International Trade Law News

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

Following yesterday's joint announcement that the U.S. and India signed a Technology Safeguards Agreement to permit civil or non-commercial satellites containing U.S. ITAR-controlled components on Indian space launch vehicles, the Directorate of Defense Trade Controls today issued the following clarification and guidance:

For the purposes of this policy, “civil or non-commercial satellites” does not include commercial satellites (communications or otherwise). Commercial satellites will continue to be subject to a presumption of denial; hybrid commercial satellites containing non-commercial payloads will be reviewed on a case-by-case basis.

Effective immediately as a result of this change in USG policy, the Directorate of Defense Trade Controls is implementing the following additional documentation requirements on requests for the export or retransfer of USML Category XV satellites or components for incorporation into satellites destined for launch from India. The following information must be contained in the purpose block of the application or in the Supplementary Letter of Explanation document attached as supporting material:

• Description of the satellite, to include satellite purpose, orbital inclination, and coverage area
• Purchaser of the satellite
• Manufacturer of the satellite
• Anticipated launch vehicle and schedule

Applicants are advised export licenses for satellite components destined for launch from India may be subject to monitoring in accordance with Section 1516 of Public Law 105-261. (See 22 CFR 123.27 for additional information.)

Labels: DDTC, India, ITAR

Following meetings between U.S. Secretary of State Hillary Rodham Clinton and India's External Affairs Minister, S.M. Krishna, the two governments today issued a joint statement indicating that the two countries had reached an End-Use Monitoring Agreement on U.S. defense articles that are exported to India.

Section 40A of the Arms Export Control Act (22 U.S.C. 2785) requires the U.S. to implement a program whereby recipients of defense articles and services to agree to end-use monitoring arrangements. The Department of Defense's Defense Security Cooperation Agency (DSCA) is responsible for conducting end-use checks on government-to-government transfers of defense articles. The Government of India has long resisted the end-use monitoring requirements on purchases of U.S. defense articles on grounds that such restrictions violated its sovereignty and such resistance has held up approval of some very large transactions.

In addition, the government of the U.S. and India announced that they have signed a Technology Safeguards Agreement and associated side letters pertaining to the use of U.S.-licensed components on spacecraft launched from Indian facilities. The agreement will facilitate the launch of U.S.-licensed spacecraft components and safeguard protected technologies and data of both countries. The side letters commit the U.S. and India to enter into consultations regarding the market for commercial space launch and satellite services.

Labels: India

Defense News has reported that the Government of India has advised U.S. officials that India will not accept the standard End-Use Monitoring (EUM) requirements required by Section 40A of the Arms Export Control Act.

The article states:

Several Indian Defence Ministry officials said privately that New Delhi will not comply with EUMs and other export-control limitations that Washington requires of its weapon customers. They said the government has promised on several occasions not to share U.S. weapon technology with other countries. But they said India will not be told how and where to operate the equipment it buys for its own military.

Among the limitations they cited were the EUM, which would allow U.S. officials to block retransfers of the planes; the Communications and Information Security Memorandum of Agreement, which guides the sharing of sensitive information between two nations; and the Logistics Supply Agreement, which regulates things such as logistics support and fuel for fighter jets and naval warships.

A Defense Security Cooperation Agency (DSCA) spokesman is quoted as saying that the "agency has no plans to change EUM requirements or exempt any country."

The value of U.S. defense sales to India is "is set to soar from tens of millions of dollars to billions this year."

Labels: India

Today President Bush signed H.R. 7081, the U.S.-India Nuclear Cooperation Approval and Nonproliferation Enhancement Act that approves the U.S-India Agreement for Cooperation on Peaceful Uses of Nuclear Energy (commonly known as the 123 agreement) and establishes the legal framework for that agreement.

Labels: India

By a vote of 298-117, the House of Representatives on Friday passed H.R. 7081, the U.S. -India Nuclear Cooperation Approval and Nonproliferation Enhancement Act.

The Senate must now pass a similar resolution in order for the U.S.-India Agreement for Peaceful Nuclear Cooperation (pdf) (commonly known as the 123 Agreement) to take effect.

Labels: India

President Bush has submitted the text of the U.S.-India Agreement for Peaceful Nuclear Cooperation (also known as the 123 Agreement) to Congress for approval. Pursuant to the Atomic Energy Act, the Senate Foreign Relations Committee and the House Committee on Foreign Affairs must be consulted “for a period of not less than thirty days of continuous session”, which includes holding hearings on the agreement and submitting a report to the full House and Senate on whether the agreement should be approved or disapproved.

While the Senate Foreign Relations Committee has scheduled a hearing on the India agreement on September 18, 2008, given that the House and Senate plan to adjourn on September 26, 2008 it will be very difficult for the India agreement to be approved by Congress this year.

