International Trade Law News

Senator Chris Dodd (D-CT), Chairman of the Senate Committee on Banking, Housing, and Urban Affairs, today sent a letter to Christopher Cox, Chairman of the U.S. Securities and Exchange Commission (SEC), expressing his concern with the SEC's Office of Global Security Risk (OGSR). The OGSR is responsible for monitoring companies' disclosures regarding their contacts with countries that have been identified by the State Department as state sponsors of terrorism. The OGSR reviews Securities Act registration statements and Exchange Act filings whenever it appears that a company may have material contacts with countries that raise global security concerns and pursues enhanced disclosure where appropriate.

The text of Senator Dodd's letter is reprinted below:

Dear Chairman Cox:

I am writing to inquire about ongoing operations of the Office of Global Security Risk within the Division of Corporation Finance at the Securities and Exchange Commission. This office was established in accordance with the Fiscal Year 2004 Consolidated Appropriations Act, Public Law 108-199, to perform several important tasks including:

* establishing a process by which the SEC identifies all companies on U.S. exchanges operating in State Department-designated terrorist-sponsoring states;

* ensuring that all companies sold on U.S. exchanges operating in State Department-designated terrorist-sponsoring states are disclosing such activities to investors;

* implementing enhanced disclosure requirements based on the asymmetric nature of the risk to corporate share value and reputation stemming from business interests in these higher risk countries;

* coordinating with other government agencies to ensure the sharing of relevant information across the Federal government; and

* initiating a global dialogue to ensure that foreign corporations whose shares are traded in the United States are properly disclosing their activities in State Department-designated terrorist-sponsoring states to American investors.

I believe that these missions are important for protecting American investors from unwittingly providing support to sponsors of terrorism or human rights abuses. As Congress noted four years ago in House Report 108-221, an “association with sponsors of terrorism and human rights abuses, no matter how large or small, can have a material adverse effect on a public company's operations, financial condition, earnings, and stock prices, all of which can negatively affect the value of an investment.” Moreover, there are obvious national security implications to American investors unknowingly promoting terrorist states through certain key investments.

I understand that the SEC’s efforts have long been underway to outfit the Office of Global Security Risk fully with adequate staff and resources. But I remain concerned about the pace at which such efforts have been pursued. It is critically important that the intent of Congress be fully followed as soon as possible, particularly given the importance of this office’s missions to promoting human rights, U.S. security interests, and investor knowledge.

I remain particularly concerned about the ability of shareholders to access reliable information regarding publicly traded companies’ business transactions involving Iran and Sudan. I respectfully urge you to ensure that the Office of Global Security Risk and other agencies within the SEC comply with the legislative mandate and make appropriate disclosures readily available to Congress and the American public. Please inform me of the Commission’s progress towards these ends in light of pressing current events— from Iranian WMD proliferation and terrorism sponsorship to Sudanese sponsorship of genocide in Darfur.

I know that you share my great interest in these issues and appreciate your prompt response.

Sincerely,

CHRISTOPHER J. DODD
Chairman

Labels: SEC

The results of April's Customs Broker's License Examination have not been released due to "extenuating circumstances" and there are a number of rumors circulating regarding the reason for the delay. The rumors include that the answer key was released prior to the exam and that one of the ports lost the exams. Stay tuned . . .

The Customs Broker exam consists of 80 multiple-choice questions. A passing grade is 75 percent. The exam has a notoriously low pass rate.

Labels: Customs

The U.S. International Trade Commission (ITC) today determined that revoking the existing antidumping duty orders on imports of oil country tubular goods (casing, tubing and drill pipe) from Argentina, Italy, Japan, Korea and Mexico would not be likely to lead to continuation or recurrence of material injury within a reasonably foreseeable time. As a result of the ITC's negative determinations in the second sunset review on these products, the antidumping orders on these products will be revoked by the Commerce Department.

