International Trade Law News

Welcome to to all of those attending the 20th annual Update Conference on export controls in Washington, DC. The theme of this year's Update conference is "Reaching Out to Industry, Past, Present, Future". International Trade Law News will be carrying on the tradition of blogging from Update started a few years ago by Scott Gearity's Export Control Blog, which is on hiatus.

Throughout the next few days we will be posting a summary of each of the plenary and breakout sessions from Update, so check here periodically to be kept up to date on the conference. We also encourage those attending Update to post their comments and impressions on the conference on this site as well.

Registration for attendees started early this afternoon at the Grand Hyatt. While most of the logistics and arrangements for Update are similar to previous years, BIS added a few new wrinkles this year. For example, while the main conference will begin tomorrow, BIS held some pre-Update events today, which included a "Meet & Greet" with BIS officials, an Export Management and Compliance Pavilion and an exhibit hall reception. The exhibit hall was a major change from previous Update conferences. Rather than having the exhibitors available during each of the conference's two full day sessions, the exhibitors were available today only.

An Internet cafe and meeting space is also being provided in the Bridge Rooms on the Constitution level for the first time to provide Internet access and a place to schedule one-on-one meetings or consult with colleagues. Government exhibitors will be located in this room on November 1 and 2.

Another unique feature of this year's program is that BIS asked for questions for certain sessions to submitted in advance and has provided those questions in the registration packet.

Finally, BIS published a newsletter commemorating twenty years of Update conferences that contained various reminiscences from BIS staff. One of the more unique features of the newsletter was the following Top Ten List:

You Know You Are An Update Junkie When . . .

10. You wish that Update were still held at the JW Marriott.
9. You have kept and proudly display every name badge you have received at Update.
8. You run an office pool for who will be the keynote speaker.
7. Your office is decorated with Update swag.
6. You arm wrestle with your colleagues to see who gets to attend from your company.
5. Your homepage is the BIS seminar schedule.
4. You call to register for the conference in April, when it is schedule for October.
3. You refer to the Gala as the Homecoming Dance.
2. You make flight arrangements a year in advance, and . . .
1. You are here at Update again!

Labels: BIS Update Conference

The fifth annual conference of the International Compliance Professionals Association (ICPA) will be held from March 9-13, 2008 at the brand new Grand Hyatt hotel in San Antonio, Texas.

The unique online brochure for ICPA's 2008 conference can be found at www.newicpa.digbro.com

Early bird registration for Members Only will begin on November 1, at 12 noon CDT.

The ICPA's annual conference is unique since it covers both import and export compliance. ICPA's annual conference always has a number of excellent speakers and is a must attend event for trade compliance professionals.

The Treasury Department's Office of Foreign Assets Control (OFAC) today published a final rule in the Federal Register revising the Sudanese Sanctions Regulations (31 CFR Part 538) to implement Executive Order 13412 issued by President Bush on October 13, 2006 to implement the Darfur Peace and Accountability Act of 2006 (DPAA). Among other things, the DPAA called for support of the regional government of Southern Sudan, assistance for the peace efforts in the Darfur region of Sudan and provision of economic assistance in specified areas of Sudan.

The final rule issued today exempts all trade and related transactions and humanitarian assistance in specified areas of Sudan, including Southern Sudan, Southern Kordofan/Nuba Mountains State, Blue Nile State, Abyei, Darfur and four official camps for internally displaced persons (Mayo, El Salaam, Wad El Bashir, and Soba) from the sanctions imposed on Sudan in November 1997. All other areas of Sudan remain subject to the comprehensive sanctions regime.

Today's final rule also maintain two types of sanctions that apply countrywide throughout Sudan. First, all property and interests in property of the Government of Sudan remain blocked, wherever located; however, the regional government of Southern Sudan from the definition of the Government of Sudan. Second, all transactions relating to Sudan’s petroleum or petrochemical industries are prohibited, wherever in Sudan the transactions may occur.

In addition, the licensing requirements for exports of agricultural commodities, medicine, and medical devices remain in effect throughout Sudan, including for the exempt areas, because of the operation of the Trade Sanctions Reform Act of 2000 (TSRA).

Today's rule also clarifies that the prohibitions imposed by E.O. 13067 are territorial and apply to all shipments of goods, services, and technology that transit non-exempt areas of Sudan (“transshipments”) and to all financial transactions that involve, in any manner, depositary institutions either located in the non-exempt areas of Sudan or owned or controlled by the Government of Sudan.

