Sep 2008
BIS Publishes Update 2008 Plenary Remarks
On September 30, 2008, the
Department of Commerce's Bureau of Industry and Security (BIS)
published the Plenary Remarks of Assistant Secretary Christopher R.
Wall at the 2008 BIS Update Conference in Washington, D.C.
here.
DDTC Increases Registration Fees and Changes Registration Renewal Period
On September 25, 2008, the U.S.
Department of State's Directorate of Defense Trade Controls (DDTC)
published a final rule
amending the
International Traffic in Arms (ITAR) to increase registration fees,
change the registration renewal period, and make other minor
administrative changes. The DDTC states that to align the
registration fees with the cost of licensing, compliance, and other
related activities, the DDTC is adopting a three-tier registration
fee schedule.
The first tier fee structure is set at $2,250 per year for registrants who are renewing a registration, required to register by law, and for whom the DDTC has not yet reviewed, adjudicated or issued a response to any application during the twelve-month period ending 90 days prior to the expiration of their current registration.
The second tier is for registrants for whom DDTC has reviewed, adjudicated or issued a response to between one and ten applications during the twelve-month period ending 90 days prior to the expiration of their current registration. For this tier, registrants will pay a set fee of $2,750 per year.
The third tier is for registrants for whom DDTC has reviewed, adjudicated or issued a response more than ten applications during the twelve-month period ending 90 days prior to the expiration of their current registration. For this tier, registrants will pay a set fee of $2,750 per year plus an additional fee that is based on multiplying $250 by the number of applications for which DDTC has reviewed, adjudicated or issued a response during the twelve months ending 90 days prior to the expiration of the current registration.
The first tier fee structure is set at $2,250 per year for registrants who are renewing a registration, required to register by law, and for whom the DDTC has not yet reviewed, adjudicated or issued a response to any application during the twelve-month period ending 90 days prior to the expiration of their current registration.
The second tier is for registrants for whom DDTC has reviewed, adjudicated or issued a response to between one and ten applications during the twelve-month period ending 90 days prior to the expiration of their current registration. For this tier, registrants will pay a set fee of $2,750 per year.
The third tier is for registrants for whom DDTC has reviewed, adjudicated or issued a response more than ten applications during the twelve-month period ending 90 days prior to the expiration of their current registration. For this tier, registrants will pay a set fee of $2,750 per year plus an additional fee that is based on multiplying $250 by the number of applications for which DDTC has reviewed, adjudicated or issued a response during the twelve months ending 90 days prior to the expiration of the current registration.
State Amends ITAR to Terminate Arms Sanctions Against Rwanda
On September 25, 2008, the U.S.
Department of State published a final rule
amending the
International Traffic in Arms Regulations (ITAR) with respect to
Rwanda. Through the final rule, the State Department is removing
Rwanda from its regulations on prohibited exports and sales to
certain countries as a result of United Nations Security Council
(UNSC) Resolution 1823, which terminated remaining arms sanctions
against Rwanda.
BIS to Post Commodity Classificaton Information Based on Exporters' Request
On September 25, 2008,
the U.S. Department of
Commerce’s Bureau of Industry and Security (BIS)
announced that it will provide companies the
opportunity to have their Commodity Classification
information made
accessible via
the BIS website.
If a company has, or plans to have, Commodity Classification information or an export control point of contact available on their website, and would like this information to be accessible via the BIS website, they are asked to contact CommodityClassification@bis.doc.gov. In the e-mail, the company must provide the following information, which then will be posted on the BIS website:
1) Company name, 2) General description of the products/services, 3) Commodity classification information website address, and 4) Export control point of contact.
If a company has, or plans to have, Commodity Classification information or an export control point of contact available on their website, and would like this information to be accessible via the BIS website, they are asked to contact CommodityClassification@bis.doc.gov. In the e-mail, the company must provide the following information, which then will be posted on the BIS website:
1) Company name, 2) General description of the products/services, 3) Commodity classification information website address, and 4) Export control point of contact.
Physicist Charged with Arms Export and Foreign Corrupt Practices Act Violations
On September 24, 2008, Shu
Quan-Sheng, a PhD physicist, was arrested in Newport News, VA on charges of
illegally exporting space launch technical data and services to
China and offering bribes to Chinese government officials. Dr. Shu,
born in China and a naturalized U.S. citizen, is the President,
Secretary and Treasurer of AMAC International (AMAC), a Newport
News high-tech company that also has an office in Beijing,
China.
Dr. Shu is charged with unlawfully exporting a defense service to foreign persons without obtaining permission, in violation of the Arms Export Control Act (AECA), and bribing, offering a bribe, and attempting to bribe a foreign government official, in violation of the Foreign Corrupt Practices Act (FCPA).
The criminal complaint states that in January 2003, Dr. Shu provided technical assistance and foreign technology acquisition expertise to several Chinese government entities involved in the building of a space launch facility in Hainan, China. The facility is designated to house liquid-propelled heavy payload launch vehicles designed to send space stations and satellites into orbit, as well as provide support for manned space flight and future lunar missions.
Specifically, the complaint charges that Dr. Shu has participated in China’s systematic effort to upgrade their space exploitation and satellite technology capabilities by providing technical expertise and foreign technology acquisition in the fields of cryogenic pumps, valves, transfer lines and refrigeration equipment, elements necessary for the use of liquefied hydrogen in the Hainan facility. Dr. Shu is also said to have been instrumental in arranging for various Chinese officials to visit various European space launch facilities and hydrogen / storage facilities.
There were several Chinese government entities involved in building of the space launch facility, including the People’s Liberation Army’s General Armaments Department and the 101st Research Institute, which is overseen by the Commission of Science Technology and Industry for the National Defense as one of the research institutions that makes up the China Academy of Launch Vehicle Technology. Another entity involved is the Beijing Special Engineering Design Research Institute, which is responsible for the procurement of cryogenic liquid storage tanks for the Hainan launch facility.
The complaint also charges Dr. Shu with violations of the FCPA. Dr. Shu is said to have offered bribes to the 101st Research Institute government officials to induce the award of the hydrogen liquefier contract to a French company Dr. Shu represented. The value of the contract is believed to be around $4 million. According to the complaint, in December 2003, Dr. Shu and his company entered into an agreement with the French company establishing AMAC and positioning Dr. Shu as the French company’s representative in China. The agreement provided that AMAC was entitled to a success fee of ten to fifteen percent.
The maximum penalty for each AECA violation is 10 years imprisonment. Violation of FCPA carries a 5-year sentence.
Dr. Shu is charged with unlawfully exporting a defense service to foreign persons without obtaining permission, in violation of the Arms Export Control Act (AECA), and bribing, offering a bribe, and attempting to bribe a foreign government official, in violation of the Foreign Corrupt Practices Act (FCPA).
