The Commerce Department’s Bureau of Industry and Security (BIS) recently published its final rule that makes significant changes to the Export Administration Regulations’ (EAR’s) requirements for items that have cryptographic features (i.e., hardware, software, middleware, firmware, source code and technology). The final rule was published on September 20, 2016, and implements the changes that were agreed at the December 15th plenary meeting of the Wassenaar Arrangements to which the United States and forty (40) other countries belong. The final rule made a number of revisions to the EAR and the Commerce Control List; however, the modifications made to the treatment of encryption items were the most significant. U.S. and foreign companies that develop, sell or distribute items that contain cryptographic features should take immediate steps to update their current product and software classifications in light of the final rule. The final rule took immediate effect on September 20, 2016.Read More
Polsinelli on International | International Legal Services Blog
Polsinelli's International attorneys provide companies with the tools and information they need to seamlessly and profitably market their products and services in markets across the globe. From corporate structuring to tax issues, import/export to international arbitrations, we understand the cultural and legal nuances that cross-border business can bring.
President Obama announced yesterday, after his meeting at the White House with Aung San Syuu Kyi, the newly elected President of Myanmar (formerly known, and hereinafter referred to, as Burma), that he intends to lift U.S. sanctions on Burma as a result of that country’s progress toward implementing democracy. The eventual lifting of the sanctions on Burma will take effect when the President: (1) submits certain notifications to Congress; and, (2) issues a new Executive Order that will terminate the national emergency with respect to Burma. When those events take place, the Burmese Sanctions Regulations (found in 31 C.F.R. Part 537) will no longer be in effect. Thereafter, the Treasury Department’s Office of Foreign Assets Control (OFAC) will remove the Burmese Sanctions Regulations from the Foreign Assets Control Regulations. It should be noted that the arms embargo prohibiting exports, reexports and imports of defense articles and services that are subject to the International Traffic in Arms Regulations (ITAR) will continue to be imposed despite the removal of the Burmese Sanctions Regulations in the future.Read More
Yesterday, President Obama issued an Executive order entitled “Termination of Emergency with Respect to the Situation in or in Relation to Côte d’Ivoire” which lifts all U.S. sanctions against Côte d’Ivoire (Ivory Coast). These sanctions have been terminated and are no longer in effect, as of 8:00am ET on September 14, 2016. The Obama Administration’s decision to lift the sanctions on Côte d’Ivoire stems from the U.N. Security Council Resolution 2283, which terminated the arms embargo and travel and financial sanctions on Côte d’Ivoire in April 2016. OFAC has also removed the individuals who were targeted under the previous U.S. sanctions on the Côte d’Ivoire from the Specially Designated Nationals Lists (SDN Lists). OFAC will be removing the Côte d’Ivoire Sanctions Regulations (in 31 CFR Part 543) from the Foreign Assets Control Regulations in the near future.Read More
As we noted previously in this blog, imports and exports of merchandise from the United States have been transitioning from a paper-driven clearance regime to a “single window” electronic system known as the Automated Commercial Environment (ACE). Using the “single window,” companies and their agents will be able to submit a single, harmonized set of data electronically into ACE which will be accessed and processed by U.S. Customs and Border Protection (CBP) and the various Partnering Government Agencies (PGAs). In order to meet the December 31st deadline for U.S. government agency migration to ACE, which was set by President Obama’s Executive Order 13659 (“Streamlining the Import and Export Processes for America’s Businesses”), CBP has been working to phase in ACE implementation over the course of the last year.Read More
The ways in which in information and documentation is submitted by U.S. companies and processed by the various U.S. government agencies for the import and export clearance of merchandise has been undergoing a dramatic evolution since 2014 and is nearing completion. Imports and exports of merchandise from the United States have been transitioning from a paper-driven clearance regime to a “single window” electronic system. The Automated Commercial Environment (ACE) serves as this “single window” enabling importers and exporters to interface with U.S. Customs and Border Protection (CBP) and other federal government agencies (i.e., “Partnering Government Agencies” or “PGAs”) that have a hand in the admissibility of imported merchandise and authorization of exports from the United States. Instead of manually submitting often duplicative information and paper-driven data to multiple agencies as part of the cargo release processes, companies and their agents now electronically submit a single, harmonized set of data and upload required documentation into ACE which can then be accessed and processed by the various PGAs. In addition, the PGAs will be able to communicate with importers and exporters directly through ACE on any additional information requirements, scheduling and execution of examinations and inspections, cargo releases, protests and enforcement actions.Read More
