently designate as "defense articles" aircraft currently subject to the EAR.
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State Amends ITAR to Include the Republic of the Sudan as Proscribed Destination
On November 9, 2011, the Department of State posted a final rule in the Federal Register amending the International Traffic in Arms Regulations (ITAR) to include the Republic of the Sudan as a proscribed destination, pursuant to a United Nations Security Council arms embargo, and to clarify that this policy does not apply to the Republic of South Sudan.
The Republic of South Sudan declared independence from Sudan and was recognized as a sovereign state by the United States on July 9, 2011. Consequently, the policy of denial as it applies to the Republic of the Sudan does not apply to the Republic of South Sudan.
With limited exceptions, section 126.1(v) of the ITAR sets out U.S. policy to deny licenses or other approvals for exports or imports of defense articles and defense services destined for or originating in the Republic of the Sudan. A license or other authorization may be issued on case-by-case basis for the following items:
- Supplies and related technical training and assistance to monitoring, verification, or peace support operations, including those authorized by the UN or operating with the consent of the relevant parties;
- Supplies of non-lethal military equipment intended solely for humanitarian, human rights monitoring, or protective uses, and related technical training and assistance;
- Personal protective gear for the personal use of United Nations personnel, human rights monitors, representatives of the media, and humanitarian and development workers and associated personnel; and
- Assistance and supplies provided in support of implementation of the Comprehensive Peace Agreement.
This rule is effective November 9, 2011.
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President's Executive Order Imposes Additional Sanctions Related to Transactions with Iran
 On November 23, 2011, President Obama signed Executive Order (EO) 13590 that authorizes the imposition of certain sanctions with respect to the provision of goods, services, technology, or support for Iran's energy and petrochemical sectors.
The EO targets transactions that could "directly and significantly contribute to the maintenance or enhancement of Iran's ability to develop petroleum resources located in Iran," and that could "directly and significantly contribute to the maintenance or expansion of Iran's domestic production of petrochemical products."
The sanctions are not limited to U.S. persons and apply to "any person."
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BIS Aligns License Requirements for Liechtenstein with those for Switzerland
On November 14, 2011, the Bureau of Industry and Security (BIS) published a final rule in the Federal Register amending certain requirements in the Export Administration Regulations (EAR) that apply to the Principality of Liechtenstein.
In the rule, BIS aligns license requirements and licensing policy under the EAR for Liechtenstein with those for Switzerland. Consequently, for purposes of the EAR, Liechtenstein will be treated the same as Switzerland.
Based on a Customs Union Treaty with Switzerland, Liechtenstein has adopted the export controls implemented under Swiss law, including those equivalent to those prescribed under multilateral regimes, and has authorized Switzerland to administer and enforce export controls within Liechtenstein's territory. As a result of this arrangement, Liechtenstein and Switzerland serve as one territory for customs and export purposes.
Based on this arrangement and its effect on export controls, BIS has determined that it is appropriate to codify the treatment of Liechtenstein and Switzerland as one territory for purposes of the EAR. This treatment of Liechtenstein is consistent with the effort of the United States to streamline licensing requirements where export controls prescribed by the multilateral regimes are implemented.
The final rule is effective November 14, 2011.
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State Seeks Comments on Proposal to Amend ITAR to Implement US-Australia and UK Defense Trade Cooperation Treaties
On November 22, 2011, the Department of State published a proposed rule in the Federal Register that amends the International Traffic in Arms Regulations (ITAR) to implement the Defense Trade Cooperation Treaty between the United States and Australia and the Defense Trade Cooperation Treaty between the United States and the United Kingdom. In addition, the proposed rule identifies, via a supplement, the defense articles and defense services that may not be exported pursuant to the Treaties.
The rule also proposes to amend the section pertaining to the Canadian exemption to reference the new supplement, and, with regard to Congressional certification, the Department of State proposes to add Israel to the list of countries and entities that have a shorter certification time period and a higher dollar value reporting threshold.
ITAR Parts affected by the proposed rule are 120, 123, 124, 126, 127, and 129.
Comments on the rule are due on or before December 21, 2011.
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OFAC Posts Recent Penalty Information
The Office of Foreign Assets Control (OFAC) posted on its website recent penalty information:
- Wilson Tool International, Inc. (Wilson Tool) of White Bear Lake, MN, has agreed to remit $15,000 to settle an alleged violation of the Iranian Transactions Regulations (ITR) occurring on September 12, 2005. OFAC alleged that Wilson Tool sold and exported punch press tooling equipment to an entity in Iran without an OFAC license. The transaction value was $10,304.33. OFAC determined that Wilson Tool did not voluntarily self- disclose this matter to OFAC and that the alleged violation constituted a non-egregious case. The base penalty amount for the alleged violation was $25,000, but was reduced considering mitigating factors.
