International Trade Law News

Sandler, Travis & Rosenberg Advisory: Obama Administration Details Proposed Export Control Reforms

2010-04-22T14:10:00.002-04:00

OBAMA ADMINISTRATION DETAILS PROPOSED EXPORT CONTROL REFORMS
Envisions Single Control List and Licensing Agency

Defense Secretary Robert Gates outlined yesterday the Obama administration's long-awaited proposal to reform the U.S. export control system. While there have been many export control reform efforts in recent years, this one is very different because it is being driven by senior government officials as part of a broader effort to increase U.S. exports and related employment, one of the White House's top priorities. The new proposal also responds to longstanding arguments that reform is needed to both more effectively limit the transfer of goods and technology to bad actors abroad as well as improve the global competitiveness of U.S. companies.

The revised export control system outlined by Secretary Gates will be based on four key principles.

Single Export Control List - (1) combine the U.S. Munitions List with the Commerce Control List, which would provide clarity as to which items require export licenses and enable the government to concentrate on controlling critical technologies and items instead of spending time on inter-agency commodity jurisdiction disputes, and (2) consolidate the numerous lists of prohibited exporters and end-users into one single, frequently updated list in order to make it easier for exporters to ensure that they do not ship products to a restricted person or entity involved in activities contrary to U.S. national security interests

Single Licensing Agency - establish a single export licensing agency with jurisdiction over both defense articles and dual-use items and technologies in order to reduce confusion over where and how to submit export license applications, streamline the review process and enhance consistency in licensing approval

Single Enforcement Coordination Agency - create a single, integrated agency to enforce export controls (a function currently divided among the Commerce Department's Office of Export Enforcement, the Department of Homeland Security's U.S. Immigration and Customs Enforcement and the Federal Bureau of Investigation) in order to strengthen enforcement, particularly abroad, and enhance cooperation and coordination with the intelligence community

Single Information Technology System - develop a single, unified IT infrastructure that would receive, process and help screen new license applications and end-users in order to reduce the redundancies, incompatibilities and costs associated with the current system of multiple databases.

The administration wants to complete the proposed revamp in three phases. The first phase would begin the transition toward the single export control list and the single licensing agency by making changes to the current system. Certain aspects of this first phase have already been announced, including changes in the encryption licensing process and the harmonization of rules applying to the export of technical data to foreign national employees. In phase two the administration would implement the tiered export control list, create a single IT structure and move toward a single licensing system. The final phase would involve the creation of the single licensing agency and the single enforcement agency.

However, the proposed changes are likely to be slow in coming. While phases one and two could be accomplished by regulatory changes and executive order, resistance and criticism from entrenched interests in both the public and private sectors are expected. In addition, the creation of new export control agencies would require congressional action, and Congress remains as deeply divided over this issue as it has for the past decade. The administration also faces numerous jurisdictional and statutory hurdles as well as potential conflicts with existing multilateral export control treaties.

Manufacturers and exporters should continue to monitor this situation closely to determine how and when export controls on their products may change. For assistance, or for further information on export control compliance matters, please contact:

Douglas Jacobson
Washington, D.C.
Tel: (202) 216-9307
Fax: (202) 842-2247
djacobson@strtrade.com

Donna L. Bade
Chicago, Illinois
Tel: (312) 641-0000
Fax: (312) 641-0005
dbade@strtrade.com

Melissa Miller Proctor
San Francsico, California
Tel: (949) 274-1428
mproctor@strtrade.com

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.

White House Issues Fact Sheet on President's Export Control Reform Initiative

2010-04-20T22:31:00.003-04:00

Following Secretary Gates' export control reform speech today, the White House issued the following Fact Sheet containing additional details on the President's Export Control Reform Initiative:

Fact Sheet on the President's Export Control Reform Initiative

Earlier today, Secretary of Defense Robert Gates discussed the Administration’s interagency review of the U.S. export control system, which calls for fundamental reform of the current system in order to enhance U.S. national security and strengthen our ability to counter threats such as the proliferation of weapons of mass destruction.

President Obama, in August of last year, initiated this comprehensive review to identify possible reforms to the system. Although the United States has one of the most robust export control systems in the world, it is rooted in the Cold War era and must be updated to address the threats we face today and the changing economic and technological landscape.

The assessment was conducted by an interagency task force created at the direction of the President and included all departments and agencies with roles in export controls. The assessment found that the current U.S. export control system does not sufficiently reduce national security risk based on the fact that its structure is overly complicated, contains too many redundancies, and tries to protect too much.

The current system is based on two different control lists administered by two different departments, three different primary licensing agencies, none of whom sees the others licenses, a multitude of enforcement agencies with overlapping and duplicative authorities, and a number of separate information technology systems, none of which are accessible to or easily compatible with the other, or agencies with no IT system at all that issues licenses. The fragmented system, combined with the extensive list of controlled items which resulted in almost 130,000 licenses last year, dilutes our ability to adequately control and protect those key items and technologies that must be protected for our national security. The goal of the reform effort is “to build high walls around a smaller yard” buy focusing our enforcement efforts on our “crown jewels.”