On August 17, 2016, the Commerce Department’s Bureau of Industry and Security (BIS) and the State Department’s Directorate of Defense Trade Controls (DDTC) published final rules in the Federal Register effectively harmonizing the export destination control statements mandated by the Export Administration Regulations (EAR) and the International Traffic in Arms Regulations (ITAR). Generally, under the current rules, destination control statements (“DCS”) are placed on commercial invoices, air waybills, bills of lading and other shipping documents that will accompany export shipments from the United States in order to put the foreign end-users on notice that the goods they are receiving are subject to U.S. laws and regulations and may require prior U.S. government authorization before they can be reexported or retransferred. The ITAR DCS is currently required for all exports, reexports and retransfers of defense articles designated on the U.S. Munitions List (USML) per 22 C.F.R. Section 123.9. Similarly, per 15 C.F.R. Section 758.6 of the EAR, the DCS is required for exports of goods that are subject to the EAR and that are classified in Export Control Classification Numbers (ECCNs)—the EAR DCS is not currently required for goods classified as EAR99; however, it is generally a recommended “best practice” for exporters to utilize the DCS for all export shipments that are subject to the EAR, regardless of an item’s classification.Read More
By Melissa Miller Proctor
On August 23, 2016, the Commerce Department’s Bureau of Industry and Security (BIS) published a proposed rule to align the time limit of License Exception Temporary Imports, Exports, Reexports and Transfers (TMP) with the time limit of Mexico’s Decree for the Promotion of Manufacturing, Maquiladora and Export Services (IMMEX) program.
Under the U.S. Export Administration Regulations (EAR), License Exception TMP authorizes the export, reexport or in-country transfer of certain controlled commodities, software and technology for temporary use abroad without a license from the BIS. See 15 C.F.R. Section 740.9 of the EAR. Currently, such items must be returned no later than one (1) year after the date of export, reexport, or transfer if they are not consumed or destroyed during the period of authorized use abroad. However, this one-year period does not align with the time limits of Mexico’s IMMEX program, which allows imports of items for manufacturing operations for periods of time that may exceed eighteen (18) months.Read More
The Trans Pacific Partnership agreement (“TPP”), the largest regional free trade and investment agreement that has ever been negotiated, was signed by the United States and eleven other countries in the Asia Pacific region (i.e., Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, and, Vietnam.). The signatory countries will have a maximum period of two (2) years in which to implement the TPP into their respective local laws. What does this mean for U.S. retailers, distributors, and manufacturers? For starters, the TPP will eliminate import tariffs on more than 18,000 goods, many of which are currently subject to high duty rates. U.S. companies will enjoy significant duty-savings opportunities on imports of qualifying goods into the United States, and U.S. exporters will likely find their goods in greater demand by foreign buyers located in TPP countries. The Obama Administration has also touted the TPP as a means for supporting higher paying jobs in the United States, growing the U.S. economy, and countering China’s economic expansion.Read More
Recently, a U.S. pharmaceutical and medical supply company was fined over $16 Million for illegal sales, exports and reexports to Iran, Sudan and Syria—countries that are currently subject to U.S. embargoes and economic sanctions programs. Alcon Laboratories, Inc., located in Fort Worth, Texas, as well as its Swiss affiliates (Alcon Pharmaceuticals, Ltd. and Alcon Management SA), recently settled with the U.S. Treasury Department’s Office of Foreign Assets Control (“OFAC”) and the U.S. Commerce Department’s Bureau of Industry and Security (“BIS”) for exporting surgical and pharmaceutical products from the United States to its affiliates in Switzerland, and then reexporting the items to distributors in Iran, Sudan, and Syria to fulfill orders in those countries.Read More
On July 25th, the U.S. Department of Commerce announced the establishment of the new Trade Finance Advisory Council (“TFAC”), which will advise the Secretary of Commerce on strategies and the implementation of new programs that would provide greater access to trade finance for U.S. exporters. Expanding access to public and private sources of finance for U.S. exporters is one of the five primary objectives of the Obama Administration’s National Export Initiative. The Commerce Department reports that access to capital is an obstacle for many exporters—particularly small and medium-sized enterprises. Such companies currently represent 98% of all U.S. exporters, but only 35% of the total U.S. export revenue.Read More
In Rosencrantz and Guildenstern Are Dead, playwright Tom Stoppard noted as follows: “Look on every exit as being an entrance somewhere else.” This brilliantly sums up the recent Brexit decision in the United Kingdom, which will undoubtedly lead to new challenges and opportunities for companies engaged in global trade over the course of the next few years. On June 23, 2016, and to the world’s astonishment, the UK voted by popular referendum to terminate its membership and formally withdraw from the European Union. Unless a second referendum ensues, the UK will soon submit formal notification of its intention to leave the EU and begin negotiating the terms of its departure with the remaining EU member states. The UK’s exit will become final either upon the entry into force of such exit agreement or two years following the filing of its notification of withdrawal, whichever occurs first. The EU member states may also agree to extend this two-year transition period if necessary. The earliest date on which the UK could separate from the EU would be late 2018; however, it is likely that the transition toward full separation will occur several years beyond that date, if at all.Read More
"I've searched all the parks in all the cities and found no statues of committees.”
