International Trade Law News

The U.S. Commercial Service (USCS) in Turkey, Egypt, Israel, West Bank/Gaza, Jordan and Lebanon have announced the development of the Access Eastern Mediterranean Program (AEM) Program to assist U.S. companies sell U.S. origin healthcare products and services to the region’s 150 million consumers during June 2004.

The USCS estimates that the annual healthcare market in Turkey, Egypt, Israel, West Bank/Gaza, Jordan and Lebanon is worth over $15 billion. Currently, the U.S. companies hold only a 20% market share.

To participate in the AEM Program, companies must first register with the USCS. The USCS will then feature the products of those companies paying the required registration fee on a special password-accessed AEM Web site. The USCS will also promote the products to hundreds of potential agents, distributors and other partners in the six markets. USC will track and follow all responses, including visitors to your information on the AEM website and provide each company with separate reports for each market.

For more information about the AEM Program, see the following Web site: http://www.buyusa.gov/easternmed/medical.html.

Peter Lichtenbaum, Assistant Secretary for Export Administration, indicated today that the long-awaited regulation that would transfer jurisdiction on Iraq-related export controls and licensing from the Treasury Department's Office of Foreign Assets Control (OFAC) to the Commerce Department's Bureau of Industry and Security (BIS) should have inter-agency clearance by the end of this month and would be published in the Federal Register in June 2004.

U.S. economic sanctions on Iraq were substantially lifted in May 2003 after President Bush suspended most of the provisions of the Iraq Sanctions Act of 1990. At that time the administration indicated that primary licensing jurisdiction over exports and reexports to Iraq would be returned to BIS. Treasury and Commerce staff have encountered numerous delays while drafting the implementing regulations over the past twelve months. Until the regulations that transfer licensing jurisdiction to BIS are published, exporters must continue to obtain licenses from OFAC to export or reexport controlled goods or technology to Iraq.

As a result of the U.S. International Trade Commission's final affirmative injury determination on May 14, 2004, the U.S. Department of Commerce will issue an antidumping duty order on imports of certain color television receivers (CTVs) from the People's Republic of China on May 21, 2004.

The antidumping duty order will impose antidumping duties ranging from 5.22% to 78.45%
on CTVs imported from China. Two of China's largest and most well-known manufacturers and exporters of CTVs, Haier Electric Appliances International Co. and Konka Group Company, Ltd., will be subject to antidumping duties in the amount of 22.94% and 9.69%, respectively.

This antidumping investigation was commenced in May 2003 after an antidumping petition was filed by Five Rivers Electronic Innovations, LLC and two labor unions.

The value of U.S. imports of CTVs from China increased from $23,907,845 in 2001 to $276,432,525 in 2003.

The U.S. Department of Commerce's Bureau of Industry and Security (BIS) has imposed a $24,500 civil penalty on Input/Output Exploration Products (UK), Inc., the foreign subsidiary of a Texas-based U.S. manufacturer of seismic imaging technology, to settle charges that the company violated the antiboycott provisions of the Export Administration Regulations (EAR).

In its charging letter, BIS alleged that in 1999 Input/Output Exploration Products (UK), Inc., violated the EAR when it provided answers to questions from a customer about its business with or in Israel and the business relationships of its parent company with or in Israel. BIS also charged that in 1999 Input/Output Exploration Products (UK), Inc. unlawfully agreed to refuse to do business with companies on lists maintained by Arab League countries that boycott Israel, and failed to report its receipt of boycott requests received in three transactions. The charges involved transactions with Syria, which the company voluntarily self-disclosed to BIS.

The antiboycott provisions of the EAR prohibit U.S. persons from complying with certain
requirements of unsanctioned foreign boycotts, including providing information about business relationships with Israel and refusing to do business with persons on boycott lists. In addition, the EAR requires that persons report their receipt of certain boycott requests to the Department of Commerce. Under the antiboycott provisions of the EAR, a controlled-in-fact foreign subsidiary of a domestic U.S. company is considered a U.S. person.

Labels: Boycotts

The National Foreign Trade Council (NFTC), USA*Engage, and the Association of Travel-Related Industry Professionals (ATRIP) have created an alliance to address U.S. sanctions policy on Cuba. The alliance was formed in an effort to discourage the U.S. from imposing further restrictions on Cuba as proposed by a recent report issued by the President's Commission for Assistance to a Free Cuba. The report's initiatives, which President Bush has directed be implemented, include a number of changes to current U.S. policy that may be harmful to Cuban Americans. The proposed actions include:

* Further limitation of family visits and humanitarian remittances to Cubans. The proposed regulations will limit visits to once in any three-year period and require travelers to obtain a specific license from the Treasury Department's Office of Foreign Assets Control (OFAC) to do so. Obtaining licenses from OFAC can be a time-consuming process.

