International Trade Law News

The U.S. Department of Justice (DOJ) announced yesterday that a former Pacific Consolidated Industries LP (PCI) executive pleaded guilty today to charges related to the bribery of a U.K. Ministry of Defence (UK-MOD) official in order to obtain lucrative equipment contracts with the U.K. Royal Air Force, in violation of the Foreign Corrupt Practices Act (FCPA)

According to the DOJ, Martin Eric Self, 51, of Orange, Calif., pleaded guilty today before Judge Andrew J. Guilford in U.S. District Court in Santa Ana, California to a two-count information charging him with violating the FCPA in connection with the illicit payment of more than $70,000 in bribes for the benefit of a UK-MOD official in exchange for obtaining and retaining lucrative contracts for PCI.

Self was a partial owner and the president of PCI at the time the crimes were committed. PCI was a private company headquartered in Santa Ana that manufactured Air Separation Units (ASUs) and other equipment for defense departments throughout the world. ASUs generate oxygen in remote, extreme and confined locations for aircraft support and military hospitals. PCI was subsequently acquired by a group of investors and re-named Pacific Consolidated Industries, LLC (PCI, LLC). PCI, LLC referred this matter to DOJ and fully cooperated in the government’s investigation.

According to the plea agreement, in or about October 1999, Self and Leo Winston Smith, PCI’s then-executive vice president and director of sales and marketing, caused PCI to enter into a marketing agreement with a person Self understood to be a relative of the UK-MOD official. The official, as a result of his position within the UK-MOD, was able to influence the awarding of UK-MOD contracts for services and equipment. As part of the plea agreement, Self admitted that he was not aware of any genuine services provided by the official’s relative, and believed there was a high probability that the payments were being made to the official’s relative in order to benefit the official in exchange for obtaining and retaining the ASU contracts. Despite these beliefs, Self initiated several of the improper wire transfers to the relative and deliberately avoided learning the true facts relating to the nature and purpose of the payment.

Self is scheduled to be sentenced on September 29, 2008. At sentencing, Self faces a statutory maximum sentence of five years in prison per count. However, the plea agreement contemplates a prison term of eight months.

Mr. Smith was indicted in April 2007 for his role in the scheme and is scheduled to stand trial in July 2008. The UK-MOD official was investigated by U.K. authorities and has pleaded guilty in the United Kingdom to accepting bribes from PCI and was sentenced to two years in prison.

Labels: FCPA

U.S. Customs and Border Protection (CBP) has posted the results of the April 7, 2008 Customs Broker License Examination. The examination and answer key are posted below:

• April 2008 Examination

• April 2008 Answer Key

According to reports, the April 2008 examination had a pass rate of 20.5%, which is unusually high. CBP is expected to send the results to the exam takers this week.

Anyone who took the examination and did not achieve a passing score may appeal questions on that examination. Any appeal must be submitted within 60 days of the date of the letter notifying the applicant of his or her score. Instructions for submitting an appeal can be found here.

Labels: Customs Brokers

Here's a unique ITAR-related story: NASA has established a new artifact loan program to help museums and other organizations traditionally not associated with NASA to gain access to NASA artifacts. As part of this program, NASA has announced that it has a number of flown and non-flown space shuttle main landing gear tires from space shuttle missions available for long-term loan to museums, schools and civic organizations. According to NASA:

The long-term loan of these tires may be used to educate, inspire or inform the public about NASA’s scientific and technological achievements through art, sculpture, furniture, building structures, exhibits or other innovative uses of the artifacts. These items may not be used for the promotion of any organization or entity, or for commercial purposes.

Because space shuttle landing gear tires fall are covered by the U.S. Munitions List (USML) and are subject to the ITAR, NASA has provided the following notice to applicants:

The space shuttle landing gear tires shall not be transferred to foreign nationals, in the U.S. or abroad, or exported out of the United States, without specific approval of a knowledgeable NASA export control official, and/or unless an export license/license exemption is obtained/available from the United States Department of State. Violations of these regulations are punishable by fine, imprisonment, or both.

