International Trade Law News

Labels: Export Controls

Labels: Export Controls

Defense Secretary Robert Gates is expected to announce the results of the Obama Administration's proposed export control reform review in a speech to the the Business Executives for National Security on April 20, 2010 in Washington, DC.

In his speech, Secretary Gates is likely to describe the Administration's near-term and long-term export control objectives and set out a timetable for action.

In August 2009, President Obama directed that the National Economic Council and National Security Council to launch a broad-based interagency process to review the overall U.S. export control system, including the dual-use and defense-related trade processes.

Labels: Export Controls

The American Association of Exporters and Importers (AAEI) has isssued a policy paper entitled “The Innovation Economy for America.” The paper, which was sent to all members of Congress last week, contains a series of ideas that, if adopted, would according to AAEI "greatly increase the likelihood that the next great company with innovative technology and products will be created in the United States and thrive in the global marketplace."

"Our leaders need to better understand what innovation really is," said AAEI President and CEO Marianne Rowden, who authored the document. "Innovation can take many forms now, from new products to new processes. If Congress can improve the business environment for our cutting-edge innovators, then it will have tilled the soil from which new ideas can propel the future of our economy."

The document describes the following four policy areas that will foster innovative thinking and invention:

1. Creating an Environment that is Conducive to and Protects Innovation

2. Implementing These Small and Medium Size Business Enterprises Initiatives and Priorities

• Completing Free Trade Agreements with Colombia, Panama and Korea
• Help Small and Medium Size Business Navigate U.S. Export Controls by providing assistance through the U.S. Small Business Administration and the U.S. Department of Commerce
• Expand Export Financing Opportunities for SMEs

• Enacting Duty Drawback Simplification
• Streamlining Export Controls

• Passing the Miscellaneous Trade Bill (H.R. 4380)
• Finishing the Automated Commercial Environment (ACE) and International Trade Data System (ITDS)
• Economizing Homeland Security Costs (including C-TPAT, CCSP)
• Harmonizing and Recognizing Authorized Economic Operator Programs
• Promoting International Standards Setting Bodies
• Enacting an Exclusive Forum for Trade-Related Disputes by passing a bill to expand the jurisdiction of hte U.S. Court of International Trade
• Eliminating and Reducing User Fees

Labels: Export Controls, Exports, Free Trade Agreements

The seventh U.S.-India High Technology Cooperation Group (HTCG) will take place this Monday and Tuesday (March 15 and 16) in Washington, DC.

The HCTG was formed in 2002 to provide a forum for discussing U.S.-India high-technology trade issues. The HCTG is co-chaired by the U.S. Department of Commerce's Bureau of Industry and Security (BIS) and the Government of India's Ministry of External Affairs

Neena Shenai, an adjunct scholar at the American Enterprise Institute, and formerly a senior advisor at BIS, has published an article entitled "India, the United States, and High-Tech Trade" that notes that this is the first HCTG under the Obama Administration and describes the three primary issues that will be discussed at the HCTG: export controls, defense trade, and civil nuclear cooperation.

Labels: Export Controls, India

Washington Times reports today on issues holding up confirmation of Undersecretary of Commerce for Industry and Security (BIS).

Compliance with import/export regulations and FCPA among top five corporate compliance challenges in 2010 for technology companies.

Politico reports that the Senate conferees for the pending Iran sanctions legislation have been selected. No word on House conferees yet.

India to press to push for liberalization of U.S. export controls at next week's U.S.-India High Technology Cooperation Group Meeting in Washington, DC.

President Obama issues annual notice advising Congress that the national emergency with respect to Iran will be continued and that comprehensive sanctions against Iran will remain.

Two reports on U.S. citizen Alan Gross who was arrested in Cuba in December 2009 here and here.

In case you missed it, 60 Minutes recently aired a report entitled "Made In The USA" In Iran discussing how U.S. parts and components end up in Iran via third countries.

Washington Post: Obama's ambitious export plan may rekindle free-trade battle.

Compliance Week announces agenda for 5th Annual Conference that will be held in Washington, DC from May 24-26, 2010.

Coalition for Security and Competiveness issues statement welcoming President’s continuing commitment to export control reform.

Census Blog: Make sure your AESDirect company account information is up to date!

Justice Department: Former Haitian Government Official Pleads Guilty to Conspiracy to Commit Money Laundering in Foreign Bribery Scheme

Labels: Export Controls

In a speech today on the National Export Initiative made today at the Export-Import Bank of the United States' annual conference in Washington, DC, President Obama announced two specific changes in U.S. export control laws that the Administration plans to implement:

1. A new one-time online review and notification process for products containing encryption algorithms. This new process is intended to reduce the current 30 to 60 day review process to "30 minutes."                                 
2. Will eliminate unnecessary obstacles for exporting products to companies with dual-national and third-country-national employees by harmonizing the EAR and ITAR standards, making it easier for American and foreign companies to comply with U.S. export control requirements without diminishing national security. 

Labels: Export Controls, ITAR

The following is an excerpt of a brief exchange between Representative Don Manzullo (R-IL) and Secretary of State Hillary Rodham Clinton on export controls at last week's House Foreign Affairs Committee on the FY 2011 international affairs budget. 

Rep. Manzullo is co-chair of the Congressional Export Control Working Group and has played an active role on export controls reform issues.


Export Controls Excerpt from Lauren Airey on Vimeo.

Labels: Export Controls

U.S. Immigration and Customs Enforcement (ICE) announced yesterday that a federal grand jury in Los Angeles indicted the former owner of a Los Angeles-area gun store and two employees of a freight forwarding company for violating international arms trafficking and export control laws for allegedly exporting gun sights and equipment used to manufacture assault rifles to the Philippines without the required export licenses.

The three men are accused of conspiring to illegally ship defense articles and other controlled items to the Philippines in violation of the Arms Export Control Act and the International Emergency Economic Powers Act.

According to the indictment, the defendants conspired to purchase and export to the Philippines, in three separate shipments, a total of 250 forging for AR-15 assault rifles and 11 holographic rifle sights. Two of the shipments were intercepted by Philippine customs officials. It is alleged that the forgings are subject to the jurisdiction of the International Traffic in Arms Regulations and the rifle sights are subject to the jurisdiction of the Export Administration Regulations.

Two of the defendants were arrested yesterday and the third defendant apparently fled to the Philippines several years ago.

