* INDUSTRY AND SECURITY BUREAU; NOTICES; Meetings: Emerging Technology and Research Advisory Committee [Publication Date: 11/26/2010]

Transcription

1 [The Ex/Im Daily Update is published each business day by the Northrop Grumman Corporation Law Department, providing notice of all changes to ATF, CR, EAR, FACR, FTR, HTSUS, and ITAR regulations, plus related high-tech export/import news and comment. See subscription information below. The Daily Update will not be published tomorrow, 25 November, Thanksgiving Day.] EX/IM ITEMS FROM TODAY'S FEDERAL REGISTER: [No items of interest.] OTHER GOVERNMENT SOURCES: 1. Ex/Im Items Scheduled for Publication in Future Federal Register Editions 2. Ex/Im Items in Congressional Record 3. Commerce/Census: "Exporting Software: To file or not to file? Part 2" 4. Commerce/BIS Issues 180-Day Suspension Order of Export Privileges for Anvik Technologies Sdn. Bhd. a/k/a Anvik Technologies and Babak Jafarpour a/k/a Bob Jefferson 5. State/DDTC: (No new postings since 18 Nov 2010.) 6. Australia Defence Export Control Office (DECO) to Hold Information Sessions on Australia-U.S. Treaty on Defence Trade Cooperation NEWS: 7. Media-Newswire: "Arms trade: Viktor Bout's Case No Time to Celebrate" BLOGS, OPINIONS & LETTERS TO EDITOR: 8. R.C. Burns: "Are Virtual Office Addresses a New Red Flag?" EX/IM TRAINING, MEETINGS & SOCIAL EVENTS: 9. ACI's "National Legal Summit on Iraq & Afghanistan Contracting" Feb in Arlington, VA 10. "Export Operations" 24x7 Online Training EDITOR'S NOTES: 11. Are Your Copies of Ex/Im Regs Up to Date? Latest Changes: ATF (2 Oct 08), Customs (15 Nov 10), EAR (13 Oct 10), FACR/OFAC (4 Nov 10), FTR (22 Feb 10), HTSUS (26 Aug 10), and ITAR (27 Aug 10) EXPANDED ITEMS: 1. Ex/Im Items Scheduled for Publication in Future Federal Register Editions (Source: * INDUSTRY AND SECURITY BUREAU; NOTICES; Meetings: Emerging Technology and Research Advisory Committee [Publication Date: 11/26/2010] 2. Ex/Im Items in Congressional Record (Source: Barnes, Richardson & Colburn, LLP, LEGISLATIVE INFORMATION IN THE CONGRESSIONAL RECORD [No relevant trade related measures were introduced. Senate and House scheduled to meet at Monday, November 29, 2010.] 3. Commerce/Census: "Exporting Software: To file or not to file? Part 2" (Source: Global Reach Blog; In my last post, I discussed the requirement to file exports of mass market software. Now, I'll discuss and clarify the

2 requirements of reporting intangible products such as customized software or products. The Foreign Trade Regulations (FTR) recognizes customized software as software that is not sold at retail locations and is commonly designed for the specific use of the recipient. Customized software is normally transmitted over the Internet via an or download, or on a CD or DVD. Let's take a closer look at these two scenarios. An or download of information is not considered a physical good. You can't touch an ; you can't place your hands on a download. What are the responsibilities of a U.S. company or individual selling an intangible product to a foreign party through an or one that is downloadable via the Internet? Based on the FTR 30.2(d)(3), "electronic transmissions and intangible transfers... shall be excluded from the EEI filing." No EEI record is required. What if you're selling customized software on a CD or DVD? The software is on a CD or DVD, which makes it a physical good that must be filed in the AES. Now you're probably asking yourself, what value do I report? For customized software you will report the value of the media (i.e. CD, DVD, etc.). For example, you sell customized software to a company in Germany that can only be used by this company. The software is loaded on a CD and shipped out of the U.S. You charge the German company $10,000 for this software, but the actual value of the CD is $2. What value needs to be reported in the AES? You would report $2; however, this shipment would be exempt from filing because it is less than $2,500 per Schedule B number and no license is required. In this