40th Anniverary of Apollo 8 Christmas Eve Broadcast -- Season's Greetings

This week marks the 40th anniversary of the Apollo 8 mission that led to the famous "Earthrise" photo taken by astronaut William Anders. Apollo 8 was the first manned mission to orbit the moon.

Below is NASA's summary of Apollo 8's Christmas eve live television broadcast. To listen and view the broadcast, click here.

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Apollo 8, the first manned mission to the Moon, entered lunar orbit on Christmas Eve, December 24, 1968. That evening, the astronauts; Commander Frank Borman, Command Module Pilot Jim Lovell, and Lunar Module Pilot William Anders did a live television broadcast from lunar orbit, in which they showed pictures of the Earth and Moon seen from Apollo 8. Lovell said, "The vast loneliness is awe-inspiring and it makes you realize just what you have back there on Earth." They ended the broadcast with the crew taking turns reading from the book of Genesis.

William Anders:

"For all the people on Earth the crew of Apollo 8 has a message we would like to send you".

"In the beginning God created the heaven and the earth.
And the earth was without form, and void; and darkness was upon the face of the deep.
And the Spirit of God moved upon the face of the waters. And God said, Let there be light: and there was light.
And God saw the light, that it was good: and God divided the light from the darkness."

Jim Lovell:

"And God called the light Day, and the darkness he called Night. And the evening and the morning were the first day.
And God said, Let there be a firmament in the midst of the waters, and let it divide the waters from the waters.
And God made the firmament, and divided the waters which were under the firmament from the waters which were above the firmament: and it was so.
And God called the firmament Heaven. And the evening and the morning were the second day."

Frank Borman:

"And God said, Let the waters under the heavens be gathered together unto one place, and let the dry land appear: and it was so.
And God called the dry land Earth; and the gathering together of the waters called he Seas: and God saw that it was good."

Borman then added, "And from the crew of Apollo 8, we close with good night, good luck, a Merry Christmas, and God bless all of you - all of you on the good Earth."

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Season's Greetings and Happy New Year. See you in 2009.

--Doug Jacobson

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Costa Rica Finally Eligible for CAFTA-DR Benefits on January 1, 2009

President Bush today issued a Proclamation providing that the Dominican Republic-Central America-United States Free Trade Agreement (CAFTA-DR) will enter into force for Costa Rica on January 1, 2009. Costa Rican products meeting the rules of origin of the CAFTA-DR that are entered into the U.S., or withdrawn from warehouse for consumption, on or after January 1, 2009 will be eligible for preferential tariff treatment.

Costa Rica is the last country to implement the CAFTA-DR. CAFTA-DR entered into force for El Salvador on March 1, 2006, for Honduras and Nicaragua on April 1, 2006, for Guatemala on July 1, 2006, and for the Dominican Republic on March 1, 2007.

In October 2007, the voters of Costa Rica narrowly backed the free trade agreement in a national referendum.

No date has yet been set for implementation of the U.S.-Peru Free Trade Agreement, which is expected to go into effect some time in 2009.

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Fiat Pays More Than US$17 Million in Connection With FCPA Charges Arising From Oil for Food Program

Italian automobile and truck manufacturer Fiat S.p.A. and several of the company's subsidiaries today agreed to pay a total of more than $17 million in connection with Foreign Corrupt Practices Act (FCPA) charges brought by the U.S. Department of Justice and U.S. Securities and Exchange Commission (SEC) in connection with the U.N. Oil for Food Program.

In the criminal case, Fiat subsidiaries Iveco S.p.A. and CNH Italia S.p.A. were each charged with one count of conspiracy to commit wire fraud and to violate the books and records provisions of the FCPA in connection with illegal kickbacks paid to officials of the former Iraqi government. Fiat agreed to pay a $7 million penalty in connection with these charges. The Justice Department agreed to enter into a deferred prosecution agreement with Fiat whereby the criminal charges would be dismissed if Fiat and its affiliates abide by the agreement.

In the civil case, the SEC filed FCPA books and records and internal controls charges against Fiat S.p.A. and CNH Global N.V. The SEC's complaint (pdf) alleged that from 2000 through 2003, certain Fiat and CNH Global subsidiaries made approximately $4.3 million in kickback payments in connection with their sales of humanitarian goods to Iraq under Oil for Food Program. The SEC alleged that Fiat and CNH Global failed to maintain adequate systems of internal controls to detect and prevent the payments and their accounting for these transactions failed properly to record the nature of the payments.

Fiat was ordered to pay $5,309,632 in disgorged profits, $1,899,510 in pre-judgment interest and a civil penalty of $3,600,000.

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"Lord of War" Viktor Bout Profiled in The Economist

The year-end edition of The Economist contains an interesting article on Viktor Bout, the notorious arms-dealer dubbed the "Merchant of Death" and "Lord of War", who was arrested earlier this year in a sting set up by DEA agents in Bangkok, Thailand.

The AP reports that Bout testified on Monday in an extradition hearing in Bangkok.

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CBP Announces Cross-Border Truck User Fee Contingency Plan for January 2009

From Strasburger & Price's Logistics Blog:

U.S. Customs & Border Protection (“CBP”) has announced that every truck entering the U.S. in 2009 must pay a fee of $10.75 per crossing or be equipped with a transponder, good for a year, which will cost $205. CBP has been working on a project which would allow motor carriers to renew their current transponders electronically (known as “DTOPS”), but DTOPS was not available for this year’s transponder renewal period. Many carriers have ordered their new transponders for 2009 but have not yet received them.

