International Trade Law News

The United Arab Emirates (UAE) announced today that it has enacted a new law governing the import and export of goods.

The new law, entitled Federal Law No. 13 of 2007, authorizes the UAE "to ban or restrict the importing, exporting or re-exporting of any commodity for reasons related to safety, public health, environment, natural resources, national security or for reasons related to the UAE's foreign policy."

According to a summary of the law issued by the Emirates News Agency, the new law includes four chapters. Chapter 1 sets forth the general framework for the issuance of import and export licenses. Chapter 2 includes procedures aimed at controlling the import and export of strategic commodities, the export and re-export of technology, and provisions relating to the brokerage and transport of such items. Chapter 3 specifies the penalties for violating the law, ranging from a maximum imprisonment of one year and fines of 1 million UAE dirhams (approximately US$272,000). Chapter 4 provides that the UAE's Cabinet must issue relevant regulations and publish them in the UAE's Official Gazette within one month.

The new law also orders the establishment of the National Commission for Commodities Subject to Import, Export and Re-export Control. The National Commission, which will be chaired by the Ministry of Economy, will include representatives of other concerned federal ministries and bodies and the private sector. It will be tasked with "cooperating and coordinating with relevant authorities on the rules introduced to control imports and exports in compliance with the new law" and "will also provide technical advice to federal and local bodies to ensure the enforcement provisions" of the law are applied.

The U.S. has been pressuring the UAE to strengthen its export control regime. In February of this year, the Bureau of Industry and Security (BIS) published in the Federal Register an advanced notice of proposed rulemaking that would give BIS the authority to place certain countries in Country Group C, resulting in additional licensing requirement. The Dubai Chamber of Commerce and Industry, and eight other companies and organizations submitted comments on the proposed rule to BIS.

BIS has also taken other steps to prevent the transshipment of goods from the UAE to Iran through the issuance of General Order No. 3 on June 5, 2006. General Order No. 3 imposes a license requirement for exports and reexports of all items subject to the Export Administration Regulations (EAR) when the transaction involves companies in the UAE that the U.S. has determined is involved in the supply of electronic components and devices capable of being used to construct Improvised Explosive Devices (IEDs). General Order No. 3 was amended on June 8, 2007 to include additional parties located located in the UAE, Germany, Syria, Lebanon, Malaysia Iran and Hong Kong.

On June 5, 2006, BIS issued a General Order Concerning Mayrow General Trading and Related Entities. This Order imposes a license requirement for the export or reexport of any item subject to the EAR to Mayrow and other named entities. The Order, which does not permit the use of license exceptions, applies to any transaction involving Mayrow or any other named entity. The Order was amended in September 2006 and June 2007 to apply to additional persons.

BIS recently imposed a $36,000 penalty on Georgia-based Ace Systems, Inc. for attempting to export dialogic voice cards to Mayrow General Trading in Dubai, UAE without the required license. Mayrow General Trading was the primary subject of General Order No. 3 when it was issued in June 2006.

Labels: BIS, Export Controls, UAE

The Treasury Department today unveiled a redesigned home page with a new look. The new site has direct links to OFAC's SDN List and summaries of OFAC's sanctions programs on the lower left hand side of the page. The URL and look of OFAC's website remains unchanged.

Labels: OFAC, Treasury Department

The Treasury Department's Office of Foreign Assets Control (OFAC) today issued a final rule in the Federal Register expanding the scope of activities allowed under the general licenses for publishing activities contained in OFAC's Cuba, Sudan, Iran and Burma sanctions regulations.

As a result of today's final rule, the general licenses relating to publishing activities permit the export and inclusion of embedded software necessary for reading, browsing, navigating or searching "written publications". In order to be eligible for the general licenses for Iran and Sudan, however, the embedded software must be classified as EAR99 under the Export Administration Regulations. The general licenses for Cuba and Burma now permit the export of such software if "the exportation is licensed or otherwise authorized by the Department of Commerce under the provisions of the EAR".

The final rule also amends the various sanctions regulations by clarifying that the term "written publications'' used in the general licenses includes manuscripts, books, journals and newspapers even if they are published solely in electronic format.

OFAC's amendment of the Iran and Sudan general licenses relating to the export of embedded software for reading or browsing written publications does not appear to be a significant change in licensing policy. This is because even the most basic software products for reading or searching written publications are not classified as EAR99. For example, Adobe's on-line product matrix confirms that Acrobat eBook Reader and Adobe Reader are classified as ECCN 5D992, since they contain encryption algorithms. Similarly, Microsoft's Internet Explorer is also classified as ECCN 5D992. Even Mozilla's Firefox is classified as ECCN 5D002.

