Defense and Export-Import Update June 29, 2012
Upcoming Export Control and Other Trade Compliance Conferences
Today's Items1. United Technologies Subsidiary Pleads Guilty to Criminal Charges for Helping China Develop New Attack Helicopter Pratt & Whitney Canada Corp. (PWC), a Canadian subsidiary of the Connecticut-based defense contractor United Technologies Corporation (UTC), yesterday pleaded guilty to violating the Arms Export Control Act and making false statements in connection with its illegal export to China of U.S.-origin military software used in the development of China’s first modern military attack helicopter, the Z-10. In addition, UTC, its U.S.-based subsidiary Hamilton Sundstrand Corporation (HSC) and PWC have all agreed to pay more than $75 million as part of a global settlement with the Justice Department and State Department in connection with the China arms export violations and for making false and belated disclosures to the U.S. government about these illegal exports. Roughly $20.7 million of this sum is to be paid to the Justice Department. The remaining $55 million is payable to the State Department as part of a separate consent agreement to resolve outstanding export issues, including those related to the Z-10. Up to $20 million of this penalty can be suspended if applied by UTC to remedial compliance measures. Click here for further details. See also Item 8 below. 2. State/DDTC Posts Pratt & Whitney Consent Agreement and Guidance on Licensing with UTC Subs The U.S. Department of State's Directorate of Defense Trade Controls (State/DDTC) is posted on its website the following documents relating to the United Technologies/Pratt & Whitney case reported in Item 1 above: 3. Commerce/BIS Posts Public Comments on Proposal to Move Certain Energetic Materials and Related Articles from USML to CCL The U.S. Department of Commerce's Bureau of Industry and Security (Commerce/BIS) has posted on its website the public comments it has received on the proposal published at 77 Fed. Reg. 25932 (May 2, 2012) to move certain energetic materials and related articles from U.S. Munitions List Category V to the Commerce Control List. 4. DFARS Amended to Add Czech Republic as a Qualifying Country (77 Fed. Reg. 38736) - The U.S. Department of Defense (DoD) is is amending Parts 225 and 252 of the Defense Federal Acquisition Regulation Supplement (DFARS) to add the Czech Republic as a qualifying country. On April 18, 2012, the Secretary of Defense signed a new reciprocal defense procurement agreement with the Czech Minister of Defense. The agreement removes discriminatory barriers to procurements of supplies and services produced by industrial enterprises of the other country to the extent mutually beneficial and consistent with national laws, regulations, policies, and international obligations. The agreement does not cover construction or construction material. 5. DFARS Amended to Update Form to Request Shipping Instructions (77 Fed. Reg. 39140) - The U.S. Department of Defense (DoD) is is amending Parts 212, 242, 247, and 252 of the Defense Federal Acquisition Regulation Supplement (DFARS) to update the form used by contractors to request shipping instructions and the associated contract clause and clause prescription to cover both commercial and Government bills of lading, and to relocate the coverage within the DFARS. 6. U.S. Customs and Border Protection Daily Digest Bulletin and CSMS Notices • CSMS #12-000244 Title: June 2012 Trade Account Owner Update 7. GAO Reports, Testimony, and Correspondence of Interest Defense Management: Steps Taken to Better Manage Fuel Demand but Additional Information Sharing Mechanisms Are Needed. GAO-12-619, June 28. http://www.gao.gov/products/GAO-12-619 Other Headlines8. UTC Helped Build China's First Military Attack Copter Wall Street Journal.com, June 28 - When two United Technologies Corp. UTX -2.10% engineers first laid eyes on the Chinese helicopter their company was helping outfit, they were shocked by what they saw. "Where are the other ten seats?" one asked the Chinese official in charge of the program, according to U.S. law enforcement authorities who interviewed the engineers. Instead of a helicopter for ferrying around groups of civilians, the engineers saw a two-seater in military configuration equipped with Pratt & Whitney engines and mock weapons. The Chinese official just laughed, according to the Justice Department. What the engineers didn't know, and what the Justice Department has spent the past six years investigating, was that Pratt & Whitney Canada had agreed to help China build its first military attack helicopter as the price for the chance to win millions of dollars in civilian business. 