Rulemaking
BIS Publishes Changes to ECCN 4A003 and Revisions to License Exception APP
06/24/11 09:35 PM
On
June 24, 2011, the Bureau of Industry and Security
(BIS) published a final rule revising the
Export Administration Regulations (EAR) to
implement changes made to the Wassenaar
Arrangement’s List of Dual Use Goods and
Technologies (Wassenaar List) maintained and
agreed to by governments participating in the
Wassenaar Arrangement on Export Controls for
Conventional Arms and Dual Use Goods and
Technologies (Wassenaar Arrangement, or WA) at
the December 2009 WA Plenary Meeting (the
Plenary) that relate to Export Control
Classification Number (ECCN) 4A003.
This rule also makes corresponding revisions to License Exception APP, the de minimis rule, and post shipment verification reporting requirements in the EAR.
Additionally, this rule moves Albania and Croatia from Computer Tier 3 to Computer Tier 1 in the section of the EAR dedicated to export control requirements for high performance computers. The Administration believes Albania and Croatia are eligible to be treated as Computer Tier 1 countries because their governments have made the necessary reforms to allow the countries to join the North Atlantic Treaty Organization, and have adopted accepted global standards in export controls.
This rule is effective on June 24, 2011.
This rule also makes corresponding revisions to License Exception APP, the de minimis rule, and post shipment verification reporting requirements in the EAR.
Additionally, this rule moves Albania and Croatia from Computer Tier 3 to Computer Tier 1 in the section of the EAR dedicated to export control requirements for high performance computers. The Administration believes Albania and Croatia are eligible to be treated as Computer Tier 1 countries because their governments have made the necessary reforms to allow the countries to join the North Atlantic Treaty Organization, and have adopted accepted global standards in export controls.
This rule is effective on June 24, 2011.
BIS Implements Strategic Trade Authorization License Exception
06/16/11 09:03 PM
On
June 16, 2011, the Bureau of Industry and Security
(BIS) posted a final rule in the Federal
Register that adds the Strategic Trade
Authorization (STA) license exception to the
Export Administrations Regulations (EAR). STA
authorizes the export, reexport, and transfer
(in- country) of specified items to destinations
that pose relatively low risk that those items
will be used for a purpose that licensing
requirements were designed to prevent.
To use the STA license exception, parties to the transaction must exchange notifications and statements designed to provide assurance against diversion of such items to other destinations. The exception is only relevant to exports, reexports, and transfers for which a license is required under the EAR. Thus, if the EAR do not impose an obligation to apply for and receive a license before exporting, reexporting, or transferring an item subject to the EAR, STA is not relevant to the transaction.
STA license exception is expected to facilitate exports between the U.S. and partner countries while enhancing the competitiveness of U.S.’s key industrial base sectors.
The final rule is effective June 16, 2011.
To use the STA license exception, parties to the transaction must exchange notifications and statements designed to provide assurance against diversion of such items to other destinations. The exception is only relevant to exports, reexports, and transfers for which a license is required under the EAR. Thus, if the EAR do not impose an obligation to apply for and receive a license before exporting, reexporting, or transferring an item subject to the EAR, STA is not relevant to the transaction.
STA license exception is expected to facilitate exports between the U.S. and partner countries while enhancing the competitiveness of U.S.’s key industrial base sectors.
The final rule is effective June 16, 2011.
CBP Seeks Comments on Petition for Remission or Mitigation of Customs Forfeitures and Penalties Incurred
06/13/11 09:17 PM
On
June 13, 2011, the U.S. Customs and Border
Protection (CBP) issued a notice in the Federal
Register seeking comments on an information
collection requirement concerning the Petition
for Remission or Mitigation of Forfeitures and
Penalties Incurred.
CBP Form 4609, the Petition for Remission of Forfeitures and Penalties Incurred, is completed and filed with the CBP Port Director by individuals who have been found to be in violation of one or more provisions of the Tariff Act of 1930, or other laws administered by the CBP. Persons who violate the Tariff Act are entitled to file a petition seeking mitigation of any statutory penalty imposed or remission of a statutory forfeiture incurred. This petition is submitted on CBP Form 4609 and used by CBP personnel as
a basis for granting relief from forfeiture or penalty.
Comments are due by August 12, 2011.
CBP Form 4609, the Petition for Remission of Forfeitures and Penalties Incurred, is completed and filed with the CBP Port Director by individuals who have been found to be in violation of one or more provisions of the Tariff Act of 1930, or other laws administered by the CBP. Persons who violate the Tariff Act are entitled to file a petition seeking mitigation of any statutory penalty imposed or remission of a statutory forfeiture incurred. This petition is submitted on CBP Form 4609 and used by CBP personnel as
a basis for granting relief from forfeiture or penalty.
Comments are due by August 12, 2011.
CBP Publishes Final Determination on Country of Origin of Pocket Projectors
05/24/11 06:43 PM
On May
24, 2011, U.S. Customs and Border Protection (CBP)
published a final determination
concerning the
country of origin of pocket projectors in the
Federal Register.
In the determination, CBP stated that:
CBP was asked to consider two manufacturing scenarios, under which certain operations would be performed in Taiwan or in China. Based upon the facts presented, CBP has concluded that the manufacturing and testing operations performed in Taiwan do not substantially transform the non-TAA country components. The light engine module and the PCBA main board are the essence of the projectors and it is at their production where the last substantial transformation occurs. Therefore, when the light engine module and PCBA main board module are assembled and programmed in China, the country of origin of the projectors is China for purposes of U.S. government procurement. However, if the light engine module and PCBA main board module are assembled and programmed in Taiwan, then the country of origin of the projectors is Taiwan for purposes of U.S. government procurement.
In the determination, CBP stated that:
CBP was asked to consider two manufacturing scenarios, under which certain operations would be performed in Taiwan or in China. Based upon the facts presented, CBP has concluded that the manufacturing and testing operations performed in Taiwan do not substantially transform the non-TAA country components. The light engine module and the PCBA main board are the essence of the projectors and it is at their production where the last substantial transformation occurs. Therefore, when the light engine module and PCBA main board module are assembled and programmed in China, the country of origin of the projectors is China for purposes of U.S. government procurement. However, if the light engine module and PCBA main board module are assembled and programmed in Taiwan, then the country of origin of the projectors is Taiwan for purposes of U.S. government procurement.
DDTC Publishes Final Rule on Dual and Third-Country Nationals Employed by Foreign End Users
05/16/11 04:38 PM
On May
16, 2011, the Department of State published
a final rule amending the
International Traffic in Arms Regulations (ITAR)
to establish a policy to address those who are
unable to implement the exemption for
intra-company, intra-organization, and
intra-government transfers of defense articles
and defense services by approved end-users to
dual national and third-country nationals who
are employees of such approved end-users.
Prior to making transfers to certain dual national and third-country national employees under this policy, approved end-users must screen employees, make an affirmative decision to allow access, and maintain records of screening procedures to prevent diversion of ITAR-controlled technology for purposes other than those authorized by the applicable export license or other authorization.
The Department of State is amending parts 124 and 126 of the ITAR to reflect new policy regarding end-user employment of dual nationals and third-country nationals. As a part of the President’s Task Force on Export Control Reform, the previous policy regarding the treatment of dual nationals and third-country nationals employed by approved end users was re-evaluated. A proposed rule to eliminate the separate licensing requirement for dual nationals and third-country nationals employed by licensed end-users was presented for public comment. The proposed rule had a comment period ending September 10, 2010. Thirty-two parties filed comments recommending changes, which the DDTC analyzes and addresses in the publication.
The rule is effective August 15, 2011.
Prior to making transfers to certain dual national and third-country national employees under this policy, approved end-users must screen employees, make an affirmative decision to allow access, and maintain records of screening procedures to prevent diversion of ITAR-controlled technology for purposes other than those authorized by the applicable export license or other authorization.
The Department of State is amending parts 124 and 126 of the ITAR to reflect new policy regarding end-user employment of dual nationals and third-country nationals. As a part of the President’s Task Force on Export Control Reform, the previous policy regarding the treatment of dual nationals and third-country nationals employed by approved end users was re-evaluated. A proposed rule to eliminate the separate licensing requirement for dual nationals and third-country nationals employed by licensed end-users was presented for public comment. The proposed rule had a comment period ending September 10, 2010. Thirty-two parties filed comments recommending changes, which the DDTC analyzes and addresses in the publication.
The rule is effective August 15, 2011.
BIS Publishes Final Rule Amending CCL
05/12/11 03:58 PM
On May
20, 2011, the Bureau of Industry and Security (BIS)
published a final rule in the Federal
Register amending the Commerce Control List
(CCL) to conform with the Wassenaar Arrangement
2010 Plenary Agreements Implementation.
This final rule revises the CCL to implement changes made to the Wassenaar Arrangement’s List of Dual-Use Goods and Technologies (Wassenaar List) maintained and agreed to by governments participating in the Wassenaar Arrangement on Export Controls for Conventional Arms and Dual-Use Goods and Technologies (Wassenaar Arrangement, or WA) at the December 2010 WA Plenary Meeting (the Plenary). The Wassenaar Arrangement advocates implementation of effective export controls on strategic items with the objective of improving regional and international security and stability. To harmonize the CCL with the changes made to the Wassenaar List at the Plenary, this rule amends entries on the CCL that are controlled for national security reasons in Categories 1, 2, 3, 4, 5 Parts I & II, 6, 7, 8, and 9, revises reporting requirements, and adds and amends definitions in the EAR.
This final rule revises the CCL to implement changes made to the Wassenaar Arrangement’s List of Dual-Use Goods and Technologies (Wassenaar List) maintained and agreed to by governments participating in the Wassenaar Arrangement on Export Controls for Conventional Arms and Dual-Use Goods and Technologies (Wassenaar Arrangement, or WA) at the December 2010 WA Plenary Meeting (the Plenary). The Wassenaar Arrangement advocates implementation of effective export controls on strategic items with the objective of improving regional and international security and stability. To harmonize the CCL with the changes made to the Wassenaar List at the Plenary, this rule amends entries on the CCL that are controlled for national security reasons in Categories 1, 2, 3, 4, 5 Parts I & II, 6, 7, 8, and 9, revises reporting requirements, and adds and amends definitions in the EAR.
BIS Posts Comments Received in Response to Proposed Regulations
03/21/11 12:10 AM
The
Bureau of Industry and Security (BIS) posted public
comments in response to: (1) the proposed rule regarding
Strategic Trade Authorization (STA) license
exception, and
(2) the proposed rule regarding
revising descriptions of items and foreign
availability.
BIS issued the proposed rule on the Strategic Trade Authorization license exception on December 9, 2010. It adds a new license exception to the Export Administration Regulations (EAR). The exception allows exports, reexports and transfer (in-country) of specified items to destinations that pose little risk of unauthorized use of those items. To prevent diversion to unauthorized destinations, transactions under this license exception would be subject to notification, destination control statement and consignee statement requirements.
With regard to amending the EAR, BIS sought public comments on how descriptions of items controlled on the Commerce Control List (CCL) of the EAR could be more clear and positive and “tiered” in a manner consistent with the control criteria the Administration has developed as part of the export control reform effort.