Labels: Antidumping

Former Under Secretary of Commerce for Export Administration David McCormick has been nominated by President Bush to be Under Secretary of the Treasury for International Affairs. Dr. McCormick currently serves as Deputy Assistant to the President and Deputy National Security Advisor for International Economic Affairs.

Labels: BIS, Treasury Department

Congratulations to the following recent President's "E" Award and "E" Star Recipients for excellence in exporting:

• Kathryn Dye, Sign-a-Rama, Inc., West Palm Beach, Fla.
• Antonio Ceballos, Numonics Corporation, Montgomeryville, Pa.
• Jayne Woodword, Hydra Platforms Manufacturing, Inc., Rock Hill, S.C.
• Sharon Bongiovanni, Gerber Technology, Tollant, Conn.
• Bill Burwell, Maryland Port Administration, Baltimore, Md.
• Susan Whitney, Nylonge Company, Elyria, Ohio
• David Spann, Mallory Alexander International Logistics, Memphis, Tenn.
• Ray Riggs, Hytrol Conveyor Company, Inc., Jonesboro, Ark.
• Carmela Mammas, Pharmaceutical Innovations, Newark, N.J.
• Tom Strauss, Georgia Department of Economic Development, Atlanta, Ga.
• Susan Whitney, Lincoln Electric Holdings, Inc., Cleveland, Ohio

Labels: Miscellaneous

Importers and Customs Brokers should note that U.S. Customs and Border Protection has issued the following administrative message via the Automated Broker Interface system:

TITLE: ABI-ACS ENHANCEMENTS

EFFECTIVE MAY 30, 2007, U.S. CUSTOMS AND BORDER PROTECTION. (CBP) IMPLEMENTED UPDATED ENHANCEMENTS TO THEIR INTERNAL. [Sic] DATA SYSTEM THAT MAY CAUSE AN INCREASE IN THE NUMBER OF INTENSIVE EXAMINATIONS OF IDENTIFIED "HIGH RISK" SHIPMENTS.

CONCURRENTLY, THE REFERENCED ENHANCEMENTS SHOULD RESOLVE ISSUES INVOLVING PERMIT TO TRANSFERS (PTT) AND CONSOLIDATED SHIPMENTS MOVING IN-BOND UNDER ONE (1) MASTER BILL OF LADING (MBL). WITH THE NEW FUNCTIONALITY, RISK ASSESSMENTS WILL BE CONDUCTED ON INDIVIDUAL SHIPMENTS RATHER THAN BEING LINKED TO OTHER SHIPMENTS UNDER THE MASTER BILL OF LADING.

FURTHER ENHANCEMENTS ARE CONTEMPLATED. WHEN CHANGES TAKE PLACE, CBP WILL UPDATE THE TRADE COMMUNITY IN A TIMELY MANNER.

PLEASE CONTACT YOUR LOCAL CBP PORT OFFICE, IF YOU HAVE QUESTIONS.

Labels: Customs

The U.S. Department of Commerce yesterday announced its affirmative preliminary determinations in the antidumping duty investigations on coated free sheet paper from China, Indonesia, and Korea. The preliminary dumping margins ranged from 23.19% to 99.65% for the Chinese respondents, 10.85% on the Indonesian respondents and zero to 30.86% for the Korean respondents.

The antidumping petition that led to the initiation of this investigation was filed by NewPage Corporation of Dayton, Ohio. NewPage also filed countervailing duty petitions on imports of coated free sheet paper from China, Indonesia and Korea. The preliminary affirmative countervailing duty determinations were published in the Federal Register on April 9, 2007.

Coated free sheet paper is used by the commercial printing industry to produce high-quality books, gift wrap and advertising materials.

The fact sheet issued by Commerce in this case can be found at the following link: ia.ita.doc.gov/download/factsheets/factsheet-cfsp-ad-prelim-053007.pdf.

Labels: Antidumping, Countervailing Duties

Various press reports indicate that former U.S Trade Representative Robert Zoellick is President Bush's choice to serve as the next president of the World Bank.