scenario, you would provide the exemption for low value shipments, "NO EEI 30.37(a)". On the other hand, if a license were required in this example, the CD would have to be reported in the AES. Remember, the FTR requires the value of the physical good, whether CD or DVD. If you can't touch it, you do not need to report the EEI in the AES. 4. Commerce/BIS Issues 180-Day Suspension Order of Export Privileges for Anvik Technologies Sdn. Bhd. a/k/a Anvik Technologies; Babak Jafarpour a/k/a Bob Jefferson (Source: * Respondent: Anvik Technologies Sdn. Bhd. a/k/a Anvik Technologies; Babak Jafarpour a/k/a Bob Jefferson * Charges: Order temporarily denying the export privileges of Anvik Technologies Sdn. Bhd. and Babak Jafapour (a/k/a Bob Jefferson) related to the use of virtual offices the United States, Hong Kong, and Malaysia * Fine or Civil Settlement: 180 days suspension of all export privileges * Debarred or Suspended from Export Transactions: Not if penalty is paid as agreed * Result of Voluntary Self-Disclosure: No * Date of Order: 15 Nov State/DDTC: (No new postings since 18 Nov 2010.) (Source: 6. Australia Defence Export Control Office (DECO) to Hold Information Sessions on Australia-U.S. Treaty on Defence Trade Cooperation (Source: The Defence Trade Cooperation Treaty was signed in September On 29 September 2010, the Treaty was approved for ratification by both houses of the US Congress, and both Australia and the US are now addressing their own domestic ratification requirements. The Treaty will enter into force when both countries' domestic requirements are complete.

3 The Treaty is expected to provide substantial benefits for Defence and improved commercial opportunities for Australian defence industry. It will create a comprehensive framework for the two way trade in certain defence articles required for specified end-uses, operations, projects and research programs, removing the need for export licenses within an 'Approved Community' of government facilities and private companies in Australia and the US. The text of the Australia-US Defence Trade Cooperation Treaty and its Implementing Arrangement is available from the Australasian Legal Information Institute at: < The Minister for Defence, Minister for Foreign Affairs and Minister for Trade have released a joint media statement welcoming the Treaty at: < The Treaty was also discussed at the 2010 Australia-US Ministerial Consultations (AUSMIN), and is mentioned in the AUSMIN 2010 Joint Communiqué at: < CurrentId=11039>. The Australian Government is committed to completing as a matter of priority all necessary steps for ratification, introducing legislation to both implement the Treaty and to strengthen Australian export controls. The Department of Defence will be conducting the first stage of a stakeholder consultation program with a series of information sessions in early December These presentations will introduce the proposed changes to Australia's defence export control system, outline the planned implementation of the Treaty, and provide the opportunity to comment. The Schedule for the presentation is below. Register for an Information Session at: < Canberra Wed 1 Dec 2010 Olims Hotel Canberra Newcastle Fri 3 Dec 2010 Crowne Plaza Newcastle (TBC) Sydney Fri 3 Dec 2010 The Sebel Surry Hills (TBC) Perth Mon 6 Dec 2010 Mercure Perth (TBC) Hobart Mon 6 Dec 2010 Mercure Hotel Hobart (TBC) Brisbane Tue 7 Dec 2010 Mercure Brisbane (TBC)