BIS issued the proposed rule on the Strategic Trade Authorization license exception on December 9, 2010. It adds a new license exception to the Export Administration Regulations (EAR). The exception allows exports, reexports and transfer (in-country) of specified items to destinations that pose little risk of unauthorized use of those items. To prevent diversion to unauthorized destinations, transactions under this license exception would be subject to notification, destination control statement and consignee statement requirements.
With regard to amending the EAR, BIS sought public comments on how descriptions of items controlled on the Commerce Control List (CCL) of the EAR could be more clear and positive and “tiered” in a manner consistent with the control criteria the Administration has developed as part of the export control reform effort.
BIS Publishes Final Rule on Mass Market Encryption
01/07/11 02:32 PM
On
January 7, 2011, the Bureau of Industry and
Security (BIS) published a final rule on publicly
available mass market encryption software and
other specified publicly available encryption
software in object code.
Through this Final Rule, BIS is removing from the scope of items subject to the Export Administration Regulations (EAR) ‘‘publicly available’’ mass market encryption object code software with a symmetric key length greater than 64- bits, and ‘‘publicly available’’ encryption object code classified under Export Control Classification Number (ECCN) 5D002 on the Commerce Control List when the corresponding source code meets the criteria specified under License Exception TSU. This change is being made pursuant to a determination by BIS that, because there are no regulatory restrictions on making such software ‘‘publicly available,’’ and because, once it is ‘‘publicly available,’’ by definition it is available for download by any end user without restriction, removing it from the jurisdiction of the EAR will have no effect on export control policy. This action will not result in the decontrol of source code classified under ECCN 5D002, but it will result in a simplification of the regulatory provisions for publicly available mass market software and specified encryption software in object code.
Through this Final Rule, BIS is removing from the scope of items subject to the Export Administration Regulations (EAR) ‘‘publicly available’’ mass market encryption object code software with a symmetric key length greater than 64- bits, and ‘‘publicly available’’ encryption object code classified under Export Control Classification Number (ECCN) 5D002 on the Commerce Control List when the corresponding source code meets the criteria specified under License Exception TSU. This change is being made pursuant to a determination by BIS that, because there are no regulatory restrictions on making such software ‘‘publicly available,’’ and because, once it is ‘‘publicly available,’’ by definition it is available for download by any end user without restriction, removing it from the jurisdiction of the EAR will have no effect on export control policy. This action will not result in the decontrol of source code classified under ECCN 5D002, but it will result in a simplification of the regulatory provisions for publicly available mass market software and specified encryption software in object code.
BIS Issues Advance Notice of Proposed Rulemaking re: Revising the Descriptions of Items on the CCL and Foreign Availability
12/09/10 05:48 PM
On
December 9, 2010, the U.S. Commerce Department's
Bureau of Industry and Security (BIS)
issued an Advance
Notice of Proposed Rulemaking in the Federal
Register. As part of the President's export
control reform initiative, BIS is seeking public
comment on how the descriptions of items
controlled on the Commerce Control List (CCL) of
the Export Administration Regulations (EAR)
could be more clear and positive and "tiered" in
a manner consistent with the control criteria
the Administration has developed as part of the
reform effort. The request for comments on how
items on the CCL could be tiered includes a
request for comments on the degree to which a
controlled item provides the United States with
a critical, substantial, or significant military
or intelligence advantage; and the availability
of the item outside certain groups of countries.
BIS states that:
Accordingly, BIS seeks public comments on how certain export control classification numbers (ECCNs) that do not contain "positive" descriptions or that are unclear can be made more clear and more specific. In addition, BIS also seeks public comments on whether items with the capabilities and characteristics described on the CCL, and controlled for other than solely anti- terrorism (AT) reasons or Crime Control (CC) reasons, are indigenously developed, produced, or enhanced (a) almost exclusively in the United States or (b) in destinations other than Argentina, Australia, Austria, Belgium, Bulgaria, Canada, Croatia, the Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Iceland, Ireland, Italy, Japan, Latvia, Lithuania, Luxembourg, Netherlands, New Zealand, Norway, Poland, Portugal, Romania, Slovakia, Slovenia, South Korea, Spain, Sweden, Switzerland, Turkey, Ukraine, or the United Kingdom.
BIS states that:
A core task of the Administration’s Export Control Reform Initiative is to enhance national security by reviewing and revising, as necessary and to the extent permitted by law and regime obligations, the lists of items (i.e., commodities, software, and technology) controlled for export and reexport so that they (1) are clearer and more "positive" in nature and (2) can more easily be screened into three tiers based upon a set of criteria. The Administration has developed a three- tiered set of criteria to help determine whether a license should be required or a license exception should be available to allow license-free export, reexport, or transfer (in-country) of a given item, with appropriate conditions, to various destinations. The three-tiered set of criteria has two primary elements-(a) the degree to which an item provides the United States with a military or intelligence advantage and (b) the availability of the item outside the United States, its close allies and multilateral export control regime partners.
Accordingly, BIS seeks public comments on how certain export control classification numbers (ECCNs) that do not contain "positive" descriptions or that are unclear can be made more clear and more specific. In addition, BIS also seeks public comments on whether items with the capabilities and characteristics described on the CCL, and controlled for other than solely anti- terrorism (AT) reasons or Crime Control (CC) reasons, are indigenously developed, produced, or enhanced (a) almost exclusively in the United States or (b) in destinations other than Argentina, Australia, Austria, Belgium, Bulgaria, Canada, Croatia, the Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Iceland, Ireland, Italy, Japan, Latvia, Lithuania, Luxembourg, Netherlands, New Zealand, Norway, Poland, Portugal, Romania, Slovakia, Slovenia, South Korea, Spain, Sweden, Switzerland, Turkey, Ukraine, or the United Kingdom.
BIS Proposes New License Exception STA
12/09/10 01:46 PM
On
December 9, 2010, the U.S. Commerce Department’s
Bureau of Industry and Security (BIS) issued
a proposed rule
adding a new
license exception to the Export Administration
Regulations (EAR). The new Strategic Trade
Authorization (STA) license exception would
allow exports, reexports and transfers
(in-country) of specified items to destinations
that pose little risk of unauthorized use of
those items. To provide assurance against
diversion to unauthorized destinations,
transactions under this license exception would
be subject to notification, destination control
statement and consignee statement requirements.
This proposed rule is part of the
Administration’s Export Control Reform
Initiative undertaken as a result of the
fundamental review of the U.S. export control
system announced by the President in August
2009.
This license exception would encompass three different authorizations, based on the reason(s) for control underlying the license requirements that would apply to the item in the particular transaction at issue, the destination, the sensitivity of the item and the end-use. One authorization would allow items subject to any (or all) of seven reasons for control to go to 37 destinations. Another authorization would allow less sensitive items subject to only national security reasons for control to go to two additional destinations. The third authorization would allow less sensitive items subject to only national security reasons for control to go to 125 additional destinations for civil end- uses. National security-controlled items that are ineligible for the last two authorizations would be identified by the new ‘‘STA exclusion paragraphs’’ in the ‘‘License Exceptions’’ sections of 50 ECCN entries on the Commerce Control List. Thus, the STA exclusion serves the opposite function of a typical list-based license exception paragraph, such as those setting forth license exceptions LVS (§ 740.3) and GBS (§ 740.4), which identifies items that are eligible for a license exception.
Comments on the proposed rule must be received by BIS no later than February 7, 2011.
This license exception would encompass three different authorizations, based on the reason(s) for control underlying the license requirements that would apply to the item in the particular transaction at issue, the destination, the sensitivity of the item and the end-use. One authorization would allow items subject to any (or all) of seven reasons for control to go to 37 destinations. Another authorization would allow less sensitive items subject to only national security reasons for control to go to two additional destinations. The third authorization would allow less sensitive items subject to only national security reasons for control to go to 125 additional destinations for civil end- uses. National security-controlled items that are ineligible for the last two authorizations would be identified by the new ‘‘STA exclusion paragraphs’’ in the ‘‘License Exceptions’’ sections of 50 ECCN entries on the Commerce Control List. Thus, the STA exclusion serves the opposite function of a typical list-based license exception paragraph, such as those setting forth license exceptions LVS (§ 740.3) and GBS (§ 740.4), which identifies items that are eligible for a license exception.
Comments on the proposed rule must be received by BIS no later than February 7, 2011.
BIS Seeks Comments on SNAP-R System
11/23/10 04:47 PM
On
November 23, 2010, the Bureau of Industry and
Security (BIS) issued a proposed rule
in
the Federal Register seeking comments on
Simplified Network Application Processing
(SNAP-R) System, On-Line Registration and
Account Maintenance
BIS is proposing to implement an on-line registration process for obtaining an account to submit license applications and similar documents electronically. The current registration process requires paper and facsimile submissions.
This proposed rule sets forth the information that parties registering on-line would be required to provide to BIS and sets forth the duties that registered parties would have with respect to keeping information in their accounts current.
Comments are due January 24, 2011.
BIS is proposing to implement an on-line registration process for obtaining an account to submit license applications and similar documents electronically. The current registration process requires paper and facsimile submissions.
This proposed rule sets forth the information that parties registering on-line would be required to provide to BIS and sets forth the duties that registered parties would have with respect to keeping information in their accounts current.
Comments are due January 24, 2011.
BIS Seeks Comments on the Effectiveness of Licensing Procedures for Agricultural Commodities Exported to Cuba
09/08/10 02:58 PM
On
September 8, 2010, the Bureau of Industry and
Security (BIS) published a notice in the
Federal
Register requesting
public comments on the effectiveness of its
licensing procedures as defined in the Export
Administration Regulations for the export of
agricultural commodities to Cuba. BIS will
include a description of these comments in its
biennial report to the Congress, as required by
the Trade Sanctions Reform and Export
Enhancement Act of 2000 (22 U.S.C. 7201 et
seq.), as amended.
Comments must be received by October 8, 2010.
Comments must be received by October 8, 2010.
BIS Seeks Comments on Best Practices for Transit, Transshipment and Reexport of EAR Items
09/01/10 12:23 PM
On
September 1, 2010, the Bureau of Industry and
Security (BIS) published a notice in the
Federal
Register on an updated
set of proposed “Best Practices for Transit,
Transshipment, and Reexport of Items Subject to
the Export Administration Regulations.” The
previous list of best practices was posted by
BIS on its website on November 24, 2003.
BIS is updating the “best practices” list, which was developed following the solicitation of public comments, in light of the U.S. Government’s current export control reform efforts and the increased attention that reexport, transit, and transshipment trade has generated in recent years, both within the U.S. and globally.
BIS states that, “The best practices identified herein include the types of practices that industry has adopted to guard against diversion risk. Both government and industry recognize that implementing effective export compliance programs is an important component of responsible corporate citizenship and good business practices. BIS seeks information to refine and revise this proposed list of best practices to help ensure that industry and the government continue to prevent diversion of controlled items subject to the Export Administration Regulations (EAR) through transshipment points.”
In the notice, BIS stated:
The following reflect existing and emerging transshipment best practices that guard against diversion risk. BIS seeks comment on these and additional practices from the public based on experience.
