International Trade Law News

The long-term loan of these tires may be used to educate, inspire or inform the public about NASA’s scientific and technological achievements through art, sculpture, furniture, building structures, exhibits or other innovative uses of the artifacts. These items may not be used for the promotion of any organization or entity, or for commercial purposes.

The space shuttle landing gear tires shall not be transferred to foreign nationals, in the U.S. or abroad, or exported out of the United States, without specific approval of a knowledgeable NASA export control official, and/or unless an export license/license exemption is obtained/available from the United States Department of State. Violations of these regulations are punishable by fine, imprisonment, or both.

Labels: ITAR

The Associated Press reports that a federal jury in Madison, Wisconsin today convicted an Indonesian national of conspiracy to violate the Arms Export Control Act for attempting to export rifles scopes to Indonesia without the proper State Department licenses. The article states that the defendant attempted to export 100 Leupold Mark 4 Close Quarter/Tactical (CQ/T) that are "designed to attach to M-16 and AR-15 assault rifles".

According to the manufacturer's website:

The CQ/T riflescope, parts, and accessories fall under the jurisdiction of the U.S. Department of State. Unless required State Department license is obtained, this product is for sale in the U.S.A. only.

Labels: ITAR

The State Department's Directorate of Defense Trade Controls (DDTC) has released the license processing time statistics for April 2008:

Cases Received: 7,728
Cases Closed: 7,438
Cases Open At End of Month: 3,720
Average Processing Time: 15 Days

By contrast, in April 2007 DDTC received 6,290 cases and the average processing time was 32 days.

The good news for defense exporters is that during the past year DDTC's average license processing times have been cut in half even though nearly 23% more applications were submitted.

As for the average processing times, DDTC notes that for electronic cases (i.e., those being filed via D-Trade), the processing times are based on the date the case was signed by the applicant until the date of final action. DDTC also indicated that the methodology for calculating the average processing times for hardcopy cases has changed. The processing times for April 2008 were determined by the date the case entered DDTC until the time the case is signed out of DDTC. Previously, the processing time for hardcopy cases was based on the application date until the date of final action.

Labels: DDTC, ITAR

The National Council on International Trade Development's (NCITD) February 14, 2008 meeting in Washington, DC will feature the following speakers:

Labels: ITAR, OFAC, Sanctions

For those readers in Texas, or those who work for companies that have operations in Texas, we wanted to advise you of the following two upcoming export controls programs co-sponsored by Strasburger & Price, LLP and JPMorgan Chase Global Trade Services:

Dallas Conference (Presented by the Greater Dallas Chamber of Commerce):

Export Regulatory Compliance & ITAR Program
Tuesday, November 13, 2007
7:30 AM – 5:00 PM
Hotel Crescent Court
400 Crescent Court
Dallas, TX
Click here for the agenda and registration information.

Houston Conference (Presented by the International Transportation Management Association):

Export Controls Seminar: Compliance with the International Traffic In Arms Regulations, Export Administration Regulations and Related Requirements
Friday, November 16, 2007
7:45 am - 5:00 pm
The Greenspoint Club (in North Houston)
16925 Northchase Drive
Houston, TX
Click here for the agenda and registration information.

Both programs will cover the following topics:

• Overview of U.S. export controls (EAR and ITAR)
  
• Industry panel on Best Practices in export controls
  
• Insight into minimizing exposure, liability and risk for you and your organization
• Fresh perspective on ethics in trade compliance and why it is so important
• Hands-on understanding of commodity jurisdiction and critical importance of getting it right
• Enforcement update and the consequences of non-compliance with recent lessons learned

Labels: Export Controls, ITAR

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 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

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

Space.com reports that China successfully launched an "ITAR-free" telecommunications satellite on July 5th. The Chinasat 6B telecommunication satellite, built by that was built by European-based Thales Alenia Space was launched from the Xichang Satellite Launch Center in southwest China's Sichuan Province by a Long March 3B launch vehicle.

