Bipartisan trade preference bill (AGOA, GSP, Haiti) introduced

On April 17, 2015, a bipartisan group of Representatives introduced H.R. 1891, a Bill “To extend the African Growth and Opportunity Act, the Generalized System of Preferences, the preferential duty treatment program for Haiti, and for other purposes.” The bill would extend the African Growth and Opportunity Act (AGOA), which is scheduled to expire on September 30, 2015, until September 30, 2025. The bill will reinstate the Generalized System of Preferences (GSP) program which expired on July 31, 2013, until December 31, 2017 with retroactive treatment (without interest) for goods that would have qualified under the law as it existed prior to its expiration, provided a request (meeting the identification requirements in the bill) is filed with Customs and Border Protection not later than 180 days after enactment. The Haitian preference program is also extended until September 30, 2025.

In order to pay for the extensions, the expiration of the merchandise processing fee would be extended from June 30, 2021 until June 30, 2025. There would also be user fee adjustments and internal revenue estimated payment adjustments.

UK - New Export Control Order came into effect 17 April

Notice to Exporters 2015/16: amendment to the Export Control Order 2008 (‘the main Order’) – changes to Schedule 1, 2 and 3 announced that the Export Control (Amendment) (No 2) Order 2015 (S.I. 2015 No: 940) came into effect on 17 April 2015. The Notice makes the following points:

Notice to Exporters 2015/15 of 27 March (paragraph 7) gave prior warning that a further amendment of the Export Control Order 2008 would be required. This has been necessary to correct a mistake in the Export Control Office (ECO) controls on firearms created by that amendment Order.

• A new national control (PL9010) covering firearms considered to be ‘Non Military ’ has been introduced in Schedule 3 (UK controlled dual-use goods, software and technology) to the Order (see Article 2(7) of the new amendment Order). Some new definitions related to the new firearms control have also been added.

• This new control entry provides for a clearer alignment of the various controls on firearms found in the UK Military List (Schedule 2 to The Order) with that of the Common Military List of the EU (CFSP 2014/C 107/1). This will improve the implementation of Regulation (EU) No.258/2012. These changes do not introduce any new controls on firearms.

• As a result of the creation of this new entry in Schedule 3, and items being re-aligned from Schedule 2, a number of consequential changes to Schedule 1 of the Order have been necessary (see Articles 2(2)-(4)). A new paragraph 10a has been added to ensure that trade controls continue to be applied to firearms in Schedule 3 PL9010 (see Article 2(5)).

The amendment Order has also allowed correction of small errors in some Schedule 2 control entries to ensure consistency with the EU Common Military List (see Article 2(6)). These amendments also include appropriate cross references to the control entries: ML1, ML2 and ML3 in Schedule 2 and the new PL9010 control in Schedule 3.

• The UK Strategic Export Control Lists have been updated to reflect the above changes.

Exporters should ensure that they are familiar with the changes made to the scope of the controls and the respective Schedules.

Australia - Defence Trade Controls Amendment Bill 2015 receives Royal Assent

On 2 April 2015, the Defence Trade Controls Amendment Bill 2015 (DTC Amendment Bill) which amends the Defence Trade Controls Act 2012 (DTC Act) received Royal Assent.

According to an announcement by the Defence Export Control Office (DECO):

The offence provisions of the Defence Trade Controls Act 2012 – for supplying and publishing DSGL technology and for brokering DSGL goods and technology – will not come into force until the end of a 12-month implementation period that will expire on 1 April 2016.

Individuals and organisations do not need to seek permits for any activities that will occur during this implementation period. Individuals and organisations will be able to apply for permits from 16 May 2015 in preparation for the offence provisions coming in to force on 2 April 2016.

Defence will work closely with stakeholders as they establish internal compliance arrangements by providing significant implementation support through outreach and engagement sessions. Detailed guidance, tools and training will be available on DECO’s website shortly.

A summary of the key changes to the DTC Act that will be introduced by the DTC Amendment Bill is available in the Guide to the DTC Bill.

US - Bipartisan Trade Promotion Authority bill introduced in Congress

On April 16, 2015, Senate Finance Committee Chairman Orrin Hatch (R-Utah), Ranking Member Ron Wyden (D-Ore.) and House Ways and Means Chairman Paul Ryan (R-Wis.) introduced bipartisan, bicameral Trade Promotion Authority (TPA) legislation. According to the announcement, the legislation “establishes concrete rules for international trade negotiations to help the United States deliver strong, high-standard trade agreements that will boost American exports and create new economic opportunities and better jobs for American workers, manufacturers, farmers, ranchers and entrepreneurs.” The announcement stated:

The Bipartisan Congressional Trade Priorities and Accountability Act of 2015 (TPA-2015) outlines 21st century congressional negotiating objectives that any administration – Republican or Democratic – must follow when entering into and conducting trade talks with foreign countries while also increasing transparency by requiring that Congress have access to important information surrounding pending trade deals and that the public receive detailed updates and see the full details of trade agreements well before they are signed. When the trade agreement meets the United States’ objectives and Congress is sufficiently consulted, the legislation allows for trade deals to be submitted to Congress for an up-or-down vote, an incentive for negotiating nations to put their best offer forward for any deal. At the same time, the bill creates a new mechanism to withdraw TPA procedures and hold the administration accountable should it fail to meet the requirements of TPA.

The TPA bill comes as the two of the most ambitious trade negotiations in the nation’s history – the Trans-Pacific Partnership (TPP) and the Transatlantic Trade and Investment Partnership (T-TIP) - are underway. According to the announcement, together these two trade agreements would further open markets encompassing nearly 1.3 billion customers and approximately 60 percent of global gross domestic product. (Citing World Bank data)

TPA expired in 2007 and is needed for the United States to successfully conclude these negotiations.

A summary the bill can be found here, section-by-section summary of bill here and a copy of the bill text can be found here.

US – President Obama proposes rescission of Cuba’s Designation as a State Sponsor of Terrorism

On April 14, 2015, President Obama submitted to the U.S. Congress a report and certification indicating the Administration’s intent to rescind Cuba’s designation as a State Sponsor of Terrorism. The rescission of Cuba’s designation as a State Sponsor of Terrorism will become effective unless Congress enacts a joint resolution prohibiting the proposal within 45 days after receiving the report.

The proposal is part of the Obama Administration’s efforts to establish diplomatic relations with Cuba and relax certain aspects of the U.S. embargo of Cuba, which we have discussed in various previous sanctions blog posts, including our posts here and here.

While rescission of Cuba’s designation as a State Sponsor of Terrorism would represent an important policy change and a further step towards normalizing U.S.-Cuba relations, it would not affect most trade and financial sanctions against Cuba. For example, the core restrictions on investment, trade, and financial transactions with Cuba and the ban on tourist travel to Cuba are imposed by statutes not linked to the State Sponsor of Terrorism designation, and will remain in place absent further Congressional action.

The limited changes which would result from the rescission of Cuba’s State Sponsor of Terrorism designation include, among others (and subject to regulatory amendments): (i) eligibility for authorized exports to Cuba of a broader range of dual-use goods, software, and technology subject to U.S. jurisdiction; (ii) eligibility for certain U.S. federal assistance (e.g., humanitarian aid) to Cuba; and (iii) the elimination of the ability of U.S. citizens to pursue private claims against Cuba in U.S. courts.

For updates, please visit our Sanctions blog. For additional information, please contact Kathryn Anderson or Alison Stafford Powell of our San Francisco/Palo Alto offices or any member of the U.S. Outbound Trade group with whom you have been working.

US - State outlines actions taken to provide certain temporary and limited sanctions relief to continue JPOA

On April 16, 2015, the Department of State published in the Federal Register a notice [Public Notice: 9095] that outlines the U.S. Government (USG) actions taken to extend certain sanctions relief under the National Defense Authorization Act for Fiscal Year 2012 (NDAA) as part of the Joint Plan of Action (JPOA), that halts progress on Iran’s nuclear program and rolls it back in key respects in exchange limited, temporary, and targeted sanctions relief to Iran by the P5+1 countries (U.S., France, the United Kingdom, Russia, China, and Germany).

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.

Sanctions suspended under the NDAA are scheduled to resume on July 1, 2015 unless further action is taken by the P5+1 and Iran and subsequent waivers are issued by the USG. Companies engaging in activities covered by the temporary sanctions relief described below should expect sanctions to apply to any activities that extend beyond the current end date of the Extended JPOA Period, June 30, 2015. The temporary suspension of sanctions applies only to activities that begin and end during the period January 20, 2014 to June 30, 2015.

The Secretary of State in the national security interest of the United States waived the imposition of sanctions with respect to:

(1) foreign financial institutions under the primary jurisdiction of China, India, Japan, the Republic of Korea, the authorities on Taiwan, and Turkey, subject to the following conditions:

a. this waiver shall apply to a financial transaction only for trade in goods and services between Iran and the country with primary jurisdiction over the foreign financial institution involved in the financial transaction (but shall not apply to any transaction for the sale, supply, or transfer to Iran of precious metals involving funds credited to an account described in paragraph (b));

b. any funds owed to Iran as a result of such trade shall be credited to an account located in the country with primary jurisdiction over the foreign financial institution involved in the financial transaction; and

c. with the exception that certain foreign financial institutions notified directly in writing by the USG may engage in financial transactions with the Central Bank of Iran (CBI) in connection with the repatriation of revenues and the establishment of a financial channel, to the extent specifically provided for in the JPOA of November 24, 2013, as extended; and

(2) foreign financial institutions under the primary jurisdiction of Switzerland that are notified directly in writing by the USG, to the extent necessary for such foreign financial institutions to engage in financial transactions with the CBI: (i) within the scope of the waiver of Sections 1245(a)(1) and 1245(c) of the Iran Freedom and Counter Proliferation Act of 2012 (subtitle D of title XXI of Public Law 112-239, 22 U.S.C 8801 et seq.)(IFCA) issued on November 25, 2014 and any extension of that waiver; and (ii) in connection with the repatriation of revenues and the establishment of a financial channel as specifically provided for in the JPOA of November 24, 2013, as extended.

(3) Foreign financial institutions under the primary jurisdiction of Oman that are notified directly in writing by the USG, to the extent necessary for such foreign financial institutions to engage in financial transactions with the CBI in connection with the repatriation of revenues and the establishment of a financial channel as specifically provided for in the JPOA of November 24, 2013, as extended; and

(4) Foreign financial institutions under the primary jurisdiction of South Africa subject to the following conditions:

a. this waiver shall apply to a financial transaction only for trade in goods and services between Iran and South Africa (but shall not apply to any transaction for the purchase of crude oil from Iran or any transaction for the sale, supply, or transfer to Iran of precious metals involving funds credited to an account described in paragraph (b));

b. any funds owed to Iran as a result of such trade shall be credited to an account located in South Africa; and

c. with the exception of certain foreign financial institutions notified directly in writing by the USG to the extent necessary for such financial institutions to engage in financial transactions with the CBI within the scope of the waiver of Sections 1245(a)(1) and 1245(c) of IFCA issued on November 25, 2014 and any extension of that waiver.