The criminal complaint states that in January 2003, Dr. Shu provided technical assistance and foreign technology acquisition expertise to several Chinese government entities involved in the building of a space launch facility in Hainan, China. The facility is designated to house liquid-propelled heavy payload launch vehicles designed to send space stations and satellites into orbit, as well as provide support for manned space flight and future lunar missions.
Specifically, the complaint charges that Dr. Shu has participated in China’s systematic effort to upgrade their space exploitation and satellite technology capabilities by providing technical expertise and foreign technology acquisition in the fields of cryogenic pumps, valves, transfer lines and refrigeration equipment, elements necessary for the use of liquefied hydrogen in the Hainan facility. Dr. Shu is also said to have been instrumental in arranging for various Chinese officials to visit various European space launch facilities and hydrogen / storage facilities.
There were several Chinese government entities involved in building of the space launch facility, including the People’s Liberation Army’s General Armaments Department and the 101st Research Institute, which is overseen by the Commission of Science Technology and Industry for the National Defense as one of the research institutions that makes up the China Academy of Launch Vehicle Technology. Another entity involved is the Beijing Special Engineering Design Research Institute, which is responsible for the procurement of cryogenic liquid storage tanks for the Hainan launch facility.
The complaint also charges Dr. Shu with violations of the FCPA. Dr. Shu is said to have offered bribes to the 101st Research Institute government officials to induce the award of the hydrogen liquefier contract to a French company Dr. Shu represented. The value of the contract is believed to be around $4 million. According to the complaint, in December 2003, Dr. Shu and his company entered into an agreement with the French company establishing AMAC and positioning Dr. Shu as the French company’s representative in China. The agreement provided that AMAC was entitled to a success fee of ten to fifteen percent.
The maximum penalty for each AECA violation is 10 years imprisonment. Violation of FCPA carries a 5-year sentence.
BIS Issues Guidance on Illicit Diversion of Goods to Iran
Following the disbanding of an
illicit Iranian global procurement scheme, on September 24, 2008,
the U.S. Department of Commerce’s Bureau of Industry and security
(BIS) issued guidance on actions exporters can take to
prevent illegal diversion of items to support Iran’s nuclear
weapons or ballistic missile programs.
Iran is currently trying to procure items for its uranium enrichment centrifuge program. Iran has admitted to evading international sanctions to procure sensitive items that can contribute to its weapons of mass destruction (WMD) programs. Specifically, Iranian entities form front companies in other countries for the sole purpose of exporting items to Iran that can be used in the nuclear and missile programs.
BIS recommends that the U.S. exporters take the following steps to prevent illicit export to Iran (more detail on the BIS Iranian Guidance website):
All exports to Iran are subject to the Export Administration Regulations (EAR) and the Department of the Treasury’s Iranian Transaction Regulations (ITR). Exports must be authorized by the Treasury’s Office of Foreign Assets Control (OFAC) prior to exporting to Iran. If ORAC authorizes such an export or reexport, no separate authorization from BIS is necessary.
Iran is currently trying to procure items for its uranium enrichment centrifuge program. Iran has admitted to evading international sanctions to procure sensitive items that can contribute to its weapons of mass destruction (WMD) programs. Specifically, Iranian entities form front companies in other countries for the sole purpose of exporting items to Iran that can be used in the nuclear and missile programs.
BIS recommends that the U.S. exporters take the following steps to prevent illicit export to Iran (more detail on the BIS Iranian Guidance website):
- Know your consumer;
- Understand “Red Flag” indicators;
- Be cautious of customers operating in transshipment countries or free trade zones;
- Screen parties to a transaction using the U.S. Government “Lists to Check” on BIS website;
- Contact BIS if something does not seem right about the transaction or if you suspect a shipment may have been diverted to Iran;
- Subscribe to the BIS listserv and to the Department of the Treasury, Office of Foreign Assets Control’s (OFAC) service to receive notifications about changes to the Entity List and List of Specially Designation Nationals and Blocked Persons.
All exports to Iran are subject to the Export Administration Regulations (EAR) and the Department of the Treasury’s Iranian Transaction Regulations (ITR). Exports must be authorized by the Treasury’s Office of Foreign Assets Control (OFAC) prior to exporting to Iran. If ORAC authorizes such an export or reexport, no separate authorization from BIS is necessary.
BIS Announces ETRAC Members
On September 23, 2008, the
Department of Commerce's Bureau of Industry and Security (BIS)
announced the membership of the Emerging Technology and Research
Advisory Committee (ETRAC) here.
ETRAC Members:
ETRAC Members:
| Pamela Abshire, University of
Maryland |
Maja Mataric, University of
Southern California |
| Jeffrey Ashe, General Electric
Global Research |
Richard McCullough, Carnegie
Mellon University |
| Robert Breault, Breault Research
Organization, Inc. |
Steven Patterson, Lawrence
Livermore National Lab. |
| Claude Canizares, Massachusetts
Institute of Technology |
Carl A. Picconatto, MITRE
Experimental Laboratory |
| A. Stephen Dahms, Alfred E. Mann
Foundation |
Jeffrey Puschell, Raytheon Space
& Airborne Systems |
| Charbel Farhat, Stanford
University |
Jeffrey Reed, Virginia
Tech |
| Bob Gleichauf, Cisco
Systems |
Michael Reiter, University of
North Carolina |
| Harry Kington, Honeywell
Aerospace |
Samuel Stanley, Jr, Washington
University |
| Gerald Kulcinski, University of
Wisconsin |
Marlin Thomas, Air Force Institute
of Technology |
| Brooks Keel, Louisiana State
University |
Thomas E. Tierney IV, Los Alamos
National Laboratory |
| Nikolai Leung, Qualcomm,
Inc. |
James Tour, Rice
University |
| Seth R. Marder, Georgia Institute of Technology |
| |
CBP Issues Softwood Lumber Act Interim Rule CBP Issues Softwood Lumber Act Interim Rule
09/23/08 07:26 PM Filed in: Customs | Rulemaking
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.
Iranian Ring Charged with Procuring IED Components Iranian Ring Charged with Procuring IED Components Iranian Ring Charged with Procuring IED Components Iranian Ring Charged with Procuring IED Components
On September 17, 2008, the
Department of Justice (DOJ) announced that a federal grand jury in
Miami, Florida, has returned a Superseding
Indictment charging sixteen foreign nationals
and corporations in connection with their participation in
conspiracy to export U.S.-manufactured commodities to prohibited
entities and to Iran.
