International Trade Law News

The Treasury Department's Office of Foreign Assets Control (OFAC) today issued its June 2009 (pdf) monthly report of civil penalties imposed for alleged violations of the sanctions regimes administered by OFAC.

OFAC announced the following four settlements with companies, none of which were resolved under OFAC's new enforcement guidelines implementing the enhanced maximum civil penalties of $250,000 for IEEPA-based violations:

• Oxbow Carbon and Minerals LLC of West Palm Beach, Florida agreed to remit $276,250.00 to settle allegations that if violated te Iranian Transactions Regulations in 2006 and 2007. OFAC alleged that Oxbow engaged in transactions in or related to services of Iranian origin and facilitated trade-related transactions by non-U.S. persons which involved the use of vessels owned and/or managed by the Islamic Republic of Iran Shipping Lines in Tehran, Iran, without an OFAC license. While Oxbow did not voluntarily disclose the alleged violations, OFAC noted that the company demonstrated cooperation during OFAC’s review of the matter and as a remedial measure has made revisions to its compliance program.
  

• National Marine Consultants, Inc. remitted $42,075.00 to settle allegations of violations of the Iranian Transactions Regulations that occurred between March 2005 and May 2007. OFAC alleged that NMCI outsourced to an Iranian entity inspection services it was contractually bound to perform for a third-party, without an OFAC license. NMCI did not voluntarily disclose the matter to OFAC but cooperated with OFAC’s investigation.

• Philips Electronics of North America Corporation (PENAC) remitted $128,750.00 to settle allegations that it violated the Cuban Assets Control Regulations between 2004 and 2006. OFAC alleged that PENAC acted without an OFAC license through an employee’s travel to Cuba in connection with the sale of medical equipment by a foreign affiliate of PENAC. PENAC voluntarily disclosed this matter to OFAC.
  

• Houston, Texas-based Willbros USA, Inc. paid $6,600 to settle an allegation of violation of the Sudanese Sanctions Regulations occurring in 2003 and 2004. OFAC alleged that Willbros, through a former Senior Vice President, willfully violated the Sudanese Sanctions Regulations (SSR) when it entered into a contract to bid on an oil development project in Sudan, despite its knowledge that such activities violated the Regulations, by facilitating the export of goods, technology or services to Sudan and evading the prohibitions set forth in the SSR. Willbros voluntarily disclosed this matter to OFAC.

Labels: Cuba, OFAC, Sanctions; Iran, Sanctions; Sudan

Today U.S. District Judge Thomas sentenced former University of Tennessee Professor John Reece Roth to 48 months in prison for violating the Arms Export Control Act. Following his release from prison, Roth, who is 72 years old, must serve two years of supervised release. Although he faced potential fines of more than $15 million, Judge Varlan did not impose any monetary penalties on Dr. Roth. The sentence was 15 months below the minimum suggested 63 month sentence contained in the Federal Sentencing Guidelines.

The press release issued by the Justice Department announcing Dr. Roth's sentence can be found here.

Following the sentencing hearing, there was a bond hearing at 2 p.m. today to determine whether Dr. Roth should remain free on bond pending an appeal. The U.S. Attorney's office opposes Dr. Roth's defense counsel's request that he remain free on bond. At the bond hearing Judge Varlan indicated that he would consider Dr. Roth's motion for bond pending appeal and will render a decision in the coming weeks.

There are still two more sentences to be handed out in this case. Daniel Daniel Max Sherman, a University of Tennessee-trained physicist who was an employee, director and one of the original founders of Atmospheric Glow Technologies, Inc. , pleaded guilty to conspiracy to violate the Arms Export Control Act. Sherman, who has been free on bond, will be sentenced in on July 17th. Sherman was a graduate student under Dr. Roth's supervision at the University of Tennessee and served as the lead scientist in the Air Force projects contracts at issue in this case.

One of Dr. Roth's alleged co-conspirators, Atmospheric Glow Technologies, Inc. (AGT) will be sentenced on August 27th. AGT, which filed last year for bankruptcy, was a plasma technology company located in Knoxville, Tennessee. AGT pleaded guilty in August 2008 to 10 counts of unlawfully exporting defense articles to a citizen of the People’s Republic of China in violation of the Arms Export Control Act.

More details to follow as soon as they are available.

Labels: Export Controls

U.S. Trade Representative Ron Kirk today announced the results of the 2008 Annual Review of the Generalized System of Preferences (GSP) program. The following is a summary of the results:

• De minimis waivers were granted on 112 products from 16 beneficiary countries.

