Treasury Department Publishes List of Countries That May Require Participation With an International Boycott

The U.S. Department of the Treasury today published in the Federal Register the list of list of countries that may require participation in, or cooperation with, an international boycott, as defined by section 999(b)(3) of the Internal Revenue Code of 1986.

Treasury has advised that the following nine countries may require participation in, or cooperation with, an international boycott:

1. Iraq
2. Kuwait
3. Lebanon
4. Libya
5. Qatar
6. Saudi Arabia
7. Syria
8. United Arab Emirates
9. Yemen 

Iraq was added to this list in August 2012.

This list of countries is used for IRS boycott reporting purposes. U.S. law requires companies to report “operations in or relating to a boycotting country” on IRS Form 5713 submitted with corporate tax returns.

This list is not applicable to the antiboycott provisions in Part 760 of the Export Administration Regulations (EAR) that are administered and enforced by the Bureau of Industry and Security (BIS).

The EAR requires that all reportable boycott requests relating to unsanctioned foreign boycotts be reported to BIS on a quarterly basis. Such requests can come from the countries listed above and others, such as Bangladesh, Pakistan and Malaysia.

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BIS Unveils Two New Export Control Reform Web-Based Decision Tools

As part of the Bureau of Industry and Security's (BIS) efforts to assist exporters comply with the Initial Implementation of Export Control Reform final rule published in the Federal Register on April 16, 2013, BIS has developed two new web-based decision tools to assist users in understanding and applying the Commerce Control List (CCL) Order of Review and the definition of "Specially Designed".

These two new Export Control Reform decision tools were posted today on the BIS website and are available for use at the following links: 

Commerce Control List (CCL) Order of Review Decision Tool — The Order of Review decision tool is intended to help exporters classify items that are subject to the Export Administration Regulations (EAR) and is based on the new CCL Order of Review in Supplement No. 4 to part 774 of the EAR. The CCL Order of Review provides guidance for how to classify items in light of the addition of the 600 series Export Control Classification Numbers (ECCNs) to the CCL and the new definition of "specially designed."

 "Specially Designed" Decision Tool — This tool is intended to assist exporters in determining whether items that are subject to the EAR are "specially designed. The "Specially designed" decision tool will lead to one of three results:

1. The item is "specially designed" on the CCL;
2. The item is not "specially designed" on the CCL; or
3. Obtain guidance on the next steps to take if you have difficulty in answering whether an item is 'caught' or 'released' under the "specially designed" definition.

BIS previously implemented the Strategic Trade Authorization (STA) decision tool to help exporters determine if they are eligible to use and be in compliance with License Exception STA.

While these decision tools are now online, the final rules implementing Export Control Reform will not take effect until October 15, 2013.

The final rules on implementation on Initial Implementation of Export Control Reform published by BIS and the State Department's Directorate of Defense Trade Controls (DDTC) can be found at the following links:

• BIS Final ECR Implementation Rule
• DDTC Final ECR Implementation Rule 

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ICC to Hold Incoterms 2010 Seminar in Paris, France on April 25, 2013 to Coincide With Launch of Incoterms 2010 Q&A Book

As part of its launch of the new Incoterms® 2010 Question and Answer book the International Chamber of Commerce (ICC) is holding a half day Incoterms 2010 "Meet the Experts" program in Paris, France on April 25, 2013.

As indicated on the agenda and registration information below, the ICC's program will feature presentations by some of the leading Incoterms 2010 experts, including several members of the Incoterms 2010 Drafting Group.

One of the presentations, which will focus on the use of Incoterms 2010 in the United States, will be presented by Frank Reynolds, the U.S. member of the Incoterms 2010 drafting group.

The other presentations will discuss common mistakes when using Incoterms 2010, how to choose the right Incoterms 2010 rule and a discussion of how Incoterms 2010 work with contracts of carriage and sales contracts.

The ICC will soon be publishing an Incoterms 2010 Question and Answer book that will feature expert guidance on more than 40 real-life scenarios. The Incoterms 2010 Q and A book will also feature supporting materials related to Incoterms 2010 to help users understand and use Incoterms 2010 to their advantage when buying or selling goods.

The Incoterms 2010 Q and A Book will be available worldwide from the online ICC bookstore and in the United States from the U.S. Council on International Business's online bookstore.

Further information on the Incoterms 2010 expert program on April 25, 2013 can be found here.

ICC Incoterms 2010 Program 25 April 2013 by dougj1

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BIS and DDTC Publish Long-Awaited Export Control Reform Rules

Today BIS and DDTC today issued the long-awaited final transition rules to implement the Export Control Reform process that commenced in August 2009. 

Both final rules will take effect on October 15, 2013.

The 82 page BIS rule at http://www.gpo.gov/fdsys/pkg/FR-2013-04-16/pdf/2013-08352.pdf adds the new 600 series entries to the Commerce Control List for military aircraft parts and engines, adds the new definition of "specially designed" and makes numerous other changes to the EAR to implement ECR.

The 20 page final DDTC rule at http://www.gpo.gov/fdsys/pkg/FR-2013-04-16/pdf/2013-08351.pdf revises the ITAR and USML to include updated USML Category VIII (military aircraft), adds new USML Category XIX (Gas Turbine Engines), adds definitions of "specially designed" and "‘‘subject to the EAR’’ to the ITAR and makes other necessary changes to the ITAR to implement the export control reform process.