9. Defense Giant Says Budget Cuts Could Mean Pink Slips NPR.com, June 27 - Just imagine the political fallout: Nov. 2, only days before the election, tens of thousands — maybe hundreds of thousands — of workers receive letters warning that they could be out of a job. . . . "I believe that everyone understood that sequestration was going to involve layoffs," says Marion Blakey, president and CEO of the Aerospace Industries Association, a defense industry trade group that has been lobbying heavily to get Congress to avert the cuts. "But what I don't think anyone understood was the unintended consequence of early layoff notices," Blakey adds. The Worker Adjustment and Retraining Notification Act, a federal law dating back to the 1980s, requires companies expecting massive layoffs to notify affected employees at least 60 days in advance. 10. Norway Growing Impatient with NH90 Delays DefenseNews.com, June 28 - Norway is becoming so frustrated over the long delays in receiving 14 NH90 helicopters it ordered in 2001 that officials are considering following Sweden’s example and buying tactical and transport helicopters that can be quickly delivered as a gap filler. In a joint $1.2 billion acquisition, Finland, Sweden and Norway contracted to acquire 52 multirole NH90s in 2001 from NHIndustries as part of the Nordic Standard Helicopter Program agreed among the three countries. 11. U.S. Defense Cut Could Cost billions to Implement Reuters.com, June 27 - The Pentagon may have to pay billions of dollars in termination fees and other contract penalties if Congress does not stop $500 billion in automatic defense spending cuts due to take effect on January 2, a top weapons industry executive said on Wednesday. Sean O'Keefe, chief executive of the North American unit of Europe's EADS (EAD.PA), said U.S. defense officials were starting to assess added costs that might be triggered by the automatic cuts required under "sequestration," although they have not begun detailed planning for the across-the-board cuts. 12. Undervalued Currency Isn’t Beijing’s Only Export Trick Wall Street Journal.com, June 28 - For years, the U.S. has accused China of keeping its currency undervalued to help Chinese exporters, although it hurts competitors elsewhere. But a new study by three researchers say Beijing has used a far more obscure tool to manage trade: fiddling with the level of tax rebates, which can greatly boost or reduce the profits of Chinese exporters. “This amounts to export management on a grand scale and reinforces a long standing finding from economic history, namely that each major downturn results in governments finding new ways to beggar-thy-neighbor,” write economists Simon Evenett and Johannes Fritz of the University of St. Gallen in Switzerland and researcher Yang Chung Jing. The work is done as part of the Global Trade Alert, a free-trade group that Mr. Evenett heads, which tracks global trade protection. 13. Boeing and Embraer in Military Alliance Financial Times.com, June 26 - Boeing has agreed to co-operate with a Brazilian aircraft maker in developing a military transport and refuelling aircraft. Embraer, which is also seeking to break into the US military market with a light attack aircraft, said Boeing would collaborate with it on its KC-390. . . . The Brazilian air force will be the main buyer of the KC-390, which is part of a strategy by Embraer to move deeper into the defence industry to offset a slowdown in civil aviation wrought by the global economic slump. 14. Beijing, EU Tangle Over Telcom Wall Street Journal.com, June 28 - Beijing is pressing the European Union not to start a threatened trade investigation into China's telecommunications-equipment makers that could spark a trade war. Officials from the European Commission, the EU's executive agency, are in China for meetings this week to discuss allegations by Europe that China gives subsidies to the companies that are forbidden by international trade rules. The subsidies, it is claimed, allow Chinese companies to sell equipment with more favorable financing conditions and at prices that drastically undercut their European competitors. Upcoming Export Control and Other Trade Compliance Conferences
