January 2013
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Global Trader Newsletter
In This Issue
EXPORT NEWS
HSBC Holdings Agree to $375M OFAC Penalty
OFAC Agrees to $132M Settlement with Standard Chartered Bank
President Issues E.O. to Establish Interagency Task Force in Support of National Export Initiative
PRC Co. Enters Guilty Plea for Export Violations
BIS Seeks Comments on Proposed Rule to Revise EAR
Iranian National and Company Charged in Conspiracy to Export Military Equipment
OFAC Posts Recent Civil Penalty Enforcement Information
Army Sargeant Sentenced to 4 Years in Jail for AECA and ITAR Violations
CUSTOMS NEWS
CBP Increases Informal Entry Limit to $2,500
CBP Posts 2012 East Coast Trade Symposium Materials Online
China National Sentenced for Understating the Value of U.S. Imports
CBP Requests Comments on Declaration for Free Entry of Returned American Products
U.S. and Israel Sign Telecommunications Testing Mutual Recognition Agreement
Calendar of Events
Who's Hiring

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Happy New Year!

The import/export news highlights from the last few months include: enforcement actions against individuals from China, Iran, and a former U.S. Army Sargent resulting in criminal penalties; President Obama issues Executive Order establishing an Interagency Task Force in support of the National Export Initiative; PRC  Corporate Entity Pleads Guilty to Conspiring to Violate IEEPA and EAR; CBP Posts 2012 East Coast Trade Symposium materials online; CBP increases informal entry limit to $2,500; China National Sentenced for Understating Import Values; U.S.-Panama Trade Promotion Agreement Entered into Force; and U.S. and Israel sign Telecommunications Testing Mutual Recognition Agreement.

As always, thank you for reading!
 
Jennifer Kessinger, Tammie Krauskopf
& Ruta Riley
globaltradeexpertise
[email protected]
Export News
HSBC Holdings Agrees to $375 Million Penalty to Settle OFAC Charges 

money On December 11, 2012, the Office of Foreign Assets Controls (OFAC) announced that HSBC Holdings, plc has agreed to remit $375 million to settle potential civil liability on behalf of the company and certain of its affiliates (collectively "HSBC Group") for violations of the Cuban Assets Control Regulations, the Burmese Sanctions Regulations, the Sudanese Sanctions Regulations, the now-repealed Libyan Sanctions Regulations, and the Iranian Transactions Regulations.

The settlement covers violations all of which OFAC has determined were egregious under its Economic Sanctions Enforcement Guidelines. Specifically, on numerous occasions between 2004 and 2010, HSBC Group processed wire transfers totaling millions of dollars that involved Cuba, the Governments of Libya and Iran, and other sanctioned countries and entities.

HSBC Group did not voluntarily self-disclose the violations. The total base penalty amount for these violations, which was the statutory maximum in this case, totaled $1,159,872,734.

OFAC Agrees to $132 Million Settlement with Standard Chartered Bank for Violations of Sanctions Programs

    

Treasury Seal On December 10, 2012, the Office of Foreign Assets Controls (OFAC) announced a $132 million agreement with Standard Chartered Bank (SCB) to settle its potential liability for apparent violations of U.S. sanctions. The settlement is part of a combined $327 million settlement with federal and local government partners.
 
OFAC alleged that from 2001 to 2007, SCB's London head office and its Dubai branch engaged in payment practices that interfered with the implementation of U.S. economic sanctions by financial institutions in the U.S., including SCB's New York branch. In London, those practices included omitting or removing material references to U.S.-sanctioned locations or entities from payment messages sent to U.S. financial institutions. In Dubai, the practices included sending payment messages to or through the U.S. without references to locations or entities implicating U.S. sanctions. As a result, millions of dollars of payments were routed through U.S. banks for or on behalf of sanctioned parties in apparent violation of U.S. sanctions.
 
These actions were in violations of the Iranian Transactions Regulations; the Burmese Sanctions Regulations; the Sudanese Sanctions Regulations; and the now-repealed version of the Libyan Sanctions Regulations.

President Issues Executive Order to Establish an Interagency Task Force in Support of the National Export Initiative

    

White House On December 6, 2012, President Obama signed into law Executive Order that establishes an Interagency Task Force on Commercial Advocacy (Task Force) as part of the National Export Initiative (NEI). The Task Force will be chaired by the Secretary of Commerce and consist of senior-level officials from various governmental agencies, including Departments of State, Treasury, Defense, Agriculture, Heal and Human Services, Transportation, Homeland Security, and others.