Best Practice #1. Pay heightened attention to the Red Flag Indicators on the BIS Web site (see http://www.bis. doc.gov/Enforcement/redflags.htm) with respect to transactions to, from, or through transshipment hubs. When a company encounters a suspicious transaction, such as those outlined in the ‘‘Know Your Customer’’ Guidance and Red Flags (Supplement No. 3 to Part 732 of the EAR), it should inquire further and attempt to resolve any questions raised by the transaction.
Best Practice #2. An Exporter/ Reexporter should seek to utilize only those Trade Facilitators/Freight Forwarders that also observe these best practices and possess their own export management and compliance program.
Best Practice #3. Exporters/ Reexporters should have information regarding their foreign customers. In particular, a company should know if the customer is a trading company or distributor, and inquire whether the customer resells to or has guidelines to resell to third parties.
Best Practice #4. With respect to transactions to, from, or through transshipment hubs, Exporters/ Reexporters should take appropriate steps to inquire about the end-user and to determine whether the item will be reexported or incorporated in an item to be reexported.
Best Practice #5. Freight Forwarders should inquire about the details of a routed transaction when asked by a foreign principal party in interest to ship to a country or countries of destination or ultimate consignees that are different from those provided by the U.S. principal party in interest.
Best Practice #6. An Exporter/ Reexporter should communicate the appropriate Export Control Classification Number (ECCN) or other classification information (EAR99) for each export/reexport to the end-user and, where relevant, to the ultimate consignee.
Best Practice #7. An Exporter/ Reexporter should report such ECCN or the EAR99 classifications for all export transactions, including ‘‘No License Required’’ designations to the Trade Facilitator/Freight Forwarder or enter them in the Automated Export System (AES).
Comments must be received before October 18, 2010.
BIS is updating the “best practices” list, which was developed following the solicitation of public comments, in light of the U.S. Government’s current export control reform efforts and the increased attention that reexport, transit, and transshipment trade has generated in recent years, both within the U.S. and globally.
BIS states that, “The best practices identified herein include the types of practices that industry has adopted to guard against diversion risk. Both government and industry recognize that implementing effective export compliance programs is an important component of responsible corporate citizenship and good business practices. BIS seeks information to refine and revise this proposed list of best practices to help ensure that industry and the government continue to prevent diversion of controlled items subject to the Export Administration Regulations (EAR) through transshipment points.”
In the notice, BIS stated:
The following reflect existing and emerging transshipment best practices that guard against diversion risk. BIS seeks comment on these and additional practices from the public based on experience.
Best Practice #1. Pay heightened attention to the Red Flag Indicators on the BIS Web site (see http://www.bis. doc.gov/Enforcement/redflags.htm) with respect to transactions to, from, or through transshipment hubs. When a company encounters a suspicious transaction, such as those outlined in the ‘‘Know Your Customer’’ Guidance and Red Flags (Supplement No. 3 to Part 732 of the EAR), it should inquire further and attempt to resolve any questions raised by the transaction.
Best Practice #2. An Exporter/ Reexporter should seek to utilize only those Trade Facilitators/Freight Forwarders that also observe these best practices and possess their own export management and compliance program.
Best Practice #3. Exporters/ Reexporters should have information regarding their foreign customers. In particular, a company should know if the customer is a trading company or distributor, and inquire whether the customer resells to or has guidelines to resell to third parties.
Best Practice #4. With respect to transactions to, from, or through transshipment hubs, Exporters/ Reexporters should take appropriate steps to inquire about the end-user and to determine whether the item will be reexported or incorporated in an item to be reexported.
Best Practice #5. Freight Forwarders should inquire about the details of a routed transaction when asked by a foreign principal party in interest to ship to a country or countries of destination or ultimate consignees that are different from those provided by the U.S. principal party in interest.
Best Practice #6. An Exporter/ Reexporter should communicate the appropriate Export Control Classification Number (ECCN) or other classification information (EAR99) for each export/reexport to the end-user and, where relevant, to the ultimate consignee.
Best Practice #7. An Exporter/ Reexporter should report such ECCN or the EAR99 classifications for all export transactions, including ‘‘No License Required’’ designations to the Trade Facilitator/Freight Forwarder or enter them in the Automated Export System (AES).
Comments must be received before October 18, 2010.
Agreements to DDTC Must Be Submitted Via D-Trade 2 System
08/15/10 11:20 PM
Effective
September 1, 2010, Directorate of Defense Trade
Controls (DDTC) will no longer accept
unclassified paper submissions
of
Technical Assistance Agreements, Manufacturing
License Agreements, and Warehouse Distribution
Agreements (including major amendments).
After September 1, 2010, all submissions must be made electronically via D-Trade 2 utilizing the DSP-5 form. Paper submissions received after August 31 will be returned to the applicant will a letter from DDTC instructing the applicant to resubmit the agreement via the D-Trade 2 System. Minor amendments against active paper agreements may continue to be submitted on paper.
For information on submitting agreements electronically please reference the Guidelines for Preparing Electronic Agreements.
After September 1, 2010, all submissions must be made electronically via D-Trade 2 utilizing the DSP-5 form. Paper submissions received after August 31 will be returned to the applicant will a letter from DDTC instructing the applicant to resubmit the agreement via the D-Trade 2 System. Minor amendments against active paper agreements may continue to be submitted on paper.
For information on submitting agreements electronically please reference the Guidelines for Preparing Electronic Agreements.
BIS Clarifies Reach of Commodity Classification Determinations and Advisory Opinions
08/03/10 10:12 PM
On
August 2, 2010, Bureau of Industry and Security
(BIS) issued an interim final rule
in
the Federal Register amending the Export
Administration Regulations (EAR) to clarify that
commodity classification determinations and
advisory opinions BIS issues or has issued under
the EAR are not and may not be relied upon as
U.S. Government determinations that the items
described therein are subject to the EAR, as
opposed to the jurisdiction of another U.S.
Government agency.
Section 748.3(a) the EAR, as amended, requires that exporters, before requesting commodity classifications and advisory opinions, determine that the items at issue are not subject to the exclusive export control jurisdiction of one of the other U.S. Government agencies listed in §734.3(b) of the EAR, such as Directorate of Defense Trade Controls (DDTC), Office of Foreign Assets Controls (OFAC), or the Patent and Trademark Office (PTO).
Only DDTC has authority to issue commodity jurisdiction determinations since they are the agency responsible for administering the U.S. Munitions List (USML) and the International Traffic in Arms Regulations (ITAR). Unlike the ITAR, the EAR does not provide authority to make commodity jurisdiction determinations. Thus, because BIS does not have the authority to issue commodity jurisdiction determinations, a BIS commodity classification only reflects whether an item identified in the commodity classification request is described in the Commerce Control List (CCL).
With respect to advisory opinions, the rule states that they are limited in scope to BIS’s interpretation of EAR provisions, and may not be relied upon or cited as evidence of U.S. Government’s determination that the items described in the advisory opinion are not subject to the export control jurisdiction of another agency of the U.S. Government.
Comments on the interim final rule are due October 2, 2010.
Section 748.3(a) the EAR, as amended, requires that exporters, before requesting commodity classifications and advisory opinions, determine that the items at issue are not subject to the exclusive export control jurisdiction of one of the other U.S. Government agencies listed in §734.3(b) of the EAR, such as Directorate of Defense Trade Controls (DDTC), Office of Foreign Assets Controls (OFAC), or the Patent and Trademark Office (PTO).
Only DDTC has authority to issue commodity jurisdiction determinations since they are the agency responsible for administering the U.S. Munitions List (USML) and the International Traffic in Arms Regulations (ITAR). Unlike the ITAR, the EAR does not provide authority to make commodity jurisdiction determinations. Thus, because BIS does not have the authority to issue commodity jurisdiction determinations, a BIS commodity classification only reflects whether an item identified in the commodity classification request is described in the Commerce Control List (CCL).
With respect to advisory opinions, the rule states that they are limited in scope to BIS’s interpretation of EAR provisions, and may not be relied upon or cited as evidence of U.S. Government’s determination that the items described in the advisory opinion are not subject to the export control jurisdiction of another agency of the U.S. Government.
Comments on the interim final rule are due October 2, 2010.
BIS Publishes Final Rule on Direct Products of U.S. Technology
07/30/10 10:17 PM
On
July 30, 2010, the U.S. Department of Commerce’s
Bureau of Industry and Security (BIS) published
a final rule on foreign
direct products of U.S. technology.
BIS clarifies the scope of the ‘‘direct product rule’’ set forth in the Export Administration Regulations (EAR). Under the EAR’s ‘‘direct product rule,’’ foreign-made items that are located outside of the United States; subject to national security controls under the EAR; the direct product of U.S.-origin software or technology that requires a written assurance as a supporting document for a license or as a pre-condition for use of License Exception Technology and Software, Restricted (TSR); and are being reexported to a destination in a country of national security concern or a terrorist supporting country, are subject to the EAR and require an export license or license exception. This rule also makes parallel revisions or clarifications to written assurances required under License Exception TSR (Technology and Software Restricted), information required on the license application for national security controlled technology, and the instructional steps in the EAR that provide guidance on how to apply the direct product rule.
BIS clarifies the scope of the ‘‘direct product rule’’ set forth in the Export Administration Regulations (EAR). Under the EAR’s ‘‘direct product rule,’’ foreign-made items that are located outside of the United States; subject to national security controls under the EAR; the direct product of U.S.-origin software or technology that requires a written assurance as a supporting document for a license or as a pre-condition for use of License Exception Technology and Software, Restricted (TSR); and are being reexported to a destination in a country of national security concern or a terrorist supporting country, are subject to the EAR and require an export license or license exception. This rule also makes parallel revisions or clarifications to written assurances required under License Exception TSR (Technology and Software Restricted), information required on the license application for national security controlled technology, and the instructional steps in the EAR that provide guidance on how to apply the direct product rule.
BIS Publishes Clarification of Grace Period for New Encryption Registration Requirement
07/27/10 03:08 PM
On
July 27, 2010, the U.S. Department of Commerce’s
Bureau of Industry and Security (BIS) published
a final rule in the Federal
Register to clarify the intent of the encryption
registration requirement that appeared in the
new encryption rules published on June 25, 2010.
The June 25, 2010 final rule established, inter alia, an encryption registration requirement for authorization under provisions of License Exception ENC, as codified in § 740.17(b)(1), (b)(2) and (b)(3) of the EAR, and for transactions in connection with mass market encryption transaction, as codified in §§ 742.15(b)(1) and (b)(3) of the EAR. In § 740.17(d)(1)(i)(A) and (d)(1)(i)(B), the rule specified that an encryption registration was required to be filed the first time that a party submits an encryption classification request under § 740.17(b)(2) and (b)(3) or performs an encryption self-classification under § 740.17(b)(1) on or after August 24, 2010. The rule also stated that an encryption registration was required to be submitted in support of an encryption classification or in circumstances where a party is making a mass market encryption item eligible for export and reexport (including the definition at § 734.2(b)(9) for encryption software) under § 742.15(b)(1) for the first time on or after August 24, 2010. Although the rule was issued in final form on June 25, the rule intended to establish a grace period permitting parties to wait until August 24 to submit their registration requirements.