• Added two agricultural products to the list of products eligible for GSP duty-free export into the United States from all beneficiary countries.

• Determined that 12 products from six beneficiary countries should be excluded from the GSP program since they exceeded the competitive need limitation.

• Unfortunately, the Obama Administration did not grant any of the numerous requests for redesignation of products that had been excluded from GSP since they exceeded the competitive need limitation in previous years.
  

Labels: GSP

After nearly ten months following his conviction of numerous export control violations, retired University of Tennessee professor John Reece Roth will be sentenced tomorrow, July 1, 2009, at 10 a.m. EDT by U.S. District Judge Thomas Varlan in Knoxville, Tennessee.

Information on Dr. Roth's sentence will be posted here as soon as it is available.

As we have previously reported, on September 3, 2008 Dr. Roth was convicted by a federal jury of one count of conspiring with Atmospheric Glow Technology, Inc. to unlawfully export in 2005 and 2006 "defense articles" to a citizen of the People’s Republic of China in violation of the Arms Export Control Act.

Dr. Roth was also convicted of 15 counts of violating the Arms Export Control Act and one count of wire fraud relating to defrauding the University of Tennessee of the honest services by illegally exporting controlled technical data relating to a U.S. Air Force contract.

Dr. Roth faces a maximum prison sentence of 175 years and more than $15,500,000 in fines. While the maximum prison sentence for each of the 15 Arms Export Control Act violations (22 USC § 2278) is 120 months in prison, the Federal Sentencing Guidelines provide for a prison sentence in the range of 63-78 months. The Federal Sentencing Guidelines note that in determining the sentence within the applicable guideline range, the judge may consider the "degree to which the violation threatened a security or foreign policy interest of the United States, the volume of commerce involved, the extent of planning or sophistication, and whether there were multiple occurrences." Where such factors are present in an extreme form, the judge may depart from the guidelines.

The sentencing date of Atmospheric Glow Technology, Inc. has not yet been set.

Labels: Export Controls, ITAR

In the first Foreign Corrupt Practices Act (FCPA) involving Vietnam, the Justice Department announced yesterday that Joseph T. Lukas, a former executive of Philadelphia-based Nexus Technologies Inc. pleaded guilty to one count of conspiracy to violate the FCPA and one count of violating the FCPA in connection with his role in a scheme to pay bribes to Government of Vietnam officials in exchange for contracts to supply equipment and technology to Vietnamese government agencies.

Mr. Lukas was arrested on September 5, 2008, after being indicted by a federal grand jury in Philadelphia. Also indicted in this case was Nexus Technologies and three alleged co-conspirators. Cases are still pending against the remaining defendants and the company.

Nexus Technologies Inc. is a Delaware company with offices in Philadelphia, New Jersey and Vietnam that allegedly purchased a wide variety of equipment and technology, including underwater mapping equipment, bomb containment equipment, helicopter parts, chemical detectors, satellite communication parts and air tracking systems, for export to agencies of the government of Vietnam. The indictment alleged that from approximately 1999 through 2008, the defendants engaged in a conspiracy to pay Vietnamese government officials bribes in order to secure lucrative contracts. Over the course of the scheme, the defendants are alleged to have paid at least $150,000 in bribes to foreign officials in Vietnam. The customers in Vietnam are alleged to have included the commercial branches of Vietnam's Ministries of Transport, Industry and Public Safety.

In connection with his guilty plea, Mr. Lukas admitted that from 1999 to 2005, he and other employees of Nexus Technologies Inc. agreed to pay, and knowingly paid, bribes to Vietnamese government officials in exchange for contracts with the agencies for which the officials worked. The bribes were falsely described as "commissions" in the company’s records.

Mr. Lukas faces a maximum prison sentence of 10 years in prison and a $350,000 fine when he is sentenced in April 2010.

Labels: FCPA, Vietnam

U.S. exporters, freight forwarders and other authorized agents filing Electronic Export Information (EEI) using the Automated Export System should be aware that today the Census Bureau's Foreign Trade Division issued an important export compliance notice.

The notice, which is reprinted below, advises that on October 1, 2009, the Bureau of Industry and Security (BIS) will be adding new electronic edits on ECCNs, Special Comprehensive Licenses and certain license exceptions to ensure that EEI information reported is correct and accurate.