OFAC has also issued two new general licenses applicable to Sudan. The first general license expands the exemption relating to official business of the U.S. Government and the United Nations to include transactions and activities not only of employees but also of contractors and grantees of the U.S. Government and United Nations or any of the United Nations’ specialized agencies, programmes, and funds (including, e.g., the World Bank Group and International Monetary Fund), subject to certain requirements set forth in the Regulations. The second general license authorizes humanitarian transshipments through non-exempt areas to or from Southern Sudan or Darfur; this general license is subject to annual renewal.

Labels: OFAC, Sanctions; Sudan

Enrollment for the Transportation Security Administration's (TSA) Transportation Worker Identification Credential (TWIC) recently began at the port of Wilmington, Delaware. TSA will begin registering workings at the next 11 ports through November. TSA estimates that all U.S. port workers will have the new biometric identification cards by October 2008.

The TWIC is a biometric identification credential that will be required for unescorted access to secure areas in all U.S. ports. The TSA and the U.S. Coast Guard (USCG) have estimated that more than 750,000 workers including longshoremen, truckers, port employees and others will be required to obtain a TWIC.

Once enrollment for a port is complete, TSA and USCG will announce a 90-day period for that port after which only persons with TWICs will be allowed unescorted access to the secure areas of the port. The cost for the TWIC has been finalized at $132.50, or $105.25 if a TWIC applicant has already undergone a similar fingerprint-based security threat assessment, such as for a Hazmat Endorsement or a Free and Secure Trade card. All port worker and truck drivers must visit a TWIC enrollment center to apply and return to pick up the TWIC card.

Transportation workers that need a TWIC can avoid lines and save time during the registration process by pre-enrolling online at the TSA website. The site allows workers to enter biographical information and make a reservation to complete the process in person at the port.

The tentative TWIC enrollment schedule for the next 10 ports is:

November 1, 2007: Corpus Christi, Texas

Mid-November 2007: Baton Rouge, La.; Beaumont, Texas; Honolulu, Hawaii; Oakland, Calif.; Tacoma, Wash.

Late November 2007: Chicago/Calumet, Ill.; Houston, Texas; Port Arthur, Texas; Providence, R.I.; Savannah, Ga.

For more information the TWIC and the latest deployment schedule, see the following link:
www.tsa.gov/what_we_do/layers/twic/index.shtm.

Labels: Ports

For those readers in Texas, or those who work for companies that have operations in Texas, we wanted to advise you of the following two upcoming export controls programs co-sponsored by Strasburger & Price, LLP and JPMorgan Chase Global Trade Services:

Dallas Conference (Presented by the Greater Dallas Chamber of Commerce):

Export Regulatory Compliance & ITAR Program
Tuesday, November 13, 2007
7:30 AM – 5:00 PM
Hotel Crescent Court
400 Crescent Court
Dallas, TX
Click here for the agenda and registration information.

Houston Conference (Presented by the International Transportation Management Association):

Export Controls Seminar: Compliance with the International Traffic In Arms Regulations, Export Administration Regulations and Related Requirements
Friday, November 16, 2007
7:45 am - 5:00 pm
The Greenspoint Club (in North Houston)
16925 Northchase Drive
Houston, TX
Click here for the agenda and registration information.

Both programs will cover the following topics:

• Overview of U.S. export controls (EAR and ITAR)
  
• Industry panel on Best Practices in export controls
  
• Insight into minimizing exposure, liability and risk for you and your organization
• Fresh perspective on ethics in trade compliance and why it is so important
• Hands-on understanding of commodity jurisdiction and critical importance of getting it right
• Enforcement update and the consequences of non-compliance with recent lessons learned

Labels: Export Controls, ITAR

The Bureau of Industry and Security recently announced that there is a limited amount of space available at next week's Update Conference on Export Controls and Policy that will take place from October 31-November 2, 2007 at the Grand Hyatt Washington in Washington DC. To check on availability, contact BIS at the following e-mail address: UpdateConference@bis.doc.gov.

If you can't make it to Washington, DC next week for Update 2007, International Trade Law News will be blogging from the conference. We will be posting summaries of the various programs and break-out sessions shortly after they are presented. Stay tuned.

Labels: BIS

The U.S. Government announced today the imposition of additional financial sanctions against Iran in its long-standing effort to combat terrorism and nuclear proliferation by that country. Because of the broad scope of existing U.S. sanctions on Iran, today's action was primarily designed to put pressure on non-U.S. banks and companies that do business with Iran.