The review’s overall findings have the full support of the President’s senior national security team.

Key Recommendations

The Administration has determined that fundamental reform of the U.S. export control system is needed in each of its four component areas, with transformation to a:

Single Control List,
Single Primary Enforcement Coordination Agency,
Single Information Technology (IT) System, and
Single Licensing Agency.

Implementation

The Administration will engage with Congress to consult and seek its input on the proposed reforms. To deploy the new system, the Administration has prepared a comprehensive, three-phase approach and is currently moving forward to make specific reforms which can be initiated immediately and implemented without legislation. The approach will make the necessary changes to the current system to transition it to the revised, enhanced system in Phase III:

Phase I makes significant and immediate improvements to the existing system and establishes the framework necessary to create the new system, including making preparations for any legislative proposals. This phase includes implementing specific reform actions already in process and initiating review of new ones.
- Control List – refine, understand, and harmonize definitions to end jurisdiction confusion between the two lists; establishes new independent control criteria to be used to screen items for control into new tiered control list structure.
- Licensing – implement regulatory-based improvements to streamline licensing processes and standardize policy and processes to increase efficiencies.
- Enforcement – synchronize and de-conflict enforcement by creation of an Enforcement Fusion Center.
- IT – determine enterprise-wide needs and begin the process to reduce confusion by creating a single U.S. Government (USG) point of entry for exporters.
Phase II results in a fundamentally new U.S. export control system based on the current structure later this year. This phase completes deployment of specific Phase I reforms and initiates new actions contingent upon completion of Phase I items. Congressional notification will be required to remove munitions list controls or transfer items from the munitions list to the dual-use list, and additional funding will be required both for enhanced enforcement and the IT infrastructure.

Control List – restructure the two lists into identical tiered structures, apply criteria, remove unilateral controls as appropriate, and submit proposals multilaterally to add or remove controls.
Licensing – complete transition to mirrored control list system and fully implement licensing harmonization to allow export authorizations within each control tier to achieve a significant license requirement reduction which is compatible with national security equities.
Enforcement – expand outreach and compliance.
IT – transition toward a single electronic licensing system.

Phase III completes the transition to the new U.S. export control system. Legislation would be required for this phase:
- Control List – merge the two lists into a single list, and implement systematic process to keep current.
- Licensing – implement single licensing agency.
- Enforcement – consolidate certain enforcement activities into a Primary Enforcement Coordination Agency.
- IT – implement a single, enterprise-wide IT system (both licensing and enforcement).

Complete Text of Secretary Gates' Export Control Reform Speech

2010-04-20T13:33:00.001-04:00

The full text of Secretary of Defense Robert Gates' export control reform speech delivered today in Washington, DC is reprinted below. I have highlighted the key reform proposals in the speech in bold text.

EXPORT-CONTROL REFORM

BUSINESS EXECUTIVES FOR NATIONAL SECURITY

WASHINGTON, DC

APRIL 20, 2010

Thank you, General Meigs, for that kind introduction.

And thank you for your long service to our country, most recently leading the Defense Department’s efforts to combat improvised explosive devices. Your efforts have saved the lives and limbs of countless men and women in uniform.

My thanks as well to Business Executives for National Security for hosting this event. In areas like accounting, procurement, privatization, and excess base structure, BENS has identified problems and proposed solutions that have saved the taxpayers billions of dollars and made our military a more effective fighting force.
As many of you know, for the better part of three years now I have spoken out at various times about the need to adapt and reform America’s national-security apparatus to better deal with the realities of the post-Cold War era.

Some of those necessary shifts include:

• Enhancing America’s civilian instruments of national power – above all diplomacy and development – and better integrating them with our military;
• Rebalancing the defense establishment to reflect the lessons learned and capabilities gained from recent conflicts, especially counterinsurgency, stability, and reconstruction operations;
• And, most recently, reforming the way we build the capacity of allies and partners to better fight alongside us and secure their own territory.

All these institutional shifts are, to one degree or another, aimed at improving the way the United States works with and through other countries to confront shared security challenges.

So is the matter I would like to discuss today: the need to reform the U.S. government’s regulations and procedures for exporting weapons and so called dual-use equipment and technology.

Earlier this year, the president announced that he would seek to further enhance our national security through substantial changes to our export-control regime. He did so with the unanimous support of his entire national-security team. This afternoon I will focus on what I believe are the compelling security arguments for the changes recommended by the president.

I want to state from the outset how critically important it is to have a vigorous, comprehensive export-control system that prevents adversaries from getting access to technology or equipment that could be used against us.

