Vol. 1206-2004

REGULATORY COMPLIANCE NEWSLETTER

NEWS:

The Directorate of Defense Trade Controls (DDTC) issues guidelines for Licensing of Foreign National Employment in the United States. In response to the Office of Inspector General (OIG) reports entitled Review of Export Controls for Foreign Persons Employed at Companies and Universities and Department of State Controls Over the Transfer of Militarily Sensitive Technologies to Foreign Nationals from Countries and Entities of Concern, the Directorate of Defense Trade Controls (DDTC) published an amendment to licensing guidelines to provide specific guidelines for licensing employment of foreign nationals in the United States. The OIG reports determined that DDTC needed to address its inability to accurately track (at a minimum by name, nationality and technology authorized) foreign persons employed in the United States with access to articles controlled on the United States Munitions List (USML). To satisfy this requirement, DDTC modified its internal policies and industry guidance (i.e., Guidelines for Completion of the Form DSP-5) with the intent that all foreign national employees in the United States in defense activities with access to USML articles would be authorized using the Form DSP-5. Use of the DSP-5 permits DDTC to identify all requests for employment, determine technical areas in which the individual is employed, standardize application documentation, and, to the extent possible, standardize conditions of approval. In addition, standardization should assist industry in monitoring its foreign national employment. Finally, the handling of requests using two different types of transactions impedes standardization and enhancement of DDTC’s license review, compliance monitoring and maintenance of a robust computer database. Therefore, DDTC has determined that only requests made using a DSP-5 will be processed for foreign national employment. All other requests (i.e., TAA) will be Returned Without Action (RWA’d).

DDTC recognizes that there are instances when, in addition to the DSP-5 employment authorization, there is a need to provide the employed foreign national ITAR controlled technical data only and/or a defense service. In these instances a DSP-5 or a technical assistance agreement request should be submitted. The applicant, unless the request is submitted with the DSP-5 license application, must provide with the request the DSP-5 license number or a copy of the license and the expiration date of the foreign national employment authorization and authorized length of stay in the United States.

DDTC also recognizes that a number of technical assistance agreements have been approved for foreign national U.S. employment, to include a defense service, that have not expired (e.g., the work authorization/length of stay has not expired). DDTC is authorizing the applicant to continue to employ the foreign national and make releases based on the agreement authorization until either the DDTC expiration date or the USG work authorization/ length of stay has expired, whichever comes first. Extension of the employment of the foreign national authorized in any agreement that expires will only be granted only when the applicant makes the request using a DSP-5. If the expiring agreement provided for a defense service that needs to be continued or to be amended, the applicant may extend the agreement for the defense service or if deemed appropriate apply for the defense service on the DSP-5 application (e.g., service is limited to less then one year, specifically defined and limited scope, such as training in the companies’ products). Effective January 1, 2005 an agreement may only be extended or approved for a defense service after the DSP-5 foreign national employment application has been approved. The duration of an agreement and DSP-5 will be no greater than the number of months/years that the individual has been granted in the USG work authorization/length of the authorized stay in the United States documentation.

To read the complete text http://www.pmdtc.org/docs/Foreign_National_Employment.doc

The Bureau of Industry and Security (BIS) is correcting an interim rule that appeared in the Federal Register of November 23, 2004 (67 FR 68076). The rule amended the regulations to require licensees to communicate in writing specific licensing conditions. This rule amends the Export Administration Regulations (EAR) by correcting an error by inserting regulatory text inadvertently omitted. Effective Date: November 23, 2004.

The Office of Foreign Assets Control (OFAC), the President has issued a new Executive Order amending Executive Order 13303 of May 22, 2003, to extend to the Central Bank of Iraq the same immunity from attachment and other judicial process granted to the Development Fund for Iraq (DFI) and to Iraqi petroleum and petroleum products. The new Order also amends E.O. 13303 to limit the immunity provided to the CBI, the DFI and Iraqi petroleum and petroleum products to exclude immunity from any final judgment arising out of a contractual obligation entered into by the Government of Iraq, including its agencies and instrumentalities, after June 30, 2004. Finally, the new Order amends E.O. 13303 to limit the immunity provided Iraqi petroleum and petroleum products by providing that such immunity applies only until title passes to the initial purchaser.

The Office of Foreign Assets Control (OFAC), Department of Treasury announced major revisions to their watch list on December 1, 2004. 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.

The Alcohol and Tobacco Tax and Trade Bureau (TTB) published a final rule establishing the Dundee Hills viticultural area in Yamhill County, Oregon. This new area is entirely within the existing Willamette Valley viticultural area. We designate viticultural areas to allow vintners to better describe the origin of their wines and to allow consumers to better identify wines they may purchase. Effective Date: January 31, 2005.