Client Alert: R&D Expenses Paid to the Vendor of Imported Goods May Need to be Included in their Entirety in the Customs Value for Duty Determination

The Canadian Federal Court of Appeal’s (“FCA”) decision in Skechers USA Canada Inc. v. President of the Canada Border Services Agency (“Skechers”) now arguably broadens the scope of what research, design and development (“R&D”) costs must be included in the value for duty of imported goods determined under the transaction value method.[1] As a result, importers should review their R&D costs to determine whether they are dutiable in light of the FCA’s Skechers decision.

Background

Skechers USA Inc. (“Skechers US”) was responsible for designing various styles of footwear, and Skechers USA Canada Inc. (“Skechers Canada”) purchased footwear from Skechers US for re-sale in Canada. Pursuant to their cost-sharing agreement, Skechers Canada paid Skechers US for costs that Skechers US incurred for activities necessary, among other things, to research, develop and design footwear. Skechers US developed 40,000 to 50,000 prototype samples of shoes every year, approximately 5,000 of which succeeded in becoming available for sale, and approximately 1,700 of which were typically marketed in Canada. Skechers Canada had included in the value for duty of the approximately 1,700 footwear styles it imported into Canada the R&D costs directly related to those styles.

The dispute with the Canada Border Services Agency (“CBSA”) was over the separate payments Skechers Canada made to Skechers US for compensation of the costs of the moulds and samples of unsuccessful shoe styles and the shoe styles that were not imported into Canada, and for general research and design costs such as the salaries of Skechers US’s research and design staff. The CBSA’s position was that these additional costs were incurred as part of the process to produce the approximately 1,700 successful footwear styles that were imported into Canada, and as such the payments by Skechers Canada to Skechers US for these additional costs were "in respect of" the footwear imported into Canada that should have been included in the value for duty determination under the transaction value method. Skechers Canada had conceded at the hearing before the CITT and the FCA that the amount of these additional R&D costs were ascertainable at the time of importation.

The FCA Decision

The FCA affirmed the CITT’s approach and indicated that in order to determine whether the additional R&D payment was "in respect of" the imported goods, “…the central question is whether a sufficient link exists between the payment and the goods in issue”.

The FCA agreed with the CITT that, as the research, design, and development process for Skechers footwear was “a seamless, interrelated process, the whole of which is required to produce the goods at issue”, there was a sufficient link between R&D costs for the product designs that never came to fruition or for goods that were never imported into Canada, and the footwear styles that were imported into Canada. As a result, the FCA found that the CITT’s conclusion that the additional R&D payments made by Skechers Canada to Skechers US for compensation of these costs should have been included in the value for duty of the footwear styles imported into Canada was reasonable and dismissed Skechers Canada's appeal.

Conclusion

Importers should review their R&D payments to determine whether they are dutiable in light of the test set out in the Skechers decision. Even if R&D payments relate to goods that are never produced or to goods that are not imported into Canada, if there is a sufficient link between the R&D payments and the imported goods, the CBSA will likely take the position that these payments are in respect of the imported goods, and therefore dutiable.

Given the manner in which R&D payments are calculated and paid, it may be difficult for importers to quantify the amount of the R&D payments that are dutiable in a given year. Where uncertainty exists, importers may consider requesting named rulings from the CBSA to obtain certainty regarding the dutiable status of their R&D payments and how these payments are to be quantified and accounted for to the CBSA.

As a result of the Skechers decision, importers should expect an increased focus on the dutiable status of R&D payments by CBSA auditors.
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[1] The primary method for determining the value for duty of goods imported into Canada is the "transaction value" method. The transaction value of goods is determined by ascertaining "the price paid or payable" for the goods when the goods are sold for export to Canada to a purchaser in Canada, subject to certain adjustments. The "price paid or payable" is defined in the Customs Act (Canada) to mean "the aggregate of all payments made or to be made, directly or indirectly, in respect of the goods by the purchaser to or for the benefit of the vendor."

For more information, please contact Paul Burns, Brian Cacic or Jonathan Tam in our Toronto office.

US - State reorganizes DCTL

The State Department has announced that, effective April 20, 2015, the Office of Defense Trade Controls Licensing (DTCL) will undergo reorganization. The announcement states that Export Control Reform (ECR) has caused a 36% drop in licensing volume and has created a disparity in the volume of cases among the current divisions. Since 2013, DTCL has also experienced some downsizing through attrition. The new organizational structure will be leaner and will appropriately balance personnel and commodity volume to reflect the post-ECR environment while enabling DTCL to work toward meeting the directorate’s strategic goals.

In summary, DTCL will be reorganized into four operational divisions:

• Space, Missile, and Sensor Systems;
• Electronic and Training Systems;
• Sea, Land, and Air Systems; and
• Light Weapons and Personal Protective Equipment Systems.

In addition, a division for Plans, Personnel, Programs, and Procedures will consolidate many of the functions that were previously included in Division 7 as well as those functions that were distributed across other parts of DTCL. The new organizational chart is depicted in the announcement. Other portions of the DDTC website will be updated the weekend prior to implementation.

D-Trade will be configured to automatically route cases to the proper division based on the USML commodities on the application; no action is required by industry to adjust applications as a result of this reorganization.

Canada and Chile modernize their FTA

On April 10, 2015, the Hon. Rob Nicholson, Canada’s Minister of Foreign Affairs, and Heraldo Muñoz, Chile’s Minister of Foreign Affairs, announced the conclusion of negotiations to modernize the Canada-Chile Free Trade Agreement (CCFTA). The announcement took place on the margins of the Seventh Summit of the Americas in Panama City.

The modernized agreement contains a new chapter on sanitary and phytosanitary measures that will strengthen bilateral cooperation and collaboration on SPS-related issues and formalize the existing CCFTA SPS Committee, established in 2001. It will also establish a new bilateral commitment to facilitate early and effective dialogue to resolve SPS-related issues affecting bilateral trade and help ensure that market access benefits under the CCFTA are not undermined by unjustified barriers to trade. Updates to the government procurement chapter aim to enhance administrative efficiency by allowing Canadian and Chilean procuring entities greater flexibility in setting tendering periods in cases where electronic tendering is used. In addition, both countries agreed to bring amendments to CCFTA rules of origin into force as soon as possible. Amendments to CCFTA rules of origin will liberalize certain rules of origin, resulting in enhanced market access for Canadian goods such as chemical products and plastics, base metals, machinery and appliances.

US - OFAC amends Syrian Sanctions Regulations
On April 13, 2015, the Office of Foreign Assets Control (OFAC) published in the Federal Register a final rule amending the Syrian Sanctions Regulations to authorize by general license certain activities relating to publishing, not already exempt from regulation, that support the publishing and marketing of manuscripts, books, journals, and newspapers in paper and electronic format.
US - AESDirect to migrate into ACE this fall

On April 10, 2015, the U.S. Census Bureau announced in an e-mail newsletter that the AESDirect export filing application will be migrated into the International Trade Data System’s Automated Commercial Environment (ACE). In addition, a comprehensive export report feature will be available to filers and USPPIs to facilitate their business processes.

The migration is part of the Presidentially mandated single window system for exports and imports. ACE will be the hub to fulfill this directive (See Executive Order). Integrating AESDirect into AES/ACE will eliminate the need to maintain two data collection systems for exports.

The migration will occur in stages:

• Summer 2015: The account registration and export reports feature will be available. Filers and USPPI’s can begin registering for ACE accounts and request approval for access to their export data.
• Fall 2015: The AESDirect application will be available for filer use. Those who have already registered for an ACE account will have access immediately and all others will need to submit an ACE account application form to access the new AESDirect filing system.
• Early 2016 (tentatively): AESDirect EDI Upload and Weblink functionality will be deployed following the release of the AESDirect filing application.

Details regarding account availability, the registration process and transitioning to the new system will be provided over the next few months. According to the Census Bureau, the new filing application will encompass all of the features inherent in both of the current online and offline filing applications (AESDirect & AESPcLink) as well as enhancements, to include: auto-save feature, saving partial shipments, saving complete shipments for later submission, option to view interface in Spanish, user administration and the creation of profiles and templates.

US - President continues national emergency with respect to Somalia

On April 10, 2015, the Federal Register published Presidential Notice of April 8, 2015 - Continuation of the National Emergency With Respect to Somalia, which continues for 1 year the national emergency originally declared in Executive Order (EO) 13536 of April 12, 2010 to deal with “the unusual and extraordinary threat to the national security and foreign policy of the United States constituted by the deterioration of the security situation and the persistence of violence in Somalia, acts of piracy and armed robbery at sea off the coast of Somalia, which have repeatedly been the subject of United Nations Security Council (UNSC) resolutions, and violations of the arms embargo imposed by the UNSC.”

Additional steps were taken in EO 13620 of July 20, 2012 in view of UNSC Resolutions 2036 of February 22, 2012, and 2002 of July 29, 2011, and to address: exports of charcoal from Somalia, which generate significant revenue for al-Shabaab; the misappropriation of Somali public assets; and certain acts of violence committed against civilians in Somalia. The national emergency is being continued because the situation with respect to Somalia continues to pose an unusual and extraordinary threat to the national security and foreign policy of the United States.

Canada - Bonded Warehouse regulations amended

On April 7, 2015, the Canada Gazette published the Regulations Amending the Customs Bonded Warehouses Regulations (SOR/2015-70, March 27, 2015). The amendments to the Regulations include removing the annual fee for a licence to operate a Customs Bonded Warehouse (CBW). The removal of the annual licence fee will help facilitate and promote access to the CBW Program, contributing to the Government’s 2013 budget commitment of enhancing Canada’s Foreign Trade Zone (FTZ)-like programs.

The Duty Deferral Program (DDP), which is administered by the Canada Border Services Agency (CBSA), relieves customs duties on imported goods that are subsequently exported. This is Canada’s main FTZ-like program, deferring or refunding approximately $1 billion of duties and taxes per year to some 2 000 clients. A key component of the DDP includes the deferral of duties and taxes, generally for up to four years, through the CBW Program.

The amendments to the Regulations also replace the term “Minister” in the Regulations with “Minister of Public Safety and Emergency Preparedness.” The term “Minister” was previously defined as the Minister of National Revenue.

The analysis accompanying the Regulation amendments states that:

By eliminating the fee associated with operating a CBW, businesses will have lower costs when attempting to access a CBW, which will help entrepreneurs in the development of manufacturing, and processing warehouse hubs in strategic locations through-out Canada. By reducing the costs to business in accessing Canada’s DDPs, the implementation of these Regulations will enhance Canada’s global business environment, providing a foundation that is more attractive to foreign investment in Canada while helping to create jobs for Canadians and fostering long-term economic growth.

Canada - List of Entities amended

On April 7, 2015, the Canada Gazette published the Regulations Amending the Regulations Establishing a List of Entities (SOR/2015-87, April 2, 2015). The Regulations support the Government of Canada’s efforts to protect Canadians against the threat of terrorism. Section 1 of the Regulations Establishing a List of Entities is amended by adding “Islamic State–Sinai Province (ISSP)” to the list of terrorist entities and its aliases: “Ansar Bayt al-Maqdis,” “Ansar Jerusalem,” and “Islamic State–Sinai State.”

The listing of terrorist entities facilitates the prosecution of perpetrators and supporters of terrorism and plays a key role in countering terrorist financing. The listing of an entity means that the entity’s property can be the subject of seizure/restraint and/or forfeiture. In addition, insti-tutions, such as banks and brokerages, are subject to reporting requirements with respect to an entity’s property and must not allow those entities to access the property nor may these institu-tions deal with or otherwise dispose of the property.