The problem we face is that the current system – which has not been significantly altered since the end of the Cold War – originated and evolved in a very different era, with a very different array of concerns in mind.
As a result, its rules, organizations, and processes are not set up to deal effectively with those situations that could do us the most harm in the 21st Century – a terrorist group obtaining a critical component for a weapon of mass destruction, or a rogue state seeking advanced ballistic-missile parts. Most importantly, the current arrangement fails at the critical task of preventing harmful exports while facilitating useful ones.

The United States is thought to have one of the most stringent export regimes in the world. But stringent is not the same as effective. A number of lapses in recent years – from highly sensitive materials being exported to vital homeland security capabilities being delayed – have underscored the flaws of the current approach.
Several factors contribute to these kinds of scenarios, which at worst could lead to the wrong technology falling into the wrong hands. One major culprit is an overly broad definition of what should be subject to export classification and control. The real-world effect is to make it more difficult to focus on those items and technologies that truly need to stay in this country. Frederick the Great’s famous maxim that “he who defends everything defends nothing” certainly applies to export control.

This problem goes back a long way, and was evident even before the collapse of the Soviet Union. In 1982, when I became deputy director for intelligence at CIA, my responsibilities included tracking prohibited transfers of U.S. technology. It soon became apparent that the length of the list of controlled technologies outstripped our finite intelligence monitoring capabilities and resources. It had the effect of undercutting our efforts to control the critical items. We were wasting our time and resources tracking technologies you could buy at RadioShack.

Today, the U.S. government reviews tens of thousands of license applications for export to EU and NATO countries. In well over 95 percent of these cases, we say “yes” to the export. Additionally, many parts and components of a major piece of defense equipment – such as a combat vehicle or aircraft – require their own export licenses. It makes little sense to use the same lengthy process to control the export of every latch, wire, and lug nut for a piece of equipment like the F-16, when we have already approved the export of the whole aircraft.

In short, the time for change is long overdue if the application of controls on key items and technologies is to have any meaning. We need a system that dispenses with the 95 percent of “easy” cases and lets us concentrate our resources on the remaining 5 percent. By doing so, we will be better able to monitor and enforce controls on technology transfers with real security implications while helping to speed the provision of equipment to allies and partners who fight alongside us in coalition operations.

A second major obstacle we face is the bureaucratic apparatus that has grown up around export control – a byzantine amalgam of authorities, roles, and missions scattered around different parts of the federal government. In theory, this provides checks and balances – the idea being that security concerns, customarily represented by DoD, would check economic interests represented by the Commerce Department and balance out diplomatic and relationship-building equities represented by State. In reality, this diffusion of authority – where separate export-control lists are maintained by different agencies – results in confusion about jurisdiction and approval, on the part of companies and government officials alike.

It creates more opportunities for mistakes, enforcement lapses, and circumvention strategies such as “forum shopping,” where exporters with problematic license applications try different agencies looking for the best result. In one instance, an individual was caught intentionally exporting a controlled item without a license, but escaped prosecution by presenting two conflicting determinations from two different government agencies.

The item in question was a carbon composite material used in ICBM nose cones.

As a result of this dispersed arrangement, the U.S. government spends an enormous amount of time and energy on what are essentially process questions – trying to decide which agency has jurisdiction – as opposed to the more important issue of whether a given technology can be safely exported. These internal squabbles can have real world consequences. A fight between agencies over jurisdiction, for example, delayed a program to place new screening equipment in U.S. and overseas airports.

Correspondingly, many companies face a frustrating situation where an exporter with a single purchase order may have to seek licenses from two separate agencies, and could be approved by one but denied by the other. Additionally, because it is so difficult to modify or update the control lists, a controlled item might never be considered for a lower level of restriction even if it becomes much less sensitive and important over time.
The system has the effect of discouraging exporters from approaching the process as intended. Multinational companies can move production offshore, eroding our defense industrial base, undermining our control regimes in the process, not to mention losing American jobs. Some European satellite manufacturers even market their products as being not subject to U.S. export controls, thus drawing overseas not only potential customers, but some of the best scientists and engineers as well. At the same time, onerous and complicated restrictions too often fail to prevent weapons and technologies from going places they shouldn’t. They only incentivize more creative circumvention strategies – on the part of foreign companies, as well as countries that do not have our best interests at heart.

Concurrently, we have not updated our system to deal with the U.S. military’s transition to off-the-shelf procurement. More and more, our military is taking advantage of commercially manufactured items, presenting challenges when determining whether or not a given technology is acceptable for export. There are electronic components used in many third-generation cellular devices that are also important components of sophisticated stealth-defeating radar systems. We need to update our export-control system to reflect these new realities.