4 Adelaide Wed 8 Dec 2010 Mercure Grosvenor Hotel (TBC) Townsville Wed 8 Dec 2010 Rydges Southbank (TBC) Melbourne Thu 9 Dec 2010 Rydges Bell City (TBC) Darwin Thu 9 Dec 2010 Novotel Darwin Atrium (TBC) 7. Media-Newswire: "Arms trade: Viktor Bout's Case No Time to Celebrate" (Source: [Excerpts.] (Media-Newswire.com) - Legal vacuum of 20 years shows need for robust global arms trade agreement - Bout was able to operate freely for lack of any international binding rules. Arms traffickers can too easily navigate the patchwork of national arms regulations, fuelling conflict while avoiding arrest and extradition, because countries have been too weak or reluctant to pass an international arms trade treaty, says international agency Oxfam. Oxfam says the case this week against alleged arms trafficker Viktor Bout showed why international rules on arms trading are so desperately needed. Bout is alleged to have sold arms and ammunition for nearly 20 years into some of the world's worst war zones including Afghanistan, Angola, the Democratic Republic of the Congo, Liberia, Rwanda, Sierra Leone and Sudan. He was arrested in Thailand in 2008 and was extradited this week to stand trial in the US, after two years of legal wrangling for conspiring to provide weapons in support of terrorist groups..... There are no comprehensive international legally-binding rules on arms trade. To date, only about 60 countries have established some kind of national legislation on arms brokering. This means that even if the actions of arms dealers like Bout are illegal under US law for instance, they can avoid arrest and extradition by carefully operating in the grey areas between different national jurisdictions. "Regardless of whether Viktor Bout is found guilty or not, the need for global rules on arms trade has never been greater. Despite numerous accusations, countries have been unable for over 20 years to bring him to justice. Arms traders are experts at exploiting these legal loopholes - and without a binding treaty that regulate global arms trade, we're just making it too easy for them to continue to do so," said Scott Stedjan, spokesman for Oxfam's Control Arms campaign. "How can we have strict national and international laws that regulate the trade of bananas and mobile phones, but allow traders of weapons and ammunitions to go unchecked? "We need a set of rules that would hold every actor involved in trading of arms - from the exporter, to the broker to the end-user - accountable to the same high standards. Let's plug the holes in the patchy international system of arms trade." Oxfam says that a robust international Arms Trade Treaty ( ATT ) would finally put an end to the legal vacuum that arms traffickers are thriving within.

5 8. R.C. Burns: "Are Virtual Office Addresses a New Red Flag?" (Source: Export Law Blog, Reprinted by permission.) * Author: R. Clifton Burns, Esq., Bryan Cave LLP, Wash DC, , Clif.Burns@bryancave.com) The Bureau of Industry and Security ("BIS") recently imposed a temporary denial order ("TDO") on Singapore-based Anvik Technologies, and its owner Babak Jafarpour. The TDO is based on evidence that BIS alleges that it has demonstrating that Anvik and Jafarpour exported items from the United States to Iran by transshipment through third countries. What's interesting here is that the transshipment points were "virtual offices" that Anvik maintained in the United States, Hong Kong and Malaysia. Virtual offices are arrangements with companies that provide an address, a telephone number, answering services and other office services to individuals and companies that don't have actual physical space at the location and may not ever be actually present in that office. In one of the transactions described in the TDO an order was placed by Anvik with a U.S. company to ship items to Anvik's virtual office located at 155 North Wacker Drive, 42nd Floor, Chicago, Illinois Anvik then instructed the personnel at the Chicago location to ship the items to Anvik's virtual office in Kuala Lumpur. Anvik instructed the Malaysia virtual office to ship the items to Iran. Two things are worth noting here. First, should shippers and exporters consider a request to ship items to a virtual office a red flag that the items may be diverted to an impermissible location or party? If you search for "155 North Wacker Drive, 42nd Floor" in Google, this 8&q=155+North+Wacker+Drive,+42nd+Floor is the first returned result: "Virtual Office and Serviced Offices Chicago 155 North Wacker North Wacker: Chicago: United States: Serviced offices and Virtual offices North Wacker Drive 42nd Floor Chicago IL Tel: " So, it