International Trade Law News

The price of going to the dry cleaners may be going up soon since M&B Metal Products Company, Inc., of Leeds, Alabama, today filed an antidumping petition on steel wire garment hangers from China.

Labels: Antidumping, China

The U.S. House of Representatives today passed the following two divestment-related bills by wide margins:

• H.R. 180 - The Darfur Accountability and Divestment Act of 2007 directs the SEC to require all companies trading in registered securities that conduct business in Sudan to disclose the nature of such operations and the GAO to investigate the existence and extent of such companies' Federal Retirement Thrift Investment Board investments. The bill also prohibits U.S. Government contracts with such companies. The bill passed by a vote of 418-1 (Representative Ron Paul (R-TX) cast the only no vote).
  

• H.R. 2347 - The Iran Sanctions Enabling Act of 2007 directs the Secretary of the Treasury to publish a list of any entity that has an investment of more than $20 million in the Iran's energy sector. The bill also states that is U.S. policy to support state and local governments and educational institutions from divesting their assets from entities included on the Treasury Department's list of companies with investments in Iran's energy sector. The bill passed by a vote of 408-6.

Labels: Congress, Divestment

The Council on Foreign Relations recently hosted an online debate on sanctions policy between Simon Cox, an economics correspondent for The Economist, and Jake Colvin of USA*Engage. To read the debate, start at the bottom of the site and work your way up.

Labels: Cuba, Sanctions, Sanctions; Iran, Sanctions; Sudan

U.S. importers of beer, wine and distilled spirits should be aware that the Treasury Department's Alcohol and Tobacco Tax and Trade Bureau (TTB) published a notice of proposed rulemaking (NPRM) in today's Federal Register that would require significant changes to the labeling and advertising of alcoholic beverages sold in the U.S.

The proposed rule would require a statement of alcohol content, expressed as a percentage of alcohol by volume, on all alcohol beverage products sold in the U.S. The NPRM would also require a "Serving Facts" panel to be included on alcohol beverage labels that is similar to the "Nutrition Facts" label required on food and beverage products. TTB proposes to have the "Serving Facts" label include information on the serving size, number of servings per container, statement of calories, carbohydrates, fat and protein. The proposed rule would also specify new reference serving sizes for wine, distilled spirits and malt beverages based on the amount of beverage customarily consumed as a single serving.

In order to minimize the cost of creating new labels, TTB proposes to have the new labeling requirements go into effect three years from the date the final rule is published in the Federal Register.

Public comments on the NPRM must be submitted to the TTB before October 29, 2007.

Labels: Labeling, Treasury Department

The Justice Department announced today that Samuel Shangteh Peng, who formerly handled export sales for Endevco Corporation, will plead guilty to five counts of exporting products to a company in India that was on the Bureau of Industry and Security's (BIS) Entity List at the time.

Peng was charged with exporting vibration amplifiers, cable assemblies and vibration processor units in 1999 and 2000 from the U.S. to Hindustan Aeronautics Limited's (HAL) Engine Division in Bangalore, India. HAL was added to the Entity List in November 1998 and removed in 2001. As a result, an export license was required to be obtained from BIS prior to exporting to HAL "all items subject to the EAR".

Peng has agreed to plead guilty to the charges, each of which carries a statutory maximum penalty of 10 years in federal prison.

Labels: BIS, Export Controls, India

The Justice Department recently announced that two former executives of ITXC Corporation, a provider of Voice over Internet Protocol services, recently pleaded guilty to conspiring to violate the Foreign Corrupt Practices Act (FCPA) and the Travel Act. The defendants face up to five years in prison and a $250,000 fine when they are sentenced in October.

In their guilty pleas, both defendants admitted they conspired with each other and other former ITXC employees and officers to make corrupt payments to employees of foreign state-owned and foreign-owned telecommunications carriers in Nigeria, Rwanda and Senegal to obtain and retain contracts for ITXC.

In a related case, a former regional manager of ITXC was sentenced to 18 months in prison and required to pay a $7,500 fine for conspiring to violate the anti-bribery provisions of the FCPA and to violate the Travel Act stemming from corrupt payments to foreign officials in order to retain business for ITXC in Africa.

The Securities and Exchange Commission (SEC) also brought parallel civil enforcement actions against these individuals and is seeking injunctions, disgorgement of all ill-gotten gains derived from the alleged misconduct and civil penalties for the alleged FCPA violations.

ITXC was acquired by Teleglobe in 2004. Teleglobe was acquired by VSNL Ltd. in 2006.

Labels: FCPA, SEC

U.S. Customs and Border Protection (CBP) has announced that the next Customs Broker License Examination will be conducted on on October 1, 2007. Applications to take the exam must be received by CBP by August 31, 2007. Further details on the Customs Broker License Examination, including the application form and relevant reference materials, can be found here.