Finally, the current export-control regime impedes the effectiveness of our closest military allies, tests their patience and goodwill, and hinders their ability to coordinate with U.S. forces – this at a time when we count on allies and partners to fight with us in places like Afghanistan and potentially elsewhere. Not too long ago, a British C-17 spent hours disabled on the ground in Australia – not because the needed part wasn’t available, but because U.S. law required the Australians to seek U.S. permission before doing the repair. These are two of our very strongest allies for God’s sake! Similarly, close, long-standing allies and partners like South Korea have bought U.S. aircraft only to encounter difficulties and delays in getting spare parts – something that weakens our bilateral relationships, our credibility, and ultimately American security.

That is one of the reasons why several U.S. secretaries of defense representing multiple administrations of both political parties have voiced frustration over the export-control system. As defense secretaries, we have all, at one time or another, had to sit across the table from defense ministers from important allies or new partners and explain why the U.S. government is unable to follow through expeditiously on its commitments to provide the weapons, equipment, and support they have been promised and have paid for. It is not an edifying experience. All the while, other countries that do not suffer from our encumbrances are taking the opportunity to sell weapons, build relationships, and improve their strategic position and economic standing.
Some obstacles to having a strategically sound defense trade relationship can be addressed through bilateral agreements with our closest allies and partners.

In 2007, the U.S. signed Defense Trade Cooperation Treaties with both the United Kingdom and Australia – treaties that still await ratification in the U.S. Senate. Through streamlined export-control arrangements and enhanced technology security measures, these agreements would substantially improve our ability to equip and support U.S., U.K., and Australian forces deploying in combat operations. They contain provisions allowing for the establishment of export-authorized groups of U.S., U.K., and Australian companies. Except for a short list of truly critical equipment and technologies, these trusted companies could largely avoid individual export licenses. I remain hopeful that the Senate will give advice and consent to both of these treaties prior to the summer recess.

The kinds of common sense changes contained in the U.K. and Australia treaties are a step in the right direction, at least with these two key allies. But international agreements are still no substitute for the kind of fundamental systematic reform of export control that this country urgently needs.

The fact is, for all the reasons I described earlier, America’s decades-old, bureaucratically labyrinthine system does not serve our 21st-century security needs or our economic interests. It is clear our current limitations in this area undermine America’s ability to work with and through partners to confront shared threats and challenges – from terrorism to rogue states to rising powers. Our security interests would be far better served by a more agile, transparent, predictable, and efficient regime. Tinkering around the edges of our current system will not do.

For these reasons and more, in August of last year, the president directed a broad-based review of the U.S. export-control regime. He has called for reforms that focus controls on key technologies and items that pose the greatest national-security threat. These include items and technologies related to global terrorism, the proliferation and delivery systems of weapons of mass destruction, and advanced conventional weapons. In short, a system where higher walls are placed around fewer, more critical items.

Following this directive, and informed by a recent National Intelligence Council assessment of the key national-security considerations, I have worked closely with my counterparts at the departments of State, Commerce, Homeland Security, as well as with the director of national intelligence and the national security advisor to develop a blueprint for such a system. Our plan relies on four key reforms: a single export-control list, a single licensing agency, a single enforcement-coordination agency, and a single information-technology system.

First, a single export-control list will make it clear to U.S. companies which items require licenses for export and which do not. This single list, combined with a single licensing agency, would allow us to concentrate on controlling those critical technologies and items – the “Crown Jewels” – that are the basis for maintaining our military technology advantage, especially technologies and items that no foreign government or company can duplicate. Items that have no significant military impact, or that use widely available technology, could be approved for export quickly. We envision a more dynamic, tiered control system where an item or technology would be “cascaded” from a higher to a lower level of control as its sensitivity decreases.

Second, a single licensing agency, which will have jurisdiction over both munitions and dual-use items and technologies, will streamline the review process and ensure that export decisions are consistent and made based on the real capabilities of the technology. This agency would also reduce exporters’ current confusion over where and how to submit export-license applications, as well as which technologies and items are likely to be approved. The administration is currently preparing options for the agency’s location, and I anticipate a presidential decision later this spring.

Third, the coordination of our currently dispersed enforcement resources by one agency will do a great deal to strengthen enforcement, particularly abroad, as well as coordination with the intelligence community. Those who endanger our troops and compromise our national security will not be able to hide behind jurisdictional uncertainties or game the system. Violators will be subject to thorough investigation, prosecution, and punishment severe enough to deter lawbreaking.

Fourth, a single, unified IT infrastructure will reduce the redundancies, incompatibilities, and waste of taxpayer money that our current system of multiple databases produces. For example, a single online location and database would receive, process, and help screen new license applications and end-users.

Of course, the question of which end-users are eligible to receive our technology is a critical national-security concern. An essential component of the reformed system is the list of entities – terrorist organizations, rogue states, and others – that cannot be allowed access to sensitive items. This would deny them technology or force them to acquire it through more difficult routes. In order to facilitate compliance and tracking, we propose to consolidate current lists of banned end-users into one single frequently-updated list that will be easy for those performing transfers to consult. Entities can be added at any time if there is reasonable cause to believe they are involved in activities contrary to U.S. national-security interests.