Facing the prospect starting in January of having to pay the per crossing fee until CBP made the new transponders available, the industry asked the agency to adopt a back-up plan. CBP has agreed that during the month of January a truck crossing into the U.S. will not have to pay the per crossing fee if it can show possession of one of the following: i) a 2008 transponder; ii) a receipt downloaded from the DTOPS website showing the 2009 transponder has been ordered, iii) a paper receipt from CBP showing the carrier filed its renewal on paper; or iv) any other evidence that the 2009 transponder for the truck has been ordered.

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The Times: Companies Blacklisted in US for Allegedly Backing Mugabe Operate Freely in UK

Monday's Times of London reports on how certain individuals and companies designated by the Office of Foreign Assets Control (OFAC) as "Mugabe regime cronies" on November 25, 2008 operate freely in the U.K. in spite of Gordon Brown's declaration that “enough is enough” in Zimbabwe. The article states:

Of 21 companies put on a US blacklist by President Bush last month, 14 are based in Britain, two in the Isle of Man, one in Jersey and one in the British Virgin Islands. The other three are based in the Democratic Republic of Congo, Florida and Zimbabwe itself.

* * *

Mr Mugabe and his henchmen use a number of ploys to stay in power and live in luxury as their countrymen suffer. In this they are said to receive the help of white businessmen, several with British passports, and a number of London-based companies. The foreign currency that these men bring into the country allows top Zanu (PF) figures to buy hard currency at the official rate - way below the currency's true worth - and earn small fortunes.

“They basically buy real money with worthless Zimbabwean dollars. That way they can buy a car for what an ordinary person would use to fill a tank with petrol,” an insider said.

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Former Willbros Officials Charged With Violating FCPA

The Justice Department announced on Friday that a former executive and a consultant of Willbros International Inc. (WII), a subsidiary of Houston-based Willbros Group Inc., have been charged in connection with a conspiracy to pay more than $6 million in bribes to government officials in Nigeria and Ecuador.

James K. Tillery, a former executive of WII, and Paul G. Novak, a former consultant to WII, were each charged with one count of conspiracy to violate the FCPA, two counts of violating the FCPA in connection with the authorization of corrupt payments to officials in Nigeria and Ecuador, and one count of conspiring to launder the bribe payments through purported consulting companies controlled by Novak.

Novak was arrested in Houston upon arrival on a flight from South Africa after his passport was revoked. Tillery remains at large.

If convicted of all charges, Tillery and Novak each face sentences of up to 35 years in prison and fines of $250,000, or twice the gain or loss from the offense, whichever is greater, for conspiring to violate the FCPA and for each violation of the FCPA; and $500,000 or twice the value of the funds involved in the transfer, whichever is greater, for the money laundering conspiracy.

In May of this year, Willbros and WII entered into a deferred prosecution agreement with the Justice Department and agreed to pay a $22 million criminal penalty in connection with corrupt payments to Nigerian and Ecuadorian government officials in violation of the FCPA.

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Report: At Siemens, Bribery Was Just a Line Item

The New York Times, ProPublica, a nonprofit investigative journalism organization, and PBS’s Frontline published an in-depth story in today's NYT on the Siemens FCPA case.

The story includes extensive interviews with a former accountant at Siemens who oversaw an annual bribery budget of about $40 million to $50 million.

Frontline will air a documentary on the Siemens case on April 7, 2009 at 9 P.M. ET on PBS. Video excerpts from the documentary are now posted on Frontline's website here.

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BIS Publishes Amendments to Chemical Weapons Convention Regulations

The Bureau of Industry and Security (BIS) published a final rule in Monday's Federal Register making various technical amendments to the Chemical Weapons Convention Regulations (CWCR) (15 CFR Parts 710 through 721).

In addition to updating the address for submitting declarations, reports and advance notifications under the CWCR and for submitting chemical determination requests, etc., the final rule also updates the list of countries that currently are States Parties to the Chemical Weapons Convention by adding Republic of the Congo, Guinea-Bissau and Lebanon, which became parties to the CWC in 2008.

BIS's CWC web site can be found here.

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Florida Jury Convicts Iranian Woman in Night Vision Case

A jury in federal court in Fort Lauderdale Florida today convicted Sharhazad Mir Gholikhan, the Iranian woman accused of violating U.S. law in connection with the attempted sale of 3,500 Generation III night-vision goggles to Iran.

According to the South Florida Sun-Sentinel, Ms. Gholikhan was "found guilty on three counts of export violations and not guilty on three related conspiracy charges." Ms. Gholikhan, who has already served time in prison in this very unusual case, faces additional prison time when sentenced in March 2009.

Ms. Gholikhan represented herself during the trial. Here is a synopsis of this case from this evening's Sun-Sentinel article:

Her conviction punctuates a legal odyssey that began last December with her surrender to U.S. authorities and played out in the Fort Lauderdale federal courtroom of U.S. District Judge James Cohn.

In April, Gholikhan pleaded guilty to one charge in exchange for a "time served" sentence. However, she retracted her plea after Cohn extended her prison term to two years and five months based on an error in the original calculation.

After her first trial ended in September with a deadlocked jury, Gholikhan fired her defense lawyer and announced she would represent herself.

As the new trial began Dec. 8, Gholikhan embraced the role of underdog, addressing the jury wearing a khaki prison uniform, instead of business attire.

On the witness stand, Gholikhan told jurors she merely acted as a translator and did not know the details of Seif's business dealings. As a Middle Eastern woman, Gholikhan said she had not choice but to obey her husband.

"This defendant is not a pushover," he said in his closing argument. "She's not a victim."

The trial centered on whether Gholikhan made phone calls and sent e-mails and faxes about the goggles before the Vienna meeting using the alias Farideh Fahimi.