The new sanctions designate as nuclear proliferators the Islamic Revolutionary Guard Corps and the Ministry of Defense and Armed Forces Logistics and identify certain financial institutions as supporters of Iran’s military. Although anti-terrorism sanctions against designated persons in Iran have been in place since 2002, and nuclear non-proliferation sanctions against Iran were later imposed in 2005, the sanctions imposed today mark the first time the U.S. has imposed sanctions against a foreign country’s military.

The Departments of State and Treasury named a number of entities as proliferators of weapons of mass destruction. These entities were designated pursuant to its authority under Executive Order 13382 issued by President on June 28, 2005 in an effort to block the property and assets of nuclear proliferators and their supporters. The new entities include the following military organizations and financial institutions known to support Iran’s military operations:

• The Islamic Revolutionary Guard Corps (IRGC)
• Ministry of Defense and Armed Forces Logistics (MODALF)
• Bank Melli
• Bank Mellat
• Nine IRGC-controlled Companies

The Treasury Department also designated certain individuals under E.O. 13382 on the basis of their relationship to either the IRGC or Iran’s Aerospace Industries Organization:

• General Hosein Salimi, Commander of the Air Force, IRGC
• Brigadier General Morteza Rezaie, Deputy Commander of the IRGC
• Vice Admiral Ali Akhbar Ahmadian, Chief of the IRGC Joint Staff
• Brigadier Gen. Mohammad Hejazi, Commander of Bassij resistance force
• Brigadier Gen. Qasem Soleimani, Commander of the Qods Force
• Ahmad Vahid Dastjerdi, Head of the Aerospace Industry Organization
• Reza-Gholi Esmaeli, Head of Trade and International Affairs Department
• Bahmanyar Morteza Bahmanyar, Head of Finance and Budget Department

In addition to the above entities and individuals designated as supporters of Iran’s proliferation program, additional financial institutions have been designated by the Treasury Department for financing terrorism. These designations, which were made pursuant to the authority of E.O. 13224, include:

• IRGC-Qods Force
• Bank Saderat

The U.S. claims that the The Qods Force, a branch of the IRGC, provides material support to the Taliban, Lebanese Hizballah, Hamas, Palestinian Islamic Jihad and the Popular Front for the Liberation of Palestine-General Command.

As a result of the sanctions imposed today, U.S. persons are prohibited from engaging in transactions involving any of the listed designees. In addition, the assets and property of any named designees that are subject to U.S. jurisdiction will be frozen.

In a statement released today, Treasury Secretary Paulson called on "responsible banks and companies around the world to terminate any business with Bank Melli, Bank Mellat, Bank Saderat, and all companies and entities of the IRGC."

Because the scope of existing U.S. sanctions on Iran is very broad and because many of these entities, including the banks named today , are already included on OFAC's Specially Designated Nationals List (OFAC prohibited all transactions involving Bank Saderat on September 12, 2006), today's action will have a limited impact on U.S. companies and financial institutions and was intended to put pressure on non-U.S. banks and companies that do business with Iran.

USA*Engage Co-Chair and National Foreign Trade Council President William Reinsch said today that “these sanctions are extraterritorial, and as such are likely to worsen relations with our allies. Given their sweeping nature, they may ultimately end up targeting hundreds of foreign companies that are doing business legally under their national laws. Their reach is so broad that they pose real challenges when it comes to connecting the dots with other companies and entities both inside and outside Iran."

Labels: OFAC, Sanctions; Iran

On October 16, 2007, the Bureau of Customs and Border Protection (CBP) issued an interim regulation to implement the U.S.-Bahrain Free Trade Agreement (BFTA). The interim regulations modify the Harmonized Tariff Schedule of the U.S. (HTSUS) to reflect the reduced tariff rates for certain goods imported from Bahrain.

As a result of the interim rule, “BH” now appears in the “Special” rate subcolumn throughout the HTSUS to reflect the reduced duties for individual commodities according to the negotiated terms of the BFTA. General Note 30 to the HTSUS, which sets forth the rules of origin for preferential duty purposes, was also added.

Unlike the tariff-shift rules of origin that predominate in NAFTA and many other U.S. free trade agreements, the rules of origin for the BFTA provide in large part that “originating goods” must be substantially transformed in Bahrain or the U.S. (or both), and possess at least 35% regional value content (i.e., at least 35% of the good’s appraised value must be attributed to the cost or value of materials produced in the U.S. or Bahrain, and the cost of processing performed in one or both countries). While the BFTA rules of origin include some tariff-shift based rules, these rules apply only to textiles and a limited group of certain non-textile goods.

Public comments on the interim regulations are due on December 17, 2007 and may be submitted through the Federal eRulemaking Portal via docket number USCBP-2007-0063.