These fundamental reforms, if enacted together, will improve America’s ability to work with and fight alongside allies and partners by setting clear, transparent standards – standards that will make it possible to share technology more freely, especially items needed and used by all of us to counter common threats. I’d like to emphasize that the new system will be in full compliance with all of our existing multilateral treaties and obligations. The prospect of more defense trade with the U.S. will incentivize other nations to strengthen their own export regimes. Given how quickly and easily goods and information now can move around the world, export controls are far more effective when they involve multiple partners with shared interests and values.

As happens with any major reform to an entrenched, long-standing system, there will be resistance and criticism. Some people will be concerned that having fewer items subject to the most onerous export restrictions will make it easier for hostile states or groups to obtain weaponry and technology that potentially could be used against us. No system – above all, the current one – is foolproof. But by consolidating most export licensing functions in one agency and creating an enforcement coordination agency, we can focus our energies and scrutiny on technologies that truly threaten American security, making it is far less likely that these critical items will fall into the wrong hands. It is also important to bear in mind that the U.S. government will retain the ability to impose economic sanctions on any foreign country or group, to include prohibiting the export of any equipment, material, or technologies that could have military use.

We will turn these principles and proposals into action through a three-phased process that will unfold over the course of the next year. In the first phase, the executive branch begins the transition towards the single list and single licensing agency by making significant improvements to the current system. These efforts would include establishing criteria for a tiered control list and standing up an integrated enforcement center. The second phase completes the transition to a single IT structure, implements the tiered control list, and makes substantial progress towards a single licensing system.

These changes, which can be made through executive action, represent substantial progress and momentum towards reform. But they are by themselves insufficient to fully meet the challenge at hand. We need a final, third phase – a thorough overhaul of the current system along the lines I have described today, most notably the single licensing agency and single enforcement coordination agency. These fundamental changes will require congressional action.

I greatly appreciated the chance to meet with a number of senior members of Congress earlier this year to discuss this topic. I valued the feedback and suggestions they provided at the time, and I look forward to further dialogue. It is the president’s hope that his national-security team can continue to work closely with congressional leaders and all of the key committees to turn these proposals into legislation that the president can sign sometime this year.

I know that earlier attempts at reform have foundered in the face of resistance. The proposition that a more focused and streamlined system actually helps our national security can go against conventional wisdom. But for the reasons I’ve described today, I believe it is the right approach, and it is urgently needed given the harmful effects of continuing with the existing set of outdated processes, institutions, and assumptions.
Indeed, America’s ability to engage effectively with the rest of the world and keep our most sensitive technology away from those who would do us harm depend critically on our ability to get this right. I look forward to working with the Congress and my interagency colleagues to achieve the kind of systematic reform that will benefit both the security and prosperity of the American people. Thank you.

Longest Prison Sentence To Date Imposed for FCPA Violation

2010-04-20T00:14:00.003-04:00

On Monday, U.S. District Court Judge Henry E. Hudson sentenced Charles Paul Edward Jumet to more than seven years in prison after pleading guilty to conspiring to violate the Foreign Corrupt Practices Act (FCPA) and making a false statement to federal agents.

The 87 month sentence is the longest prison term imposed against an individual for violating the FCPA. In addition to the prison term, the defendant was ordered to pay a $15,000 fine and to serve three years of supervised release following release from prison.

According to the Justice Department, Jumet and others conspired to pay money secretly to Panamanian government officials in exchange for awarding contracts to Ports Engineering Consultants Corporation (PECC) to maintain lighthouses and buoys along Panama’s waterway. The Panamanian government ultimately awarded PECC a no-bid 20-year concession.

After the contract was awarded, Jumet admitted that he and others authorized corrupt payments to be made to the Panamanian government officials. Jumet and others paid more than $200,000 to the former administrator and the former deputy administrator of the Panama Maritime Authority and to a former high-ranking elected executive official of the Republic of Panama.

Jumet also made a false statement to federal agents about a "dividend" check payable to the bearer in the amount of $18,000 that was endorsed and deposited into an account belonging to the high-ranking elected Panamanian government official. Jumet falsely claimed that this "dividend" check was a donation for the high-ranking elected official’s re-election campaign, when, in fact, Jumet admitted it was given to the elected Panamanian government official as a corrupt payment for allowing PECC to receive the contract.

In a related case, John Warwick pleaded guilty on Feb. 13, 2010, for his role in the same conspiracy to violate the FCPA. He is scheduled to be sentenced by Judge Hudson on May 14, 2010.

Latest Update on Incoterms 2010

2010-04-14T16:02:00.002-04:00

Frank Reynolds, the U.S. Delegate to the International Chamber of Commerce's (ICC) Incoterms Committee, has provided International Trade Law News with another update on the status of the revisions currently underway to Incoterms 2000, the standardized trade terms commonly used in international sales contracts.