US - CITA removes product from Annex 3.25 of CAFTA-DR
On April 8, 2015, the Committee for the Implementation of Textile Agreements (CITA) published in the Federal Register a determination to remove a product currently included in Annex 3.25 of the Dominican Republic-Central America- U.S. Free Trade Agreement (CAFTA-DR). CITA determined that certain three-thread circular knit fleece fabrics (HTS Subheading 6001.21.0000), more fully described in the Federal Register, are available in the CAFTA-DR countries in commercial quantities in a timely manner. The product, which is currently included in Annex 3.25 of the CAFTA-DR Agreement in unrestricted quantities, will be removed, effective 180 days (October 5, 2015) after publication of this notice.
Vietnam - Guidance on import duty exemption for medical equipment

The Ministry of Finance promulgated the Circular No. 10/2015/TT-BTC (Jan. 29, 2015) detailing the implementation of the Decision No. 54/2014/QD-TTg dated September 19, 2014 by the Prime Minister on duty exemption for imported components used for manufacturing and assembling medical equipment which are given priority in research and production.

The duty exemption is applied to components such as imported electronic components, semi-conductor parts, and mechanical parts to assemble complete products with the conditions as follows:

• The goods are imported for manufacturing, assembling medical equipment with fundamental technical specifications mentioned in the annex of the Decision No. 54/2014/QĐ-TTg.
• Imported components have been not manufactured domestically as stipulated in Circular No. 04/2012/TT-BKHĐT dated August 13, 2012 by the Ministry of Planning and Investment and related guidance by this Ministry.
• Imported components have been not produced domestically for manufacturing and assembling medical equipment which are prioritized in researching and manufacturing under the projects as regulated the annex of the Decision No. 54/2014/QĐ-TTg permitting import duty exemption for 5 years since the projects start producing and assembling products.

Once the projects start their operation, the determination of duty-free deadline is made in accordance with the guidance regulated in the item No. 15, Article No. 100 of Circular No.128/2013/TT-BTC dated September 10, 2013 by the Ministry of Finance.

The dossiers of registering the list of duty- free imports, dossiers of duty exemption and of drawing the balance sheet and regulations on using imported medical components are carried out in the light of Circular No.128/2013/TT-BTC. Circular No. 10/2015/TT-BTC came into force March 3, 2015.

US - OFAC releases advanced format for the Consolidated Non-SDN data files

On April 6, 2015, the Office of Foreign Assets Control (OFAC) released a new format for OFAC’s Consolidated Sanctions List Data Files. 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. OFAC previously released the Specially Designated Nationals List (SDN) in the new advanced format. The Consolidated Sanctions List Data Files were last updated on December 17, 2014. The April 6 release adds a new format for the existing data.

For FAQs regarding the new format, please click here.

US - BIS revises EAR for 2014 Missile Technology Control Regime
On April 7, 2015, the Bureau of Industry and Security, Commerce (BIS) published in the Federal Register a final rule [Docket No. 141204999-5186-01] that amends the Export Administration Regulations (EAR) to reflect changes to the Missile Technology Control Regime (MTCR) Annex that were agreed to by MTCR member countries at the September and October 2014 Plenary in Oslo, Norway, and pursuant to the 2014 Technical Experts Meeting in Prague, Czech Republic. This rule also makes conforming changes to correlate the Commerce Control List (CCL) (Supplement No. 1 to Part 774 of the EAR) with the current MTCR Annex. This final rule revises six Export Control Classification Numbers (ECCNs) to implement the changes that were agreed to at the meetings and to better align the MT controls on the CCL with the MTCR Annex.
US - OFAC posts guidance on Iran Plan

On April 3, 2015, the Office of Foreign Assets Control (OFAC) issued guidance relating to the April 2, 2015 announcement of parameters for a Joint Comprehensive Plan of Action regarding the Islamic Republic of Iran's Nuclear Program. The guidance summary stated:

• The parameters announced on April 2, 2015 for a Joint Comprehensive Plan of Action (JCPOA) by the P5+1 and Iran do not immediately relieve, suspend or terminate any sanctions on Iran. The only sanctions relief in force is the relief provided pursuant to the Joint Plan of Action (JPOA) reached on November 24, 2013 and extended through June 30, 2015.
• The parameters announced on April 2, 2015 provide a path for sanctions on Iran to be suspended and eventually terminated in exchange for IAEA verified implementation by Iran of its key nuclear commitments.
• As of today and until a JCPOA is concluded, other than the sanctions relief provided under the JPOA, all U.S. sanctions remain in place and will continue to be vigorously enforced.
• The sanctions relief provided for under the JPOA reached on November 24, 2013 remains in effect, as described in published Guidance and Frequently Asked Questions

US - COAC meeting

On April 6, 2015, U.S. Customs and Border Protection (CBP) published in the Federal Register a notice [Docket No. USCBP–2015–0011] announcing that the Advisory Committee on Commercial Operations to U.S. Customs and Border Protection (COAC) will meet on April 24, 2015, in Washington, DC. The meeting will be open to the public. Meeting participants may attend either in person or via webinar after pre-registering using a method indicated in the notice.

COAC will hear from the following 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 One U.S. Government Subcommittee will discuss the Automated Commercial Environment, Partner Government Agencies and International Interoperability (World Customs Organization).
2. The Exports Subcommittee will address policy and a strategic approach regarding exports. The subcommittee will work in close collaboration with One U.S. Government Subcommittee.
3. The Trade Enforcement Subcommittee will discuss policy to include metrics and implementation through Centers of Excellence and Expertise.
4. The Global Supply Chain Subcommittee will discuss Customs— Trade Partnership Against Terrorism, Land ports of entry (Canada and Mexico), Ocean Cargo, In-Transit and Air Cargo Advance Screening.
5. The Trusted Trader Subcommittee will start work once the pilot has advanced to the implementation phase for testing U.S. Customs and Border Protection and Partner Government Agency trade benefits.
6. The Trade Modernization Subcommittee will discuss International Strategy (World Trade Organization Trade Facilitation Agreement, Trans Pacific Partnership, and World Customs Organization), Trade Expertise and Revenue Modernization.

Japan extends ban on North Korean imports and exports

On March 31, 2015, the Ministry of Economy, Trade and Industry (METI) announced that it has decided to extend the ban on all exports destined for North Korea, and all imports originating in or shipped from North Korea, in line with the “Measures against North Korea Pursuant to the Foreign Exchange and Foreign Trade Act” (decided by the Cabinet on March 31, 2015).

The ban on all exports of goods destined for North Korea will be extended by imposing the requirement that exporters obtain export approval from the Minister of Economy, Trade and Industry (related article: Article 48, Paragraph 3 of the Foreign Exchange and Foreign Trade Act [the Act]).

The ban on all imports of goods originating in or shipped from North Korea will be extended by imposing the requirement that importers obtain import approval from the Minister of Economy, Trade and Industry (related article: Article 52 of the Act).

To ensure the enforcement of these restrictions, the following transactions shall be banned:

• Transactions involving buying/selling, loaning/borrowing, or giving of goods that involve the movement of the goods between North Korea and third countries (intermediate trade) (related article: Article 25, Paragraph 6 of the Act); and
• Payments of import bills for goods originating in or shipped from North Korea which are imported without import approval (related article: Article 16, Paragraph 5 of the Act).

Goods exported for humanitarian purposes are exempt from the above restrictions. These restrictions will enter into effect from April 14, 2015, to April 13, 2017.

Australia’s expanded autonomous sanctions relating to Russia commenced on 31 March 2015

Australia imposed targeted financial sanctions and travel bans relating to Russia against designated persons and entities in June and September 2014. Expanded sanctions were announced in September 2014. Following a consultation period, the expanded regime, Autonomous Sanctions (Russia, Crimea and Sevastopol) Specification 2015, has just taken effect.

The expanded sanctions restrict:

• export to and import from Russia of arms and related materiel;
• export to Russia of specified items for use in petroleum exploration and production;
• export to Crimea and Sevastopol of specified items for use in the energy and minerals sector;
• commercial dealing with certain capital financial market instruments issued by certain Russian state-owned entities; and
• Australian investment in Crimea and Sevastopol related to infrastructure, transport, telecommunications, energy, oil, gas and minerals sectors.

The expanded sanctions are aligned with sanctions implemented by the EU, Canada and the US. Several changes to the draft regulations were made to more closely align with the approach taken by the EU (e.g., to seek to have consistent definitions of prohibited activities and include some EU carve outs from the restrictions). Another important change was to narrow the scope of restricted services from what was originally proposed.

Details of the new sanctions can be found here. For additional information, please contact Anne l. Petterd of our Sydney office.

US - Executive Order targeting malicious cyber-enabled activities issued

On April 1, 2015, President Obama issued Executive Order 13694 - Blocking the Property of Certain Persons Engaging in Significant Malicious Cyber-Enabled Activities (the “Cyber EO”) (the “Cyber EO”) authorizing the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) to designate as Specially Designated Nationals (SDNs) certain persons that have engaged in “significant malicious cyber-enabled activities.” No party has yet been designated under the Cyber EO. OFAC has stated in its Frequently Asked Questions (FAQs) that the Cyber EO is “intended to address situations where, for jurisdictional or other issues,” significant actors “may be beyond the reach of other authorities available to the U.S. government,” which is similar to the intent behind certain other OFAC programs, such as the Foreign Sanctions Evaders program.

U.S. Persons and persons otherwise subject to OFAC jurisdiction (e.g., non-U.S. persons that cause prohibited acts to occur in the United States or by U.S. Persons) are prohibited from dealing with SDNs, as well as their 50%-or-more owned entities (collectively, “Blocked Persons”). In addition, the property and interests in property of such Blocked Persons must be frozen if they come within the United States or the possession/control of a U.S. Person.

The Cyber EO targets a broad range of “cyber-enabled activities” that are “reasonably likely to result in, or have materially contributed to, a significant threat to the national security, foreign policy, or economic health or financial stability of the United States.” In particular, the Cyber EO authorizes designation of (i) parties “responsible for or complicit in or [who] have engaged in, directly or indirectly, cyber-enabled activities” that originate or are directed from outside the United States and that have the purpose or effect of:

• harming, or otherwise significantly compromising the provision of services by, a computer or network of computers that support one or more entities in a critical infrastructure sector;
• significantly compromising the provision of services by one or more entities in a critical infrastructure sector;
• causing a significant disruption to the availability of a computer or network of computers; or
• causing a significant misappropriation of funds or economic resources, trade secrets, personal identifiers, or financial information for commercial or competitive advantage or private financial gain.

In addition, the Cyber EO authorizes designation of (ii) parties “responsible for or complicit in or [who] have engaged in . . . the receipt or use for commercial or competitive advantage or private financial gain, or by a commercial entity, outside the United States of trade secrets misappropriated through cyber-enabled means, knowing they have been misappropriated,” as well as (iii) parties who have “materially” supported parties blocked pursuant to the Cyber EO, (iv) parties who are owned or controlled by, or acting or purporting to act on behalf of those blocked parties, and (v) parties that have attempted to engage in the targeted activities.