Labels: USTR

The Senate last Friday unanimously confirmed Mario Mancuso to be Under Secretary of Commerce for Export Administration. Secretary of Commerce Gutierrez's statement following the confirmation can be found here.

The Bureau of Industry and Security has been without a permanent Under Secretary since David McCormick was nominated in August 2006 to serve as Deputy National Security Advisor for International Economic Affairs.

Labels: BIS

An Antidumping petition was filed today with the U.S. International Trade Commission and the U.S. Department of Commerce against Steel Nails from the People's Republic of China and the United Arab Emirates. The petition was filed by Mid Continent Nail Corporation, Davis Wire Corporation, Gerdau Ameristeel Corporation (Atlas Steel & Wire Division), Maze Nails (Division of W.H. Maze Company) and Treasure Coast Fasteners, Inc.

This case appears to be the first U.S. antidumping petition brought against products from the United Arab Emirates.

Labels: Antidumping

Today the U.S. imposed additional sanctions on Sudan. Specifically, the Treasury Department's Office of Foreign Assets Control (OFAC) blocked the assets and added to the SDN List three Sudanese individuals, including two high-ranking government officials and a rebel leader, for their roles in the violence-plagued Darfur region of Sudan. In addition, OFAC added to SDN List the names of 30 Sudanese companies owned or controlled by the Government of Sudan, and one company that violated the arms embargo in Darfur.

Among the companies designated in today's action are GIAD Industrial City, which has supplied armored vehicles to the Sudanese government for military operations in Darfur; Sudatel, the national telecommunications company; and five firms in the petrochemical sector, including Advanced Petroleum Company, RAM Energy Company, Bashaier, Hi-Tech Petroleum Group, and Hi-Tech Chemicals.

As a result of OFAC's designations, any assets these individuals and entities may have that are within U.S. jurisdiction must be frozen, and U.S. persons are prohibited from transacting or doing business with them.

A complete list of the individuals and entities designated today is posted at the following link: www.treasury.gov/offices/enforcement/ofac/actions/20070529.shtml.

Labels: Sanctions; Sudan

U.S. Customs and Border Protection (CBP) has announced that Jayson P. Ahern, who currently serves as Assistant Commissioner, Office of Field Operations, will become CBP's Deputy Commissioner when current Deputy Commissioner Deborah Spero retires in August.

Labels: Customs

The Treasury Inspector General for Tax Administration (TIGTA), which provides independent oversight of IRS activities, recently issued a report finding that the Internal Revenue Service does a poor job in identifying tax-exempt groups that may have links to terrorists.

In its report, TIGTA found that:

The IRS does not systemically match filing data of tax-exempt organizations against a comprehensive list of potential terrorists to identify instances in which charitable and other nonprofit organizations may be linked to terrorist activities. Instead, IRS personnel manually review all tax-exempt documents and compare information from them to a United States Department of the Treasury terrorist watch list. This list, however, is incomplete compared to the more comprehensive terrorist watch list available for use by all Federal Government agencies. As a result of using a manual process and a limited terrorist watch list, the IRS provides only minimal assurance that tax-exempt organizations potentially involved in terrorist activities are being identified.

Labels: OFAC

Tuesday's edition of the The Australian newspaper reports that the AWB Limited "will lose its 67-year-old monopoly over wheat exports" as a result of the illegal payments that it made to the Government of Iraq during the U.N. Oil-For-Food Program (OFFP). The article also notes that a fourth class action lawsuit has been brought against the AWB and its U.S. affiliate in New York, "this time by US winter wheat farmers seeking millions of dollars in damages over the Iraq kickbacks scandal."

In November 2006, an Australian Government inquiry looking into Australian companies role in the OFFP found that AWB knowingly paid prohibited inland transportation fees to a Jordanian company that routed the payments to the Iraqi Government. The Office of the Independent Inquiry into the U.N. Oil-for-Food Programme (Volcker Commission) found that AWB was the biggest single source of kickbacks made to the Iraqi government.