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Want a Used Space Shuttle? Better Comply With ITAR

NASA is preparing for the retirement of the Space Shuttle program in late 2010 and has issued a Request for Information (RFI) to obtain input from educational institutions, science museums, and other organizations interested in acquiring and displaying the Space Shuttle Orbiters and Space Shuttle Main Engines.

NASA estimates the total cost to be incurred by a recipient organization for one Space Shuttle Orbiter is $42 million, which includes the $6 million delivery fee for the flight to the closest airport with an 8,000 to 10,000 foot long runway.

The RFI states that that organizations that ultimately receive a Space Shuttle Orbiter or shuttle engines must abide by the following International Traffic in Arms Regulations (ITAR) restrictions placed on the items:

The Orbiters and SSMEs fall under the purview of the U.S. Munitions List (USML), as defined in the ITAR (22 CFR120-130) and are export controlled. The Space Shuttle Orbiters and SSMEs shall not be transferred to foreign persons (ITAR 120.16), in the U.S. or abroad, or exported out of the U.S., without notification to NASA and the specific approval/export license from the Department of State Directorate for Defense Trade Controls (http://www.pmddtc.state.gov/). Violations of these regulations are punishable by fine, imprisonment, or both.

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State Department Imposes ITAR Denial Policy on Blackwater

The State Department's Directorate of Defense Trade Controls (DDTC) published in today's Federal Register a notice advising that DDTC has imposed a general policy of denial on export licenses, ITAR authorizations and exemptions associated with Blackwater USA and its affiliates owned by EP Investments, LLC.

The denial policy exempts applications for licenses and other approvals that are in direct support of U.S. Government contracts and provides for case-by-case review of other types of authorizations and exemptions.

DDTC indicated that the policy of denial "is necessary to provide the U.S. Government with assurance that [Blackwater] is both capable and willing to comply with the AECA and ITAR and will do so."

DDTC indicated that it "recognizes the recent steps taken by [Blackwater] to improve its compliance program, for example setting up the Export Compliance Committee (ECC), and has tailored the policy of denial accordingly to leverage these measures by permitting certain exceptions to be made."

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BIS Points Out Inaccuracies in Washington Times Report on Suspension of VEU Program

Under Secretary of Commerce for Industry and Security Mario Mancuso made the following statement today in response to the Washington Times article entitled “U.S. to Tighten Export Rules on 5 Firms in China (see yesterday's post on this story here):”

First, the Validated End User (VEU) program was designed to ensure that U.S. products are used for commercial purposes consistent with our broader foreign policy towards China. It does not provide companies with access to ‘strategic military equipment.’ The items approved for export under VEU are dual-use in nature and are used for strictly commercial purposes.

Second, VEU does not allow companies to obtain U.S. technology without the formal security checks required for an export license. In fact, companies approved for VEU undergo a much more rigorous and demanding interagency review than that required for an individual export license.

Third, it is incorrect to report that the Commerce Department has been unable to conduct checks of facilities in China. Commerce does have the ability to conduct checks and recently conducted such checks under a pre-existing framework.

The five VEU companies currently authorized have an established licensing history and a proven track record of using U.S. products for commercial purposes. Among other requirements, VEU companies must maintain comprehensive compliance programs and agree to allow on-site reviews.

We continue to work on an agreement that would formalize procedures for VEU-specific on-site reviews. The absence of such procedures does not pose a security risk. However, the lack of an agreement diminishes VEU’s trade enhancing benefits, and Commerce is evaluating all options related to the program for China, including suspension.

The U.S.-China relationship is critical to the prosperity of both countries, and Commerce will continue to consider ways to expand commercial high technology trade with China consistent with our national security interests.

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A Harmonized (Tariff) Christmas

By Tyler Brown, Senior Export Technical Representative, Jet Propulsion Laboratory, Office of Export Compliance

For this analysis, we assumed that the Lords, Ladies, maids and entertainers are not performing defense services. Articles and material would appear to all be EAR99. Dealing only with the associated hardware, I propose the following HTS designations:

* Twelve drummers drumming: 9206.00.2000 - Percussion musical instruments (for example, drums, xylophones, cymbals, castanets, maracas): Drums

* Eleven pipers piping: 9205.90.20.60 - Woodwind instruments: Flutes and piccolos (except bamboo)

* Ten lords 'a-leaping: Since there are no hereditary Lords in the U.S., the Country of Origin of the Lords would need to be specified, and the leaping activity subjected to an analysis as to whether it constitutes a defense service.

* Nine ladies dancing: See above.

* Eight maids a-milking: Given a modern interpretation: 8434.10.00.00 - Milking machines and dairy machinery, and parts thereof: Milking machines

* Seven swans a-swimming: 0106.39.00.00 - Birds: Other

* Six geese a-laying: (Assume the geese weigh over 185 gms.) 0105.99.00.00 - Live poultry of the following kinds: Chickens, ducks, geese, turkeys and guineas: Other, Other

* Five golden rings: Note: 9. For the purposes of heading 7113, the expression "articles of jewelry" means: (a) Any small objects of personal adornment (for example, rings, bracelets, necklaces, broaches, earnings, watch chains, fobs, pendants, tie pins, cuff links, dress studs, religious or other medals and insignia); 7113.19.50.00 - Of other precious metal, whether or not plated or clad with precious metal: Other, other.