According to OFAC’s accompanying FAQs, the term “cyber-related activities” will be further defined in forthcoming OFAC regulations. For current purposes, these activities include “deliberate activities accomplished through unauthorized access to a computer system, including by remote access; circumventing one or more protection measures, including by bypassing a firewall; or compromising the security of hardware or software in the supply chain.” OFAC’s FAQs clarify that the Cyber EO is not meant to target:

• legitimate network defense or maintenance activities performed by computer security experts and companies as part of the normal course of business on their own systems, or systems they are otherwise authorized to manage;
• legitimate activities to ensure and promote the security of information systems, such as penetration testing and other methodologies;
• activities to prevent or interfere with legitimate cyber-enabled activities undertaken to further academic research or commercial innovation as part of computer security-oriented conventions, competitions, or similar “good faith” events; or
• unwitting owners of compromised computers.

For additional information, please contact Maria H. van Wagenberg, Lise S. Test or Janet K. Kim, of our Washington, DC office, or any member of our Outbound International Trade group with whom you normally work. Check our Sanctions blog for any updates.

Australia - New Customs Regulation 2015 and Customs (International Obligations) Regulation 2015 take effect 1 April

Australian Customs and Border Protection (ACBP) Notice No. 2015/14 dated 31 March 2015 announced that the Customs Regulation 2015 (2015 Regulation) and Customs (International Obligations) Regulation 2015 (International Obligations Regulation) take effect from 1 April 2015. These regulations remake the Customs Regulations 1926 (the 1926 Regulations), which sunset on the same date.

According to the notice, the new regulations have undergone changes to significantly improve their operation including repealing redundant provisions, simplifying language and restructuring provisions that were difficult to navigate in the 1926 Regulations. Exposure drafts of the new regulations were published earlier in 2015. Provisions relating to Australia’s international obligations including Free Trade Agreements, Duty Drawback Scheme and Dumping and Counterveiling measures are contained in the International Obligations Regulation. These provisions are exempt from sunsetting requirements and have been placed in a separate instrument to ensure that they are not subject to sunsetting in the future.

The notice explains that the new regulations are necessary because the Legislative Instruments Act 2003 (LIA) provides that all legislative instruments, other than exempt instruments, progressively ‘sunset’ according to the relevant table set out in the LIA. The purpose of this is to ensure that a suitable review mechanism exists so that legislative instruments remain relevant, necessary and fit-for-purpose. The relevant table provides that any legislative instrument made a year before 1930 is to sunset on 1 April 2015. As such it was necessary to re-make the 1926 Regulations to ensure that relevant provisions continued post 1 April 2015.

The new regulations do not introduce any substantive changes to existing government policy, but they have .a different look and feel to the 1926 Regulations. Sections and numbering within the 1926 Regulations have necessarily been restructured and the contents split into two instruments as part of the process to enhance its overall operation.

Explanatory statements about the 2015 Regulation and the International Obligations Regulation are available. Finding tables are also available indicating the location of sections from the previous 1926 Regulations within the remade regulations and vice versa.

The new section numbering means the location of duty refund reason types within the new regulations differ from their location within the 1926 Regulations. More detail about these changes is available within the updated ‘Refunds of Customs Import Duty’ fact sheet. The notice states that:

The new regulations contain transitional provisions to ensure that things done under the 1926 Regulations, before those regulations were repealed, will continue to have effect (if there is a corresponding provision in the new regulation) as if it had been done under the new regulation.

Canada restores GPT and LDCT to Burma

On March 25, 2015, the Canada Gazette published the Order Amending Schedule to the Customs Tariff (Extension of General Preferential Tariff to Burma) (SOR/2015/62, March 13, 2015) and the Order Amending Schedule to the Customs Tariff (Extension of Least Developed Country Tariff to Burma) (SOR/2015/63, March 13, 2015), which extend entitlement to the General Preferential Tariff (GPT) and Least Developed Country Tariff (LDCT) tariff treatments to imports originating from Burma.

Canada extends unilateral preferential tariff rates to imports from developing and least developed countries through two tariff treatments:

• the GPT offers tariff rates that are lower than Most-Favoured-Nation (MFN) Tariff rates to goods imported from developing countries identified in the Schedule to the Customs Tariff; and
• the LDCT offers duty-free access on the importation into Canada of all products (with the exception of supply-managed agricultural goods) from least developed countries, as identified by the United Nations and listed in the Schedule to the Customs Tariff.

Burma’s eligibility for the GPT and the LDCT was removed in 1997 as part of a global concerted response to the human rights situation in that country (see SOR/97-398). In recent years, there have been positive developments in Burma, notably elections in 2010 that led to a transition to civilian rule, the release of political prisoners, economic reforms, and the introduction of new laws to protect freedom of association and assembly.

In light of these positive developments, countries are gradually easing sanctions and normalizing trade relations with Burma. In that regard, Canada has already taken a number of actions towards normalizing relations with Burma. On April 24, 2012, Canada eased economic sanctions taken against Burma. Canada has also opened an embassy in Yangon and appointed its first-ever resident ambassador to Burma. Reinstating GPT and LDCT eligibility for Burma is consistent with these actions.

US - Department of Energy Regulations on Nuclear Assistance to Go Into Effect

On March 25, 2015, a reissued version of the U.S. Department of Energy (“DOE”) regulations on “Assistance to Foreign Atomic Energy Activities,” 10 C.F.R. Part 810 (“Part 810” or “the DOE Regulations”), go into effect. The DOE Regulations control the provision outside the United States of technology and other assistance related to nuclear projects, including civil nuclear power projects. The rule issued on February 23, 2015 (“Final Rule”) finalizes amendments that have been under consideration since 2011. The changes to the DOE Regulations affect, in particular, the authorization and reporting requirements that apply to parties engaging in activities within the scope of Part 810. Most importantly, certain activities previously eligible for a general authorization now require specific approval from DOE. Parties engaging in activities affected by this change are required to request specific authorization by August 24, 2015.

Background

Several different sets of U.S. regulations control the exportation of nuclear-related items or activities, as follows:

• The International Traffic in Arms Regulations, 22 C.F.R. Part 120 et seq., enforced by the U.S. Department of State, which control the export/reexport of nuclear weapons and related technical data;
• The regulations at 10 C.F.R. Part 110 (“Part 110” or “the NRC Regulations”), enforced by the U.S. Nuclear Regulatory Commission, which control the export/retransfer of nuclear material and equipment;
• Part 810, enforced by DOE, which controls the provision abroad of nuclear-related technology or assistance; and
• The Export Administration Regulations, 15 C.F.R. Part 730 et seq. (“EAR”), enforced by the U.S. Department of Commerce, which control the export/reexport of “dual use” goods, software, and technology.

Part 810 applies to “persons subject to U.S. jurisdiction,” which include not only U.S. citizens/permanent residents and U.S. companies but also licensees, contractors, or subsidiaries under their direction, supervision, responsibility, or control. Activities within the scope of the DOE Regulations may only proceed pursuant to general or specific authorizations. Activities that are eligible for general authorizations are subject to post-transaction reporting obligations requiring that a report be submitted to DOE within 30 calendar days of beginning the activity. Generally authorized activities do not, however, require pre-transaction approval from DOE. Activities not eligible for a general authorization require specific authorization from DOE before the activities may permissibly proceed.

Prior to the publication of the Final Rule, the DOE Regulations had not been comprehensively updated since 1986. DOE first published a proposed rule to update Part 810 in September 2011. Based on the numerous comments that DOE received from the public in response to that proposed rule, DOE published a supplemental proposed rule in August 2013. The Final Rule, published on February 23, 2015, notes that the extensive revisions to Part 810 are designed to ensure that the regulations remain “effective and efficient” in light of increasing commercial nuclear activities.

Key Changes

The Final Rule includes changes to virtually every section of the DOE Regulations. Some of these changes merely update the DOE Regulations to reflect longstanding interpretations applied by DOE but not explicitly reflected in the regulations. Others have a more substantive effect on the regulatory requirements that apply to parties engaging in Part 810-regulated activities. In some cases, these changes create new specific authorization requirements for activities that were previously generally authorized. Parties engaging in activities that were previously eligible for a general authorization but are now subject to a specific authorization requirement due to the revised DOE Regulations must submit a specific authorization request to DOE by August 24, 2015. Provided such an authorization request is submitted by that date, parties may continue to engage in these activities until DOE acts on the specific authorization request.

Below we list some of the key changes to the DOE Regulations presented in the Final Rule.

1. Clarifying the Scope of the DOE Regulations

Historically, parties have often struggled with the threshold question of whether their activities are subject to the DOE Regulations. The provision describing the scope of the prior DOE Regulations stated only that general or specific authorization was required to engage in the production outside the United States of Special Nuclear Material (i.e., plutonium, uranium-233, or uranium enriched above 0.711 percent by weight in the isotope uranium-235). While Part 810 previously listed certain activities deemed to be within their scope, the list was high-level and did not indicate which aspects of a particular activity would be controlled.

The revised DOE Regulations provide further clarity on this issue. For example, DOE has historically interpreted certain activities involving civilian nuclear reactors to be within the scope of Part 810 because Special Nuclear Material is a by-product of the nuclear reaction used to generate power. This was not expressly stated anywhere in the prior version of the DOE Regulations. The revisions to these regulations, however, clarify where DOE draws the line today and formalizes what had already become a de facto basis for analysis for many companies. The new language is similar to language that the NRC uses to describe which nuclear equipment is subject to Part 110. Specifically with regard to civil nuclear reactors, the revisions add language to Part 810 stating that activities for the development, production, or use of the following are within the scope of Part 810:

• components within or attached directly to the reactor vessel,
• the equipment that controls the level of power in the core, and
• the equipment or components that normally contain or come in direct contact with or control the primary coolant of the reactor core.

Furthermore, although it is not included in the text of Part 810, DOE clarified in its commentary in the Final Rule that activities related to the steam turbine generator portion of a boiling water reactor are not subject to Part 810 and are controlled under the EAR.

2. Revising the Countries Eligible for Country-Based General Authorization

Arguably the most significant changes to the DOE Regulations are the revisions to the scope of a general authorization for assistance to certain countries. Previously, Part 810 included a list of countries that were not eligible for the country-based general authorization provided at § 810.7(h) (“Excluded Country List”). So long as a nuclear-related activity did not involve one of those excluded countries (or certain highly-restricted technologies or activities), the activity was eligible for a general authorization and did not require specific authorization from DOE.

Under the revised DOE Regulations, this approach is reversed. Now, the country-based general authorization found in § 810.6(a) is available only for countries that appear on a list provided in an Appendix to the Regulations (“Eligible Country List”). In other words, the reissued DOE Regulations contain a positive list of countries eligible for the general license, rather than a negative list of countries not eligible.

In some cases (e.g., Croatia (as part of the former Yugoslavia), Kazakhstan, the United Arab Emirates, Vietnam), countries previously on the Excluded Country List and subject to a specific authorization requirement for Part 810-controlled activities are now eligible for the country-based general authorization under the revised DOE Regulations. On the other hand, numerous countries (e.g., Jordan, Malaysia, New Zealand, Singapore) that were previously eligible for the country-based general authorization are now subject to a specific authorization requirement. In its commentary in the Final Rule, DOE advised that these changes reflect an updated assessment of the nuclear proliferation risks that exist around the world. Finally, although Mexico and Chile were not previously identified on the Excluded Country List, under the new DOE Regulations the eligibility of these countries for the country-based general authorization is limited to activities related to specific International Atomic Energy Agency agreements.