Mr. Reynolds has advised that the ICC Incoterms Committee's third proposed draft of Incoterms 2010 led to 51 single spaced pages of comments from 23 countries. Those comments were reviewed and the fourth proposed draft was completed in late March. The fourth draft will be submitted to the ICC's Commercial Law and Practice (CLP) Commission in May, the first step in the approval process.

If the draft proposal makes it through the CLP, it will continue through the approval process to the ICC’s Executive Board which is scheduled to meet in September 2010. If all goes well, Incoterms 2010 will be released shortly thereafter with an anticipated effective date of January 1, 2011. If the new version is not approved, it will be sent back to the drafting committee for further work.

As previously reported, the new version of Incoterms will be entitled “Incoterms 2010”, reflecting the release date rather than the date they come into force.

The ICC introduced the first version of Incoterms, short for "International Commercial Terms," in 1936. There are currently 13 Incoterms. Incoterms have been revised six times in order to reflect international trade developments.

Frank Reynolds is the author of several publications, including Incoterms for Americans, a useful publication for U.S. exporters and importers, which will be revised following the publication of Incoterms 2010.

Defense Secretary Gates to Outline Export Control Reform Proposals

2010-04-13T18:29:00.003-04:00

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.

DDTC Issues Announcement on New and Pending ITAR Licenses to Kyrgyzstan

2010-04-09T11:38:00.001-04:00

As a result of this week's ousting of the President of Kyrgyzstan by the opposition, the State Department's Directorate of Defense Trade Controls (DDTC) today issued the following announcement regarding delays in license applications for the export of ITAR-controlled items to Kyrgyzstan:

In response to recent events in the Kyrgyz Republic (Kyrgyzstan), DDTC wishes to inform exporters that although there is no current U.S. or UN arms embargo on Kyrgyzstan, the final decision of license applications for the export of U.S. Munitions List (USML) items to Kyrgyzstan received from this date or currently in the review process may be delayed. License applications will continue to be reviewed on a case-by-case basis, but approval should not be assumed. We encourage exporters to take the current situation into account and if applying for a new license to export or re-export USML items to Kyrgyzstan, that the license application provide detailed information on the end-use and end-user of the USML items.

The PDF version of the DDTC's announcement, which also includes the text of the White House statement on Kyrgyzstan, can be found here.

Upcoming Export Compliance Webinars - Antiboycott Issues and Exporting Humanitarian Products to Embargoed Countries

2010-04-08T22:40:00.000-04:00

The law firm of Sandler, Travis & Rosenberg is presenting the following two export compliance webinars in the coming weeks:

•Dealing with Antiboycott Issues in the Real World on April 20, 2010 - This webinar is intended to provide exporters and freight forwarders with an overview and in-depth practical understanding on how the U.S. antiboycott laws and regulations impact international transactions. The webinar will cover the types of boycott requests that are not permissible and the specific types of boycott-related language and requests that are reportable to BIS and to the Internal Revenue Service. The webinar will also discuss current trends in antiboycott activity and enforcement. The webinar will feature an interactive question and answer session during which participants can raise issues pertinent to their export compliance activities.

•Exporting Agricultural Products, Medicines and Medical Devices to Embargoed Countries: What You Need to Know on April 29, 2010 - While the U.S. maintains comprehensive embargoes on several countries, U.S. law and policy authorize the export of agricultural products, medicines and medical devices to embargoed countries, subject to certain conditions and licensing requirements. However, the requirements for exporting authorized humanitarian products to embargoed countries are complex and the requirements vary, depending on the country of destination. This 1-1/2 hour webinar on April 29, 2010 will provide practical and useful information and insights on the requirements of the Commerce Department’s Bureau of Industry and Security (BIS) and the Treasury Department’s Office of Foreign Assets Control (OFAC) to export agricultural products, medicines and medical devices to Cuba, Iran, North Korea, Sudan and Syria.

Both webinars will be presented by Doug Jacobson, the leader of Sandler, Travis & Rosenberg’s Export Controls Practice Group and the editor of International Trade Law News. Doug has been practicing international trade and export controls law for nearly 20 years. He regularly defends companies in antiboycott enforcement actions and has extensive experience in obtaining licenses from BIS and OFAC to export humanitarian products to embargoed countries. Doug will share his practical experience and insights with the webinar participants.

Click here to register for these webinars.

AAEI Issues "The Innovation Economy for America" Policy Paper

2010-03-15T08:00:00.073-04:00

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

3. Promoting Exports by

Enacting Duty Drawback Simplification
Streamlining Export Controls

4. Lower Transaction Costs for Business by

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

U.S. India High Technology Cooperation Group Meetings to Take Place this Week in DC

2010-03-14T20:06:00.000-04:00

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.