The Executive Order provides that the Task Force, in order to increase the success of U.S. exporters competing for foreign procurements, will coordinate the activities of relevant agencies to enhance Federal support in commercial advocacy cases; develop strategies to raise the awareness of commercial advocacy assistance within the U.S. business community; and distribute information about foreign procurement opportunities that may be of interest to U.S. businesses.

PRC Corporate Entity Pleads Guilty to Conspiring to Violate IEEPA and EAR

    

China Flag On December 3, 2012, U.S. Bureau of Industry and Security (BIS) announced that China Nuclear Industry Huaxing Construction Co., Ltd., (Huaxing), a corporate entity owned by the People's Republic of China (PRC) and located in Nanjing, China, pleaded guilty to conspiring to violate the International Emergency Economic Powers Act (IEEPA) and the Export Administration Regulations (EAR).

It is believed that this plea marks the first time that a PRC corporate entity has entered a plea of guilty in a U.S. criminal export matter. As part of its plea agreement, Huaxing agreed to the maximum criminal fine of $2 million, $1 million of which will be stayed pending its successful completion of five years of corporate probation. Through an administrative agreement with the Department of Commerce, Huaxing has also agreed to pay another $1 million immediately and be subject to multiple third-party audits over the next five years to ensure the efficacy of its compliance with U.S. export laws.

According to court documents, from June 2006 to March 2007, Huaxing conspired to export PPG Industries' high-performance coatings from the United States to Chashma II, via China, without first having obtained the required export license from BIS in violation of the EAR.  Chashma II is a PAEC power plant under construction near Kundian, Punjab province, Pakistan, and is on the list of  prohibited end users under the EAR.

Court documents provide that in January 2006, PPG Industries sought such an export license for the shipments of coatings to Chashma II. The Commerce Department denied that license application. Following that denial, the Information states, Huaxing agreed upon an arrangement whereby the high-performance coatings would be sold to a third-party distributor in China which, in turn, would deliver the coatings to Huaxing for application at Chashma II. Further, members of the conspiracy stated that the coatings were to be used at a nuclear power plant in China, the export of goods to which did not require a license from the Department of Commerce. Through these means, the transactions were structured to evade U.S. export laws by concealing that the true end-user of the coatings was Chashma II. The total value of the three illegal exports in question was approximately $32,000.

Huaxing's guilty plea is related to the December 2010 guilty plea of PPG Paints Trading (Shanghai) Co., Ltd. (PPG Paints Trading), a Chinese subsidiary of Pittsburgh-based PPG Industries. Together, PPG Paints Trading and its parent company, PPG Industries, paid $3.75 million in criminal and administrative fines and more than $32,000 in restitution. In November 2011, Xun Wang, the highest ranking executive at the Chinese PPG subsidiary, pleaded guilty to conspiracy and agreed to cooperate with the government's investigation.

BIS Seeks Comments on the Proposed Rule to Revise EAR to Make CCL Clearer

    

BIS On November 29, 2012, the Bureau of Industry and Security (BIS) posted a proposed rule in the Federal Register that would implement changes identified by BIS and the public in response to the proposed rulemaking entitled Commerce Control List: Revising Descriptions of Items and Foreign Availability as part of the President's Export Control Reform (ECR) Initiative that was published on December 9, 2010. These changes are expected to make the Commerce Control List (CCL) clearer.

This proposed rule would implement changes that can be made to the CCL without requiring changes to multilateral export control regime guidelines or lists.  Detailed information on these changes can be found in the Federal Register notice.

According to the Federal Register notice, for changes that require a decision of a multilateral regime to be implemented, the U.S. Government is developing regime change proposals for consideration by members of those multilateral export control regimes. BIS will implement those changes in separate rulemakings, if approved by the respective multilateral export control regimes.

Comments to BIS are due on January 28, 2013.

Iranian National and Company Charged in Conspiracy to Export Military Equipment from the U.S.   

   

Flag of Iran On November 20, 2012, Department of Justice reported that Amin Ravan, a citizen of Iran, and his Iran-based company, IC Market Iran (IMI), have been charged in an indictment with conspiracy to defraud the United States, smuggling, and violating the Arms Export Control Act (AECA) in connection with the unlawful export of 55 military antennas from the United States to Singapore and Hong Kong.

According to the indictment, Ravan was based in Iran and, at various times, acted as an agent of IMI in Iran and an agent of Corezing International, Pte, Ltd, a company based in Singapore that also maintained offices in Hong Kong and China.  