Labels: Iraq

The second meeting of the U.S.-China Strategic Economic Dialogue (SED) begins tomorrow in Washington and export controls, including the pending "China Rule" that will soon be issued by the Bureau of Industry and Security (BIS), are high on the meeting's agenda.

As has been widely reported, Wu Yi, China's Vice-Premier, last week published an op-ed piece in the Asian Wall Street Journal urging the U.S. to "relax export controls to boost the competitiveness of American companies, reverse the trend of dwindling market share of American hi-tech products in China, and reduce its trade deficit with China."

Not surprisingly, Reuters reported today that "China's frequent call for lifting U.S. export controls to trim trade imbalances -- expected to be repeated at high-level economic talks this week -- is likely to fall on deaf ears. . . ."

Labels: BIS, China, Export Controls

The Directorate of Defense Trade Controls announced today that it will soon be upgrading to D-Trade2:

On Wednesday, June 27th at 5pm EST, we will shut down D-Trade in order to upgrade to D-Trade2/Version 5.0. D-Trade2/Version 5.0 will be operational and online 9am Monday, July 2nd. Please note that both external and internal operations involving D-Trade will be affected by this promotion.

Beginning the week of May 21, we will post additional information on the DDTC Web site on how operations will be handled during this period, along with highlights of new and improved features available in D-Trade2/Version 5.0. Please hold your questions/concerns regarding the temporary shutdown until we post detailed guidance.

Labels: DDTC

As we reported last week, the results of April's Customs Broker's exam, were supposed to have been released by U.S. Customs and Border Protection (CBP) on May 15th. However, as of today those taking the exam still have not received their scores and there has been no further word from CBP on when the exam results are expected.

Labels: Customs

The American Enterprise Institute (AEI) recently unveiled the "Global Investment in Iran Interactive Database", a website that provides detailed information on foreign investment in Iran from 2000 to date. The database, which is based on public information, includes information on more than 300 transactions with public and private entities in Iran in the oil and gas, consumer, transportation, construction, power and telecommunication sectors.

The database shows that since 2000, French companies and financial institutions, working individually or through international consortia, entered into agreements with Iran worth more than $30 billion. Entities in China, Germany and Italy were also significant investors in Iran.

The interactive database can be found at the following link: www.aei.org/IranInteractive/.

Labels: Sanctions; Iran

The Miami Herald reports today that any changes to the U.S. embargo on Cuba are unlikely to occur during the current session of Congress. The article notes that after "Democrats seized control of Congress last November, the Bush administration's tough policies on Cuba appeared in trouble. Not anymore." The article further states that:

Since the elections, more than a dozen bills have been introduced to ease the U.S. sanctions, from relaxing or lifting travel restrictions to making it easier to export agricultural goods.

But the new Democratic leadership -- whose Republican predecessors had helped ensure that no anti-sanctions initiatives reached President Bush's desk -- has not pushed those bills and is unlikely to do so soon, Democratic congressional staffers and activists on both sides of the issue say.

The reasons include more pressing priorities like Iraq and immigration reform and an unusually early start of the presidential campaign -- with Florida figuring prominently, given its early primary date. Also, many Democrats prefer to wait for the political picture in Havana to clear up before moving to change policy, the staffers and activists say.

Labels: Cuba, Sanctions

The State Department published in Monday's Federal Register the annual list of countries that are not cooperating fully with U.S. antiterrorism efforts. This year's list includes Cuba, Iran, North Korea, Syria, Venezuela, which is unchanged from last year.

This annual certification is required by section 40A of the Arms Export Control Act (AECA) (22 U.S.C. 2781), which prohibits exports of defense articles and services to countries that are not fully cooperating with U.S. antiterrorism efforts. The statute also requires the President to determine and certify to Congress by May 15th of each year the countries that are not cooperating fully with United States antiterrorism efforts. Executive Order 11958 delegated the functions of the president under this provision of law to the Secretary of State.

