US - BIS revises the Unverified List (UVL)

On January 29, 2015, the Bureau of Industry and Security (BIS) published in the Federal Register a final rule [Docket No. 141104925-4925-01] amending the Export Administration Regulations (EAR) by adding fourteen (14) persons, removing one person, and updating the addresses of other persons listed on the Unverified List (the “Unverified List” or UVL). The 14 persons are being added to the UVL on the basis that BIS could not verify their bona fides because an end-use check could not be completed satisfactorily for reasons outside the U.S. Government’s control. One person is removed from the UVL based on BIS’s ability to verify that person’s bona fides through the successful completion of an end-use check. Also, new addresses are added for two listed persons on the UVL.

Supplement No. 6 to Part 744 (“the UVL”) contains the names and addresses of foreign persons who are or have been parties to a transaction, as that term is described in § 748.5 of the EAR, involving the export, reexport, or transfer (in-country) of items subject to the EAR, and whose bona fides BIS has been unable to verify through an end-use check.

US - BIS imposes licensing requirement on exports/reexports to Crimea

On January 29, 2015, the Bureau of Industry and Security (BIS) published in the Federal Register a final rule amending the Export Administration Regulations, 15 C.F.R. Part 730 et seq. (EAR), to impose a license requirement on the export, reexport, or transfer by any person of virtually all “items subject to the EAR” to or within the Crimea region of Ukraine. The final rule came into effect upon publication in the Federal Register. It is intended to complement the comprehensive embargo of Crimea implemented on December 19, 2014 by the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC), pursuant to Executive Order 13685. See our prior Sanctions blog posts on the OFAC sanctions against Crimea here and here.

The license requirement for Crimea will be implemented pursuant to a new § 746.6 of the EAR. It will apply not only to exports from the United States, but also reexports from other countries and transfers within Crimea by any person, including non-U.S. persons, of “items subject to the EAR.” (“Items subject to the EAR” include U.S. origin goods, software and technology, as well as foreign-made items with de minimis controlled U.S. content.) The only exclusions are for food or medicine designated as EAR99. License applications for exports, reexports, or transfers of all other “items subject to the EAR” to or within Crimea will be subject to a presumption of denial, except for items authorized under OFAC General License No. 4, which will be subject to case-by-case review. Items eligible for General License No. 4 and eligible for case-by-case review include agricultural commodities not meeting the definition of “food,” medical supplies, and medical supply replacement parts, all of which must be designated as EAR99.

In addition, the BIS final rule includes a “savings clause” allowing shipments previously eligible for export under an EAR License Exception or without a license (NLR) to proceed, provided (i) they are on dock for loading, on lighter, laden aboard an exporting/reexporting carrier, or en route aboard a carrier to a port of export/reexport on January 29, 2015, and (ii) they are exported/reexported before February 1, 2015. If a shipment does not satisfy these requirements, a license will be required from BIS. If the shipment would otherwise be within the scope of OFAC General License No. 5 (which authorizes certain wind-down activities in Crimea by U.S. persons), the BIS final rule suggests that the applicant note this fact on the license application to BIS.

Under new § 746.6 of the EAR, only the following License Exceptions will be available for Crimea:

1. TMP for items for use by the news media as set forth in § 740.9(a)(9) of the EAR.
2. GOV for items for personal or official use by personnel and agencies of the U.S. Government, the International Atomic Energy Agency (IAEA), or the European Atomic Energy Community (Euratom) as set forth in § 740.11(a) and (b)(2) of the EAR.
3. GFT for gift parcels and humanitarian donations as set forth in § 740.12.
4. TSU for operation technology and software for lawfully exported commodities as set forth in § 740.13(a) and sales technology as set forth in § 740.13 (b) of the EAR.
5. BAG for exports of items by individuals leaving the United States as personal baggage as set forth in § 740.14(a) through (d) of the EAR.
6. AVS for civil aircraft and vessels as set forth in § 740.15(a)(4) and (d) of the EAR.

If you have an questions, or require additional information, please contact Alison J. Stafford Powell, Kerry B. Contini and Maria H. van Wagenberg or any member of the Outbound Practice with whom you have been working.

US - USTR seeks comments on Iceland’s participation in the Environmental Goods Agreement negotiations

On January 27, 2015, the Office of the U.S. Trade Representative (USTR) published in the Federal Register a notice advising that USTR, on behalf of the Trade Policy Staff Committee (TPSC), is seeking public comment regarding U.S. interests and priorities with respect to this initiative to invite Iceland to join the WTO Environmental Goods Agreement (EGA) negotiations.

On March 21, 2014, USTR notified Congress of the Administration’s intention to enter into negotiations for an EGA with an initial group of 13 trading partners. USTR has since notified Congress of the Administration’s intent to join a consensus among EGA participants to invite the Government of Iceland to join the EGA negotiations.

USTR seeks comments on CAFTA–DR dispute settlement proceeding regarding Guatemala’s failure to effectively enforce its labor laws
On January 26, 2015, the Office of the U.S. Trade Representative (USTR) published in the Federal Register a notice advising the public that effective September 19, 2014, at the request of the United States, the arbitral panel reviewing the U.S. challenge to Guatemala’s breach of its obligations under Article 16.2.1(a) of the Dominican Republic—Central America—United States Free Trade Agreement (CAFTA–DR) has begun its review. Although USTR will accept any comments received during the course of the dispute settlement proceedings, comments should be submitted on or before February 20, 2015, to be assured of timely consideration by USTR.
Canada Customs announces new policy regarding retroactive transfer price adjustments

There has been a significant change in Canadian trade law that presents significant opportunities for importers but raises some related obligations. The Canada Border Services Agency ("CBSA") has changed its long-standing policy and announced in Customs Notice 15-001, Treatment of Downward Price Adjustments in Value for Duty Calculations, that a retroactive transfer price adjustment resulting in the reduction of the price paid or payable for imported goods may entitle the importer to a refund of duties paid under certain circumstances. Before this change in policy, the CBSA took the position that retroactive transfer price reductions were not to be taken into account when calculating the value for duty of imported goods under the transaction value method. However, recent jurisprudence signalled that this position was not correct in all circumstances, and the CBSA has changed its position accordingly.

Retroactive Transfer Price Adjustments Under the Transaction Value Method

The primary method of valuing goods for customs purposes in Canada is the transaction value method. Under this valuation method, the value for duty of imported goods is the price paid or payable for the goods, subject to certain adjustments. Pursuant to section 32.2 of the Customs Act, once a Canadian importer has "reason to believe" that the value declared for imported goods is incorrect, as would be the case if the transfer price of goods sold between related parties is adjusted retroactively, the importer is required, within 90 days of the reason to believe date, to amend the value for duty declared on the relevant customs entries.

The CBSA historically took the position that while retroactive transfer price increases triggered the obligation to correct the value for duty originally declared (giving rise to the requirement to pay additional applicable duties and taxes), retroactive price reductions could not to be taken into account and therefore importers were precluded from obtaining duty refunds. The basis for this position was the CBSA's interpretation of paragraph 48(5)(c) of the Customs Act, which states that "rebates or decreases in the price paid or payable effected after goods are imported" are to be disregarded when determining the value of imported goods under the transaction value method.

Prompted by recent jurisprudence, the CBSA has now addressed this apparent asymmetry by recognizing that downward adjustments to the price paid or payable of imported goods are to be taken into account under the transaction value method where they were made in accordance with a written agreement in effect at the time of importation.

New Refund Opportunities And Additional Self-Correction Obligations for Importers

The CBSA's new policy presents an opportunity for refund claims where an importer retroactively adjusts the transfer price of imported dutiable goods in accordance with a written agreement that was in effect at the time the goods were imported. This presents the potential for significant duty recovery, since an importer may file a refund claim within four years of the importation subject to the claim. However, Canadian importers seeking to take advantage of this opportunity must be able to demonstrate that the transfer price is an arm's length price as supported by a written transfer price study or an Advance Pricing Agreement (APA).

While the new CBSA policy creates significant refund opportunities for importers where retroactive price reductions occur, new obligations also arise, which if not met, will give rise to the potential imposition of administrative monetary penalties. Under the new policy with respect to retroactive price decreases, importers are required to correct their customs entries, even if the correction would not result in a refund of duties (i.e., where the goods were imported duty-free).

It is not uncommon for periodic transfer price adjustments to be made with respect to a fiscal year, with the final transfer price adjustment for the year being equal to the total net adjustment taking into account all of the periodic adjustments made for that year. The CBSA has confirmed in the Customs Notice that the importer will have reason to believe the original value declared is incorrect only after the last periodic adjustment is made and the total net adjustment for the year is determined. Therefore, the 90-day period within which the importer must file a correcting entry to account for a downward price adjustment begins to run from this date. In circumstances where an importer does not make a correction within the 90-day timeframe as required, it may be able to mitigate its liability by making a voluntary disclosure to the CBSA of its non-compliance provided certain conditions are met.

Next Steps for Canadian Importers

As a result of the new policy, importers should determine whether, over the last number of years, retroactive transfer price reductions have occurred, based on transfer price studies or APAs and in accordance with written agreements that existed at the time the goods were imported. If such circumstances exist, importers should take advantage of the opportunity to file refund claims. However, importers must recognize the new obligations imposed upon them as a result of the new policy. Importers must set up procedures to ensure the timely filing of value for duty correcting entries, not only in situations where there are retroactive price increases charged to them, but also in situations where retroactive price reductions occur in revenue-neutral situations. Given the new CBSA policy, it is expected that a focus of CBSA audits will be to ensure that the required value for duty adjustments have been made to account for retroactive transfer price adjustments, whether increases or decreases.

To view Customs Notice 15-001 of the CBSA, please access the following link: http://www.cbsa-asfc.gc.ca/publications/cn-ad/cn15-001-eng.html.

If you have any questions or want additional information, please contact Paul Burns, Brian Cacic or Jonathan Tam, of our Toronto office.