Labels: Customs

The Bureau of Industry and Security (BIS) announced in today's Federal Register the first group of five “validated end-users” (VEUs) located in the People’s Republic of China (PRC) to whom U.S. exporters may ship goods without an export license. Today's announcement is the result of the regulation issued by BIS on June 19, 2007 establishing the Authorized End-User Program, whereby VEUs will be able to obtain eligible items that are on the Commerce Control List without having to wait for their suppliers to obtain export licenses from BIS.

The first group of VEUs includes:

• Applied Materials China, Ltd.
• BHA Aerocomposite Parts Co., Ltd.
• National Semiconductor Corporation
• Semiconductor Manufacturing International Corporation
• Shanghai Hua Hong NEC Electronics Company, Ltd.

The final rule lists the names and addresses of 14 facilities that have been authorized under the VEU program and the various ECCNs that have been approved for export to these locations without a specific license issued by BIS.

In announcing the approval of these five VEUs, BIS indicated that:

approval of these five companies as VEUs should significantly reduce the value of trade that requires a license for export or reexport to the PRC. Approximately $54 million of items described as "eligible items'' in this notice were licensed for
export to these five end-users in 2006. This $54 million represents about 18% of all licensed exports to the PRC in 2006. Approval of these companies as VEUs also represents a significant savings of time for suppliers and end-users. Authorization VEU will eliminate the burden on exporters and reexporters of preparing license applications and on BIS for processing such applications, as exports and reexports will be made
without licenses. This savings will enable exporters and reexporters to supply the VEUs much more quickly, thus enhancing the competitiveness of the exporters, reexporters, and end-users in the PRC.

BIS also noted that it reserves the right to conduct on-site reviews of these VEUs. If such reviews are warranted, BIS will inform the PRC Ministry of Commerce that it will conduct such a review.

Labels: BIS, Export Controls

U.S. Customs and Border Protection (CBP) published a notice in today's Federal Register advising importers of the quarterly interest rates used to calculate interest on overdue accounts (underpayments) and refunds (overpayments) of customs duties.

For the calendar quarter beginning October 1, 2007, the interest rates for overpayments will remain at 7% for corporations and 8% for non-corporations, and the interest rate for underpayments will remain at 8%.

CBP interest rates are tied to Federal short-term interest rates and have doubled since reaching a low of 4% during mid-2004.

Labels: Customs

As a follow-up to yesterday's announcement of the Validated End-User (VEU) Program for India, the Bureau of Industry and Security has posted additional information regarding the program on its website. The information includes the text of the rule, a fact sheet, the press release from the Secretary of Commerce and guidance for submitting to companies on submitting an advisory opinion request to be considered a VEU.

On a separate, but related note, a Commerce Department official today said that the first group of Chinese companies to be approved under the VEU Program will be announced and published in the Federal Register in the next few weeks. While BIS is currently taking more than the 30 calendar days to make VEU determinations, Supplement No. 9 to Part 748 of the EAR makes clear that the 30-day period applies to decisions made by the End-User Review Committee (ERC) after the final application is received and that the period during which the ERC is waiting for additional information from an applicant or potential validated end-user is not included in calculating the 30 calendar day deadline for the ERC's determination.

Labels: BIS, China, India

The National Council on International Trade Development (www.ncitd.org) has announced that its next monthly trade compliance meeting on October 11, 2007 in Washington, DC will feature the following speakers:

• Mr. Ned Weant, Acting Director, Office of Anti-Boycott Compliance, Bureau of Industry and Security,
  U.S. Department of Commerce
  
• Ms. Ann K. Ganzer, Director, Office of Defense Trade Controls Policy, Directorate of Defense Trade Controls, U.S. Department of State
• Mr. Bernie Kritzer, Director, Office of National Security and Technology Transfer Controls, Bureau of Industry and Security, U.S. Department of Commerce
  

For information on how to join NCITD or to attend the meeting, see www.ncitd.org or contact the NCITD Secretariat at 202-872-9280.

Export Control Industry Benchmarking Program

In addition, NCITD and AAEI are teaming up to present a unique export control benchmarking program in Washington, October 31st, the day before the Update 2007 Conference begins. This program will allow active, but anonymous, audience participation. Each participant will be provided with a handheld “voting” device. Responses will be tallied electronically and anonymously, and displayed to the audience in a matter of seconds! This will promote an unusually frank sharing of information about sensitive topics such as salaries, disclosures and enforcement activity.

The topics that will be covered during the benchmarking program are trade compliance programs, staffing, organizational structures and reporting, policies and procedures, training, internal audits and reviews, classification practices, licensing procedures, deemed exports, antiboycott compliance, voluntary disclosures and enforcement experiences.