* Four calling birds: Today when people sing that song they usually sing about calling birds. But actually many years ago they sang the song's old English words. They sang about colly, or collie, birds. Colly or collie means black, according to the British Broadcasting Corporation. It comes from an old word for coal. The Internet Wikipedia pins down colly bird even more: to the European blackbird. Common in parks and cities in Europe, it looks like a dusky version of its cousin, the American robin. Both belong to the thrush family. Like all thrushes, they sing (or call) beautifully. 0106.39.00.00 - Birds: Other

* Three French hens: Live poultry of the following kinds: Chickens, ducks, geese, turkeys and guineas: Chickens, Weighing not more than 185 g: 0105.11.00; Breeding stock, whether or not purebred: 10 Layer-type (egg-type), 20 Broiler-type (meat-type), 40 Other; Chickens, Weighing more than 185 g: 0105.94.00.00 (I actually spent some time worrying about whether the "French Hens" might be a re-export...)

* Two turtle doves: 0106.39.00.00 - Birds: Other

* A partridge in a pear tree: 0106.39.00.00 - Birds: Other; 0602.20.00.00 - Trees, shrubs and bushes, grafted or not, of kinds which bear edible fruit or nuts

And remember, any Christmas ornamentation falls under 9505.10: Festive, carnival, or other entertainment articles, including magic tricks and practical joke articles; parts and accessories thereof: Articles for Christmas festivities and parts and accessories thereof.

Editor's Note: Thanks to Tyler Brown for permission to publish "A Harmonized (Tariff) Christmas." Happy Holidays!

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Former Employee of Arizona Nuclear Power Plant Sentenced to 15 Months in Prison in Connection With Exporting Software to Iran

Mohammad Reza Alavi, a former employee of the Palo Verde Nuclear Generating Station in Arizona, was sentenced today in federal district court in Phoenix to 15 months in prison in connection with exporting software to Iran. Alavi was found guilty by a federal jury on May 27, 2008 for Unauthorized Access to a Protected Computer. Alavi was also charged with one count of stealing protected software from the nuclear power plant and one count of illegally exporting the software in violation of OFAC's Iranian Transactions Regulations. However, the jury failed to reach a verdict on those counts and Alavi subsequently pleaded guilty to one count of Interstate Transportation of Stolen Goods.

Alavi admitted that he unlawfully transported 3 KeyMaster software, which was designed for the Palo Verde Nuclear Generating Station and is used as a simulator system to train employees on the operation of its nuclear reactors, to Iran to use in future employment in the nuclear industry.

According to the U.S. Government, on July 19, 2006, after having given notice of his intent to resign from the Palo Verde Nuclear Generating Station, Alavi installed the customized Palo Verde version of the 3 KeyMaster software onto his personal laptop and activated the program by obtaining a registration key from the Western Services Corporation’s protected website. Alavi did not have authorization from Palo Verde or Western Services Corporation to take the software with him. On August 16, 2006, Alavi took the software to Iran where he intended to reside.

While in Iran on October 10, 2006, Alavi used the Internet and logged onto the Western Services protected customer web site located in the United States and successfully obtained another 3 KeyMaster software registration key. In obtaining the registration key, the Alavi falsely identified himself as another Palo Verde employee on the registration form.

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BIS Reportedly Plans to Suspend China VEU Program

The Washington Times reported tonight that the Bureau of Industry and Security (BIS) is close to issuing a new regulation that would suspend the China Validated End-User (VEU) program until China agrees to on-site inspections of the five Chinese companies that have been granted VEU status. The article states that:

A Commerce Department official, who spoke on the condition of anonymity because of ongoing diplomatic negotiations, told The Times that the Bush administration plans to suspend the program unless it can impose safeguards before it leaves office next month.

"This program will either be fixed or ended before Jan. 20," the official said, adding that a decision will be made "in days, not weeks."

China could avoid a suspension of the program by agreeing to U.S. demands for on-site inspections. The official said, however, that it does not appear likely that Beijing will make concessions before the Bush administration leaves office.

In October 2007, the Bureau of Industry and Security (BIS) announced the following five VEUs in China:

* Applied Materials China, Ltd.
* BHA Aerocomposite Parts Co., Ltd.
* National Semiconductor Corporation
* Semiconductor Manufacturing International Corporation
* Shanghai Hua Hong NEC Electronics Company, Ltd.

In January 2008, the Wisconsin Project on Nuclear Arms Control issued a report (PDF) criticizing the selection of two of the five Chinese companies named as VEUs. The report stated that Shanghai Hua Hong NEC Electronics Company, Ltd. and BHA Aerocomposite Parts Co., Ltd. "are affiliated closely to China’s military industrial complex and to companies that have been punished by the U.S. government for proliferation or other improper export behavior."

In October 2008, the Government Accountability Office recommended that the Secretary of Commerce suspend the VEU program until BIS was permitted to conduct on-site reviews in China to ensure that the items shipped to the VEUs in China are used as intended.

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BIS Publishes Comments on Proposed License Exception Intra-Company Transfer

The Bureau of Industry and Security has posted the public comments submitted on the proposed rule to establish License Exception Intra-Company Transfer (ICT) that was issued by BIS on October 3, 2008.

BIS received 18 comments on the proposed rule from individuals, companies and trade associations. In general, the comments commended BIS for making the effort to reduce the licensing burdens on U.S. companies and their affiliates. However, most of the comments noted that many aspects of the proposed rule in its current form were too burdensome burdensome. Several of the comments indicated that the proposed ICT license exception was in practice similar to the rarely used Special Comprehensive License that is available to U.S. exporters today.

The comments can be found at the following link (note that this is a very large PDF file (12MB)).

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Siemens Pays US$1.6 Billion to Settle U.S. and German Anti-Corruption Charges

Siemens AG announced today that legal proceedings against it arising from allegations of bribing public officials were concluded on the same day in Munich, Germany and in Washington, DC and that the company will pay total fines and penalties of US$ 1.6 billion.