US accepts WTO Trade Facilitation Agreement
On January 23, 2015, the Office of the U.S. Trade Representative (USTR) announced that USTR Michael Froman formally delivered the United States’ letter of acceptance of the WTO Trade Facilitation Agreement (TFA) to the WTO Director-General Azevêdo. The TFA is part of the Bali package -- the first multilateral agreement to be adopted by the WTO in 20 years. The U.S. joins Hong Kong and Singapore, which had previously notified the WTO of their acceptance of the TFA. The TFA will have its greatest impact in developing economies where Customs related delays and complicated rules are common. The TFA had been adopted unanimously in Bali, but stalled over India’s refusal to agree to its adoption when the first formal vote came up. The deadlock ended when India and the U.S. reached an agreement that would protect developing countries’ food security measures from WTO legal challenges. The Trade Facilitation Agreement will enter into force once two-thirds of the WTO’s 160 Members have completed their domestic legal procedures and submitted instruments of acceptance to the WTO.
US - President extends national emergency with respect to terrorists

On January 21, 2015, President Obama signed Notice of January 21, 2015 - Continuation of the National Emergency With Respect to Terrorists Who Threaten To Disrupt the Middle East Peace Process (published in the Federal Register on January 22, 2015) which continued for 1 year the national emergency first declared on January 23, 1995 by Executive Order 12947 to deal with the unusual and extraordinary threat to the national security, foreign policy, and economy of the United States constituted by grave acts of violence committed by foreign terrorists that disrupt the Middle East peace process.

The extension was necessary because terrorist activities continue to threaten the Middle East peace process and to pose an unusual and extraordinary threat to the national security, foreign policy, and economy of the United States.

EU initials enhanced partnership and cooperation agreement with Kazakhstan

On 20 January 2015, the European Commission announced that the EU-Kazakhstan Enhanced Partnership and Cooperation Agreement was initialed. According to the announcement, this agreement will greatly facilitate stronger political and economic relations between Kazakhstan and the EU. It will increase the flow of trade, services and investment between the parties and will contribute to Kazakhstan’s political and social development. The initialing of the Agreement is an important step towards its eventual signature and subsequent implementation.

The Commission said that:

Kazakhstan is the first Central Asian partner to have concluded an Enhanced Partnership and Cooperation Agreement with the EU. The new Agreement will replace the Partnership and Cooperation Agreement in force since 1999, and will give EU – Kazakhstan relations a new up-to-date and stronger foundation.

The EU – Kazakhstan Enhanced Partnership and Cooperation Agreement counts about 280 pages and is comprised of 9 Titles as follows: General Principles and Aims of this Agreement; Political Dialogue, Cooperation in the Field of Foreign and Security Policy; Trade and Business; Cooperation in the Area of Economic and Sustainable Development; Cooperation in the Area of Justice, Freedom and Security; Other Cooperation Policies; Financial and Technical Cooperation; Institutional Framework; and General and Final Provisions.
***
Once signed and implemented, concrete benefits can flow from the Agreement. Examples include a better protection of consumers including lower prices and better-quality products; more business opportunities for small and medium enterprises, as a result, more jobs; more efficient use of energy and the development of renewable energy sources; a better functioning judiciary sector, a strengthened rule of law and increased transparency.

The Agreement foresees provisional application so that positive impacts can be expected already prior to ratification.

Jan 28: Eye On China Webinar Series: Effective E-Commerce Strategies in China

Please join Howard Wu (Shanghai), Jay Ruan (Shanghai) and Lothar Determann (Palo Alto) as they discuss effective e-commerce strategies in China. Our complimentary 60-minute webinars will begin at: 09:00 Pacific, 11:00 Central, 12:00 Eastern, 17:00 United Kingdom, 18:00 Central Europe, 01:00 Beijing +1

  • Common e-commerce models
  • Regulatory and licensing challenges
  • Data privacy and protection
  • Cloud computing in China

Click here for more information and registration.

US - COAC to meet Feb. 11 in San Francisco

On January 21, 2015, U.S. Customs and Border Protection (CBP) published in the Federal Register a notice [Docket No. USCBP–2014–0035] advising the public that the Advisory Committee on Commercial Operations of U.S. Customs and Border Protection (COAC) will meet on February 11, 2015 from 8 a.m. to 12:00 p.m. (PST), in San Francisco, CA. The meeting will be open to the public. COAC provides advice to the Secretary of Homeland Security, the Secretary of the Treasury, and the Commissioner of CBP on matters pertaining to the commercial operations of CBP and related functions within the Departments of Homeland Security and Treasury.

Meeting participants may attend either in person (see details in notice) or via webinar after pre-registering using a method indicated in the Federal Register notice. To facilitate public participation, CBP is inviting public comment on the issues to be considered by the committee prior to the formulation of recommendations as listed in the Agenda below.

The COAC will hear from the following project leaders and subcommittees on the topics listed below and then will review, deliberate, provide observations, and formulate recommendations on how to proceed on those topics:

1. The Exports Subcommittee: Review and discuss the status of the Air Manifest sub-work group and the findings of the Commodity Licensing sub-work group, which represents two of the seven planned sub-workgroups formed under the Export Process Work Group (EPWG), and the continued collaboration between the Bureau of Industry and Security’s Federal Advisory Committee, the President’s Export Council Subcommittee on Export Administration (PECSEA).
2. The One U.S. Government at the Border (1USG) Subcommittee: Review, discuss findings and present recommendations of the Process and Messaging Working Group. Update to COAC on the Status of U.S. Government Hold Authority. Subcommittee Closeout Report and update on status of 13th Term recommendations.
3. The Trade Enforcement and Revenue Collection Subcommittee: Update and present a recommendation of the Intellectual Property Rights (IPR) Voluntary Disclosure working group, present recommendations of the Anti- Dumping/Countervailing Duty (AD/ CVD) Working Group, and report on the Bonds Working Group’s discussions on e-bonds.
4. The Trusted Trader Subcommittee: Update and discuss the Customs-Trade Partnership Against Terrorism (C– TPAT) Exporter Entity and the Trusted Trader Program pilot.
5. The Trade Modernization Subcommittee: Updates and discussion on Automated Commercial Environment (ACE), Centers of Excellence and Expertise, as well as Role of the Customs Broker activities will take place. Recommendations are expected to be presented regarding CBP regulating how Customs Brokers can confirm the bona fide nature of an importer, what metrics CBP can report regarding the deployment of Centers of Excellence and Expertise, and recommendations regarding the development of a Simplified Entry Summary.
6. The Global Supply Chain Subcommittee: Updates and discussion regarding the Beyond the Border activities with Canada and 21st Century activities with Mexico will take place.

Intellectual Property Webinar: Protecting Your Brand in Challenging Jurisdictions: Spotlight on Ukraine, Venezuela, Myanmar and China

January 28, 2015: 8 AM San Francisco, 10 AM Chicago, 10 AM Mexico City, 11 AM New York, 4 PM London, 8 pm Dubai, 5 PM Frankfurt

Click here to register for the webinar.

Most of the countries discussed in this webinar are sanctioned or embargoed in varying degrees by the United States and, in some cases, also the European Union and other countries. For example, Iran, Syria and now also the Crimean region of Ukraine are subject to comprehensive US and some EU sanctions. Even in the other countries, there are numerous restricted parties, including banks, with whom dealings are prohibited.

These sanctions can restrict the ability of trademark owners and their advisors to conduct certain trademark-related activities in or involving sanctioned countries, including not only exploiting marks through licensing or assignment, but sometimes even simply protecting marks, making payments and hiring local agents. The sanctions are beyond the scope of this webinar.

US - Some CEEs to assume post-release functions starting Jan. 28

On January 20, 2015, U.S. Customs and Border Protection (CBP) issued CSMS # 14-000040 which announced that pursuant to Delegation Order 14-004, on January 28, 2015, the following three Centers of Excellence and Expertise (CEE) Center Directors will assume trade authority for post-release trade processes of entry summaries for the respective industry tariff lines filed in the Ports of Entry listed below:

Electronics Center Director

Pharmaceutical, Health & Chemicals Center Director

Petroleum, Natural Gas & Minerals Center Director

Long Beach

El Paso

Seattle

Los Angeles/LAX

New York

Blaine

Chicago

Newark

Pembina

Cleveland

Chicago

Great Falls

Milwaukee

Cleveland

San Francisco

Minneapolis

Milwaukee

Honolulu

St. Louis

Minneapolis

Portland, OR

San Francisco

St. Louis

Long Beach

Honolulu

Atlanta

Los Angeles/LAX

Houston

Charleston

San Diego

Dallas/Ft. Worth

Charlotte

Nogales

Norfolk

Phoenix

Savannah

El Paso

Entry summary filing procedures and document submission processes will remain the same for brokers and importers. Local ports will issue notices regarding any team number changes, if necessary. CBP will consolidate post-release processing to provide an increased level of uniformity and certainty. An appropriate level of trade staff at these locations will be transitioned to the Center to support Center operations. The Center Director will have full authority for trade decisions for the respective industry tariff lines.

Delegation Order 14-004 and the Trade Guidance that accompanies it provides that until further notice, Port Directors will retain singular authority over those matters pertaining to the control, movement, examination, and release of cargo. While a Port Director may consult a Center Director regarding these matters, Center Directors will not issue decisions or determinations. Additionally, Port Directors will retain responsibility for matters related to Drawback.

Finally, the Port Director will also retain responsibility for exercising authority over all matters related to Fines, Penalties and Forfeitures (FP&F). All notices to the trade regarding these cases (including CBPF 5955A, pre-penalty/penalty notices, and seizure notices) are issued under the authority of the FP&F Officer.

Examples of Joint Authorities - Port Directors and Center Directors will both have the authority to demand redelivery of cargo when necessary to ensure safety and security, and to protect the revenue. Both Port Directors and Center Directors will have the authority to take samples of merchandise as needed. Port Directors and Center Directors have the authority to demand single transaction bonds when necessary to ensure safety and security, and to protect the revenue. Revenue collections can be accepted by Port of Entry (POE) staff and/or Center personnel on behalf of CBP.

Document Submissions from the Trade - In instances where a regulation requires documentation or information to be submitted to a Port Director, the filer/importer may continue to file such documentation at, or transmit such information to, the POEs. Alternatively, the documentation or information may be submitted to the appropriate Center Director. This includes instances when CBP has requested the documentation or information and when the filer/importer initiates the submission without a specific request by CBP.

Regulatory References - Effective January 28, 2015, and until further notice, the authority for all trade functions and activities may be exercised, with certain exceptions outlined above, by the Center Directors for the Electronics; Pharmaceuticals, Health & Chemicals; and Petroleum, Natural Gas & Minerals Centers. Such trade functions and activities include, but are not limited to, decisions and determinations in the following areas:

• Entry/Entry Summary processing such as: articles conditionally free or subject to a reduced rate, DCMAO, American Goods Returned, Permanent Exhibition Entries, special classes of merchandise, importations temporarily free of duty, quota, informal entries, trade fair entries, warehouse entries and withdrawals, FTZ entry summaries, and other special entry procedures.
• Decisions and activities regarding packing, stamping, country of origin marking, rules of origin, trademarks, copyrights, bonds, classification, appraisement, and the sampling of merchandise.