3. Creating Ukraine Reporting Requirements

In the previous version of the DOE Regulations, Ukraine was identified on the Excluded Country List and was not eligible for the country-based general authorization. In light of actions taken by Ukraine to prevent nuclear proliferation (as well as the U.S. Government’s concern about Ukraine’s ability to sustain its nuclear program without support from the Russian Federation during the ongoing dispute between those two countries), DOE included Ukraine in the new Eligible Country List. Thus, many nuclear-related activities involving Ukraine no longer require specific authorization from DOE.

Nevertheless, DOE expressed concerns in its commentary in the Final Rule about tensions between Russia and Ukraine and, particularly, the Government of Ukraine’s lack of control over certain territories. To address these risks, the revised DOE Regulations include new requirements for (i) pre-activity notifications to be submitted to DOE 10 days before engaging in a generally authorized activity involving Ukraine, and (ii) post-activity reports to be submitted to DOE within 10 days of transferring any nuclear technology to Ukraine. DOE made clear in the Final Rule that the pre-activity notification requirement is designed to provide DOE with information necessary to assess whether the activity raises proliferation concerns. If DOE has concerns, it can bar the activity from occurring under the general authorization and impose a specific authorization requirement. The requirement to submit post-activity reports within 10 days is shorter than the 30 day requirement that applies to generally authorized activities involving other countries.

4. Formalizing the Deemed Export Rule

The previous version of the DOE Regulations did not explicitly address the release of technology to non-U.S. nationals (so-called “deemed exports”). Nevertheless, DOE has long maintained that such releases (whether within or outside of the United States) were subject to the DOE Regulations. Pursuant to DOE practice, if the recipient of Part 810-controlled technology or assistance was a national of a country not eligible for the general authorization, then the release of technology or assistance to that recipient would require specific authorization from DOE. For dual-nationals, DOE traditionally considered whether either nationality would trigger a specific authorization requirement.

DOE’s revisions to Part 810 explicitly confirm DOE’s pre-existing position on deemed exports. For non-U.S. nationals who are nationals of a country not listed on the Eligible Country List, a specific authorization request before the transfer may proceed. In its commentary in the Final Rule, DOE explicitly affirmed its approach of considering “all countries of an individual’s allegiance” (e.g., both nationalities of dual-nationals) when making determinations of whether specific authorizations are required. Thus, if an individual is a national of two countries, one of which is not on the Eligible Country List, then specific authorization from DOE is required before Part 810-controlled technology is released to that individual.

The revised DOE Regulations also provide instructions for requesting specific authorization for deemed exports. Under the new regulations, an application for specific authorization to transfer Part 810-controlled technology to a non-U.S. national must include a description of the technology to be transferred, the purpose of the transfer, background information about the foreign national, a copy of any confidentiality agreement safeguarding nuclear technology, and a signed statement from the non-U.S. national certifying that he or she will comply with Part 810’s requirements.

5. Creating a General Authorization for Deemed Exports to Certain Employees of NRC Facilities

The revised DOE Regulations include a new general authorization authorizing the transfer of nuclear technology to non-U.S. nationals of countries not on the Eligible Country List who work at an NRC-licensed facility. To qualify for this general authorization, the non-U.S. national must have been granted unescorted access at an NRC-licensed facility in accordance with NRC regulations.

Recommended Actions

Parties that engage in any activities subject to Part 810 (including activities that occur within the United States but involve non-U.S. national employees or contractors) should carefully review the revised DOE Regulations to determine whether their activities are subject to new specific authorization requirements or are eligible for new general authorizations. If any ongoing activities are now subject to a specific authorization requirement because of the changes to Part 810, a request for specific authorization must be submitted to DOE by August 24, 2015.

For additional information, please contact Joseph A. Schoorl, Kerry Contini, Nicholas Coward, Edward Dyson or any member of our Outbound practice with whom you normally work. Please check our sister blog www.bakermckenzie.com/sanctionsnews for updates.

UK adopts standardised packaging and labelling requirements for cigarettes and hand rolling tobacco

On 24 March 2015, the UK legislative website published SI 2015/829 - The Standardised Packaging of Tobacco Products Regulations 2015 (the Regulations). The Regulations were made by the Secretary of State for Health in exercise of the powers conferred by sections 94 and 135(2) and (3) of the Children and Families Act 2014 and section 2(2) of the European Communities Act 1972. The Regulations come into force on 20 May 2016 except that they do not apply to the supply before 21 May 2017 of a tobacco product produced before 20th May 2016 if the product complies with the Tobacco Products (Manufacture, Presentation and Sale) (Safety) Regulations 2002 at the date of supply.

The Explanatory Note accompanying the Regulations summarizes them as follows:

These Regulations make provision for the retail packaging of cigarettes and hand rolling tobacco to be standardised.

These Regulations implement Articles 13 and 14, and one element of Article 9.3, of Directive 2014/40/EU of the European Parliament and of the Council of 3rd April 2014 on the approximation of the laws, regulations and administrative provisions of the Member States concerning the manufacture, presentation and sale of tobacco and related products (OJ No. L 127 29.4.2014, p1).

Regulations 3 and 7 prescribe the sole colours that are permitted to be used on the external and internal surfaces of the retail packaging of cigarettes and hand rolling tobacco respectively. These two regulations do not prohibit anything that is required by any other enactment, which includes, but is not limited to, mandatory health warnings, security features and fiscal marks. These regulations are subject to the text permitted under Schedules 1 and 3 respectively.

Regulation 4 sets out requirements for individual packets of cigarettes. It stipulates the material that such packets must be made from, the shape that the packet must be, what openings are permitted and the minimum amount of cigarettes permitted in each individual packet. Regulation 8 sets out requirements for individual packets of hand rolling tobacco. It stipulates the shapes or type of packet that are permitted and the minimum weight of tobacco allowed in each packet. These two regulations implement Article 14, and one element of Article 9.3, of Directive 2014/40/EU.

Regulation 5 sets out requirements for the appearance of individual cigarettes, including the permitted colours and text, and the requirements for that text.

Regulation 10 prohibits elements or features of the labelling on the packaging or the actual products, if the element or feature has one of the effects set out in paragraph (3). Paragraph (4) prohibits retail packaging that suggests economic advantage. This regulation applies to all tobacco products. This regulation, together with regulation 19(3), implements Article 13 of Directive 2014/40/EU.

Regulation 11 prohibits packaging for cigarettes and hand rolling tobacco that produces a noise or smell that is not normally associated with that packaging. This does not prohibit any smell resulting from additives designed to give the cigarettes or hand rolling tobacco themselves a smell or flavour, where those additives are otherwise permitted.

Regulation 12 prohibits features of the packaging of cigarettes or hand rolling tobacco that are designed to change after the product has been sold to the consumer.

Regulation 13 makes provisions concerning the registration, under the Trade Marks Act 1994, of trade marks the use of which is affected by these Regulations.

Regulation 14 makes provisions concerning the registration, under the Registered Design Act 1949, of designs the use of which is affected by these Regulations.

Regulations 15 to 18 make provision for offences and enforcement.

Regulation 19(1) and(2) amend section 3(1) of the Children and Young Persons (Protection from Tobacco) Act 1991 and article 4(1) of the Children and Young Persons (Protection from Tobacco) (Northern Ireland) Order 1991, to remove the requirement that cigarette packets must have a minimum of 10 cigarettes. Article 14 of Directive 2014/40/EU provides that packets must have a minimum of 20 cigarettes.

Regulation 19(3) revokes regulation 4 of the Tobacco Products (Manufacture, Presentation and Sale) (Safety) Regulations 2002 which requires packets of cigarettes to carry a statement of the tar, nicotine and carbon monoxide yields of the cigarettes contained in it. Such statements are now prohibited by Article 13(1)(a) of Directive 2014/40/EU.

Schedule 1 sets out what text is permitted on the retail packaging of cigarettes. Schedule 3 sets out what text is permitted on the retail packaging of hand rolling tobacco. These schedules also set out the colour, typeface, size, location and orientation of the permitted text, and make provision for the use of barcodes and calibration marks on that packaging.

Schedules 2 and 4 make further provisions about the packaging of cigarettes and hand rolling tobacco in respect of the surfaces of the packaging, any lining inside packets of cigarettes, tabs or seals on packets of hand rolling tobacco and in respect of any wrappers. The schedules prohibit inserts or additional materials that are not an integral part of the packaging, required as part of the packaging process or required to protect the product.

A draft of these Regulations has been notified to the European Commission as a technical standard, pursuant to Directive 98/34/EC of the European Parliament and of the Council (OJ No l204, 21.7.98, p 37) laying down a procedure for the provision of information in the field of technical standards and regulations, as amended.

US - Government procurement - list of domestically nonavailable articles

On march 24, 2015, the Department of Defense (DoD), the General Services Administration (GSA) and the National Aeronautics and Space Administration (NASA) published in the Federal Register an advance notice of proposed rulemaking [FAR Case 2015-001; Docket No. 2015-0001; Sequence No. 1] indicating that DoD, GSA, and NASA are considering amending the Federal Acquisition Regulation (FAR) to update the list of domestically nonavailable articles under the Buy American Act. DoD, GSA, and NASA are seeking information that will assist in identifying domestic capabilities and for evaluating whether some articles on the list of domestically nonavailable articles are now mined, produced, or manufactured in the United States in sufficient and reasonably available commercial quantities and of a satisfactory quality.

Interested parties should submit written comments to the Regulatory Secretariat at one of the addressees shown in the Federal Register notice on or before May 26, 2015 to be considered in the formulation of a proposed rule.



U.S.- Brazil Commercial Dialogue meeting

On March 19, 2015, Kenneth Hyatt, Deputy Under Secretary for International Trade, U.S. Department of Commerce (Commerce), and Daniel Godinho, Secretary of Foreign Trade, Ministry of Development, Industry and Foreign Trade (MDIC), released a joint statement, which outlines the results of the March 18-19, 2015, meeting of the U.S.-Brazil Commercial Dialogue in Washington, D.C. The Joint Statement covered the following topics:

• Standards and Regulatory Engagement
• Trade Facilitation
• Trade Statistics
• Intellectual Property Cooperation
• Industry and Investment
• Standards and Metrology
• Services and Supply Chains

Read about the details for each topic in the Joint Statement.

EEA Joint Parliamentary Committee discusses TTIP and industrial policy

The European Free Trade Association (EFTA) announced that on 17 March 2015, Members of the European Parliament (MEPs) and parliamentarians from the EEA EFTA States – Liechtenstein, Norway and Iceland – met in Fredrikstad to discuss developments in the EEA and other topical issues in the EU of relevance to the EEA EFTA States. The announcement said:

The EEA Joint Parliamentary Committee (EEA JPC) met with representatives of the EEA Joint Committee and the EEA Council to receive an update on recent developments in the EEA. As the EEA JPC’s primary objective is to follow developments in the EEA and to give its views on topics for discussion at the earliest stage possible, this biannual meeting is of great importance.

Another important topic on the EEA JPC’s agenda in Fredrikstad was the ongoing free trade negotiations between the United States and the European Union – the Transatlantic Trade and Investment Partnership (TTIP) – with a special focus on its possible implications for the EEA. The EEA EFTA States are closely integrated in the EU Single Market through the EEA Agreement and apply the same Single Market rules, so any impact that TTIP has on the Single Market is likely to affect the EEA EFTA States. The EEA JPC is therefore following these negotiations closely.