Proposals for this opportunity must be submitted to NASA by June 11, 2008 and will be selected "on the basis of the creative and innovative merit of the proposal, past experience, technical knowledge, outreach potential, educational potential, both fiscal and schedule soundness, alignment with NASA outreach and educational goals, and attraction of nontraditional audiences."

A list of the available space shuttle flown main landing gear tires can be found here. All of these space shuttle tires were manufactured by the Michelin Aircraft Tire Company, "the sole tire supplier to the NASA space shuttle" at its Norwood, North Carolina facility.

Labels: ITAR

As a follow-up to yesterday's post about OFAC's issuance of a general license to assist relief efforts in Myanmar (Burma), the Treasury Department today issued a press release stating:

The U.S. Department of the Treasury's Office of Foreign Assets Control (OFAC), in consultation with the Department of State, issued a general license to help facilitate the flow of funds for humanitarian assistance to the Burmese people in the wake of Cyclone Nargis.

"The American people continue to demonstrate their concern for the people of Burma, particularly as they reel from the devastation of Cyclone Nargis," said OFAC Director Adam J. Szubin. "This license will help to clear the way for additional humanitarian aid to make it to the Burmese people swiftly and efficiently."

This general license is particularly needed in the wake of Cyclone Nargis and the resulting devastation. The issuance of this general license will ease the work of U.S. and third-country nongovernmental organizations (NGOs), as most will no longer need to apply to OFAC for specific licenses or registration numbers in order to transfer funds to Burma to support their humanitarian activities. The general license authorizes the export and reexport of financial services, including the flow of humanitarian funds, to Burma in support of the not-for-profit humanitarian or religious activities in Burma of U.S. or third-country NGOs.

Prior to the issuance of the general license, sending funds to Burma, which is generally prohibited under the Burma sanctions program, would have required the issuance of a specific license by OFAC. NGOs may continue to rely upon outstanding specific licenses and may apply for specific licenses to engage in funds transfers in support of humanitarian activities beyond the scope of the general license.

Existing general licenses already authorize the exportation or reexportation of financial services ordinarily incident to the exportation of goods, technology, or services, other than financial services, to Burma. This action will allow U.S. individuals and entities to send, and U.S. financial institutions to transfer, funds to Burma to be used to support the humanitarian activities of U.S. or third-country NGOs in Burma. Third-country individuals and entities also will be able to transfer dollar-denominated funds through the United States to be used to provide humanitarian assistance by NGOs in Burma. This general license does not authorize the provision of financial services directly or indirectly to the Government of Burma or to persons blocked under the Burma sanctions and such services remain prohibited.

All transfers authorized by this general license may be made utilizing the services of blocked financial institutions in Burma, provided the transfers are made through third-country banks (no debits or credits may be made to any blocked account on the books of a U.S. financial institution).

Please visit the following link to access the general license:
www.treasury.gov/offices/enforcement/ofac/programs/burma/gls/burmagl14.pdf

Editors Note: For those interested in contributing funds to the disaster relief efforts in Myanmar, a list of NGOs can be found at www.interaction.org/burma.

Labels: Burma/Myanmar

The Associated Press reports that a federal jury in Madison, Wisconsin today convicted an Indonesian national of conspiracy to violate the Arms Export Control Act for attempting to export rifles scopes to Indonesia without the proper State Department licenses. The article states that the defendant attempted to export 100 Leupold Mark 4 Close Quarter/Tactical (CQ/T) that are "designed to attach to M-16 and AR-15 assault rifles".

According to the manufacturer's website:

The CQ/T riflescope, parts, and accessories fall under the jurisdiction of the U.S. Department of State. Unless required State Department license is obtained, this product is for sale in the U.S.A. only.

The article indicates that the defendant "offered investigators various explanations" for trying to export the rifle scopes to Indonesia, including that "he wanted the scopes to hunt boars, then said he needed them for a rifle competition in Indonesia, then said it was all a misunderstanding and a joke. " The article states that "text messages investigators recovered indicate coconspirators in Indonesia planned to sell the scopes to police."