In Washington, DC, Siemens today pleaded guilty before Judge Richard Leon in Federal Court to charges of knowingly circumventing and failing to maintain adequate internal controls and failing to comply with the books and records provisions of the U.S. Foreign Corrupt Practices Act (FCPA). The Criminal Information (definitely worth reading) filed by the Justice Department against Siemens indicates that the Siemens was charged with one count of violating the FCPA's internal controls provisions (15 U.S.C Sections 78m(b)(2)(B), 78m(b)(5) and 78ff(a)) and one count of violating the FPCA's books and records provisions (15 U.S.C. Sections 78m(b)(2)(A), 78m(b)(5), and 78ff(a)). Siemens was not charged with violating the anti-bribery provisions of the FCPA. In related cases, three Siemens foreign subsidiaries pleaded guilty today to individual counts of conspiracy to violate the FCPA.

In connection with these pleas, Siemens and the three subsidiaries agreed to pay a fine of US$450 million to resolve charges brought by the Justice Department. At the same time, Siemens settled a civil action against it brought by the SEC for violations of the FCPA. Siemens agreed to the disgorgement of profits in the amount of US$350 million. The civil Complaint filed by the U.S. Securities and Exchange Commission (SEC) against Siemens can be found here.

In Germany, the Munich public prosecutor today announced the termination of the legal proceeding alleging the failure of the former Managing Board of Siemens AG to fulfill its supervisory duties. Siemens agreed to pay a fine of €395 million (approximately US$540 million). In a similar action in October 2007 relating to Siemens’ former telecommunications group, Siemens paid €201 million (US$275 million). This brings the total amount payable to authorities in Germany in connection with these legal proceedings to €596 million ($815 million). The investigations of former members of the Managing Board, employees of Siemens AG and other individuals is still ongoing and remains unaffected by this settlement.

Under the terms of the plea and settlement agreements reached today in the U.S., Siemens has engaged Dr. Theo Waigel, former German Finance Minister, as compliance monitor to evaluate and report on the company’s progress in implementing and operating its new compliance programs. Waigel will be the first non-U.S. national appointed to serve as a FCPA compliance monitor. As compliance monitor, Dr. Waigel will deliver regular reports to the SEC und DOJ regarding the effectiveness of the Company’s newly implemented compliance measures.

Because Siemens cooperated in the case and has implemented a comprehensive compliance program, the Defense Logistics Agency (DLA) has held that Siemens will remain a contractor for U.S. government business.

Siemens and its employees are still facing anti-corruption cases in Argentina, Austria, Bangladesh, China, Germany, Greece, Hungary, Indonesia, Israel, Italy, Malaysia, Nigeria, Norway, Poland, Russia, Switzerland and Vietnam.

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Reporting Requirements Begin December 18 for Private Aircraft Arriving or Departing the United States

The new regulation requiring private aircraft to transmit traveler manifest and arrival and departure information to U.S. Customs and Border Protection (CBP) using the Electronic Advance Passenger Information System (eAPIS) goes into effect later this week.

On Thursday, December 18, 2008, CBP will begin to accept voluntary APIS manifests for private aircraft arriving in and departing from the United States. On May 18, 2009, the voluntary compliance period will end and private aircraft pilots or their designees must adhere to the requirements of this final rule. This new regulation requires private pilots or their designees to transmit electronically to CBP:

• Traveler manifest information for each individual traveling onboard the aircraft
• Notice of arrival information
• Notice of departure information

This data must be received by CBP no later than 60 minutes prior to departure for flights arriving in or departing from the United States.

CBP has developed a component within the eAPIS web site (https://eapis.cbp.dhs.gov) to assist private pilots in comply with the rule. CBP has also created an eAPIS web based training program, which consists of several training modules on various aspects of eAPIS.

Under the new regulation, pilots that fail to comply with the reporting requirements are subject to a civil penalty of $5,000 for the first violation and $10,000 for each subsequent violation.

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BIS Publishes "Fix-It" Rule Making Technical Corrections to EAR

The Bureau of Industry and Security published a final "fix-it" rule in Monday's Federal Register making a number of clerical and technical changes to the Export Administration Regulations (EAR). Among other things, the final rule:

• Updates addresses, telephone numbers, procedures and a definition;
  
• Removes some potentially confusing language regarding de minimis content of foreign made items;
• Makes a necessary conforming change to one Export Control Classification Number (ECCN 1C202);
  
• Restores some header language in Category 5, Part II of the Commerce Control List;
• Restores ECCN 5B991, which was inadvertently omitted from the Code of Federal Regulations;
• Revises the authority citation paragraphs for 14 parts of the EAR to include citations to the most recent presidential notices that extend authority for those parts or to remove an outdated citation or both.

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CBP Announces Changes for Expedited Border-Crossing Program for Truckers

U.S. Customs and Border Protection announced today that current members of the Free and Secure Trade frequent border crosser program (FAST), can now create an account online through the Global Online Enrollment System (GOES) on CBP's web site.

The FAST program is available to drivers crossing the borders between the U.S. and Canada or Mexico.

Creating an online account on GOES will allow FAST members to update their personal information and mailing address. Members are encouraged to update their contact information by February 1, 2009 since new replacement cards will be mailed in spring 2009.

Current U.S.-Canada FAST members will receive their new FAST cards by mail at the address previously provided. U.S.-Mexico FAST members will be notified by telephone when to pick up their new card at their local enrollment center.

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CBP Conducts Surprise Agriculture Inspections on All Passengers Arriving on Two Flights From Japan and Korea

U.S. Customs and Border Protection announced today that agriculture specialists inspected the luggage of all 366 passengers who arrived aboard two flights, a Korean Airlines flight and an All Nippon Airways flight, to Washington Dulles International Airport on Thursday.