On Oct. 10, 2012, Ravan was arrested by authorities in Malaysia in connection with a U.S. provisional arrest warrant.   The United States is seeking to extradite him from Malaysia to stand trial in the District of Columbia.   If convicted of the charges against him, Ravan faces a potential twenty years in prison for the AECA violation, ten years in prison for the smuggling charge and five years in prison for the conspiracy charge.

According to the indictment, in March 2007, Ravan, through his co-conspirators at Corezing, ordered from a Massachusetts company 50 cavity-backed, military antennas for $86,750, and discussed structuring payment from Ravan to his Corezing co-conspirators in a manner that would avoid transactional delays caused by the Iran embargo. Ultimately, between July and September 2007, a total of 50 cavity-backed spiral antennas and five biconical antennas were exported from the United States to Corezing in Singapore and Hong Kong without the required State Department's Directorate of Defense Trade Controls licenses.

Two of Ravan's co-conspirators, principals of Corezing, have been charged in a separate indictment in the District of Columbia in connection with this particular transaction involving the export of military antennas to Singapore and Hong Kong.  They were arrested in Singapore last year and the United States is seeking their extradition.


OFAC Posts Recent Civil Penalty Enforcement Information

    

Treasury Seal The U.S. Office of Foreign Assets Controls (OFAC) posted recent civil penalty enforcement information on their website:

On October 19, 2012, Brasseler USA, a Savannah, GA, medical supply company, has agreed to pay $18,900 to settle potential civil liability for alleged violations of the Iranian Transaction Regulations (ITR) from 2006 to 2009. Specifically, OFAC alleged that on three separate occasions, Brasseler exported goods or services to a person in a third country with knowledge that they were intended specifically for transshipment to Iran, without authorization from OFAC. The total of the transactions amounted to $5,241. Brasseler did not voluntarily self-disclose the matter to OFAC. According to OFAC, the alleged violations constituted a non-egregious case, and the base penalty amount for the violations totaled $21,000.


On November 15, 2012, Sogda Limited, Inc., a Kirkland, WA company, has agreed to pay $128,250 to settle potential civil liability for alleged violations of the Iranian Transactions Regulations (ITR). The alleged violations occurred between March 25, 2009 and August 26, 2010, when the company engaged in seven export transactions that involved the transshipment of goods through Iran.

The company did not voluntarily disclose the matter to OFAC. The alleged violations constituted a non-egregious case, and the base penalty amount for the alleged violations was $570,000.

Army Sergeant Sentenced to 4 Years in Jail for AECA and ITAR Violations

    

handcuffs On October 30, 2012, U.S. Immigration and Customs Enforcement (ICE) reported that Fidel Ignacio Cisneros (Cisneros), 42, of Lynnwood, WA, was sentenced to 46 months in federal prison, followed by two years of supervised release, after he violated the Arms Export Control Act (AECA) and International Traffic in Arms Regulations (ITAR).

According to court documents, from 2007 to 2010, Cisneros served as a soldier in the U.S. Army where he performed various missions in Iraq and elsewhere. During his deployment, Cisneros stole three Acquired Tactical Illuminating Laser Aimers (Atilla-200 lasers), an ACOG rifle scope and several other items. He brought all of the items back to Orlando, FL. According to the press release, he did so without first obtaining permission from the Department of Defense.

Using his eBay account, Cisneros auctioned one of the Atilla-200 lasers to the highest bidder, noting in the auction advertisement that it was "impossible to find on the international market." Cisneros shipped the Atilla-200 laser from Orlando to a Japanese national in Tokyo in exchange for $3,200. According to the U.S. Munitions List (USML) and category XII(b) of the ITAR, individuals cannot export Atilla-200 lasers outside of the U.S. without a license. Cisneros did not have the appropriate license or permission to export the Atilla-200 laser to Japan.

In March 2010, Cisneros also auctioned several other controlled items, and shipped them to California, Nevada, and Kuwait.
Customs News 

CBP Increases Informal Entry Limit to $2,500

CBP Seal
On December 6, 2012, U.S. Customs and Border Protection (CBP) posted a final rule in the Federal Register that increases the limit, from $2,000 to $2,500, for which merchandise qualifies for an informal entry. The rule also reduces the minimum Merchandise Processing Fee (MPF) from $25 to $2. Concurrently, Canada is increasing its informal entry limit from $1,600 to $2,500.

The changed was effected to meet a commitment of the Beyond the Border Initiative to expedite customs clearance between the U.S. and Canada.