The article also notes that the defendant is scheduled to be sentenced July 28 and that Indonesian authorities are still searching for the coconspirators.

The criminal penalties for violating the Arms Export Control Act include a fine of not more than $1,000,000, imprisonment of up to ten years, or both.

Labels: ITAR

The State Department's Directorate of Defense Trade Controls (DDTC) has released the license processing time statistics for April 2008:

Cases Received: 7,728
Cases Closed: 7,438
Cases Open At End of Month: 3,720
Average Processing Time: 15 Days

By contrast, in April 2007 DDTC received 6,290 cases and the average processing time was 32 days.

The good news for defense exporters is that during the past year DDTC's average license processing times have been cut in half even though nearly 23% more applications were submitted.

As for the average processing times, DDTC notes that for electronic cases (i.e., those being filed via D-Trade), the processing times are based on the date the case was signed by the applicant until the date of final action. DDTC also indicated that the methodology for calculating the average processing times for hardcopy cases has changed. The processing times for April 2008 were determined by the date the case entered DDTC until the time the case is signed out of DDTC. Previously, the processing time for hardcopy cases was based on the application date until the date of final action.

Labels: DDTC, ITAR

The Justice Department announced today the unsealing of an indictment against international arms dealer Viktor Bout, for, among other things, conspiring to sell millions of dollars worth of weapons to the Fuerzas Armadas Revolucionarias de Colombia (the FARC), a designated foreign terrorist organization based in Colombia, to be used to kill Americans in Colombia.

Bout has been called the "poster boy for a new generation of post Cold War international arms dealers." The Indictment unsealed today charges Bout with four separate terrorism offenses:

Count One: Conspiracy to kill United States nationals;

Count Two: Conspiracy to kill United States officers or employees;

Count Three: Conspiracy to acquire and use an anti-aircraft missile; and

Count Four: Conspiracy to provide material support or resources to a designated foreign terrorist organization.

If convicted, Bout faces a maximum sentence of life imprisonment on each of Counts One through Three, including a mandatory minimum sentence of 25 years in prison for Count Three and a maximum sentence of 15 years on Count Four.

Bout has been in custody in Thailand since March 6, 2008 and the U.S. is actively pursuing Bout’s extradition from Thailand.

The U.S. Department of Commerce (DOC) announced today that, after reviewing the second six months of data from the monitoring program of apparel imports from Vietnam, there is insufficient evidence to warrant self-initiating an antidumping investigation. The import monitoring program began upon Vietnam’s entry into the World Trade Organization in January 2007.

Assistant Secretary for Import Administration David Spooner said that DOC's “investigation reveals that prices of Vietnamese apparel are in line with, and in most cases even exceed, other major suppliers, including Central America.”

During its review DOC examined import data for five different apparel product groups from Vietnam – trousers, shirts, underwear, swimwear and sweaters – during August 2007 through January 2008. The review determined that during this period, the U.S. did not import apparel from 208 of nearly 500 ten-digit Harmonized Tariff Schedule lines within the five groups from Vietnam. Many of the remaining ten-digit HTS lines had rising unit values, further indicating that dumping is not taking place.

DOC then compared trends in unit values and import levels to other suppliers of these products to the United States, including Bangladesh, CAFTA-DR (Costa Rica, Dominican Republic, El Salvador, Guatemala, Honduras, and Nicaragua), India, Indonesia, Pakistan, Thailand, Cambodia, Macau, Malaysia and the Philippines. Based on this comparison, Commerce concluded that there was insufficient evidence to self-initiate an antidumping investigation.

DOC indicated that it will continue to monitor trade in these categories during the next six months for the next review that will begin in September 2008.

The import data for these product groups can be found on the Vietnam Textile and Apparel Import Monitoring Program Web site at www.otexa.ita.doc.gov/vn.htm.

Labels: Antidumping, Vietnam

In order to support the humanitarian relief efforts in Burma (Myanmar) as a result of the devastation left by Cyclone Nargis, the Treasury Department's Office of Foreign Assets Control (OFAC) today issued General License Number 14 under the Burmese Sanctions Regulations.

