Home / News / The Export Control Update: October 2016

 

DOJ Publishes "Guidance Regarding Voluntary Self-Disclosures, Cooperation, and Remediation in Export Control and Sanctions Investigations Involving Business Organizations" 

(Source: Department of Justice, National Security Division)

The subject Guidance document is available for download HERE.  Below is a reprint of the Introduction of the 11-page document.

Foreign governments and other non-state adversaries of the United States are engaged in an aggressive campaign to acquire superior technologies and commodities that are developed, manufactured, and controlled in, and by, the United States. Such acquisitions - when conducted in contravention of U.S. law and policy - undermine the comparative and competitive advantages of U.S. industries and warfighters and, consequently, the national and economic security of the United States.

Thwarting these unlawful efforts is a top priority for the National Security Division (NSD) of the Department of Justice (DOJ). Working in partnership with U.S. Attorneys' Offices, law enforcement and regulatory agencies, other U.S. government stakeholders, and our foreign government counterparts, NSD utilizes an "all-tools" approach to prevent and combat the unlawful export of commodities, technologies, and services, as well as to block trade and transactions with sanctioned countries and designated individuals and entities.

In particular, NSD has made it a priority to pursue willful export control and sanctions violations by corporate entities and their employees. Working with the U.S. Attorneys' Offices, NSD aggressively directs and supports investigations of corporate criminal misconduct through grand jury subpoenas, search warrants, witness interviews, and other mechanisms to obtain evidence from multinational corporations operating in U.S. markets or utilizing the U.S. financial system. Where appropriate, NSD pursues international assistance to obtain the necessary evidence to build criminal cases. Where such investigations reveal willful violations of U.S. export controls and sanctions, NSD and U.S. Attorneys' Offices seek to hold corporate entities criminally liable and prosecute culpable employees individually.Consequently, business organizations and their employees are at the forefront of our enforcement efforts. As the gatekeepers of our export-controlled technologies, business organizations play a vital role in protecting our national security. However, when NSD learns of willful violations of U.S. export controls and sanctions, NSD is committed to using all of its tools to protect our national security and deter similar criminal misconduct.

This Guidance memorializes the policy of NSD to encourage business organizations to voluntarily self-disclose criminal violations of the statutes implementing the U.S. government's primary export control and sanctions regimes - the Arms Export Control Act (AECA), 22 U.S.C. § 2778, and the International Emergency Economic Powers Act (IEEPA), 50 U.S.C. § 1705.

This Guidance applies only to export control and sanctions violations. It sets forth the criteria that NSD, through the Counterintelligence and Export Control Section (CES) and in partnership with the U.S. Attorneys' Offices, uses in exercising its prosecutorial discretion in this area and in determining the possible benefits that could be afforded to an organization that makes a voluntary self-disclosure (VSD), as defined below. This Guidance also implements in export control and sanctions cases the memorandum of the Deputy Attorney General dated September 9, 2015, promoting greater accountability for individual corporate defendants (DAG Memo on Individual Accountability), as well as the November 2015 revisions to the Principles of Federal Prosecution of Business Organizations set forth in the U.S. Attorneys' Manual (USAM Principles). See USAM 9-28.000 and USAM 9-28.900.

Almost all criminal violations of U.S. export controls and sanctions harm the national security or have the potential to cause such harm.  This threat to national security informs how NSD and U.S. Attorneys' Offices arrive at an appropriate resolution with a business organization and distinguishes these cases from other types of corporate wrongdoing. In determining what credit to give an organization that voluntarily self-discloses illegal export control or sanctions conduct, fully cooperates, and remediates flaws in its controls and compliance program, federal prosecutors must balance the goal of encouraging such disclosures and cooperation with the goal of deterring these very serious offenses. If successful, this Guidance will serve to further deter individuals and companies from engaging in export control and sanctions violations in the first place, encourage companies to implement strong export control and sanctions compliance programs to prevent and detect such violations, and, consistent with the DAG Memo on Individual Accountability, increase the ability of NSD and U.S. Attorneys' Offices to prosecute individual wrongdoers whose conduct might otherwise have gone undiscovered or been impossible to prove.

This Guidance aims to provide greater transparency about what is required from companies seeking credit for voluntarily self-disclosing potential criminal conduct, fully cooperating with an investigation, and remediating. Accordingly, the Guidance first explains what constitutes a VSD, full cooperation, and timely and appropriate remediation. Second, the Guidance provides examples of aggravating factors that, if present to a substantial degree, could limit the credit an organization might otherwise receive, though the company would still find itself in a better position than if it had not submitted a VSD, cooperated, and remediated. Third, the Guidance explains the possible credit that may be afforded to a business organization that complies with the mandates set out below, including the disclosure of all relevant facts about the individuals involved in the wrongdoing. Finally, the Guidance provides sample scenarios that demonstrate the application of this policy.

Ordinarily, when an organization voluntarily self-discloses violations of U.S. export controls and sanctions, it presents its VSD to the appropriate regulatory agency under the procedures set forth in the agency's regulations. It is not the purpose of this Guidance to alter that practice. Business entities should continue to submit VSDs to the Department of State, Directorate of Defense Trade Controls (DDTC) for violations of the International Traffic in Arms Regulations (ITAR); to the Department of Commerce, Bureau of Industry Security (BIS) for violations of the Export Administration Regulations (EAR); and to the Department of the Treasury, Office of Foreign Assets Control (OFAC), for violations of U.S. sanctions regulations. However, as discussed further below, when an organization, including its counsel, becomes aware that the violations may have been willful, it should within a reasonably prompt time also submit a VSD to CES.

