International Trade Law News

The Seattle Times reports on Boeing's recently completed $15 million settlement with the State Department's Directorate of Defense Trade Controls (DDTC) for violating the International Traffic in Arms Regulations (ITAR) by making unlicensed foreign sales of commercial aircraft containing the controlled QRS-11 gyrochip.

The article describes the commodity jurisdiction history of the QRS-11 and notes that the State Department had determined that the gyrochip was covered by the U.S. Munitions List as early as 1993. However, "Boeing continued the exports even after the State Department told the company to stop" and Boeing's "lawyers advised that the State Department 'did not have jurisdiction' to regulate the exports." The article quotes a Boeing spokesman as saying that "In hindsight, we should have handled it differently" and "we would handle it differently today."

Separately, DDTC also entered into a consent agreement with Goodrich Corporation and L-3 Communications imposing a $7 million penalty to settle alleged violations of the ITAR. Among other things, DDTC alleged that Goodrich and L-3, including L-3's subsidiary, L-3 Communications Avionics, Inc., formerly a subsidiary of Goodrich known as Goodrich Avionics Systems, Inc., violated the ITAR by omitting material facts from a commodity jurisdiction for a product containing QRS-11 gyrochips and making unauthorized exports of such products. Under the consent agreement, Goodrich will pay a civil penalty of $1,250,000 and L-3 will pay a civil penalty of $2,000,000. The remainder of the penalty will be spent on remedial compliance measures. Both companies are also required to appoint qualified individuals to serve as Special Compliance Officers for three years.

Labels: DDTC, Export Controls