* Elimination of the "fully-hosted" travel category. Fully-hosted travel permits travel to Cuba, provided that those traveling do not spend any money while there; under current OFAC regulations, individuals who travel to Cuba fully-hosted do not violate any of the
existing U.S. embargo prohibitions.

* Restrictions on passengers' charter-flight baggage to 44 pounds.

The alliance notes that, while the report issued by the President's Commission for Assistance to a Free Cuba is to promote democratic reform in Cuba, these regulations do more to impede that goal than to realize it. Instead, they state that the "new regulations will restrict Americans' freedoms, cause substantial harm to American businesses and be especially harmful to Cuban families on both sides of the Florida Straits." Jody Frisch, newly-named Executive Director of ATRIP and the alliance said that we "are especially troubled by the Administration's efforts to eliminate the fully hosted provision for travel to Cuba, since the original Cuba embargo is predicated on the government's authority to restrict commercial and financial transactions. We question the legal authority to restrict travel that does not involve financial transactions, and we will take a hard look at all available remedies to ensure that the government does not overstep its legal authority."

Today the Bureau of Industry and Security (BIS) issued an advance copy of the final rule containing the Syria General Order (General Order No. 2 to Supplement No. 1 of Part 736 of the Export Administration Regulations (EAR)). The final rule and General Order will be published in the Federal Register on Friday, May 14th and will become effective on that date.

Effective May 14, 2004, a license must be obtained from BIS prior to the export or reexport to Syria of all items subject to the EAR, except food and medicines that are classified as EAR99. A license is also required for the "deemed export" and "deemed reexport" of any technology or source code on the Commerce Control List (CCL) to a Syrian foreign national. "Deemed exports" and "deemed reexports" involving technology or source code subject to the EAR but not listed on the CCL do not require a license to Syrian foreign nationals.

The General Order imposes strict limitations on the use of license exceptions in connection with exports to Syria.

The General Order specifies that BIS "may" issue specific licenses on a case-by-case basis to export certain products to Syria, including:
--Items in support of activities, diplomatic or otherwise, of the United States Government;
--Medicines on the CCL and medical devices (as discussed below medicines classified as EAR99 may be exported to Syria without a license);
--Parts and components intended to ensure the safety of civil aviation and the safe operation of commercial passenger aircraft (subject to a $2 million limit per each two-year license issued);
--Aircraft chartered by the Syrian Government for the transport of Syrian Government officials on official Syrian Government business;
--Telecommunications equipment and associated computers, software and technology;
--Items in support of United Nations operations in Syria.

The General Order makes clear that the following are not subject to this General Order and thus will not require a license to be exported to Syria:
--Informational materials in the form of books and other media;
--Publicly available software and technology; and
--Technology exported in the form of a patent application or an amendment.

In addition to permitting the export of food and medicine classified as EAR99 to Syria without a license, the General Order provides that "BIS may also consider" license applications for the export and reexport of medicine (on the CCL) and medical devices on a case by case basis.

With respect to medicine and medical devices, it will be necessary to obtain an export license from BIS to ship any medicine listed on the CCL and all medical devices directly from the U.S. to Syria. It will also be necessary to obtain a license to reexport any U.S. origin medicine on the CCL and medical devices from a third country to Syria. An analysis of all foreign-produced products should be undertaken before those products are exported to Syria to ensure that the value of the U.S.-origin parts and components contained in the finished product conforms to the de minimis requirements of the EAR.

Unfortunately, because the Syria Accountability Act (SAA) did not conform to the language of the Trade Sanctions Reform Act, the General Order only permits the unlicensed export of food, but does not permit "agricultural commodities" to be exported to Syria. One of the problems with this is that the term "food" is not defined in the EAR or in the General Order. BIS will have to issue guidance in the future to eliminate confusion over what products fall within the scope of the term "food" used in the SAA and in the General Order.

While not specifically noted in the General Order, BIS is likely to examine very closely the end-users stated in license applications. Over the past few years, BIS has had a policy of denying license applications to Syria when the products were destined for the Syrian military, police, intelligence services or similar types of end-users.

While not specified in the General Order, applications to obtain an export license must be subitted to BIS on Form 748P or via SNAP, BIS' electronic licensing system.

Today President Bush issued an Executive Order implementing sanctions on Syria pursuant to the Syria Accountability and Lebanese Sovereignty Restoration Act of 2003 (SAA) (Public Law 108-175, 117 STAT. 2486).