This Guidance does not supplant the USAM Principles. Prosecutors must consider the ten factors set forth in the USAM when determining how to resolve criminal investigations of organizations. However, this Guidance does set forth the way that NSD and U.S. Attorneys' Offices will evaluate credit for companies that voluntary self-disclose, fully cooperate, and remediate in export control and sanctions cases.

Full Document: http://files.constantcontact.com/4545a8d7301/6536ffe2-60e6-451c-991a-6c6f6c1cdb17.pdf?ver=1476300088000

 

 

 

 

USML Categories VIII, XII, and XV Amended and Some Items Shifting to CCL

The Department of State has published a final rule that will be effective December 31, 2016 that will revise Category XII (fire control, laser, imaging, and guidance equipment) of the U.S. Munitions List (USML) to remove certain items from control on the USML and to describe more precisely the articles continuing to warrant control on the USML. The Department of State also amends USML Categories VIII, XIII, and XV to reflect that items previously described in those Categories are now controlled under the revised Category XII or Commerce Control List. Further, the Department revises USML Category XI to move items to the CCL as a result of changes to related control in USML Category XII. The Export Administration Regulations (EAR) amends Export Control Classification Number (ECCN) 7A611 and creates a new ‘‘600 series’’ ECCNs 7B611, 7D611, and 7E611. In addition, for certain dual-use infrared detection items, this final rule expands controls for certain software and technology, eliminates the use of some license exceptions, revises licensing policy, and expands license requirements for certain transactions involving military end users or foreign military commodities. This final rule also harmonizes provisions within the EAR by revising controls related to certain quartz rate sensors.

ITAR Changes Below:

Section 121.1 is amended by:

  • Removing and reserving paragraph (e) in U.S. Munitions List Category VIII;

  • Revising paragraphs (a)(3)(ii) and (a)(10) of U.S. Munitions List Category XI;

  • Revising U.S. Munitions List Category XII; Removing and reserving paragraph (a) in U.S. Munitions List Category XIII; and

  • Removing and reserving paragraph (c) in U.S. Munitions List Category XV

Federal Register: https://www.gpo.gov/fdsys/pkg/FR-2016-10-12/pdf/2016-24225.pdf

 

EAR Changes Below:

  • Part 734

    • Section 734.4 is amended by removing and reserving paragraph (a)(3) and revising paragraph (a)(5).

  • Part 740

    • Section 740.2 is amended by adding paragraph (a)(7) and removing and reserving paragraph (a)(9).

    • Section 740.16 is amended by revising paragraphs (a)(2) and (b)(1) through (3)

    • Section 740.20 is amended by revising paragraphs (b)(2)(ii) and (b)(2)(x)

  • Part 742

    • Section 742.6 is amended by revising paragraph (b)(1)

  • Part 744

    • Section 744.9 is amended by revising the section heading and paragraphs (a) and (b)

  • Part 772

    • Section 772.1 is amended by revising the last sentence in Note 1 to the definition of ‘‘specially designed’’

  • Part 774

    • In Supplement No. 1 to part 774, Category 0, ECCN 0A919 is amended by revising the Items paragraph of the List of Items Controlled section

    • In Supplement No. 1 to part 774, Category 0, ECCN 0A987 is amended by:

      • Revising the Related Controls paragraph in the List of Items Controlled section;

      • Revising paragraph f. in the Items paragraph in the List of Items Controlled section; and

      • Adding a note to 0A987.f

    • In Supplement No. 1 to part 774, Category 2, ECCN 2A984 is amended by revising the heading and Note 1 of the Related Controls paragraph in the List of Items Controlled section

    • In Supplement No. 1 to part 774, Category 6, ECCN 6A002 is amended by:

    • Removing the ‘‘Special Conditions for STA’’ section; and

    • Revising the Related Controls paragraph in the List of Items Controlled section.

    • In Supplement No. 1 to part 774, Category 6, ECCN 6A003 is amended by:

      • Adding a License Requirement Note in the License Requirements section;

      • Revising notes 3 and 4 in the Related Controls paragraph in the List of Items Controlled section; and

      • Adding note 5 to the Related Controls paragraph in the List of Items Controlled section

    • In Supplement No. 1 to part 774, Category 6, ECCN 6A004 is amended by revising the Related Controls paragraph in the List of Items Controlled section

    • In Supplement No. 1 to part 774, Category 6, ECCN 6A005 is amended by revising the last two sentences in the Related Controls paragraph in the List of Items Controlled section

    • In Supplement No. 1 to part 774, Category 6, ECCN 6A007 is amended by revising the Related Controls paragraph in the List of Items Controlled section

    • In Supplement No. 1 to part 774, Category 6, ECCN 6A008 is amended by revising the Related Controls paragraph in the List of Items Controlled section

    • In Supplement No. 1 to part 774, Category 6, ECCN 6A107 is amended by revising the Related Controls paragraph in the List of Items Controlled section

    • In Supplement No. 1 to part 774, Category 6, ECCN 6A611 is revised

    • In Supplement No. 1 to part 774, Category 6, ECCN 6A990 is revised

    • In Supplement No. 1 to part 774, Category 6, ECCN 6A993 is amended by revising the Related Controls paragraph in the List of Items Controlled sectionn Supplement No. 1 to part 774, Category 6, ECCN 6D002 is amended by revising the TSR paragraph in the List Based License Exceptions section and the Related Controls paragraph in the List of Items Controlled section

    • In Supplement No. 1 to part 774, Category 6, ECCN 6D003 is amended by revising the TSR paragraph in the List Based License Exceptions section and the Related Controls paragraph in the List of Items Controlled section

