Addition of Items Determined to No Longer Warrant Control under United States Munitions List Category XIV (Toxicological Agents) or Category XVIII (Directed Energy Weapons).

BIS Rule PDF Format

State Department Rule PDF Format

This proposed rule indicates how articles the President determines no longer warrant control under Category XIV (Toxicological Agents, Including Chemical Agents, Biological Agents, and Associated Equipment) or Category XVIII (Directed Energy Weapons) of the United States Munitions List (USML) would be controlled under the Commerce Control List (CCL).  The affected Category XIV articles consist primarily of dissemination, detection and protection “equipment” and related articles and would be controlled under new Export Control Classification Numbers (ECCNs) 1A607, 1B607, 1C607, 1D607, and 1E607, as proposed by this rule.  The affected Category XVIII articles consist primarily of tooling, production “equipment,” test and evaluation “equipment,” test models and related articles and would be controlled under new ECCNs 6B619, 6D619 and 6E619, as proposed by this rule.  This proposed rule was published in conjunction with a proposed rule from the Department of State, Directorate of Defense Trade Controls, which would amend the list of articles controlled by USML Categories XIV and XVIII (see 80 FR 34572).  The public comment period for each of these proposed rules closes on Monday, August 17, 2015.

http://www.bis.doc.gov/index.php/regulations/federal-register-notices#FR34562

 

New Panama locks to open in April, but at higher cost

The new locks at the Pacific end of the Panama Canal began to fill with water this week in preparation for months of testing of their new gates before they open to commercial traffic in April 2016.

The flooding to the Pacific locks, following that of the Atlantic locks earlier this month, puts the $5.25 billion canal expansion project on track with the revised timetable for completion that was established last year.

But when the canal’s third set of locks finally do open next year, the expansion will be a year and a half behind the original opening date of October 2014 and approximately $100 million over the original budget. Nevertheless, Jorge Quijano, the Panama Canal Authority’s Administrator, thinks the canal will make up for lost time and revenue.

“We expect some of the diversion from the West Coast to continue and we expect to grab back most, if not all of what we have lost (to the Suez Canal) by not having post-Panamax vessel capacity,” Quijano said in an interview with JOC.com.

He said shippers have told him that even though the West Coast labor contract with the International Longshore & Warehouse Union was finally signed in May, they expect problems to continue on the landside, so they may shift as much as 10-15 percent of the Asian cargo volume to the East Coast through the Panama Canal. “We have been seeing more utilization of vessels moving through the canal to the East Coast.”

Read more at http://www.joc.com/maritime-news/international-freight-shipping/new-panama-locks-open-april-higher-cost_20150623.html

China’s indigenous commercial jetliner receives 500 orders

China’s first domestic large commercial jetliner (C919) has received 500 orders thus far, its manufacturer (Commercial Aircraft Corporation of China, Ltd. (“COMAC”) said on June 15, 2015.  China News (www.chinanews.com) reported that COMAC received orders on the opening day of the 51st Paris Air Show.  PuRen Germany Gmbh, owned by China PR Group Co., ordered seven of COMAC’s shorter-range regional ARJ21-700 and seven C919.  In addition, Ping An International Financial Leasing Co. ordered 50 of the C919 at the show (http://www.chinadaily.com.cn/business/2015-06/16/content_21016911.htm).

BIS CUBA CALL-IN PROGRAM

On January 16, 2015, the Bureau of Industry and Security amended the Export Administration Regulations to reflect certain changes in U.S. foreign policy towards Cuba. For further information, please review the associated Federal Register notice, fact sheet,and frequently asked questions.

BIS CUBA CALL-IN PROGRAM ANNOUNCEMENT

The Bureau of Industry (BIS) has scheduled monthly call-in programs to field questions from the exporting community concerning the Cuba rule published on January 16, 2015.
The first program will take place on Tuesday, May 12 at 2 pm EDT. Subsequent programs are scheduled at 2 pm EDT on June 9, July 7, August 11 and September 8.