The article notes that:

Thales Alenia Space officials say getting around U.S. State Department restrictions - generally referred to as ITAR, or International Traffic in Arms Regulations - with respect to China's rocket adds around six percent to the cost of a telecommunications satellite. That is because these satellites cannot take advantage of U.S. companies whose production lines are active and thus whose unit costs are reduced - in addition to the fact companies producing in U.S. dollars have an advantage over euro-based companies like Thales Alenia Space.

Even so, they said they have no intention of moving toward what they refer to as a fully "ITAR-free" product line. Such a move would help reduce the cost of ITAR-free satellites by increasing the production volume, but would run the risk of not being able to keep up with market demand because ITAR-free satellites rely on a supply chain that would have difficulty increasing throughput in the short term . . .

Labels: China, ITAR

The Directorate of Defense Trade Controls (DDTC) published in today's Federal Register a list of 11 persons that have been statutorily debarred since the beginning of 2006 as a result of violating or conspiring to violate the Arms Export Control Act.

Persons subject to statutory debarment are prohibited from participating directly or indirectly in activities regulated by the ITAR, including the exportation or importation of defense articles, related technical data or defense services. The debarment period runs for a period of at least three years, although the individual can apply to DDTC for reinstatement beginning one year after the date of the debarment.

A complete list of individuals and companies that are currently statutorily debarred can be found on DDTC's website at the following link: www.pmddtc.state.gov/debar059.htm (Note: At this writing the list has not been updated to reflect the 11 persons named in today's notice).

Labels: DDTC, ITAR

Labels: Canada, DDTC, ITAR

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

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

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

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

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

Labels: Canada, ITAR

Labels: DDTC, ITAR

Labels: Export Controls, ITAR

Canada's The Globe and Mail newspaper reported today that the U.S. and Canada have reached an agreement on how to handle the recent controversy involving dual citizens that work on military projects in Canada which are subject to the U.S. International Traffic in Arms Regulations (ITAR). The paper reports that:

The Harper government has come to terms with Washington on a deal exempting Department of National Defence employees from U.S. restrictions that prevent dual nationals from 17 countries from having access to data related to U.S. military technology.

Under the deal, the exemption could eventually be extended to other federal bureaucrats, and then, with the agreement of the U.S. government, to people in the private-sector industry.

"It's a step-by-step approach," a federal source said.

Labels: Canada, ITAR

While the ITT case is the largest criminal export controls case to date, ITT is not the only defense contractor to have recently run afoul of U.S. laws governing the export of defense articles.

Last Thursday, the U.S. Attorney for the Northern District of Alabama, indicted Huntsville, Alabama-based Axion Corporation on charges of illegally exporting sensitive military technology overseas, fraud involving aircraft parts and submitting false documents to the government.

According to the indictment, in September 2003 and continuing thereafter, Axion Corporation and its owner, Alexander Nooredin Latifi, "knowingly and willfully exported defense articles, specifically technical drawings of the bifilar weight assembly for the UH-60 Black Hawk helicopter, to overseas manufacturers without first obtaining a required license and authorization from the State Department."

In addition to criminal penalties, the indictment seeks the forfeiture of any assets and property derived from the offenses alleged in the indictment, including the company's headquarters and $659,280 in proceeds derived from alleged criminal activity.

Labels: Export Controls, ITAR

Canada's The Globe and Mail newspaper today reports that ITAR "restrictions on military purchases are causing so much paralysis in Ottawa" that the Canadian Government proposed "scrapping its project" to purchase Sikorsky Cyclone helicopters to replace its aging fleet of Sea Kings. The paper reports that "the Canadian government is refusing to sign documents containing ITAR restrictions -- such as technical assistance agreements and export licences -- that are crucial to the production of the Sikorsky Cyclones."

The article also indicates that "some federal officials feel that a solution to ITAR is close to being made public. However, senior officials in the defence industry fear the new rules will favour only government bureaucrats, and that employees in the private sector will continue facing the same discriminatory measures."

Labels: Canada, Export Controls, ITAR