    • In Supplement No. 1 to part 774, Category 6, ECCN 6D991 is revised

    • In Supplement No. 1 to part 774, Category 6, ECCN 6E001 is amended by revising the TSR paragraph in the List Based License Exceptions section and the Related Controls paragraph in the List of Items Controlled section

    • In Supplement No. 1 to part 774, Category 6, ECCN 6E002 is amended by revising the TSR paragraph in the List Based License Exceptions section and the Related Controls paragraph in the List of Items Controlled section

    • In Supplement No. 1 to part 774, Category 6, The following ECCNs will be amended by revising the Related Controls paragraph in the List of Items Controlled section

      • ECCN 6E990

      • ECCN 7A001

      • ECCN 7A002

      • ECCN 7A003

      • ECCN 7A005

      • ECCN 7A101

      • ECCN 7A102

    • In Supplement No. 1 to part 774, Category 7, ECCN 7A611 is revised

    • In Supplement No. 1 to part 774, Category 7, ECCN 7A994 is revised

    • In Supplement No. 1 to part 774, Category 7, add ECCN 7B611 between ECCNs 7B103 and 7B994

    • In Supplement No. 1 to part 774, Category 7, add ECCN 7D611 between ECCNs 7D103 and 7D994

    • In Supplement No. 1 to part 774, Category 7, add ECCN 7E611 between ECCNs 7E104 and 7E994

    • In Supplement No. 1 to part 774, Category 7, ECCN 7E994 is amended by revising the Related Controls paragraphin the List of Items Controlled section

    • In Supplement No. 1 to part 774, Category 8, ECCN 8A002 is amended by adding a sentence to the end of the Related Controls paragraph in the List of Items Controlled section

    • In Supplement No. 1 to part 774, Category 9, ECCN 9A991 is amended by:

      • Removing the License Requirement Notes paragraph in the License Requirements section, and

      • Revising the Related Controls paragraph in the List of Items Controlled section.

Federal Register: https://www.gpo.gov/fdsys/pkg/FR-2016-10-12/pdf/2016-24220.pdf

Want a more detailed overview of these regulation changes? Our Export Control Reform for USML Category XII: Fire Control, Laser, Imaging, and Guidance Webinar will cover the following:

  • Significant changes to USML Category XII and corresponding revisions to Categories VIII, XI, XIII, and XV, which will result in some items moving off the USML

  • What the definition of "specially designed" really means for classification purposes, and how Category XII has introduced a new concept of "specially designed for a military end-user"

  • How to classify formerly ITAR-controlled items on the Commerce Control List, especially the new and revised "600 series" Export Control Classification Numbers (ECCNs) (7A611, 7B611, 7D611, and 7E611)

  • Adjustments to several related non-600 series ECCNs is CCL Categories 0, 2, 6, 7, 8, and 9

  • License exception eligibility for these items, including important changes to License Exceptions APR, GOV, and STA

  • Revisions to unique EAR military end use and end user controls

  • The actions exporters should take now to prepare for the rapidly approaching effective date of these changes

Learn More at: http://www.learnexportcompliance.com/Webinars/Export-Control-Reform-for-USML-Category-XII-Fire-C.aspx

 

 

 

State/DDTC No Longer Accepts CJ Submission through EFS

(Source: State/DDTC)

Effective Wednesday, November 16th at 5PM EST, The Department of State will no longer use the Electronic Form Submission (EFS) application to accept Commodity Jurisdiction (CJ) (DS-4076) applications. Beginning Monday, November 21st at 8AM EST users will submit CJ applications via the Defense Export Control and Compliance (DECCS) CJ application.

 

 

 

DDTC Posts IT Modernization Webinar: Commodity Jurisdiction       

(Source: State/DDTC)

The webinar presented October 14, 2016 regarding the upcoming deployment of Defense Export Control and Compliance System (DECCS) Release 1 is available for review. The webinar provided a brief overview of the status of the IT Modernization effort and a demonstration of the new Commodity Jurisdiction (CJ) (DS-4076) interface.

Click here to read
Recorded webinar
Presentation slides

 

 

 

State/DDTC Posts Revision 4.4b of Guidelines for Preparing Agreements

(Source: State/DDTC)

Summary of Changes:

This revision reflects conforming changes to the latest ITAR updates from 81 FR 66804 and 81 FR 54732. It also adds administrative clarifications for some of the changes made in Revision 4.4. The changes from 81 FR 54732 will go into effect on 15 November 2016.

Conforming Changes Resulting from the latest ITAR Revisions:

  • Updates the DCS references to reflect the changes to § 123.9(b)(iv), § 124.9(a)(6) and §124.14(c)(7)

  • Adds a statement listing the sales territory to the § 124.7(a)(4) paragraph of MLAs

    • Sec 5.2.c.4, Appendix A - Tabs 3 and 7

  • Updates references to § 126.1 countries

  • Updates references from § 124.7 to § 124.7(a) to reflect the new ITAR designations*

  • Updates references from § 124.8 to § 124.8(a) to reflect the new ITAR designations*#

As there were over 100 instances of § 124.7 and § 124.8 in the Agreements Guidelines, and since the changes were purely administrative in nature, the updated references have not been highlighted in all instances.

This change affects all the required Option 2 DN/TCN request statements in Section 3.5.