Labels: BIS, Export Controls, ITAR

While the federal government in Washington, DC remains closed today for the second day in a row, the Government Printing Office remains open and publishing the Federal Register.

Today's edition of the Federal Register contains one export control-related notice, a final rule published by the Bureau of Industry and Security amending the Export Administration Regulations (EAR) to modify License Exception GOV to provide authorization for exports and reexports for use on the International Space Station (ISS).

In order to prepare for the end of the Space Shuttle program (there are only four more shuttle missions scheduled), today's final rule amends section 740.11 of the EAR by providing a new authorization for the export or reexport of commodities subject to the EAR that are classified under ECCN 9A004 (which covers space launch vehicles and spacecraft not controlled by the ITAR) for use on the ISS.

Specifically, this rule provides a new authorization for commodities classified under ECCN 9A004 that are subject to the EAR that  are needed at launch destinations outside of the U.S. (France, Japan, Kazakhstan and Russia) on short notice. The rule defines "short notice" as a requirement to have a commodity manifested and at the scheduled launch site for hatch-closure no more than 45 days from the time the exporter or reexporter received complete documentation.

While most exports of items for use on the RSS to launch countries are handled by NASA, this amended license exception permits other exporters to use this license exception if necessary.

Labels: BIS; EAR;, Export Controls

While there have been many export control reform proposals issued in the past few months, very few of them have focused on the legal aspects of the U.S. export control regime.

Neena Shenai, an adjunct scholar at the American Enterprise Institute for Public Policy Research, has added an interesting perspective to the export control reform debate in her working paper entitled Export Control Reform 2010: Transforming the Legal Architecture of Dual-Use and Defense Trade Controls (available here in PDF format). Ms. Shenai, an attorney, is well-suited to provide this perspective given her experience in the private sector and in government, which includes serving as a law clerk to a judge at the U.S. Court of International Trade, practicing international trade law at a leading law firm and serving as an advisor to the Assistant Secretary for Export Administration at the Commerce Department's Bureau of Industry and Security.

The paper offers the thesis that improvements in the export control system’s legal architecture, including administrative procedural safeguards and limited judicial review while also protecting classified information and national security determinations, will improve the workings of the system in general.

Ms. Shenai reaches that conclusion by discussing the existing legal framework of dual-use and defense-related export controls, examining the various shortcomings of the existing export controls legal regime and discussing what can be learned from other U.S. international-related legal regimes that could serve as useful models for reform of the U.S. export control system. The regimes examined include the licensing of nuclear products by the Nuclear Regulatory Commission, the administration of trade remedy laws, the administration of U.S. customs laws and the treatment of national security information protected from disclosure under the Freedom of Information Act.

The paper then provides a number of general and specific recommendations to improve the legal framework of the export control system, including improvements to the commodity jurisdiction (CJ), commodity classification and licensing processes. For example, the paper advocates having agency decisions provide applicants with detailed information on why licenses were granted or denied, the grounds on how CJ determinations are made and allowing applicants the ability to appeal such decisions to a federal court, preferably the Court of International Trade, given its longstanding history of hearing cases under the U.S. trade laws.

Ms. Shenai concludes by noting that "the recommendations made in this paper, if implemented, would serve to ensure that the U.S. export control laws are administered in a fair, transparent, predictable, and accountable fashion, while simultaneously maintaining national security protections."

It should be noted that this working paper has not yet been finalized and Ms. Shenai welcomes comments and corrections. Information on how to contact Ms. Shenai can be found in the document.

Labels: BIS, Export Controls, ITAR

Finding a Willing Buyer Only One Part of the Export Process

Exporters Looking to Boost Business Need to Mind Rules and Regulations Too

The Obama administration is launching a government-wide effort to double U.S. exports over the next five years as part of a plan to increase domestic employment and boost the U.S. economy. However, companies looking to take advantage of the new National Export Initiative to break into new markets should be aware that shipping goods overseas comes with potential perils as well as opportunities.

As part of the NEI, the federal government plans to increase its trade advocacy efforts, including educating U.S. companies about opportunities overseas, directly connecting them with new customers and advocating more forcefully for their interests. The NEI will also include a focus on improving access to export financing and helping to remove barriers that prevent U.S. companies from getting access to foreign markets. Only a very small percentage of U.S. companies currently export their products, and of those that do, 58% export to only one country. The Obama administration is looking to increase these figures in the expectation that doing so will also increase employment.

However, warns Doug Jacobson, head of Sandler, Travis & Rosenberg’s export controls practice group, while increasing the number of U.S. companies that export and increasing trade promotion assistance are laudable goals, U.S. exporters must be aware that finding a willing buyer is only the first step in the exporting process.

“In addition to taking the necessary steps to ensure they are paid for their goods, U.S. exporters must be aware of the wide range of U.S. regulatory and legal issues applicable to exports,” Jacobson said. “The benefits of exporting can be great for U.S. companies, but the penalties for violating export laws and regulations can be severe. ST&R often represents exporters in enforcement actions that learn of their export compliance obligations only after they receive an administrative subpoena from the Bureau of Industry and Security or the Office of Foreign Assets Control. Many of those violations could have been avoided if the exporters understood their export compliance obligations in advance.”

Examples of the important compliance-related issues that U.S. exporters should be aware of when selling goods overseas include the following.

Ultimate Destination. U.S. export restrictions and licensing requirements vary by the country of destination. Some countries are subject to comprehensive embargoes, while others are subject to targeted sanctions directed at certain individuals and companies.

Jurisdiction and Classification of Goods. Proper jurisdiction and classification of goods under the Export Administration Regulations or the International Traffic in Arms Regulations is required to determine export licensing requirements and end-use and end-user restrictions for all products being exported from the U.S. In addition, the proper export classification is required to be declared in the Electronic Export Information filing that must be transmitted via the Automated Export System.

Know Your Customer. To avoid engaging in transactions with parties that have been denied export privileges or are subject to U.S. sanctions, exporters should screen all customers and parties involved in the export against the government’s various restricted party lists.

Anti-boycott Compliance. Boycott requests, which often contain the words “boycott” or “blacklist” or provisions prohibiting the importation of goods from certain countries, are often found in documents involving sales to the Middle East, including purchase orders, tenders, contracts, shipping requests and letters of credit. Certain boycott requests must be reported to the Bureau of Industry and Security.