Meanwhile, the House Foreign Affairs Committee has released the documents submitted by the White House related to the US-India civilian nuclear cooperation agreement and the documents can be found here:

President's transmittal of text to Congress (9/11/2008)

Presidential Determination #2008-26 (9/10/2008)

Report Pursuant to Section 104(c) of Hyde Act Regarding Civil Nuclear Cooperation with India

Nuclear Proliferation Assessment Statement

Implementation of India-United States Joint Statement of 7/18/05 India's Separation Plan

Agreement Between Government of India and IAEA for Application of Safeguards to Civilian Nuclear Facilities

Agreed Text of Agreement between the United States of America and India (8/1/07)

Labels: India

Yesterday, at a meeting in Vienna, Austria the Nuclear Suppliers Group (NSG) approved the U.S.-backed exemption allowing NSG members to export civilian nuclear technology to India. The waiver is controversial since India has not signed the Treaty on the Non-Proliferation of Nuclear Weapons.

The Arms Control Association (ACA), which opposes the waiver, published the text of the exemption here (pdf) on the ACA's website.

Congressman Howard L. Berman (D-CA), chairman of the House Foreign Affairs Committee, today released the following statement about yesterday's decision by the Nuclear Suppliers Group and the expectation that the Bush Administration will ask Congress to consider the U.S.-India civilian nuclear cooperation agreement starting this week:

"I support cooperation on civilian nuclear energy with India. I oppose policies that would lead to a nuclear arms race or undermine proliferation standards.

"Before we vote, Congress needs to study the NSG decision, along with any agreements that were made behind the scenes to bring it about. If the Administration wants to seek special procedures to speed congressional consideration, it will have to show how the NSG decision is consistent with the Hyde Act as Secretary Rice promised, including which technologies can be sent to India and what impact a nuclear test by India would have. The burden of proof is on the Bush Administration so that Congress can be assured that what we're being asked to approve conforms with U.S. law."

The Henry J. Hyde United States-India Peaceful Atomic Energy Cooperation Act of 2006 and the Atomic Energy Act require that after the Administration submits the U.S.-India civilian nuclear cooperation agreement to Congress, 30 days of continuous congressional session must elapse before a resolution of approval can be introduced. Only by first passing new legislation could Congress set aside the 30-day requirement.

Labels: India, Nuclear

Speaking at the Berlin Air Show being held this week, the online edition of The Hindu newspaper reports that India's Defense Minister "has asked major weapon exporting countries to relax their technology control laws if they wish to participate in the country’s defence modernisation programme which will touch $50 billion over the next five years."

India's Defense Minister also said:

"We don’t want to project India only as a market [for defence platforms]. Indigenisation is our first priority. We want to buy but only with countries willing to completely transfer technology to us. The future is co-development and co-production."

He said that the air show provided a good opportunity for India to project its defence capabilities but since the country had demonstrated that it was a historical non-proliferator, it was time the West started dealing with India positively as far as defence technology was concerned. "We cannot shift totally to the concept of full indigenisation otherwise our modernisation will be affected. But we will do business only with countries willing to transfer technology."

India is the official partner country of the 2008 Berlin Air Show.

Labels: Export Controls, India

As a follow-up to yesterday's announcement of the Validated End-User (VEU) Program for India, the Bureau of Industry and Security has posted additional information regarding the program on its website. The information includes the text of the rule, a fact sheet, the press release from the Secretary of Commerce and guidance for submitting to companies on submitting an advisory opinion request to be considered a VEU.

On a separate, but related note, a Commerce Department official today said that the first group of Chinese companies to be approved under the VEU Program will be announced and published in the Federal Register in the next few weeks. While BIS is currently taking more than the 30 calendar days to make VEU determinations, Supplement No. 9 to Part 748 of the EAR makes clear that the 30-day period applies to decisions made by the End-User Review Committee (ERC) after the final application is received and that the period during which the ERC is waiting for additional information from an applicant or potential validated end-user is not included in calculating the 30 calendar day deadline for the ERC's determination.

Labels: BIS, China, India

The Bureau of Industry and Security (BIS) published a final rule in the Federal Register today adding India as an eligible destination for U.S. exports, reexports and transfers under the Authorization Validated End-User (VEU) system. As a result, U.S. companies will be able to export certain controlled commodities and technologies without a license to specific end-users in India, once the end-user is “validated” by the agency. The Authorization VEU may be used for commodity, software or technology exports that require a license, except those that are controlled for missile technology or crime control reasons.

India is the second country named as eligible under the VEU system. On June 19, 2007, BIS rolled out the new authorization scheme for “validated-end users” (VEUs) in eligible country destinations. Concurrently, the BIS designated China as the first eligible country. Although BIS has not announced any Authorized VEUs to date, it intends to do so in the near future.

In order to qualify for Authorization VEU status, an applicant must submit an application to BIS, which includes detailed information about the prospective validated end-user. The specific information required is set forth in Supplement Number 8 to Part 748 of the Export Administration Regulations.

Labels: BIS, India

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

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

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

Labels: BIS, Export Controls, India

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

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

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

Labels: Export Controls, India