July 10 - U.K. Government/Export Control Organisation - Export Control - Beginners Workshop - Leeds - Double Tree by Hilton Hotel - Click here for more information. July 11 - U.S. Dept. of Commerce/International Trade Administration - Webinar - NAFTA Series: HS Number, Preference Criteria, NAFTA Certificate and Other Documents for Mexico - 3:00 p.m. EDT - $25 - Click here to register. July 11 - U.K. Government/Export Control Organisation - Export Control - Intermediate Workshop - Leeds - Double Tree by Hilton Hotel - Click here for more information. July 12 - U.K. Government/Export Control Organisation - Export Control - Control List Classification and Using the Checker Tools: Dual-Use Goods - London - 1 Victoria Street - Click here for more information. July 13- U.K. Government/Export Control Organisation - Export Control - Marking Better License Applications - London - 1 Victoria Street - Click here for more information. July 16-17 - American Conference Institute - 3rd Global Forum on Anti-Corruption Compliance in High Risk Markets - Washington, DC - Westin Gateway Hotel - Click here for more information. July 17-19 - U.S. Dept. of Commerce/Bureau of Industry and Security - Update 2012: Conference on Export Controls and Policy - Washington, DC - Washington Hilton Hotel - Click here for more information. July 23-25 - Society for International Affairs - Summer Back to Basics Conference - Arlington, VA - Crystal Gateway Marriott Hotel - Click here for more information. July 24-25 - American Conference Institute - DCAA Audits Boot Camp - San Diego, California - Hotel TBD - Click here for more information. July 24-25 - American Conference institute - 7th Advanced Forum on ITAR Compliance - Washington, DC - Fairmont Washington Hotel - Click here for more information. July 24-25 - American Conference Institute - Advanced China Tax Summit - Shanghai - Hotel TBD - Click here for more information. Aug. 8-9 - U.S. Dept. of Commerce/Bureau of Industry and Security & The District Export Council of Southern California - Complying with U.S. Export Controls - Los Angeles, CA - Sheraton Gateway Hotel Los Angeles - Click here for more information. Aug. 22-24 - Partnership International, Inc. - 3rd Annual "Partnering for Compliance™" West Coast - San Jose, California - Sainte Claire Hotel - Click here for more information. Aug. 22-24 - Partnership International, Inc. - 3rd Annual "Partnering for Compliance™" West Coast - San Jose, California - Sainte Claire Hotel - Click here for more information. Aug. 27 - U.K. Government/Export Control Organisation - Export Control - Beginners Workshop - Glasgow - Hilton Hotel - Click here for more information. Aug. 28 - U.K. Government/Export Control Organisation - Export Control - Beginners Workshop - Glasgow - Hilton Hotel - Click here for more information. Aug. 29 - U.K. Government/Export Control Organisation - Export Control - Beginners Workshop - Aberdeen - Aberdeen Marriott Hotel - Click here for more information. Aug. 29-30 - U.S. Dept. of Commerce/Bureau of Industry and Security & North Texas District Export Council, Inc. - How to Develop an Export Management and Compliance Program and Multi-Agency Compliance Conference - Irving, Texas - Sheraton DFW Airport Hotel - Click here for more information. Aug. 30 - U.K. Government/Export Control Organisation - Export Control - Marking Better License Applications - Aberdeen - Aberdeen Marriott Hotel - Click here for more information. Sept. 4 - U.K. Government/Export Control Organisation - Export Control - Beginners Workshop - Birmingham - Hilton Garden Hotel, Brindley Place - Click here for more information. Sept. 5 - IDEEA, Inc. - ComDef 2012 - 25th Anniversary: Understanding the Past to Inform the Future - Washington, DC - National Press Club - Click here for more information. Sept. 5 - U.K. Government/Export Control Organisation - Export Control - Intermediate Workshop - Birmingham - Hilton Garden Hotel, Brindley Place - Click here for more information. Sept. 6 - U.K. Government/Export Control Organisation - Export Control - Control List Classification and Using the Checker Tools: Dual-Use Goods - London - 1 Victoria Street - Click here for more information. Sept. 7 - U.K. Government/Export Control Organisation - Export Control - Marking Better License Applications - London - 1 Victoria Street - Click here for more information. Sept. 11-12 - U.S. Dept. of Commerce/U.S. Census Bureau - Automated Export System Compliance Seminar and AESPcLink Training - New Orleans, Louisiana - Hilton New Orleans Riverside - Click here for more information. Sept. 12 - U.S. Dept. of Commerce/International Trade Administration - Webinar - NAFTA