The Indictment includes charges of conspiracy, violations of the International Emergency Economic Powers Act (IEEPA) and the United States Iran Embargo, and making false statements to federal agencies in connection with the export of thousands of U.S. goods to Iran. Specifically, the Indictment alleges that the defendants purchased, and then caused the export of U.S. dual-use goods to ultimate buyers in Iran through middle countries, including the United Arab Emirates, Malaysia, England, Germany, and Singapore. Dual-use commodities are those that have commercial application, but could potentially be used to further the military or nuclear programs of other nations and thus could be detrimental to the foreign policy or national security of the United States.
The goods at issue are controlled by the Export Administration Regulations (EAR) for missile technology, national security and antiterrorism reasons as well as under the International Traffic in Arms Regulations (ITAR). In this case, the Indictment alleges that the defendants exported 120 field-programmable gate arrays, over 5,000 integrated circuits of varying types, around 345 Global Positioning Systems (GPS), 12,000 Microchip brand micro-controllers, and a Field Communication. These commodities have potential military applications, including as components in construction of improvised explosive devises (IEDs).
The charges announced are the result of a criminal investigation that was initiated in July 2006. Led by the Commerce Department, the investigation also included the efforts of the Departments of Homeland Security, Defense, State and Treasury.
As a result of investigation, the Commerce Department’s Bureau of Industry and Security (BIS) issued a Final Rule in the Federal Register announcing 75 additions to its Entity List because of their involvement in this illegal global procurement network for the benefit of the Iranian Government, and for their relationship to the Mayrow General Trading, one of the procurement front companies.
The Indictment includes charges of conspiracy, violations of the International Emergency Economic Powers Act (IEEPA) and the United States Iran Embargo, and making false statements to federal agencies in connection with the export of thousands of U.S. goods to Iran. Specifically, the Indictment alleges that the defendants purchased, and then caused the export of U.S. dual-use goods to ultimate buyers in Iran through middle countries, including the United Arab Emirates, Malaysia, England, Germany, and Singapore. Dual-use commodities are those that have commercial application, but could potentially be used to further the military or nuclear programs of other nations and thus could be detrimental to the foreign policy or national security of the United States.
The goods at issue are controlled by the Export Administration Regulations (EAR) for missile technology, national security and antiterrorism reasons as well as under the International Traffic in Arms Regulations (ITAR). In this case, the Indictment alleges that the defendants exported 120 field-programmable gate arrays, over 5,000 integrated circuits of varying types, around 345 Global Positioning Systems (GPS), 12,000 Microchip brand micro-controllers, and a Field Communication. These commodities have potential military applications, including as components in construction of improvised explosive devises (IEDs).
The charges announced are the result of a criminal investigation that was initiated in July 2006. Led by the Commerce Department, the investigation also included the efforts of the Departments of Homeland Security, Defense, State and Treasury.
As a result of investigation, the Commerce Department’s Bureau of Industry and Security (BIS) issued a Final Rule in the Federal Register announcing 75 additions to its Entity List because of their involvement in this illegal global procurement network for the benefit of the Iranian Government, and for their relationship to the Mayrow General Trading, one of the procurement front companies.
New Customs Declaration Requirements for Imported Plants and Wood Products
09/16/08 08:39 AM Filed in: Customs | Legislation
With enactment of the 2008 Farm
Bill, the Lacey Act was amended with a purpose to prevent illegal
harvesting and commerce of protected plants and trees. As amended,
the Lacey Act expands the scope of covered products to include
trees in the definition of a plant, and adding products made from
plants or trees.
Moreover, prior to the amendment, the Lacey Act covered only plants native to the U.S. that are protected by a U.S. State law conserving species threatened with extinction. After the amendment, the Lacey Act extends the scope of coverage to any plants under protection of a U.S. State or any foreign law.
The amended Lacey Act prohibits the import, export, transport, sale, receipt, acquisition, or purchase in interstate or foreign commerce of any plants that were harvested in violation of a U.S. State, or any foreign laws protecting those plants. Furthermore, the Lacey Act makes it unlawful to produce or submit any records that falsely identify any plant.
The Lacey Act, as amended, defines “plant” as any wild member of the plant kingdom, including roots, seeds, parts, or products thereof, and including trees from either natural or planted forest stands.” Excluded from the definition of “plant” are: (1) common cultivars (except trees) and common food crops; (2) live plants that are to remain, be planted, or replanted; and (3) scientific specimens of plant genetic material to be used for research (with some exceptions).
One new feature of the Lacey Act is the new import declaration requirement. Beginning December 15, 2008, the Lacey Act requires an import declaration for plants and plant products, except for plant-based packaging materials used to pack the merchandise being imported. Such import declaration must contain:
(a) the scientific name of any plant (including the genus and species of the plant contained in the importation);
(b) a description of the value of the importation and the quantity, including the unit of measure, of the plant; and
(c) the name of the country from which the plant was harvested.
The Lacey Act provides that violations may be prosecuted through either civil or criminal enforcement actions. The penalties for knowing violations of the Act may result in civil fines of $10,000 per violation. Criminal penalties under the Act may result in up to five years incarceration. Finally, imports in violation of the Lacey Act are subject to forfeiture.
Moreover, prior to the amendment, the Lacey Act covered only plants native to the U.S. that are protected by a U.S. State law conserving species threatened with extinction. After the amendment, the Lacey Act extends the scope of coverage to any plants under protection of a U.S. State or any foreign law.
The amended Lacey Act prohibits the import, export, transport, sale, receipt, acquisition, or purchase in interstate or foreign commerce of any plants that were harvested in violation of a U.S. State, or any foreign laws protecting those plants. Furthermore, the Lacey Act makes it unlawful to produce or submit any records that falsely identify any plant.
The Lacey Act, as amended, defines “plant” as any wild member of the plant kingdom, including roots, seeds, parts, or products thereof, and including trees from either natural or planted forest stands.” Excluded from the definition of “plant” are: (1) common cultivars (except trees) and common food crops; (2) live plants that are to remain, be planted, or replanted; and (3) scientific specimens of plant genetic material to be used for research (with some exceptions).
One new feature of the Lacey Act is the new import declaration requirement. Beginning December 15, 2008, the Lacey Act requires an import declaration for plants and plant products, except for plant-based packaging materials used to pack the merchandise being imported. Such import declaration must contain:
(a) the scientific name of any plant (including the genus and species of the plant contained in the importation);
(b) a description of the value of the importation and the quantity, including the unit of measure, of the plant; and
(c) the name of the country from which the plant was harvested.
The Lacey Act provides that violations may be prosecuted through either civil or criminal enforcement actions. The penalties for knowing violations of the Act may result in civil fines of $10,000 per violation. Criminal penalties under the Act may result in up to five years incarceration. Finally, imports in violation of the Lacey Act are subject to forfeiture.