For more information and to register for this program, which costs $150 per person, please see the following link on the AAEI's website: www.aaei.org/tier.asp?bid=1790.

Labels: Export Controls

The U.S. House of Representatives today passed by voice vote the International Emergency Economic Powers Act (S. 1612), a bill that will significantly increase the penalties for violating IEEPA-based export control laws. Because the Senate passed the identical bill in June, the measure will be sent to the President for signature, which is likely to take place in a matter of days.

The passage of the International Emergency Economic Powers Act ("IIEPA Act") means that the maximum civil penalty for violating IIEPA-based export control laws will increase from $50,000 per violation to $250,000 or twice the amount of the transaction that is the basis of the violation with respect to which the penalty is imposed. The maximum criminal penalties for committing willful violations of IEEPA-based export control laws will increase to $1,000,000, with a maximum jail sentence of 20 years.

The original civil penalty amount was set at $10,000 when IEEPA (P.L. 95-223) was passed in 1977. Other than an inflation adjustment raising the maximum penalty amount to $11,000, there were no increases until the renewal of the USA PATRIOT Act in 2005 (Public Law 109-177) raised the level to $50,000. Thus, once the IEEPA Act is signed into law, the maximum civil penalties for export control violations will have increased more than 2170% in two years.

The IEEPA currently serves as the legal basis for the Export Administration Regulations (EAR) and most of the sanctions regimes administered by the Office of Foreign Assets Control (OFAC). The most notable exceptions are the sanctions programs on Cuba and North Korea which were issued under the authority of the Trading With the Enemy Act.

The changes in penalties will apply to all pending enforcement actions as well as those commenced on or after the date of the IIEPA Act's enactment.

Labels: BIS, Congress, OFAC

The Bureau of Industry and Security (BIS) published a final rule in the Federal Register today adding India as an eligible destination for U.S. exports, reexports and transfers under the Authorization Validated End-User (VEU) system. As a result, U.S. companies will be able to export certain controlled commodities and technologies without a license to specific end-users in India, once the end-user is “validated” by the agency. The Authorization VEU may be used for commodity, software or technology exports that require a license, except those that are controlled for missile technology or crime control reasons.

India is the second country named as eligible under the VEU system. On June 19, 2007, BIS rolled out the new authorization scheme for “validated-end users” (VEUs) in eligible country destinations. Concurrently, the BIS designated China as the first eligible country. Although BIS has not announced any Authorized VEUs to date, it intends to do so in the near future.

In order to qualify for Authorization VEU status, an applicant must submit an application to BIS, which includes detailed information about the prospective validated end-user. The specific information required is set forth in Supplement Number 8 to Part 748 of the Export Administration Regulations.

Labels: BIS, India

Ways and Means Trade Subcommittee Chairman Sander M. Levin (D-MI) and Oversight Subcommittee Chairman John Lewis (D-GA) today announced that the Subcommittees will hold a joint hearing on import safety at 10 a.m. on Thursday, October 4, in Room 1100 of the Longworth House Office Building.

This hearing will focus on the mechanisms and legal authorities under current law for ensuring the safety of food and consumer products imported into the U.S. The hearing will examine how these mechanisms and authorities are functioning, what problems may exist with respect to each mechanism or authority, and what improvements are needed. The hearing will look into the role of the U.S. Customs and Border Protection (CBP) and CBP’s coordination with the Food and Drug Administration (FDA), the Food Safety Inspection Service (FSIS) and the Consumer Product Safety Commission (CPSC) at the ports of entry. In addition, the hearing will address the application of sanitary and phytosanitary measures in the United States and overseas and the consistency of those measures with the World Trade Organization (WTO) rules.

Labels: Congress

U.S. Customs and Border Protection's 2007 Trade Symposium that will be held in Washington, DC from November 14-15, 2007 is sold out. Requests to be placed on the waiting list for the program can made at the following page on CBP's website: https://apps.cbp.gov/tradesymposium/?w=3.

Labels: Customs

London-based legal publisher Cameron May is presenting a conference entitled "Commercial and Investment Arbitration in Latin America: New Challenges for Governments, Corporations and Practitioners" from November 29, 30 in Quito, Ecuador.

The program will cover the latest developments in commercial and investment arbitration in different Latin American jurisdictions and will include over thirty panelists from law firms, universities, international corporations with long‐term presence in the region and government representatives.

For more information see the conference brochure or contact Mr. Christophe Landais at christophe@cameronmay.com.

Labels: Miscellaneous