Processing of liquidations, protests, petitions, recordkeeping, and financial and accounting matters.

EU allows member states to “opt out” of GMO

On 13 January 2015, the European Parliament announced that new legislation to allow EU member states to restrict or ban the cultivation of crops containing genetically modified organisms (GMOs) on their own territory, even if this is allowed at EU level, was passed by Members of the European Parliaments (MEPs). The legislation, informally agreed by Parliament and Council in December, was originally tabled in 2010 but was then deadlocked for four years due to disagreement between pro- and anti-GMO member states.

The new rules would allow member states to ban GMOs on environmental policy grounds other than the risks to health and the environment already assessed by the European Food Safety Authority (EFSA).

Member states could also ban GMO crops on other grounds, such as town and country planning requirements, socio-economic impact, avoiding the unintended presence of GMOs in other products and farm policy objectives. Bans could also include groups of GMOs designated by crop or trait.

Before a member state may adopt such measures, the legislation provides for a procedure enabling the GMO crop company to consent to such restrictions on its marketing authorisation. However, if the company disagrees, the member state may impose a ban unilaterally.

MON810 maize is currently the only GM crop cultivated in the EU. The “Amflora” GM potato was banned by the EU General Court in 2013 after an initial green light from the European Commission.

Member states should also ensure that GMO crops do not contaminate other products, and particular attention should be paid to preventing cross-border contamination with neighbouring countries, says the text.

The new legislation will come into force in spring 2015.

US - FDA launches Guidance Document search tool

On January 16, 2015, the US Food and Drug Administration posted a Constituent Update announcing that, in response to feedback from visitors, the U.S. Food and Drug Administration has introduced a new guidance search on FDA.gov to make it easier to search and browse FDA guidance documents.

The Update said that visitors to FDA.gov can rapidly search the agency’s guidance documents using key words, product, date of issue, FDA center or office, type of document, subject, draft or final status and comment period.

Guidance documents represent the FDA’s thinking on particular topics, policies and regulatory issues. Guidance documents are prepared for applicants, sponsors, the public and FDA staff, and are used by stakeholders to understand the agency’s interpretation of regulations and policies.

EU - Commission publishes results of the consultation on investment protection in EU-US trade talks

On 13 January 2015, the European Commission published its analysis of the almost 150,000 replies to its online consultation on investment protection and investor-to-state dispute settlement (ISDS) in the Transatlantic Trade and Investment Partnership (TTIP). The Commission asked the public for their views on a possible approach to protecting investments and settling investment-related disputes between private investors and governments. A key question in the consultation was whether the EU’s proposed approach for TTIP would achieve the right balance between protecting investors and safeguarding the EU’s right and ability to regulate in the public interest.

The Commission's report (Report on the online public consultation on investment protection and investor-to-state dispute settlement (ISDS) in the Transatlantic Trade and Investment Partnership Agreement (TTIP)) sets out a detailed analysis of all the replies. The Commission will now discuss the way forward with the European Parliament, EU Member States and other interested stakeholders, including NGOs, businesses, trade unions consumer organisations and academia. Broadly speaking, the replies can be divided into three categories:

• replies which indicate opposition to or concerns around TTIP in general;
• replies opposing or expressing general concerns about investment protection/ISDS in TTIP;
• replies which provide detailed comments on the EU’s suggested approach in TTIP, representing broad and divergent views;

The Commission said that the many replies in the first two categories are a clear indication of the concerns that many citizens across Europe have concerning TTIP generally and about the principle itself of investment protection and ISDS.

US - Publication of updated Cuban Assets Control Regulations and license exceptions

On January 15, 2015, the Department of the Treasury's Office of Foreign Assets Control (OFAC) announced that it is amending the Cuban Assets Control Regulations, 31 C.F.R. part 515 (CACR), to implement policy changes announced by the President on December 17, 2014, to further engage and empower the Cuban people by facilitating authorized travel to Cuba by U.S. persons, certain authorized commerce, and the flow of information to, from and within Cuba. The CACR amendment will be published in the Federal Register tomorrow (January 16, 2015), at which time the changes will take effect. OFAC is also publishing a number of Frequently Asked Questions pertaining to this regulatory amendment.

On January 16, 2015, the Bureau of Industry and Security (BIS) will also publish amendments to the Export Administration Regulations (EAR) to create License Exception Support for the Cuban People (SCP) to authorize 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. In addition, amendments will be made to License Exceptions Consumer Communications Devices (CCD) to eliminate the donation requirement and to Gift Parcels and Humanitarian Donations (GFT) to authorize multiple gifts parcels in a single shipment. The document will also establish a general policy of approval for exports and reexports to Cuba of items for the environmental protection of U.S. and international air quality, and waters, and coastlines.

Check our Sanctions page at www.bakermckenzie.com/sanctionsnews/ for any additional updates on this subject.

U.S. to allow cross-border trucking with Mexico

On January 9, 2015, the U.S. Department of Transportation (DOT) announced that Mexican motor carriers will soon be able to apply for authority to conduct long-haul, cross-border trucking services in the United States, increasing economic and export opportunities between the two countries, and marking a significant milestone in implementation of the North American Free Trade Agreement (NAFTA).

The policy change is expected to result in the permanent termination of more than $2 billion in annual retaliatory tariffs on U.S. goods and follows a three-year pilot program that tested and validated the safety of Mexican trucking companies to operate long-haul in the U.S.

The DOT also submitted a report to Congress with findings from the pilot program.

Companies from Mexico that apply for long-haul operating authority will be required to pass a Pre-Authorization Safety Audit to confirm they have adequate safety management programs in place, including systems for monitoring hours-of-service and to conduct drug testing using an HHS-certified lab. Additionally, all drivers must possess a valid U.S. Commercial Driver’s License or a Mexican Licencia Federal de Conductor, and must meet the agency’s English language proficiency requirements.

Like Canadian companies that are granted U.S. operating authority, carriers and drivers from Mexico are required to comply with all laws and regulations, including regular border and random roadside inspections. Once the motor carrier is approved, their vehicles will be required to undergo a 37-point North American Standard Level 1 inspection every 90 days for at least four years.

In 2002, Congress appropriated funding to DOT’s Federal Motor Carrier Safety Administration to hire new staff for additional Southern Border enforcement to meet the long-haul trucking provisions in NAFTA. Currently, there are more than 200 inspectors and staff in the region that will continue to oversee the safety of cross-border operations into the country.

American trucking companies have been able to apply and operate long-haul in Mexico through NAFTA since 2007. Currently, five U.S. companies use this authority to transport international goods into Mexico.

Additional information may be found in the Federal Motor Carrier Safety Administration (FMCSA) notice [Docket No. FMCSA-2011-0097] which was published in the Federal Register on January 15, 2015. It was effective on publication.

Client Alert: DOJ Opinion Release 14-02 Highlights the Importance of Pre-Acquisition Compliance Due Diligence (and Recognizes Its Limitations)

One of the most significant developments of 2014 in FCPA compliance arrived in November with the issuance by the Department of Justice of Opinion Procedure Release 14-02 (the "Opinion").

The Opinion stands for the proposition that the DOJ will not penalize a company subject to the FCPA for acquiring a foreign target with corruption issues, provided (a) the acquiring company did reasonable due diligence under the circumstances, (b) the company has an integration plan designed to implement real anti-corruption controls at the target post-closing, and (c) the company is not knowingly acquiring tainted contracts or other assets from which it will derive financial benefit going forward.

Click here to view the full client alert.

US - CBP publishes quarterly IRS interest rates
On January 13, 2015, U.S. Customs and Border Protection (CBP) published in the Federal Register a general notice advising the public of the quarterly Internal Revenue Service interest rates used to calculate interest on overdue accounts (underpayments) and refunds (overpayments) of customs duties. For the calendar quarter beginning January 1, 2015, the interest rates for overpayments will be 2 percent for corporations and 3 percent for non-corporations, and the interest rate for underpayments will be 3 percent for both corporations and non-corporations.
US - CBP expands Global Entry program

On January 12, 2015, U.S. Customs and Border Protection (CBP) published in the Federal Register two documents expanding the Global Entry program. Global Entry allows preapproved, low-risk participants expedited entry into the United States using Global Entry kiosks located at designated airports. Currently, eligibility for participation in Global Entry is limited to U.S. citizens, U.S. nationals, U.S. lawful permanent residents, Mexican nationals, and certain eligible citizens of the Netherlands, the Republic of Korea, the Federal Republic of Germany, the State of Qatar, and the United Kingdom. Additionally, participants in the NEXUS trusted traveler program and certain participants in the Secure Electronic Network for Travelers Rapid Inspection (SENTRI) trusted traveler program are permitted to use the Global Entry kiosks as part of their membership in those programs.

The first document [CBP Dec. No. 15–01] announces that CBP is expanding eligibility for Global Entry to include citizens of the Republic of Panama. All of these individuals must otherwise satisfy the requirements for participation in the Global Entry program. Additionally, the same document announces that U.S. citizens who participate in Global Entry or U.S. citizens who can utilize Global Entry kiosks as NEXUS or SENTRI participants have the option to apply for membership in Panama Global Pass, the Republic of Panama’s trusted traveler program.

Previously, thirty-two U.S. airports had been designated as Global Entry airports. The second document [CBP Dec. No. 15-02] announces the expansion of the program to include seven additional designated airports on or before July 13, 2015. Each of these airports will have Global Entry kiosks for the use of participants. The additional airports, listed alphabetically by state, are:

• Ted Stevens Anchorage International Airport, Anchorage, Alaska (ANC);
• Chicago Midway International Airport, Chicago, Illinois (MDW);
• Cincinnati/Northern Kentucky International Airport, Hebron, Kentucky (CVG);
• Cleveland Hopkins International Airport, Cleveland, Ohio (CLE);
• Pittsburgh International Airport, Pittsburgh, Pennsylvania (PIT);
• Austin-Bergstrom International Airport, Austin, Texas (AUS);
• General Mitchell International Airport, Milwaukee, Wisconsin (MKE).

The exact starting dates of Global Entry at each airport location will be announced on the Global Entry Web site.