Clarifications:

  • Clarifies that conforming statement changes should be updated at the next amendment, whether major or minor

  • Clarifies that § 126.18(c) and § 126.18(d) are separate vetting options (Sec 3.5.b, Fig 3.1)

  • Clarifies how to update Space Insurance amendments when adding the conforming changes

  • Clarifies that Section 20.4.g applies to reexports and retransfers

  • Adds Appendix G - Summary of Changes from Revisions 4.4 and 4.4a

Applicants are not required to submit an amendment for the sole purpose of updating the revised statements in Revisions 4.4 and 4.4b, or to reflect other conforming changes. However, the conforming changes should be made at the next amendment, whether major or minor. All new agreement/amendment applications submitted after November 15, 2016, should conform to all the changes in Revision 4.4b. If the changes have not been made, provisos will be added instructing the applicant to make the changes prior to execution. Applicants may submit agreements that conform to the changes in Revision 4.4b prior to November 15.

Notes: The ITAR updates in 81 FR 54732 go into effect on November 15, 2016. Applicants are responsible for notifying their foreign signatories of these changes.

Existing NDAs remain valid. Sublicensees and DN/TCNs are not required to re-execute NDAs.

 

 

 

Save a Stamp…File Boycott- Related Requests Online Now

By: Danielle McClellan

Effective October 14, 2016 BIS has amended the EAR to permit electronic submission as an additional method available to US person for reporting requests they receive to take certain actions in furtherance or support of an unsanctioned foreign boycott.  The amendments are basically administrative changes to the EAR to permit electronic filing as opposed to only mail filings.

Prior to this rule, § 760.5(b)(4) and (5) of the EAR required United States persons to prepare reports of boycott- related requests on form BIS 621–P (single transaction) or on form BIS 6051–P (multiple transactions), both available on-line through the Office of Antiboycott Compliance (OAC) page of the BIS Web site (OAC Web page) in a fillable PDF format, and to submit the reports in duplicate paper copy to OAC postmarked by the last day of the month following the calendar quarter in which the request was received (or, if received outside the United States, by the last day of the second month following the calendar quarter in which the request was received).

While United States persons may continue to submit paper reports by mail consistent with §760.5(b)(4)— (b)(7), this final rule amends the EAR to allow submission of reports electronically, with the same deadlines, through the OAC Web page.

Federal Register: https://www.gpo.gov/fdsys/pkg/FR-2016-10-14/pdf/2016-24831.pdf

Information on both paper and electronic submissions is available through the OAC Web page at https://www.bis.doc.gov/index.php/enforcement/%20oac?id=300

 

 

 

Antiboycott Violation Nets $238,000 Fine for Furnishing Prohibited Business Information

By: Danielle McClellan

Coty Middle East FZCO (UAE) has agreed to pay $238,000 to settle 70 violations of 15 CFR §760.2(d) - Furnishing Information about Business Relationships with Boycotted Countries or Blacklisted Persons.

Coty Middle East FZCO is a foreign affiliate of Coty Inc., a US company located in Delaware thus are they are defined as a US person under 760.1(b) of the Export Administration Regulations (EAR). From 2009-2013 Coty Middle East engaged in transactions involving the sale and/or transfer of goods or services from the US to Bahrain, Egypt, Iraq, Jordan, Kuwait, Lebanon, Oman, Pakistan, Qatar, Saudi Arabia, Syria, UAE, and Yemen, activities in the interstate or foreign commerce of the United States. In connection with these activities Coty Middle East furnished the following statement 70 times:  “WE HEREBY CERTIFY.... THAT ABOVE MENTIONED GOODS DO NOT CONTAIN ANY MATERIAL OF ISRAEL ORIGIN…”

View Order: https://efoia.bis.doc.gov/index.php/documents/antiboycott/alleged-antiboycott-violations-2015/1083-a748/file

 

 

 

Lebanon Company Fined $450,000 for Reexporting Items to Syria

By: Danielle McClellan

Tecnoline SAL (Tecnoline )of Sin El Fil, Beirut, Lebanon pled guilty to 7 charges of Causing, Aiding, or Abetting a Violation of the Regulations and will pay a civil penalty of $450,000. Tecnoline reexported US-origin mass spectrometers, gas chromatographs and consumables, liquid chromatograph-mass spectrometer systems, and liquid chromatograph modules (ECCN 3A999), controlled for anti-terrorism reasons, to Syria. There is a long standing US Embargo against Syria which makes a BIS license required for all exports/reexports subject to the EAR with the only exception being food and certain medicines).

The items were manufactured by Agilent Technologies (Agilent), a US company, and Technoline was an authorized distributor and reseller of Agilent’s products. In 2004, Technoline signed an agreement with Agilent that acknowledged their awareness of US export control laws and regulations and agreed to comply with them as a reseller and distributor of controlled products. Between August 2009 and October 2010, Technoline negotiated price discounts on the items with Agilent and eventually ordered the items for the Syrian Government ministries or entities. Technoline falsely identified the ultimate destination of the items as being Iraq or Lebanon (BIS license not required) and on one or more occasions they failed to disclose the ultimate destination of the items. Agilent shipped the items to TEchnoline in Beirut, Lebanon via Agilent’s German subsidiary. Once Technoline received the items they transferred them to Syria, there they were installed at Syrian Government ministries within a month or so. There were never any authorizations from BIS to export the items from the US to Syria, or to reexport them from Germany to Syria.

View Order: https://efoia.bis.doc.gov/index.php/documents/export-violations/export-violations-2015/1080-e2474/file

 

 

 

Annotating an Export Shipment: Filing Citations, Exemption and Exclusion Legends

(Source: Global Reach Blog)      

The U.S. Census Bureau often receives questions on how to annotate commercial documents for export shipments to minimize potential delays at the port of export. In a previous blog on Filing Citations and Exemption Legends, we provided an overview of filing citations and exemption legends. In this blog, I would like to expand upon the information previously provided. We will discuss the use of exclusion legends and give a snap shot of the different types of citations and legends that must be clearly stated on the commercial loading documents. 