In the clarification, BIS states:
The June 25, 2010 final rule established, inter alia, an encryption registration requirement for authorization under provisions of License Exception ENC, as codified in § 740.17(b)(1), (b)(2) and (b)(3) of the EAR, and for transactions in connection with mass market encryption transaction, as codified in §§ 742.15(b)(1) and (b)(3) of the EAR. In § 740.17(d)(1)(i)(A) and (d)(1)(i)(B), the rule specified that an encryption registration was required to be filed the first time that a party submits an encryption classification request under § 740.17(b)(2) and (b)(3) or performs an encryption self-classification under § 740.17(b)(1) on or after August 24, 2010. The rule also stated that an encryption registration was required to be submitted in support of an encryption classification or in circumstances where a party is making a mass market encryption item eligible for export and reexport (including the definition at § 734.2(b)(9) for encryption software) under § 742.15(b)(1) for the first time on or after August 24, 2010. Although the rule was issued in final form on June 25, the rule intended to establish a grace period permitting parties to wait until August 24 to submit their registration requirements.
In the clarification, BIS states:
The intent of this grace period was to allow industry time to gather information necessary to accurately submit the information required in the encryption registration (Supplement No. 5 to part 742), to change internal procedures, and to train personnel before submitting the encryption registration. However, the rule inadvertently omitted language that clarifies that parties may self-classify or seek classifications between June 25, 2010 and August 24, 2010 without first submitting a registration. It also inadvertently omitted language that clarifies the post-classification registration requirement for parties that self-classified or sought classifications between June 25, 2010 and August 24, 2010, but did not self-classify or seek a classification again on or after August 24, 2010. This rule corrects the regulations to include language that clarifies the intent of the grace period.
BIS Seeks Comments on Special Comprehensive License Forms BIS-752P and BIS-752P-A
07/25/10 02:47 PM
On
July 25, 2010, Bureau of Industry and Security
(BIS) published a notice in Federal
Register requesting comments on Special
Comprehensive License forms BIS-752P and
BIS-752P-A.
The Special Comprehensive License (SCL) procedure authorizes multiple shipments of items from the U.S. or from approved consignees abroad who are approved in advance by the BIS to conduct servicing, support services, stocking spare parts, maintenance, capital expansion, manufacturing, support scientific data acquisition, reselling and reexporting in the form received, and other activities as approved on a case-by-case basis.
An application for an SCL requires submission of additional supporting documentation, such as the company’s internal control program.
Comments are due on September 24, 2010.
The Special Comprehensive License (SCL) procedure authorizes multiple shipments of items from the U.S. or from approved consignees abroad who are approved in advance by the BIS to conduct servicing, support services, stocking spare parts, maintenance, capital expansion, manufacturing, support scientific data acquisition, reselling and reexporting in the form received, and other activities as approved on a case-by-case basis.
An application for an SCL requires submission of additional supporting documentation, such as the company’s internal control program.
Comments are due on September 24, 2010.
BIS Revises the CCL to Update and Clarify Crime Control License Requirements
07/15/10 02:59 PM
On
July 15, 2010, the U.S. Department of Commerce’s
Bureau of Industry and Security published a
final rule in the Federal
Register to revise the Commerce Control List
(CCL) to update and clarify crime control
license requirements under the Export
Administration Regulations (EAR). The rule
updates and clarifies export and reexport
license requirements on striking weapons,
restraint devices, shotguns and parts, optical
sighting devices, and electric shock devices. It
also adds equipment designed for the execution
of humans to the Commerce Control List. This
rule makes no changes to the longstanding policy
of denial of applications to export or reexport
specially designed implements of torture. The
rule provides additional illustrative examples
of such items and adopts a definition of torture
used in a U.S. statute that implements the
United Nations Convention against Torture and
Other Cruel, Inhuman or Degrading Treatment or
Punishment.
BIS published the rule as part of an ongoing review of crime control license requirements and policy. As part of the ongoing review, BIS received public comments on whether the scope of the items and destinations that are subject to crime control license requirements should be changed. After reviewing the comments and conducting its own internal deliberations, BIS decided to proceed in stages. This final rule is the culmination of the first stage that addresses relatively simple extensions, modifications or removals of items currently on the CCL or additions to the CCL of items that have an easily identified crime control or law enforcement nexus.
BIS plans to publish a subsequent proposed rule that will identify potential expansion of certain Export Control Classification Numbers (ECCNs) as suggested in the comments to the proposed rule; whether, and if so, the extent to which biometric measuring devices, integrated data systems, simulators, and communications equipment should be added to the Commerce Control List; the degree to which software and technology related to commodities on the Commerce Control List should be listed and how such software and technology should be described; and general policy issues such as whether the range of destinations to which crime control license requirements apply should be modified.
BIS published the rule as part of an ongoing review of crime control license requirements and policy. As part of the ongoing review, BIS received public comments on whether the scope of the items and destinations that are subject to crime control license requirements should be changed. After reviewing the comments and conducting its own internal deliberations, BIS decided to proceed in stages. This final rule is the culmination of the first stage that addresses relatively simple extensions, modifications or removals of items currently on the CCL or additions to the CCL of items that have an easily identified crime control or law enforcement nexus.
BIS plans to publish a subsequent proposed rule that will identify potential expansion of certain Export Control Classification Numbers (ECCNs) as suggested in the comments to the proposed rule; whether, and if so, the extent to which biometric measuring devices, integrated data systems, simulators, and communications equipment should be added to the Commerce Control List; the degree to which software and technology related to commodities on the Commerce Control List should be listed and how such software and technology should be described; and general policy issues such as whether the range of destinations to which crime control license requirements apply should be modified.
BIS Eliminates Paper Versions of Most Export Submissions
04/05/10 12:33 AM
On
April 5, 2010, Bureau of Industry and Security
(BIS) issued a final rule in Federal
Register that eliminates the paper version of
most of export submissions to BIS. The rule also
changes certain recordkeeping requirements
associated with the elimination of paper
documents.
Specifically, the rule revises the EAR to state that BIS may issue export and reexport licenses either electronically or on paper and that each license will bear a license number. This language enables BIS to exercise discretion in deciding whether to issue a license electronically in SNAP-R or on paper. However, BIS expects that it will issue nearly all licenses electronically. Unless some exceptional circumstances exist, only licenses for which the applicant was authorized to file the application on paper and licenses that BIS cannot issue electronically (currently, only reopened licenses) will be issued on paper. BIS made the change to reduce the costs of generating and mailing paper copies of licenses.
Currently, BIS issues license related documents in two ways: electronically in BIS’s Simplified Network Application Processing Redesign system (SNAP-R) and on paper. Most license related documents are issued in both electronic and paper form. Only a few such documents are issued only on paper.
The EAR require that export license applications, reexport license application, License Exception AGR notification, encryption review requests, and classification requests be submitted to BIS electronically using SNAP-R, except in individual instances where BIS authorizes a paper submission. The license related documents associated with a SNAP-R submissions are issued on line in SNAP-R where the submitter may view, save, or print a copy. In addition, a paper version of each of those documents is mailed to the submitter.
In two situations, BIS issues only a paper version of a license related document: when BIS authorizes a paper submission, and when BIS must reissue the license related document because it reopened a matter previously considered to be completed. BIS does not intend to stop issuing paper license related documents in those two situations. It also does not intend to change its practices regarding issuance of Special Comprehensive Licenses or Special Iraq Reconstruction Licenses, both of which are paper-based.
BIS intends to discontinue issuing paper documents in the situations where it currently issues both paper and electronic versions of license related documents.
Recordkeeping Requirements
The final rule also made changes to recordkeeping requirements associated with the elimination of paper documents:
The new rule also provides that parties who receive documents issued by BIS in SNAP-R may store the documents in two ways, either of which meet the requirements that original documents be retained: electronically in a format readable by software possessed by the recipient party, or storage of a complete printed paper copy of the document.
The new rule is effective May 5, 2010.
Specifically, the rule revises the EAR to state that BIS may issue export and reexport licenses either electronically or on paper and that each license will bear a license number. This language enables BIS to exercise discretion in deciding whether to issue a license electronically in SNAP-R or on paper. However, BIS expects that it will issue nearly all licenses electronically. Unless some exceptional circumstances exist, only licenses for which the applicant was authorized to file the application on paper and licenses that BIS cannot issue electronically (currently, only reopened licenses) will be issued on paper. BIS made the change to reduce the costs of generating and mailing paper copies of licenses.
Currently, BIS issues license related documents in two ways: electronically in BIS’s Simplified Network Application Processing Redesign system (SNAP-R) and on paper. Most license related documents are issued in both electronic and paper form. Only a few such documents are issued only on paper.
The EAR require that export license applications, reexport license application, License Exception AGR notification, encryption review requests, and classification requests be submitted to BIS electronically using SNAP-R, except in individual instances where BIS authorizes a paper submission. The license related documents associated with a SNAP-R submissions are issued on line in SNAP-R where the submitter may view, save, or print a copy. In addition, a paper version of each of those documents is mailed to the submitter.
In two situations, BIS issues only a paper version of a license related document: when BIS authorizes a paper submission, and when BIS must reissue the license related document because it reopened a matter previously considered to be completed. BIS does not intend to stop issuing paper license related documents in those two situations. It also does not intend to change its practices regarding issuance of Special Comprehensive Licenses or Special Iraq Reconstruction Licenses, both of which are paper-based.
BIS intends to discontinue issuing paper documents in the situations where it currently issues both paper and electronic versions of license related documents.
Recordkeeping Requirements
The final rule also made changes to recordkeeping requirements associated with the elimination of paper documents:
- The rule removes
a requirement that the license holder attach a
replacement license issued by BIS to the original
license that it replaces. However, the rule
retains the requirement that the license holder
keep both the original and the replacement
licenses.
• The rule exempts parties who submit documents to BIS via SNAP-R from requirements to retain copies of documents so submitted even thought those documents are “export control documents” under the EAR.
• The new rule requires that the following documents are kept: (1) notification from BIS that an application is being returned without action; (2) notification from BIS that an application is being denied; and (3) notification from BIS of the results of a commodity classification or encryption review request conducted by BIS.
The new rule also provides that parties who receive documents issued by BIS in SNAP-R may store the documents in two ways, either of which meet the requirements that original documents be retained: electronically in a format readable by software possessed by the recipient party, or storage of a complete printed paper copy of the document.
The new rule is effective May 5, 2010.
CBP Publishes Proposed Rule re: Customs Broker Recordkeeping Requirements
03/23/10 11:52 PM
On
March 23, 2010, Customs and Border Protection (CBP)
published a notice of proposed
amendments to title 19 of
the Code of Federal Regulations (CFR) regarding
customs broker recordkeeping requirements as
they pertain to the location and method of
record retention.
Specifically, CBP proposes to amend the regulations to permit a licensed customs broker to store records relating to his customs transactions at any location within the customs territory of the United States, so long as the broker’s designated recordkeeping contact, identified in the broker’s permit application, makes all records available to CBP within a reasonable period of time from request at the broker district that covers the CBP port to which the records relate.