CBSA posts information on Combatting Counterfeit Products

On January 2, 2015, the Canada Border Services Agency (CBSA) posted material on Combatting Counterfeit Products (Intellectual Property Rights). The posting states:

About the program

The Canada Border Services Agency (CBSA) supports the fight against counterfeit and pirated goods entering or leaving Canada.

The Agency has established a process that allows intellectual property rights (IPR) holders to file a request asking for the CBSA to temporarily detain suspected counterfeit goods encountered at the border while rights holders seek legal redress.

As a Canadian trademark holder registered with the Canadian Intellectual Property Office (CIPO), you are eligible to file a Request for Assistance (RFA) application with the CBSA. RFAs will help the CBSA to effectively identify and detain commercial shipments suspected of containing counterfeit trademark goods.

As an owner of a valid Canadian copyright, you are eligible to file an RFA application with the CBSA. RFAs will help the CBSA to effectively identify and detain commercial shipments suspected of containing pirated copyright goods.

If suspect counterfeit or pirated goods are discovered during a commercial examination, the CBSA can use the information contained in the RFA application to contact the appropriate rights holders and inform them of the details they need to allow them to pursue a civil court action.

How the program works

• Step 1: Ensure that your trademark is registered with CIPO and your information is up to date. CIPO registration of copyright is not mandatory, but is recommended.
• Step 2: Complete the RFA form and submit it to the CBSA for processing.
• Step 3: Wait for confirmation of enrollment and approval letter outlining program specific details.
• Step 4: Once approved, if suspected counterfeit goods are intercepted by the CBSA, you will be notified and given the opportunity to take appropriate action.
• Step 5: The Royal Canadian Mounted Police will be responsible for leading any criminal investigations related to commercial scale counterfeiting and piracy.

Note: By filing an RFA you acknowledge that you become liable to the government for any costs related to storage, handling and destruction of detained goods that arise, beginning the day after a notice of detention is sent to you. You can often minimize these costs by responding promptly to CBSA and advising

• (1) the goods are not counterfeit or pirated, or
• (2) you choose not to launch an action for this shipment.

Contact information

If you have any questions about the RFA application process, send your enquiries to CBSA-ASFC_IPR-DPI cbsa-asfc.gc.ca.

The information was posted because the Combating Counterfeit Products Act (Bill C-8) received Royal Assent and the Customs enforcement provisions came into force on January 1, 2015.

US - CBP publishes eBond test modifications and clarifications

On January 7, 2015, U.S. Customs and Border Protection (CBP) published in the Federal Register a general notice that announced modifications and clarifications to CBP’s voluntary National Customs Automation Program eBond test, scheduled to deploy January 3, 2015 and published in the Federal Register on November 28, 2014 (79 Fed. Reg. 70881). This test provides for the transmission in Automated Commercial Environment of electronic bond contracts (eBonds) between principals and sureties, with CBP as third-party beneficiary, for the purpose of linking those eBonds to the transactions they are intended to secure. The modifications and clarifications to CBP’s eBond test concern: the method by which continuous bonds executed prior to or outside of the eBond test may be converted to eBonds by the surety and principal; a surety or principal’s ability to terminate an eBond; the identification of the principal on an eBond by the filing identification number; and an email address correction.

The eBond test modifications and clarifications set forth in the notice went into effect upon publication. Comments and/or questions concerning this notice or any aspect of the test may be submitted to CBP via email with the subject line identifier reading “Comment/Questions on eBond test.”

US - President signs Executive Order imposing additional sanctions on N. Korea; OFAC designates SDN [updated from January 2, 2015]

On January 2, 2014, President Obama signed Executive Order 13687 of January 2, 2015 — Imposing Additional Sanctions With Respect To North Korea (published in the Federal Register on January 6, 2015). According to a Press Release issued by the US Treasury Department’s Office of Foreign Assets Control (OFAC), the Order is being issued in response to recent cyber-attacks targeting Sony Pictures Entertainment that were allegedly carried out by the Government of North Korea. Simultaneously, OFAC announced that, pursuant to the Order, it had designated ten individuals and three entities as Specially Designated Nationals (SDNs).

New Executive Order

The Order expands on existing U.S. sanctions targeting North Korea by authorizing OFAC to designate as SDNs any of the following parties:

• Agencies, instrumentalities, or controlled entities of the Government of North Korea or the Workers’ Party of Korea;
• Officials of the Government of North Korea or of the Workers’ Party of Korea;
• Parties determined to have materially assisted, sponsored, or provided financial, material, or technological support for, or goods or services to or in support of, the Government of North Korea or any person whose property and interests in property are blocked pursuant to the Order; and
• Parties determined to be owned or controlled by, or to have acted or purported to act for or on behalf of, directly or indirectly, the Government of North Korea or any person whose property and interests in property are blocked pursuant to the Order

Parties designated under the Order will be tagged with the [DPRK2] tag on OFAC’s List of Specially Designated Nationals and Blocked Persons (the SDN List). The Order does not “block” or freeze the assets of the Government of North Korea generally or impose other broad sanctions targeting North Korea.

U.S. Persons are prohibited from dealing, directly or indirectly, with parties designated as SDNs or with any entities in which one or more SDNs own a 50% or greater interest. For purposes of the Order, “U.S. Persons” include (i) entities organized under U.S. laws and their non-U.S. branches, (ii) individuals or entities in the United States, and (iii) U.S. citizens or permanent resident aliens (“Green Card” holders) wherever located or employed. While non-U.S. persons, including separately incorporated foreign subsidiaries of U.S. companies, are generally not subject to the Order, non-U.S. persons may trigger U.S. sanctions prohibitions if they cause any SDN-related transactions to occur in whole or in part in the United States or elsewhere by U.S. Persons.

New SDN Designations

In conjunction with the issuance of the Order, OFAC announced that it has added ten individuals and three entities to the SDN List pursuant to the authority provided in the Order. The three entities designated under the Order—Reconnaissance General Bureau, Korea Mining Development Trading Corporation, and Korea Tangun Trading Corporation—were previously designated as SDNs under other sanctions programs.

For additional information, please contact Alexandre (Alex) Lamy or Joseph A. Schrool of our Washington D.C. Office or any member of our Outbound Trade group with whom you normally work. Check our Sanctions page at www.bakermckenzie.com/sanctionsnews/ for any additional update.

2015 International Trade Webinar Series: New Developments in Global Trade

We are excited to launch our 2015 International Trade Compliance Webinar Series entitled, "New Developments in Global Trade for 2015.” We expect this year to be an exciting year, with many noteworthy developments in the trade regulation area. We will conduct several webinar sessions that will focus on export control regulation, Customs valuation and transfer pricing, EU and LATAM import developments and FCPA/anti-bribery. Terrie Gleason of our Washington DC office, Chair of the Global Customs Practice, will moderate these webinars.

Our first webinar is scheduled for Tuesday, January 27, 2015 and will cover, "US Export Control Reform." Sylwia Lis (Washington, DC) and Paul Amberg (Chicago) will be speaking.

All webinars will begin at 11:00 AM Eastern (US) and are scheduled to run approximately 90 minutes. If you reside in a different time zone and wish to verify your time - please click on the following link: www.timeanddate.com.

View the upcoming webinar dates and topics.

Eurasian Economic Union entered into force on 1 January 2015
On 23 December 2014, the presidents of Russia, Belarus, Kazakhstan, Armenia and Kyrgyzstan held a meeting of the Supreme Eurasian Economic Council, to take the last decisions before the agreement on the Eurasian Economic Union (EAEC or Евразийскому экономическому союзу (ЕАЭС)) entered into force on 1 January 2015. According to Rossiskaya Gazeta, the Russian labor market will change as workers from any of the members (except Kyrgyzstan) will be able to work in Russia, Belarus, Armenia and Kazakhstan, and feel at home. At this time, Kyrgyzstan will only be joining the Customs Union and the Common Economic Space. Passport controls will remain since there is no common border. However, immigration cards and visas will not be needed among the members. Armenia’s accession treaty was approved by the Parliaments of Armenia, Belarus, Kazakhstan and Russia and received Presidential assents in all four countries during December 2014 and entered into force on 2 January 2015, while Kyrgyzstan’s will not be effective until May 2015, assuming all legal formalities are completed. On 2 January 2015, the Heads of State met again to nominate Armenian members to the Board, the Council, the Court and its staff. In addition to the existing website of the Eurasian Economic Commission, the Eurasian Economic Union will have its own website: http://www.eaeunion.org/. The plan is for the Eurasian Economic Commission to function in a manner similar to that of the European Commission, while the Eurasian Economic Union will function in a manner similar to that of the European Union with its own Court.
US - OFAC releases new, advanced format for the Specially Designated and Blocked Persons List

On January 5, 2014, the Office of Foreign Assets Control (OFAC) announced the release of a new format for OFAC’s Specially Designated Nationals and Blocked Persons (SDN) List. This new sanctions list format was jointly developed by the United Nations (U.N.) and the Wolfsberg Group of International Banks in an effort to create a universal sanctions list format that can be efficiently used by governments worldwide and enhances sanctions compliance. The new format incorporates a variety of features that ensure maximum flexibility for sanctions list creators, while also limiting the need for future changes to the underlying data specification due to the standard’s adaptability.

According to the announcement, some of the new capabilities associated with the advanced sanctions list format include:

• The advanced format provides a great deal of new metadata including specific labels for name parts that go beyond the standard, “Last name, First name” style of current sanctions lists. The advanced format now allows for unique name parts to be used, labeled and properly ordered based on the nomenclature rules of a specific culture, language, or region.
• The new format now supports language scripts beyond the standard Latin script used in many sanctions lists. It is now possible for sanctions targets to be provided to users in their original script (e.g., Arabic) and other non-Latin script translations. The Treasury Department will provide a Latin script translation for all listed, non-Latin script sanctions targets.
• The advanced list format provides a data dictionary of all valid look-up values in the header of the file. Including a data dictionary with the underlying data makes it easier for list users to construct databases that contain identifiers and other information that match the data in OFAC’s systems. When new look-up values are introduced to a sanctions list, this data dictionary is automatically updated.
• This new format introduces a flexible, “feature identifier” functionality that augments the normal identification look-up values that are currently available in the SDN List formats. Historically, the “remarks field” in the Treasury SDN list’s data format had been used for information that did not easily fit into existing fields and identifier categories. Using the advanced format, Treasury will now be able to provide easily-parsed, non-traditional identifier information.
• The United States is the first U.N. member state to implement this advanced sanctions data model. In an effort to ensure a greater level of global sanctions compliance the Treasury Department supports the new sanctions list model and appreciates the efforts of the U.N. and the Wolfsberg Group in their creation of a universal format. Treasury encourages the adoption of this model among all U.N. member states and says it will continue to work with international partners as they implement this standard.