Let's hope that CBP issues the results of the October exam faster than they did with the April 2, 2007 exam. As previously reported, CBP announced in early May that the exam results would be delayed "due to extenuating circumstances" and finally issued the results in mid-June. CBP never disclosed the reason for the delay.

Labels: Customs; Customs Brokers

The Bureau of Industry and Security's Office of Export Enforcement has released the most recent edition Don't Let This Happen To You!, the publication that contains a synopsis of criminal and civil export control and antiboycott enforcement cases brought by BIS .

The PDF version of the document can be found here. A link to the document can also be found on the lower right hand side of the home page of BIS's website.

Labels: BIS, Export Controls

U.S. Customs and Border Protection has announced that the next meeting of the Advisory Committee on Commercial Operations of U.S. Customs and Border Protection and Related Homeland Security Functions (COAC) will meet on August 16, 2007 at the Ronald Reagan Building in Washington, DC. The tentative agenda of the meeting, which is open to the public, includes:

1. International Container Security Standards.
2. Post-Incident Business Resumption.
3. Advance Data Elements.
4. Secure Freight Initiative/Supply Chain Security.
5. Office of International Trade.
6. Intellectual Property Rights.
7. ACE Program

Labels: Customs

In connection with debate on legislation to extend agricultural programs (H.R. 2419), the U.S. House of Representatives failed to pass, by a vote of 185-245, an amendment offered by Ways and Means Committee Chairman Rangel (D-NY) to modify the "cash in advance" restrictions on U.S. agricultural sales to Cuba under the Trade Sanctions Reform Act of 2000 (TSRA). The amendment would have changed the definition of "cash in advance" to mean payment prior to the transfer of title to the purchaser and the the release of control of the product to the purchaser. Since February 2005, OFAC has taken the position that payment by the Cuban buyers must be made prior to shipment of the goods from the U.S.

The proposed amendment would have also authorized direct transfers between Cuban banks and U.S. banks and allow visas to be issued to Cuban nationals to conduct activities related to purchasing U.S. agricultural goods.

Labels: Congress, Cuba

The House Ways and Means Subcommittee on Trade announced that will hold a hold a hearing on legislative proposals relating to trade with China at 9 a.m. on August 2, 2007 in room 1100 of the Longworth House Office Building.

The hearing will focus on pending legislation relating to trade with China, including bills to address trade-distorting currency practices and legislation to modify U.S. trade remedy laws. The hearing will also address the safety of food imports into the U.S. and issues related to the application of sanitary and phytosanitary measures overseas.

The Trade Subcommittee has not yet announced the witnesses that will appear at the hearing. However, any individual or organization may submit a written statement for consideration inclusion in the printed record of the hearing.

Labels: China, Congress

The House Foreign Affairs Committee's Subcommittee on Terrorism, Nonproliferation, and Trade held a hearing today entitled, "Exports Controls: Are We Protecting Security and Facilitating Exports?"

In his opening statement, House Foreign Affairs Chairman Tom Lantos (D-CA) came out with his guns blazing. Most of his ammunition was directed at the State Department's Directorate of Defense Trade Controls (DDTC). For example, Chairman Lantos said that DDTC:

. . . has been awash in unprocessed applications for licenses to ship military equipment overseas – a whopping 10,000 of them at one point last fall. The State Department is beset by so-called managers who, in fact, area unable to manage this process. Their recommendation: Throw more money at it. I certainly support increasing the resources at the State Department for this crucial job. It is absurd in the extreme that State has only 37 licensing officers to process nearly 70,000 applications, while Commerce boasts over 70 officers for a comparatively-paltry workload of 23,000 licenses. But increased resources alone will not fix the problem of mismanagement. Simply put, the management of arms licensing needs sustained attention and commitment by the senior leadership of the State Department to fix the problems – attention that has been lacking for several Administrations. The Committee on Foreign Affairs will do its part in finding solutions, with or without the Administration’s help. This hearing is an important part of that process.

• In Fiscal Year 2006, BIS processed 18,941 export licenses valued at $36 billion, a 13% increase over Fiscal Year 2005 and the highest number of applications reviewed by BIS in over a decade.
• In Fiscal Year 2006, average processing time for dual-use licenses – including full interagency review – was 33 days. Through June 30 of the current fiscal year, the average licensing processing time dropped to 29 days, a decrease from 40 days in FY 2001.
• Said that any new dual-use export control system must have the following three defining features: (1) must become more end-user focused; (2) must be further improved to ensure America’s exporters are able to apply for and receive licenses in a timely, transparent, and efficient way; and (3) must limit the export of sensitive products while still ensuring that controls do not unduly restrict the vast majority of legitimate, civilian high-tech trade.