– G.K. Chesterton
In the United States, Chapter 11 cases can move with incredible speed and fundamentally alter or eliminate the rights of unsecured creditors or equity holders. In many cases, the debtors and their lenders are highly incentivized, often by incentives they created to manipulate the process, to implement their proposed plan to the detriment of unsecured creditors or equity holders. The U.S. Bankruptcy Code created committees to serve as representatives for the underrepresented. Although committees rarely receive the glory and may never be commemorated with statues in their honor, they serve a critical role in the bankruptcy process.Read More
Why take the risk to keep asking the “Should we be more global?” question at your company when it might not be well received? You might stir up the usual perceptions:
- “We already have our hands full domestically with what we are really good at.”
- “We still have a lot of domestic penetration and coverage to achieve.”
- “We do have a couple of international customers but they came to us without any proactive effort on our part. Plus, we sold to them on the domestic side and they did all of the heavy lifting.”
By Karen Dickinson, Melissa Ho, and Ed Novak
In one form or another, in one denomination or many, paper money has been used in the U.S. for over 300 years. However, recently the U.S. government has begun more closely scrutinizing cash transactions in U.S. banks as part of a larger U.S. effort to curb money laundering related to drug trafficking and other crimes. As a result, new bank rules regarding cash transactions are making it more difficult for U.S. and foreign businesses and individuals to deal with U.S. banks on a cash basis.
By: Melissa Miller Proctor
Companies tend to “get the itch” to begin selling internationally when they see their competitors going global, when they receive multiple inquiries from prospective buyers in foreign markets, and perhaps when they are approached by a third party offering to become their distributor in foreign markets. With regard to the latter, one of the initial decisions that must be made by a first-time exporter is whether to ship product directly to foreign customers, or engage a third party distributor to assist in this effort. While it is true that using a distributor, especially in a foreign country, can alleviate some of the risks and burdens for U.S. companies, there are several steps that a U.S. Seller should take before jumping into the deep end of the pool with a new partner in a foreign market.
By Melissa Miller Proctor
Last summer, U.S. Customs and Border Protection (“CBP”) published a General Notice in the Federal Register announcing its process for allowing U.S. exporters to request CBP’s assistance in resolving disputes with foreign government authorities involving tariff classification and customs valuation issues. See 80 Fed. Reg. 34924. U.S. companies from time to time receive pushback from customers in foreign markets on the classifications and values that are being used for their products. Exporters are encouraged to seek assistance from CBP when they encounter differing interpretations on classification and valuation in foreign countries, as they can lead to the disparate treatment of their goods resulting in additional costs and potential liability for foreign customers. In addition, U.S. exporters may experience a competitive disadvantage due to these varying interpretations and costly delays in the clearance of their goods in the countries of importation. The following describes the mechanics of CBP’s new process, as well as provides tips for preparing and submitting effective requests to CBP.
By: Karen Dickinson
Arizona companies are regularly dealing with customers and competitors from outside the United States. Technology companies know better than most that dealing globally is an economic imperative. That’s why understanding U.S. treaty negotiations that have been in the news this year—and will continue to be so—can be a game changer for tech companies expanding globally.
By Melissa Miller Proctor
On March 25, 2016, manufacturers and importers of adult apparel products comprised of low-risk fabrics designated as such under the Flammable Fabrics Act (FFA), will no longer be required to generate Certificates of Conformity required under the Consumer Product Safety Improvement Act of 2008 (CPSIA). The CPSIA requires that manufacturers and importers of products that are subject to a CPSC rule certify, based on a test or reasonable testing program, that their products comply with that rule. Adult apparel is subject to the flammability standards established under the FFA; however, as noted above, the FFA also provides a list of fabrics that have been determined to be low-risk because they consistently satisfy the applicable flammability standards. Please read on for a list of those fabrics, and additional information.