Labels: DDTC, Sanctions

The Bureau of Industry and Security (BIS) announced in Monday's Federal Register that the Deemed Export Advisory Committee (DEAC) is soliciting speakers for its meeting in Boston, Massachusetts on June 19, 2007. The DEAC is seeking speakers from industry, academia and other backgrounds to address the DEAC members on issues related to deemed exports and, in particular, their organizations' perspectives and concerns related to U.S. deemed export control policies. Speakers must notify BIS of their interest to appear at the DEAC meeting by May 30, 2007.

Labels: BIS, Deemed Exports

The Office of the United States Trade Representative (USTR) has announced in Monday's Federal Register that it will conduct a 2007 Generalized System of Preferences (GSP) Product and Country Eligibility Practices Review. Petitions to modify the list of products that are eligible for duty-free treatment under the GSP program and to modify the GSP status of certain GSP beneficiary developing countries because of country practices must be submitted to USTR by June 22, 2007 . The deadline for competitive need limitation (CNL) waivers are due on November 16, 2007.

Labels: GSP, USTR

Labels: Canada, DDTC, ITAR

The U.S. and Canada today announced that they have completed an exchange of letters documenting an arrangement between the U.S. Department of State and the Canadian Department of National Defence (DND) permitting dual citizens in Canada to work on certain military projects that are subject to the U.S. International Traffic in Arms Regulations (ITAR).

Under the arrangement announced today, the State Department's Directorate of Defense Trade Controls (DDTC) will implement procedures to grant access to defense articles and services exported to Canada under the ITAR to DND personnel who are Canadian citizens holding a minimum secret-level security clearance, including dual nationals. DND personnel covered by this agreement include Canadian Forces members, civilian employees, embedded contractors and employees of other federal government departments and agencies working within DND. Canadian standards and procedures will continue to be used to process security clearances.

This agreement, which has been negotiated for more than one year, was necessary since the U.S. has been limiting access to ITAR-controlled defense articles and services to Canadian citizens, and denying access to Canadian citizens who possess dual nationality with a U.S. proscribed country. Canada objected to these restrictions claiming they would be inconsistent with the Canadian Charter of Rights and Freedoms and human rights legislation, which prohibit discriminatory treatment of Canadian citizens, regardless of their country of origin or other nationality. This arrangement will allow Canada to proceed with the purchase of U.S.-produced CH-47 helicopters, C-17 transport aircraft and C-130 aircraft.

The U.S. and Canada both indicated that they consider this arrangement as an important first step in resolving these ITAR-related issues. The State Department has offered to conclude similar arrangements with other Canadian government agencies provided they can assure the U.S. of their commitment to "vigorously implement and oversee similar procedures".

The press releases issued by the U.S. Department of State and Canada's Department of National Defence can be found here and here.

Labels: Canada, ITAR

By a vote of 397-28, the U.S. House of Representatives today passed H.R. 1585, the National Defense Authorization Act for Fiscal Year 2008. Section 1049 of the bill prohibits the Department of Defense from selling any parts for F-14 fighter aircraft (of Top Gun fame), except for those in a museum or preserved for historical purposes. It also prohibits the U.S. Government from issuing any export licenses for any F-14 aircraft parts to a non-U.S. person or entity.

This provision, which was originally introduced earlier this year as the Stop Arming Iran Act by Senator Ron Wyden (D-OR) (S. 387) and Representative Gabrielle Giffords (D-AZ) (H.R. 1441), is aimed at preventing Iran from obtaining spare parts for F-14s. While F-14 Tomcats were retired by the U.S. military in 2006, it estimated that Iran, which acquired 79 F-14s from the U.S. in the 1970s, still has several of the aircraft left in service.