Foreign Corrupt Practices Act. The FCPA prohibits U.S. persons and their agents from making prohibited payments to foreign government officials to obtain and keep business.

For more information on these issues, or how ST&R can help you increase your exports while remaining compliant with applicable laws and regulations, please contact Doug Jacobson at (202) 216-9307.

You can also stay up-to-date on the latest developments on this issue by subscribing to ST&R’s WorldTrade\INTERACTIVE daily e-newsletter.

Sandler, Travis & Rosenberg, P.A., is a customs and international trade law firm concentrating in assisting clients with the global movement of goods, ideas and personnel and the setting of global trade policy. Our affiliated consulting company, Sandler & Travis Trade Advisory Services Inc., is a leading provider of trade-related management and consulting services to government and industry. For more information about ST&R and STTAS, please visit our Web site.

Reprinted with permission of Sandler, Travis & Rosenberg, P.A.

Labels: Export Controls, Exports, Sanctions

The next meeting of the National Council on International Trade Development (NCITD) will take place on Wednesday, February 10, 2010 in Washington, DC and will feature the following speakers:

• Bill Reinsch, President, National Foreign Trade Council
  Topic: Export Control Reform Update

• Charles B. Shotwell, Director, Office of Defense Trade Controls Policy, Directorate of Defense Trade Controls, U.S. Department of State                                                                                                   Topic: Commodity Jurisdiction: Trends and Statistics; Automation Update  

Labels: DDTC, Export Controls

The Justice Department announced today that Mr. Yi-Lan Chen, aka “Kevin Chen,” who holds a Taiwan passport, was arrested yesterday in Guam on charges of illegally exporting commodities for Iran’s missile program in violation of the International Emergency Economic Powers Act (IEEPA) and the Iranian Transactions Regulations administered by the Treasury Department's Office of Foreign Assets Controls

According to the affidavit filed in support of the criminal complaint filed in federal court in Miami, Florida, Mr. Chen allegedly facilitated the purchase and export of various dual-use products from the U.S. to Iran by way of Taiwan and Hong Kong, including P200 turbine engines and spare parts, sealing compound, glass to metal pin seals, and circular hermetic connectors.

Federal agents learned of Chen’s efforts to obtain and export U.S. goods and commodities after Chen apparently attempted to export detonators through a California company. An investigation allegedly revealed that Chen’s ultimate customers were located in Iran and included Electro SANAM Industries, which has been linked to Iran's ballistic missile program, and the owner of a company in Tehran linked to chemical research and development facilities in Iran.

After receiving orders from customers in Iran, Chen apparently requested quotes, usually by e-mail, from U.S. businesses and made arrangements for the sale and shipment of the goods to freight forwarders in Hong Kong and Taiwan. Once in Hong Kong or Taiwan, the goods were then shipped to Iran.

If convicted, Chen faces a statutory maximum sentence of up to 20 years in prison and fines of up to $1 million.

Labels: Export Controls, Sanctions; Iran

As mentioned in our previous post, the Senate Committee on Banking, Housing, and Urban Affairs held a hearing today on the confirmation of two senior Bureau of Industry and Security officials, Kevin Wolf, nominated as Assistant Secretary of Commerce for Export Administration, and David Mills, nominated to serve as Assistant Secretary of Commerce for Export Enforcement. The webcast of the hearing, which also included nominees for other agencies, can be viewed here.  

The hearing was presided over by Senator Dodd (D-CT) and Senator Shelby (D-AL), the committee's chairman and ranking member.

While not a member of the Senate Banking Committee, Senator Blanche Lincoln (D-AR) gave a very nice introduction to Kevin Wolf. Unfortunately, due to audio problems, Kevin Wolfe's introductory remarks were inaudible, but in his prepared opening statement, which can be found here, he said note that "his background will also be helpful in crafting and implementing . . . the details of the significant export control reforms the President and the Secretary have announced . . . " He added that "if confirmed, [he will] be committed to the rule of law, transparency, and advancing the use of modem technology."

In his prepared remarks, David Mills discussed how his long time service at OFAC prepared him for this position and indicated that he believes that "the enforcement of those regimes must not only be fair and firm, but also as clear and transparent as possible, in order to advance both our national security and foreign policy interests and our economic potential through export promotion."

Several Senators asked questions to Messrs. Wolfe and Mills, including questions on a variety of export controls-related issues, including diversion-related issues, export control modernization, foreign availability, export enforcement penalties and whether BIS and its agents have the sufficient resources and powers to accomplish their goals. Senator Dodd's initial questions on export control issues start at the 71 minute mark of the webcast.

Labels: BIS, Export Controls

Today the Export Control Practitioners Group, composed of a diverse group of associations, businesses, practitioners and seasoned compliance experts, released a comprehensive set of specific recommendations for transparent and efficient reform of the U.S. export control system.

The recommendations were included in a letter sent to National Security Advisor General James Jones and National Economic Council Director Lawrence Summers, both of whom are actively involved in the Obama Administration's export control reform initiative that was announced by the White House in August 2009.

The Export Controls Practitioners Group, which has been active for the past decade, began preparing these recommendations following the Administration’s announcement.

In addition to outlining their guiding principles for export control reform, the Export Controls Practitioners Group provided specific and practical recommendations in the following areas:

• Structure of the export control agencies;
• Changes to the Commodity Jurisdiction process;
• Control list review and reduction;
• Accountability in the export control process, including an appeals process of classification or jurisdiction decisions or technical and definitional decisions made by the agencies;
• Recommendations involving the process for decontrolling items in light of their foreign availability;
• Specific recommendations on changes to the procedures for the issuance of export licenses, license agreements, license exemptions, and license exceptions;
• Reforms to the export control enforcement process, including a suggestion for a graduated penalty process that would ensure that violations resulting from mistake or inadvertent conduct would not be subject to the most severe penalties;
• Limiting deemed export licensing requirements to sensitive, multilaterally controlled technology only (e.g., the Wassenaar Arrangement Very Sensitive List and the multilateral proliferation lists).
• Providing Trusted Party License Exceptions for dual-use intra-company transfers to and among non-embargoed destinations.
• Urging Congress to adopt legislation restoring Executive Branch authority to determine licensing
  jurisdiction for commercial satellites and associated items and technologies;
• Modernize the treatment of products and software containing encryption algorithms;
• Modifying end-user and end-Use Screening Requirements, including consolidating the various end-user lists maintained by the various agencies into one centralized list that includes names and data in the end users’ native languages, to afford easier access by exporters and other interested parties.