wouldn't take a rocket scientist or back-breaking due diligence to discover that Anvik was using a virtual office and not a real one. This should trigger a further investigation by a shipper as to the identity of Anvik and why it was shipping merchandise to a virtual office in a Chicago high-rise. Second, the Chicago address is soon going to be on the BIS Denied Parties list. And what is the first red flag on BIS's list of Red Flags "The customer or its address is similar to one of the parties found on the Commerce Department's [BIS's] list of denied persons." As a result, other "tenants" at the same North Wacker Drive address may start to encounter difficulties in having packages shipped to that address as shippers and exporters encounter that red flag. 9. ACI's "National Legal Summit on Iraq & Afghanistan Contracting" Feb in Arlington, VA (Source: Adam Denenberg, a.denenberg@americanconference.com) * What: Conference: "National Legal Summit on Iraq & Afghanistan Contracting" * When: Feb 2011 * Where: Hyatt Regency Crystal City, Arlington, VA * Speakers: Stuart Bowen, Special Inspector General for Iraq Reconstruction (SIGIR); Michael J. Thibault, Co-chair, Commission on Wartime Contracting; Moshe Schwartz, Specialist in Defense Acquisition Policy, Congressional; Fred

6 Berger, Chairman, The Louis Berger Group; Julia Symon, Director of Compliance, KBR; Enayat Qasimi, Former Senior Foreign Affairs Advisor to the President of Afghanistan * Sponsor: American Conference Institute (ACI) * Registration: , or a.denenberg@americanconference.com 10. "Export Operations" 24x7 Online Training (Source: Beth Peterson, beth@bpeglobal.com) * What: Covers key export standard operation procedures, best practices and establishing an export management compliance program. * When/Where: Available online 24 hours/day 7 days/week * Sponsor: BPE * Instructor: Julie Gibbs, Sr. Consultant, BPE * Register: ; training@bpeglobal.com 11. Are Your Copies of Ex/Im Regs Up to Date? Latest Changes & Sources: (Source: As indicated below.) The official versions of the following regulations are dated 1 April (although published annually in June or July) in the U.S. Code of Federal Regulations (C.F.R.), but are updated as amended in the Federal Register. The below list contains the latest change to each regulation. * ATF ARMS IMPORT REGULATIONS (ATF), Department of Justice, Bureau of Alcohol, Tobacco, Firearms, and Explosives; 27 CFR Part 447-Importation of Arms, Ammunition, and Implements of War: < c=ecfr&sid=0624fc9399af9afc346df6f1f00c88df&rgn=div5&view=text&node=27: &idno=27> - 2 Oct 08: 73 FR : 27 CFR Parts 447, 478, 479, and 555; Technical Amendments to Regulations in Title 27, Chapter II * CUSTOMS REGULATIONS (CR): 19 CFR, Ch. 1, Pts : < sid=7a bc58ba37d919f9324b&c=ecfr&tpl=/ecfrbrowse/title19/19tab_02.tpl> - 15 Nov 10: 775 FR : 19 CFR Parts 4 and 10; Technical Corrections to Customs and Border Protection Regulations * EXPORT ADMINISTRATION REGULATIONS (EAR): 15 CFR Subtit. B, Ch. VII, Pts : < sid=ae096b291da9d16eab0b4af95b5d5866&c=ecfr&tpl=/ecfrbrowse/title15/15cfrv2_02.tpl#700> - 13 Oct 10: 75 FR : 15 CFR Parts 772 and 774; Wassenaar Arrangement 2009 Plenary Agreements Implementation: Categories 1, 2, 3, 4, 5 Part I, 6, 7, and 9 of the Commerce Control List, Definitions, Reports; Correction * FOREIGN ASSETS CONTROL REGULATIONS (OFAC FACR), 31 CFR, Parts , Embargoes, Sanctions, Executive Orders: < sid7512a3e262e688321f54bbe4ee1aff1d&c=ecfr&tpl=/ecfrbrowse/title31/31cfrv3_02.tpl#500> - 4 Nov 10: 75 FR : 31 CFR Part 510; North Korea Sanctions Regulations * FOREIGN TRADE REGULATIONS (FTR): 15 CFR Part 30, Jan. 1, 2010; < Feb 10: 75 FR : 15 CFR Part 30, Foreign Trade Regulations (FTR): Eliminate the Social Security Number (SSN) as an Identification Number in the Automated Export System (AES). "The Annotated FTR," an unofficial 123-page version with index, practice commentaries, and summaries, in Word 2007 and pdf formats (last 21 Sep 2010), is available free upon request from author Jim Bartlett, JEBartlett@JEBartlett.com.