For more information on this specific action, please visit OFAC’s Recent Actions page.

US – President signs Executive Order imposing additional sanctions on N. Korea and adding additional names to the SDN list
On January 2, 2014, President Obama signed an Executive Order Imposing Additional Sanctions with Respect to North Korea and adding names to the list of specially designated nationals. Additional information and updates will be posted in the coming days on this site and at www.bakermckenzie.com/sanctionsnews.
Canada – Canada-Korea FTA regulations published

On December 31, 2014, the Canada Gazette published the CKFTA Rules of Origin for Casual Goods Regulations (SOR/2014-300, Dec. 12, 2014), the CKFTA Rules of Origin Regulations and the CKFTA Tariff Prefer¬ence Regulations (SOR/2014-301, Dec. 12, 2014) pursuant to the Customs Tariff. The regulations are necessary to fully implement the Canada–Korea Economic Growth and Prosperity Act which received Royal Assent on November 26, 2014 and implements the Canada-Korea Free Trade Agreement (CKFTA), which was signed on September 22, 2014.

The CKFTA Rules of Origin Regulations implement, in Canada, the rules of origin negotiated by Canada and Korea that will be used to determine when goods have undergone sufficient production to qualify for preferential tariff treatment. Goods that meet the criteria set out in the CKFTA Chapter on Rules of Origin or its associated annex qualify as originating and therefore are eligible for preferential tariff treatment. Preferential tariff treatment under the CKFTA, which reflects the actual reduction in specific rates of duty, has been implemented in the Customs Tariff through the Canada–Korea Economic Growth and Prosperity Act.

The CKFTA Rules of Origin for Casual Goods Regulations establish the conditions under which goods acquired in Korea by travellers are considered originating and therefore entitled to preferential tariff treatment. Where travellers acquire goods in Korea that are either marked as made in Korea, or not marked to the contrary, the traveller can claim the Korea tariff preference on importation of the goods into Canada.

The CKFTA Tariff Preference Regulations allow eligible goods that are not shipped directly between Korea and Canada to retain their eligibility for preferential tariff rates provided the goods remain under customs control in third countries.

US - Commerce proposes changes to ADD price adjustment regulations
On December 31, 2014, Enforcement and Compliance, International Trade Administration, Department of Commerce (Commerce) published in the Federal Register a proposed rule [Docket No. 140929814–4814–01] that would modify two regulations pertaining to price adjustments in antidumping duty (ADD) proceedings and is seeking comments from parties. These modifications, if adopted, are intended to clarify that Commerce generally will not consider a price adjustment that reduces or eliminates a dumping margin unless the party claiming such price adjustment demonstrates, to the satisfaction of Commerce, through documentation that the terms and conditions of the adjustment were established and known to the customer at the time of sale. To be assured of consideration, written comments must be received no later than January 30, 2015.
US - OFAC publishes Ukraine-related General License 5

On December 30, 2014, the Office of Foreign Assets Control (OFAC) published General License No. 5 Authorizing Certain Activities Prohibited by Executive Order 13685 of December 19, 2014 Necessary to Wind Down Operations Involving the Crimea Region of Ukraine. Except as provided in paragraph (b) of the general license (GL5), it authorizes, through 12:01 a.m. EDT, February 1, 2015, all transactions and activities prohibited by Section 1 of Executive Order 13685 of December 19, 2014, “Blocking Property of Certain Persons and Prohibiting Certain Transactions With Respect to the Crimea Region of Ukraine” (the “Crimea E.O.”), that are ordinarily incident and necessary to

(1) the winding down or divestiture or transfer to a foreign person of a U.S. person's share of ownership, including an equity interest, in pre-December 20, 2014 investments located in the Crimea region of Ukraine;
(2) the winding down of operations, contracts, or other agreements that were in effect prior to December 20, 2014, involving the exportation, reexportation, sale, or supply of goods, services, or technology to the Crimea region of Ukraine; or
(3) to the winding down of operations, contracts, or other agreements that were in effect prior to December 20, 2014, involving the importation of any goods, services, or technology from the Crimea region of Ukraine into the United States.

Paragraph (b) of GL5 states that GL5 does not authorize:

(1) any new exportation, reexportation, sale, or supply of goods, services, or technology from the United States, or by a U.S. person, wherever located, to the Crimea region of Ukraine, or
(2) any new importation into the United States of goods, services or technology from the Crimea region of Ukraine, except as needed to wind down operations, contracts, or other agreements otherwise prohibited by the Crimea E.O.

GL5 does not authorize any transactions or dealings otherwise prohibited by any other Executive order or any other part of 31 C.F.R. Chapter V, or any transactions or dealings with any specially designated national (SDN) listed pursuant to any Ukraine-related Executive order.

U.S. persons participating in transactions authorized by GL5 are required, within 10 business days after the wind-down activities conclude, to file a detailed report, including the parties involved, the type and scope of activities conducted, and the dates of the activities, with the Office of Foreign Assets Control, Licensing Division, U.S. Department of the Treasury, 1500 Pennsylvania Avenue N.W., Annex, Washington, DC 20220.

For more specific updates on this topic, please consult Baker & McKenzie’s Sanctions Update blog www.bakermckenzie.com/sanctionsnews/.

EU - Commission updates list of dual-use items subject to controls
On 30 December 2014, the Official Journal published Commission Delegated Regulation (EU) No 1382/2014 of 22 October 2014 amending Council Regulation (EC) No 428/2009 setting up a Community regime for the control of exports, transfer, brokering and transit of dual-use items. The Delegated Regulation updates the list of dual-use items set out in Annex I of Council regulation (EC) No 428/2009 in conformity with the relevant obligations and commitments, and any modifications thereto, that Member States have accepted as members of the international non-proliferation regimes and export control arrangements, or by ratification of relevant international treaties. The list implements internationally agreed dual-use controls including the Wassenaar Arrangement, the Missile Technology Control Regime (MTCR), the Nuclear Suppliers' Group (NSG), the Australia Group and the Chemical Weapons Convention (CWC).
US - BIS issues EAR corrections and clarifications

On December 29, 2014, the Bureau of Industry and Security (BIS) published in the Federal Register a final rule [Docket No. 141027899-4899-01] correcting certain provisions of the Export Administration Regulations (EAR) that were amended in past rulemakings appearing in the Federal Register between November 5, 2007 and October 14, 2014. This final rule makes corrections to certain provisions to ensure consistency and clarity in the regulations. In addition, this final rule makes other corrections to the EAR to fix typographical errors to ensure that the regulations accurately reflect the revisions intended by these past rulemakings.

These final rulemakings consist of the following: Revisions to the Commerce Control List: Imposition of Controls on Integrated Circuits, Helicopter Landing System Radars, Seismic Detection Systems, and Technology for IR Up-Conversion Devices, October 14, 2014 (79 Fed. Reg. 61571); Russian Sanctions: Addition of Persons to the Entity List and Restrictions on Certain Military End Uses and Military End Users, September 17, 2014 (79 Fed. Reg. 55608); Corrections and Clarifications to the Export Administration Regulations; Correction, August 18, 2014 (79 Fed. Reg. 48660); Russian Oil Industry Sanctions and Addition of Person to the Entity List, August 6, 2014 (79 Fed. Reg. 45675); Wassenaar Arrangement 2013 Plenary Agreements Implementation: Commerce Control List, Definitions, and Reports; and Extension of Fly-by- Wire Technology and Software Controls, August 4, 2014 (79 Fed. Reg. 45288); Corrections and Clarifications to the Export Administration Regulations; Conforming Changes to the EAR Based on Amendments to the International Traffic in Arms Regulations, June 5, 2014 (79 Fed. Reg. 32612); Revisions to the Export Administration Regulations (EAR): Control of Spacecraft Systems and Related Items the President Determines No Longer Warrant Control Under the United States Munitions List (USML), May 13, 2014 (79 Fed. Reg. 27417); Revisions to the Export Administration Regulations (EAR) To Make the Commerce Control List Clearer, October 4, 2013 (78 Fed. Reg. 61874); Revisions to the Export Administration Regulations: Military Vehicles; Vessels of War; Submersible Vessels, Oceanographic Equipment; Related Items; and Auxiliary and Miscellaneous Items That the President Determines No Longer Warrant Control Under the United States Munitions List, July 8, 2013 (78 Fed. Reg. 40892); Implementation of the Understandings Reached at the 2012 Australia Group (AG) Plenary Meeting and the 2012 AG Intersessional Decisions; Changes to Select Agent Controls, June 5, 2013 (78 Fed. Reg. 33692); Revisions to the Export Administration Regulations: Initial Implementation of Export Control Reform, April 16, 2013 (78 Fed. Reg. 22660); Export and Reexport Controls to Rwanda and United Nations Sanctions Under the Export Administration Regulations, July 23, 2012 (77 Fed. Reg. 42973); and December 2006 Wassenaar Arrangement Plenary Agreement Implementation: Categories 1, 2, 3, 5 Part I, 6, 7, 8, and 9 of the Commerce Control List; Wassenaar Reporting Requirements; Definitions; and Statement of Understanding on Source Code, November 5, 2007 (72 Fed. Reg. 62524).

US - State corrects ITAR rule for military electronics (USML Category XI)

On December 29, 2014, the Department of State (State) published in the Federal Register a final rule correction and correcting amendments [Public Notice 8979] to a final rule “Amendment to the International Traffic in Arms Regulations: United States Munitions List Category XI (Military Electronics), and Other Changes” published in the Federal Register of July 1, 2014 (79 Fed. Reg. 37536), and effective on December 30, 2014 and making other, minor changes.

The changes in this rule are meant to clarify the regulation by revising certain text and providing conforming updates to Supplement No. 1 to part 126, taking into account revisions made to the USML categories in the rule published on July 1, 2014.

Additionally, minor corrections are made to section 126.6, as follows: 1) subparagraph (c)(4) is deleted to account for a previous revision to section 126.1 that excepts section 126.6; 2) subparagraph (c)(6)(ii) is revised to replace the obsolete term, “Shippers Export Declaration” with the correct term, “Electronic Export Information;” and, subparagraph (c)(7)(iv) is deleted to remove reference to the obsolete “Direct Shipment Verification Program.”