• American Association of Exporters and Importers
• American Council on International Personnel
• Association For Manufacturing Technology
• Coalition for Employment Through Exports
• Computer and Communications Industry Association
• Electronic Design Automation Consortium
• Emergency Committee for American
• National Council on International Trade Development
• National Defense Industrial Association
• National Foreign Trade Council
• Satellite Industry Association
• Semiconductor Equipment and Materials International
• Semiconductor Industry Association
• TechAmerica
• U.S. Chamber of Commerce

Labels: Export Controls

AP: Taiwan-based company assists Chinese firm in obtaining pressure transducers for Iran -- http://bit.ly/929Jcd

Follow-up from previous tweet: Certain pressure transducers are classified on U.S. Commerce Control List as ECCN 2B230 (NP and AT controls)

New Blog Post: Management Consultant Arrested and Charged With Violating Iran Embargo: http://bit.ly/79P0SX

It's official: DDTC Appoints Lisa Studtmann as Director of Office of Defense Trade Controls Compliance -- http://bit.ly/5Km9KX

Politico: Beth McCormick to be Deputy Ass't Secy at State Dept's Bureau of Political-Military Affairs (oversees DDTC) - http://bit.ly/7mo4lZ

RT @complianceweek: Poll says compliance budgets are faring better than you'd expect, considering economy . . . http://bit.ly/7ZVdOw

New Blog Post: Coalition for Security and Competitiveness Releases Detailed Export Control Recommendations: The Co... http://bit.ly/5q1FbK

House Foreign Affairs Committee to hold export controls hearing at Stanford University on January 15th. Details here: http://bit.ly/6ptLlb

New Blog Post: Philadelphia Area Chemical Engineer Sentenced to Four Years in Prison for Violating Iran Sanctions:... http://bit.ly/7Gnx11

Pakistan claims to be implementing "effective export controls in line with international obligations": http://bit.ly/61RuOX

The Hill's story on yesterday's CSC export control reform recommendations found here: http://is.gd/6bxHC

SEC Enforcement Division names Cheryl J. Scarboro as head of Foreign Corrupt Practices unit. Details at http://bit.ly/707aub

AP reports that North Korea will allow more American tourists -- http://bit.ly/6Y5Fk4

LA Times: 3 men charged in scheme to illegally export vacuum pumps and equipment to Iran via UAE -- http://is.gd/6fkmk

Politico: At meeting with defense company executives SecDef Gates pledges support for export control reforms - http://bit.ly/7S8u8z

DefenseNews reports on new Deputy Assistant Secretary of State who will oversee defense export control agency: http://bit.ly/6qRsfP

American Association of Exporters and Importers' export control reform recommendations to Congress can be found here: http://bit.ly/8abX2y

Op-Ed by Rep. Berman in San Jose Mercury News on today's export controls hearing being held at Stanford: http://bit.ly/8obtnz

Rep. Berman: You practically have to have a law degree or Ph.D. to keep from running afoul of increasingly complex export-controls regime.

BIS adds Chinese entity to list of parties eligible for Validated End-User (VEU) program: http://bit.ly/7Qp0v7

National Defense Magazine: Job Creation Argument May Prompt Congress to Move on Arms Export Controls Reform - http://bit.ly/8tlUlG

AP: North Korea plays sanctions card in nuclear standoff -- http://is.gd/6nvR6

Stanford president urges lawmakers to change export controls at export controls hearing (from Stanford News) http://bit.ly/4Kry4X

San Jose Mercury News' story on yesterday's export controls hearing at Stanford found here: http://bit.ly/5HIDYA

Labels: Export Controls, Miscellaneous, Sanctions; Iran, Twitter

The Coalition for Security and Competitiveness (CSC) today released detailed recommendations on the specific steps the Obama Administration and Congress can take to reform and modernize the U.S. export control system.

The document, entitled "Recommendations for a 21st Century Technology Control Regime", which was included with a letter sent to to President Obama and other key members of the Obama Administration, states that:

United States export control system has not been significantly revised in more than twenty years. The result is a system that no longer fully protects our national security, has not kept up with accelerating technological change, and does not function with the efficiency and transparency needed to keep the United States competitive in the global marketplace.

The Administration’s export control review, as well as impending legislative proposals, provides an opportunity to strengthen our security and give business the clarity and guidance it needs to comply with the rules and remain competitive.

Labels: BIS, BIS; EAR, DDTC, Export Controls, ITAR

The Philadelphia Inquirer reports on today's sentencing of an Iranian arms procurement agent who was extradited to the United States in 2008 and pled guilty to negotiating the purchase of a number of items on the USML that were destined to Iran:

Under heavy security, an Iranian engineer targeted by Philadelphia-based U.S. Homeland Security agents during an undercover sting in Eastern Europe was sentenced to five years in prison today for trying to buy radar and avionics technology for the Iranian military.

Amir Hossein Ardebili of Sharaz, Iraq had pleaded guilty in federal court in Wilmington to conspiracy, money laundering, munitions export laws and violating the American arms embargo that prohibits most trade with Iran.

Ardebili's arrest in Tbilisi, Georgia in October 2007, his extradition to the United States in January 2008 and his guilty plea in Wilmington in May 2008 were kept secret until early this month. The case remained sealed, U.S. officials said, so that U.S. agents could quietly pursue leads gleaned from Ardebili's laptop computer, which was seized following his arrest in Tbilisi.

Before the sentence was imposed today, Ardebili read a long statement aloud in court, crying often – once so hard that he needed to take a break. He admitted that he broke American law, but begged the judge to consider that he did so in Iran, where his actions where not illegal.

"I don't want to minimize the things I did," said Ardebili, 35. "I'm sorry and I'm looking for your mercy."

U.S. District Court Judge Gregory M. Sleet said that Ardebili "presents somewhat of a paradox" – "motivated by profit and you might say greed" to obtain weapons that may "pose a threat to the national security of the United States.".