CBP Publishes COAC Quarterly Meeting Minutes CBP Publishes COAC Quarterly Meeting Minutes CBP Publishes COAC Quarterly Meeting Minutes
09/15/08 07:45 AM Filed in: Customs
U.S. Customs and Border Protection
(CBP) has posted on its website the minutes from the August 7, 2008 quarterly
meeting of the
Departmental Advisory Committee on Commercial Operations of Customs
and Border Protection and Related Homeland Security Functions
(COAC). The discussion included the following:
1. C-TPAT Partners. As of July 21, 2008, there were 8,527 certified C-TPAT Partners, of which 600 are new companies. Buffalo and Houston were added to the C-TPAT field offices with focus primarily on Canadian and Mexican supply chains. A total of 8,519 C-TPAT validations were conducted, with 1,916 validations conducted this year. CBP is taking actions to suspend companies that fail the validation process. Of the 593 members that failed the validation, half were highway carriers. Mexico’s highway carriers are revalidated annually to ensure their improvement. The validation cycle time has improved according to latest information, and is currently at 60 days. CBP has reduced the cycle time it takes to issue reports to a partner from 100 days to 45 days.
2. Mutual Recognition (MR) Arrangements. CBP Commissioner has signed new MR arrangements with Jordon and Canada. CBP continues to work with the European Union (EU) on supply chain security and hopes to sign an MR arrangement with the EU by next year. CBP has been working with Japan on joint validations and hopes to have an MR agreement completed by the end of this year. CBP is working with Canadian Customs on a single set of rules that would be applicable to companies common to both the U.S. and Canadian Supply Chain Security Programs; there are about 1,000 such companies.
3. Automated Commercial Environment (ACE) Program Status and Int’l Trade Data System (ITDS). CBP had expected to replace the Vessel and Rail e-manifest system by October of 2008. Issues with testing the new software have delayed the implementation of the e-system. CBP hopes to have a system in place by December 2008, which the Trade can participate in testing. The Entry Summary Processing deployment from January 2009 is also pushed into the future, probably one month after the Rail and Vessel elements are completed.
4. Import Safety Initiatives. Import Safety and Intra-Agency Requirements, Office of Int’l Trade (OT) of CBP, addressed the effort of the interagency working group. The initiative is active and will implement the Import Safety Action plan. The Consumer Product Safety Commission (CPSC) Reauthorization Bill is expected to be signed by the President in the near future. Importer Self Assessment (ISA) Module will include a Product Safety Component. Work is being done to identify good safety practices. It is desirable that the practices be administered on a company, rather than a commodity, basis. CPSC has conducted several foreign factory visits. CPSC only has 9 officers in the field but this number will be increased to 50 officers.
5. Lacey Act Amendments. The effective date of the Lacey Act Amendments is December 15, 2008. The Act requires that the name of the plant, the value, the quantity of the plant and the Country of Origin (COO) of the plant must all be declared at entry. The schedule that identifies the Harmonized Tariff Schedule (HTS) chapters that will be affected by the Act will be available in the near future. There are 8,000 lines that come in daily that will be required to submit the Import Declaration. If actual COO is not known at the time of entry, the Import Declaration must state all possible COOs. The COO form is currently a paper form, and so all 8,000 lines that were paperless will now require a paper form. The United States Department of Agriculture (USDA) does not have an automated feed into CBP’s system as Food and Drug Administration (FDA) does. Development of an electronic method to add the name into the system will be difficult because of the length of the plant genus or species name. There are over 1,500 genus and species of tress in the world that could potentially be recorded.
6. Agricultural Program Update. Wood boring insect. – an emerald ash borer – was found in Virginia. The insect is established in the Midwest and has, so far, killed 20 million trees and has endangered millions more. Enforcement of wood packing requirements needs to be increased.
7. 10+2. First Data Format was distributed in May 2008 and comments in response were received. Second version was distributed on July 17, 2008, and comments are still being accepted. Industry Working Group introduced account-based filing for 10+2 and the way it would work. This will be shared with CBP and on the November meeting agenda.
8. Secure Freight Initiative (SFI). SFI of CBP’s Office of Field Operations is facing challenges with the initiative, largely because the technology for anomaly detection is not available. Equipment has not been used in high-volume ports yet. Issues also arise with respect to space and trade flows at various ports. Setting up a lane to use the equipment is difficult when land is scarce. The system is already operational in Hong Kong, and should become operational in Oman and Korea.
9. CBP Trade Strategy. CBP has introduced, in the May meeting, the CBP Trade Strategy in a multi-level approach. CBP has provided the Trade Strategy report to COAC and is expecting comments. The implementation of the Strategy is expected October 1, 2008.
10. Proposed Rules of Origin. Currently, CBP is running two systems: one is a case-by-case analysis of past legal cases, which has been done for the past 200 years; another is based on Decision Tree, which codifies inputs and existing body of law, which has been in existence for the past 15 years. The traditional system is problematic because it is subjective, and therefore the Court has difficulty applying the decisions consistently. Similarly, the Trade faces issues of certainty and predictability as well as the reasonable care requirements. The new system, on the other hand, has yielded terrific results: less than 1% of the decisions are revised. Thus, decision has been made to move to the more modern system, which already applies to 40% of the Trade. 60-day comment period was opened since the Issue Date.
11. First Sale. Office of Int’l Trade is withdrawing the First Sale Proposal because they need to focus on the Farm Bill Act. CBP is working on a yes/no question with respect to whether the valuation is based on the first sale. The yes / no answer will be required at the entry line level and will become electronic. If it is first sale, CBP form 7501 on the Automated Broker Interface (ABI) will simply need to be marked “F” and left blank, if the entry valuation is not on first sale basis.
12. Proposed Closure of the Los Angeles Drawback Center. The question is raised whether to reassign the Los Angeles drawback officers to the San Francisco Office. The number of drawback specialists would not be reduced. CBP will issue a Federal Register Notice before the office is closed and will provide the public with opportunity to comment.
The next COAC meeting is schedule for November 20, 2008 in Washington, DC.
1. C-TPAT Partners. As of July 21, 2008, there were 8,527 certified C-TPAT Partners, of which 600 are new companies. Buffalo and Houston were added to the C-TPAT field offices with focus primarily on Canadian and Mexican supply chains. A total of 8,519 C-TPAT validations were conducted, with 1,916 validations conducted this year. CBP is taking actions to suspend companies that fail the validation process. Of the 593 members that failed the validation, half were highway carriers. Mexico’s highway carriers are revalidated annually to ensure their improvement. The validation cycle time has improved according to latest information, and is currently at 60 days. CBP has reduced the cycle time it takes to issue reports to a partner from 100 days to 45 days.