AES Broadcast 06/30/2009 Broadcast # 2009024

**********************************************************************

BIS to Add New Edits on ECCNs, Special Comprehensive Licenses, and Certain License Exceptions

**********************************************************************

United States Principal Parties in Interest (USPPIs) and their authorized filing agents (AES filers) are reminded that the AES record containing the Electronic Export Information (EEI) is an export control record under § 758.1(f) of the Export Administration Regulations (EAR). Furthermore, the AES record represents whether the export authorized under the terms and conditions of a license, license exception or no license required is true, accurate and complete.

Effective October 1, 2009, BIS is tightening up the edits on the EEI to improve statistics and to ensure that AES filers are correctly certifying the use of a license or license exception authorization or no license required designation. AES filers must prepare for these edits, as described below to prevent the return of fatal errors from AES.

- The export Control Classification Number (ECCN), when reported in AES must be [a] valid 5 - position ECCN as listed on the Commerce Control List. See Supplement 1 to § 774 of the EAR for a complete list of valid ECCNs and their descriptions. www.access.gpo.gov/bis/ear/ear_data.html

- The Special Comprehensive License (SCL) number reported in AES under license type C31 must be a BIS approved SCL.

- License exceptions LVS(C35), GBS(C36), CIV(C37), and TSR(C38) must designate an eligible ECCN and country. See Part 740 (License Exceptions) and Supplement 1 to § 774 (Commerce Control List) www.access.gpo.gov/bis/ear/pdf/740spir.pdf and
www.access.gpo.gov/bis/ear/ear_data.html

- In accordance with the EAR § 740.17, license exception ENC(C50) must only be used with ECCNs 5A002, 5B002, 5D002 and 5E002. www.access.gpo.gov/bis/ear/pdf/740.pdf

Please note that by using a License Exception, you are certifying that the terms, provisions and conditions for the use of the License Exception described in the EAR have been met. See Part 740 of the EAR.

If you are unable to resolve fatal errors related to the above and require regulatory guidance from BIS, please contact its Office of Exporter Services at one of the following locations.

Western Regional Office (949) 660-0144
San Jose, CA Branch (408) 291-4212
Headquarters, Washington, DC (202) 482-4811

Labels: AES, Census

An antidumping petition was filed today with the U.S. International Trade Commission and Department of Commerce against woven electric blankets from China.

The petitioner in this case is Jarden Consumer Solutions, a subsidiary of Jarden Corporation (NYSE: JAH) and the owner of Sunbeam Bedding and several other well known consumer brands, including Mr. Coffee.

The petition identifies the product allegedly sold at less than fair value as finished or unfinished woven electric blankets of all sizes including twin, full, queen and king sizes. The subject blankets consist of a shell of woven fabric, made of synthetic or natural fiber, or a blend of synthetic and natural fiber which contains heat-producing wire whose temperature is controlled by one or more thermostats or controllers. Imported woven electric blankets are classified under Harmonized Tariff Schedule of the United States (“HTSUS”) subheading 6301.10.0000 and are currently subject to an 11.4% duty rate.

Labels: Antidumping, China

U.S. Customs and Border Protection announced today that the 2009 Trade Symposium will take place from December 8 – 10, 2009. The program will be held for the first time at the Walter E. Washington Convention Center in Washington, DC, a much larger venue than the Ronald Reagan Building.

Further information on registration procedures and the agenda will be issued in the "early fall."

The materials from CBP's 2008 Trade Symposium can be found here.

Labels: CBP

As a follow-up to our previous post, the Bureau of Industry and Security today announced that the 22nd annual Update Conference on Export Controls and Policy will be held September 30 through October 2, 2009 in Washington, DC.

Because the expected number of attendees will likely exceed the number of persons interested in attending, BIS will hold a registration lottery as they did in the past few years. Interested persons must first complete and submit the online “Interest Form” below between June 25 and July 17. If there are more potential participants than there is space available, BIS will grant registration through a random selection from the entire list of respondents, regardless of when received during the period. Those selected will be notified and given registration instructions in late July. They must register and submit payment by the designated date or their place will be forfeited and given to someone on the waiting list.

More information on the venue and program will be available in the coming weeks.

Labels: BIS Update Conference

While the specific dates and location have not been finalized, this year's Bureau of Industry and Security's annual update Update Conference on Export Controls and Policy should be held during the week of September 28, 2009 (end of September and beginning of October). Details on registration will follow once BIS has finalized the dates.

Labels: BIS Update Conference, Export Controls

There are two good export controls-related programs scheduled for next week. It is not too late to sign up for these programs.