CALL-IN INFORMATION

Toll Number:                                                    1-210-838-9521
Toll Free Number:                                           1-888-889-0538

Leader and Participant passcode:                  CUBA

RELEVANT LINKS

Cuba rule:                                                       [LINK]
FAQs:                                                              [LINK]

Licensing Policy

There is a general policy of denial for exports and reexports to Cuba of items subject to the Export Administration Regulations (EAR), as described in Section 746.2(b) of the EAR. However, there are exceptions to the general policy of denial, some of which are listed below:

  • Medicines and medical devices, whether sold or donated, are generally approved.
  • Vessels and aircraft on temporary sojourn to Cuba are reviewed on a case-by-case basis when they are used to deliver humanitarian goods or services or when their use is consistent with the foreign policy interests of the United States.
  • Items necessary for the environmental protection of U.S. and international air quality, waters and coastlines, including items related to renewable energy or energy efficiency, are generally approved.

In addition to authorization provided under licenses, there is authorization provided by license exception, some of which are described below.

License Exceptions

A license exception is an authorization to export or reexport under stated conditions certain items without a license that would otherwise require a license. Only the license exceptions, or portions thereof, listed Section 746.2(a)(1) of the EAR are available for Cuba.

You may export or reexport to Cuba without an individual validated license if your transaction meets all the applicable terms and conditions of the available license exceptions. To determine the scope and eligibility requirements, you must review the sections or specific paragraphs of Part 740 of the EAR. Read each license exception carefully, as the provisions available for sanctioned countries are generally narrow.

Support for the Cuban People

License Exception Support for the Cuban People (SCP) (Section 740.21 of the EAR) authorizes the export and reexport of certain items to Cuba that are intended to improve the living conditions of the Cuban people, support independent economic activity, and strengthen civil society in Cuba, and improve the free flow of information to, from, and among the Cuban people. Items eligible for export and reexport to Cuba pursuant License Exception SCP must be for certain specified end uses and end user and are limited to those designated as EAR99 (i.e., items subject to the EAR but not specified on the Commerce Control List (CCL)) or controlled on the CCL only for anti-terrorism reasons.

Agricultural Commodities

License Exception Agricultural Commodities (AGR) (Section 740.18 of the EAR) authorizes the export or reexport of U.S.-origin agricultural commodities to Cuba, provided that your transaction meets all of the criteria in Section 740.18(a) of the EAR. Please note that the commodities must meet the definition of “agricultural commodities” in Part 772 of the EAR and must be designated as EAR99. To supplement the definition of “agricultural commodities” in the EAR, the U.S. Department of Agriculture maintains a list of specific commodities that fall within the definition.

Note: You must notify the Bureau of Industry and Security prior to any export or reexport (or prior to the first of multiple shipments) under License Exception AGR. Notifications are submitted through the Simplified Network Application Processing Redesign (SNAP-R). The U.S. Government has up to 11 business days to review your transaction prior to shipment. Exporters are required to check SNAP-R or the System for Tracking Export License Applications (STELA) prior to shipment to ensure that the U.S. Government has no objections to your proposed transaction. Please refer to Section 740.18(a) of the EAR for additional information regarding the terms and conditions for use of License Exception AGR. For assistance with using SNAP-R to submit AGR notices, please review the SNAP-R Exporter User Manual or call the Office of Exporter Services at (202) 482-4811.

Consumer Communications Devices

License Exception Consumer Communications Devices (CCD) (Section 740.19 of the EAR) authorizes the export and reexport of certain commodities and software to eligible recipients in Cuba. A list of the eligible items is located in Section 740.19(b) of the EAR. Eligible recipients are individuals in Cuba, other than certain Cuban Government and Communist Party officials, and independent non-governmental organizations in Cuba. Organizations administered or controlled by the Cuban Government or the Cuban Communist Party, including schools and hospitals, are not eligible recipients. Note that there are some restrictions on reexports of foreign-produced commodities by U.S.-owned or -controlled entities in third countries.

Gift Parcels

License Exception Gift Parcels and Humanitarian Donations (GFT) (Section 740.12(a) of the EAR) authorizes the export and reexport of certain donated items by an individual (donor), or a forwarding service acting on behalf of the donor, to an eligible recipient (donee). Gift parcels may contain a variety of items, including food, most medicines, medical supplies and devices, certain consumer communications devices, and other items of a type normally exchanged as gifts between individuals, subject to restrictions described in Section 740.12(a) of the EAR. Eligible recipients (donees) are individuals, other than certain Cuban Government or Cuban Communist Party officials, and charitable, educational, and religious organizations in Cuba that are not administered or controlled by the Cuban Government or the Cuban Communist Party. For example, hospitals or schools administered or controlled by the Cuban Government are not eligible recipients.