Pursuant to Export Control Reform (ECR), the Department of Commerce has been publishing revisions to the Export Administration Regulations, including various revisions to the Commerce Control List (CCL). Revision of the USML and CCL are coordinated so there is uninterrupted regulatory coverage for items moving from the jurisdiction of the Department of State to that of the Department of Commerce.

US - State imposition of nonproliferation measures against foreign persons, including a ban on U.S. Government procurement

On December 30, 2014, the Bureau of International Security and Nonproliferation, Department of State published in the Federal Register a notice [Public Notice: 8986] advising that a determination has been made that a number of foreign persons (23 entities or individuals) have engaged in activities that warrant the imposition of measures pursuant to Section 3 of the Iran, North Korea, and Syria Nonproliferation Act. The Act provides for penalties on entities and individuals for the transfer to or acquisition from Iran since January 1, 1999; the transfer to or acquisition from Syria since January 1, 2005; or the transfer to or acquisition from North Korea since January 1, 2006, of goods, services, or technology controlled under multilateral control lists (Missile Technology Control Regime, Australia Group, Chemical Weapons Convention, Nuclear Suppliers Group, Wassenaar Arrangement) or otherwise having the potential to make a material contribution to the development of weapons of mass destruction (WMD) or cruise or ballistic missile systems. The latter category includes (a) items of the same kind as those on multilateral lists but falling below the control list parameters when it is determined that such items have the potential of making a material contribution to WMD or cruise or ballistic missile systems, (b) items on U.S. national control lists for WMD/missile reasons that are not on multilateral lists, and (c) other items with the potential of making such a material contribution when added through case-by-case decisions.

The following measures have been imposed:

1. No department or agency of the U.S. Government may procure or enter into any contract for the procurement of any goods, technology, or services from these foreign persons, except to the extent that the Secretary of State otherwise may determine;
2. No department or agency of the U.S. Government may provide any assistance to these foreign persons, and these persons shall not be eligible to participate in any assistance program of the U.S. Government, except to the extent that the Secretary of State otherwise may determine;
3. No U.S. Government sales to these foreign persons of any item on the United States Munitions List are permitted, and all sales to these persons of any defense articles, defense services, or design and construction services under the Arms Export Control Act are terminated; and
4. No new individual licenses shall be granted for the transfer to these foreign persons of items the export of which is controlled under the Export Administration Act of 1979 or the Export Administration Regulations, and any existing such licenses are suspended. These measures shall be implemented by the responsible departments and agencies of the U.S. Government and will remain in place for two years from the effective date, except to the extent that the Secretary of State may subsequently determine otherwise.

US - State extends limited Iran sanctions relief through June 30, 2015

On December 30, 2014, the Department of State published in the Federal Register a notice [Public Notice: 8985] extending certain temporary and limited sanctions relief in order to implement the Joint Plan of Action of November 24, 2013 between the P5+1 and the Islamic Republic of Iran through June 30, 2015

On November 24, 2013, the United States and its partners in the P5+1 – France, the United Kingdom, Russia, China, and Germany – reached an initial understanding with Iran, outlined in a Joint Plan of Action (JPOA),that halts progress on its nuclear program and rolls it back in key respects. In return, the P5+1 committed to provide limited, temporary, and targeted sanctions relief to Iran.

The JPOA was renewed by mutual consent of the P5 + 1 and Iran on July 19, 2014, and again on November 24, 2014, extending the temporary sanctions relief provided under the JPOA to cover the period beginning on November 24, 2014, and ending June 30, 2015 (the Extended JPOA Period), in order to continue negotiations aimed at achieving a long-term comprehensive solution to ensure that Iran’s nuclear program will be exclusively peaceful. This Notice outlines the U.S. Government (USG) actions taken to implement the sanctions relief aspects of this understanding.

The effective dates of these waiver actions are as described in the determinations set forth in the Federal Register notice.

USTR requests comments on the identification of countries for the 2015 Special 301 Review

On December 29, 2014, the Office of the United States Trade Representative (USTR) published in the Federal Register a request for written submissions from the public and announcement of public hearing concerning foreign countries that deny adequate and effective protection of intellectual property rights or deny fair and equitable market access to U.S. persons who rely on intellectual property protection.

The provisions of Section 182 of the Trade Act of 1974 (Trade Act) (19 U.S.C. 2242) commonly referred to as “Special 301” provisions of the Trade Act requires the USTR to identify countries that deny adequate and effective protection of intellectual property rights (IPR) or deny fair and equitable market access to U.S. persons who rely on intellectual property protection and to determine which, if any, of these countries to identify as Priority Foreign Countries. Acts, policies, or practices that are the basis of a country's identification as a Priority Foreign Country can be subject to the procedures set out in sections 301-305 of the Trade Act.

In addition, USTR has created a “Priority Watch List” and “Watch List” to assist the Administration in pursuing the goals of the Special 301 provisions. Placement of a trading partner on the Priority Watch List or Watch List indicates that particular problems exist in that country with respect to IPR protection, enforcement, or market access for persons that rely on intellectual property protection. Trading partners placed on the Priority Watch List are the focus of increased bilateral attention concerning the problem areas.

USTR is requesting written submissions from the public concerning foreign countries that deny adequate and effective protection of intellectual property rights or deny fair and equitable market access to U.S. persons who rely on intellectual property protection. USTR requests that interested parties provide the information described in the Federal Register notice, and identify whether a particular trading partner should be named as a Priority Foreign Country under Section 182 of the Trade Act or placed on the Priority Watch List or Watch List. Foreign governments that have been identified in previous Special 301 Reports or that are nominated for review in 2015 are considered interested parties, and are invited to respond to this request for public submissions. Interested parties, including foreign governments, wishing to submit information to be considered during the review or testify at the public hearing must adhere to the procedures and deadlines set forth below. The schedule and deadlines are set forth in the notice.

US - President makes AGOA changes

On December 23, 2014, the President issued Presidential Proclamation 9223 of December 23, 2014 -- To Take Certain Actions Under the African Growth and Opportunity Act and for Other Purposes (published in the Federal Register on December 30, 2014) The Proclamation:

• Designates Guinea-Bissau as a beneficiary sub-Saharan African country and revises general note 16(a) to the Harmonized Tariff Schedule of the United States (HTS) by inserting in alphabetical sequence in the list of beneficiary sub-Saharan African countries "Republic of Guinea-Bissau (Guinea-Bissau)."
• Terminates the designations of South Sudan and The Gambia as beneficiary sub-Saharan African countries for purposes of section 506A of the 1974 Act effective on January 1, 2015 and revises general note 16(a) to the HTS by deleting "Republic of South Sudan" and "Republic of The Gambia" from the list of beneficiary sub-Saharan African countries. Note 7(a) to subchapter II and note 1 to subchapter XIX of chapter 98 of the HTS are modified to delete "The Gambia" from the list of beneficiary countries. Further, note 2(d) to subchapter XIX of chapter 98 of the HTS is modified by deleting "The Gambia" from the list of lesser developed beneficiary sub-Saharan African countries.
• Modifies the HTS. In order to extend for an additional year U.S. tariff commitments under the 2004 agreement on agricultural trade with Israel through December 31, 2015.
• Modifies the HTS as set forth in Annex II to the proclamation to adopt the recommendations of USITC in Investigation No. 1205-10 (Recommendations to Modify Chapters 29, 30, 37, and 85 of the HTS contained in USITC Publication 4392 (corrected August 2013)) pursuant to the International Convention on the Harmonized Commodity Description and Coding System (the HS Convention),
• Provides that the modifications to the HTS set forth in Annex II shall be effective with respect to goods that are entered regarding changes to the , or withdrawn from warehouse for consumption, on or after the later of January 1, 2015, or the 30th day after publication of the proclamation in the Federal Register.
• Makes technical corrections necessary to provide the intended duty treatment under Article 3.2.8 of the United States-Bahrain Free Trade Agreement (USBFTA) the HTS (staged reductions) as set forth in Annex III to the proclamation.

US - APHIS imposes restrictions on certain bird/poultry products from British Columbia

On December 22, 2014, U.S. Customs and Border Protection (CBP) posted a release notifying the public that travelers originating in or transiting through British Columbia, Canada, before entering the United States should be aware that due to a confirmed outbreak of Highly Pathogenic Avian Influenza (HPAI), commonly known as bird flu, the United States Department of Agriculture (USDA) Animal and Plant Health Inspection Service (APHIS) has notified CBP of immediate restrictions on the importation of certain bird and poultry products and live birds from a control zone in southern British Columbia.

All of the Canadian Province of British Columbia south of Highway 16 has been designated an HPAI control zone (control zone.) The HPAI restrictions apply to goods originating in or transiting through the control zone before entering the United States.

Effective immediately, the following avian and/or poultry products originating in or transiting through the control zone are prohibited: uncooked chicken, turkey, duck, or goose; raw eggs; live birds; hatching eggs; composted manure; and meat from hunter-harvested birds.

Commercially packaged, shelf-stable poultry, such as canned chicken, is allowed. Also, thoroughly cooked poultry, including deli turkey or chicken, are permitted, as are hard-boiled eggs.

Pet food made in Canada containing turkey, chicken, duck, or goose must be commercially packaged and in the original container, is limited to a total weight of 50 pounds, and if the package is opened, then the pet must be present in the vehicle.

Canadian pet birds, including U.S.-origin pet birds, originating from outside the control zone can enter the U.S. from Canada through a land border port, but only with a valid APHIS-issued import permit, and port inspection.

Canadian pet birds, including U.S.-origin pet birds, originating from or transiting the control zone and arriving at a U.S. land border port of entry, must be accompanied by a valid USDA APHIS Import Permit, Canada Food Inspection Agency (CFIA) endorsed health certificate, and must undergo a 30-day quarantine.

Canadian pet birds, including U.S.-origin pet birds, from British Columbia, entering the United States by air or ocean, require a permit from APHIS Veterinary Services.

Additional information on restrictions due to avian influenza can be found on the APHIS web site here.

Travelers intending to bring food products into the U.S. from Canada are encouraged to learn which products are allowed and which are prohibited, before they travel. Please visit the CBP’s web site travel section here.