• In FY 2007, [DDTC] expects to license up to $100 billion in authorized exports. On a year-to-year basis, the number of application received have increased 8%, with total licenses completed by [DDTC] anticipated to rise from 66,000 in FY 2005 up to an estimated 80,000 in FY 2007.
• At the beginning of FY07 DDTC had over 10,000 pending applications, but by January 2007 the number was reduced to approximately 5,200. DDTC currently has approximately 7,200 pending applications, with 567 over 60 days old. The complexity of license applications and Technical Assistance Agreements (TAA) is increasing. In FY 2006, more than 7,000 TAAs were received and the value of defense services provided with such agreements is roughly equal to or greater than the value of hardware exports.
• DDTC is initiating the following changes "to manage export control risk": (1) Deputy Assistant Secretary for Defense Trade Control will institute a mandatory DAS-level review of any Operation Iraqi Freedom or Operating Enduring Freedom case that is pending for greater than seven days; (2) will shortly commence with the concurrent review of TAA applications with DOD, which we expect to expedite the review of such items; (3) ill initiate a policy change that will permit employees of foreign companies who are nationals from NATO or EU countries, Japan, Australia and New Zealand to be considered authorized under an approved license or TAA.
  

• State and Commerce have yet to clearly determine which department controls the export of certain sensitive items. No one has held State or Commerce accountable for making clear and transparent decisions about export control jurisdiction.
  
• Lack of clarity on exemption use has limited the government’s ability to ensure that unlicensed exports comply with export laws and regulations. At times, State has provided conflicting information to exporters on the proper use of the Canadian exemption, which has resulted in some exporters using the exemption while others applied for licenses to export the same item.
  
• State and Commerce can provide little assurance about the overall effectiveness of their respective export control systems. In managing their systems, neither department has conducted systematic assessments that would provide a basis for determining what corrective actions may be needed to ensure they are fulfilling their missions.
  
• DDTC's streamlining initiatives have generally not been successful and processing times have increased in recent years—from a median of 13 days in 2002 to 26 days in 2006. Also, at the end of 2006, State's backlog of applications reached its highest level of more than 10,000 open cases.
• Anticipated efficiencies of D-Trade have not been realized. GAO's analysis of processing times for permanent export licenses does not show a significant difference between D-Trade and paper processing for fiscal years 2004 through 2006.
  

• Discussed Coalition for Security and Competitiveness' proposals for development of a modern export control system that is efficient, predictable, transparent and an enabling component of America’s broader national security strategy.
  

• Seeking export control system that can deliver decisions on 95 percent of all license applications in 30 days, not the current 55+ days it often takes.

• Said that Coalition is in beginning stages of discussing and identifying key elements of a “model modern system” to compare with the existing system. The Coalition intends to put forward proposals for a "next generation" system next year for consideration by and discussion with Congress as well as the 2008 Presidential campaigns.
  

• Described three interrelated problems challenging U.S. arms export control system today: (1) Failure to Assess and Reorient Controls against Terrorist Threats; (2) Systemic Vulnerabilities and Risks to U.S. Technology; (3) Declining Levels of Service for U.S. Industry

• Advocated proposal for Congress to work with senior management at DDTC on plan to: (1) clear backlog of license applications within next 120 days; (2) Identify permanent funding sources (e.g., budgetary or license fees) to prevent recurrence of any backlog and assure predictable time lines for U.S. business community; (3) Establish timetable and reporting channel to Congress for a post-9/11 inter-agency review of gaps to be closed or enhancements needed in U.S. export control regulations and policies; and (4) Include plan and timetable for eliminating system vulnerabilities and weaknesses that triggered GAO’s “high risk” designation.

Labels: BIS, Congress, DDTC, Export Controls

Yet another U.S. company has been fined under the Foreign Corrupt Practices Act (FCPA) for payments made by a foreign subsidiary. This time, the Securities and Exchange Commission (SEC) announced yesterday that it has imposed a $300,000 civil penalty on Delta & Pine Land Company (Delta & Pine), a Mississippi-based company engaged in the production and marketing of cottonseed, and its Turkish subsidiary, Turk Deltapine, Inc., for violating the FCPA.

The SEC found that Delta & Pine violated the books-and-records and internal controls provisions of the FCPA and that Turk Deltapine violated the anti-bribery provisions of the FCPA. Specifically, the FCPA charged that, from 2001 through 2006, Turk Deltapine made payments of approximately $43,000 to multiple officials of the Turkish Ministry of Agricultural and Rural Affairs in order to obtain governmental reports and certifications that were necessary for Turk Deltapine to obtain, retain and operate its business in Turkey. According to the SEC, the payments included cash and payment of travel and hotel expenses, air conditioners, computers, office furniture and refrigerators.