Labels: Export Controls, Sanctions; Iran

Labels: BIS; EAR;, Export Controls

• Crew of cargo plane from North Korea detained in Thailand denies knowledge that they were transporting Arms

• German authorities are investigating shipments of high technology to Iran to see if they may have violated export control laws
  

• Federal agents in Dallas have grounded a helicopter that they say Italian aircraft brokers were planning to ship from North Texas to Iran in violation of U.S. trade sanctions.
  
  
• Obama Administration intends to target 'dozens' of IRGC front companies in effort to squeeze Iran 

Labels: Export Controls, North Korea, Sanctions; Iran

The National Association of Manufacturers (NAM) yesterday sent a letter to National Security Advisor General James Jones and National Economic Advisor Lawrence Summers outlining the following eight recommendations for the President’s pending review of U.S. export controls:

1. Improving the Licensing System and Increasing Transparency
2. Providing Greater Assessments of Foreign Availability
3. Reviewing and Restructuring Encryption Rules and Policy
4. Conducting a Systematic Review of the Commerce Control List
5. Promoting Greater Multilateral Cooperation with our Friends and Allies
6. Enhancing the Commerce Department’s Role in the Commodity Jurisdiction Process
7. Improving Outreach Cooperation on Enforcement
8. Improving Outreach to and Resources for Small and Medium-sized Manufacturers

The detailed version of the NAM export control reform recommendations can be found here.

Labels: Export Controls

The Commerce Department's Bureau of Industry and Security (BIS) published a final rule in today's Federal Register modifying the Commerce Control List to implement the 2007 and 2008 changes made by the Wassenaar Arrangement Task Force on Editorial Issues (TFEI) that had not been made in any prior rule issued by BIS.

These changes, which are editorial and not substantive in nature, clarify, remove extraneous text or correct text that appears in the Wassenaar Dual-Use List and affect a large number of ECCNs.

Labels: BIS; EAR;, Export Controls

Last week the Wassenaar Arrangement (WA) on Export Controls for Conventional Arms and Dual-Use Goods and Technologies held its 15th annual Plenary session in Vienna, Austria.

During the Plenary the participating countries agreed to a number of changes to the WA's List of Dual-Use Goods and Technologies and the Munitions List. The changes to the List of Dual-Use Goods and Technologies included the modification of a number of entries on the control lists (including changes in parameters and specifications), the addition and changes to several notes, as well as other changes to the text that were intended to make the lists more "user-friendly" for exporters and licensing authorities.

Among the more significant changes is a new Note 4 to Category 5 - Part 2 of the Dual-Use List, the category that covers information security and encryption. The new note indicates that Category 5–Part 2 does not apply to items incorporating or using "cryptography" and meeting all of the following:

a. The primary function or set of functions is not any of the following:
1. "Information security";
2. A computer, including operating systems, parts and components therefor;
3. Sending, receiving or storing information (except in support of entertainment, mass commercial broadcasts, digital rights management or medical records management); or
4. Networking (includes operation, administration, management and provisioning);
b. The cryptographic functionality is limited to supporting their primary function or set of functions; and
c. When necessary, details of the items are accessible and will be provided, upon request, to the appropriate authority in the exporter’s country in order to ascertain compliance with conditions described in paragraphs a. and b. above.

Labels: BIS; EAR, Export Controls

In a speech at the Practising Law Institute's annual "Coping with U.S. Export Controls" conference in Washington, DC, National Foreign Trade Council (NFTC) President Bill Reinsch today outlined the business community's principles for reforming the U.S. export control system to enhance national security and economic competitiveness. Reinsch, a former Under Secretary of Commerce for Export Administration in the Clinton Administration, also discussed current efforts by the Administration and Congress to reform the outdated system, noting, "for the first time in 20 years, prospects for reform are realistic."

Labels: Export Controls

On Friday, December 11, 2009, the Bureau of Industry and Security (BIS) will publish a final rule in the Federal Register amending the Export Administration Regulations (EAR)  to implement changes made to the Wassenaar Arrangement's List of Dual Use Goods and Technologies (Wassenaar List) agreed upon at the December 2008 Wassenaar Arrangement Plenary Meeting.

While the final rule adds only one new Export Control Classification Number (ECCN) to the Commerce Control List (CCL), ECCN 1A008, changes were made to a number of ECCNs, including ECCNs 1A001, 1A002, 1A003, 1A004, 1A007, 1A008, 1B001, 1B003, 1C008 1C010, 1D003, 1E001, 1E002, 2A983, 3A001, 3A002, 3B001, 4D001, 4D003, 4E001, 5A001, 5B001, 5D001, 5E001, 5A002, 5B002, 5D002, 5E002, 6A001, 6A004, 6A005, 6A006, 6A008, 6A996, 6D003, 6E993, 7A003, 8A001, 8A002 and 9A012.

The final rule also imposes new or expanded National Security (NS) Column 1 controls, NS Column 2 controls and anti-terrorism (AT) controls on certain ECCNs.

The final rule also revises certain definitions in the EAR, by adding the terms: “Bias (accelerometer)” and “Personalized smart card”, removing the term “Noise Level” and adding the terms “Explosives”, “Fusible” and “personal area network.”

The final rule also removes and adds some reporting requirements. 

BIS noted in the final rule that changes made by the Wassenaar Arrangement to ECCNs 6A002 and 6A003 will be implemented in a separate rule, "because of the sensitivity of the items and complexity of procedures and controls for these items."

A copy of the advance version of the final rule can be found here.

Because of the large number of changes to the CCL made by this final rule exporters should carefully review this notice to determine whether any of the export control requirements applicable to their products have changed.

Labels: BIS, Export Controls

In order to save the government time and money, the Bureau of Industry and Security (BIS) issued a proposed rule in today's Federal Register that would eliminate the use of most paper documents that it sends to parties having business before the agency. The documents that would be affected by this proposed rule include:

• export and reexport licenses,
• notices of denial of license applications, 
• notices of return of a license application without action, 
• classification results, 
• License Exception AGR notification results, and 
• encryption review request results.
  

Labels: BIS, Export Controls

In a letter sent yesterday to President Obama signed by more than 100 companies, members of the Aerospace Industries Association (AIA) praised the Obama Administration for undertaking the review of U.S. export controls and urged the administration to take action on a number of initiatives to modernize the export control system.

The letter identified the following five areas of reform to improve the export control system that do not require new legislation:

1. Establishment of transparent and specific criteria to identify those militarily critical and sensitive defense and space technologies that must be subject to the most rigorous controls.