The Alcohol and Tobacco Tax and Trade Bureau (TTB) proposes to establish the ``Texoma'' viticultural area in north-central Texas in Montague, Cooke, Grayson, and Fannin Counties. The proposed area consists of approximately 3,650 square miles on the southern side of Lake Texoma and the Red River, along the Texas-Oklahoma State line. They designate viticultural areas to allow bottlers to better describe the origin of wines and allow consumers to better identify the wines they may purchase. They invite comments on this proposed addition to their regulations. Date: Written comments must be received on or before January 31, 2005.

The Customs and Border Protection (CBP) published a final rule amendment to the Regulations that implements the standards for preferential treatment for brassieres imported from Caribbean Basin countries. This rule was initially published as an interim regulation in the Federal Register on October 4, 2001, as T.D. 01-74, and later amended by T.D. 03-29 published in the Federal Register on September 30, 2003. T.D. 01-74 set forth interim amendments to the CBP Regulations to implement those provisions within the United States-Caribbean Basin Trade Partnership Act (CBTPA) which established the standards for preferential treatment for brassieres imported from CBTPA beneficiary countries. T.D. 03-29 amended the brassieres provision set forth in T.D. 01-74 to reflect the amendments to section 213(b) of the Caribbean Basin Economic Recovery Act (the CBERA) that were made by section 3107 of the Trade Act of 2002. T.D. 03-29 also included a number of other changes to the CBERA implementing regulations for brassieres to clarify a number of issues that arose after their original publication. Effective Date: December 30, 2004.

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 site

·      AURELIANO FELIX, Jorge, AKA/DBA: a.k.a. MACUMBA
Privileges affected: DOB 15 Apr 1952; nationality Mexico (individual).
Effective date: 11/24/04, Expiration date: UNTIL RESCINDED

·       Central Bank of Iraq, IRAQ
Privileges affected: All blocked funds held in the United States in accounts are hereby confiscated and vested in the Department of the Treasury. Except funds that are subject to the Vienna Convention on Diplomatic Relations or the Vienna Convention on Consular Relations, or that enjoy equivalent privileges and immunities under the laws of the United States, and are or have been used for diplomatic or consular purposes. It has been determined that an account opened on the books of the Federal Reserve Bank of New York (Account Entitled ``Central Bank of Iraq/Oil Proceeds Receipts Account'') for the purpose of receiving proceeds of Iraqi petroleum contracts is subject to the prohibitions of Executive Order 13303 of May 22, 2003. Accordingly, any attachment, judgment, decree, lien, execution, garnishment, or other judicial process with respect to that account is prohibited and shall be deemed null and void.
Effective date: 03/20/03, Expiration date: UNTIL RESCINDED
F.R. Date: 12/02/2004, Citation: 68 FR 14305; 68 FR 40334; 69 FR 70177

·       Changgwang Sinyong Corporation., KOREA, NORTH
Privileges affected: Also includes any successor, sub-unit, or subsidiary thereof. Pursuant to Sections 2 and 3 of the Iran Nonproliferation Act of 2000 (P.L. 106-178), the U.S. Government determined on November 22, 2004, that the measures authorized in Section 3 of the Act shall apply to the foreign entity identified in the report submitted pursuant to Section 2(a) of the Act.
Effective date: 11/24/04, Expiration date: 11/23/2004
F.R. Date: 12/01/2004, Citation: 65 FR 20239; 67 FR 54693; 68 FR 16113; 68 FR 40011; 68 FR 44136; 69 FR 69989

·      ESPARRAGOZA MORENO, Juan Jose, Calle 8 8988 Colonia Zona Este, Tijuana, Baja California CP 22000, Mexico, MEXICO
Privileges affected: DOB 03 Feb 1949; alt DOB 02 Mar 1949; POB Sinaloa, Mexico (individual).
Effective date: 06/02/03, Expiration date: UNTIL RESCINDED

CONFERENCES:

OCR 2005 USER Conference

Title – “Using OCR Solutions Effectively”
Date: March 7, 2005, Time: 8:30 AM to 4:30 PM

The conference will focus on the latest updates from BIS and DDTC, Regulatory Requirements, and Highlights from Industry Experts who use OCR Solutions to meet Export/Import Compliance.

Venue: Hyatt Newporter, Newport Beach, California.
Registration: http://ocr.ocr-inc.com/request.asp
Hotel Accommodations: http://newporter.hyatt.com/property/index.jhtml

(The Hotel has agreed for an OCR group discount rate of $100 per day. Please ask for the discount rates if you are planning to stay at the venue.)

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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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