In addition, in connection with these improper payments, the SEC found that Delta & Pine failed to keep accurate books and records and failed to have effective internal controls. In addition, the SEC found that Delta & Pine officers in the U.S. learned of these payments in 2004, but did not receive all facts concerning those payments from Turk Deltapine employees. Instead of halting the payments, the payments continued to be made via a company that supplied chemicals to Turk Deltapine.

Turk Deltapine’s payments to MOA officials did not cease until 2006, when the payments came to light in connection with due diligence being performed by a potential acquirer of Delta & Pine. Delta & Pine was subsequently acquired by Monsanto on June 1, 2007.

In its administrative order, the SEC ordered the SEC ordered Deltapine and Turk Deltapine to cease and desist from such violations and required Delta & Pine to retain an independent consultant to review and make recommendations concerning the company's FCPA compliance policies and procedures.

Labels: FCPA

USA Today recently published two very detailed, well-researched and informative articles on Chinese defense and commercial espionage activities in the U.S. and law enforcement's efforts to deal with these threats. Both of the stories were written by David J. Lynch, USA Today's former Beijing bureau chief.

The first story, "Law Enforcement Struggles to Combat Chinese Spying", contains detailed information on the FBI's surveillance, arrest and trial of Chi Mak, the Chinese-born engineer who was convicted on May 10th of trying to export U.S. defense technology to China.

The article notes that:

Beijing's goals aren't limited to traditional national security interests. The world's fastest-growing economy operates a shadowy technology bazaar where individuals offering trade secrets find a ready buyer. About one-third of all economic espionage investigations are linked to Chinese government agencies, research institutes or businesses, according to Bruce Carlson of the FBI's counterintelligence division, who leads the bureau's efforts to combat Chinese spying. Since 2001, the number of FBI investigations of suspected Chinese economic espionage cases increased 12%. "The basis for the whole program is money. People (in the USA) are looking to make a buck. China has money to spend," says Carlson

Left unchecked, such economic espionage threatens the foundations of U.S. prosperity, say current and former counterintelligence officials. In an era of globalization, competitors in low-wage developing countries can produce most products less expensively. The United States' economic advantage revolves around the sophisticated technology and unique know-how residing in corporate laboratories and research institutes. So that's where the corporate thieves and foreign spies concentrate their efforts.

Labels: China, Export Controls

The House Foreign Affairs Committee's Subcommittee on Terrorism, Nonproliferation, and Trade will hold a hearing tomorrow on export controls. The hearing, entitled, "Exports Controls: Are We Protecting Security and Facilitating Exports?" will include the following witnesses:

Labels: BIS, DDTC, Export Controls

The Securities and Exchange Commission (SEC) has "temporarily suspended" the controversial Web tool that was recently posted on the agency's Web site to permit investors to obtain information from company disclosure documents about their business interests in Cuba, Iran, Sudan, Syrian and North Korea, countries that have been designated by the U.S. as "State Sponsors of Terrorism".

In a press release, SEC Chairman Christopher Cox said:

To address these and related concerns, we are temporarily suspending the availability of the web tool while it undergoes reconstruction. We will work to improve the web tool so that it meets the various concerns that have been expressed. Alternatively, our staff is considering whether the use of interactive data tags applied by companies themselves could permit investors, analysts and others to easily discover this disclosure without need of an SEC-provided web tool at all. In the interim, the companies' disclosure regarding their business contacts in the five nations will continue to be available through the SEC's EDGAR database, and findable using our new full-text search capability.

Labels: Cuba, Sanctions; Iran, Sanctions; Sudan, SEC

The Commerce Department's International Trade Administration (ITA) published a notice in today's Federal Register announcing that is seeking a second round of public comments on an aspect of its non-market economy (NME) methodology in antidumping proceedings.

Specifically, ITA is requesting comment on certain aspects of the methodology by which it selects an economically comparable market economy country to serve as a surrogate for the NME country (i.e., China) under investigation or review. Comments are due in 30 days.

Labels: Antidumping

U.S. Customs and Border Protection (CBP) today published a final rule in the Federal Register modifying section 173.3 of the Customs Regulations (19 CFR 173.3) to permit CBP to voluntarily reliquidate entries that have been "deemed liquidated" by operation of law. Entries that may be "deemed liquidated" by operation of law include countervailing duty, antidumping or drawback entries.

Labels: Customs

Dow Jones Newswires reported tonight that the U.S. Department of Justice (DOJ) is conducting a criminal inquiry of nearly a dozen oil and oil-services companies, focusing on potentially illegal payments to customs agents who provided freight forwarding and other services, including in Nigeria. The article states that the Securities and Exchange Commission is also conducting a civil investigation. The article states that:

Labels: FCPA, Nigeria

DefenseNews.com has reported that Israel’s parliament recently passed a new export control law that will "significantly" strengthen Israel's existing export control regime. The article states that "in addition to traditional defense exports, the law covers dual-use items as well as intellectual property and other intangible, so-called deemed exports." The new law also authorizes Israel’s Ministry of Defense Export Control Division (DECD) to levy significant fines and other penalties on exporters suspected of violating provisions of the new law. Israel's new export control law is supposed to go into effect at the "end of the year".