Labels: Burma/Myanmar, Cuba, OFAC, Sanctions; Iran, Sanctions; Sudan

Labels: Customs; FDA

The Bureau of Industry and Security (BIS) announced on Friday that Mario Mancuso, Under Secretary of Commerce for Industry and Security, will be in Israel this week to participate in meetings with senior Israeli government officials and business leaders to discuss dual-use export control cooperation, high-technology trade and investment issues.

During his trip to Israel, Under Secretary Mancuso will meet with officials from Israel's Ministries of Industry, Trade and Labor, Defense and Foreign Affairs. He will also meet with Israeli and U.S. business leaders to discuss ways to promote secure high technology trade and investment.

Israel recently passed a new export control law that is intended to strengthen Israel's existing export control regime.

The trip to Israel promises to be the first of Undersecretary Mancuso's visits to key countries in order to elevate the U.S. level of engagement on dual-use export controls and high-technology trade and investment.

Labels: BIS, Israel

Here's a story with interesting ITAR implications. Reuters has reported that during last week's Moscow Air Show (MAKS 2007) a wealthy Russian tried to buy a B-52 bomber from he U.S. delegation. According the report:

The unidentified Russian, wearing sunglasses and surrounded by bodyguards, approached the U.S. delegation and asked to buy the bomber . . . .

An astounded member of the U.S. delegation said the bomber was not for sale but that it would cost at least $500 million if it were to be sold on the spot.

"That [$500 million] is no problem. It is such a cool machine," the Russian was quoted as saying . . . . The bomber was not sold.

Labels: ITAR

The Bureau of Industry and Security (BIS) announced in today's Federal Register that the next meeting of the Deemed Export Advisory Committee (DEAC) will take place on September 10, 2007 in Washington, DC. The DEAC will meet in open session from 9 a.m.-11 a.m., followed by a session closed to the public. Details on the meeting agenda and location can be found here.

The DEAC's objective is to make recommendations for possible improvements to policies on the transfer of technology or source code subject to the Export Administration Regulations and to advise the Secretary of Commerce on deemed export licensing policy.

Labels: BIS, Deemed Exports

U.S. Customs and Border Protection (CBP) has announced that it will hold a free conference in Atlanta, GA (ACE Exchange VII) from October 15-17, 2007 where importers and other persons involved in importing activities can learn about the current and future functionality of the Automated Commercial Environment (ACE).

ACE Functionality Available Now Includes:

• National View of Company’s Transactions
• Paying Duties and Fees on a Monthly Statement
• Reporting Tool with Transactional, Financial and Compliance Data Mandatory Submission of Electronic Manifest for Trucks

• Creating CBP Form 5106 Online (Importer Identification Number Information)
• Participation of Other Government Agencies (OGAs)
  
• Ability for Brokers, Cartmen, Lightermen and Facility Operators to meet CBP Regulatory Requirements

Labels: ACE, Customs, Customs; Customs Brokers

• The lucky winners of the Update 2007 lottery received an e-mail advising them of their registration ID code that will permit them to register for the program. Recipients of the registration ID code must register for Update 2007 before September 14, 2007 or their registration will be forfeited and transferred to someone on the wait list. The agenda for Update 2007 can be found here. Since we were one of the lucky winners of the Update lottery, we will see you in October.

• BIS also announced today that the next version of the SNAP-R web-based licensing system will be implemented during the weekend of August 25, 2007. According to BIS, some of the changes include: Updates computer-related measurements to reflect the changes from CTP to APP and MTOP to WT; The Product/Model Number field on the electronic BIS-748P license form will be increased from 15 to 30 characters; the help desk phone number will be displayed when a user experiences account lockout; and a rider will be added to all licenses approved for Hong Kong. Users can resume using the new and improved version of SNAP-R on Monday, August 27, 2007.

Labels: BIS

Like Congress, we have been on a bit of a hiatus during the past few weeks (a blogging hiatus, but not a work hiatus). However, we will be resuming our regular posts, which will include important customs and export control-related news from the past weeks.

In addition, we are pleased to welcome a new contributor to International Trade Law News. Laura Martino, a newly hired international trade associate in Strasburger & Price's Washington, DC office, will be posting regular updates on customs and export-related matters. Laura's first post can be found below.

Laura is a 2003 a graduate of the American University's Washington College of Law and handled import and export issues at two prominent law firms before joining Strasburger. While in law school Laura served as a Legal Intern at the Office of the United States Trade Representative, where she assisted with bilateral and multilateral trade negotiations.