Exclusion legends are used for shipments that fall outside the scope of the Foreign Trade Regulations (FTR). The types of shipments that are excluded from filing requirements are identified in Section 30.2(d) of the FTR.  It is important to remember that whether you are required to file the Electronic Export Information (EEI) or not, the correct annotation must be displayed on the commercial loading document or in a prominent location on the shipment package. Below is a snapshot describing the citations and legends that must be provided prior to exportation.   

Citations / Legends

Description

Annotation

Proof of Filing Citation

Parties to the transaction file the EEI and receive their Internal Transaction Number (ITN) before the exportation of the shipment.

Automated Export System (AES) ITN. Example: AES X20160523777777

Postdeparture Citation

Postdeparture approved U.S. Principal Party in Interest (USPPI) have the privilege of filing  EEI within five days after exportation rather than obtaining the ITN in advance.

USPPI Filed: AESPOST followed by the USPPI ID and followed by the DATE OF EXPORT. Example: AESPOST   123456789 05/23/2016 Agent Filed:   AESPOST followed by the USPPI ID - FILER ID and followed by the DATE OF EXPORT. Example:   AESPOST  123456789  - 987654321   05/23/2016

AES Downtime Filing Citation

When the AES experiences a major failure, the AES Downtime Filing Citation is used in place of a proof of filing citation.  The downtime filing citation is not to be used when the filer's system is down, experiencing delays or for shipments subject to the International Traffic in Arms Regulations.

AESDOWN followed by the FILER ID and followed by DATE OF EXPORT. Example:   AESDOWN 123456789 05/23/2016

Exemption Legends

These transactions are within the scope of the FTR, but certain details make them exempt from filing EEI in the AES. The exemptions are located in 30.36 - 30.40. Below are two of the most commonly used exemptions: Ø 30.36 - Exemption for shipments destined to Canada. Ø 30.37(a) - Exemption for shipments that are valued $2,500 or less per Schedule B.

NO EEI followed by the corresponding   FTR Exemption. Example: NO EEI 30.37(a)

Exclusion Legends

These transactions are outside the scope of the FTR and shall be excluded from filing EEI in the AES. Exclusions: Ø 30.2(d)(1) - Good transiting the U.S. under U.S. Customs and Border Protection bond from one foreign country to another.

NO EEI followed by the corresponding FTR Exclusion. Example: NO EEI 30.2(d)(1)

 

Ø 30.2(d)(2) - Except Puerto Rico and the U.S. Virgin Islands, goods shipped from the U.S. territories and goods shipped between the U.S. and these territories do not require EEI filing. Ø 30.2(d)(3) - Electronic transmissions and intangible transfers. Ø 30.2(d)(4) - Goods shipped to Guantanamo Bay Naval Base from the U.S., Puerto Rico, or the U.S. Virgin Islands and from Guantanamo Bay Naval Base to the U.S., Puerto Rico, or the U.S. Virgin Islands. Ø 30.2(d)(5) - Goods licensed by a federal agency where the country of ultimate destination is the U.S. or goods destined to international waters where the entity assuming control of the goods is a U.S. entity.

 

 

 

 

 

Tips on How to Resolve AES Fatal Errors

(Source: census@subscriptions.census.gov, 24 Oct 2016)

When a shipment is filed to the AES, a system response message is generated and indicates whether the shipment has been accepted or rejected. If the shipment is accepted, the AES filer receives an Internal Transaction Number (ITN) as confirmation. However, if the shipment is rejected, a Fatal Error notification is received.

To help you resolve AES Fatal Errors, here are some tips on how to correct the most frequent errors that were generated in AES for this month.

Fatal Error Response Code: 110

  • Narrative: State of Origin Unknown

  • Reason: The U.S. State of Origin indicated is not valid in AES.

  • Resolution: The U.S. State of Origin Code must be a valid two-character U.S. state, territory, or possession code (i.e., any USPS code). Verify the State of Origin, correct the shipment and resubmit.

 Fatal Error Response Code: 572

  • Narrative: DDTC Registrant Expired

  • Reason: The DDTC Registration Number reported is not valid in the AES at the time of export.

  • Resolution: When the License Code/License Exemption Code indicates a Department of State - Directorate of Defense Trade Controls (DDTC) license (SAG, SCA, S00, S05, S61, S73, S85 or S94), the DDTC Registration Number must be reported. The DDTC Registration Number must be valid in the AES and cannot be expired at the time of export. Verify the DDTC Registration Number and the Estimated Date of Export, correct the shipment and resubmit. For further assistance, contact the licensing agency. The Department of State - Directorate of Defense Trade Controls / DDTC Help Desk can be reached on 202-663-2838.

 

For a complete list of Fatal Error Response Codes, their reasons, and resolutions, see Appendix A - Commodity Filing Response Messages.

It is important that AES filers correct Fatal Errors as soon as they are received in order to comply with the Foreign Trade Regulations. These errors must be corrected prior to export for shipments filed predeparture and as soon as possible for shipments filed postdeparture, but not later than five calendar days after departure.

For further information or questions, contact the U.S. Census Bureau's Data Collection Branch.

 

 

 

OFAC Amends Cuban Assets Control Regulations

Effective October 17, 2016 OFAC has made the following changes to the Cuban Assets Control Regulations.

Health: Joint medical research

  • OFAC is amending section 515.547 to authorize persons subject to U.S. jurisdiction to engage in joint medical research projects with Cuban nationals. This general license expands the scope of joint research projects that are authorized to include both non-commercial and commercial medical research. Cuban-origin pharmaceuticals.