The inspection, dubbed Operation Checkpoint, is part of a continuing agriculture enforcement blitz and awareness campaign that focuses on intercepting high-risk agriculture products on flights originating in various nations. CBP inspected 172 passengers from Korean Airlines flight 93 and 194 passengers of All Nippon Airways flight NH002.

CBP fined a Korean Airlines passenger $300 after discovering a package of beef dumplings that the passenger failed to declare hidden in sweet bread. Additionally, CBP agriculture specialists seized 25 pounds of pork products and 11 pounds of beef products from the Korean Airlines flight, and 15 pounds of pork products, one pound of beef products, and four plant cuttings and propagated plant roots from the All Nippon Airways flight.

“We have noticed a correlation between the holidays and an increase of inadmissible agriculture products travelers bring to the United States. We want to raise awareness among international travelers that federal law prohibits the importation of agriculture products from certain nations,” said Christopher Hess, CBP port director at Dulles International Airport.

CBP recently conducted a similar enforcement action named Operation Addis that targeted high-risk agriculture products arriving from Africa.

On November 14, CBP agriculture specialists inspected all 125 passengers who arrived to Dulles aboard Ethiopian Airways flight 500, and discovered two dangerous insect pests in a mango and a host of inadmissible meat and plant products.

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Siemens Reportedly to Pay Record $800 Milllion FCPA Settlement

Bloomberg has reported that Siemens AG has agreed to pay $800 million to settle allegations that it violated the U.S. Foreign Corrupt Practices Act. If finalized, this will be the largest FCPA penalty ever, dwarfing the $44.1 million penalty imposed on Baker Hughes in April 2007.

The article states that prosecutors are proposing that the company pay a criminal penalty of $450 million. In addition, under an agreement with the Securities and Exchange Commission, Siemens will also be required to disgorge $350 million in profits and agree to an outside compliance monitor. The settlement agreement is likely to be finalized on Monday during a hearing in federal court in Washington, DC.

During the past few years, public prosecutors and other government authorities in jurisdictions around the world have been conducting investigations of Siemens AG and its consolidated subsidiaries and certain of its current and former employees regarding allegations of public corruption. The SEC and the DOJ have also been investigating possible violations of U.S. law by Siemens in connection with the Oil-for-Food Program.

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Bill Introduced in Congress to Impose Conditions on U.S.-UAE Nuclear Agreement

On December 9th, Representative Ileana Ros-Lehtinen (R-FL), the Ranking Member of the House Committee on Foreign Affairs, introduced the Limitation on Nuclear Cooperation with the United Arab Emirates Act of 2008 (H.R. 7316), a bill that would impose conditions on the proposed agreement between the U.S. and the United Arab Emirates (UAE) for the Cooperation on Peaceful Uses of Nuclear Energy (commonly known as a "123 Agreement").

Section 3(c) of H.R. 7316 requires the President to certify to Congress that the UAE has met a number of stringent conditions before the 123 agreement could be enacted or before any licenses are issued for the export of nuclear material, equipment or technology to the UAE.

Among other things, the President would have to certify that the UAE Government has:

• Taken effective actions to prohibit, terminate, and prevent the transfer of goods, services, or technology to the Government of Iran, including fully implementing United Nations Security Council sanctions against Iran.

• Developed and fully implemented an export control regime in accordance with international standards.

• Developed and implemented the appropriate or necessary legislative and functional actions to target the logistical and financial networks that support terrorist organizations.

• Not violated the Iran Sanctions Act of 1996, the Iran, North Korea, and Syria Nonproliferation Act and other provisions of applicable U.S. law.

This bill will not be considered during the remaining days of the 100th Congress, but will certainly be reintroduced when the next session of Congress convenes on January 6, 2009. As indicated in the excellent report on this bill at the Global Security Newswire, this bill was introduced now since the U.S.-UAE 123 Agreement appears very close to being signed.

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Fundamentals of Exporting Webinar to be Presented by U.S. Export Assistance Center of Missouri

The U.S. Export Assistance Center of Missouri is presenting a series of six webinars on the fundamentals of exporting in January through March 2009.

The topics covered in each program are listed below. Doug Jacobson of Strasburger & Price, LLP (editor of this blog) and Scott Sullivan, who oversees Flowserve Corporation's export compliance program, will be presenting the export controls program on March 18, 2009.

Sign up by December 31st to received an early bird discount for all six sessions. For more information and to register, see this page on the U.S. Export Assistance Center of Missouri's website.
Export Fundamentals - Webinar Announcement

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Transparency International Releases 2008 Bribe Payers Index

In connection with International Anti-Corruption Day (see previous post), Transparency International (TI) today issued its 2008 Bribe Payers Index (BPI) and Survey.

The BPI report, which focuses on the supply-side of bribery, ranked the 22 countries with the largest economies by the tendency of their firms to bribe abroad. The report found that companies based in Russia, China, Mexico and India represented the highest bribery risk.

For the first time, the BPI reviewed the risk of bribery by business sector. Out of 19 sectors reviewed, the report found that the public works construction, real estate and oil and gas sectors are most prone to corruption.

TI said that the "report notes that the findings of the 2008 BPI and sector rankings highlight that both governments and businesses must do more to effectively curb supply side corruption. There is no place for complacency – even the best performers among the 22 countries are to a degree likely to pay bribes, as illustrated by 16 percent of respondents considering Belgian companies to ‘often’ or ‘almost always’ use familiar or personal relationships to win public contracts."

TI also indicated that "companies headquartered in the world’s most economically influential countries have a duty to make sure their anti-bribery standards are comprehensive and enforced rigorously at every step."