Labels: Miscellaneous

By Laura Martino*

U.S. Customs and Border Protection (CBP) announced in today's Federal Register that it is terminating the agency's long-standing Supplementary Information Letter (SIL) program for making post-entry amendment to customs entries on September 20, 2007. After that date, importers or customs brokers seeking to amend entry summaries prior to liquidation must do so by submitting a Post-Entry Amendment (PEA) to CBP.

In addition to extending the PEA test procedure until August 21, 2008 (the "test" procedure was originally announced in late 2000 and has been extended on several occasions), CBP has made other changes to the PEA process. Effective immediately, an importer or broker filing a single PEA must submit the PEA at least 20 days prior to the scheduled liquidation date of each entry summary covered in the PEA letter (liquidation normally occurs 314 days after the entry date). Single PEAs submitted untimely will be rejected by CBP. Previously, PEAs were required to be filed promptly after discovery of the error and prior to liquidation of the one or more entry summaries covered in the PEA.

As with SILs, PEAs allows importers to continue to make amendments to already filed entry summaries prior to liquidation. However, unlike SILs, PEAs allows importers to submit to CBP a quarterly report covering the errors that occurred during the calendar quarter.

CBP anticipates that eliminating the SIL program will reduce the paperwork burden for both importers and the agency. In addition, CBP believes that the new filing deadline for single PEAs will provide the agency with the time it needs to review underpayments and overpayments of duties, taxes and fees and statistical errors prior to liquidation.

* Laura Martino is an international trade attorney in Strasburger & Price's Washington, DC office.

Labels: Customs

Earlier this week Senators Max Baucus (D-MT) and Orrin Hatch (R-UT) introduced the Trade Enforcement Act of 2007, legislation intended to "significantly bolster the U.S. government’s trade enforcement abilities." While the full text of the legislation has not been released, the press release issued by the Senate Finance Committee states that Baucus-Hatch proposal would make the following changes to U.S. trade laws:

• Amends section 701(a)(1) of the Tariff Act of 1930 to clarify that the Commerce Department has the authority to apply countervailing duties to nonmarket economies like China.
• Limits President's authority in China safeguard investigations by providing that the President may decline to provide relief only in extraordinary cases and only if the President determines that the relief would seriously harm U.S. national security or would have an adverse impact on the U.S. economy.
• Overrides the Federal Circuit’s Bratsk Aluminum decision by providing that the ITC must make its material injury determination in antidumping and countervailing duty cases without regard to whether other imports will likely replace imports from the country under investigation.
  
• Requires the United States Trade Representative (USTR) to provide an annual report to
  Congress identifying the most significant market access barriers to U.S. companies abroad
  and to take enforcement action to resolve them.
  
• Creates a Senate-confirmed Chief Enforcement Officer to investigate and prosecute trade enforcement cases. It also establishes an interagency Trade Enforcement Working Group to advise USTR and authorizes $5 million for USTR’s enforcement responsibilities.
• Sets up a WTO Dispute Resolution Settlement Commission of retired judges and international trade law experts to review WTO dispute settlement reports to determine whether they added to the United States’ obligations under the WTO or deviated from the standard of review.

Labels: Antidumping, China, Congress, Trade Policy

The Justice Department announced today that Xiaodong Sheldon Meng pleaded guilty to violating the Foreign Economic Espionage Act and the Arms Export Control Act by possessing a trade secret belonging to his former employer and "knowingly and willfully" exporting ITAR-controlled source code to China.

According to the Justice Department, this is the first time that a person has been convicted for "illegal exports of military-related source code".

The defendant faces a maximum prison term of 24 months and could be subject to a fine of $500,000 for the Economic Espionage Act conviction and a maximum fine of $1,000,000 on the Arm Export Control Act conviction.

Labels: China, Export Controls, ITAR

The Government Accountability Office (GAO) today released to the public a report submitted to Congress last month indicating that the Department of Defense's Defense Reutilization and Marketing Service (DRMS) recently sold surplus aircraft parts to the public that could be used on F-14 fighter aircraft. The report states:

Although DRMS has clearly taken a proactive approach to identifying and removing sensitive items from its system, we determined that approximately 1,400 items newly designated as controlled property were sold to the public in February 2007. DRMS told us the parts were sold to the public because it did not successfully update its automated control list and remove these items prior to their being listed on the Web site. DRMS had identified these items as parts that could be used on the F-14 fighter aircraft.

Labels: Export Controls, ITAR

NPR's All Things Considered today presented a story on arms export and technology transfer issues and enforcement. The story discusses the Justice Department's decision to appoint its first-ever national export control coordinator to oversee export control enforcement cases. Click here to listen to the story.

Labels: Export Controls