Vol. 0527-2005

REGULATORY COMPLIANCE NEWSLETTER

NEWS:

DEFENSE TRADE CONTROLS – Exporter Guidance – BAE Systems Avionics Ltd. (UK) Changes to SELEX Airborne Systems Ltd.

DDTC was recently notified that BAE Systems Avionics Ltd. of the United Kingdom has changed its name and ownership structure due to an acquisition by Finmeccanica SpA of Italy. The change is not simply a name change but involves a change in ownership. The acquisition is reported to have been completed on April 29, 2005. All valid Department of State export authorizations to which BAE Systems Avionics Ltd. is a party are affected and must be amended as noted below to properly reflect this change.

New Licenses Required: Valid State Department authorizations must be replaced by new licenses reflecting the new ownership structure. Requests for new licenses must be submitted to the Office of Defense Trade Controls Licensing. Note that the transaction involves a change in ownership of an approved party and therefore a DSP-119 (amendment form) cannot be used.

Each new license application should include only the unshipped balance of quantity and dollar value (limited to DSP-5s and -85s), reference the previously approved license number, and be submitted as three complete copies.

Each copy should include license attachments as well as proviso letters, when applicable.

BAE notification to the applicant of its change in name and ownership structure should be included as supporting documentation.

Agreements Require Amending: Novation of technical assistance and manufacturing license agreements by amendment is required when BAE Systems Avionics Ltd. was a signatory. For agreements in which BAE Systems Avionics Ltd. was otherwise involved (e.g., sublicensee), an amendment is also required.

New Non-transfer and Use Certificate (DSP-83) Required: New certificates must be provided and signed by SELEX and the applicant. The DSP-83 certificate, however, will not be required at the time of license application or agreement amendment resubmission, but must be received by the applicant prior to export, as a condition of the new license or agreement amendment issuance.

ITAR Exemptions Restricted: As a general matter, such as contained in Section 125.4 of the ITAR, exemptions for exports in furtherance of previously issued licenses for which BAE Systems Avionics Ltd. was a party may not be claimed until such time as a new license is issued for exports to SELEX.

Reexport/Retransfer Approval Required: Authorization for the export of defense articles and/or defense services previously issued to BAE Systems Avionics Ltd. (UK) is required from DDTC prior to reexport/retransfer to SELEX. Submission must be in accordance with Section 123.9 of the ITAR.

The Bureau of Industry and Security (BIS) proposed to amend the Export Administration Regulations (EAR) by imposing a license requirement for exports and reexports of items controlled for missile technology (MT) reasons to Canada. To date, the EAR has required a license for MT-controlled items to all destinations except Canada, and generally no license exceptions are available for MT-controlled items. The effect of the rule is that all exports and reexports of MT-controlled items to any destination require a license, and generally no license exceptions are available, so that all exports and reexports of MT-controlled items subject to the EAR are subject to prior review. Effective Date: Comments must be received on or before June 23, 2005.

The Bureau of Industry and Security (BIS) issued a notice that extends the comment period on an advance notice of proposed rulemaking addressing potential regulatory and policy changes that would effect existing BIS deemed export licensing practices. BIS is continuing to seek comments on how the revisions would impact industry, the academic community, and U.S. government agencies involved in research. The new comment period deadline is June 27, 2005. Effective Date: Comments must be received by June 27, 2005.

The Department of Justice (DOJ) has amended the regulations of the Bureau of Alcohol, Tobacco, Firearms, and Explosives (ATF) to require licensed importers to identify by marking all explosive materials they import for sale or distribution. Licensed manufacturers currently are required to place identification markings on explosive materials manufactured in the United States. Similar marking requirements, however, do not currently exist for imported explosive materials. Identification markings are needed on explosives to help ensure that these materials can be effectively traced for criminal enforcement purposes. Although ATF does not have regulatory oversight over foreign manufacturers, it does have authority over licensed importers of explosive materials. The rule will impose identification requirements on licensed importers of explosive materials that are substantially similar to the marking requirements imposed on domestic manufacturers. In addition, the rule incorporates into the regulations the provisions of ATF Ruling 75-35, relating to methods of marking containers of explosive materials. The rule also amends the regulations to remove the requirement that a licensee or permittee file for an amended license or permit in order to change the class of explosive materials described in their license or permit from a lower to a higher classification. Effective Date: July 26, 2005.

The Nuclear Regulatory Commission (NRC) amended the export/import regulations to remove Syria from the list of restricted destinations and add it to the list of embargoed destinations. The amendment is necessary to conform the NRC's regulations with U.S. law and foreign policy. Effective Date: May 25, 2005.