2. Mutual Recognition (MR) Arrangements. CBP Commissioner has signed new MR arrangements with Jordon and Canada. CBP continues to work with the European Union (EU) on supply chain security and hopes to sign an MR arrangement with the EU by next year. CBP has been working with Japan on joint validations and hopes to have an MR agreement completed by the end of this year. CBP is working with Canadian Customs on a single set of rules that would be applicable to companies common to both the U.S. and Canadian Supply Chain Security Programs; there are about 1,000 such companies.
3. Automated Commercial Environment (ACE) Program Status and Int’l Trade Data System (ITDS). CBP had expected to replace the Vessel and Rail e-manifest system by October of 2008. Issues with testing the new software have delayed the implementation of the e-system. CBP hopes to have a system in place by December 2008, which the Trade can participate in testing. The Entry Summary Processing deployment from January 2009 is also pushed into the future, probably one month after the Rail and Vessel elements are completed.
4. Import Safety Initiatives. Import Safety and Intra-Agency Requirements, Office of Int’l Trade (OT) of CBP, addressed the effort of the interagency working group. The initiative is active and will implement the Import Safety Action plan. The Consumer Product Safety Commission (CPSC) Reauthorization Bill is expected to be signed by the President in the near future. Importer Self Assessment (ISA) Module will include a Product Safety Component. Work is being done to identify good safety practices. It is desirable that the practices be administered on a company, rather than a commodity, basis. CPSC has conducted several foreign factory visits. CPSC only has 9 officers in the field but this number will be increased to 50 officers.
5. Lacey Act Amendments. The effective date of the Lacey Act Amendments is December 15, 2008. The Act requires that the name of the plant, the value, the quantity of the plant and the Country of Origin (COO) of the plant must all be declared at entry. The schedule that identifies the Harmonized Tariff Schedule (HTS) chapters that will be affected by the Act will be available in the near future. There are 8,000 lines that come in daily that will be required to submit the Import Declaration. If actual COO is not known at the time of entry, the Import Declaration must state all possible COOs. The COO form is currently a paper form, and so all 8,000 lines that were paperless will now require a paper form. The United States Department of Agriculture (USDA) does not have an automated feed into CBP’s system as Food and Drug Administration (FDA) does. Development of an electronic method to add the name into the system will be difficult because of the length of the plant genus or species name. There are over 1,500 genus and species of tress in the world that could potentially be recorded.
6. Agricultural Program Update. Wood boring insect. – an emerald ash borer – was found in Virginia. The insect is established in the Midwest and has, so far, killed 20 million trees and has endangered millions more. Enforcement of wood packing requirements needs to be increased.
7. 10+2. First Data Format was distributed in May 2008 and comments in response were received. Second version was distributed on July 17, 2008, and comments are still being accepted. Industry Working Group introduced account-based filing for 10+2 and the way it would work. This will be shared with CBP and on the November meeting agenda.
8. Secure Freight Initiative (SFI). SFI of CBP’s Office of Field Operations is facing challenges with the initiative, largely because the technology for anomaly detection is not available. Equipment has not been used in high-volume ports yet. Issues also arise with respect to space and trade flows at various ports. Setting up a lane to use the equipment is difficult when land is scarce. The system is already operational in Hong Kong, and should become operational in Oman and Korea.
9. CBP Trade Strategy. CBP has introduced, in the May meeting, the CBP Trade Strategy in a multi-level approach. CBP has provided the Trade Strategy report to COAC and is expecting comments. The implementation of the Strategy is expected October 1, 2008.
10. Proposed Rules of Origin. Currently, CBP is running two systems: one is a case-by-case analysis of past legal cases, which has been done for the past 200 years; another is based on Decision Tree, which codifies inputs and existing body of law, which has been in existence for the past 15 years. The traditional system is problematic because it is subjective, and therefore the Court has difficulty applying the decisions consistently. Similarly, the Trade faces issues of certainty and predictability as well as the reasonable care requirements. The new system, on the other hand, has yielded terrific results: less than 1% of the decisions are revised. Thus, decision has been made to move to the more modern system, which already applies to 40% of the Trade. 60-day comment period was opened since the Issue Date.
11. First Sale. Office of Int’l Trade is withdrawing the First Sale Proposal because they need to focus on the Farm Bill Act. CBP is working on a yes/no question with respect to whether the valuation is based on the first sale. The yes / no answer will be required at the entry line level and will become electronic. If it is first sale, CBP form 7501 on the Automated Broker Interface (ABI) will simply need to be marked “F” and left blank, if the entry valuation is not on first sale basis.
12. Proposed Closure of the Los Angeles Drawback Center. The question is raised whether to reassign the Los Angeles drawback officers to the San Francisco Office. The number of drawback specialists would not be reduced. CBP will issue a Federal Register Notice before the office is closed and will provide the public with opportunity to comment.
The next COAC meeting is schedule for November 20, 2008 in Washington, DC.
FTZ Board Revises Proposal for Site-Designation and Management Framework
On September 11, 2008, the
Foreign-Trade Zones (FTZ) Board published a notice in the Federal Register
that modifies its
proposal to make available an alternative framework for designation
and management of the general purpose FTZ sites. In response to the
comments received to an earlier notice, the key proposal revisions
include allowance for a special transitional phase for each grantee
applying to transfer to the alternative framework, elimination of a
general initial limit on the number of “usage-driven” sites,
elimination of an “anchor” site concept, and the sunset limits
duration flexibility for “magnet” sites – with five years
established as a minimum rather than a fixed standard.
The FTZ Board proposed framework includes:
Under the proposed plan, existing FTZ grantees will have the option to reorganize their FTZ by incorporating the proposed elements. Comments on this proposal are due by October 31, 2008.
The FTZ Board proposed framework includes:
- The “service area,” housing general-purpose FTZ sites, is required to comply with the adjacency requirement of the FTA Board’s regulations (60 miles / 90 minutes driving time from Customs Port of Entry boundaries), the enabling legislation, and the grantee organization’s charter. The FTZ Board evaluation of the proposed service area could potentially involve the convenience of commerce factor.
- An initial limit of up to 2,000 acres of designated FTZ space within the service area. Acreage within the 2,000-acre limit not applied to specifically designated sites would effectively be “reserve” acreage available for future FTZ designation.
- The usefulness of the 2,000 available acres would be enhanced by emphasizing “floating” or, available for activation, acreage within an individual site’s boundaries.
- Designation of a limited number of “magnet” sites selected by the grantee for ability and readiness to attract multiple FTZ uses.
- Possible designation of “usage-driven” sites to serve companies which are not located in a magnet site but which are ready to pursue conducting activity under FTZ procedures.
- Unlike magnet sites, usage driven sites could be designated through the current minor boundary modification (MBM) mechanism in addition to FTZ Board action.
- No specific limit on the number of usage-driven sites.
- Regarding numbers of magnet sites, the framework would reflect a general goal of focusing each FTZ on six or fewer simultaneously existing magnet sites.