June 24, 2009 - Import/Export Classification Boot Camp: Cross-Training for International Trade Professionals, Philadelphia, Pennsylvania

This one-day seminar presented by Sandler, Travis & Rosenberg, P.A. breaks the traditional barriers between imports and exports. This seminar will give attendees a comprehensive understanding of the principles of both import and export classification, including:
• Overview of the U.S. export classification regimes
• Principles of import classification (Harmonized Tariff Schedule of the United States)
• Principles of export classification (Schedule B, Export Administration Regulations, International Traffic in Arms Regulations)
• Consequences of import and export misclassification
• Import/Export Classification "Best Practices"

The program will be held from 8:30 am to 4:30 pm at the Sofitel Philadelphia located at 120 South 17th Street Philadelphia, PA 19103. For more information and to register see the following link.

June 25-26, 2009 - Defense Export Controls, Alexandria, Virginia

This two-day seminar presented by Technology Training Corporation and sponsored by the American Institute of Engineers will feature a wide-range of speakers on defense and other export control topics. Included among the government speakers are current and former officials with DDTC, BIS, OFAC, DTSA, NASA, DOJ, GAO, DSCA, NRC as well as representatives from the private sector.

This two-day program will be held at the Holiday Inn Hotel & Suites in Alexandria, Virginia. For more information and to register see the following link.

Labels: Export Controls

The hearing hearing on policy considerations associated with the Export Administration Act that was to be held at 2 p.m. today by House Foreign Affairs Committee's Subcommittee on Terrorism, Nonproliferation and Trade has been postponed. The new hearing date has not yet been set.

The witnesses scheduled to appear at the hearing were:

• The Honorable John Engler, President and Chief Executive Officer of the National Association of Manufacturers
  

• Arthur Shulman, Esq., Senior Research Associate at the Wisconsin Project on Nuclear Arms Control

• Owen Herrnstadt, Esq., Director of Trade and Globalization Policy at the International Association of Machinists and Aerospace Workers

Labels: EAA, Export Controls

The owner of a Florida company that pleaded guilty earlier this year to illegally exporting military and commercial aircraft parts to Iran was sentenced yesterday to 35 months in federal prison.

As part of his plea, Mr. Train Bujduveanu, a Romanian national and naturalized U.S. citizen, admitted that he used his company, Orion Aviation, to sell aircraft parts to Iran from Mr. Hassan Keshari, owner of Kesh Air International, a California-based company.

According to the indictment and statements and documents contained in court filings, Bujduveanu received orders by email from Keshari requesting specific aircraft parts for buyers in Iran. Bujduveanu then provided quotes, usually by e-mail, to Keshari. After the receipt of payment for the parts from Keshari, Bujduveanu then shipped the parts to a company in Dubai through the use of false or misleading shipping documents. From Dubai, the parts were then shipped on to the purchasers in Iran.

Among the aircraft parts illegally exported to Iran through the conspiracy were parts designed exclusively for the F-14 fighter jet, the Cobra AH-1 attack helicopter, and the CH-53A military helicopter.

Mr. Bujduveanu's co-conspirator, Hassan Keshari, pleaded guilty to one-count of conspiracy to violate export control laws and was sentenced in May 2009 to 17 months in federal prison.

Labels: Export Controls

The United Nations Security Council today passed a resolution condemning North Korea's May 25th nuclear test and imposing additional multilateral sanctions on North Korea.

Security Council resolution 1874 requires U.N. member states to impose a series of additional measures on North Korea, including tougher inspections of cargo suspected of containing banned items related to the country’s nuclear and ballistic missile activities, a tighter arms embargo (with the exception of light weapons) and new financial restrictions.

Resolution 1874 also condemned North Korea's recent nuclear test on grounds that it was conducted in “violation and flagrant disregard” of relevant Council resolutions, particularly 1695 (2006) and 1718 (2006). The resolution also demands that North Korea “not conduct any further nuclear test or any launch using ballistic missile technology.”

Security Council Resolution 1695, issued in July 2006, required U.N. member states to implement measures to prevent the procurement of missiles or missile related-items, materials, goods and technology from North Korea and the transfer of any financial resources in relation to North Korea's missile or WMD programs.

Among other things, Security Council Resolution 1718, issued in October 2006, required U.N. member states to prevent the transfer to North Korea of luxury goods, certain arms and related materiel, and items that could contribute to North Korea’s nuclear, ballistic missile, and other WMD programs. The resolution also called upon member states to prevent transfers to North Korea of technical training, advice, services or assistance related to the provision, manufacture, maintenance or use of the WMD programs.

Labels: North Korea, United Nations