Labels: Export Controls, Israel

On a voice vote the U.S. House of Representatives yesterday voted to approve legislation (H.J. Res. 44) that would renew for one year the import restrictions on Burma (Myanmar) that were originally enacted in the Burmese Freedom and Democracy Act of 2003 (50 U.S.C. 1701 note). The Senate Finance Committee favorably reported similar legislation on Monday as well (S.J. Res. 16).

The Burmese Freedom and Democracy Act prohibits the importation into the U.S. of items of Burmese origin. The President may waive these sanctions once a series of human rights, democracy and counter-narcotics requirements have been met. While the Secretary of State has been granted the authority to act on behalf of the President in issuing such waivers, no waivers have been granted since the import ban took effect on August 27, 2003.

Update: On July 24, 2007, the Senate voted to approve H.J. Res. 44 by a vote of 93-1. Senator Enzi (R-WY) was the only Senator to vote against the resolution. The Joint Resolution has been sent to the President.

Labels: Burma/Myanmar

The U.K. Government today published its 2006 Annual Report on Strategic Export Controls. The report contains an overview of U.K. policy and international developments in export control regimes and includes information on U.K. licensing decisions made during 2006.

With respect to licensing, the report states that in 2006, the U.K. processed 9,908 Standard Individual Export License (SIELs) applications, an increase from the 9,062 SIELs processed in 2005. Of these over 82% were processed within 20 working days. During the same period a total of 584 Open Individual Export Licence (OIELs) applications were processed, 74% of which were processed within 60 days.

The report also contains information on export enforcement activity in the U.K. The report shows a reduction in the number of cases of strategic goods seized by Her Majesty's Revenue and Customs (HMRC) in the reporting period. The report also lists the monetary penalties imposed by HMRC for violations of U.K.'s export control laws. In fiscal year 2006-2007, the report shows that the U.K. imposed monetary penalties on only two entities for exporting military goods to Kuwait and Iraq. The total amount of penalties assessed on the two companies was only £18,000 (approximately US$36,000). (By contrast, the U.S. Bureau of Industry and Security's (BIS) 2006 Annual Report states that BIS brought 104 administrative cases and imposed US$13.1 million in civil penalties for violations of U.S. export control laws.)

The PDF version of the 2006 Annual Report and accompanying annex can be found on the website of the U.K. Government's Foreign and Commonwealth Office.

Labels: Export Controls, United Kingdom

At a hearing held today by the House Science and Technology Committee’s Subcommittee on Space and Aeronautics on the status of NASA's Space Shuttle and International Space Station (ISS) programs, Tommy Holloway, Chairman, of the ISS Independent Safety Task Force said that the current International Traffic in Arms Regulation (ITAR) restrictions on NASA are a threat to the safe and successful integration and operations of the ISS.

Mr. Holloway, who formerly served as Manager of NASA's Space Station and Space Shuttle programs, told the members of the Subcommittee that:

Currently the International Traffic in Arms Regulation (ITAR) restrictions and IP [International Partner] objections to signing what the IPs believe are redundant Technical Assistance Agreements are a threat to the safe and successful integration and operation of the Station. For example, a contractor workforce comprises a majority of the operations workforce and must be able to have a direct interface with the IP operations team to assure safe and successful operations. Their interactions and their ability to exchange and discuss technical data relevant to vehicle operations are severely hampered by the current ITAR restrictions. This is an issue across the ISS Program, but must be resolved soon to allow operations training for the first flight of the European Space Agency's Automated Transfer Vehicle (ATV) in the first part of 2008.

NASA depends heavily on U.S. contractors for technical support for Station integration and for operations. These contractors are the source of data and expertise that is critical in meeting schedules and performing mandatory work with the IPs. For example, the mission operations contractors comprise a majority of the operations workforce and must be able to have a direct interface with the IP operations teams to assure safe and successful operations. Currently the ITAR restrictions and the IPs' objections to signing technical assistance agreements are a threat to the safe and successful integration and operations of the Station.

Each U.S. contractor working with the European, Japanese, and Russian space agencies is required to apply for a Technical Assistance Agreement (TAA) from the State Department that governs their interactions with foreign entities for each specific relationship. U.S. aerospace and defense companies are accustomed to dealing with these TAA requirements in what has become a normal part of international business. However, when the Department of State approvals are too narrowly defined and come with many caveats, limitations, and provisos, they severely restrict Program management flexibility. The constraints imposed by the current processes result in lost time and opportunity to share critical data to enable a robust joint Program.