  • OFAC is also amending section 515.547 to add new authorizations related to Cuban- origin pharmaceuticals. Specifically, section 515.547 now authorizes transactions incident to obtaining approval from the U.S. Food and Drug Administration (FDA) of Cuban-origin pharmaceuticals. The general license includes discovery and development, pre-clinical research, clinical research, regulatory review, regulatory approval and licensing, regulatory post-market activities, and the importation into the United States of Cuban-origin pharmaceuticals.

  • Section 515.547 also now authorizes the importation into the United States, and the marketing, sale, or other distribution in the United States, of FDA-approved Cuban-origin pharmaceuticals.

  • In addition, revised section 515.547 authorizes persons subject to U.S. jurisdiction who are engaging in such authorized activities to open, maintain, and close bank accounts at Cuban financial institutions as long as such accounts are used solely for the authorized activities.

  • The statement of licensing policy previously contained in section 515.547 for the importation of Cuban-origin commodities for bona-fide research purposes in sample quantities remains in effect for items that would not be authorized by the new general license in section 515.547(b).

Trade and Commerce: Transactions incident to exports and reexports to Cuba

  • Section 515.533(a) of the Regulations authorizes transactions ordinarily incident to certain exportations of items from the United States, as well as certain reexportations of items from a third country, to Cuba, provided that the exportations or reexportations are authorized by the Department of Commerce.

  • OFAC is removing references to ‘‘100% U.S.- origin items’’ in this section for clarity and to minimize the circumstances under which persons authorized by Commerce to export or reexport items to Cuba are required to obtain a specific license from OFAC.

  •  Consistent with Section 1706 of the Cuban Democracy Act of 1992 (22 U.S.C. 6005) (CDA), this general license does not authorize any transaction between a U.S.-owned or -controlled firm in a third country and Cuba for the exportation to Cuba of commodities produced in a country other than the United States or Cuba. Such transactions must be specifically licensed pursuant to section 515.559 in addition to any required authorization from the Department of Commerce. There are also restrictions imposed by the CDA on the types of transactions that may be licensed pursuant to that section.

  • OFAC is also making a technical correction to section 515.533(a) to remove references to ‘‘agricultural items’’ so that only ‘‘agricultural commodities,’’ as defined in 15 CFR part 772, are subject to the limitations on payment and financing terms required by the Trade Sanctions Reform and Export Enhancement Act of 2000, 22 U.S.C. 7207(b)(1). OFAC is making a conforming edit with respect to section 515.584(f) and also expanding that authorization to apply to any banking institution.

  • Finally, OFAC is adding a note to section 515.533(a) to clarify that this paragraph authorizes the importation into the United States of items from a third country for exportation to Cuba pursuant to a license or other authorization by the Department of Commerce.

  • OFAC is making additional technical and conforming changes to remove certain obsolete language and consolidate all of the conditions applicable to this general license in a single paragraph. Importation of certain items previously exported or reexported to Cuba and servicing and repair of such items.

  • OFAC is further amending section 515.533 to add a new general license authorizing the importation into the United States or a third country of items previously exported or reexported to Cuba pursuant to section 515.533 or 515.559. This authorization will allow recipients of authorized exports or reexports to Cuba to return the items to the United States or a third country, including for service and repair. Irrespective of involvement in the importation of these items, persons subject to U.S. jurisdiction are authorized to service and repair such items. The exportation or reexportation of serviced, repaired, or replacement items to Cuba, however, must be separately authorized pursuant to section 515.533(a) or 515.559, in addition to any Department of Commerce authorization that may be required.

  • Certain vessel transactions:

    • Section 515.207(a) prohibits foreign vessels that call on Cuban ports for trade purposes from entering U.S. ports for the purpose of loading or unloading freight for 180 days from the date they depart Cuba, absent OFAC authorization.

    • OFAC is amending section 515.550 to add an additional exception to the prohibition in section 515.207(a) for foreign vessels that have carried from a third country to Cuba only items that, were they subject to the Export Administration Regulations (15 CFR parts 730 through 774) (EAR), would be designated as EAR99 or would be controlled on the Commerce Control List only for anti- terrorism reasons.

  • Contingent contracts.

    •  OFAC is adding a new general license in section 515.534 authorizing persons subject to U.S. jurisdiction to enter into certain contingent contracts for transactions prohibited by the Regulations and to engage in transactions ordinarily incident to negotiating and entering into such contracts. The performance of such contracts—making deposits, receiving payments, providing certain services or goods, etc.—must be made contingent on OFAC authorizing the underlying transactions or authorization no longer being required. Furthermore, if the transaction implicates another Federal agency’s licensing requirements, then the contract must make obtaining the necessary license(s) from such agency or the removal of that licensing requirement an additional precondition of performance.

    • OFAC is making a conforming change to section 515.533 to remove a provision in that section authorizing certain contingent contracts that are now authorized by this new general license.

Civil Aviation Safety: Civil aviation safety-related services.

  • OFAC is amending section 515.572 to add a new general license authorizing persons subject to U.S. jurisdiction to provide Cuba and Cuban nationals, wherever located, with services aimed at ensuring safety in civil aviation and the safe operation of commercial aircraft.

Travel and Related Transactions: OFAC is making several changes to rules related to the importation of Cuban-origin merchandise as accompanied baggage and certain travel- related authorizations.

  • Importation of Cuban Merchandise

    • Section 515.560 previously authorized persons subject to U.S. jurisdiction engaging in authorized travel to Cuba to acquire merchandise in Cuba and import it into the United States as accompanied baggage, provided that the merchandise was for personal use only and had a value of $400 or less (with no more than $100 of such merchandise consisting of alcohol or tobacco products).