- Magnet sites and usage-driven sites would be subject to “sunset” time limits, which would self-remove FTZ designation from a site not used for FTZ purposes before the site’s sunset date. For magnet sites, the default sunset period would be five years with sunset based on whether a site had been activated with CBP. For a usage-driven site, the sunset limit would require within five years of approval admission into the site of foreign non-duty paid material for a bona fide customs purpose.
- Magnet sites and usage-driven sites would also be subject to ongoing “recycling” where activation at a site during the site’s initial sunset period would serve to push back the sunset date by another five years (the sunset test would then apply again).
- An optional five year transitional phase would be available for grantees of zones with existing configurations that differ from the general parameters envisioned in the proposal.
- For the transitional phase for a particular zone, the grantee would have the option of requesting usage-driven designation for any site where a single entity is conducting FTZ activity.
- The five-year transition period for a specific grantee would begin with approval of the grantee’s reorganization application by the FTZ board.
- The transitional phase for any zone would be limited by the defining 2,000 acre limit inherent in the proposed framework.
Under the proposed plan, existing FTZ grantees will have the option to reorganize their FTZ by incorporating the proposed elements. Comments on this proposal are due by October 31, 2008.
OFAC Issues New Economic Sanctions Enforcement Guidelines
09/10/08 11:05 PM Filed in: OFAC
| Enforcement
On September 8, 2008, the Office
of Foreign Assets Control (OFAC) of the U.S. Department of the
Treasury published in the Federal
Register an
interim final rule, “Economic Sanctions Enforcement Guidelines”
(Guidelines). The Guidelines are applicable to all persons subject
to any of the sanctions programs administered by OFAC, including
matters that fall under International Emergency Economic Powers Act
(IEEPA) and Trading With the Enemy Act (TWEA).
The Guidelines establish several significant changes from the 2003 proposed rule.
First, rather than identifying “aggravating” and “mitigating” factors, the Guidelines set forth General Factors for Taking Administrative Action (General Factors) that OFAC will consider in determining an appropriate enforcement response to an apparent violation and, if a civil monetary penalty is warranted, in establishing the amount of the penalty. The Guidelines reflect a realization that in many cases, a particular factor may be considered either “aggravating” or “mitigating” (e.g. remedial action was considered a mitigating factor under 2003 rules; but, absence of remedial action considered as aggravating factor).
Some or all of the following General Factors will be considered in determining the appropriate administrative action in response to an apparent violation of U.S. sanctions by a person, and, where a civil monetary penalty is imposed, the amount of such penalty:
A. Willful or reckless violation of law,
B. Awareness of conduct at issue,
C. Harm to sanctions program objectives,
D. Individual characteristics of the subject person,
E. Compliance program,
F. Remedial response,
G. Cooperation with OFAC,
H. Timing of apparent violation in relation to imposition of sanctions,
I. Other enforcement actions taken by federal, state or local agencies against the subject person,
J. Future compliance / Deterrence effect, and
K. Other relevant facts on a case-by-case basis.
Second significant development is that the Guidelines provide for the issuance of either cautionary letters or findings of violation under certain circumstances, rather than the cautionary letters and warning letters provided for under the 2003 proposed rule and the evaluative letters provided for in the 2006 interim final rule.
Third, in recognition of OFAC’s position that enhanced maximum civil penalties authorized by the Enhancement Act should be reserved for the most serious cases, the Guidelines distinguish between egregious and non-egregious civil monetary penalty cases. Egregious cases are defined as those representing the most serious sanctions violations, based on an analysis of all applicable General Factors.
Fourth, in those cases in which the imposition of a civil monetary penalty is deemed appropriate, the Guidelines provide a new process for determining the penalty amount. This process involves first determining a base penalty amount, which is based on two considerations: (i) whether the conduct, activity, or transaction giving rise to a violation is egregious or non-egregious, and (ii) whether the case involves a voluntary self-disclosure by the subject person. The existence or lack of a voluntary self-disclosure is a major factor in establishing the penalty amount. The base penalty amount for a case involving self-disclosure reflects a 50 percent or more reduction from the base penalty amount that would otherwise be applicable.
Thus, under the Guidelines, the base penalty amount in a case determined to be non-egregious and involving voluntary self disclosure will not exceed one-half of the transaction value (capped at $125,000 per violation), while in an egregious case without voluntary self-disclosure, the penalty may reach the applicable statutory maximum.
Once a base penalty amount is determined based on the transaction value and egregiousness / voluntary self-disclosure factors, the amount may be adjusted upward or downward based on the other General Factors.
With respect to responses to apparent violations, depending on the facts and circumstances of a particular case, an OFAC investigation may lead to one or more of the following actions:
A. No action,
B. Request for additional information,
C. Cautionary letter,
D. Finding of violation,
E. Civil monetary penalty,
F. Criminal referral, or
G. Other administrative actions, including (1) License denial, suspension, modification, or revocation, and (2) Cease and desist order.
In establishing the amount of civil penalties, including for failure to furnish information or to keep records, OFAC will review the facts and circumstances surrounding an apparent violation and apply the General Factors.
Although this interim final rule is effective immediately, OFAC is soliciting comments for a 60-day period with a view of improving the Guidelines.
The Guidelines establish several significant changes from the 2003 proposed rule.
First, rather than identifying “aggravating” and “mitigating” factors, the Guidelines set forth General Factors for Taking Administrative Action (General Factors) that OFAC will consider in determining an appropriate enforcement response to an apparent violation and, if a civil monetary penalty is warranted, in establishing the amount of the penalty. The Guidelines reflect a realization that in many cases, a particular factor may be considered either “aggravating” or “mitigating” (e.g. remedial action was considered a mitigating factor under 2003 rules; but, absence of remedial action considered as aggravating factor).
Some or all of the following General Factors will be considered in determining the appropriate administrative action in response to an apparent violation of U.S. sanctions by a person, and, where a civil monetary penalty is imposed, the amount of such penalty:
A. Willful or reckless violation of law,
B. Awareness of conduct at issue,
C. Harm to sanctions program objectives,
D. Individual characteristics of the subject person,
E. Compliance program,
F. Remedial response,
G. Cooperation with OFAC,
H. Timing of apparent violation in relation to imposition of sanctions,
I. Other enforcement actions taken by federal, state or local agencies against the subject person,
J. Future compliance / Deterrence effect, and
K. Other relevant facts on a case-by-case basis.
Second significant development is that the Guidelines provide for the issuance of either cautionary letters or findings of violation under certain circumstances, rather than the cautionary letters and warning letters provided for under the 2003 proposed rule and the evaluative letters provided for in the 2006 interim final rule.