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International Anti-Corruption Day: Your No Counts

December 9th is International Anti-Corruption Day.

In order to promote the launch of their 2008-2009 anti-corruption campaign, the U.N. Office of Drugs and Crime (UNODC) has produced the following 60 second video that promotes the power to say no when confronted with bribery.

The aim of UNODC's 2008-2009 anti-corruption communication campaign is to support a positive and pro-active stance against corruption and to promote the U.N. Convention against Corruption as the key tool to fight corruption worldwide.

The UNODC has produced a number of logos, posters, leaflets and other materials in a variety of languages in order to promote the "Your No Counts" anti-corruption campaign.

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Employees of U.S. Affiliate of Chinese Electronics Distribution Company Charged With Violating Export Control Laws

The Boston Business Journal reported today that the U.S. Attorney for Massachusetts has charged three employees of Chitron Electronics Inc., a Waltham, Massachusetts affiliate of China-based Chitron Electronics Co. Ltd., with conspiracy to violate U.S. export control laws.

The story states that the three were charged with making false statements on export declarations by indicating the the products were being shipped to Hong Kong, when in fact the products were destined for mainland China.

According to the company's website, Chitron Electronics Co. Ltd. is one of the largest independent distributors of electronic components in China.

UPDATE: The U.S. Attorney's office has issued a press release containing more details on this case. The release states that Chitron's "Hong Kong office was merely a transshipment point or shipping office; it was set up to act as a freight forwarder -- to receive shipments from Chitron-US and re-ship or transship them to Mainland China thereby circumventing U.S. export laws and license requirements."

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Export Controls Articles of Interest

Here are some recent articles of interest on various export control issues:

• Shipping Digest, December 8, 2008 "Exporters must read between the lines to avoid running afoul of export-control regulations"

• Boston Globe, December 7, 2008: "Oil firm sidesteps sanctions on Iran"

• Compliance Week, December 2, 2008, "How to Avoid Export Controls Violations"

• Space Review, December 1, 2008, "The uphill battle for export control reform"

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BIS Publishes Notice of Minor Change to November 18, 2008 Final Rule

The Bureau of Industry and Security (BIS) published in Monday's Federal Register a "fix-it" rule correcting the November 18, 2008 final rule that amended the end-use and end-user controls in the Export Administration Regulations (EAR) and revising the definition of the term "transfer."

Today's notice notes that the November 18, 2008 final rule:

contained one inadvertent error in the amendatory instruction used for revising one of those two sections. This error in the amendatory instruction led to one sentence of the revised regulatory text [in Section 760.1] to not be revised as was intended in the regulatory text of that final rule. This document corrects that amendatory instruction error by revising that one sentence from that section.

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CFIUS Publishes Guidance on Types of Transactions Having National Security Considerations

The Treasury Department, as chair of the Committee on Foreign Investment in the United States (CFIUS), and as required by the Foreign Investment and the Foreign Investment and National Security Act of 2007 (FINSA), has for the first time issued guidance on the types of mergers, acquisitions and takeovers by foreign persons that CFIUS has reviewed and presented "national security considerations."

The guidance, published in today's Federal Register (pdf), also provides insight into how CFIUS identifies the national security effects of covered transactions.

Some of the types of covered transactions involving foreign control of U.S. businesses that have presented national security considerations include:

• Transactions involving U.S businesses that provide products and services—either as prime contractors or as subcontractors or suppliers to prime contractors—to agencies of the U.S. Government and state and local authorities, including, but not limited to, sole-source arrangements.

• U.S. businesses in the energy sector at various stages of the value chain. This includes the exploitation of natural resources, the transportation of these resources (e.g., by pipeline), the conversion of these resources to power, and the provision of power to U.S. Government and civilian customers.
  

• U.S. businesses that affect the domestic transportation system, including maritime shipping and port terminal operations and aviation maintenance, repair and overhaul.

• Transactions involving U.S. businesses that could significantly and directly affect the U.S. financial system.
  

• Transactions involving U.S. critical infrastructure, including major energy assets.

• U.S. businesses’ production of certain types of advanced technologies that may be useful in defending, or in seeking to impair, U.S. national security. Many of these U.S. businesses are engaged in the design and production of semiconductors and other equipment or components that have both commercial and military applications. Others are engaged in the production or supply of goods and services involving cryptography, data protection, Internet security, and network intrusion detection, and they may or may not have contracts with U.S. Government agencies.

• CFIUS stated that a significant portion of the covered transactions that it has reviewed and that have presented national security considerations have involved U.S. businesses that are engaged in the research and development, production, or sale of technology, goods, software, or services that are subject to U.S. export controls.

On November 21, 2008, the Treasury Department published in the Federal Register the final regulations implementing the new CFIUS reporting and review process.

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Congressman Accused of Violating FCPA Loses Reelection Bid

Representative William J. Jefferson (D-LA), the first U.S. public official be indicted for violating the Foreign Corrupt Practices Act lost his bid for reelection to Congress on Saturday to Republican Anh "Joseph" Cao, a New Orleans attorney. Cao will be the first Vietnamese-American elected to Congress.

Jefferson was indicted in June 2007 on charges including bribery and racketeering for allegedly using his office to corruptly solicit bribes and for paying bribes to a foreign official. The indictment alleges that Jefferson violated the FCPA by allegedly offering, promising and making payments to a foreign official located in the U.S. to advance his family's business endeavors involving NITEL, the government-controlled telecommunications service provider in Nigeria.

Jefferson's trial has been delayed pending the outcome of an appeal pending in the Fourth Circuit relating to non-FCPA aspects of this case.