U.S. Customs and Border Protection agents have found F-14 spare parts being shipped to Iran by brokers who bought the items from Department of Defense auctions. Several persons have been convicted for exporting F-14 spare parts to Iran.

Labels: Congress, DDTC, Sanctions; Iran

The Lawyers’ Committee for Civil Rights of the San Francisco Bay Area (LCCR) today filed a lawsuit against the U.S. Treasury Department under the Freedom of Information Act (FOIA) for denying access to records concerning the Specially Designated Nationals and Blocked Persons List (SDN List) maintained by Treasury's Office of Foreign Assets Control (OFAC). The lawsuit was filed in the U.S. District Court for the Northern District of California.

As a result of complaints from U.S. consumers that were wrongly associated with names appearing on the SDN list, in 2005 the LCCR filed a request under the Freedom of Information Act (FOIA) with Treasury seeking access to specific information regarding the SDN List, including calls made to OFAC's compliance "hotline" regarding SDN-related issues, procedures for individuals to remove their names from the SDN List and the number of complaints from individuals that were erroneously included on the SDN List.

In response to the FOIA request, OFAC said that the agency did not track complaints from individuals, maintained no complaint mechanisms for consumers mistakenly flagged by the watchlist and would not provide policies or procedures since such records were not covered by FOIA. To date, OFAC has yet to release any of the requested documents.

LCCR's lawsuit requests the court to find that OFAC violated FOIA and demands immediate disclosure of the requested documents.

In March 2007, the LCCR published a report entitled "The OFAC List: How a Treasury Department Terrorist Watchlist Ensnares Everyday Consumers" which cited numerous examples of individuals who were denied consumer transactions because of erroneous matches to the SDN List. The report mentions the names of prominent individuals, including Barack Hussein Obama, Alberto Gonzales, Muhammad Ali, etc. whose first, middle or last names appear on the SDN List and therefore may be confused with a restricted person.

A copy of the LCCR's Complaint and accompany attachments (including the LCCR's FOIA request letter and correspondence from Treasury) can be found at:
http://www.lccr.com/5%2016%2007%20OFAC%20FOIA%20Complaint.pdf
(Note: This is a large file).

Labels: OFAC

Results of the April 2nd Customs Broker Exam have still not been released by Customs and Border Protection (CBP). CBP recently announced that the because of "extenuating circumstances" the exam would be scored by May 15th and the test results would be sent shortly thereafter. However, as of today the final answers have not yet been finalized. Apparently, CBP wants to make sure that the answer key is absolutely correct in order to minimize the number of appeals/protests that are filed. Meanwhile, those that took the exam anxiously await to receive their results.

Labels: Customs

The U.S. Department of Commerce's Bureau of Industry and Security (BIS) announced today that Cooper Tools Industrial Ltda. (CTIL), a wholly-owned Brazilian subsidiary of Cooper U.S., Inc., a Delaware Corporation, agreed to pay a $27,000 civil penalty to settle allegations it committed fifteen violations of the antiboycott provisions of the Export Administration Regulations.

In its charging letter, BIS's Office of Antiboycott Compliance alleged that CTIL furnished fifteen items of prohibited information about business relationships with Israel to persons in Kuwait and the United Arab Emirates.

Labels: BIS, Boycotts

U.S. Customs and Border Protection (CBP) published in today's Federal Register a notice revising the Terms and Conditions for access to and use of the Automated Commercial Environment (ACE) Secure Data Portal (ACE Portal). The principal changes to the terms and conditions include:

• A revised definition of "Account Owner'' to permit either an individual or a legal entity to serve in this capacity.
• New requirements relating to providing notice to CBP when there has been a material change in the status of the Account and/or Account Owner.
• Explanatory provisions as to how the information from a particular account may be accessed through the ACE Portal when that account is transferred to a new owner.