Third, in recognition of OFAC’s position that enhanced maximum civil penalties authorized by the Enhancement Act should be reserved for the most serious cases, the Guidelines distinguish between egregious and non-egregious civil monetary penalty cases. Egregious cases are defined as those representing the most serious sanctions violations, based on an analysis of all applicable General Factors.
Fourth, in those cases in which the imposition of a civil monetary penalty is deemed appropriate, the Guidelines provide a new process for determining the penalty amount. This process involves first determining a base penalty amount, which is based on two considerations: (i) whether the conduct, activity, or transaction giving rise to a violation is egregious or non-egregious, and (ii) whether the case involves a voluntary self-disclosure by the subject person. The existence or lack of a voluntary self-disclosure is a major factor in establishing the penalty amount. The base penalty amount for a case involving self-disclosure reflects a 50 percent or more reduction from the base penalty amount that would otherwise be applicable.
Thus, under the Guidelines, the base penalty amount in a case determined to be non-egregious and involving voluntary self disclosure will not exceed one-half of the transaction value (capped at $125,000 per violation), while in an egregious case without voluntary self-disclosure, the penalty may reach the applicable statutory maximum.
Once a base penalty amount is determined based on the transaction value and egregiousness / voluntary self-disclosure factors, the amount may be adjusted upward or downward based on the other General Factors.
With respect to responses to apparent violations, depending on the facts and circumstances of a particular case, an OFAC investigation may lead to one or more of the following actions:
A. No action,
B. Request for additional information,
C. Cautionary letter,
D. Finding of violation,
E. Civil monetary penalty,
F. Criminal referral, or
G. Other administrative actions, including (1) License denial, suspension, modification, or revocation, and (2) Cease and desist order.
In establishing the amount of civil penalties, including for failure to furnish information or to keep records, OFAC will review the facts and circumstances surrounding an apparent violation and apply the General Factors.
Although this interim final rule is effective immediately, OFAC is soliciting comments for a 60-day period with a view of improving the Guidelines.
CBP Extends Comment Period for Proposed Uniform Rules of Origin
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.
Defense Trade Advisory Group to Meet October 21, 2008
On September 9, 2008, the
Department of State published a Notice of Meeting for the Defense Trade Advisory
Group (DTAG). The DTAG will meet on October 21, 2008 from 9:30 a.m.
- 1 p.m. at the U.S. Department of State, Harry S. Truman Building,
Washington, D.C. Entry and registration will begin at 8:45
a.m.
As access to the Department of State facilities is restricted, persons wishing to attend the meeting must notify the DTAG Executive Secretariat by COB, Thursday, October 14, 2008.
As access to the Department of State facilities is restricted, persons wishing to attend the meeting must notify the DTAG Executive Secretariat by COB, Thursday, October 14, 2008.
BIS Requests Comments on Foreign-Based Policy Export Controls
On September 8, 2008, the
Department of Commerce's Bureau of Industry and Security (BIS)
published a notice in the Federal Register requesting
comments on foreign-based policy export controls. BIS is reviewing
the foreign policy-based export controls in the Export
Administration Regulations (EAR) to determine whether they should
be modified, rescinded, or extended. BIS would like to receive
comments on how existing foreign policy-based export controls have
affected exporters and the general public.
In addition, BIS is particularly interested in comments regarding the Entity List (Supplement No. 4 to Part 744 of the EAR), including comments on its usefulness and format, as well as the specific entities listed and the licensing policies and requirements for each.
Comments must be received by October 8, 2008.
In addition, BIS is particularly interested in comments regarding the Entity List (Supplement No. 4 to Part 744 of the EAR), including comments on its usefulness and format, as well as the specific entities listed and the licensing policies and requirements for each.
Comments must be received by October 8, 2008.
Retired Professor Convicted of Arms Export Violations
On September 3, 2008, Dr. J. Reece
Roth, a retired University of Tennessee (UT) professor, was
found guilty of conspiracy to violate the Arms
Export Control Act (AECA) and fifteen separate violations of
illegally exporting sensitive information relating to a U.S. Air
Force research and development contract. The information concerned
plasma technology to be used in the construction of drones under
the U.S. Air Force contract.
The AECA prohibits transfer of defense-related materials, including technical data, to a foreign national without permission. Dr. Roth was convicted of conspiring with Atmospheric Glow Technology, Inc. (AGT), a Knoxville, Tennessee, technology company, with unlawfully transferring fifteen different "defense articles" to a graduate student, a national of China, in violation of the AECA. As part of a plea agreement, AGT recently pleaded guilty to 10 counts of exporting defense-related materials. Sentencing in that case in still pending.
Roth testified last week that he didn’t break the law because the prosecution had not proved that the research was successful, reports the Associated Press. "My understanding was that it only applied to things that worked, and we had not shown that. We had a lot of work to do," Roth testified.
Roth was also accused of taking reports and related studies in his laptop to China during a lecture tour in 2006, and having one report e-mailed to him there through a Chinese professor's Internet connection.
The government seized materials from Roth's office and took his laptop from him at the airport when he returned from the trip. Prosecutors claimed he violated the export control act simply by taking the laptop with sensitive materials outside the country even if, as forensic evidence showed, he didn't open all of those files while he was in China.
"Today's guilty verdict should serve as a warning to anyone who knowingly discloses restricted U.S. military data to foreign nationals," said Patrick Rowan, Acting Assistant Attorney General for National Security. United States Attorney Russ Dedrick said, "Our scientific and educational communities must take precautions to insure that technology and research are protected, when required, from disclosure to foreign governments."
The maximum punishment for the conspiracy to violate AECA is five years imprisonment and a fine of $250,000. The maximum penalty for each of the AECA offenses is 10 years imprisonment, a criminal fine of $1,000,000, and a mandatory special assessment of $100 for each offense. Dr. Roth's sentencing has been set for January 7, 2009, in United States District Court in Knoxville.
The AECA prohibits transfer of defense-related materials, including technical data, to a foreign national without permission. Dr. Roth was convicted of conspiring with Atmospheric Glow Technology, Inc. (AGT), a Knoxville, Tennessee, technology company, with unlawfully transferring fifteen different "defense articles" to a graduate student, a national of China, in violation of the AECA. As part of a plea agreement, AGT recently pleaded guilty to 10 counts of exporting defense-related materials. Sentencing in that case in still pending.
Roth testified last week that he didn’t break the law because the prosecution had not proved that the research was successful, reports the Associated Press. "My understanding was that it only applied to things that worked, and we had not shown that. We had a lot of work to do," Roth testified.
Roth was also accused of taking reports and related studies in his laptop to China during a lecture tour in 2006, and having one report e-mailed to him there through a Chinese professor's Internet connection.