The following sanctions were imposed by the United States on Syria in accordance with section five of the SAA and are effective at 12:01 eastern daylight time on May 12, 2004:

1. Prohibition on the export or reexport to Syria of most U.S. origin products. This includes a ban on the sale and donation of all U.S. origin products to Syria, except for food, medicine and medical devices. In addition, pursuant to the waiver provision of the SAA the President will permit certain other discrete categories of exports to Syria, such as those to support activities of the United States Government and United Nations agencies, to facilitate travel by United States persons, for certain humanitarian purposes, to help maintain aviation safety, and to promote the exchange of information. “Medicines on the Commerce Control List and medical devices” were among the humanitarian items that will still be permitted to be exported to Syria. However, the President did not provide a waiver to permit the export of “agricultural commodities”, a term defined by section 902(1) of the Trade Sanctions Reform and Export Enhancement Act of 2000 (TSRA) (Public Law 106-387) as much broader than the “food” exception set forth in today's Executive Order. In addition, a waiver was granted permitting the export of telecommunications equipment and certain software and technology to Syria.

The prohibition on exports and reexports to Syria will primarily be implemented by the U.S. Department of Commerce’s Bureau of Industry and Security (BIS). All products that will be still permitted to be exported to Syria, including food, medicine and medical devices, will require a specific license to be issued by BIS prior to export. BIS will issue a General Order (General Order No. 2) implementing the export ban and specifying the procedures for obtaining a specific license to export the permitted products to Syria. The General Order will be published in the Federal Register by the end of this week. However, until the General Order is issued U.S. companies and their overseas affiliates should refrain from entering into any transactions with Syria and should not ship any U.S. origin products to Syria from the United States or via third countries.

2. A ban on the export to Syria of any items that appear on the United States Munitions List (arms and defense weapons, ammunition, etc.) or the Commerce Control List (CCL) (dual-use items such as chemicals, nuclear technology, propulsion equipment, lasers, etc.). These prohibitions will be implemented by the State Department’s Directorate of Defense Trade Controls (for USML items) and the Commerce Department’s Bureau of Industry and Security (for items on the CCL).

3. A prohibition on commercial air services between the United States and Syria by Syria-owned and controlled aircraft. The flight ban will be implemented by the U.S. Department of Transportation.

In addition to the sanctions provided for under the SAA, the Executive Order also imposed the following additional sanctions that were not required by the SAA:

4. The Treasury Department will issue regulations pursuant to the USA PATRIOT Act requiring U.S. financial institutions to sever correspondent accounts with the Commercial Bank of Syria (CBS) based on money laundering concerns. CBS is the single, government-owned bank specializing in servicing foreign trade and commercial banking, including foreign exchange transactions. CBS maintains correspondent accounts with banks in countries all over the world, including the United States. In accordance with this requirement, today the Treasury Department has sent to the Federal Register a notice of proposed rulemaking that would prohibit any U.S. bank, broker-dealer, futures commission merchant, introducing broker or mutual fund from opening or maintaining a correspondent account for or on behalf of CBS.

5. The Treasury Department's Office of Foreign Assets Control (OFAC) will designate certain Syrian individuals and entities contributing to terrorist-related activities. OFAC will subject designees to sanctions that will block their property and property interests and prohibit U.S. persons from engaging in financial transactions with them.

The White House indicated that the President will consider additional sanctions against Syria if it does not take “serious and concrete steps to cease its support for terrorist groups, terminate its weapons of mass destruction programs, withdraw its troops from Lebanon, and cooperate fully with the international community in promoting the stabilization and reconstruction of Iraq.”

Please continue to monitor Trade Law News for further information regarding the sanctions on Syria.

It appears likely that tomorrow, May 11, 2004, the U.S. will finally impose sanctions on Syria pursuant to the Syria Accountability and Lebanese Sovereignty Restoration Act of 2003. As previously reported, The Syria Accountability Act was signed into law by President Bush on December 12, 2003 (P.L. 108-175 117 STAT. 2486).

While the Bureau of Industry and Security (BIS) has already begun to implement unofficially the provision of the Syria Accountability Act that prohibits the export to Syria of any item on the United States Munitions List or Commerce Control List, Congress has been pressing the Administration to impose the additional sanctions on Syria as required by section 5(a)(2) of the Act. That provision requires the President to impose at least two out of the following six sanctions: (A) the prohibition of the export of products of the United States (other than food and medicine) to Syria; (B) Prohibiting United States businesses from investing or operating in Syria; (C) Restricting Syrian diplomats in Washington, D.C., and at the United Nations in New York City, to travel only within a 25-mile radius of Washington, D.C., or the United Nations headquarters building; (D) Prohibiting aircraft owned or controlled by Syria to take off from, land in, or overfly the United States; (E) Reducing United States diplomatic contacts with Syria; (F) Blocking transactions in any property in which the Government of Syria has any interest, by any person, or with respect to any property, subject to the jurisdiction of the United States. Naturally, hard liners in Congress have been pressing for the total ban on exports to and investment in Syria.