Donors may send one gift parcel per month per eligible recipient. The combined total domestic retail value of eligible items may not exceed $800 per gift parcel. However, the frequency and value limits do not apply to food donated in gift parcels. Items contained in gift parcels must also be in quantities normally given as gifts between individuals.

Aircraft and Vessels

Flying an aircraft or sailing a vessel to Cuba, even temporarily, constitutes an export or reexport to Cuba. If the aircraft or vessel is subject to the EAR (e.g., those departing from the United States), then a license is required to fly/sail to Cuba. Certain exports and reexports of aircraft on temporary sojourn to Cuba may be eligible for License Exception Aircraft and Vessels (AVS) (Section 740.15(a) of the EAR). Note that only paragraph (a) of License Exception AVS is available for Cuba and that the corresponding requirements and criteria must be met in order to be eligible. An individual validated license is required for all exports and reexports of vessels on temporary sojourn to Cuba.

License applications for exports and reexports of aircraft and vessels on temporary sojourn to Cuba are reviewed on a case-by-case basis when they are used to deliver humanitarian goods or services or when their use is consistent with the foreign policy interests of the United States. License applications are generally only authorized for commercial shipments of authorized cargo. You may contact the Foreign Policy Division at (202) 482-4252 for additional information regarding temporary sojourns and assistance with associated license applications.

Other U.S. Government Agencies

Please be aware that other U.S. Government agencies administer regulations that could also impact your export or reexport transaction. For example, the Department of the Treasury’s Office of Foreign Assets Control (OFAC) maintains certain Cuba-related sanctions. Exporters and reexporters are responsible for complying with all applicable regulatory requirements.

Questions

For questions specific to Cuba, contact the Foreign Policy Division at 202-482-4252.

http://www.bis.doc.gov/index.php/policy-guidance/country-guidance/sanctioned-destinations/cuba

Delayed pilots aimed at speeding US-Mexico truck trade move forward

WASHINGTON — It’s been more than a decade in the making, but the Mexican government has finally cleared a hurdle that prevents U.S. Customs and Border Protection agents from pre-clearing cargo south of the border.

As soon as August, the U.S. and Mexican governments are expected to finalize the terms of two pilot projects that will permit American customs agents to pre-clear goods on Mexican soil before they are carried into the U.S., according to a statement from Rep. Henry Cuellar, D-Laredo.

Backers hope the pilot projects will demonstrate to Congress that an expansion of the program will allow shippers to get cargo faster across the border without sacrificing security. In April, Mexico’s Chamber of Deputies agreed to loosen restrictions on armed foreign agents operating on Mexican soil, paving the way for long-stalled pilot projects  in Otay Mesa, California, and San Jeronimo, Mexico.

At the Otay Mesa Port of Entry, the second-busiest commercial port on the border, customs agents from both countries will work in tandem under the same roof to inspect and pre-clear fruits and vegetables. The lifting of the weapon ban will also allow U.S. Customs agents to pre-clear shipments of Dell computer and other electronics leaving a Foxconn factory in San Jeronimo for across the New Mexico border.

The need for faster border crossings is increasing as shippers supply chains become more time-sensitive and overall trade between the two North American Free Trade Agreement partners builds.  U.S. trade in goods with Mexico rose 5.5 percent last year to $534.5 billion, according to U.S. Census Bureau data. Although Canada is still the primary partner for truck-borne trade with the U.S., Mexico is closing the gap. In 2014, 48 percent of truck border crossings occurred on the U.S.-Mexican border, up almost 20 percent since 2004, due in large part to the increased exports and growing industrial output that are now spurring Mexican growth and trade.

http://www.joc.com/regulation-policy/customs-regulations/us-customs-regulations/delayed-pilots-aimed-speeding-us-mexico-truck-trade-move-forward_20150609.html

Defendants Charged with Conspiracy to Engage in Wire Fraud, Identity Theft, and Misuse of Automated Export System

Thursday, June 4, 2015
Department of Justice
U.S. Attorney’s Office
Eastern District of Wisconsin