This proposed rule also intends to remove the requirement, as it currently applies to brokers who maintain separate electronic records, that certain entry records must be retained in their original format for the 120-day period after the release or conditional release of imported merchandise. The changes proposed in the notice are intended to conform CBP’s recordkeeping requirements to reflect modern business practices whereby documents are often generated, stored and transmitted in an electronic format. The proposed changes serve to remove duplicative recordkeeping requirements and streamline recordkeeping procedures for brokers who maintain electronic recordkeeping systems without compromising the agency’s ability to monitor and enforce recordkeeping compliance.
Comments must be received on or before May 24, 2010.
Specifically, CBP proposes to amend the regulations to permit a licensed customs broker to store records relating to his customs transactions at any location within the customs territory of the United States, so long as the broker’s designated recordkeeping contact, identified in the broker’s permit application, makes all records available to CBP within a reasonable period of time from request at the broker district that covers the CBP port to which the records relate.
This proposed rule also intends to remove the requirement, as it currently applies to brokers who maintain separate electronic records, that certain entry records must be retained in their original format for the 120-day period after the release or conditional release of imported merchandise. The changes proposed in the notice are intended to conform CBP’s recordkeeping requirements to reflect modern business practices whereby documents are often generated, stored and transmitted in an electronic format. The proposed changes serve to remove duplicative recordkeeping requirements and streamline recordkeeping procedures for brokers who maintain electronic recordkeeping systems without compromising the agency’s ability to monitor and enforce recordkeeping compliance.
Comments must be received on or before May 24, 2010.
DDTC Publishes Proposed Rules for Comment
11/25/09 03:11 PM
On
November 25, 2009, the Department of State's
Directorate of Defense Trade Controls (DDTC)
published a proposed rule
to
amend Section 126.6 of the International Traffic
in Arms Regulations (ITAR) pertaining to U.S.
Government transfer programs and foreign-owned
military aircraft and naval vessels. Section
126.6 is being amended to clarify the particular
circumstances when a license is not required by
DDTC. DDTC will accept comments on this proposed
rule until January 25, 2010.
On November 25, 2009, the DDTC also published a proposed rule to amend Section 125.9 of the ITAR regarding an exemption for technical data, to clarify that the exemption covers technical data, including classified information, regardless of media or format, sent or taken by a U.S. person who is an employee of a U.S. corporation or a U.S. Government agency to a U.S. person employed by that U.S. corporation or to a U.S. Government agency outside the United States. DDTC will accept comments on this proposed rule until January 25, 2010.
On November 25, 2009, the DDTC also published a proposed rule to amend Section 125.9 of the ITAR regarding an exemption for technical data, to clarify that the exemption covers technical data, including classified information, regardless of media or format, sent or taken by a U.S. person who is an employee of a U.S. corporation or a U.S. Government agency to a U.S. person employed by that U.S. corporation or to a U.S. Government agency outside the United States. DDTC will accept comments on this proposed rule until January 25, 2010.
CBP Proposes Regulation Changes re: the Use of Statistical Sampling in Audits and Prior Dislcosures and Offsetting Overpayments and Over-Declarations
10/22/09 09:46 AM
On
October 21, 2009, Customs and Border Protection
(CBP) announced that it
had published in the Federal
Register proposed amendments to the Customs
regulations on the use of statistical sampling
in CBP audits and prior disclosure cases and the
use of offsetting overpayments and
over-declarations in audits. Written comments on
the proposed amendments may be submitted by
interested persons on or before December 21,
2009.
The proposed amendments to the regulations provide further guidance with regard to the use of statistical sampling in audits conducted by CBP under section 1509 of the Regulations and in independent reviews and lost revenue calculations for private parties for purposes of prior disclosure. Specifically, the amended regulations provide that: (1) CBP has the sole discretion concerning whether to employ statistical sampling in any given case, authorize a person being audited to perform self-testing and use statistical sampling, or accept the statistical sampling used by a private party conducting an independent review and calculation of lost revenue in a prior disclosure case. Once CBP approves the specfics of a statistical sampling plan, and the person being audited or submitting the prior disclosure agrees to waive its ability to challenge the validty of the sampling plan at a later date (any future challenges will be limited to computation and clerical errors), the audit (or self-testing) may proceed in accordance with the sampling plan. CBP reserves the reight in any case to conduct a full enty-by-entry audit if it deems such an audit to be appropriate.
Furthermore, the amendments provide that CBP auditors and private parties seeking to use statistical sampling with regard to a prior disclosure case may do so only when: (1) review of 100 percent of the transactions is impossible or impractical; (2) the sampling plan is prepared in accordance with generally recognized sampling procedures; and (3) the sampling procedure is executed in accordance with that plan. 19 C.F.R. § 163.11(c)(2) (as proposed).
With regard to offsetting overpayments and over-declarations, CBP is proposing updating the regulations to reflect an amendment to section 1509(b) made by Section 382 of the Trade Act of 2002. Prior to the Act, once liquidation had become final with respect to an entry that was overpaid, CBP was bound by the liquidation and could not offset an overpayment against the underpayments that formed the basis of a penalty action. CBP is now authorized under the statute to account for overpayments of duties and fees and over-declarations of quantities or values when calculating loss of duties, taxes, or fees and monetary penalties levied under section 1592, if:
(1) The overpayments or over-declarations are identified by CBP during an audit (review or examination) conducted by CBP under section 1509(b);
(2) The audit was completed on or after August 6, 2002, the effective date of the Act;
(3) The overpayments or over-declarations relate to liquidated entries;
(4) The overpayments or over-declarations are determined by CBP as having been made within the time period and scope of the audit as defined by CBP; and
(5) The overpayments or over-declarations are determined by CBP not to have been made for the purpose of violating any provision of law, including the customs laws and laws enforced by other agencies, including, but not limited to, the Internal Revenue Service.
The proposed amendments to the regulations provide further guidance with regard to the use of statistical sampling in audits conducted by CBP under section 1509 of the Regulations and in independent reviews and lost revenue calculations for private parties for purposes of prior disclosure. Specifically, the amended regulations provide that: (1) CBP has the sole discretion concerning whether to employ statistical sampling in any given case, authorize a person being audited to perform self-testing and use statistical sampling, or accept the statistical sampling used by a private party conducting an independent review and calculation of lost revenue in a prior disclosure case. Once CBP approves the specfics of a statistical sampling plan, and the person being audited or submitting the prior disclosure agrees to waive its ability to challenge the validty of the sampling plan at a later date (any future challenges will be limited to computation and clerical errors), the audit (or self-testing) may proceed in accordance with the sampling plan. CBP reserves the reight in any case to conduct a full enty-by-entry audit if it deems such an audit to be appropriate.
Furthermore, the amendments provide that CBP auditors and private parties seeking to use statistical sampling with regard to a prior disclosure case may do so only when: (1) review of 100 percent of the transactions is impossible or impractical; (2) the sampling plan is prepared in accordance with generally recognized sampling procedures; and (3) the sampling procedure is executed in accordance with that plan. 19 C.F.R. § 163.11(c)(2) (as proposed).
With regard to offsetting overpayments and over-declarations, CBP is proposing updating the regulations to reflect an amendment to section 1509(b) made by Section 382 of the Trade Act of 2002. Prior to the Act, once liquidation had become final with respect to an entry that was overpaid, CBP was bound by the liquidation and could not offset an overpayment against the underpayments that formed the basis of a penalty action. CBP is now authorized under the statute to account for overpayments of duties and fees and over-declarations of quantities or values when calculating loss of duties, taxes, or fees and monetary penalties levied under section 1592, if:
(1) The overpayments or over-declarations are identified by CBP during an audit (review or examination) conducted by CBP under section 1509(b);
(2) The audit was completed on or after August 6, 2002, the effective date of the Act;
(3) The overpayments or over-declarations relate to liquidated entries;
(4) The overpayments or over-declarations are determined by CBP as having been made within the time period and scope of the audit as defined by CBP; and
(5) The overpayments or over-declarations are determined by CBP not to have been made for the purpose of violating any provision of law, including the customs laws and laws enforced by other agencies, including, but not limited to, the Internal Revenue Service.
In-Country Transfers of Items Subject to EAR Require Licenses
09/08/09 04:00 PM
On
September 8, 2009, the Department of Commerce’s
Bureau of Industry and Security (BIS) published
a final rule in the Federal
Register amending three sections of 15 C.F.R.
Part 744 of the Export Administration
Regulations (EAR) used by the U.S. Government as
the regulatory basis for placing persons on the
Entity List.
Effective immediately, the new rule specifies that licenses are required for in-country transfers of any items subject to the EAR as they pertain to Certain Entities in Russia (§744.10), Entities Acting Contrary to the National Security or Foreign Policy Interests of the U.S. (§744.11), and Certain Sanctioned Entities (§744.20).
Prior to this amendment, the three sections specified that licenses are required for exports and re-exports to persons listed on the Entity List however, they were silent regarding licenses pertaining to in-country transfers of items subject to the EAR.
As a result of this amendment, all end-use and end-user controls that are used as a regulatory basis for placing persons on the Entity List (15 C.F.R. §§ 744.2-744.4, 744.10-744.11, and 744.20) now include in-country transfers in addition to exports and re-exports.
Effective immediately, the new rule specifies that licenses are required for in-country transfers of any items subject to the EAR as they pertain to Certain Entities in Russia (§744.10), Entities Acting Contrary to the National Security or Foreign Policy Interests of the U.S. (§744.11), and Certain Sanctioned Entities (§744.20).
Prior to this amendment, the three sections specified that licenses are required for exports and re-exports to persons listed on the Entity List however, they were silent regarding licenses pertaining to in-country transfers of items subject to the EAR.
As a result of this amendment, all end-use and end-user controls that are used as a regulatory basis for placing persons on the Entity List (15 C.F.R. §§ 744.2-744.4, 744.10-744.11, and 744.20) now include in-country transfers in addition to exports and re-exports.
BIS Amends Regulations to Ease Restrictions on Gift Parcels and Humanitarian Donations to Cuba
09/03/09 05:40 PM
On
September 3, 2009, the U.S. Department of
Commerce’s Bureau of Industry and Security
(BIS) announced amendments to the Export
Administration Regulations (EAR) making it
easier for Americans to visit and send gifts to
their family members in Cuba. The amendment
concerns primarily 15 C.F.R. §740.12, which
authorizes, among other things, certain exports
of gift parcels to Cuba pursuant to a License
Exception GFT (Gift Parcels and Humanitarian
Donations). BIS published Questions and Answers
regarding these amendments here.
The new measures remove the requirement that gift parcels be sent only to donor’s immediate family members. Instead, an individual in the U.S. may now send a gift parcel to an individual or an independent religious, educational, or charitable organization in Cuba. The same donor can send only one gift parcel to the same donee in any calendar month; however, there is no frequency limit on gift parcels of food to Cuba. The new regulations also require that parcel contents be used by donee or his immediate family; resale of gifts is prohibited. With some exceptions, any items normally exchanged between individuals as gifts may be included in such gift parcels, with the combined total domestic retail value not exceeding $800 (this limit does not apply to food items).