2. Facilitation of timely technology flows between the U.S. and our closest allies and partners, particularly in support of defense and national security programs important to the U.S. Government.

3. Adoption of procedures to ensure any required Defense Department reviews associated with a proposed release of U.S. technology properly balance both policy and technical considerations, and are completed in a timely and consistent manner.

4. Update of the treatment of the next-generation of aerospace and defense technologies, such as Unmanned Aircraft Systems (UAS), under U.S. and multilateral export control regimes.

5. Review of export control compliance requirements to improve comprehension and implementation, particularly among small and medium-sized firms, as well as a review of resource requirements to raise confidence in the effectiveness of U.S. enforcement efforts.

The letter also reiterated the need to ratify the defense trade cooperation treaties with the United Kingdom and Australia that are currently pending in the Senate. 

The full text of the AIA's letter can be found here.

Labels: Export Controls, ITAR

The U.S. Attorney for the District of Delaware announced today that an Iranian arms procurement agent who was extradited to the United States in 2008 has pled guilty to negotiating the purchase and illegal export of a number of military components to Iran and will be sentenced on December 14, 2009.

According to the indictments, Amir Hossein Ardebili was charged with multiple violations of the Arms Export Control Act, International Emergency Economic Powers Act, smuggling, conspiracy, and money laundering. The charges resulted from a three year international undercover investigation regarding Ardebili’s role as an arms acquisitions agent for the government of Iran. Some of the items that Ardebeli allegedly attempted to procure included:

• QRS-11 Gyro Chip Sensors which are solid-state gyro chips that are used in aircraft, missile, space and commercial applications. The BEI GyroChip Model QRS11 Quartz Rate Sensor, Model No. QRS-11-00300-100, is listed on the United States Munitions List in Category XII(d), and therefore requires a license from the Department of State for export. [Note: certain types of QRS-11 chips are subject to the jurisdiction of the Commerce Department.]

• MAPCGM0003 Phase Shifters. Phase shifters perform a key function in the active radiating elements of electronically steered antennae. They enable an antenna to point a radiated beam in specific directions. Phase shifters have many applications including phased array radar, which is used in military target acquisition and missile guidance.

• Digital Air Data Computer (DADC-107). The DADC-107 is a fully computerized Form/Fit/Function (FFF) replacement for the Central Air Data Computer installed on F-4 fighter aircraft. It calculates flight parameters including altitude, air speed, static pressure, mach number, and true angle of attack. Its high accuracy enhances weapons delivery system performance. The DADC-107 is a United States Munitions List Article under category VIII(h) and therefore requires a United States State Department license for export.

• Indictment of Amir Hossein Ardebili, a/k/a Amir Akhami, a/k/a Alex Dave
• Government's Sentencing Memorandum 
• Defendant's Motion for Variance From Sentencing Guidelines
  

Labels: Export Controls, ITAR

The Bureau of Industry and Security (BIS) has created a web portal with links to the video and written transcripts from several of the presentations made at BIS's Update 2009 Conference on Export Controls and Policy that was held September 30 through October 2, 2009 in Washington, DC.

Among the programs available are presentations on encryption, deemed exports, voluntary disclosures, AES, export enforcement and supply chain. Secretary of Commerce Gary Locke's keynote speech is also available to view or read.

This is a great service for exporters and trade compliance professionals that were unable to make this year's program and for those who attended but were unable to attend a particular presentation.

Labels: Export Controls

A U.S. citizen who served as a director of a Singapore-based importer and exporter of aircraft parts was sentenced today in federal court in Brooklyn to 46 months in prison for conspiring to export aircraft parts to Iran. The defendant was also ordered to forfeit $500,000 to the U.S. Treasury Department.

Laura Wang-Woodford, who served as a director of Singapore-based Monarch Aviation Pte., Ltd. and Jungda International Pte. Ltd., was arrested in December 2007, at San Francisco International Airport, pleaded guilty earlier this year to conspiring to export aircraft parts to Iran via Singapore and Malaysia. Wang-Woodford's co-conspirator, her husband Brian Woodford, remains a fugitive.

Ms. Wang-Woodford and her husband, who were originally indicted in 2003, were subsequently charged with:

• 1 count of conspiring to export aircraft parts to Iran;
  
• 15 counts of exporting aircraft parts to Iran in violation of the International Emergency Economic Powers Act;
  
• 1 count of conspiring to export defense articles without a license;
• 2 counts of exporting and attempting to export defense articles without a license, in violation of the Arms Export Control Act and the International Traffic in Arms Regulations; and
  
• 1 count of conspiring to launder the proceeds of the unlawful export of defense articles.

Labels: Export Controls, ITAR, Sanctions; Iran

The often delayed sentencing of Atmospheric Glow Technologies, Inc. (AGT), the company alleged to be Professor John Reece Roth's co-conspirator in the criminal case involving unlawful exports of ITAR controlled technology, has now been set for November 23, 2009 before U.S. District Judge Varlan in Knoxville, Tennessee.

As has been widely reported, AGT plead guilty in August 2008 to 10 counts of unlawfully exporting defense articles to a citizen of the People’s Republic of China in violation of the Arms Export Control Act.

AGT, which filed for bankruptcy in 2008, was a privately held plasma technology company formed in 2000 as a spin-off of the University of Tennessee's Plasma Sciences Laboratory. Professor Roth, who was an original shareholder of AGT, was hired by AGT to work on the U.S. Air Force plasma technology contract that led to the violations of U.S. export control laws that resulted in criminal proceedings against AGT, Roth and Daniel Max Sherman, a physicist who formerly worked at AGT and was trained by Roth. In July of this year Roth was sentenced to serve 48 months in prison and Sherman received a prison sentence of 14 months in August.

Labels: Export Controls

The next meeting of the National Council on International Trade Development (NCITD) will take place on Wednesday, October 14, 2009 in Washington, DC and will feature the following speakers:

• Ryan Cathie, Jay P. Nash and Clarence Smith, Center for International Trade and Security, University of Georgia. Topic: Export Controls in China, Japan an Singapore

• Justin Friedman, Director, Office of Export Control Cooperation, U.S. Department of State. Topic: International Export Control Assistance

• Best Practices Roundtable: Expanding a U.S. Compliance Program as a Global Program, Moderators: Carol Fuchs and Felice Laird
  

Labels: Export Controls

The Bureau of Industry and Security (BIS) recently released the third version of its Commodity Classification Information Table that contains information submitted by companies regarding where to locate commodity classification and export controls information on company websites.

