International Trade Law News

Today the Bureau of Industry and Security (BIS) published a regulation in the Federal Register amending the Export Administration Regulations (EAR) to reflect the U.S. Government's April 23, 2004 decision to modify the U.S. sanctions on Libya. Effective April 29, 2004, U.S. companies and their foreign subsidiaries may now export and reexport U.S. origin products to Libya, subject to the limitations discussed below. As the Federal Register notice indicates, BIS now has jurisdiction over the export and reexport of items subject to the Export Administration Regulations (EAR) to Libya. OFAC will continue to have jurisdiction over certain financial transactions with Libya and transactions involving blocked Libyan assets or Libyan entities included on the list of Specially Designated Nationals (SDN List).

The following is a summary of the main points of BIS's new licensing requirements and policies involving Libya:

License Requirements for Exports and Reexports to Libya

*Items subject to the EAR, but not listed on the Commerce Control List (CCL) (i.e., EAR99 items), generally do not require a license for export to Libya (except as defined in the end-user and end-use controls set forth in Part 744 of the EAR).

*Most items on the CCL (i.e., non-EAR99 items, such as high-performance computers, software containing advanced cryptographic, cryptoanalytic and cryptologic items ) will require a license from BIS for export or reexport to Libya.

*The de minimis rules applicable to Libya remain unchanged. Reexports of items to Libya from third countries are subject to the EAR when U.S.-origin controlled content in such items exceeds 10% and would require a license if exported or reexported to Libya as an individual component. Reexports that exceed 10% but do not exceed 20% U.S.-origin controlled content will be reviewed on a case-by-case basis.

*Items controlled by multilateral export control regimes (i.e., items controlled for national security (NS), missile technology (MT), chemical and biological weapons (CB), and nuclear nonproliferation (NP) reasons on the Commerce Control List (15 CFR Part 774)(CCL)) will require a license to Libya, as do items controlled for crime control (CC) and regional stability (RS) reasons.

*Libya remains on the list of designated state sponsors of terrorism. As a result, most items controlled for anti-terrorism (AT) reasons will continue to require a license for export or reexport to Libya.

*Additionally, certain categories of items controlled for reasons not included on the Country Chart in Part 738 of the EAR (e.g., encryption (EI), short supply (SS), Chemical Weapons (CW), Computers (XP) and Significant Items (SI)) also require a license for export or reexport to Libya.

Deemed Exports

Section 734.2(b)(ii) of the EAR provides that the release of technology or source code to a foreign national in the United States is "deemed" to be an export to the home country of that foreign national. License applications for the deemed export of technology or source code to Libyan nationals in the United States will be reviewed by BIS on a case-by-case basis. This license requirement does not apply to Libyan nationals who have established permanent residency in the United States or to persons protected under the Immigration and Naturalization Act (8 USC § 1324(b)(a)(3)).

OFAC Licensing and Restrictions

BIS will recognize the validity of any specific license authorized by OFAC for export to Libya until the date indicated by OFAC at the time of issuance, or until May 1, 2005 if the license does not have a specified expiration date. Items exported or reexported to Libya under a specific license from OFAC may not be transferred within Libya to a new end-user without authorization from BIS. Additionally, items reexported from Libya must conform with relevant provisions of the EAR on the basis of the country to which the items are being sent. Items reexported from Libya may require a BIS license or be eligible for shipment under a License Exception. Companies may not make sales to the Libyan military, police, intelligence service or other sensitive end-users or with individuals or groups designated as terrorists on OFAC's list of Specially Designated Nationals (SDN).

End-use/End-user Controls

This new regulation does not relieve exporters and others of their responsibility to comply with obligations under the end-user and end-use controls maintained under the Enhanced Proliferation Control Initiative (EPCI), as set forth in Part 744 of the EAR. EPCI prohibits the export or reexport of any item subject to the EAR, if, at the time of export or reexport, the exporter has reason to know, or are informed by BIS that the item will be used in the design, development, production or use of weapons of mass destruction.

Labels: BIS

The Department of Commerce recently announced the initiation of two separate investigations of live swine from Canada. The first is an antidumping investigation to determine if live swine from Canada is being sold in the U.S. at less than fair market value. The other is a countervailing duty investigation to determine whether Canadian exporters of live swine receive subsidies from the Canadian government that fail to comply with international trade agreements.

The Department of Commerce is expected to make a preliminary ruling on the antidumping investigation within 90 days of the initiation of the investigation and a decision on the countervailing duties investigation in early May.