First Assistant United States Attorney Gregory J. Haanstad of the Eastern District of Wisconsin announced that defendant Mao Peng (age 25) of Kenosha, Wisconsin has been charged in a three-count criminal information with conspiring to engage in wire fraud, identity theft, and misuse of the United States’ Automated Export System to further criminal activity. Mr. Peng has also entered into a written plea agreement by which he has agreed to plead guilty to those charges. According to the information and a plea agreement, Peng conspired to defraud the State of Wisconsin of state and local sales tax revenue in connection with the purchase of luxury vehicles, which Peng and his company Longen Trading intended to export to China, by fraudulently using Native American straw buyers to make those purchases in a tax-exempt manner. Specifically, Peng and Longen Trading used Native American straw buyers in connection with the purchase of approximately 154 luxury vehicle purchase transactions, having a total purchase price of approximately $9,132,106.94, and thereby evaded Longen Trading’s payment of a total of approximately $515,964.04 in state and local sales taxes that Longen Trading was legally obligated to pay in connection with the purchase of those vehicles. According to the information and a plea agreement, Peng and Longen Trading also conspired to cause luxury vehicles to be purchased for export, via identity theft, that is, by using means of identification that belonged to a past or prospective straw buyer, without that person’s permission to purchase the vehicle using his or her identity. Specifically, between on or about June 2012 and June 2014, Peng and Longen Trading conspired with others to purchase approximately 71 luxury vehicles, having a total purchase price of approximately $4,212,945.06, using a means of identification belonging to another person, without that person’s knowledge or permission. According to the information and plea agreement, between approximately June 2012 and June 2014, Peng and Longen Trading also conspired with others to use the Department of Commerce’s Automated Export System (“AES”) to further these illegal activities, in violation of 13 U.S.C. § 305(a)(2). Under the plea agreement, Mr. Peng has agreed to plead to all three counts of the information, to join the government in recommending that the sentencing court impose a sentence of 27 months’ imprisonment, to pay restitution of $515,964.04 to the Wisconsin Department of Revenue, and to stipulate to the civil forfeiture of approximately $1.2 million in funds seized from various bank accounts he controlled as well as 29 new luxury vehicles, including new Porsche, Mercedes Benz, and BMW vehicles. In announcing the filing of the information and plea agreement, First Assistant United States Attorney Gregory J. Haanstad stated: “As this case reflects, the United States Attorney’s Office and the United States Department of Justice are committed to aggressively combatting both identity theft and tax evasion. We are also committed to taking the profit out of crime and to obtaining just financial outcomes in our criminal cases through the judicious use of both asset forfeiture and restitution remedies.” Haanstad commended the investigative work that the United States Secret Service and United States Department of Commerce, Bureau of Industry & Security, Office of Export Enforcement conducted in this matter, along with the investigative assistance provided by the following state and local law enforcement agencies: the Wisconsin Department of Criminal Investigations, the Wisconsin Department of Transportation Investigations, the Milwaukee Police Department, the Oneida Police Department, the Menomonee Police Department, the Stockbridge-Munsee Police Department, the Kenosha Police Department, the Wauwatosa Police Department, the Waukesha Police Department, the Glendale Police Department, the Green Bay Police Department, the Milwaukee Secret Service Financial Crimes Task Force, and the Native American Drug and Gun Initiative Task Force. “The quality and overall success of this investigation is a direct reflection of the contributing agencies’ efforts, resources, and teamwork,” stated a spokesperson for the United States Secret Service’s Milwaukee Office. “OEE will continue to work diligently with our law enforcement partners to identify and disrupt criminal export activity,” stated David R. Nardella, Acting Special Agent-in-Charge, U.S. Department of Commerce, Bureau of Industry & Security, Office of Export Enforcement, Chicago Field Office. This case is being prosecuted by Assistant United States Attorney Scott Campbell. An information is only a charge and is not evidence of guilt. A defendant is presumed innocent and is entitled to a fair trial at which the government must prove guilty beyond a reasonable doubt. First Assistant United States Attorney Gregory J. Haanstad of the Eastern District of Wisconsin announced that defendant Mao Peng (age 25) of Kenosha, Wisconsin has been charged in a three-count criminal information with conspiring to engage in wire fraud, identity theft, and misuse of the United States’ Automated Export System to further criminal