Also discussed at the meeting was industrial policy in Europe, in particular the impact that recent developments of a more horizontal policy approach taken at EU level could have on the EEA.

In addition to these in-depth discussions on industrial policy and the TTIP, a briefing was given by Catherine Stihler MEP on the status of the Digital Agenda. The Digital Single Market and challenges within digital technology are priority areas in the European Commission’s 2015 Work Programme and also of interest to the EEA JPC.

The next EEA JPC meeting will be held Brussels in autumn 2015.

EU issues trade and investment barriers report

On 19 March 2015, the European Commission announced the release of its Trade and Investment Barriers Report 2015. The report lists all major obstacles identified in the EU's priority markets. With 7 cases mentioned (Argentina, Brazil, China, India, Japan, Russia, and the United States) in the report Russia tops the list. China follows closely with 6 cases. The report outlines also 4 barriers both for India and Brazil and 3 cases respectively for Argentina and the US. The announcement states:

Barriers identified in the report include requirements to use locally-produced goods, or to be based in a country as a condition to obtain certain advantages. Discriminatory taxes and subsidies for domestic producers in Brazil or a new law in Russia requiring personal data to be stored on a local server are some examples of highly trade-distortive practices. This trend is a concern in a wider perspective, as several other countries – including China - have adopted or are contemplating similar measures.

The report also identifies a high number of sanitary and food-related barriers that persist in Brazil, China, the US and Russia, and highlights intellectual property rights issues in China and the US.

Canada, U.S. sign preclearance agreement

On March 16, 2015, the Government of Canada announced that Canadian Minister of Public Safety and Emergency Preparedness Hon. Steven Blaney and U.S. Secretary of Homeland Security Jeh Johnson signed the Agreement on Land, Rail, Marine and Air Transport Preclearance between the Government of Canada and the Government of the United States of America. The Agreement is a major commitment of the Beyond the Border Action Plan issued by Prime Minister Harper and President Obama in December 2011. The Agreement was signed in Washington following a meeting to discuss border security.

When it takes effect, the new Agreement will provide a legal framework that will enable the establishment of new preclearance operations in any of the four modes of transportation. It will allow the market to propose operations when and where it makes sense – facilitating trade and travel, and creating economic benefits for Canadians.

Quick Facts

• Preclearance operations were implemented in Canada for the first time in 1952, when U.S. preclearance officers began screening travellers for U.S.-bound planes at the Toronto International Airport. A formal preclearance agreement with the U.S. did not exist at that time; Canada and the U.S. reached their first air transport preclearance agreement in 1974.
• Each year, roughly 11 million passengers are pre-cleared for flights to the U.S. at eight Canadian airports under the current bilateral air preclearance framework – reducing wait times for these passengers and often reducing the number of connections they required.
• This historic new comprehensive Agreement covers all modes of travel, including air. When it enters into force, it would replace the existing air transport Agreement, which was signed in 2001. This single Agreement would ensure a consistent approach to all preclearance activities, regardless of the mode of transportation, making it easier to implement and govern preclearance activities in both countries.
• In the Beyond the Border Action Plan, in addition to negotiating a comprehensive approach to preclearance in the land, rail, marine and air modes, Canada and the U.S. committed to implementing a truck cargo pre-inspection pilot in Canada. Phase I of the pilot was implemented at the Pacific Highway crossing between British Columbia and Washington, from June to December 2013. Phase II was implemented at the Peace Bridge, between Ontario and New York, from February 2014 to January 2015. An evaluation of the pilot will be completed by July 31, 2015.

Australia - Government begins reviews of border fees, charges and taxes

The Australian Government has commissioned a joint review of charges, fees and taxes (Fees Review) at the border that will focus on identifying where the border charging arrangements can be improved to better support future border operations and outcomes for industry. The announcement stated:

The Fees Review will be led by Customs and Border Protection and the Department of Immigration and Border Protection (DIBP) and will be conducted jointly with the Department of Agriculture given similarities in certain charging arrangements.

The Fees Review is near completion with a number of recommendations put forward for Government consideration. Further information will be made available following Government decision on which recommendations to pursue.

Scope

The Fees Review will consider changes to current charges, fees and taxes as well as new approaches to charging in the future. It will include charges levied by Customs and Border Protection, DIBP and some import related fees and charges applied by the Department of Agriculture.

The Review will cover current major charging arrangements at the border, including:

Import Processing and Passenger Movement Charges levied by Customs and Border Protection.
• Import related fees and charges recovered by the Department of Agriculture such as full import declaration charges, container charges and registration fees.
Visa Application Charges administered by DIBP.
• Current and future cost recovery based charging for services, particularly those resulting from industry demand factors.

While the Review will focus on the major charging arrangements mentioned above, views on current and potential future charges outside these groups are welcome.

Refer to in-scope fees and charges for a detailed listing including current rates.

A number of other fees, charges and taxes will not form part of the Review, including:

• Customs Duty (including refunds, Tariff Concessions, Drawbacks), the Goods and Services Tax (GST) and other indirect taxes Customs and Border Protection collects on behalf of Commonwealth.
• Fees and charges recovered by the Department of Agriculture for services such as document assessments, inspections, treatments, export certification and post entry quarantine activities.

The Department of Agriculture is completing a comprehensive review of its cost recovery arrangement which will include fees and charges excluded from within the scope of this Review. Further information on these can be found on the Department of Agriculture’s website.

Visa Application Charges recently underwent changes. This Review will focus on examining the outcome of these changes, and look for opportunities for improvements within the current pricing framework.

Consultation

As part of the review process, we developed an Industry Consultation Paper to invite public comment on the Fees Review. The written submission period has now closed. We thank all those who contributed for their valuable feedback.

Customs and Border Protection and Agriculture have carefully considered all written submissions and held industry consultations in Sydney and Melbourne to discuss key propositions and capture industry feedback. A Summary Document has been developed which summarises the key issues raised in the submissions and at the industry consultation sessions. We will continue to meet with targeted working groups to explore and discuss the ideas outlined in the submissions and potential recommendations of the Fees Review to the Government.

Targeted industry consultation will occur shortly on the issues of Visa Application Charges and other charges administered by the Department of Immigration and Border Protection. These issues will be managed in a separate and more targeted consultative process.

More updates will be provided over the course of the review.

Position Papers

To facilitate the industry consultation sessions, draft position papers were developed and included a number of propositions for possible changes to border fees, charges and taxes, some of which were based on suggestions provided by industry following an invitation to make formal submissions to the Fees Review. Position papers were developed for the following topics:

High value goods
Low value goods
Broker, depot and warehouse licensing
Passenger Movement Charge
Differentiated traveller facilitation services

These papers did not constitute a government position. The propositions included within the draft papers were to be used to consult with industry and to seek their views on the merits of the propositions, possible implementation issues and improvements which could be made to improve charging arrangements.

To make it clear that the propositions did not demonstrate the government’s position a disclaimer was included on the cover sheet of each paper. The disclaimer reads:

“The purpose of this position paper is to present a range of border-related fees, charges and taxes for stakeholder consultation. This position paper does not constitute a position of government. Policy positions and options proposed in this paper may or may not be progressed by government, including in part or as a whole.”

The draft position papers were provided ahead of the industry consultation sessions and were a valuable vehicle for guiding the discussions. Based on feedback from the industry sessions a number of propositions will not be pursued.

US - CAFC upholds CVD on non-market economies

On March 13, 2015, the U.S. Court of Appeals for the Federal Circuit (CAFC) held the Department of Commerce’s (Commerce) imposition of both antidumping (AD) and countervailing duties (CVD) pursuant to a 2012 law that overruled the CAFC’s decision in GPX International Tire Corp. v. United States, 666 F.3d 732 (Fed. Cir. 2011) (“GPX I”), reh’g granted, 678 F.3d 1308 (Fed. Cir. 2012) (“GPX II”), and permitted Commerce to impose countervailing duties with respect to non-market economy (“NME”) countries retroactively to proceedings initiated on or after November 20, 2006 does not violate the Ex Post Facto Clause of Article I, Section 9 of the U.S. Constitution or the Due Process Clause of the Fifth Amendment to the U.S. Constitution.

In GPX I, the CAFC had found that Congress had ratified Commerce’s prior position (which did not permit the imposition of CVD on NME countries) by re-enacting the CVD law in 1988 and 1994. However, on March 13, 2012, less than three months after the release of the decision in GPX I, Congress enacted new legislation overruling that decision. The CAFC granted a rehearing (GPX II) and then remanded the case to the Court of International Trade (CIT) “for a determination of the constitutionality of the new legislation. On remand, the CIT rejected challenges to the new law under, inter alia, the Ex Post Facto Clause and the Due Process Clause of the U.S. Constitution. In the March 13 opinion, the CAFC affirmed the CIT’s determinations. GPX International Tire Corp. v. United States, (Case No. 2014-1188, 2014-1248, Fed. Cir. March 13, 2015).

US - President continues national emergency with respect to Iran

On March 11, 2015, President Obama signed a Presidential Notice entitled Continuation of the National Emergency with Respect to Iran, which extends for an additional year the national emergency with respect to Iran first declared in Executive Order (EO) 12957 (March 15, 1995). On May 6, 1995, the President issued EO 12959, imposing comprehensive sanctions on Iran to further respond to this threat. On August 19, 1997, the President issued EO 13059, consolidating and clarifying the previous orders. Additional steps were taken in EO 13553 of September 28, 2010, EO 13574 of May 23, 2011, EO 13590 of November 20, 2011, EO 13599 of February 5, 2012, EO 13606 of April 22, 2012, EO 13608 of May 1, 2012, EO 13622 of July 30, 2012, EO 13628 of October 9, 2012, and EO 13645 of June 3, 2013.

The national emergency is being continued because, while the Joint Plan of Action (JPOA) between the P5+1 and Iran that went into effect on January 20, 2014, and was renewed by mutual consent of the P5+1 and Iran on July 19, 2014, and November 24, 2014, marks the first time in a decade that Iran has agreed to and taken specific actions that stop the advance and roll back key elements of its nuclear program, certain actions and policies of the Government of Iran continue to pose an unusual and extraordinary threat to the national security, foreign policy, and economy of the United States.

The emergency declared in EO 12957 constitutes an emergency separate from that declared on November 14, 1979, by EO 12170. This renewal, therefore, is distinct from the emergency renewal of November 2014.



US - BIS revises support documentation requirements for EAR license applications
On March 13, 2015, the Bureau of Industry and Security (BIS) published in the Federal Register a final rule [Docket No. 131018874-5199-02] that revises the support document requirements for license applications submitted to the BIS and is part of BIS’s retrospective regulatory review under Executive Order 13563. In addition to clarifying and streamlining the support document requirements for license applications in part 748 of the Export Administration Regulations (EAR), the final rule removes the requirement to obtain an International Import Certificate or Delivery Verification in connection with a license application and limits the requirement to obtain a Statement by Ultimate Consignee and Purchaser to exports, reexports, and transfers (in-country) of 600 Series Major Defense Equipment. Revisions to the EAR affecting BIS’s participation in issuing documents for the Import Certificate and Delivery Verification system for imports into the United States will be addressed in a future final rule, as will potential substantive changes to information collections under the Paperwork Reduction Act.
US - FinCEN finds Banca Privada d’Andorra is a financial institution of primary money laundering concern and proposes special measure

On March 13, 2015, the Financial Crimes Enforcement Network (FinCEN), Treasury, published in the Federal Register a notice of finding that, pursuant to the authority contained in the USA PATRIOT Act, the Director of FinCEN found on March 6, 2015 that reasonable grounds exist for concluding that Banca Privada d’Andorra (BPA) is a financial institution operating outside of the United States of primary money laundering concern. The finding referred to in this notice was effective as March 6, 2015.