I would grant immediate relief in the form of an [ITAR] exemption to allow NASA contractors direct interaction with the IPs and their contractors to facilitate and accommodate all engineering and safety reviews, data exchanges pertaining to specific ATV/HTV hardware and software, Program management interactions, and flight operations including anomaly resolution.

Labels: ITAR, NASA

Last week a federal grand jury in Houston indicted Jason Edward Steph, a former executive of a subsidiary of Houston-based Willbros Group Inc., on charges of conspiring to make payments to Nigerian officials in violation of the Foreign Corrupt Practices Act (FCPA). Willbros is a publicly-traded company that provides construction, engineering and other services to the oil and gas industry.

The Grand Jury alleged that Mr. Steph conspired to make over $6 million in bribe payments to Nigerian officials in order to obtain and retain gas pipeline construction business from a joint venture controlled by the Nigerian state oil company. Mr. Steph was also charged with money laundering and conspiracy to commit money laundering based upon the international transfer of some of the bribe money. The indictment alleges that most of the payments were allegedly laundered through consultants, who typically received three percent of Willbros' contract revenue by wire transfer from Houston to a foreign bank. The consultants subsequently transferred some or all of the funds to Nigerian officials.

The maximum sentence for a charge of conspiring to violate the FCPA is five years in prison and a fine of up to $250,000, or twice the gross gain or loss. Each of the money laundering charges carries a maximum sentence of 20 years in prison and a fine of up to $500,000 or twice the value of the funds involved in the transfer, whichever is greater.

This is the second FCPA prosecution of a Willbros executive arising from Willbros' overseas operations. In September 2006, Jim Bob Brown, who is named as a co-conspirator in the Steph indictment, pled guilty to violating the FCPA by conspiring with others to bribe Nigerian and Ecuadorian officials. Mr. Brown also settled civil charges brought by the Securities and Exchange Commission. Mr. Brown has not yet been sentenced.

A copy of the indictment can be found at the following link.

Labels: FCPA

On July 17, 2007, the Commerce Department's Bureau of Industry and Security (BIS) published the following three important final rules and notices in the Federal Register:

Antiboycott Penalty Guidelines:

The first document published by BIS in the July 17, 2007 edition of the Federal Register was a final rule setting forth BIS policy concerning voluntary self-disclosures of the antiboycott provisions of the Export Administration Regulations (EAR) and the factors that BIS will consider when deciding whether to pursue administrative charges and impose penalties for violations of the antiboycott provisions.

Specifically, the final rule creates a new section 764.8 of the EAR (15 CFR § 764.8) setting forth the procedures for voluntary self disclosure of violations of the antiboycott provisions. For example, section 764.8 requires, among other things, that voluntary self-disclosures be in writing and that they be received by BIS's Office of Antiboycott Compliance before the agency learns of the same or substantially similar information from ‘‘another source’’ and has commenced an investigation or inquiry in connection with that information. Significantly, the final rule specifies that violations revealed by exporters to BIS in telephone or e-mail requests for advice concerning the antiboycott provisions are "not information received from another source". The final rule states that a voluntary self-disclosure of a violation of the antiboycott provisions of the EAR will be considered to be a "Great Weight" mitigating factor in the settlement of administrative enforcement cases.

The final rule also creates a new supplement No. 2 to part 764 that describes how BIS responds to violations of the antiboycott provisions and how BIS makes penalty determinations in the settlement of antiboycott administrative enforcement cases. The rule also specifies the various factors that BIS considers to be important when settling antiboycott administrative enforcement cases.

The final antiboycott guidelines rule takes effect on August 16, 2007.

Guidance on Licensing Jurisdiction of Microelectronic Circuits:

BIS also published a final rule in the July 17, 2007 Federal Register adding language to ECCN 3A001 advising that the following are subject to the licensing jurisdiction of the Department of State, Directorate of Defense Trade Controls (DDTC):

Radiation hardened microelectronic circuits controlled by Category XV(d) of the United States Munitions List (USML) and all specifically designed or modified systems or subsystems, components, parts, accessories, attachments, and associated equipment controlled by Category XV(e) of theUSML.

1. The overall structure of the CCL, including suggestions for how the structure of the CCL may be changed to better advance U.S. national security, foreign policy, and economic interests;
2. Types of items that should be listed on the CCL and the appropriate levels of controls to be placed on those items, taking into account technology levels, markets, and foreign availability;
3. Any updates to the CCL item descriptions that would enable the descriptions to better reflect the intent of the multinational controls and to eliminate any overly broad descriptions that inadvertently capture non-critical items that are not controlled by other countries; and
4. Coordination and harmonization of controls on items covered by the multilateral regimes, such as the Wassenaar Arrangement.
   

Labels: BIS, Boycotts, DDTC

In response to a request by the Senate Finance Committee, the U.S. International Trade Commission last week issued a report entitled "U.S. Agricultural Sales to Cuba: Certain Economic Effects of U.S. Restrictions".