Labels: ACE, Customs

Labels: DDTC, ITAR

The National Foreign Trade Council (NFTC) has published “The United States and Global Trade: A State Legislator’s Guide to Maximizing Economic Opportunity through Trade”. The guide, which will be distributed to state legislators, contains information on the role states can play in developing U.S. trade policy and how state governments can maximize the benefits of trade for individual state economies.

The NFTC's guide includes a review of a number of current trade-related issues, including trade agreements, investment rules and trade promotion authority. The guide also includes state-by-state information on the importance of exports to state economies.

The PDF version of the guide can be found on the NFTC Web site at: www.nftc.org/default/trade/US%20&%20Global%20Trade%20Report.pdf.

Labels: Trade Policy

In anticipation of the forthcoming publication of the final rule on export and reexport controls for the People's Republic of China, the the Bureau of Industry and Security (BIS) has posted on its website three items regarding U.S. export control policy towards China.

The first item posted is speech entitled "The Future of U.S. Export Controls on Trade with China" presented by Assistant Secretary Padilla at BIS's export control conference in Shenzhen China in January 2007.

The second item is a brief slide show entitled "U.S. Dual-Use Export Controls and China" which provides some basic information on U.S. policy and licensing statistics with respect to exports to China.

The final item is a PDF version of the article entitled "In Pursuit of Security and Prosperity: Technology Controls for a New Era" that was written by Acting Undersecretary Foulon and Assistant Secretary Padilla and published in the Spring 2007 edition of the Washington Quarterly, published by the Center for Strategic and International Studies.

In the article Foulon and Padilla advocate "a new hierarchy of controls . . . to meet the requirements of . . . differing degrees of economic integration and technology collaboration" since the "current country-based system of controls is . . . becoming increasingly difficult to sustain." Specifically, they note that "a revamped control system could use a three-step approach based first on customers and then on countries and technologies."

Labels: BIS, Export Controls

The AP has published an article on the wide variety of U.S. products that are readily available in Cuba. The article also discusses the legal and illegal ways U.S. products end up in Cuba.

Labels: Cuba, Sanctions

Michael Moore's response to OFAC's May 2, 2007 letter requesting information on his recent trip to Cuba can be found be found at the following link on his website.

Somehow, I don't think that OFAC will find his letter to be responsive, particularly since he requested OFAC to terminate the investigation, rather than answering the specific questions asked by OFAC.

Labels: Cuba, OFAC

Japan's Ministry of Economy, Trade and Industry (METI) has imposed an administrative sanction on Yamaha Motor Co., Ltd. prohibiting the company from exporting unmanned industrial helicopters and related components for nine months for violating Japanese export control laws.

As previously reported, in January 2006 Japanese police conducted a raid on Yamaha's headquarters and other company locations seeking evidence concerning Yamaha's exports of RMAX unmanned remote-controlled helicopters to Beijing BVE Technology, a Chinese company believed to be connected to China's People's Liberation Army. The helicopters included advanced flight technologies and could be used for military purposes, such as loading and releasing biological and chemical weapons. METI subsequently filed a criminal complaint against Yamaha Motor Co., Ltd. and three company employees were arrested.

In March 2007, Yamaha agreed to pay a fine of 1 million yen (approximately US$ 8,000) for exporting the RMAX helicopter without an export permit. The charges against the employees were subsequently dropped.

In a statement posted on Yamaha's website, the company said:

Yamaha Motor takes the administrative sanction with the utmost seriousness. Yamaha Motor deeply acknowledges the shortcomings of its export-control procedures, and will continue to strive to strengthen its export-control procedures under the direction of the security trade control operations the company established in May 2006. Furthermore, Yamaha Motor will unite all its resources and fully address the measures with which to regain the trust and confidence of the public, such as strengthening compliance regulations.

Labels: Export Controls

In a recent speech at the Washington Institute for Near East Policy, Deputy Treasury Secretary Robert M. Kimmitt said that efforts to encourage international support for public and private sector financial sanctions on Iran for pursuing nuclear and missile programs are working. He also called efforts by some members of Congress to impose sanctions on U.S. subsidiaries for doing business in Iran as counterproductive.