US – CBP posts year-end immediate delivery procedures

On December 23, 2014, U.S. Customs and Border Protection (CBP) issued CSMS #14-000658 - Year-End Immediate Delivery Procedures which announced that the CBP Office of International Trade is issuing a blanket authorization for Immediate Delivery (ID) procedures for merchandise to be released on or after December 16, 2014 through December 31, 2014, in accordance with 19 C.F.R. § 142.21(i). The authorization is offered to filers who may elect to take advantage of the interim Harmonized Tariff Schedule changes, which take effect on or after January 1, 2015.

This blanket authorization does not apply to absolute quota merchandise and merchandise moved under an immediate transportation entry (type 61). Tariff rate quota merchandise previously authorized for ID release under 19 C.F.R. § 142.21(e) may still be released; however, the entry summary shall be presented within the time specified in 19 C.F.R. § 142.23 or within the quota period, whichever expires first.

In those instances where the paper CBP Form 3461/CBP Form 3461(ALT) is used as the entry document and importers wish to elect ID, a line must be drawn through the word “ENTRY” on the document. ABI entry transmissions, including the “paperless” provisional messages, will establish the desired entry date by using the estimated entry date in the summary transmission (“EI” and “AE” transmissions). This will identify the change from “Entry” to “Immediate Delivery” and will allow filers to elect a date of entry in order to take advantage of tariff changes or special programs. Under ID procedures, the entry/entry summary must be filed within 10 working days after release. This blanket authority only extends to shipments released December 16, 2014 through December 31, 2014.

No grace period will be granted for the purpose of timely filing ID entry summaries under this one-time allowance.

US - BIS revises EAR: Controls on electronic commodities; exports and reexports to Hong Kong
On December 23, 2014, the Bureau of Industry and Security (BIS) published in the Federal Register a final rule [Docket No. 141107937-4937-01] This rule amends the Export Administration Regulations (EAR) to expand controls for national security reasons and responds to public comments solicited by a BIS notice of inquiry regarding the proper export control classification of certain electronic commodities and a type of radar. Specifically, in this rule, BIS amends the EAR to expand national security controls on certain electronic commodities controlled on the Commerce Control List (CCL) and to limit license exceptions for these items. This rule also expands license requirements for exports and reexports to Hong Kong of items controlled for national security reasons.

The rule is effective December 23, 2014, except that the revision of the Related Controls paragraph under the List of Items Controlled section in ECCN 3E001, Supplement No. 1 to part 774, is effective December 30, 2014.
US - BIS clarifies scope of certain “600 series” ECCNs
On December 23, 2014, the Bureau of Industry and Security (BIS) published in the Federal Register a final rule [Docket No. 141119982-4982-01] that revises six Export Control Classification Numbers (ECCNs) to clarify that they do not control certain basic parts, components, accessories and attachments because those basic parts, components, accessories and attachments are controlled in a new ECCN created by a rule published on July 1, 2014 to be effective on December 30, 2014. This rule also removes controls on certain monolithic microwave integrated circuit (MMIC) power amplifiers and discrete microwave transistors and related technology. These controls are no longer necessary because two other rules published after July 1, 2014, provide appropriate controls on those items. This rule also clarifies the application of “specially designed” to controls published on July 1, 2014 that would apply to printed circuit boards, populated circuit card assemblies and multichip modules to reduce the possibility of confusion. Finally, this rule revises three of the amendatory instructions in the final rule published on July 1, to avoid negating changes to the Export Administration Regulations that became effective after that date.

The rule is effective December 30, 2014.
US - FAS proposes changes to dairy TRQ licensing
On December 23, 2014, the Foreign Agricultural Service (FAS), U.S. Department of Agriculture (USDA) published in the Federal Register a proposed rule that would amend the regulation that provides for the issuance of licenses to import certain dairy articles under tariff-rate quotas (TRQs) as set forth in the Harmonized Tariff Schedule of the United States. The three most significant changes to the rule would be to suspend for an additional seven years, the historical license reduction provision, which currently expires with the beginning of quota year 2016; to modify procedures for collecting licensing fees in order to better align the fee collection to the costs of administering the program; and to exclusively use electronic communications in the application, reporting and payment processes. The expected outcome from the implementation of the proposed changes would be to allow license holders to adjust to changing market conditions impacting the dairy sector; increase USDA’s ability to more closely align cost recovery with the actual costs of administering the program; and allow USDA to reduce lag times, minimize paper files, and increase the efficiency of the program operations. Comments on this proposed rule must be submitted on or before February 23, 2015.
US, Mexico sign agreement suspending AD/CVD on sugar

On December 19, 2014, the U.S. Department of Commerce announced that it signed agreements to suspend the antidumping (AD) and countervailing duty (CVD) investigations of imports of sugar from Mexico. Commerce will suspend the ongoing AD and CVD investigations of sugar from Mexico without issuing final determinations. These agreements do not change the U.S. Department of Agriculture’s sugar program or U.S. obligations under the WTO regarding sugar quotas.

CVD Agreement

• The CVD agreement contains provisions to prevent an oversupply of sugar in the U.S. market. Specifically, Commerce will calculate an export limit for Mexico based on information it obtains from the U.S. Department of Agriculture (USDA) about the U.S. needs for sugar in a given year. The CVD agreement will also prevent imports from being concentrated during certain times of the year, and will limit the amount of refined sugar that may enter the U.S. market from Mexico.
• Mexico’s export limit is set at 100 percent of U.S. needs after accounting for U.S. production and imports from tariff rate quota countries. (U.S. needs are calculated based on USDA data.)
• For purposes of the agreement, “refined sugar” is defined as sugar with a polarity of 99.5 percent or greater. “Other sugar” is sugar that does not meet the definition of refined sugar. The agreement caps exports of refined sugar at 53 percent of total exports from Mexico.
• The Government of Mexico will allocate the amount of sugar that each Mexican sugar producer/exporter can export to the United States. As part of this process, the Government of Mexico has agreed to establish an export licensing mechanism. Sugar from Mexico will not be able to enter the United States if it is not accompanied by an export license.
• The signatories of the CVD agreement are Commerce and the Government of Mexico.

AD Agreement

• The AD agreement establishes reference prices, or minimum prices, to guard against undercutting or suppression of U.S. prices. These minimum prices are $0.26/pound by dry weight commercial value for refined sugar and $0.2225/pound by dry weight commercial value for all other sugar. “Refined sugar” is defined as sugar with at least 99.5 percent polarity or above. “Other sugar” is sugar that does not meet the definition of refined sugar.
• The signatories of the AD agreement are Commerce and the Mexican sugar producers and exporters which account for substantially all of the subject merchandise imported into the United States.

Commerce and the relevant Mexican government agencies have agreed to establish information exchanges and consultative processes in relation to the operation and enforcement of the agreements. Commerce will instruct U.S. Customs and Border Proctection to terminate the suspension of liquidation and refund any cash deposits collected as a result of the preliminary AD and CVD investigation determinations consistent with the relevant provisions of U.S. antidumping and countervailing duty law.

U.S. Government imposes comprehensive sanctions against Crimea

Effective at 3:30 pm on December 19, 2014, President Obama issued an Executive Order that (i) imposes comprehensive sanctions on the Crimea region of Ukraine (“Crimea”), which has been occupied by Russia since March 2014, and (ii) provides the authority for blocking certain persons in connection with the situation in Crimea. OFAC’s announcement is available here. The Executive Order prohibits the following activities:

• New investment in Crimea by U.S. Persons (i.e., (i) entities organized under U.S. laws and their non-U.S. branches, (ii) persons located in the United States (even temporarily), and (iii) U.S. citizens and permanent resident aliens, wherever located or employed);
• Imports into the United States, directly or indirectly, of any goods, services or technology from Crimea;
• Exports, reexports, sale, or supply, directly or indirectly, from the United States or by a U.S. Person, of any goods, services or technology to Crimea; and
• Any approval, financing, facilitation, or guarantee by a U.S. Person of a transaction by a foreign person that would be prohibited if performed by a U.S. Person.

The Executive Order also includes expansive authority to block any person determined by the U.S. Government to (i) operate in Crimea, (ii) be a leader of an entity operating in Crimea, (iii) be owned or controlled by, or have acted on behalf of any person who is blocked under the Executive Order, or (iv) have “materially assisted, sponsored, or provided financial, material, or technological support for, or goods or services to or in support of, any person” who is blocked under the Executive Order.

Simultaneous to the Executive Order, OFAC issued General License No. 4 that authorizes certain exports/reexports to Crimea of agricultural commodities, medicines, medical supplies, and associated replacement parts. The applicable conditions resemble those required for the comparable general license under the Iran sanctions program.

Finally, OFAC also designated a number of individuals and entities as Specially Designated Nationals (SDNs) in today’s action under pre-existing Ukraine-related Executive Order 13660. The list of new SDNs is available here.

Submitted by Maria van Wagenberg and Kerry Contini. If you have any questions, please contact the authors or any member of our Outbound Practice.

EU strengthens sanctions against Crimea and Sevastopol

On 18 December 2014, the Council of the EU announced that it had imposed substantial additional sanctions on investment, services and trade with Crimea and Sevastopol. Council Regulation (EU) No 1351/2014 of 18 December 2014 amending Regulation (EU) No 692/2014 concerning restrictive measures in response to the illegal annexation of Crimea and Sevastopol (the New Regulation) was published in the Official Journal on 19 December 2014, entered into force on 20 December 2014, and introduced substantial sanctions against Crimea and Sevastopol as the EU looks to reinforce that it does not recognise their annexation to Russia and to strengthen existing measures against them targeting trade and investment in Crimea and Sevastopol. The EU’s existing sanctions against Crimea and Sevastopol are set out in Council Regulation (EU) No 692/2014 (as amended).

Previously, the EU’s sanctions against Crimea and Sevastopol encompassed: (1) a ban on the import into the EU of goods originating in Crimea and Sevastopol; (2) a prohibition on the provision, directly or indirectly, of related financing or financial assistance as well as insurance and reinsurance; (3) a ban on new investments related to infrastructure in (i) transport, (ii) telecommunications, (iii) energy and (iv) the exploitation of oil, gas and mineral resources in Crimea and Sevastopol; and (4) an export ban on key equipment and technology related to the creation, acquisition or development of infrastructure in the aforementioned sectors.

Whilst the import ban remains, the New Regulation replaces the trade and investment restrictions ((3) and (4)) with a broader ban on investment in Crimea and Sevastopol. According to the New Regulation, these new sanctions are not intended to apply to legitimate business conduct with entities outside Crimea and Sevastopol that operate within Crimea and Sevastopol as long as there are reasonable grounds to determine that the relevant goods or services, or related investments, are not destined to enterprises or any subsidiary or affiliate under their control in Crimea or Sevastopol.