    • OFAC is now removing these monetary value limits, which means that the normal limits on duty and tax exemptions for merchandise imported as accompanied baggage and for personal use will apply. OFAC will continue to require that such merchandise be imported as accompanied baggage and for personal use. Certain transactions in third countries.

    • Previously, section 515.585 authorized persons who are subject to U.S. jurisdiction but located in countries other than the United States or Cuba to, among other things, purchase or acquire merchandise subject to the prohibitions in section 515.204 provided that the merchandise was for personal consumption while in a third country.

    • OFAC is amending section 515.585 to remove the limitation that the merchandise be consumed while abroad, to authorize the importation of such merchandise into the United States as accompanied baggage provided that the merchandise is for personal use only, and to clarify that this authorization is applicable to persons subject to U.S. jurisdiction who are present in a third country, such as when traveling in or through the third country. Foreign passengers’ baggage.

    • Previously, section 515.569 authorized foreign passengers to import Cuban- origin goods, excluding Cuban-origin alcohol and tobacco products, as accompanied baggage, provided that the goods were not in commercial quantities and not imported for resale.

  • OFAC is now removing the exclusion for alcohol and tobacco products while retaining the conditions that the goods not be in commercial quantities and not be imported for resale.
  • Professional research and professional meetings in Cuba: Section 515.564 includes a general license authorizing persons subject to U.S. jurisdiction to travel to Cuba for purposes of attending or organizing professional meetings or conferences in Cuba.

    • OFAC is removing the restriction in section 515.564(a)(2)(i) that the purpose of such meeting or conference not be for the promotion of tourism in Cuba, and making additional conforming edits.

    • OFAC is also taking this opportunity to clarify section 515.564 by removing paragraphs (a)(1)(ii) and (a)(2)(iii), which included language inconsistent with adjacent paragraphs. Remittances for third-country national travel.

    • OFAC is amending section 515.570 to authorize persons subject to the jurisdiction of the United States to make remittances to third- country nationals for travel by third- country nationals to, from, and within Cuba, provided that such travel would be authorized by a general license if the traveler were a person subject to U.S. jurisdiction.

    • OFAC is also making a clarifying change in section 515.420 to make clear that the interpretation in that section relates only to persons subject to U.S. jurisdiction.

  • Recordkeeping requirements for providers of travel and carrier services: In the case of customers traveling pursuant to a specific license, in order to ease the burden on persons subject to U.S. jurisdiction that provide authorized travel or carrier services pursuant to section 515.572.

    • OFAC is amending section 515.572(b)(1) to make clear that such service providers may collect and retain either a copy of the traveler’s specific license or the traveler’s specific license number.

Humanitarian-Related Transactions Additional grants, scholarships, and awards

  • Sections 515.565 and 515.575 previously authorized the provision of grants, scholarships, and awards in which Cuba or Cuban nationals have an interest (including as recipients) with respect to educational and humanitarian activities, respectively.

    • OFAC is now expanding that authorization to authorize the provision of grants, scholarships, and awards in two additional categories of activities: scientific research and religious activities. OFAC is consolidating these authorizations in new section 515.590 and making conforming edits to sections 515.565 and 515.575.

  • Services related to developing Cuban infrastructure. OFAC is adding section 515.591 to authorize persons subject to the jurisdiction of the United States to provide Cuba or Cuban nationals with services related to developing, repairing, maintaining, and enhancing Cuban infrastructure, consistent with the export or reexport licensing policy of the Department of Commerce. ‘‘Infrastructure’’ in this case means systems and assets used to provide the Cuban people with goods and services produced by the public transportation, water management, waste management, non-nuclear electricity generation, and electricity distribution sectors, as well as hospitals, public housing, and primary and secondary schools.

Other Amendments

  • Definition of prohibited officials of the Government of Cuba and prohibited members of the Cuban Communist Party.

    • OFAC is amending sections 515.337 and 515.338 to narrow the definitions in these sections.

  • Additional technical and conforming edits.

    • OFAC is also making several technical and conforming edits, including adjusting a cross-reference in the note to section 515.421(a)(4) to reflect that the payment and financing terms for agricultural commodities are now located in section 515.533(a)(4);

      • Removing sections 515.531 and 515.803 as obsolete; adding the word ‘‘repair’’ to the general licenses for certain travel- related transactions in sections 515.533 and 515.559 to clarify that travel for such purposes has been within the scope of the existing authorizations;

      • Removing paragraphs (a) and (b) of section 515.536, as all activities described in such paragraphs are authorized by the general license in section 515.562 relating to official business of the U.S. government;

      • Correcting the cross-reference in section 515.560(c)(6)(ii) to the definition of depository institution to be section 515.333; adding the words ‘‘paragraphs (a)(1) through (a)(4)’’ in the first sentence of section 515.572(b)(1) to clarify that records pertaining to passengers do not need to be maintained for transactions authorized pursuant to paragraph (a)(5) of section 515.572;

      • Removing a duplicative ‘‘subject’’ from Note 1 to section 515.578(a); and adding the word ‘‘authorized’’ to complete the sentence in section 515.584(c).

Federal Register Notice: https://www.gpo.gov/fdsys/pkg/FR-2016-10-17/pdf/2016-25032.pdf

For additional information, please review the rule, the Department of Commerce and Department of the Treasury's joint fact sheet, and BIS's updated Frequently Asked Questions, For any specific questions regarding exports or reexports to Cuba, please contact the Foreign Policy Division at (202) 482-4252.

 

 

 

BIS revises License Exceptions Related to Cuba

This rule amends a license exception to allow cargo aboard aircraft to transit Cuba when that cargo is bound for destinations other than Cuba. This rule also authorizes export and reexport of certain items sold directly to individuals in Cuba under a license exception. Finally, this rule revises the lists of ineligible Cuban officials for purposes of certain license exceptions. BIS is publishing this rule to further implement the administration’s policy of increasing engagement and commerce that benefits the Cuban people.