We have worked closely with our fellow finance ministries and central banks abroad to build consensus on these financial measures, and the effect has been striking: international partners who originally resisted the idea of applying sanctions on Iran have reversed this position and now support pressuring the Iranian regime to renounce its support for WMD proliferation and to comply with its international obligations.

We have learned that the Swiss bank UBS cut off all dealings with Iran, and Credit Suisse and HSBC have also significantly limited their exposure to Iranian business. A number of other foreign banks are refusing to issue new letters of credit to Iranian businesses. According to the banks, these were business decisions, pure and simple - handling Iran's accounts was no longer good business. Multinational corporations have also held back from investing in Iran, including limiting investment in Iran's oil field development.

Members of Congress are considering a number of legislative options, including application of U.S. sanctions to the business activities of foreign subsidiaries of American companies; mandatory divestment from companies doing business with Iran; and having the government "name and shame" firms – both domestic and foreign -- that do business with Iran. While these proposals are certainly well intended, they could have significant counter-productive policy implications. Our shared goal is to pressure the Iranian regime to change its behavior, and the best way to achieve this objective is to keep the focus on illicit conduct and maintain as broad an international coalition as possible. Yet many of these proposed measures may be seen by our allies as extraterritorial U.S. Government action and could affect our ability to obtain their cooperation on mutual action with respect to Iran.

Labels: Sanctions; Iran, Treasury Department

The Senate Banking Committee held a hearing yesterday on the nomination of Mario Mancuso to serve as Undersecretary of Commerce for Export Administration. Senator Jack Reed (D-RI) chaired the hearing since Senator Christopher Dodd (D-CT), the Committee's Chairman, was unable to attend.

In addition to reading a prepared statement, Mr. Mancuso answered a brief question on the reauthorization of the Export Administration Act. The Committee did not vote on the nomination and did not provide any date on when the Committee would vote on his nomination.

Mr. Mancuso was nominated by President Bush in January, but his confirmation has been delayed. Prior to his nomination, Mr. Mancuso served as Deputy Assistant Secretary of Defense for Special Operations and Combating Terrorism at the Department of Defense. He previously served as Special Counsel to the General Counsel at the Department of Defense.

BIS has been without an Under Secretary since David McCormick was nominated in August 2006 to serve as Deputy National Security Advisor for International Economic Affairs.

Labels: BIS

Following a six-week trial, Chi Mak, the Chinese-born engineer accused of sending export controlled information to China, was convicted today by a jury in federal court in Santa Ana, California of conspiracy to violate export control laws, acting as an unregistered foreign agent, attempting to violate export control laws and making false statements to the FBI. Prosecutors previously dropped a charge of exporting defense articles. Mak faces up to 35 years in prison when he is sentenced in September.

Mak was arrested in 2005 in after FBI agents stopped his brother and sister-in-law as they boarded a flight at Los Angeles International Airport to Hong Kong. The government alleged that they found three encrypted CDs in their luggage containing documents on a submarine propulsion system, a solid-state power switch for ships and a Power Point presentation on the future of power electronics. Mak's son was arrested later and accused of encrypting the material. The trial of Mak's other family members is scheduled to start on June 5th.

A key issue in this case was whether the information that was attempted to be sent by Mak to China was in the public domain or not, since some of the materials included papers presented at public conferences.

Labels: Export Controls

The Directorate of Defense Trade Controls has published a notice on its website explaining the State Department’s policy with respect to exports by or involving ITT Night Vision Division following the debarment announced on April 11, 2007.

Labels: DDTC

The Office of Foreign Assets Control is investigating whether director Michael Moore violated U.S. law by traveling to Cuba in March 2007. OFAC's letter to Mr. Moore, which requests information on his trip and seeks to determine whether he qualifies as a full-time journalist (and therefore eligible for a general license), can be found on the