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DDTC Modifies Procedures to Utilize ITAR Section 126.18 Exemption to Transfer Technical Data to Foreign Nationals Via Agreements

The State Department's Directorate of Defense Trade Controls (DDTC) has issued updated procedures for exporters utilizing the exemption contained in section 126.18 of the International Traffic in Arms Regulation (ITAR) authorizing the intra-company or intra-organization transfer of ITAR-controlled technical data via technical assistance agreements (TAAs) and manufacturing licensing agreements (MLAs).

Section 126.18 of the ITAR, which was published by DDTC in May 2011 and went into effect on August 15, 2011, allows companies, governmental entities and international organizations, to transfer unclassified defense articles, including technical data, to their dual and third-country full-time employees as long as “effective procedures” are in place to prevent diversion to unauthorized destinations, entities or for unauthorized purposes.

In guidance issued on July 25, 2011, DDTC required all TAAs and MLAs to be amended prior to use of the ITAR § 126.18 exemption to (1) update the new verbatim clause at ITAR § 124.8(5); and (2) to add specific language to the ITAR § 124.7(4) section of the agreement.

Based on DDTC's review of these requirements and through experience gained by DDTC in administering the new provision, DDTC has decided to change the requirement for utilizing the § 126.18 in connection with TAAs and MLAs.

Effective immediately, TAAs and MLAs do not have to be amended to include the modifications cited above in order to utilize the ITAR § 126.18 exemption. However, all agreement holders and foreign parties utilizing the ITAR § 126.18 exemption must maintain a copy of DDTC's web notice in their records.

However, DDTC will require all TAAs or MLAs that are amended to be updated to include the updated ITAR §124.8(5) verbatim clause. All pending TAAs and MLAs, or amendments, which do not include the updated ITAR § 124.8(5) verbatim clause will receive a proviso to correct prior to execution of the agreement or amendment.

In addition, the requirement to specifically request use of the ITAR § 126.18 exemption in the ITAR § 124.7(4) paragraph of the agreement is no longer required. However, in order to continue the use of ITAR § 124.16 under Option 1 (foreign vetting), or the initial request of ITAR § 124.16, the TAA or MLA must be amended to include Option 2 (DDTC vetting) language.

DDTC will soon update its guidelines for preparing electronic agreements to reflect this policy change.

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Obama Administration Notifies Congress of Proposed Transfer of Certain Defense Articles from USML to CCL and President Issues Export Control Reform Administration Executive Order

As part of the ongoing Export Control Reform process that could eventually move many parts and components associated with defense articles from the U.S. Munitions List and the International Traffic in Arms Regulations (ITAR) to the jurisdiction of the Bureau of Industry and Security (BIS) and the Export Administration Regulations (EAR), President Obama today issued an Executive Order (see below) that delegates the various responsibilities associated with the reformed export control system to the appropriate Cabinet Department.

The Executive Order makes the following changes to the existing U.S. export control system:

1. Consolidates brokering responsibilities with the State Department's Directorate of Defense Trade Controls (DDTC).
2. Eliminates possible “double licensing” requirements by allowing  the State Department to authorize the accompanying items that may have moved to the Commerce Control List (CCL) and prevent any potential double-licensing requirement. 
3. Modifies the Congressional notification process by requiring BIS to establish procedures for notifying Congress of approved export licenses for a certain subset of items that are moved or that may move from the USML to the CCL.
4. Other Administrative Updates: The Executive Order delegates to the Attorney General the functions previously assigned in 2003 to the Secretary of the Treasury, reflecting the move of ATF to the Department of Justice. ATF will remain responsible for permanent imports of most defense articles.

This Executive Order was timed to coincide with the notifications by the State Department to the U.S. Congress required by section 38(f)(1) of the Arms Export Control Act (22 USC 2778(f)(1)) regarding the defense articles that will be transferred from the USML to the CCL as part of the Export Control Reform process.

The initial notifications to Congress for USML Categories VIII (aircraft) and XIX (gas turbine engines) were submitted yesterday to the Speaker of the House, Chairman and Ranking Members of the Senate Foreign Relations Committee and House Foreign Affairs Committee. The House and Senate now have 30 days to review the proposed transfer. Absent a Congressional resolution of disapproval, the Obama Administration will have the authority to transfer the designated items from the USML to the CCL, which will take place after BIS and DDTC issue the final rules modifying the USML and CCL, as well as the other required regulations, including the transition rules. 

Further information on the Export Control Reform process can be found at www.export.gov/ecr.

Export Control Reform Administration EO (3.8.2013) by

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DDTC Issues New Registration Form (DS-2032)

The State Department's Directorate of Defense Controls (DDTC) today published the following announcement on its website regarding the need for DDTC registrants to use the new version of the Statement of Registration Form and that registration letters will be sent to registrants by email in the future.

Industry Notice:Effective immediately, industry must use the updated version (Version 3) of the DS2032 Statement of Registration form. Revisions include fixing several typos and adding new flow-over instructions to Block 12 advising the applicant to enter the email address of the person to receive the approval letter and who will receive the electronic renewal notice letter. DDTC no longer mails hardcopy approval letters or renewal letters. (1.18.13)

The direct link to the new version of the DS-2032 registration form and related instructions is found here.

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