In circumstances outside the scope of the license exception, such as when parties seek to ship gift parcels to Cuba more frequently, or want to consolidate several parcels into one shipment, individuals should file for a license application with BIS.
In addition to the GFT Exception, the licensing policy was also revised to facilitate exports needed to establish telecommunications links between the U.S. and Cuba, including relations established through third countries and provision of satellite radio and television services to Cuba. A new License Exception CCD (Consumer Communications Devices) found in §740.19 of the EAR authorizes exports and re-exports to Cuba of donated personal communication devices such as mobile phones, computers and software, satellite receivers and digital cameras.
With respect to the License Exception BAG (Baggage) found in §740.14, the EAR was amended to remove the 44-pound limit that used to apply to personal baggage of travelers to Cuba.
To accommodate the new License Exception CCD, the U.S. Census Bureau has modified the Automated Export System (AES) by adding the new License Type Code “C58.” The AES filers who report “C58” are required to report CCD, regardless of value, in the license number field and the Export Control Classification Numbers 4A994, 4D994, 5A991, 5D991, 5A992, 5D992, or EAR99 corresponding to the License Exception. AES filers must report the country of destination and ultimate consignee as CU. Furthermore, Export Information Codes OS, OI, CH, and CI, and all modes of transportation, except pipeline, are acceptable.
The new measures remove the requirement that gift parcels be sent only to donor’s immediate family members. Instead, an individual in the U.S. may now send a gift parcel to an individual or an independent religious, educational, or charitable organization in Cuba. The same donor can send only one gift parcel to the same donee in any calendar month; however, there is no frequency limit on gift parcels of food to Cuba. The new regulations also require that parcel contents be used by donee or his immediate family; resale of gifts is prohibited. With some exceptions, any items normally exchanged between individuals as gifts may be included in such gift parcels, with the combined total domestic retail value not exceeding $800 (this limit does not apply to food items).
In circumstances outside the scope of the license exception, such as when parties seek to ship gift parcels to Cuba more frequently, or want to consolidate several parcels into one shipment, individuals should file for a license application with BIS.
In addition to the GFT Exception, the licensing policy was also revised to facilitate exports needed to establish telecommunications links between the U.S. and Cuba, including relations established through third countries and provision of satellite radio and television services to Cuba. A new License Exception CCD (Consumer Communications Devices) found in §740.19 of the EAR authorizes exports and re-exports to Cuba of donated personal communication devices such as mobile phones, computers and software, satellite receivers and digital cameras.
With respect to the License Exception BAG (Baggage) found in §740.14, the EAR was amended to remove the 44-pound limit that used to apply to personal baggage of travelers to Cuba.
To accommodate the new License Exception CCD, the U.S. Census Bureau has modified the Automated Export System (AES) by adding the new License Type Code “C58.” The AES filers who report “C58” are required to report CCD, regardless of value, in the license number field and the Export Control Classification Numbers 4A994, 4D994, 5A991, 5D991, 5A992, 5D992, or EAR99 corresponding to the License Exception. AES filers must report the country of destination and ultimate consignee as CU. Furthermore, Export Information Codes OS, OI, CH, and CI, and all modes of transportation, except pipeline, are acceptable.
BIS Issues Final Rule on Certain Thermal Imaging Cameras
05/22/09 10:08 PM
On May
22, 2009, the Bureau of Industry and Security (BIS)
published a final rule in the Federal
Register revising the license requirements and
license exception eligibility for certain
thermal imaging cameras and foreign made
military commodities incorporating such cameras.
The rule imposes a license requirement for certain exports and reexports of military commodities manufactured outside the United States that are not subject to the International Traffic in Arms Regulations (ITAR), regardless of the level of U.S.-origin content, if those military commodities incorporate certain thermal imaging cameras that are subject to the Export Administration Regulations (EAR).
The rule also removes Commerce Control List (CCL) based export and reexport license requirements with respect to 36 destinations for certain thermal imaging cameras when they are not incorporated into military commodities and if they are not being exported or reexported to be embedded in a civil product. It imposes a semi-annual reporting requirement on the transactions from which it removes the CCL based license requirements.
The rule also imposes a license requirement for software used to increase the frame rate of certain cameras.
BIS states that it is making these changes in recognition of the emerging availability of these cameras around the world, the export licensing practices of other governments and the potential use of these cameras in military applications.
The rule imposes a license requirement for certain exports and reexports of military commodities manufactured outside the United States that are not subject to the International Traffic in Arms Regulations (ITAR), regardless of the level of U.S.-origin content, if those military commodities incorporate certain thermal imaging cameras that are subject to the Export Administration Regulations (EAR).
The rule also removes Commerce Control List (CCL) based export and reexport license requirements with respect to 36 destinations for certain thermal imaging cameras when they are not incorporated into military commodities and if they are not being exported or reexported to be embedded in a civil product. It imposes a semi-annual reporting requirement on the transactions from which it removes the CCL based license requirements.
The rule also imposes a license requirement for software used to increase the frame rate of certain cameras.
BIS states that it is making these changes in recognition of the emerging availability of these cameras around the world, the export licensing practices of other governments and the potential use of these cameras in military applications.
BIS Seeks Public Comments on Effects of Export Controls on Decisions to Use or Not Use U.S.-Origin Parts or Components
01/30/09 05:34 PM
On
January 5, 2009, the Bureau of Industry and
Security (BIS) published a
notice
in the
Federal Register seeking public comments on whether
U.S. export controls influence manufacturers'
decisions to use or not use U.S.-origin parts and
components in commercial products and the effects
of such decisions. In the notice, BIS states that
it "is interested in obtaining specific information
about whether such a practice occurs, and if so,
its economic effects in order to assess the
effectiveness of export controls as well as the
impact of export controls on the U.S. economy.
Comments must be received no later than February 19, 2009.
Comments must be received no later than February 19, 2009.
Obama Administration Halts Implementation of New and Pending Regualtions
01/21/09 05:35 PM
In a
tool commonly used by new administrations to delay
or avoid “midnight regulations” put in place by the
outgoing administration between election and
Inauguration Day, on January 20, 2009, the Obama
administration ordered all federal agencies and
departments to stop any pending regulations until
they can be reviewed by the incoming
administration. The
memorandum was sent to all
Executive agencies and department heads by White
House Chief of Staff, Rahm Emanuel. Pursuant to the
President’s instructions, Emanuel requested that
the following three steps be taken depending on the
status of the new regulations.
The administrations request that agency and department heads extend the effective date of regulations that have already been published, but have not yet taken affect, could potentially affect the effective date for a number of import-related regulations.
- Subject to certain exceptions for emergency situations or other urgent circumstances relating to health, safety, and environmental, financial or national security matters, as determined by the Director of the Office of Management and Budget, no proposed or final regulations should be sent to the Office of the Federal Register for publication unless it has been reviewed or approved by a department or agency head appointed by President Obama after noon on January 20, 2009.
- All proposed or final regulations that have not been published in the Federal Register be withdrawn from the Office of the Federal Register so that they can be reviewed and approved by a Obama appointees.
- For regulations that have been published in the Federal Register, but have not yet taken effect, that the agency or department head consider extending the effective date of the regulations for 60 days for the purpose of reviewing questions of law and policy provided the regulations do not affect critical health, safety, environmental, financial or nations security matters. Notice and comment periods should also be reopened for 30 days after the 60 day extension is implemented.
The administrations request that agency and department heads extend the effective date of regulations that have already been published, but have not yet taken affect, could potentially affect the effective date for a number of import-related regulations.
BIS Seeks Public Comments on Foreign Produced Items Made from U.S.-Origin Encryption Technology or Software
01/07/09 05:40 PM
On
January 6, 2009, the Bureau of Industry and
Security (BIS) published a
notice
in the
Federal Register requesting public comments on the
appropriate extent and scope of U.S. export
controls on foreign products that are the direct
products of U.S.-origin encryption technology or
software. BIS is seeking information on the
potential impact of controlling such foreign made
items for Encryption Items (EI) reasons under the
Export Administration Regulations (EAR) (i.e.,
those items classified under ECCN 5A002 or 5D002).
Specifically, BIS is requesting comments regarding the impact this control would have on both U.S. exporters of encryption technology/software and foreign manufacturers of products that are derived in whole or in part from U.S.-origin encryption technology or software.
Comments must be received by BIS no later than March 9, 2009.
Specifically, BIS is requesting comments regarding the impact this control would have on both U.S. exporters of encryption technology/software and foreign manufacturers of products that are derived in whole or in part from U.S.-origin encryption technology or software.
Comments must be received by BIS no later than March 9, 2009.
BIS Issues Final Rule with Conforming Changes to End-User/End Use Based Controls and Clarification of Terms
11/18/08 12:40 AM
On
November 18, 2008, the Bureau of Industry and
Security (BIS) published a final rule in the Federal
Register amending the Export Administration
Regulations (EAR) by making conforming changes
in certain end-user/end-use controls in the EAR
to ensure that the terminology used to describe
each type of end-user/end-use control is
consistent, to the fullest extent possible, with
the terminology in such other controls in the
EAR. In addition, the final rule amends the EAR
by revising the definition of the term
"transfer" and certain related terms, to provide
greater clarity regarding these provisions.
With regard to the end-user/end-use conforming changes, BIS states that the amendments clarify that a party cannot proceed with an export, reexport, or transfer (in-country) that is in transit at the time the party is informed by BIS that a license is required (in accordance with certain end-user/end-use controls in the EAR), unless that party first obtains a license from BIS authorizing the completion of the transaction. These changes are intended to enhance the ability of BIS to stop items subject to the EAR, including items not on the CCL, from being exported, reexported or transferred when there is an unacceptable risk that such items will be used in, or diverted to, any of the proliferation activities specified in certain sections of the EAR.
With regard to the end-user/end-use conforming changes, BIS states that the amendments clarify that a party cannot proceed with an export, reexport, or transfer (in-country) that is in transit at the time the party is informed by BIS that a license is required (in accordance with certain end-user/end-use controls in the EAR), unless that party first obtains a license from BIS authorizing the completion of the transaction. These changes are intended to enhance the ability of BIS to stop items subject to the EAR, including items not on the CCL, from being exported, reexported or transferred when there is an unacceptable risk that such items will be used in, or diverted to, any of the proliferation activities specified in certain sections of the EAR.
BIS Requests Public Comments on Removing Category 7A Products from De Minimis Eligibility
11/14/08 11:14 PM
On
November 14, 2008, the Bureau of Industry and
Security (BIS) announced in the Federal
Register that it is seeking public comments on
the prospect of removing from de minimis
eligibility commodities controlled for missile
technology (MT) reasons under Category 7 -
Product Group A on the Commerce Control List
(CCL) except when the 7A commodities are
incorporated as standard equipment in Federal
Aviation Administration (FAA) (or national
equivalent) certified civilian transport
aircraft.
BIS states that it specifically is seeking public input on the impact the proposed change would have on U.S. manufacturers of Category 7A commodities, as well as the impact such a change would have on foreign manufacturers that incorporate U.S.-origin 7A commodities into their foreign-made products.