The U.S. Census Bureau (Census Bureau) amended the Foreign Trade Statistics Regulations (FTSR) to incorporate the requirement that the Kimberley Process Certificate (KPC) number for the exports and the reexports of rough diamonds be filed through the Automated Export System (AES). The rule carries out the purposes of Executive Order 13312 of July 29, 2003, which implemented the Clean Diamond Trade Act and the Kimberley Process Certification Scheme in the United States. Effective Date: June 15, 2005.

The International Trade Administration (ITA) amended its regulations governing the establishment of tariff rate quotas (TRQ) for a limited quantity of worsted wool fabrics pursuant to Title V of the Trade and Development Act of 2000 (``the Act'') as amended by the Trade Act of 2002 and the Miscellaneous Trade Act of 2004, (Public law 108-429). Section 501(e) of the Act requires the President to fairly allocate TRQs on the import of certain worsted wool fabric. Section 504(b) of the Act authorizes the President to modify the limitations on worsted wool fabric imports under TRQs. The President has delegated to the Secretary of Commerce the authority to allocate the quantity of imports under the TRQs (specifically for wool products under HTS headings, 9902.51.11 and 9902.51.12) and to determine whether the limitations on the quantity of imports under the TRQs should be modified. The interim rule is necessary to implement the amendment to the Act included in the Miscellaneous Trade Act of 2004, (Public law 108-429). The document amends the regulations to specify which HTS categories may be allocated as TRQs and to eliminate Commerce's authority to modify these quotas. Effective Date: May 16, 2005. To be considered, written comments must be received by 5:00 p.m. on July 15, 2005.

The Office of Foreign Assets Control (OFAC), Department of Treasury announced major revisions to their watch list on May 25, 2005. A number of entities have been added in the notice and information on existing parties on the watch list has been updated with new addresses and branch offices.

DENIED PERSON UPDATE:

• The following entities were added to the Denied Persons List. The full list of changes can be accessed at the OCR web siteIslamic Jihad Group, AKA/DBA: a.k.a. Jama'at al-Jihad; a.k.a. Libyan Society; a.k.a. Kazakh Jama'at; a.k.a. Jamaat Mojahedin; a.k.a. Jamiyat; a.k.a. Jamiat al-Jihad al-Islami; a.k.a. Dzhamaat Modzhakhedov; a.k.a. Islamic Jihad Group of Uzbekistan; a.k.a. al-Djihad al-Islami
  Privileges affected: In consultation with the Secretary of the Treasury, the Attorney General, and the Secretary of Homeland Security; No prior notice need be provided to any person subject to this determination who might have a constitutional presence in the United States because to do so would render ineffectual the blocking and other measures authorized in the Order.
  Effective date: 05/25/05, Expiration date: UNTIL RESCINDED
  F.R. Date: 05/25/2005, Citation: 70 FR 30179

• Islamic Jihad Group (IJG) , AKA/DBA: a.k.a. Jama'at al-Jihad; a.k.a. Libyan Society; a.k.a. Kazakh Jama'at; a.k.a. Jamaat Mojahedin; a.k.a. Jamiyat; a.k.a. Jamiat al-Jihad al-Islami; a.k.a. Dzhamaat Modzhakhedov; a.k.a. Islamic Jihad Group of Uzbekistan; a.k.a. al-Djihad al-Islami
  Effective date: 05/25/05, Expiration date: UNTIL RESCINDED

CONFERENCES:

BIS Seminars

Title: Essentials of Export Controls
Date: July 7, 2005
Location: Washington, DC

Title: Exploring the EAR (½ day)
Date: July 8, 2005
Location: Washington, DC

Title: How to Classify Your Item (½ day)
Date: July 8, 2005
Location: Washington, DC

Title: Intro to Export Management Systems
Date: August 5, 2005
Location: Washington, DC

AAEI Seminar

Title: Ensuring Compliance with Export Controls on International Technology Transfers
Date: June 27 - 28, 2005
Location: Washington, DC, United States

SIA Seminar

Title: Summer Back-To-Basics Conference
Date: July 18-19, 2005
Location: Arlington, VA

Title: Fall Advanced Conference
Date: November 7-8, 2005
Location: Washington, DC

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Disclaimer:

This newsletter is not intended to provide legal guidance. Adherence to this decision does not relieve the exporter of the statutory responsibilities of complying with the applicable statutes, regulations, policies and procedures of the U.S. Government

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