The ITC's report provides an overview of Cuba's purchases of agricultural products since 2000, an analysis of the effects that U.S. restrictions on trade and travel to Cuba by U.S. citizens have on those Cuban purchases and estimates of likely U.S. agricultural sales if such restrictions were lifted.

The major findings trade-related findings of the report include:

• Following implementation of the Trade Sanctions Reform and Export Enhancement Act (TSRA) of 2000, U.S. exports grew rapidly and by 2004 the U.S. was the largest supplier of agricultural products to Cuba.
  
• However, following OFAC's February 2005 policy change that required the seller to receive payment from the Cuban buyer prior to the departure of the vessel carrying the goods to Cuba, the value of Cuban agricultural imports from the United States dropped by 10% in 2005 and a further 4% in 2006.
• U.S. regulations, such as those requiring the Cuban government to pay for U.S. agriculture products in cash or through letters of credit drawn on third-country banks, raise the cost of U.S. goods for Cubans and likely limit U.S. sales.
  
• The ITC found that OFAC appears to have restricted business travel to and from Cuba that is necessary for U.S. exporters to effectuate sales. Particularly important are Cuban officials traveling to the United States to inspect U.S. processing facilities, U.S. port facilities, fresh produce, live animals and other products subject to sanitary and phytosanitary standards. For many of these products, the ITC found that restricting business travel effectively bars U.S. sales to Cuba.
• OFAC restrictions on maritime shipping of U.S. products to Cuba significantly increased
  freight charges for cargo to Cuba above freight charges to other Caribbean destinations.
• Overall, the ITC found that all U.S. agricultural commodity sectors would likely benefit from the lifting of the financing restrictions on U.S. agricultural exports to Cuba.

Labels: Cuba, ITC, OFAC

In response to the recent concerns over the safety of imports from China, on July 18, 2007 President Bush issued Executive Order 13439 establishing an interagency Working Group on Import Safety. The Working Group will be chaired by the Secretary of Health and Human Services. The Working Group's mission is "to identify actions and appropriate steps that can be pursued, within existing resources, to promote the safety of imported products", including the following:

• Reviewing or assessing current procedures and methods aimed at ensuring the safety of products exported to the United States, including reviewing existing cooperation with foreign governments, foreign manufacturers, and others in the exporting country's private sector regarding their inspection and certification of exported goods and factories producing exported goods and considering whether additional initiatives should be undertaken with respect to exporting countries or companies;

• Identifying potential means to promote all appropriate steps by U.S. importers to enhance the safety of imported products, including identifying best practices by U.S. importers in selection of foreign manufacturers, inspecting manufacturing facilities, inspecting goods produced on their behalf either before export or before distribution in the United States, identifying origin of products, and safeguarding the supply chain; and

• Surveying authorities and practices of Federal, State, and local government agencies regarding the safety of imports to identify best practices and enhance coordination among agencies.

Labels: Customs

The U.S. International Trade Commission (ITC) today made affirmative preliminary injury determinations in the antidumping and countervailing duty cases on circular welded carbon-quality steel pipe from China.

Vice Chairman Shara L. Aranoff and Commissioners Charlotte R. Lane and Irving A. Williamson voted in the affirmative. Chairman Daniel R. Pearson and Commissioner Deanna Tanner Okun made affirmative threat determinations. Commissioner Dean A. Pinkert did not participate in these investigations.

As a result of the ITC's affirmative determinations, the U.S. Department of Commerce will continue to conduct its antidumping and countervailing duty investigations, with its preliminary countervailing duty determination due on or about August 31, 2007, and its preliminary antidumping determination due on or about November 14, 2007.

Labels: Antidumping, China, Countervailing Duties

Secretary of Commerce Carlos Gutierrez last week released the Administration's 2007 National Export Strategy. The 2007 National Export Strategy, which is intended to raise awareness in the American business community about the advantages of exporting examines, examines how the combination of declining trade barriers and advancing technologies has made exporting easier than ever. The entire 2007 National Export Strategy in PDF format can be found here.

Labels: Commerce Department

On July 11, 2007, the Treasury Department's Office of Foreign Assets Control (OFAC) issued its monthly report of civil penalties imposed on companies and individuals for allegedly violating the sanctions regimes administered by OFAC.

OFAC's monthly report indicates that the agency settled three cases involving corporations and three cases against persons. The following is a summary of the settlements:

Entities:

• LogicaCMG Inc. paid $220,000.00 to settle allegations of violations of the Cuban Assets Control Regulations by a predecessor corporation, CMG Telecommunications, Inc. (CMG), occurring during 2001. OFAC alleged that CMG procured, assembled, and exported a computer system, as well as provided technical support for the system after export, with knowledge that the goods and services were ultimately destined for Cuba and that such exports to Cuba were prohibited. CMG did not have an OFAC license to engage in these transactions and CMG did not voluntarily disclose this matter to OFAC.