activity. Mr. Peng has also entered into a written plea agreement by which he has agreed to plead guilty to those charges. According to the information and a plea agreement, Peng conspired to defraud the State of Wisconsin of state and local sales tax revenue in connection with the purchase of luxury vehicles, which Peng and his company Longen Trading intended to export to China, by fraudulently using Native American straw buyers to make those purchases in a tax-exempt manner. Specifically, Peng and Longen Trading used Native American straw buyers in connection with the purchase of approximately 154 luxury vehicle purchase transactions, having a total purchase price of approximately $9,132,106.94, and thereby evaded Longen Trading’s payment of a total of approximately $515,964.04 in state and local sales taxes that Longen Trading was legally obligated to pay in connection with the purchase of those vehicles. According to the information and a plea agreement, Peng and Longen Trading also conspired to cause luxury vehicles to be purchased for export, via identity theft, that is, by using means of identification that belonged to a past or prospective straw buyer, without that person’s permission to purchase the vehicle using his or her identity. Specifically, between on or about June 2012 and June 2014, Peng and Longen Trading conspired with others to purchase approximately 71 luxury vehicles, having a total purchase price of approximately $4,212,945.06, using a means of identification belonging to another person, without that person’s knowledge or permission. According to the information and plea agreement, between approximately June 2012 and June 2014, Peng and Longen Trading also conspired with others to use the Department of Commerce’s Automated Export System (“AES”) to further these illegal activities, in violation of 13 U.S.C. § 305(a)(2). Under the plea agreement, Mr. Peng has agreed to plead to all three counts of the information, to join the government in recommending that the sentencing court impose a sentence of 27 months’ imprisonment, to pay restitution of $515,964.04 to the Wisconsin Department of Revenue, and to stipulate to the civil forfeiture of approximately $1.2 million in funds seized from various bank accounts he controlled as well as 29 new luxury vehicles, including new Porsche, Mercedes Benz, and BMW vehicles. In announcing the filing of the information and plea agreement, First Assistant United States Attorney Gregory J. Haanstad stated: “As this case reflects, the United States Attorney’s Office and the United States Department of Justice are committed to aggressively combatting both identity theft and tax evasion. We are also committed to taking the profit out of crime and to obtaining just financial outcomes in our criminal cases through the judicious use of both asset forfeiture and restitution remedies.” Haanstad commended the investigative work that the United States Secret Service and United States Department of Commerce, Bureau of Industry & Security, Office of Export Enforcement conducted in this matter, along with the investigative assistance provided by the following state and local law enforcement agencies: the Wisconsin Department of Criminal Investigations, the Wisconsin Department of Transportation Investigations, the Milwaukee Police Department, the Oneida Police Department, the Menomonee Police Department, the Stockbridge-Munsee Police Department, the Kenosha Police Department, the Wauwatosa Police Department, the Waukesha Police Department, the Glendale Police Department, the Green Bay Police Department, the Milwaukee Secret Service Financial Crimes Task Force, and the Native American Drug and Gun Initiative Task Force. “The quality and overall success of this investigation is a direct reflection of the contributing agencies’ efforts, resources, and teamwork,” stated a spokesperson for the United States Secret Service’s Milwaukee Office. “OEE will continue to work diligently with our law enforcement partners to identify and disrupt criminal export activity,” stated David R. Nardella, Acting Special Agent-in-Charge, U.S. Department of Commerce, Bureau of Industry & Security, Office of Export Enforcement, Chicago Field Office. This case is being prosecuted by Assistant United States Attorney Scott Campbell. An information is only a charge and is not evidence of guilt. A defendant is presumed innocent and is entitled to a fair trial at which the government must prove guilty beyond a reasonable doubt.

http://www.justice.gov/usao-edwi/pr/defendants-charged-conspiracy-engage-wire-fraud-identity-theft-and-misuse-automated

How does Secretary of State’s May 29, 2015 rescission of Cuba’s designation as a state sponsor of terrorism affect the Bureau of Industry and Security?

The Secretary of State’s action does not change the Export Administration Regulations.   It does not suspend or terminate any of the license requirements or other controls in those regulations pertaining to Cuba.  Cuba remains subject to a comprehensive embargo and the export or reexport of all items subject to the EAR still requires authorization from BIS.

http://bis.doc.gov/index.php/licensing/embassy-faq#subcat198