This final ruling is in conjunctions with OFAC (Office of Foreign Assets Controls) recent amendments to the Cuban Assets Control Regulations (CACR) (31CRF Part 515). Although the changes below revise the licensing policy for certain types of exports, the United States continues to maintain a comprehensive embargo on trade with Cuba. The export and reexport to Cuba of all items subject to the EAR still requires a BIS license, unless authorized by a license exception specified in §746.2(a)(1) of the EAR or exempted from license requirements in §746.2(a)(2) of the EAR.

The following changes will be made:

PART 740

  • Section 740.12 is amended by revising paragraphs (a)(2)(v)(A) and (B) to read as follows: § 740.12    Gift parcels and humanitarian donations (GFT).

(a) *  *  *

(2) *  *  *

(v) *  *  *

(A) No gift parcel may be sent to any member of the Council of Ministers or flag officer of the Revolutionary Armed Forces.

(B) No gift parcel may be sent to any member of the Politburo.

  • Section 740.15 is amended by revising the introductory text and paragraph (d)(6), removing the second (duplicate) ‘‘note to paragraph (d),’’ redesignating paragraph (e) as paragraph (f), and adding a new paragraph (e) to read as follows:

    • § 740.15    Aircraft, vessels and spacecraft (AVS). This License Exception authorizes departure from the United States of foreign registry civil aircraft on temporary sojourn in the United States and of U.S. civil aircraft for temporary sojourn abroad; the export of equipment and spare parts for permanent use on a vessel or aircraft; exports to vessels or planes of U.S. or Canadian registry and U.S. or Canadian Airlines’ installations or agents; the export or reexport of cargo that will transit Cuba on an aircraft or vessel on temporary sojourn; and the export of spacecraft and components for fundamental research. Generally, no License Exception symbol is necessaryfor export clearance purposes; however, when necessary, the symbol ‘‘AVS’’ may be used.

    •  (d) *  *  *

    • (6) Cuba, eligible vessels and purposes. Only the types of vessels listed in this paragraph (d)(6) departing for Cuba for the purposes listed in this paragraph (d)(6) may depart for Cuba pursuant to this paragraph (d). Vessels used to transport both passengers and items to Cuba may transport automobiles only if the export or reexport of the automobiles to Cuba has been authorized by a separate license issued by BIS (i.e., not authorized by license exception).

    • (i) Cargo vessels for hire for use in the transportation of items;

    • (ii) Passenger vessels for hire for use in the transportation of passengers and/ or items; and

    • (iii) Recreational vessels that are used in connection with travel authorized by the Department of the Treasury, Office of Foreign Assets Control (OFAC).

    • Note to paragraph (d)(6)(iii): Readers should also consult U.S. Coast Guard regulations at 33 CFR part 107 Subpart B— Unauthorized Entry into Cuban Territorial Waters.   

    • (e) Intransit cargo. Cargo laden on board an aircraft or vessel may transit Cuba provided:

      • (1) The aircraft or vessel is exported or reexported on temporary sojourn to Cuba pursuant to paragraph (a) or (d) of this section or a license from BIS; and

      • (2) The cargo departs with the aircraft or vessel at the end of its temporary sojourn to Cuba, is not removed from the aircraft or vessel for use in Cuba and is not transferred to another aircraft or vessel while in Cuba.

 

  • Section 740.19 is amended by revising paragraphs (c)(2)(i) and (ii) to read as follows: § 740.19    Consumer communications devices (CCD).

    •  (c) *  *  *

    • (2) *  *  *

    • (i) Ineligible Cuban Government Officials. Members of the Council of Ministers and flag officers of the Revolutionary Armed Forces.

    • (ii) Ineligible Cuban Communist Party Officials. Members of the Politburo.

  • Section 740.21 is amended by:

    • a. Removing the word ‘‘or’’ from the end of paragraph (b)(2);

    • b. Removing the period from the end of paragraph (b)(3) and adding in its place ‘‘; or’’;

    • c. Adding paragraph (b)(4) and;

    • d. Revising paragraphs (d)(4)(ii) and (iii).

    • The addition and revisions read as follows: § 740.21    Support for the Cuban People (SCP).

      •  (b) *  *  *

      • (4) Items sold directly to individuals in Cuba for their personal use or their immediate family’s personal use, other than officials identified in paragraphs (d)(4)(ii) or (iii) of this section.

      • (d) *  *  *

      • (4) *  *  *

      • (ii) Members of the Council of Ministers and flag officers of the Revolutionary Armed Forces; and

      • (iii) Members of the Politburo.

  • Section 746.2 is amended by revising paragraph (a)(1)(x) to read as follows:

    •  § 746.2    Cuba.

      • (a) *  *  *

      • (1) *  *  *

      • (x) Aircraft, vessels and spacecraft (AVS) for certain aircraft on temporary sojourn; equipment and spare parts for permanent use on a vessel or aircraft, and ship and plane stores; vessels on temporary sojourn; or cargo transiting Cuba on aircraft or vessels on temporary sojourn (see § 740.15(a), (b), (d), and (e) of the EAR).

Federal Register Notice: https://www.gpo.gov/fdsys/pkg/FR-2016-10-17/pdf/2016-25034.pdf

For additional information, please review the rule, the Department of Commerce and Department of the Treasury's joint fact sheet, and BIS's updated Frequently Asked Questions, For any specific questions regarding exports or reexports to Cuba, please contact the Foreign Policy Division at (202) 482-4252.

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