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CBP Officers and Agents to be Featured in New Reality TV Show Starting in January

U.S. Customs and Border Protection agent and officers (CBP) will be featured in a new television series premiering on January 6, 2009 at 8 p.m. EST.

The 13 episode series, called “Homeland Security USA”, takes cameras into situations never before seen on television, with each episode covering locations on the “front lines” where CBP officers and agents work each day.

The premiere episode, “This is Your Car on Drugs,” takes viewers inside some of the busiest international entry points to the U.S., including Los Angeles International Airport, the Blaine, Washington border crossing and locations along the U.S.-Mexico border.

Check your local listings and set your TiVos.

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New Film About Che Guevera Shown at the Havana Film Festival

The new film Che, directed by Steven Soderbergh and starring Benicio Del Toro, was presented yesterday and today at the Havana Film Festival (officially the Festival Internaional del Neuvo Cine Latinoamerican) that is running from December 2-12, 2008.

The film, which is made up of two individual two hour films entitled The Argentine and Guerrilla, chronicle the life of Argentinian revolutionary Ernesto Che Guevara. The films will be shown together in New York and Los Angeles the week of December 12, 2008 followed by widespread release of each film starting on January 9, 2009.

Benicio Del Toro received the Best Actor award for his portrayal of Che Guevera at the 2008 Cannes Film Festival.

Che has been included on critic Roger Ebert's top 20 films of 2008.

In case you are wondering, the films were legally exported from the United States to Cuba pursuant to the "informational materials exemption" to the Trading with the Enemy Act, commonly known as the "Berman Amendment."

Thc "informational materials exemption" is found in section 2502(a) of the Omnibus Trade and Competitiveness Act, Pub. L. No. 100-418, 102 Stat. 1107 (1988), and section 525 of the Foreign Relations Authorization Act, Fiscal Years 1994 and 1995, Pub. L. No. 103-236, 108 Stat. 382 (1994).

These amendments to section 5(b)(a) of the Trading with the Enemy Act, 50 U.S.C. App. 66 1-44, restrict the President's authority to regulate, directly or indirectly, the importation or exportation of information or informational materials, regardless of the format or medium of transmission or whether the information or informational materials are for personal or commercial use.

Sections 515.206 and 515.332 of the Cuban Assets Control Regulations (CACR) provide notice of this exemption and define the term "information and informational materials." Section 515.545 of the CACR contains a general license covering transactions incident to such exportation and importation.

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Census Issues AES Notification Regarding Shipments to International Waters

The Census Bureau's Foreign Trade Division last week issued a notice (pdf) clarifying the Foreign Trade Regulations' requirement for the filing of Electronic Export Information (EEI) through the Automated Export System (AES) for shipments to international waters.

The notice states that the shipments to international waters must be reported via AES when (a) the commodity is valued at over $2,500 per Schedule B number; or (b) if a shipment is licensed by the Bureau of Industry and Security, regardless of value.

In order to permit the reporting of such shipments, Census has modified AES by adding a new Export Information Code known as "IW". AES filers who report "IW" are required to report either license code C30 (General License) or C31 (Special Comprehensive License), a valid BIS license number and the Export Control Classification Number corresponding to the license must be reported when applicable.

A common example of the use of "IW" is the export of a controlled item to an offshore oil platform located in international waters.

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Trade Associations Send Cuba Sanctions Letter to President-Elect Obama

Twelve leading business groups today sent a letter (PDF) to President-elect Barack Obama, urging his administration to reexamine current U.S. Cuba policy and consider new approaches that would benefit U.S. national security and economic interests and the Cuban people.

The associations, which include the American Farm Bureau Federation, American Society of Travel Agents, Business Roundtable, Coalition for Employment through Exports, Emergency Committee for American Trade, Grocery Manufacturers Association, National Foreign Trade Council, National Retail Federation, Organization for International Investment, U.S. Chamber of Commerce, U.S. Council for International Business and USA*Engage, applauded President-elect Obama’s support for suspending restrictions on family remittances, visits, and humanitarian care packages from Cuban Americans, and noted that while “these are excellent first steps . . . we urge you to also commit to a more comprehensive examination of U.S. policy.”

In addition to calling for a comprehensive reevaluation of policy, the associations urged President-elect Obama to “immediately remove travel restrictions and allow Americans to act as ambassadors of freedom and American values to Cuba,” and to engage in bilateral discussions with Cuban government.

The groups also asked President-elect Obama to suspend certain restrictions on trade that would allow American companies to help Cuba to respond more effectively to the humanitarian crisis in the wake of recent hurricanes and storms in Cuba. They wrote that, “the United States could exempt agricultural machinery, heavy equipment and other exports from the embargo which would provide the goods and technology needed to rebuild from recent storms. The United States could also license direct banking services in order to facilitate these sales.”

The associations highlighted the cost to American businesses and workers, citing a 2001 U.S. International Trade Commission estimate that showed the Cuban embargo costs U.S. businesses up to $1.2 billion annually in lost sales.

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December NCITD Meeting to Feature Speakers From BIS, DDTC and Japanese Embassy

The next meeting of the National Council on International Trade Development (NCITD) will take place on Thursday, December 11, 2008 in Washington, DC and will feature the following speakers:

• Matthew Borman, Assistant Secretary for Export Administration, Bureau of Industry and Security, U.S. Department of Commerce. Topic: Export Controls Developments.

• Candace Goforth, Division Chief, Training and Quality Assurance, Directorate of Defense Trade Controls. Topic: DDTC update.

• Satoshi Miura, Counselor, Embassy of Japan. Topic: Japanese Export Controls.

For information on how to join NCITD or to attend the meeting, see www.ncitd.org or contact the NCITD Secretariat at 202-872-9280.

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