7 * HARMONIZED TARIFF SCHEDULE OF THE UNITED STATES (HTS, HTSA or HTSUSA), 1 Jan 2010 (with Rev. 1 of 1 Jul 10): 19 USC 1202 Annex. The HTS is available for downloading at < [Editor's Note: "HTS" and "HTSA" are often seen as abbreviations for the Harmonized Tariff Schedule of the United States Annotated, shortened versions of "HTSUSA".] - 26 Aug 2010: Revision 2 < * INTERNATIONAL TRAFFIC IN ARMS REGULATIONS (ITAR) 22 C.F.R. Ch. I, Subch. M, Pts (2010): < sid=6c0d30f40ed2aac29b20e86ead3a8861&c=ecfr&tpl=/ecfrbrowse/title22/22cfrv1_02.tpl> and scroll down to "SUBCHAPTER M". Printed copies of the ITAR in several sizes are available for purchase from SIA at < "The Annotated ITAR," an unofficial 245-page version with index, practice commentaries, summaries, and Arms Export Control Act, in Word and pdf formats (last updated 18 Nov 2010), is available free upon request from author Jim Bartlett, JEBartlett@JEBartlett.com Aug 10: 75 FR , Changes to 22 C.F.R , 125.4(a), 125.4(b)(9), 126.8, , 129.7(e) and 129.8(c), exemptions, proposals re SME, registration and licensing of brokers) EDITORIAL POLICY: * The Northrop Grumman Corporation Law Department s the NGC Ex/Im Daily Update every business day to thousands of subscribers to help NGC employees, customers, and others comply with U.S. defense and high-tech trade restrictions and Federal business ethics regulations. We check the following websites daily: Federal Register, AES, ATF, BIS, CBP, Congressional Record, DSS, DDTC, DTSA, DHS, DOJ, OFAC, GAO, Treasury, White House, the trade control sites of Australia, Canada, and U.K., and numerous law firms and news sources. Due to space limitations, we do not post Arms Sales notifications or Denied Party notifications. To reduce byte size, we the Ex/Im Daily Update as a plain text document without attachments. Links to websites are not html "clickable," but may be found by copying and pasting in your Internet browser address line. * The Ex/Im Daily Update is distributed at no charge, but is a cooperative publication, and subscribers are invited to contribute items of interest. We will give full attribution to contributors unless anonymity is requested. Send items to James.Bartlett@ngc.com. * INTERNET ACCESS AND BACK ISSUES: The National Defense Industries Association (NDIA) posts the Daily Update on line, and maintains back issues since August, 2009, at < Older issues are available from the Editor on request. * ANNOUNCEMENTS OF SEMINARS AND EVENTS: There is no charge to publish notices of coming events in the Ex/Im Daily Update, but sponsors are requested to provide one complimentary press pass for a Northrop Grumman employee in return for the free publicity. Please send notices to James.Bartlett@ngc.com. * RIGHTS & RESTRICTIONS: This contains no proprietary, classified, or export-controlled information. All items are obtained from public sources or are published with permission of private contributors, and may be freely circulated without further permission from NGC. Any further use of contributors' material, however, must comply with applicable copyright laws. * CAVEATS: This is for general information only. Content, including comments from attorneys and professional consultants, cannot be relied upon as legal or expert advice. The timeliness and accuracy of items are not verified by NGC. Consult your own legal counsel or compliance specialists before taking actions based upon news items or opinions from this or other unofficial sources. If any U.S. federal tax issue is discussed in this communication, it was not intended or written by the author or sender for, and cannot be used for the purpose of avoiding penalties under the Internal Revenue Code or promoting, marketing, or recommending to another party any transaction or tax-related matter. * SUBSCRIPTIONS: Send request to James.Bartlett@NGC.com. Requests must come from the address to be subscribed. Please include your full professional contact information (name, title, company, address, and telephone), and tell us how you heard about the Ex/Im Daily Update. We do not sell or reveal subscriber information. * TO UNSUBSCRIBE: Send request for removal to James.Bartlett@ngc.com.