In a separate notice of proposed rulemaking also published on March 13, 2015, FinCEN proposed imposing a special measure authorized by 31 U.S.C. § 5318A(b)(5) against BPA. Written comments are due on or before May 12, 2015.

US - State releases Fact Sheet on U.S. export policy for military unmanned aerial systems

On February 17, 2015, the State Department released a Fact Sheet, U.S. Export Policy for Military Unmanned Aerial Systems which is reproduced below:

The United States is the world’s technological leader in the development and deployment of military Unmanned Aerial Systems (UAS). As other nations begin to employ military UAS more regularly and as the nascent commercial UAS market emerges, the United States has a responsibility to ensure that sales, transfers, and subsequent use of all U.S.-origin UAS are responsible and consistent with U.S. national security and foreign policy interests, including economic security, as well as with U.S. values and international standards.

As a result, the United States has established a new policy designed specifically for U.S.-origin military and commercial UAS. This new policy, governing the international sale, transfer and subsequent use of U.S.-origin military UAS, supplements and builds upon the U.S. Conventional Arms Transfer Policy and is consistent with the requirements of the Arms Export Control Act and the Foreign Assistance Act which govern all U.S. military transfers. The new policy also governs the international sale, transfer and subsequent use of U.S.-origin commercial UAS, supplementing and building upon the Export Administration Regulations which govern all U.S. commercial transfers.

The new export policy is part of a broader United States UAS policy review which includes plans to work with other countries to shape international standards for the sale, transfer, and subsequent use of military UAS.

Enhanced Controls on the Export of U.S.-Origin Military UASs

The United States is committed to stringent standards for the sale, transfer, and subsequent use of U.S.-origin military UAS. The United States’ new UAS export policy establishes the standards by which the United States will assess, on a case-by-case basis under the U.S. Conventional Arms Transfer Policy, potential exports of military UASs, including armed systems. The new export policy puts in place stringent conditions on the sale or transfer of military UAS, including potential requirements for:

• Sales and transfers of sensitive systems to be made through the government-to-government Foreign Military Sales program;
• Review of potential transfers to be made through the Department of Defense Technology Security and Foreign Disclosure processes;
• Each recipient nation to be required to agree to end-use assurances as a condition of sale or transfer;
• End-use monitoring and potential additional security conditions to be required; and
• All sales and transfers to include agreement to principles for proper use.

The new policy also maintains the United States’ long-standing commitments under the Missile Technology Control Regime (MTCR), which subjects transfers of military and commercial systems that cross the threshold of MTCR Category I (i.e., UAS that are capable of a range of at least 300 kilometers and are capable of carrying a payload of at least 500 kilograms) to a “strong presumption of denial” for export but also permits such exports on “rare occasions” that are well justified in terms of the nonproliferation and export control factors specified in the MTCR Guidelines.

Principles for Proper Use of U.S.-Origin Military UAS

As the most active user of military UAS, and as an increasing number of nations are acquiring and employing UASs to support a range of missions, the United States has an interest in ensuring that these systems are used lawfully and responsibly. Accordingly, under the new UAS export policy, the United States will require recipients of U.S.-origin military UAS to agree to the following principles guiding proper use before the United States will authorize any sales or transfers of military UASs:

• Recipients are to use these systems in accordance with international law, including international humanitarian law and international human rights law, as applicable;
• Armed and other advanced UAS are to be used in operations involving the use of force only when there is a lawful basis for use of force under international law, such as national self-defense;
• Recipients are not to use military UAS to conduct unlawful surveillance or use unlawful force against their domestic populations; and
• As appropriate, recipients shall provide UAS operators technical and doctrinal training on the use of these systems to reduce the risk of unintended injury or damage.

Enhanced Controls on the Export of U.S.-Origin Commercial UAS

The United States is equally committed to stringent standards for the sale, transfer, and subsequent use of U.S.-origin commercial UAS, to include future commercial MTCR Category I systems. All commercial UAS will be reviewed under the requirements and licensing policies described in the Export Administration Regulations.

Implications of the New Policy

The new U.S. UAS export policy provides a disciplined and rigorous framework within which the United States will exercise restraint in sales and transfers and advance its national security and foreign policy interests, which includes enhancing the operational capabilities and capacity of trusted partner nations, increasing U.S. interoperability with these partners for coalition operations, ensuring responsible use of these systems, and easing the stress on U.S. force structure for these capabilities. It also ensures appropriate participation for U.S. industry in the emerging commercial UAS market, which will contribute to the health of the U.S. industrial base, and thus to U.S. national security which includes economic security.

The United States is committed to working with other countries to adopt similar standards for the sale, transfer, and subsequent use for military UAS.

US - Commerce, Interior allocate 2015 duty exemptions for insular watch assembly producers
On March 11, 2015, Enforcement and Compliance, International Trade Administration, Department of Commerce and the Office of Insular Affairs, Department of the Interior published in the Federal Register a notice allocating calendar year 2015 duty exemptions for watch assembly producers (program producers) located in the United States Virgin Islands (USVI) pursuant to Pub. L. 97-446, as amended by Pub. L. 103-465, Pub. L 106-36 and Pub. L. 108-429. In accordance with Section 303.3(a) of the regulations (15 C.F.R. 303.3(a)), the total quantity of duty-free insular watches and watch movements for calendar year 2013 is 1,866,000 units for the USVI. This amount was established in Changes in Watch, Watch Movement and Jewelry Program for the U.S. Insular Possessions, 65 Fed. Reg. 8048 (February 17, 2000). There are currently no watch assembly producers in Guam, American Samoa or the Northern Mariana Islands.
March 19 Webinar: Insights into Litigation webinar series - Global Investigations: Best Practices and Pitfalls

Manage Your Risk

As part of one of the largest and most recommended Dispute Resolution practices in the world, our North America Litigation lawyers offer practical insights on how to help you navigate the complexities your business may face with confidence, while achieving your strategic and commercial objectives. To share these insights, we have developed a webinar series that is focused on practical business solutions and the risks and challenges in doing business locally and internationally.

Please join us for the next webinar in our 2015 series:

Global Investigations: Best Practices and Pitfalls

Thursday, March 19, 2015 1:00 pm ET

This program will focus on the most challenging issues in cross-border investigations including conflicts between the expectations of DOJ/SEC and local law in jurisdictions where the investigation is being carried out. Special focus will be given to issues of data preservation and review, termination of employees and local partners suspected of corruption, self-disclosure to U.S. and foreign law enforcement authorities and the impact of Deferred Prosecution and Non-Prosecution Agreements on subsequent internal investigations. The panel will include three Baker & McKenzie partners, all of whom have extensive experience prosecuting transnational criminal cases for DOJ and representing clients in global investigations.

This webinar has been approved for 1.0 CLE ethics credit

Click here to register now.

Our complimentary webinar series is aimed at in-house legal counsel and compliance managers, ranging from those who are new to the areas concerned, through to experienced practitioners who want to refresh their knowledge and learn more about litigation risks and best practices.

Each complimentary, 60-minute webinar will be the third Thursday of the month and will begin at:

- 10:00 am PT
- 11:00 am MT
- 12:00 pm CT
- 1:00 pm ET

Participants can register for one or more of these webinars. We hope that you will be able to join us for what should be an interesting and fruitful series.

Log-in details will be sent via email two days before and on the day of the event.

US - Agriculture issues rules for pima cotton and wool apparel manufacturers trust funds including TRQ monetary equivalent; duty refund regulations to come later

On March 9, 2015, the Foreign Agricultural Service (FAS) and the Commodity Credit Corporation (CCC), both of the Department of Agriculture, published in the Federal Register a final rule (with a request for comments) that implements the Pima Agriculture Cotton Trust Fund (Agriculture Pima Trust) and the Agriculture Wool Apparel Manufacturers Trust Fund (Agriculture Wool Trust) Fund established in the Agricultural Act of 2014 (Farm Bill).

The Agriculture Pima Trust provides annually for one payment, called the Pima Cotton Payments. The Agriculture Wool Trust provides annually for four payments. The first payment under the Agriculture Wool Trust is currently administered by the Department of Commerce’s Office of Textiles and Apparel (OTEXA), and is called the Grants to Manufacturers of Certain Worsted Wool Fabrics. This program is being transferred from OTEXA to the Secretary of Agriculture, who will administer the payment for the 2015–2019 calendar years, and will be called Payments to Manufacturers of Certain Worsted Wool Fabrics. The second payment is called Monetization of the Wool TRQ. The Farm Bill requires the Secretary of Agriculture to determine a monetary amount equivalent to what a person would have saved if OTEXA’s Wool Tariff Rate Quota program (Wool TRQ) were still in effect. This payment will be based on OTEXA’s Wool Tariff Rate Quota program, which terminated at the end of calendar year 2014. The Monetization of the Wool TRQ will be administered by the Secretary for the 2015–2019 calendar years.

The third payment is called the Wool Yarn, Wool Fiber, and Wool Top Duty Compensation Payment. Payments are made to processors of wool yarn, wool fiber, and wool top to compensate them for termination of the suspension of import duties on such wool. This payment will be administered by the Secretary for the 2015–2019 calendar years. The fourth payment is called the Refund of Duties Paid on Imports of Certain Wool Products. This program is currently administered by the Department of Homeland Security’s Customs and Border Protection (CBP) through calendar year 2015. The program will be transferred in calendar year 2016 to the Secretary of Agriculture, who will administer the program for the 2016– 2019 calendar years. Regulations for the fourth payment will be published at a later date.

The final rule is effective March 9, 2015. Comments concerning this final rule must be received by April 8, 2015, to be assured consideration. We are issuing this final rule without prior notice and opportunity for comment.

US - President issues new E.O. declaring national emergency with respect to Venezuela situation

On March 9, 2015, President Obama issued a new Executive Order (E.O.) declaring a national emergency with respect to the “unusual and extraordinary threat to the national security and foreign policy of the United States posed by the situation in Venezuela.” The targeted sanctions in the E.O. implement the Venezuela Defense of Human Rights and Civil Society Act of 2014, which the President signed on December 18, 2014, and also go beyond the requirements of this legislation.

According to a White House Fact Sheet, the new authority is aimed at persons involved in or responsible for the erosion of human rights guarantees, persecution of political opponents, curtailment of press freedoms, use of violence and human rights violations and abuses in response to antigovernment protests, and arbitrary arrest and detention of antigovernment protestors, as well as the significant public corruption by senior government officials in Venezuela. The E.O. does not target the people or the economy of Venezuela.

Specifically, the E.O. targets those determined by the Department of the Treasury, in consultation with the Department of State, to be involved in:

• actions or policies that undermine democratic processes or institutions;
• significant acts of violence or conduct that constitutes a serious abuse or violation of human rights, including against persons involved in antigovernment protests in Venezuela in or since February 2014;
• actions that prohibit, limit, or penalize the exercise of freedom of expression or peaceful assembly; or
• public corruption by senior officials within the Government of Venezuela.