General License No. 14 authorizes the exportation or reexportation of financial services to Burma in support of not-for-profit humanitarian or religious activities in Burma of U.S. or third-country nongovernmental organizations.

However, the General License does not permit financial services to be provided directly or indirectly to the Government of Burma, to persons whose property and interests in property have been blocked by the U.S. or to nongovernmental organizations owned or controlled by the Government of Burma.

Labels: Burma/Myanmar

The Commerce Department's Bureau of Industry and Security (BIS) recently imposed a $31,500 penalty on TFC Manufacturing Inc., a Lakewood, California-based aerospace fabrication facility, for violating the "deemed export" rule.

According to the Settlement Agreement and Proposed Charging Letter, BIS alleged that between March and April 2006, TFC engaged in the unlicensed released in the U.S. of technology for the production of aircraft parts (classified under ECCN 9E991) to an employee who was a national of Iran. Pursuant to the deemed export rule in section 734.2(b)(ii) of the Export Administration Regulations (EAR), the release of technology to a national of Iran is deemed to be the export of the technology to Iran and is prohibited without a license.

This penalty was imposed under the increased penalty provisions of the IEEPA Enhancement Act.

Labels: BIS, Deemed Exports

U.S. Customs and Border Protection officers conducting outbound operations at the port of El Paso, Texas recently seized 2,000 AC/DC power adapters in an in-bond shipment from China to Mexico since the Underwriters Laboratories "UL" markings on the adapters were counterfeit.

CBP's intensive examination of the merchandise revealed that the items were labeled "Made in China" and did not bear "UL"-authorized control numbers. Through collaboration with Underwriters Laboratories, it was determined that the labels were counterfeit.

Labels: CBP

The comments submitted by the public on U.S. Customs and Border Protection's (CBP) proposed change to the "first-sale" rule have been posted on the Regulations.gov website. The controversial proposal generated a great deal of interest and CBP received more than 140 comments by importers, trade associations, law firms and members of Congress.

Under CBP's proposal issued on January 24, 2008, in a transaction involving a series of sales, the price actually paid or payable for the imported goods when sold for exportation to the U.S. would be changed to the price paid in the last sale occurring prior to the introduction of the goods into the U.S., instead of the first (or earlier) sale. As a result, the entered value for duty assessment purposes would be determined on the basis of the price paid by the buyer in the U.S. (the last sale), rather than the first sale.

CBP's proposal has generated a great deal of criticism by U.S. importers and retailers since this change in CBP's long-standing policy will increase the duties paid on U.S. imports.

Labels: CBP, First Sale Rule

Export compliance professionals in the Kansas City and St. Louis areas are invited to attend Export Compliance Roundtable breakfast programs on May 28 and 29, 2008. These programs are sponsored and presented by Kewill Trade & Logistics and Strasburger & Price, LLP.

These programs will feature a presentation by Douglas N. Jacobson, Esq. on Hot Topics in Export Controls Compliance and Enforcement, an overview of Kewill Trade & Logistics solutions presented by John McGurk, and a roundtable discussion of compliance issues facing exporters today.

The Kansas City are program will be held in Overland Park, Kansas on May 28 and the St. Louis area program will be held in Clayton, Missouri on May 29.

For more information and to register, see the following site:
www.tradepointsystems.com/marketing/breakfast2/default.html

Labels: Export Controls

The National Council on International Trade Development (www.ncitd.org) has announced that its next monthly international trade compliance meeting on May 8, 2008 in Washington, DC will feature the following speakers:

Ms. Hillary Hess
Director, Regulatory Policy Division
Bureau of Industry and Security, U.S. Department of Commerce

Ms. Randy Pratt
Director, Information Technology Controls Division
Bureau of Industry and Security, U.S. Department of Commerce

Ms. Lauren Airey
Legislative Assistant to Rep. Don Manzullo (IL-16)
Speaking on H.R. 5828, the Securing Exports Through Coordination and Technology Act of 2008

For information on how to join NCITD or to attend the meeting, see www.ncitd.org or contact the NCITD Secretariat at 202-872-9280.