The latest version of the table now contains information from nearly 40 companies, an increase from the 17 companies included in the first version of the table.

This table is the result of an initiative launched in September 2008 by BIS to establish a page on its website where manufacturers could voluntarily provide information on the export classification of their products to customers and other persons that intend to export their products. BIS explained that they commenced this initiative in an effort to aid exporters in the licensing process and to assist exporters in complying with U.S. export and reexport control laws.

Information on including your company's export control information on BIS's Commodity Classification Information Table can be found here.

Labels: BIS; EAR;, Export Controls

The Directorate of Defense Trade Controls (DDTC) published a Federal Register notice announcing that the 30 day comment period has begun for the revised DS-4076 Commodity Jurisdiction Determination Form. This form is in a fillable PDF format.

DDTC is encouraging manufacturers to review the form and to consider using it in connection with Commodity Jurisdiction requests.

Note that the estimate for completing this form is 10 hours per response, which includes time required for searching existing data sources, gathering the necessary data, providing the information required, and reviewing the final information to be submitted.

Comments on this form must be submitted to the Office of Management and Budget by October 28, 2009.

The purpose of a Commodity Jurisdiction request is to determine whether an item or service is covered by the U.S. Munitions List (USML) and therefore subject to the International Traffic in Arms Regulations (ITAR) or if the item or service is subject to the jurisdiction of the Commerce Department's Export Administration Regulations (EAR).

Labels: DDTC, Export Controls

While there have been a large number of export control events scheduled lately, here is another good one to add to your calendar.

The American Enterprise Institute is holding a program during the afternoon of Monday, October 5, 2009 in Washington, DC entitled "Export Control Reform 2009: Enhancing National Security and Economic Competitiveness."

Here is a summary of the program's two panels on dual-use and defense export control reforms, which will feature many of the major players in the current export control reform process:

Panel I: Dual-Use Controls: Walking the Tight Rope

Panelists: Matthew Borman, Department of Commerce
Bill Reinsch, National Foreign Trade Council
Ed Rice, U.S. House of Representatives
Moderator: Neena Shenai, AEI

Panel II: Defense Trade Controls: Protecting U.S. National Security, Enhancing Business Opportunities Abroad

Panelists: Richard Aboulafia, Teal Group Corporation
Marion Blakey, Aerospace Industries Association
Thomas Donnelly, AEI
Moderator: Dan Blumenthal, AEI

Click here for more information and to register for this free program.

Labels: Export Controls

Secretary of Commerce Gary Locke met yesterday with Secretary of Defense Robert Gates at the Pentagon to discuss export controls and business visa reform. (Photo courtesy of Department of Commerce).

Locke and Gates met for approximately one hour and agreed to continue to work together with their counterparts at other cabinet agencies toward these reforms.

They plan to meet again in the next few weeks with fellow administration officials to address their progress.

On July 22nd Secretary Gary Locke said that "undertaking a review of export controls" is one of his top five priorities and that he has already instructed the Bureau of Industry and Security to initiate a review of the entire U.S. export control system. The White House subsequently announced that the Obama Administration would conduct a review of the U.S. export control system.

Secretary Locke will be the keynote speaker at next week's Update Conference on Export Controls and Policy presented by the Commerce Department's Bureau of Industry and Security.

We hope to see many of our readers at Update.

Labels: BIS, BIS Update Conference, Export Controls

The State Department's Directorate of Defense Trade Controls (DDTC) issued an announcement (doc) today that could impact many exporters of products and technical data subject to the International Traffic in Arms Regulations (ITAR).

As noted below, DDTC will all require all license submissions for exports of items identified as USML Category XXI, the category that covers "miscellaneous articles" (and related technical data), to include either a copy of a DDTC Commodity Jurisdiction (CJ) determination letter identifying the commodity as controlled under Category XXI or a letter from the Director of the Office of Defense Trade Controls Policy granting permission to use Category XXI.

DDTC made this change since there has been an "increase" in the improper use of Category XXI to describe defense articles that should be properly categorized under another USML category.

Exporters that are not sure about which USML Category covers their product, or whether their product is subject to the jurisdiction of the ITAR or Exprot Administration Regulations, should seek a CJ from DDTC.

The complete text of DDTC's announcement is as follows:

• A copy of a DDTC Commodity Jurisdiction determination letter identifying the commodity as controlled under the USML at Cat XXI;
• Or an official letter from the Director, Office of Defense Trade Controls Policy granting permission to use Cat XXI.

Labels: DDTC, Export Controls, ITAR

The Bureau of Industry (BIS) published a final rule (PDF) in today's Federal Register amending several sections of Part 744 of the Export Administration Regulations (EAR) to specify that in-country transfers of items subject to the EAR to parties on the Entity List are now subject to the Entity's List's licensing requirements.

BIS stated that the rationale for making these changes was as follows:

Regardless of the form of the transaction (export, reexport, or transfer (incountry)), the United States Government believes it is important to review all transactions involving persons listed on the Entity List prior to the initiation of a transaction with a listed person and/or receipt by the listed person of an item in a transaction.

Labels: BIS; EAR, Export Controls

Today the Treasury Department's Office of Foreign Assets Control (OFAC) issued the long-awaited final rule to amend the Cuban Assets Control Regulations to implement changes to the U.S. embargo on Cuba passed by Congress in March of this year.

The advance version of the final rule that will be published in the Federal Register on Tuesday, September 8, 2009 can be found here (pdf). These regulations are effective today. OFAC’s fact sheet providing an overview of these changes is reprinted below.