Comments must be received no later than January 20, 2009.
BIS states that it specifically is seeking public input on the impact the proposed change would have on U.S. manufacturers of Category 7A commodities, as well as the impact such a change would have on foreign manufacturers that incorporate U.S.-origin 7A commodities into their foreign-made products.
Comments must be received no later than January 20, 2009.
BIS to Hold Public Meeting on Proposed Intra-Company Transfer (ICT) Rule
10/21/08 10:01 PM
On
October 27, 2008, the Commerce Department's Bureau
of Industry and Security (BIS) will hold a
public meeting to discuss its
proposed rule on the Intra-Company Transfer (ICT)
license exception. The meeting will be held at 9:00
am in Room 4830 of the Herbert C. Hoover Building
in Washington, D.C. on October 27, 2008.
CBP Issues Softwood Lumber Act Interim Rule CBP Issues Softwood Lumber Act Interim Rule
09/23/08 07:26 PM
On
September 22, 2008, the U.S. Customs and Border
Protection (CBP) has issued
an interim rule with
instructions on implementation of the Softwood
Lumber Act of 2008 (SLA).
Enacted on June 18, 2008, SLA applies to softwood lumber products that are imported into the United States from any country on or after September 18, 2008. For purposes of determining if a product is within the scope of SLA, merchandise descriptions should be used.
Entry Summary (CBP 7501) Requirements:
For products within the scope of SLA, importers must provide the following information at the time of entry summary filing:
The export price and the estimated export charge must always be expressed in U.S. dollars.
If an importer claims that a shipment of softwood lumber home packages or kits is exempt from SLA per § 804(c)(7), the importer is required to retain, and produce upon request by CBP:
The SLA does not provide for a de minimis provision. Thus, all shipments of softwood lumber products as defined in the SLA, regardless of value, must comply with these requirements.
A sample entry summary form (CBP 7501) with instructions of entries for purposes of SLA, can be found here.
Enacted on June 18, 2008, SLA applies to softwood lumber products that are imported into the United States from any country on or after September 18, 2008. For purposes of determining if a product is within the scope of SLA, merchandise descriptions should be used.
Entry Summary (CBP 7501) Requirements:
For products within the scope of SLA, importers must provide the following information at the time of entry summary filing:
- Export price;
- Estimated Export charge – if any, calculated by applying the percentage determined and published by Department of Commerce, found here, to the export price; and
- Importer declaration – each importer must provide a softwood lumber declaration on the electronic entry summary by entering the letter code “Y” on the relevant line of the entry summary. By entering “Y” on the import declaration, the importer will represent to CBP that the importer has made an inquiry (including seeking appropriate documentation from the exporter and consulting the determinations published by the Department of Commerce). Furthermore, the declaration serves to show that the information provided was to the best of the person’s knowledge and belief that: (a) the export price provided is determined in accordance with the definition set forth in SLA, and is consistent with the export price provided on the export permit, if any, granted by the country of export; and (b) the exporter has paid, or committed to pay, all export charges dues in accordance with the volume, export price, and export charge rate or rates.
The export price and the estimated export charge must always be expressed in U.S. dollars.
If an importer claims that a shipment of softwood lumber home packages or kits is exempt from SLA per § 804(c)(7), the importer is required to retain, and produce upon request by CBP:
- A copy of the appropriate home design, plan, or blueprint matching the customs entry in the United States;
- A purchase contract from a retailer of home kits or packages signed by customers not affiliated with the importer;
- A listing of all parts in the package or kit being entered into the United States that conforms to the home design, plan, or blueprint for which such parts are being imported; and
- If a single contract involves multiple entries, a listing of all items included in each individual shipment.
The SLA does not provide for a de minimis provision. Thus, all shipments of softwood lumber products as defined in the SLA, regardless of value, must comply with these requirements.
A sample entry summary form (CBP 7501) with instructions of entries for purposes of SLA, can be found here.
CBP Extends Comment Period for Proposed Uniform Rules of Origin
09/10/08 10:54 PM
On
September 8, 2008, U.S. Bureau of Customs and
Border Protection (CBP) announced that the
comment period on the proposed uniform rules of
origin for imported merchandise has been
extended. Interested parties may submit their
comments to CBP on or before October 23, 2008.
On July 25, 2008, CBP published a notice proposing to amend the CBP regulations to establish uniform rules of origin for imported merchandise. Under the proposal, application of the country of origin rules codified in 19 CFR Part 102 will be extended to all imported merchandise.
All merchandise imported into the U.S. undergoes country of origin determination. Under current regulations, CBP uses two primary methods to determine the country of origin of imported goods that contain material from, or were processed in, more than one country. To determine whether goods have been "substantially transformed" in a particular country, one method employs case-by-case analysis while the other primarily uses 19 CFR Part 102 rules detailing change in tariff classification.
Under the proposed regulations, CBP intends to eliminate the “substantial transformation” test codified in Part 134 of the CBP regulations, and adapt the Part 102 rules that currently apply to textiles (with some exceptions) and to products originating in the NAFTA region.
On July 25, 2008, CBP published a notice proposing to amend the CBP regulations to establish uniform rules of origin for imported merchandise. Under the proposal, application of the country of origin rules codified in 19 CFR Part 102 will be extended to all imported merchandise.
All merchandise imported into the U.S. undergoes country of origin determination. Under current regulations, CBP uses two primary methods to determine the country of origin of imported goods that contain material from, or were processed in, more than one country. To determine whether goods have been "substantially transformed" in a particular country, one method employs case-by-case analysis while the other primarily uses 19 CFR Part 102 rules detailing change in tariff classification.
Under the proposed regulations, CBP intends to eliminate the “substantial transformation” test codified in Part 134 of the CBP regulations, and adapt the Part 102 rules that currently apply to textiles (with some exceptions) and to products originating in the NAFTA region.
BIS Issues Rule for Expanding Entity List
08/23/08 12:59 PM
On
August 21, 2008, Bureau of Industry and Security
(BIS) issued a final
rule that expands the
criteria for adding parties to the Entity List. The
BIS Entity List lists parties whose involvement in
a transaction can require a license under the
Export Administration Regulations (EAR). The list
specifies the license requirements that apply to
each listed entity.
Effective immediately, the new rule authorizes imposition of foreign policy export and reexport license requirements, limiting the availability of license exceptions, and setting license application review policy for exports and reexports. BIS may take such actions “if there is reasonable cause to believe, based on specific and articulable facts, that the entity has been involved, is involved, or poses a significant risk of becoming involved in activities that are contrary to the national security or foreign policy interests of the United States.”
Under the rule, the activities at issue do not have to be subject to EAR in order for a party to be placed on the Entity List. BIS lists five examples of conduct that could be found detrimental to the identified U.S. interests:
Supporting persons engaged in acts of terror;
Actions that could strengthen military or terrorism capabilities of governments that have been designated by the Secretary of State as repeatedly providing support for acts of international terrorism;
Dealing or assisting dealing in conventional weapons in a way contrary to the U.S. national security or foreign policy interest;
Preventing accomplishment of an end use check conducted by BIS or the Directorate of Defense Trade Controls; and
Engaging in conduct that poses a risk of violating the EAR when such conduct raises sufficient concern that prior review of exports or reexports enhances BIS’s ability to prevent EAR violations.
The rule applies to foreign parties only, and will not be used to add U.S. persons on the Entity List. Thus, a foreign party could be added to the Entity List if specific and articulable facts provide that it has been engaged in the type of conduct identified.
The new rule also amends the EAR to include a procedure for addressing requests of a listed parties to be removed from the list or have their listing modified.
Effective immediately, the new rule authorizes imposition of foreign policy export and reexport license requirements, limiting the availability of license exceptions, and setting license application review policy for exports and reexports. BIS may take such actions “if there is reasonable cause to believe, based on specific and articulable facts, that the entity has been involved, is involved, or poses a significant risk of becoming involved in activities that are contrary to the national security or foreign policy interests of the United States.”
Under the rule, the activities at issue do not have to be subject to EAR in order for a party to be placed on the Entity List. BIS lists five examples of conduct that could be found detrimental to the identified U.S. interests:
Supporting persons engaged in acts of terror;
Actions that could strengthen military or terrorism capabilities of governments that have been designated by the Secretary of State as repeatedly providing support for acts of international terrorism;
Dealing or assisting dealing in conventional weapons in a way contrary to the U.S. national security or foreign policy interest;
Preventing accomplishment of an end use check conducted by BIS or the Directorate of Defense Trade Controls; and
Engaging in conduct that poses a risk of violating the EAR when such conduct raises sufficient concern that prior review of exports or reexports enhances BIS’s ability to prevent EAR violations.
The rule applies to foreign parties only, and will not be used to add U.S. persons on the Entity List. Thus, a foreign party could be added to the Entity List if specific and articulable facts provide that it has been engaged in the type of conduct identified.
The new rule also amends the EAR to include a procedure for addressing requests of a listed parties to be removed from the list or have their listing modified.
State Department Posts Comments Received on Proposed Rule
05/22/08 03:22 PM
On April
11, 2008, the State Department's Directorate of
Defense Trade Controls (DDTC) published a
notice
in
the Federal Register regarding a proposed rule
intended to clarify the control of aircraft
parts and components under Section 17(c) of the
Export Administration Act of 1979 (EAA). In the
notice, the DDTC states that there have been an
increasing number of Commodity Jurisdiction (CJ)
requests for certain basic parts and components
having a long history of use on both civil and
military aircraft. DDTC stated, "The intent of
this notice is to make it clear that these parts
and components are not subject to the
jurisdiction of the Department of State and to
restate the Department's longstanding practice
of using the CJ process of using the CJ process
to determine the applicability of the criteria
of Section 17(c) of the EAA ("Section 17(c)") in
cases where there is uncertainty."
In the notice, DDTC stated it would accept comments to the proposed rule until May 12, 2008. On May 22, 2008, DDTC posted the comments it received to the proposed rule here. Comments were received from the following parties:
In the notice, DDTC stated it would accept comments to the proposed rule until May 12, 2008. On May 22, 2008, DDTC posted the comments it received to the proposed rule here. Comments were received from the following parties:
- Aerospace Industries Association
- Airbus
- Alcoa
- Aviation Suppliers Association
- The Boeing Company
- Commerce/BIS Transportation and Related Equipment Technical Advisory Committee
- deButts, Thomas, Pillsbury, Winthrop, Shaw, Pittman, LLP
- Emerson Power Transmission
- Goodrich Corporation
- Industrial Fasteners Institute
- Korry Electronics
- Lockheed Martin Corporation
- Rep. Donald Mazullo, U.S. House of Representatives
- Modification and Replacement Parts Association
- William Root
- Safran USA
Update on Proposed Re-Interpretation of "First Sale" Valuation
03/27/08 12:20 PM
Comments for the
proposed interpretation of the "First Sale" rule
are due on April
23, 2008. To date,
17 comments have been posted. Two of the
comments support the proposed
change. Comments against the proposed
interpretation include Boeing, Wicked Fashions
Inc., RG Barry Corporation, Northern Tool and
Equipment Co., Inc., The New Zealand Manufacturers
and Exporters Association and COAC.