Also, it is not too late to sign up for the NCITD's "Free Trade Agreements for U.S. Businesses: A Practical Seminar on how U.S. Free Trade Agreements Work" program on May 7, 2008. Click here for more information.

Labels: AES, BIS

U.S. companies that import chemicals covered by the Toxic Substances Control Act (TSCA) may be interested to know that the U.S. Environmental Protection Agency (EPA), in consultation with the U.S. Bureau of Customs and Border Protection (CBP), has developed a new "TSCA Section 13 Import Compliance Checklist." While this checklist is intended to provide a "roadmap" to help chemical importers determine how to certify their chemical imports for compliance with the import requirements under section 13 of TSCA and 19 CFR §§ 12.118-12.127, there is no requirement that importers use the Checklist or submit it to EPA or CBP.

The "TSCA Section 13 Import Compliance Checklist" is in PDF format and can be located at the following link: www.epa.gov/opptintr/chemtest/pubs/checklist.pdf.

Labels: TSCA

Saturday's New York Times reported on the China International Exhibition on Police Equipment that was sponsored by China's Ministry of Public Security and recently held in Beijing. The article describes the large number of U.S. companies exhibiting at the show and that "the trade show coincided with increasing controversy in the United States over American exports of crime-control equipment to China."

The number of U.S. companies exhibiting at trade show has apparently attracted the interest of the Bureau of Industry and Security:

Asked about the abundant American gear shown at the police equipment trade show, Mario Mancuso, the under secretary of commerce for industry and security, replied with a one-sentence written statement: “Enforcing U.S. regulations on crime control equipment, including the Tiananmen Square Sanctions, is a top priority, and we continually review our regulations to ensure that they effectively support our national security and foreign policy.”

Another Commerce Department official said that questions from The New York Times about American equipment exhibited at the trade show had prompted the department to begin a review of whether American laws might have been broken. The official insisted on anonymity, in keeping with a department policy of not commenting on work that might lead to law enforcement actions.

The department has officials in Beijing and Hong Kong who look for violations of export control laws, but did not try to send anyone into the police equipment trade show.

Labels: BIS, China

The U.S.-China Economic and Security Review Commission will hold a public hearing in Washington, DC on May 20, 2008 to address "China's Proliferation Practices and the Development of its Cyber and Space Warfare Capabilities'' The hearing will examine China's proliferation activities, China's growing cyber space activities and capabilities as well as China's growing presence and capabilities in outer space. Further details on the hearing can be found in Monday's Federal Register.

Congress created the U.S.-China Economic and Security Review Commission in 2000 in the National Defense Authorization Act (Section 1238 of Pub. L. 106-398). The Commission is mandated by Congress to investigate, assess, evaluate and report to Congress annually on "the national security implications and impact of the bilateral trade and economic relationship between the United States and the People's Republic of China."

On a related note, USCC held a public hearing in New Orleans, Louisiana last week on the safety and trade issues related to imported seafood from China. The agenda for that hearing can be found here.

Labels: China

As part of the Bush Administration's efforts to convince Congress to pass the U.S.-Colombia Trade Promotion Agreement, the Commerce Department today released the “Colombia Tariff Ticker” which tracks the dollar value of tariffs since the signing of the U.S.-Colombia Trade Promotion Agreement 520 days ago. According to Commerce, the tariffs paid by U.S. exporters to Colombia shown on the Colombia Tariff Ticker are an estimate based on data from the World Trade Atlas and Colombian tariff schedules.

Colombia Tariff Ticker
In launching the Colombia Tariff Ticker, the Commerce Department said that the U.S.-Colombia Trade Promotion Agreement "would eliminate 80 percent of these tariff payments on consumer and industrial goods immediately, and 100 percent within ten years." Commerce also noted that American exports face an estimated $1.9 million on tariffs each day that passes without two-way free trade with Colombia.

Labels: Colombia, Commerce Department