While these regulations expand the ability of Americans to visit “close relatives” in Cuba and send remittances to family members in Cuba, from the perspective of U.S. exporters the regulations make two important changes:

1. The amended regulations authorize a greatly expanded range of commercial telecommunications transactions with Cuba, such as cellular and satellite communications. In addition, the amended regulations contains a general license authorizing travel to Cuba related to the commercial export of telecommunications-related items that have been authorized by the Department of Commerce. Individuals traveling under this general license must be employed by a telecommunications services provider that is a person subject to U.S. jurisdiction or by an entity duly appointed to represent such a provider. In addition, the traveler’s schedule of activities cannot include free time, travel, or recreation in excess of that consistent with a full work schedule (i.e., no long weekends on the beach); and

2. The amended regulations also authorize a general license to authorize, with certain conditions, employees of producers or distributors of medical or agricultural products (including food) to travel to Cuba to engage in the marketing, sales negotiation, accompanied delivery, or servicing in Cuba of agricultural commodities, medicine, or medical devices eligible under the Department of Commerce's export or reexport licensing policy to Cuba. Note that persons traveling to Cuba under this general license must submit pre and post-departure reports to Cuba identifying
the traveler and the producer/distributor and describing the purpose and scope of such travel and describing the business activities conducted, the persons with whom the traveler met in the course of such activities, and the expenses incurred. The same limitations on free time describe above also apply. This is a major change for U.S. exporters of humanitarian products since all previous travel to Cuba had to take place pursuant to a specific license issued by OFAC.

Important Note: All travel to Cuba pursuant to these general licenses must be arranged and provided by OFAC authorized providers of air and travel services.

Fact Sheet: Treasury Amends Cuban Assets Control Regulations
To Implement the President’s Initiative on
Family Visits, Remittances, and Telecommunications

The U.S. Department of the Treasury's Office of Foreign Assets Control (OFAC) today issued a final rule amending the Cuban Assets Control Regulations, 31 C.F.R. Part 515 (CACR), to implement the President's initiative of April 13, 2009, to reach out to the Cuban people in support of their desire to freely determine their country's future, promote greater contact between separated family members in the United States and Cuba, and increase the flow of remittances and information to the Cuban people.

Today's amendments to the CACR change the rules in three major areas: (1) family visits; (2) family remittances; and (3) telecommunications. These amendments also make certain technical and conforming changes to the CACR.

Family visits. OFAC has eased restrictions on travel-related transactions for visits to "close relatives" who are nationals of Cuba by issuing a general license.

• Travelers may visit "close relatives" (including, for example, aunts, uncles, cousins, and second cousins) who are nationals of Cuba.
• There is no limit on the duration of a visit to these "close relatives."
• There is no limit on the frequency of visits to these "close relatives."
• Authorized expenditure limits for travel within Cuba have been increased to match the expenditures allowed for all other authorized categories of travel to Cuba -- specifically, the current State Department "per diem rate" for Havana (for use anywhere in Cuba) plus amounts for additional transactions directly incident to visiting close relatives in Cuba. The current "maximum per diem rate" is $179. For future updates to this rate, travelers may check the Department of State's Office of Allowances web site (http://aoprals.state.gov).
• Travelers may be accompanied by persons who share a common dwelling as a family with them.

Remittances. OFAC has also eased restrictions on remittances (including from inherited blocked accounts) to "close relatives" who are nationals of Cuba by issuing a general license.

• Persons subject to the jurisdiction of the United States may send remittances to "close relatives" (including, as noted above, aunts, uncles, cousins, and second cousins) who are nationals of Cuba. These amendments do not affect the prohibition on remittances to a "prohibited official of the Government of Cuba" or a "prohibited member of the Cuban Communist Party," as defined in the CACR.
• There is no limit on the amount of such a remittance.
• There is no limit on the frequency with which persons subject to the jurisdiction of the United States may send such remittances.
• Authorized family travelers may carry up to $3,000 of such remittances to Cuba.
• Remittances for emigration-related purposes continue to be subject to separate restrictions.
• Remittances may be made from depository institutions. To facilitate this, depository institutions are permitted to set up testing arrangements and exchange authenticator keys with Cuban financial institutions.

Telecommunications. Certain telecommunications services, contracts, related payments, and travel-related transactions are authorized by general licenses. The CACR amendments ease the telecommunications rules in three broad areas, as well as allow travel-related transactions for the specific purpose of conducting business in all three areas.

• Persons subject to U.S. jurisdiction may contract with and pay non-Cuban telecommunications services providers to provide services to particular individuals in Cuba (other than prohibited officials of the Government of Cuba or prohibited members of the Cuban Communist Party, as defined in the CACR). For example, an individual in the United States may contract with and pay a U.S. or third-country telecommunications company to provide cellular telephone service for a phone owned and used by that individual's friend in Cuba. Moreover, a U.S. telecommunications services provider may enter into a contract with a particular individual in Cuba to provide telecommunications services to that individual.
• Telecommunications services providers that are persons subject to U.S. jurisdiction are generally licensed (1) to make payments incident to the provision of telecommunications services between the United States and Cuba and the provision of satellite radio or satellite television services to Cuba and (2) to enter into and perform (including making payments) under roaming services agreements with telecommunications services providers in Cuba.
• Transactions incident to establishing facilities to provide telecommunications services linking the United States and Cuba, including fiber-optic cable and satellite facilities, are authorized by general license. The Bureau of Industry and Security of the U.S. Department of Commerce licenses the exportation and re-exportation of goods and technology for the establishment of telecommunications facilities linking the United States and Cuba.
• Two general licenses have been added authorizing, with certain conditions, travel-related transactions incident to authorized telecommunications transactions. One of these licenses authorizes, with certain conditions, travel transactions incident to the commercial export of telecommunications-related items that have been authorized by the Department of Commerce. The second license authorizes travel transactions incident to participation in telecommunications-related professional meetings.

New general license for TSRA travel-related transactions. The new amendments to the CACR also implement provisions of the Omnibus Appropriations Act, 2009. Pursuant to section 620 of the Omnibus Appropriations Act, 2009, which amended the Trade Sanctions Reform and Export Enhancement Act of 2000 (TSRA), there is a new general license for travel-related transactions incident to agricultural and medical sales under TSRA.

• This new general license authorizes, with certain conditions, travel-related transactions that are directly incident to the commercial marketing, sales negotiation, accompanied delivery, or servicing in Cuba of agricultural commodities, medicine, or medical devices that appear consistent with the Department of Commerce's export or reexport licensing policy.
• A traveler may rely on this general license if he or she is regularly employed by a producer or distributor of the agricultural or medical items or by an entity duly appointed to represent such a producer or distributor, and if that traveler's schedule of activities is consistent with a full work schedule.
• Under the new general license, written reports must be submitted to OFAC at least 14 days before departure for Cuba and within 14 days of return.

Labels: Cuba, Export Controls