The rule is effective January 7, 2013.

CBP Posts 2012 East Cost Trade Symposium Materials  

CBP Seal
U.S. Customs and Border Protection (CBP) posted on its website the 2012 East Coast Trade Symposium materials. This year, the Symposium was held in National Harbor, MD, on November 27-28. The theme for this year's symposium was "Expanding 21st Century Global Partnerships."

China National Sentenced for Understating the Value of U.S. Imports

DOJ Seal
On November 28, 2012, the U.S. Department of Justice announced that Jin Qing Huang, 57, a citizen of the People's Republic of China, was sentenced in the U.S. District court to 16 months imprisonment followed by one year of supervised release for understating the value of merchandise imported from China into the U.S. to avoid paying antidumping duties.

According to the plea agreement, from 2006 to 2010, Huang controlled Woncity and other corporations that imported merchandise, including plastic bags and other restaurant supplies, from China. Plastic bags exported from China are subject to a 77.57% antidumping duty. On July 19, 2007, Huang imported merchandise into the U.S., falsely stating that the value of merchandise was $52,494, when in fact the value was $82,196. Similarly, on May 22, 2008, Huang falsely stating that the value of imported goods was $10,073, when in fact the value was $30,118. Huang admits that he underpaid the legally required duty on imports, charged and not charged in this case, by an amount between $5,000 and $10,000.

U.S.-Panama Trade Promotion Agreement Enter Into Force   

 

USTR On October 31, 2012, U.S. Department of State reported that the U.S.-Panama Trade Promotion Agreement (TPA) entered into force.

Pursuant to the TPA, nearly half of all current trade will receive immediate duty-free treatment with most of the remaining tariffs eliminated within the next 15 years. Almost all U.S. exports of consumer and industrial products to Panama will now be duty-free with remaining tariffs phased out over ten years.

The agreement also preserves duty-free access for Panamanian goods previously granted under trade preference programs.

More information on the agreement can be found on the U.S. Trade Representative's website.

United States and Israel Sign Telecommunications Testing Mutual Recognition Agreement

 

Israel flag On October 15, 2012, the Deputy U.S. Trade Representative (USTR) and Israeli Minister of Industry, Trade and Labour signed the Mutual Recognition Agreement between the Government of the United States and the Government of Israel for Conformity Assessment of Telecommunications Equipment (Telecommunications Agreement).

The Telecommunications Agreement streamlines the conformity assessment process by permitting recognized U.S. laboratories to test telecommunications products for conformity with Israeli technical requirements, and vice versa.

The Agreement also provides that, in the future, the U.S. and Israel can agree to the mutual acceptance of equipment certifications by recognized conformity assessment bodies in the United States and Israel. The Agreement is expected to save manufacturers the time and expense of additional product testing and certification, which is expected to lower prices for consumers and boost exports.
 
The Agreement covers equipment subject to telecommunications regulation, including wire and wireless equipment, and terrestrial and satellite equipment. The Agreement fully preserves the authority of the U.S. Federal Communications Commission (FCC) to determine the technical requirements it considers appropriate, and in no way lowers current U.S. safety requirements.

The Agreement will enter into force after both the United States and Israel have completed all internal legal requirements.
Calendar of Events
Upcoming Trade Events & Seminars

datebookOur 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 29-30, 2013 - Houston, TX - $450

Complying with U.S. Export Controls - Bureau of Industry and Security
January 29-30, 2013 - Scottsdale, AZ - $495

8th Annual Export Control Forum - Bureau of Industry and Security
February 25-26, 2012 - Newport Beach, CA - $525

How To Develop an Export Management and Compliance Program - Bureau of Industry and Security
March 5-6, 2013 - Chicago, IL - Details not yet posted

Complying with U.S. Export Controls - Bureau of Industry and Security
March 13-14, 2013 - Portland, OR - $350

Complying with U.S. Export Controls - Bureau of Industry and Security
March 27-28, 2013 - San Diego, CA - $495

Who's Hiring?
A Summary of Current Trade Job Opportunities

hand signing formAs 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.

Thanks again for your interest in our newsletter!
 
Sincerely,
 
Jennifer Kessinger, Tammie Krauskopf & Ruta Riley
Attorneys & Consultants

Tel. 925.876.1381 (Jennifer Kessinger)

[email protected]

Tel. 708.707.4087 (Tammie Krauskopf)

[email protected]
Tel. (630) 862-8123

www.globaltradeexpertise.com
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