The government seized materials from Roth's office and took his laptop from him at the airport when he returned from the trip. Prosecutors claimed he violated the export control act simply by taking the laptop with sensitive materials outside the country even if, as forensic evidence showed, he didn't open all of those files while he was in China.
"Today's guilty verdict should serve as a warning to anyone who knowingly discloses restricted U.S. military data to foreign nationals," said Patrick Rowan, Acting Assistant Attorney General for National Security. United States Attorney Russ Dedrick said, "Our scientific and educational communities must take precautions to insure that technology and research are protected, when required, from disclosure to foreign governments."
The maximum punishment for the conspiracy to violate AECA is five years imprisonment and a fine of $250,000. The maximum penalty for each of the AECA offenses is 10 years imprisonment, a criminal fine of $1,000,000, and a mandatory special assessment of $100 for each offense. Dr. Roth's sentencing has been set for January 7, 2009, in United States District Court in Knoxville.
BIS Initiates Foreign Availability Assessment Process for Certain Thermal Imaging Cameras in China
On September 2, 2008, the U.S.
Department of Commerce’s Bureau of Industry and Security
(BIS) announced a 90-day study to assess the
foreign availability of uncooled thermal imaging cameras
incorporating microbolometer focal plane arrays in China.
BIS was required to initiate such assessment after the Sensors and Instrumentation Technical Advisory Committee (SITAC) certified a petition asserting that uncooled thermal imaging cameras were widely availably in China, thus rendering U.S. export controls ineffective. In connection with the petition, SITAC has issued a report detailing the foreign availability of the uncooled thermal imaging cameras in controlled countries.
Part 768 of the Export Administration Regulations (EAR) sets out the procedure associated foreign availability assessment. The Secretary of Commerce has 90 days from the date of initiation to determine whether the thermal imaging cameras are available in China in sufficient quantity, and whether they are of comparable quality to render current U.S. export controls ineffective.
To develop its own recommendation for the Secretary of Commerce consideration, BIS is also seeking information from the public and other U.S. Government agencies on the availability of these cameras in China. Comments from the public must be received by September 17, 2008. Once the Secretary completes the review process, both SITAC and Congress will be notified of the final assessment determination.
If foreign availability is determined, the Department of Commerce may remove the license requirements, unless the President determines that this would be detrimental to national security. The Secretary may also recommend to the President that negotiations be undertaken to eliminate the foreign availability.
The Federal Register notice details methods by which public may submit comments on the matter.
BIS was required to initiate such assessment after the Sensors and Instrumentation Technical Advisory Committee (SITAC) certified a petition asserting that uncooled thermal imaging cameras were widely availably in China, thus rendering U.S. export controls ineffective. In connection with the petition, SITAC has issued a report detailing the foreign availability of the uncooled thermal imaging cameras in controlled countries.
Part 768 of the Export Administration Regulations (EAR) sets out the procedure associated foreign availability assessment. The Secretary of Commerce has 90 days from the date of initiation to determine whether the thermal imaging cameras are available in China in sufficient quantity, and whether they are of comparable quality to render current U.S. export controls ineffective.
To develop its own recommendation for the Secretary of Commerce consideration, BIS is also seeking information from the public and other U.S. Government agencies on the availability of these cameras in China. Comments from the public must be received by September 17, 2008. Once the Secretary completes the review process, both SITAC and Congress will be notified of the final assessment determination.
If foreign availability is determined, the Department of Commerce may remove the license requirements, unless the President determines that this would be detrimental to national security. The Secretary may also recommend to the President that negotiations be undertaken to eliminate the foreign availability.
The Federal Register notice details methods by which public may submit comments on the matter.
DOJ Revises Corporate Charging Guidelines with Respect to the Waiving of Attorney-Client Privilege and Cooperation
09/01/08 10:42 PM Filed in: DOJ
On August 28, 2008, the U.S.
Department of Justice (DOJ) announced that it is revising its corporate
charging guidelines for federal prosecutors throughout the nation
with respect to prosecuting corporate fraud. The Department’s
Principles of Federal Prosecution of Business Organizations govern
how all federal prosecutors investigate, charge, and prosecute
corporate crimes.
The revisions will for the first time be included in the United State’s Attorney’s Manual, which is binding on all Department of Justice federal prosecutors. Before the current revisions, the regulations were published in the form of DOJ’s internal legal memorandum, also known as the McNulty Memorandum. The revised Principles will be effective immediately.
The first important revision affects credit for cooperation. The revised guidelines state that credit for cooperation will depend on the disclosure of relevant facts, rather than corporation’s waiver of attorney-client privilege or work product protection. Thus, whether or not a corporation waives attorney-client privilege or work product, it may receive due credit for cooperation if they disclose relevant facts. Conversely, if a corporation fails to disclose relevant facts, it may not receive credit for cooperation.
The second important provision affects the federal prosecution’s ability to receive non-factual attorney-client privileged communications and work product. While under the old regulations federal prosecutors were allowed to request such information, titled “Category II” information, the new guidelines forbid it, with two exceptions well established in existing law.
Among other significant changes, the new guidelines instruct prosecutors not to consider a corporation’s advancement of legal fees to employees when evaluation cooperativeness. Moreover, the new regulations establish that corporation may participate in a joint defense agreement and still be eligible for cooperation credit.
Finally, federal prosecutors will be prohibited to consider whether a corporation sanctioned or retained culpable employees in evaluating whether credit for cooperation should be granted.
The revised "Principles of Federal Prosecution of Business Organizations" can be found here.
The revisions will for the first time be included in the United State’s Attorney’s Manual, which is binding on all Department of Justice federal prosecutors. Before the current revisions, the regulations were published in the form of DOJ’s internal legal memorandum, also known as the McNulty Memorandum. The revised Principles will be effective immediately.
The first important revision affects credit for cooperation. The revised guidelines state that credit for cooperation will depend on the disclosure of relevant facts, rather than corporation’s waiver of attorney-client privilege or work product protection. Thus, whether or not a corporation waives attorney-client privilege or work product, it may receive due credit for cooperation if they disclose relevant facts. Conversely, if a corporation fails to disclose relevant facts, it may not receive credit for cooperation.
The second important provision affects the federal prosecution’s ability to receive non-factual attorney-client privileged communications and work product. While under the old regulations federal prosecutors were allowed to request such information, titled “Category II” information, the new guidelines forbid it, with two exceptions well established in existing law.
Among other significant changes, the new guidelines instruct prosecutors not to consider a corporation’s advancement of legal fees to employees when evaluation cooperativeness. Moreover, the new regulations establish that corporation may participate in a joint defense agreement and still be eligible for cooperation credit.
Finally, federal prosecutors will be prohibited to consider whether a corporation sanctioned or retained culpable employees in evaluating whether credit for cooperation should be granted.
The revised "Principles of Federal Prosecution of Business Organizations" can be found here.