While the details of the sanctions will not be known until the announcement is made, it appears likely that the U.S. may impose a total ban on the export of U.S.-origin products to Syria. Unfortunately, due to an error in the legislative drafting process section 5(a)(2)(A) of the Syrian Accountability Act only exempts U.S. origin "food and medicine" from the scope of any export restrictions that may be imposed by the President. As a result of this oversight, the Syrian Accountability Act fails to conform to Section 902 of the Trade Sanctions Reform and Enhancement Act of 2000, commonly known as "TSRA")(P.L. 106-387). TSRA specifies that "agricultural commodities, medicines and medical devices" must be excluded from the scope of any unilateral sanctions imposed by the United States.

Since the Syria Accountability Act was enacted into law in December 2003, various agricultural and medical device interests have been working behind the scenes in an effort to ensure that the decision makers at the White House and at the Departments of Commerce, State and Treasury will exclude "agricultural commodities, medicines and medical devices" from the sanctions imposed by the U.S. on Syria.

Agricultural products and medical devices are excluded from the sanctions currently imposed by the U.S. on Cuba, Iran and Sudan and it would be contrary to existing law if such humanitarian products were not excluded from any sanctions imposed on Syria.

Today the Office of the U.S. Trade Representative released its annual "Special 301" report on the adequacy and effectiveness of intellectual property rights (IPR) protection in trading partners around the world. The report found that although several countries have taken positive steps to improve their IPR regimes, the lack of IPR protection and enforcement continues to be a global problem. The report calls for certain governments to take stronger actions to combat commercial piracy and counterfeiting.

The USTR stated that due to Ukraine’s persistent failure to take effective action against "significant
levels of optical media piracy and to implement intellectual property laws that provide adequate and
effective protection" Ukraine will continue to be designated a Priority Foreign Country and
the $75 million in sanctions imposed on Ukrainian products on January 23, 2002 will remain in place.

USTR placed 33 trading partners on the "watch list" for IPR violations: Azerbaijan, Belarus, Bolivia, Bulgaria, Canada, Chile, Colombia, Costa Rica, Croatia, Dominican Republic, Ecuador, Guatemala, Hungary, Israel, Italy, Jamaica, Kazakhstan, Latvia, Lithuania, Malaysia, Mexico, Peru, Poland, Romania, Saudi Arabia, Slovak Republic, Tajikistan, Thailand, Turkmenistan, Uruguay, Uzbekistan, Venezuela and Vietnam.

Another 16 trading partners are incluced on the "priority watch list," which entails greater scrutiny. Eleven of these -- Argentina, Bahamas, Brazil, EU, India, Indonesia, Lebanon, Philippines, Poland, Russia and Taiwan -- were on last year's priority list. The other five -- Egypt, Korea, Kuwait, Pakistan and Turkey -- were moved this year from the watch list to the priority list.

USTR again designated China and Paraguay for "Section 306" monitoring. Being placed under Section 306 monitoring means that the USTR can move directly to the application of trade sanctions against either country if monitoring shows a slippage in enforcement of bilateral intellectual property rights agreements.

The USTR also noted some positive developments in global adherence to IPR enforcement. These include the passage of new legislation on protecting optical discs in Poland and the Philippines, and recent moves in Romania to ensure procurement of legitimate software for use in government ministries. USTR also noted that Malaysia, Poland and Taiwan have begun to increase their IPR enforcement measures.

The USTR's Special 301 Report can be found at the following Web Site: http://www.ustr.gov/reports/2004-301/special301.htm.

The U.S. Department of Commerce's Bureau of Industry and Security (BIS) announced today that ADCO Sales, Inc. (ADCO) of Woburn, Massachusetts agreed to pay a $2,000 civil penalty to settle charges that it exported optical sighting devices for firearms in violation of the Export Administration Regulations. Optical sighting devices for firearms are classifed as ECCN OA987 on the Commerce Control List.

In its charging letter, BIS alleged that ADCO exported optical sighting devices on four occasions between October 1998 and May 1999 to Hong Kong, Switzerland, and Israel without the required export licenses.