The E.O. also authorizes the Department of the Treasury, in consultation with the Department of State, to target any person determined:

• to be a current or former leader of an entity that has, or whose members have, engaged in any activity described in the E.O. or of an entity whose property and interests in property are blocked or frozen pursuant to the E.O.; or
• to be a current or former official of the Government of Venezuela.

Individuals designated or identified for the imposition of sanctions under this E.O., including the seven individuals that are listed in the Annex of the E.O., will have their property and interests in property in the United States blocked or frozen, and U.S. persons are prohibited from doing business with them. The E.O. also suspends the entry into the United States of individuals meeting the criteria for economic sanctions.

For additional updates and guidance on this subject, please visit our Sanctions Update blog.

EU extends sanctions for misappropriation of Ukrainian state funds

On 5 March 2015, it was announced that the European Council has extended the pre-existing restrictive measures against eighteen individuals.

These individuals, including the former Ukrainian President Viktor Yanukovich, have been subject to investigations regarding the misappropriation of Ukrainian state funds. The sanctions have been adjusted in order to reflect the progression of these investigations; and have been extended by a year for fourteen of the individuals listed, and by three months for the other four.

The extension was put into effect through Council Regulation (EU) 2015/357 and Council Decision 2015/364/CFSP. These instruments do not introduce any new designations.

The sanctions were originally brought into force on 6 March 2014 by Council Regulation (EU) 208/2014 and Council Decision 2014/119/CFSP.

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

Switzerland - Federal Council extends measures to prevent the circumvention of sanctions with respect to the situation in Ukraine

On 6 March 2015, the Federal Council decided to extend its measures to prevent the circumvention of international sanctions in view of the situation in Ukraine, The action followed decisions taken by the EU. It added the measures decreed by the EU last December following non-recognition of the annexation of the Crimea and Sevastopol to the ordinance on international sanctions of 27 August 2014. The Federal Council also added to Annex 3 of the ordinance the names of 28 further persons and entities who have had financial and travel restrictions imposed on them in the EU. The amended ordinance with supplemented annexes came into effect at 6 pm on 6 March. According to the Federal Council’s announcement:

The Federal Council once again stressed that Swiss territory may not be misused to circumvent EU sanctions. It is continuing to pursue its current policy and today made amendments to the ordinance on the circumvention of international sanctions in relation to the situation in Ukraine. The Federal Council is thus taking measures necessary to prevent circumvention of the latest EU sanctions.

This decision by the Federal Council extends the measures introduced following Switzerland's non-recognition of Russia's annexation of the Crimea, an act which contravenes international law. All foreign investment in the Crimea and Sevastopol is now prohibited. Service bans apply in the investment and tourism branches, and in some other economic sectors. The existing ban on the export of key goods to the Crimea and Sevastopol has been extended to include further articles. In addition, the measures have been made more precise to accord with adjustments made to the EU sanctions.

Furthermore, 28 names have been added to the existing list of individuals and businesses with whom financial intermediaries may no longer enter into new business relationships. Anyone in Switzerland with an existing business dealings with any of these entities is required to report this relationship (Annex 3 of the ordinance).

The Federal Council is continuing to monitor the situation in Ukraine closely and reserves the right to introduce further measures.

For additional information on the Swiss measures, please contact Philippe M. Reich of our Zurich office.

US - USTR releases Notorious Markets List

On March 5, 2015, the U.S. Trade Representative (USTR) released the Special 301 Out-of-Cycle Review of Notorious Markets for 2014, which highlights certain physical and online markets around the world that are reported to engage in and facilitate substantial copyright piracy and trademark counterfeiting that harms American businesses and undermines U.S. workers. The publication of the Notorious Markets report helps the United States and foreign governments to prioritize intellectual property rights (IPR) enforcement that protects job-supporting innovation and creativity in the United States and around the world.

The Out-of-Cycle Review of Notorious Markets identifies particularly infamous markets, and does not constitute an exhaustive list of all markets reported to deal in pirated or counterfeit goods around the world. Nor does it reflect the U.S. Government’s analysis of the general IPR protection and enforcement climate in the country concerned; such analysis is contained in the annual Special 301 Report issued at the end of April. However, the United States urges the responsible authorities to intensify efforts to combat piracy and counterfeiting, and to use the information contained in the Notorious Markets List to pursue legal actions where appropriate.

US - USTR releases 2015 President’s Trade Agenda

On March 4, 2015, the U.S. Trade Representative (USTR) released the 49 page President’s Trade Agenda - 2015 Trade Policy Agenda. The 2015 efforts will build on the 2014 initiatives. Last year, the United States made substantial progress toward concluding the Trans-Pacific Partnership (TPP). With the European Union, the U.S. made a fresh start in negotiations for the Transatlantic Trade and Investment Partnership (T-TIP). The U.S. also played a critical role in realizing the first fully multilateral trade agreement in the history of the World Trade Organization (WTO), the Trade Facilitation Agreement (TFA), and made significant progress in negotiations to expand the scope of goods covered by the WTO Information Technology Agreement (ITA). Additionally, along with 13 other partners, we launched negotiations on the Environmental Goods Agreement (EGA) in Geneva.

In 2015, the U.S. hopes to conclude negotiations with TPP countries and make significant progress with the EU toward a T-TIP agreement to further strengthen the world’s largest trade relationship. The U.S. will advance negotiations on the Trade in Services Agreement (TiSA). USTR will work with Congress to update and renew the African Growth and Opportunities Act (AGOA) for the longest term possible. USTR says that it will continue fighting for America’s trade rights, strengthening the multilateral trading system at the WTO, expanding the ITA, and continuing negotiations on an EGA.

Also available is a copy of the 354 page 2015 Trade Policy Agenda and 2014 Annual Report of the President of the United States on the Trade Agreements Program.

US - Import restrictions extended on certain categories of archaeological material from El Salvador

On March 6, 2015, U.S. Customs and Border Protection (CBP) in the Department of Homeland Security and the Department of the Treasury published in the Federal Register a final rule [CBP Dec. 15-05] amending the CBP regulations to reflect the extension of import restrictions on certain categories of archaeological material from the Pre-Hispanic cultures of El Salvador. The restrictions, which were originally imposed by Treasury Decision (T.D.) 95-20 and previously extended by T.D. 00-16, CBP Decision (CBP Dec.) 05-10 and CBP Dec. 10-01, are due to expire on March 8, 2015, unless extended. The Assistant Secretary for Educational and Cultural Affairs, U.S. Department of State (State), has determined that conditions continue to warrant the imposition of import restrictions. Accordingly, these import restrictions will remain in effect for an additional five years, and the CBP regulations are being amended to reflect this extension until March 8, 2020.

These restrictions are being extended pursuant to determinations of State made under the terms of the Convention on Cultural Property Implementation Act in accordance with the 1970 United Nations Educational, Scientific and Cultural Organization (UNESCO) Convention on the Means of Prohibiting and Preventing the Illicit Import, Export and Transfer of Ownership of Cultural Property. T.D. 95-20 contains the Designated List of archaeological material representing Pre-Hispanic cultures of El Salvador, and describes the articles to which the restrictions apply. The effective date of the final rule is March 8, 2015.

Ukraine - Import licensing of active pharmaceutical ingredients has been abolished

On 15 January 2015, the Parliament of Ukraine adopted Law of Ukraine No.126-VIII “On amendments to several Laws of Ukraine regarding abolishing import licensing of active pharmaceutical ingredients” (the Amendment). This Amendment abolishes the requirement to obtain a license to import active pharmaceutical ingredients (APIs), which became effective from 1 January 2015.

Import licensing of pharmaceuticals was introduced by Law of Ukraine No. 5038-VI “On amendments to several Laws of Ukraine regarding import licensing of pharmaceuticals and regarding the definition of the Term “Active Pharmaceutical Ingredient”” dated 4 July 2012 (the Import Licensing Law). Pursuant to the Import Licensing Law, an import license for pharmaceuticals into Ukraine has been required since 1 March 2013, while the import of APIs was exempt from the licensing requirement until 1 January 2015.

The Amendment was published on 31 January 2015 and it became effective on 1 February 2015. As a result, importers may continue to import APIs to Ukraine without obtaining an import license.

The Amendment should improve the framework of legal regulation in the field of circulating pharmaceuticals and create favorable conditions for entrepreneurship in the Ukrainian pharmaceuticals market.

For more information, please contact Oksana Simonova, Mariana Marchuk or Olha Demianiuk of our Kyiv office.

US - President continues national emergency with respect to Zimbabwe

On March 5, 2015, the Federal Register published Presidential Notice of March 3, 2015 - Continuation of the National Emergency with Respect to Zimbabwe which extends for an additional year the national emergency first declared on March 6, 2003, by Executive Order (EO) 13288. EO 13288 blocked the property of certain persons, pursuant to the International Emergency Economic Powers Act (50 U.S.C. 1701–1706), to deal with the unusual and extraordinary threat to the foreign policy of the United States constituted by the actions and policies of certain members of the Government of Zimbabwe and other persons to undermine Zimbabwe’s democratic processes or institutions. These actions and policies had contributed to the deliberate breakdown in the rule of law in Zimbabwe, to politically motivated violence and intimidation in that country, and to political and economic instability in the southern African region.

Additional steps were taken on November 22, 2005, in EO 13391. The scope of the national emergency was further expanded by EO 13469 on July 25, 2008.

The national emergency is being continued because the actions and policies of these persons continue to pose an unusual and extraordinary threat to the foreign policy of the United States

US - President continues national emergency with respect to Ukraine

On March 5, 2015, the Federal Register published Presidential Notice of March 3, 2015 - Continuation of the National Emergency with Respect to Ukraine which extends for an additional year the national emergency first declared on March 6, 2014, by Executive Order (EO) 13660, to deal with the unusual and extraordinary threat to the national security and foreign policy of the United States constituted by the actions and policies of persons that undermine democratic processes and institutions in Ukraine; threaten its peace, security, stability, sovereignty, and territorial integrity; and contribute to the misappropriation of its assets.

The scope of the national emergency was expanded by EO 13661 on March 16, 2014, which found that the actions and policies of the Government of the Russian Federation with respect to Ukraine undermine democratic processes and institutions in Ukraine; threaten its peace, security, stability, sovereignty, and territorial integrity; and contribute to the misappropriation of its assets.

The scope was further expanded by EO 13662 on March 20, 2014, which found that the actions and policies of the Government of the Russian Federation, including its purported annexation of Crimea and its use of force in Ukraine, continue to undermine democratic processes and institutions in Ukraine; threaten its peace, security, stability, sovereignty, and territorial integrity; and contribute to the misappropriation of its assets. EO 13685 of December 19, 2014, was issued to take additional steps to address the Russian occupation of the Crimea region of Ukraine.

The national emergency is being extended for an additional year because the actions and policies addressed in these Executive Orders continue to pose an unusual and extraordinary threat to the national security and foreign policy of the United States.

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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
Email: Janet Kim
T + 1 202 835 1653

John F. McKenzie
Partner, San Francisco
Email: John McKenzie
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Partner, Washington DC
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Editor, International Trade
Compliance Update


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