U.S. Customs and Border Protection ("CBP") is proposing that the transaction value (or price paid or payable) for imported goods in a series of sales is the price paid or payable in the last sale occurring prior to the goods' importation into the United States, rather than the price in the first or earlier sale. CBP states that this is based on its proposed revised interpretation of the phrase "when sold for exportation to the United States" such that CBP no longer believes that the first (or earlier) sale qualifies as a sale for exportation to the United States. CBP states that this proposed interpretation is in line with the conclusions of the Technical Committee on Customs Valuation as set forth in Commentary 22.1, entitled, "Meaning of the Expression 'Sold for Export to the Country of Importation' in a Series of Sales."
U.S. Customs and Border Protection ("CBP") is proposing that the transaction value (or price paid or payable) for imported goods in a series of sales is the price paid or payable in the last sale occurring prior to the goods' importation into the United States, rather than the price in the first or earlier sale. CBP states that this is based on its proposed revised interpretation of the phrase "when sold for exportation to the United States" such that CBP no longer believes that the first (or earlier) sale qualifies as a sale for exportation to the United States. CBP states that this proposed interpretation is in line with the conclusions of the Technical Committee on Customs Valuation as set forth in Commentary 22.1, entitled, "Meaning of the Expression 'Sold for Export to the Country of Importation' in a Series of Sales."
CBP Extends Comment Period for Proposed Interpretation re: "First Sale" Valuation
02/08/08 08:31 PM
On
February 7, 2008, the U.S. Customs and Border
Protection ("CBP") published a
notice in the
Federal
Register extending by 30
days the comment period for its proposed
interpretation of the phrase "sold for exportation
to the United States" for purposes of applying the
transaction value method of appraisement when a
series of sales exist prior to importation into the
U.S.
CBP is proposing that the transaction value (or price paid or payable) for imported goods in a series of sales is the price paid or payable in the last sale occurring prior to the goods' importation into the United States, rather than the price in the first or earlier sale. CBP states that this is based on its proposed revised interpretation of the phrase "when sold for exportation to the United States" such that CBP no longer believes that the first (or earlier) sale qualifies as a sale for exportation to the United States. CBP states that this proposed interpretation is in line with the conclusions of the Technical Committee on Customs Valuation as set forth in Commentary 22.1, entitled, "Meaning of the Expression 'Sold for Export to the Country of Importation' in a Series of Sale."
On January 24, 2008, CBP published a notice in the Federal Register setting forth its proposed interpretation with a comment period to expire on March 24, 2008. CBP received correspondence requesting an extension of the comment period. Accordingly, CBP has decided to allow an additional 30 days for comments. Comments are now due on or before April 23, 2008.
CBP is proposing that the transaction value (or price paid or payable) for imported goods in a series of sales is the price paid or payable in the last sale occurring prior to the goods' importation into the United States, rather than the price in the first or earlier sale. CBP states that this is based on its proposed revised interpretation of the phrase "when sold for exportation to the United States" such that CBP no longer believes that the first (or earlier) sale qualifies as a sale for exportation to the United States. CBP states that this proposed interpretation is in line with the conclusions of the Technical Committee on Customs Valuation as set forth in Commentary 22.1, entitled, "Meaning of the Expression 'Sold for Export to the Country of Importation' in a Series of Sale."
On January 24, 2008, CBP published a notice in the Federal Register setting forth its proposed interpretation with a comment period to expire on March 24, 2008. CBP received correspondence requesting an extension of the comment period. Accordingly, CBP has decided to allow an additional 30 days for comments. Comments are now due on or before April 23, 2008.
For further information, contact: Lorrie Rodbart, Valuation and Special Programs Branch, Regulations and Rulings, Office of International Trade; Phone: (202) 572-8740.
CBP Extends 10+2 Comment Period
02/06/08 04:09 PM
On February 1, 2008,
U.S. Customs and Border Protection (CBP) published
a notice in the Federal Register
extending the comment period for its proposed
"10+2" filing requirement for ocean cargo by 15
days until March 18, 2008. It is expected that
many interested parties will be filing comments
on the proposed rule.
On January 2, 2008, U.S. Customs and Border Protection (CBP) published a proposed rule regarding importer security filing and additional carrier requirements, also known as the "10+2" rule. The proposed rule will require that importers and carriers to submit additional information regarding cargo before the cargo is brought into the U.S. by vessel. The information must be provided 24 hours prior to loading of the cargo on the vessel and via a CBP-approved electronic data interchange system.
The proposed rule is intended to allow CBP to identify high-risk shipments to prevent smuggling and ensure cargo safety and security. The proposed regulations originate from the Security and Accountability for Every (SAFE) Port Act of 2006 and the Trade Act of 2002. CBP issued a news release about the rule here.
On January 2, 2008, U.S. Customs and Border Protection (CBP) published a proposed rule regarding importer security filing and additional carrier requirements, also known as the "10+2" rule. The proposed rule will require that importers and carriers to submit additional information regarding cargo before the cargo is brought into the U.S. by vessel. The information must be provided 24 hours prior to loading of the cargo on the vessel and via a CBP-approved electronic data interchange system.
The proposed rule is intended to allow CBP to identify high-risk shipments to prevent smuggling and ensure cargo safety and security. The proposed regulations originate from the Security and Accountability for Every (SAFE) Port Act of 2006 and the Trade Act of 2002. CBP issued a news release about the rule here.
Customs Proposes Eliminating "First Sale" Valuation
01/24/08 10:16 PM
CBP
Proposes Eliminating "First Sale"
Valuation
Proposed Change May Substantially Increase Duties and Fees for Importers
On January 24, 2008, U.S. Customs and Border Protection (CBP) published a notice in the Federal Register proposing to change its practices with regard to the proper customs valuation of imported products in multi-sale transactions.
Specifically, CBP is proposing rejecting the use of "first sale" valuation and instead requiring the use of the "last sale," i.e., the value paid by the U.S. buyer for the product, as the basis of transaction value for such products.
Under current conditions, importers may value imported products in situations involving multiple sales (e.g., those involving a sale from the manufacturer to a middleman overseas and a sale from the middleman to the buyer in the U.S.), at the "first sale" price between the manufacturer and the overseas middleman if certain conditions are met. Specifically, the first sale must be an arm's length sale and the goods must be clearly destined for export to the U.S.
CBP proposes changing its interpretation of the meaning of "sold for export to the United States" when determining the acceptability of transaction value in multi-sale transactions by accepting only the last sale to the U.S. in meeting this requirement of transaction value. CBP states this change is based on a report to the World Customs Organization (WCO) by the Technical Committee on Customs Valuation adopted in April 2007 -- Commentary 22.1, entitled, "Meaning of the Expression 'Sold for Exportation to the Country of Importation' in a Series of Sales" -- and would align CBP's treatment of such sales with most other World Trade Organization (WTO) members.
CBP's proposed action would overturn nearly 20 years of legal and administrative precedent and would cause importers to reevaluate their current customs valuations and abandon any current use of "first sale" valuations, resulting in the potential payment of additional duties and fees.
CBP is accepting comments on the proposed interpretation until March 24, 2008. Global Trade Expertise (GTE) can assist importers in determining the effect the proposed interpretation will have on an importer's customs valuations. GTE can also assist importers in drafting comments to CBP. Please contact us if you have any questions. We would be happy to discuss the matter with you at no charge.
Proposed Change May Substantially Increase Duties and Fees for Importers
On January 24, 2008, U.S. Customs and Border Protection (CBP) published a notice in the Federal Register proposing to change its practices with regard to the proper customs valuation of imported products in multi-sale transactions.
Specifically, CBP is proposing rejecting the use of "first sale" valuation and instead requiring the use of the "last sale," i.e., the value paid by the U.S. buyer for the product, as the basis of transaction value for such products.
Under current conditions, importers may value imported products in situations involving multiple sales (e.g., those involving a sale from the manufacturer to a middleman overseas and a sale from the middleman to the buyer in the U.S.), at the "first sale" price between the manufacturer and the overseas middleman if certain conditions are met. Specifically, the first sale must be an arm's length sale and the goods must be clearly destined for export to the U.S.
CBP proposes changing its interpretation of the meaning of "sold for export to the United States" when determining the acceptability of transaction value in multi-sale transactions by accepting only the last sale to the U.S. in meeting this requirement of transaction value. CBP states this change is based on a report to the World Customs Organization (WCO) by the Technical Committee on Customs Valuation adopted in April 2007 -- Commentary 22.1, entitled, "Meaning of the Expression 'Sold for Exportation to the Country of Importation' in a Series of Sales" -- and would align CBP's treatment of such sales with most other World Trade Organization (WTO) members.
CBP's proposed action would overturn nearly 20 years of legal and administrative precedent and would cause importers to reevaluate their current customs valuations and abandon any current use of "first sale" valuations, resulting in the potential payment of additional duties and fees.
CBP is accepting comments on the proposed interpretation until March 24, 2008. Global Trade Expertise (GTE) can assist importers in determining the effect the proposed interpretation will have on an importer's customs valuations. GTE can also assist importers in drafting comments to CBP. Please contact us if you have any questions. We would be happy to discuss the matter with you at no charge.
Customs Publishes Proposed "10+2" Rule for Ocean Cargo
01/03/08 08:37 AM
On
January 2, 2008, U.S. Customs and Border Protection
(CBP) published a proposed
rule regarding
importer security filing and additional carrier
requirements, also known as the "10+2" rule. The
proposed rule will require that importers and
carriers to submit additional information
regarding cargo before the cargo is brought into
the U.S. by vessel. The information must be
provided by way of a CBP-approved electronic
data interchange system and is intended to allow
CBP to identify high-risk shipments to prevent
smuggling and ensure cargo safety and security.
The proposed regulations originate from the
Security and Accountability for Every (SAFE)
Port Act of 2006 and the Trade Act of 2002. CBP
issued a news release about the rule
here.
The "10+2" name for the proposed rule refers to the 10 additional pieces of information the importer is required to provide to CBP as an "Importer Security Filing" plus 2 data elements to be provided to CBP by carriers/vessel operators prior to loading the cargo: (1) a vessel stow plan used to transmit information about the physical location of cargo loaded aboard a vessel bound for the U.S. ; and (2) container status messages, which report container movements and changes in status (e.g., empty or full).
The 10 additional data elements required to reported by importers are:
The "10+2" name for the proposed rule refers to the 10 additional pieces of information the importer is required to provide to CBP as an "Importer Security Filing" plus 2 data elements to be provided to CBP by carriers/vessel operators prior to loading the cargo: (1) a vessel stow plan used to transmit information about the physical location of cargo loaded aboard a vessel bound for the U.S. ; and (2) container status messages, which report container movements and changes in status (e.g., empty or full).
The 10 additional data elements required to reported by importers are:
- Manufacturer (or supplier) name and address
- Seller (or owner) name and address
- Buyer (or owner) name and address
- Ship-to name and address
- Container stuffing location
- Consolidator (stuffer) name and address
- Importer of record number/foreign trade zone applicant identification number
- Consignee number(s)
- Country of origin, and
- Commodity Harmonized Tariff Schedule number