In another ongoing dispute between Canada and the U.S., the WTO has ruled that U.S. Antidumping duties on softwood lumber from Canada were consistent with the WTO Antidumping Agreement.

The WTO did not rule, however, that every U.S. practice was legal under the Antidumping Agreement. Most notably, the WTO panel ruled that the U.S. practice of zeroing was inconsistent with Section 2.4.2 of the Antidumping Agreement. This decision contravenes the U.S. Court of Appeals for the Federal Circuit’s ruling in Timkin v. U.S., in which the Federal Circuit ruled that Commerce’s practice of zeroing negative margins was in accordance with U.S. and international laws. The Timkin court distinguished the U.S. practice from previous WTO decisions, namely the EC – Bed Linens decision, on the basis that those WTO decisions “did not involve the United States.” Timkin Company v. United States, 354 F.3d 1334 (Fed. Cir. 2004).

Under the Dispute Settlement Understanding, both the United States and Canada may appeal the decision.

The White House today announced the lifting of most United States economic sanctions on Libya. First, the White House stated that the President issued Presidential Determination No. 2004-30 certifying that Libya has fulfilled the requirements of United Nations Security Council Resolution 731, adopted January 21, 1992, United Nations Security Council Resolution 748, adopted March 31, 1992, and United Nations Security Council Resolution 883, adopted November 11, 1993. As a result of this Presidential Determination, the application of the Iran and Libya Sanctions Act will be terminated with respect to Libya.

In addition, the Treasury Department 's Office of Foreign Assets Control (OFAC) has modified sanctions imposed on U.S. firms and individuals under the authority of the International Emergency Economic Powers Act. OFAC has issued a general license that will authorize most new transactions with Libya. The general license will take effect on the date the Federal Register publishes the Department of Commerce’s revised regulations on exports to Libya. The general license will lift most of the economic embargo that has been in place against Libya since 1986 and will permit the following activities:

*Most trade and investment activities between the U.S. and Libya will be permitted under the general license, including the importation and exportation of goods or services, subject to export controls maintained by the Department of Commerce's Bureau of Industry and Security (BIS). As a result of this action it will not longer be necessary to obtain a license to export agricultural products, medical devices, medicines and other EAR99 items to Libya. However, as noted below, items on the Commerce Control List will still require an export license to be issued by BIS prior to export.
U.S. companies will be able to enter into and implement most industrial, commercial or government contracts, as well as invest in Libya, again subject to export controls based on Libya’s status on the State Sponsors of Terrorism List.

*U.S. banks and other financial service providers will be able to participate in and support transactions with Libya.

*Libyan students may study in the U.S. if they are accepted by an American university and qualify for a student visa.

Certain restrictions on transactions with Libya will remain:

*All property blocked as of the effective date of the general license will remain blocked;

*Restrictions will continue to apply to exports of dual-use items with military potential, including potential for WMD or missile applications.

*Exports to Libya of defense articles and services on the U.S. Munitions List remain prohibited.

*Goods or technology controlled for export to Libya under the terms of the U.S. Department of Commerce’s Export Administration Regulations require licensing for export;

*Transportation-related transactions remain prohibited, except as expressly authorized by the general license for travel issued on February 26, 2004. This includes, but is not limited to, flights to or from Libya by U.S. air carriers, code-sharing involving flights to or from Libya, and flights to or from the United States by Libyan air carriers.

Because the general license transfers export licensing jurisdiction from OFAC to BIS, there will be a delayed effective date to coincide with the effective date of BIS's revised regulations for Libya to ensure no gap in export licensing jurisdiction. As a result of this delay, no transactions with Libya should be conducted until the general license is published in the Federal Register, which should take place next week.

Labels: BIS

The Office of the United States Trade Representative (USTR) has released the 2004 edition of the National Trade Estimate (NTE) Report on Foreign Trade Barriers. The NTE documents foreign trade barriers to U.S. exports and U.S. efforts to reduce and eliminate those barriers.

The NTE report includes a list of barriers and unfair trade practices to U.S. exports of goods, services, and farm products. This year's NTE Report covers 58 major trading partners of the U.S. and profiles policies restricting market access. The NTE report highlights the global effort to reduce or eliminate those barriers, and notes the effect of the Free Trade Agreement negotiations the U.S. has held or plans to hold, as well as top areas of concern related to intellectual property rights protection and sanitary and phytosanitary measures.

The NTE report can be found at the following Web site: http://www.ustr.gov/reports/nte/2004/index.htm.