We outline the key provisions of the New Regulation below.

1. Investment Ban

It is prohibited to:

a) Acquire new or extend any existing participation in ownership of real estate located in Crimea or Sevastopol;
b) Acquire new or extend any existing participation in ownership or control of an entity in Crimea or Sevastopol, including the acquisition of shares, and other securities of a participating nature of such entity;
c) Grant or be part of any arrangement to grant any loan or credit or otherwise provide financing, including equity capital, to an entity in Crimea or Sevastopol, or for the documented purpose of financing such entity;
d) Create any joint venture in Crimea or Sevastopol or with an entity in Crimea or Sevastopol; and
e) Provide investment services directly related to the activities referred to in (a) to (d).

These restrictions do not apply to the execution of obligations arising under contracts concluded before 20 December 2014, or ancillary contracts necessary for the execution of the same, provided that prior notification is made to the competent Member State authority at least five working days in advance of the same.

In certain cases, competent Member State authorities may authorise these activities, under such terms and conditions as they deem appropriate, where they are:

a) Necessary for official purposes of consular missions or international organisations enjoying immunities in accordance with international law located in Crimea or Sevastopol;
b) Related to projects exclusively in support of hospitals, or other public health institutions providing medical services or civilian education establishments located in Crimea or Sevastopol;
c) Appliances or equipment for medical use;
d) For maintenance in order to ensure the safety of existing infrastructure; or
e) Necessary for the urgent prevention or mitigation of an event likely to have a serious and significant impact on human health and safety, including the safety of existing infrastructure, or the environment.
f) These are referred to herein as “Exceptions (a), (b)” etc.

Only in “duly justified cases of emergency” may these activities proceed without authorisation as long as the exporter notifies the competent Member State authority within five working days with details of the relevant justification.

2. New Product Controls Target Key Sectors: Transport, Telecommunications, Energy and the Prospection, Exploration and Production of Oil, Gas and Mineral Resources

The New Regulation introduces controls on certain goods and technologies, listed in the new Annex II, that are suited for use in targeted sectors of the economy: (1) transport; (2) telecommunications; (3) energy; and (4) the prospection, exploration and production of oil, gas and mineral resources. As regards Annex II items, it is prohibited to:

a) Sell, supply, transfer, or export Annex II items to any person, entity or body in Crimea or Sevastopol, or for use in Crimea or Sevastopol; and
b) Provide, directly or indirectly, related technical assistance or brokering services, financing or financial assistance.

These restrictions do not apply to the execution until 21 March 2015 of obligations arising from contracts concluded before 20 December 2014, or by ancillary contracts necessary for the execution of the same, provided that prior notification is made to the competent Member State authority at least five working days in advance of the same.

Further, Exceptions (a) – (c) and (e) apply (but not (d)), and prior authorisation is not required for “duly justified cases of emergency” subject to the five working days notification requirement.

3. Ban on Certain Services Related to Key Sector Infrastructure

It is prohibited to provide technical assistance, brokering, construction or engineering services directly relating to infrastructure in Crimea or Sevastopol in the key sectors listed above as defined on the basis of Annex II is prohibited, independently of the origin of the goods and technology.

This restriction does not apply to the execution until 21 March 2015 of obligations arising from contracts concluded before 20 December 2014, or by ancillary contracts necessary for the execution of the same. There is no prior notification requirement.

Authorisation to provide such services can only be granted where it can be demonstrated to the competent Member State authority that such services are necessary for the urgent prevention or mitigation of an event likely to have a serious and significant impact on human health and safety, including the safety of existing infrastructure, or the environment (Exception (e)). Prior authorisation is not required for “duly justified cases of emergency” subject to the five working days notification requirement.

4. Ban on Services Relating to Tourism Activities

It is prohibited to provide services directly related to tourism activities in Crimea or Sevastopol, which extends to ships falling within EU jurisdiction that provide cruise services. This include ships flying the flag of a Member State or any ship owned and under the operational control of an EU shipowner or any ship over which an EU operator assumed overall responsibility as regards its operation. Such ships may not enter into or call at the ports situated in the Crimean peninsula that are listed in the new Annex III, except in cases of emergency for maritime safety in which case prior notification must be made to the competent Member State authority within five working days of this. The targeted ports are: Sevastopol; Kerch; Yalta; Theodosia; Evpatoria; Chernomorsk; and Kamysh-Burun.

These restrictions do not apply to the execution of obligations arising under contracts concluded before 20 December 2014, or ancillary contracts necessary for the execution of the same, provided that prior notification is made to the competent Member State authority at least five working days in advance of the same.

For additional information, please contact Ross Denton or Sunny Mann of our London office.

Canada adds names to Ukrainian sanctions
On December 19, 2014, the Special Economic Measures (Ukraine) Regulations were amended by the Regulations Amending the Special Economic Measures (Ukraine) Regulations (SOR/2014-317). The unofficial version has been posted on the Foreign Affairs, Trade and Development Canada (DFATD) website. The amending regulations add nine names to sanctions list in Part 1 of the schedule.
Canada revises Russian sanctions
On December 19, 2014, the Special Economic Measures (Russia) Regulations were amended by the Regulations Amending the Special Economic Measures (Russia) Regulations (SOR/2014-316). The unofficial version has been posted on the Foreign Affairs, Trade and Development Canada (DFATD) website. The amending regulations prohibit certain new debt and equity financing; add 11 individuals to the sanctions list, and prohibit any person in Canada and any Canadian outside Canada from exporting, selling, supplying or shipping any good referred to in column 1 of Schedule 4 (certain iron and steel pipe, drilling and boring tools, certain pumps, drilling equipment, etc.) wherever situated, to Russia or to any person in Russia for use in offshore oil exploration or production at a depth greater than 500 m; oil exploration or production in the Arctic; or shale oil exploration or production. The amendments also prohibit providing to Russia or to any person in Russia any financial, technical or other services related to any good whose export, sale, supply or shipment is prohibited.
US - USTR publishes determinations of trade surplus for various FTA countries in certain sugar and syrup goods and sugar containing products

On December 19, 2014, the Office of the United States Trade Representative (USTR) published in the Federal Register a notice, in accordance with relevant provisions of the Harmonized Tariff Schedule of the United States (HTS), of its determination of the trade surplus in certain sugar and syrup goods and sugar containing products of Chile, Morocco, Costa Rica, the Dominican Republic, El Salvador, Guatemala, Honduras, Nicaragua, Peru, Colombia, and Panama. As described below, the level of a country’s trade surplus in these goods relates to the quantity of sugar and syrup goods and sugar-containing products for which the United States grants preferential tariff treatment under (i) the United States-Chile Free Trade Agreement (Chile FTA); (ii) the United States-Morocco Free Trade Agreement (Morocco FTA); (iii) the Dominican Republic-Central America-United States Free Trade Agreement (CAFTA-DR); (iv) the United States-Peru Trade Promotion Agreement (Peru TPA); (v) the United States-Colombia Trade Promotion Agreement (Colombia TPA), and (vi) the United States-Panama Trade Promotion Agreement (Panama TPA).

For details on the surplus or negative surplus for each country, see the notice The effective date is January 1, 2015.

US - DHS creates CBP Integrity Advisory Panel

On December 19, 2014, the Department of Homeland Security (DHS) published in the Federal Register a notice of task assignment [Docket No. DHS-2014-0073] for the Homeland Security Advisory Council (HSAC). The Secretary of DHS, Jeh Johnson, tasked the HSAC to establish a subcommittee entitled the CBP Integrity Advisory Panel on December 9, 2014. The CBP Integrity Advisory Panel will provide findings and recommendations to the HSAC on best practices sourced from Federal, state, and local law enforcement integrity leaders. This notice is not a solicitation for membership.

The HSAC provides organizationally independent, strategic, timely, specific, and actionable advice and recommendations for the consideration of the Secretary of DHS on matters related to homeland security. The HSAC is comprised of leaders of local law enforcement, first responders, state and local government, the private sector, and academia.

Tasking: The DHS Integrity Advisory Panel will develop findings and recommendations that address, among other closely related topics, best practices and recommendations for U.S. Customs and Border Protection (CBP). This panel should: (1) Benchmark CBP’s progress in response to Use of Force reviews; (2) Identify best practices from federal, state, local, and tribal law enforcement on integrity incident prevention – both mission compromising and off-duty conduct; (3) Identify best practices from federal, state, local, and tribal law enforcement on transparency pertaining to incident response and discipline as well as stakeholder outreach; (4) Obtain recommendations to ensure CBP develops an effective capability for investigating criminal misconduct within its ranks given CBP’s high-risk environment and its expanding workforce;(5) Obtain recommendations for CBP to facilitate enhanced participation among law enforcement and intelligence agencies within an interagency task force environment, combining federal, state, local, and tribal resources to more effectively address the significant threat of public corruption by leveraging resources, capabilities, and reducing duplication of effort; (6) Evaluate CBP’s efforts to become an intelligence-driven organization.

The DHS CBP Integrity Advisory Panel’s findings and recommendations will be submitted to the HSAC for their deliberation and vote during a public meeting. Once the report is voted on by the HSAC, it will be sent to the Secretary for his review and acceptance. DHS CBP Integrity Task Force findings and recommendations should be submitted to the Homeland Security Advisory Council by June 2015.

US - FDA makes guidance available on minimizing risk for children’s toy laser products

On December 19, 2014, the U.S. Food and Drug Administration (FDA) published in the Federal Register a notice [Docket No. FDA–2012–D–1092] announcing the availability of the guidance entitled “Minimizing Risk for Children’s Toy Laser Products.” This guidance is intended to inform manufacturers of laser products, FDA headquarters and field personnel, and the public of the Center for Devices and Radiological Health’s (CDRH) current thinking on the safety of children’s toy laser products and to provide specific safety recommendations for the manufacture and labeling of children’s toy laser products.

Electronic or written comments may be submitted on this guidance at any time. General comments on Agency guidance documents are welcome at any time.

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Chair, NA International
Commercial Practice Group

Miguel Noyola
Partner, Chicago
Email: Miguel Noyola
T + 1 312 861 7589


Members, US International
Trade Compliance Steering Committee


Janet K. Kim
Partner, Washington DC
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John F. McKenzie
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Editor, International Trade
Compliance Update


Stuart P. Seidel
Partner, Washington DC
Email: Stuart Seidel
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