This is the third penalty imposed on CMG as a result of prohibited transactions with Cuba. As we previously reported, in May 2007 LogicaCMG, Inc. paid $99,000 to the Bureau of Industry and Security to settle allegations that CMG violated the Export Administration Regulations by making an unlicensed export of telecommunications equipment to Cuba via Panama.

In addition, in April 2007, LogicaCMG pled guilty in federal court for violating the International Emergency Economic Powers Act for the unlicensed reexport from Panama to Cuba and was ordered to pay a $50,000 criminal fine.

• Gibson Overseas, Inc. paid $1,357 to settle allegations of violations of the Iranian Transactions Regulations occurring during January 2006. OFAC alleged that Gibson used an Iranian vessel to ship goods from China to Dubai in violation of 31 C.F.R. § 560.206, which prohibits transactions or dealings in goods or services of Iranian origin. Gibson did not voluntarily disclose this matter to OFAC.

• American Bankers Life Assurance Company of Florida remitted $1,271.50 to settle allegations of violations of the Narcotics Trafficking Sanctions Regulations occurring between October – December 2003. OFAC alleged that the insurance company processed premium payments on insurance policies on the lives of two persons who are named as Specially Designated Narcotics Traffickers. ABLAC did not voluntarily disclose this matter to OFAC.
  

• One individual agreed to a settlement totaling $10,000 for alleged travel-related transactions incident to travel to Cuba. Specifically, OFAC alleged that from May through December 2002 the individual engaged in prohibited travel-related transactions, including the purchase of food and lodging in Cuba. The individual traveled to and from Cuba through a third country. (This is one the largest penalties imposed by OFAC on an individual for travel-related violations of the Cuban Assets Control Regulations.)
  

• Another individual agreed to pay $2,892.75 to settle charges of allegedly dealing in property in which Cuba or a Cuban national had an interest. OFAC alleged that in 2004, 2005 and 2006 the individual purchased Cuban-origin cigars on six separate occasions that were offered for sale on the Internet. The individual did not voluntarily disclose this matter to OFAC.

• An individual was assessed a penalty totaling $200.00 for making four payments in 2003 to purchase of Cuban-origin cigars offered for sale on the Internet. The individual did not voluntarily disclose this matter to OFAC.

Labels: Cuba, OFAC, Sanctions, Sanctions; Iran

The Bureau of Industry and Security (BIS) today announced that the 20th annual Update Conference on Export Controls and Policy will be held from October 31- November 2, 2007 in Washington, DC.

In order to avoid last year's major registration problems, BIS is conducting a registration lottery. To register for the Update lottery interested persons must fill out an “Update Interest Form” by August 3, 2007. At the end of this period, if there is space to accommodate all interested applicants, BIS will give applicants instructions on how to register for the program. If there are more potential participants than space available (the more likely scenario, since last year's Update sold out in less than an hour), BIS will make registration assignments through a random selection from the entire list of applicants, regardless of when received during the initial registration period. Those chosen will then be notified during the week of August 13, 2007 and given instructions on how to register and pay. Those whose names are not drawn will notified that they have been placed on a waiting list.

Labels: BIS

The Economic Times of India has reported that the Government of India is planning a new export controls initiative to intercept exports to prohibited end-users and "end-users of concern." According to the report:

The government is planning to ask a core group on proliferation that consists of ministries of home affairs, defence and external affairs to draw up a list of ‘end users of concern.’ This will be based on global trends in proliferation of weapons of mass destruction, information from other countries and UN Security Council resolutions. The list will be shared with all customs and port authorities.

The government will authorise the customs department through a notification to stop any export consignment to these business houses. Once intercepted, the exporter would be told that he should seek a license to go ahead with the export. The application will be approved or rejected within a specified time frame, possibly, two weeks, it is understood. The government is likely to work with associations of biotech companies, chemicals makers and aerospace manufacturers to create awareness.

Labels: Export Controls, India

Last week's July 4th articles on state legislatures requiring American flags to be "Made in the USA" generated a great deal of interest and follow-up. For example, the Political Reps Blog contains a good digest of other blogs addressing the pros and cons of such laws. I also received several e-mails on the topic.

I also learned that in 2004 Florida passed a law requiring that all classrooms in state educational institutions must display a United States flag at least 2 feet by 3 feet in size that is made in the United States.

New Jersey's Gloucester County Times also today reports on a bill pending in the New Jersey Legislature that would require any United States or State of New Jersey flag purchased with state funds be manufactured in the United States. The bill, Assembly No. 2939, passed the New Jersey General Assembly by a 79-0 vote on June 8th and is currently pending in the New Jersey Senate.

Labels: Country of Origin