- ASF, Inc. (ASF), a Mobile, AL company, has agreed to remit $5,400 to settle allegations of a violation of the Iranian Transactions Regulations (ITR) that occurred on May 2, 2006. OFAC alleged that ASF engaged in a transaction related to goods destined for Iran and facilitated the exportation of goods from a third country to Iran by a foreign person, without an OFAC license. OFAC determined that ASF did not voluntarily disclose this matter to OFAC and that the apparent violation constituted a non-egregious case. The base penalty amount for the alleged violation was $10,000.
- Commerzbank AG, New York Branch (Commerzbank), of New York, NY, has agreed to remit $175,500 to settle apparent violations of the Cuban Assets Control Regulations that occurred from September 7, 2005, through September 30, 2005. The agreement covers allegations that Commerzbank, acting as an advising and confirming bank in connection with a letter of credit, presented four sets of trade documents, in which a Cuban Specially Designated National (SDN) had an interest, to the Miami branch of the foreign bank that issued the letter of credit, for payment in favor of a Canadian company. The aggregate value of the trade documents was $884,157. Commerzbank did not voluntarily self-disclose the matter, and the alleged violations constituted a non-egregious case. The base penalty amount for the alleged violations totaled $260,000. The settlement amount reflects OFAC's consideration of the following facts and circumstances, pursuant to the General Factors under OFAC's Economic Sanctions Enforcement Guidelines: Commerzbank should have been aware of the prohibited Cuban interest, given that the trade documents contained repeated references to the SDN and its vessels; Commerzbank has undertaken remedial measures to strengthen its OFAC compliance program to ensure that such apparent violations do not recur in the future; and Commerzbank cooperated with OFAC's investigation, including by agreeing to toll the statute of limitations.
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CBP Seeks Comments on the U.S.-Peru Trade Promotion Agreement
Comments are due by January 3, 2012.
 On November 3, 2011, U.S. Customs and Border Protection (CBP) posted interim rule in the Federal Register amending the Customs regulations to implement the preferential tariff treatment and other customs-related provisions of the U.S.-Peru Trade Promotion Agreement (PTPA).
PTPA was signed by the United States and Peru in April 2006. On January 16, 2009, the President singed Proclamation 8341 to implement the provisions of the PTPA. The Proclamation modified the Harmonized Tariff Schedule of the United States (HTSUS) by adding General Note 32, incorporating the relevant PTPA rules of origin pursuant to the PTPA Implementation Act, and the insertion into the HTSUS of the preferential duty rates applicable to particular commodities under the PTPA where the special program "PE" appears in parenthesis in the "Special" rate of duty column.
Customs is now seeking written data, views, or arguments on all aspects of the interim rule, as well as comments discussing the economic, environmental or federalism effects that might result from this interim rule.
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U.S. Agrees to Russia Joining WTO
The Office of the U.S. Trade Representative announced on November 10, 2011 that the Working Party on the Accession of the Russian Federation to the World Trade Organization (WTO) agreed to adopt the terms and conditions for Russia's accession to the WTO.
Bloomberg Businessweek reported that, under the terms, Russia would gradually cut its average tariff ceiling for manufactured goods to 7.3% from the current 9.5%, and duties on farm products will drop to 10.8% from 13.2%. On average, the final tariff cap on Russian goods would fall to 7.8% from the current 10%.
According to the WTO, Russia exported more than $400 billion in goods in 2010. Imports were valued at almost $249 billion. Trade in services such as transportation and travel amounted to $114 billion.
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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
January 24 - 25, 2012 - Phoenix/Scottsdale, AZ - $495
7th Annual Export Control Forum - Bureau of Industry and Security
February 27 - 28, 2012 - Irvine, CA - $525
Complying with U.S. Export Controls - Bureau of Industry and Security
February 7 - 8, 2012 - New Orleans, LA - Details not yet posted
How to Develop an Export Management and Compliance Program - Bureau of Industry and Security
February 9, 2012 -New Orleans, LA - Details not yet posted
Complying with U.S. Export Controls - Bureau of Industry and Security
February 15 - 16, 2012 - Orlando, FL - $469
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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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