Series: Solution Scenarios: Inbound Warehouses, Trading Companies, Sending Samples to Mexico - 3:00 p.m. EDT - $25 - Click here to register. Sept. 12-14 - MarcusEvans - 4th Practical Ensuring Compliance and Fighting Fraud in Russia and CIS - Moscow, Russia - Click here for more information. Sept. 12-13 - U.S. Dept. of Commerce/Bureau of Industry and Security & The Professional Association of Exporters and Importers - Complying with U.S. Export Controls - Milpitas, California - Crowne Plaza San Jose-Silicon Valley Hotel - Click here for more information. Sept. 18-19 - C-5 Group - 2nd Forum on Anti-Corruption Southern Africa - Cape Town, South Africa - Hotel TBD - Click here for more information. Sept. 19-20 - C-5 Group - 2nd Advanced Forum on European Export Controls - Amsterdam - Radisson Blu Hotel - Click here for more information. Sept. 26-27 - C-5 Group - 2nd Forum on Customs Compliance in Russia & CIS - Moscow - Hotel TBD - Click here for more information. Oct. 1-2 - SMi Group - Defence Exports 2012 - Amsterdam - Mövenpick Hotel Amsterdam City Centre Hotel - Click here for more information. Gary Stanley, Editor of Defense and Export-Import Update, will deliver a presentation at the conference entitled Export Compliance and Post-Approval License Management and will moderate the annual Panel Discussion featuring senior U.S. Government and industry representatives, including DDTC Managing Director Bob Kovac, Ass’t. Secretary of Commerce for Export Administration Kevin Wolf, and Acting DoD/DTSA Director James Hursch. Oct. 2-3 - American Conference Institute - Industry Forum on Government Subcontracting Management, Compliance & Enforcement - Arlington, Virginia - DoubleTree by Hilton Hotel - Click here for more information. See also Oct. 1 Pre-Forum Wolring Groups on "The Ins and Outs of Crafting a Small Business Subcontracting Plan under the Small Business Jobs Act and FAR Part 19 How to Reduce Penalties for False Certifications, Fraud and Non-Compliance with Set-Aside Requirements" and "Implementing the Most Contentious Mandatory Flowdown Provisions: From Data Rights to Defective Pricing." Oct. 3-4 - U.S. Dept. of Commerce/U.S. Census Bureau - Automated Export System Compliance Seminar and AESPcLink Training - Denver, Colorado - Small Business Development Center, 1445 Market St. - Click here for more information. Oct. 10 - U.S. Dept. of Commerce/International Trade Administration - Webinar - NAFTA Series: Compliance, Standards and Regulations to Exporting Goods to Mexico - 3:00 p.m. EDT - $25 - Click here to register. Oct. 23-24 - American Conference Institute - ITAR Boot Camp - Chicago, IL - Millennium Knickerbocker Hotel - Click here for more information. See also Oct. 21 Pre-Conference Working Groups on "ITAR Licensing" and "IT Management of ITAR Compliance." Nov. 8-9 - Society for International Affairs - 2012 Fall Conference - Arlington, VA - Crystal Gateway Marriott Hotel - Click here for more information. Nov. 14 - U.S. Dept. of Commerce/International Trade Administration - Webinar - NAFTA Series: Complying with Value Declaration Requirements - 3:00 p.m. EDT - $25 - Click here to register. Nov. 14-15 - American Conference Institute - 4th National Forum on DCAA Audits - Arlington, VA - Hotel TBD - Click here for more information. Nov. 14-15 - American Conference Institute - 2nd National Summit on Industrial & National Security Compliance - Arlington, Virginia - Hilton Hotel - Click here for more information. Nov. 27-28 - American Conference Institute - 7th National Forum on International Technology Transfers & Deemed Export Compliance - Washington, DC - Hotel TBD - Click here for more information. Dec. 12 - U.S. Dept. of Commerce/International Trade Administration - Webinar - NAFTA Series: Rules in Setting Up Agents, Distributors and a Direct Employee Present in Mexico - 3:00 p.m. EDT - $25 - Click here to register. Jan. 9 - U.S. Dept. of Commerce/International Trade Administration - Webinar - NAFTA Series: How to Handle Problems with Mexican Customs - 3:00 p.m. EDT - $25 - Click here to register. Jan. 30-31 - 2nd Industry Forum on U.S. Export & Re-Export Compliance for Canadian Operations - Toronto, ON - Hotel TBD - Click here for more information. Feb. 6 - U.S. Dept. of Commerce/International Trade Administration - Webinar - NAFTA Series: NAFTA Labeling Requirements for Exported Goods - 3:00 p.m. EDT - $25 - Click here to register.
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About Gary Stanley
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