Import and Export News Briefs

2010-03-12T00:36:00.011-05:00

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

Secretary Locke Participates in White House Web Chat to Discuss National Export Initiative

2010-03-11T17:08:00.000-05:00

Here is the video from today's White House chat session that Commerce Secretary Gary Locke held following the President's speech on the National Export Initiative. Questions were submitted via Twitter (@seclocke), Facebook and email.

Text of Executive Order on President's National Export Initiative

2010-03-11T12:20:00.000-05:00

NEI Executive Order

President Announces Details of National Export Initiative at Ex-Im Bank's Annual Conference

2010-03-11T12:06:00.004-05:00

In a speech today at the Export-Import Bank of the United States' annual conference in Washington, DC, President Obama provided more details on the National Export Initiative (NEI) and his goal of doubling U.S. exports in the next five years that was announced in his State of the Union Speech in January.

The following is a summary the important points made in today's speech:

Four aims of NEI are (1) increasing export financing; (2) increasing export advocacy; (3) providing assistance for American businesses to locate, set up shop, and win in new markets; and (4) focusing on making sure American companies have free and fair access to those markets, including enforcing existing trade agreements.

Signed an Executive Order instructing the federal government to use every available federal resource in support of that mission. That order created an Export Promotion Cabinet, made up of the Secretaries of State, Treasury, Agriculture, Commerce and Labor, along with our U.S. Trade Representative, Small Business Administrator, the Export-Import Bank President, and other senior U.S. officials whose work impacts exports. That cabinet will convene its first meeting in April.

Re-launched the President’s Export Council, the principal national advisory committee on international trade. Named Jim McNerney, the President and CEO of Boeing, as its chair; and Ursula Burns, the CEO of Xerox, as vice chair (White House announcement on these appointments here).

Export promotion efforts will extend throughout the Administration. Secretary Locke is issuing guidance to all senior government officials who have foreign counterparts on how they can best promote our exporters. Secretary Clinton is mobilizing a commercial diplomacy strategy, directing every one of our embassies to create a Senior Visitor Business Liaison who will manage our export advocacy efforts locally.

Will unleash a battery of comprehensive and coordinated efforts to promote new markets and new opportunities for American exporters. Will bring together the Ex-Im Bank, the SBA, the Departments of Commerce and Agriculture, and the Trade Development Agency to set up one-stop-shops across the country and in the 250 embassies and consulates abroad, to help American businesses gain a foothold in the fastest-growing markets with the most demand. And we’ll provide a comprehensive toolkit of services – from financing to counseling to promotion – to help potential exporters grow and expand.

Will increase funding for existing promotion efforts, including International Trade Administration at the Department of Commerce, and strengthen the USDA’s ability to connect farmers with new customers overseas.

Working to reform the U.S. Export Control System for strategic, high-tech industries, which will strengthen our national security. Will concentrate our efforts on enforcing controls on the export of our most critical technologies, making America safer while enhancing the competitiveness of key American industries. Have conducted a broad review of the Export Control System, and Secretary Gates will outline our reform proposal within the next couple weeks.

Regarding exports, the President announced two specific changes in export control laws that the Administration will work to implement:

A new one-time online review process for products containing encryption that is intended to reduce the current 30 to 60 day review process to "30 minutes".
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.

The video of the speech is below:

President Announces Two Export Control Reform Initiatives Today (Encryption and Dual-Nationals)

2010-03-11T12:04:00.003-05:00

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:

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."
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.

Further details on these reforms will be announced by BIS and DDTC in the near future.

More information on the other aspects of the President's speech today are found in the subsequent post.

Remarks at Today's State Department Briefing Fail to Clear Up Confusion Over Dealing With BAE Systems

2010-03-09T23:15:00.002-05:00

As has been reported there is a great deal of confusion in the U.S. defense trade community about dealing with BAE Systems plc and their U.S. affiliates in light of the company's guilty plea last week to a conspiracy charge in connection with certain statements made to the U.S. Government. The fundamental legal question for U.S. companies is whether they are permitted by section 127.1(c) of the ITAR to continue to engage in defense-related transactions with BAE Systems given that the company appears to be "ineligible" as a result of the guilty plea.

At today's press briefing State Department spokesman P.J. Crowley was asked by a reporter about the BAE Systems licensing issue and, not surprisingly, his answer did not go very far in resolving this issue. As noted below, Mr. Crowley noted that the State Department is "assessing the implications that the plea will have on the statutory debarment and resulting policy of denial" and that "it would be inappropriate for [State] to make decisions on pending export applications at this time." He noted that this meant that "applications for export will be delayed if those applications involve BAE Systems PLC or any of its subsidiaries." The complete text of the exchange is below:

QUESTION: A question on export licenses. In reference to a specific company, I got a query from someone from another bureau about an export license being put on hold for a defense contract. Does the State Department have a particular hold on all export licenses at the moment? I know you guys are reviewing – you have an interagency review on export controls. Is that affecting the application for export licenses?
MR. CROWLEY: Export licenses writ [sic] large?
QUESTION: Yeah, that’s what I’m wondering. I mean, this was in reference to a specific defense contractor, a British defense contractor.
MR. CROWLEY: Well, so, is your question about that specific contractor?
QUESTION: Yes. Can I ask about the (inaudible)?
MR. CROWLEY: (Laughter.) No, you’ll say – I got the impression that we were holding --
QUESTION: Well, I’d like to ask about BAE’s application for --
MR. CROWLEY: Sure.
QUESTION: -- an export license being put on hold, and then specifically, is this something that is affecting everybody or just them?
MR. CROWLEY: Let me talk more specifically. I’m not aware of any blanket hold on all export licenses. On March 1^st, BAE Systems plc pled guilty in U.S. District Court for the District of Columbia to conspiracy involving violations of several U.S. laws, including the Arms Export Control Act. The State Department is studying the judgment and the plea agreement between the Department of Justice and BAE Systems plc, which BAE entered into to settle issues related to violations of the export – Arms Export Control Act. We are assessing the implications that the plea will have on the statutory debarment and resulting policy of denial. Though no final determinations have been reached, our analysis indicates it would be inappropriate for us to make decisions on pending export applications at this time. But for further information on the plea agreement, I refer you to the Department of Justice.
QUESTION: Can you explain what that means? You said we’re assessing implications the plea will have on the statutory something-something. What was that?
MR. CROWLEY: What this means is only that their applications for export will be delayed if those applications involve BAE Systems plc or any of its subsidiaries.
QUESTION: Thank you.

Until this issue is resolved once and for all by the State Department's Directorate of Defense Trade Controls, U.S. companies should consult section 127.1(c) of the ITAR and their export controls counsel for guidance on how to proceed.

Secretary of State Clinton Addresses Export Control Reform During House Foreign Affairs Committee Hearing

2010-03-04T18:32:00.001-05:00

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.

GSP Import Benefits at Stake for Certain Countries and Products

2010-03-04T16:26:00.002-05:00

Sandler, Travis & Rosenberg Client Advisory:

DUTY-FREE IMPORT BENEFITS AT STAKE FOR CERTAIN COUNTRIES AND PRODUCTS

March 25 Deadline for Comments on GSP Eligibility

U.S. importers, trade associations and foreign governments have until 5:00 p.m. on March 25 to submit comments to the Office of the U.S. Trade Representative concerning the eligibility of certain goods for duty-free treatment under the Generalized System of Preferences. These comments may seek to preserve, reinstate or revoke this treatment.

The U.S. GSP program includes provisions, known as competitive need limitations, that trigger the removal of duty-free treatment if imports of a covered product from a beneficiary developing country exceed certain limits. For calendar year 2009, these limits are (a) 50% of the value of total U.S. imports of the product from all countries or (b) $140 million. Once the president determines that a CNL has been exceeded, GSP duty-free treatment for the subject article must be terminated no later than July 1 of the next calendar year.

However, CNL waivers are permitted for products that are imported in de minimis quantities. In addition, duty-free treatment may be reinstated for products that no longer exceed the CNL.

USTR is therefore accepting comments from interested parties on the following potential modifications to GSP eligibility, based on import data for calendar year 2009.

De Minimis Waiver - The president may waive the 50% CNL with respect to an eligible article imported from a BDC if the value of total imports of that article from all countries did not exceed $19.5 million.

Redesignation Request - If imports of an eligible article from a BDC ceased to receive duty-free treatment due to exceeding a CNL in a prior year, the president may redesignate that article for duty-free treatment if imports in the 2009 did not exceed the CNL.

Potential Revocation of a Current CNL Waiver - A CNL waiver remains in effect until the president determines that it is no longer warranted due to changed circumstances. However, the president should revoke any CNL waiver that has been in effect with respect to an article for five years or more if the BDC's exports of that article to the U.S. exceeded (a) $210 million (1.5 times the applicable CNL value limit) or (b) 75% of the value of total U.S. imports of that article.

A list of products that may qualify for one of these actions can be found on USTR's Web site.

ST&R has extensive experience helping companies navigate all aspects of the GSP program, including the issues outlined above. For more information, including on how ST&R can assist you in the preparation and submission of comments to USTR, please contact Nicole Bivens Collinson, Jennifer Mulveny or Doug Jacobson.

Deadline for NCITD International Trade Scholarship is Approaching

2010-03-04T13:47:00.008-05:00

Update: Application deadline extended to April 15, 2010.

The National Council on International Trade Development (NCITD) has established a scholarship for students of international trade.

Scholarships awarded (minimum $1,000) will be paid directly to the institution, in the name of the awardee(s).

Awardee(s) will also receive a one-year NCITD membership and will be welcome to attend monthly meetings

Criteria for Eligibility:

Applicants must have at least "junior" status for 2010-2011 in an accredited U.S. college or university with at least a 3.0 Grade Point Average or equivalent "B" average.

Applicants must be currently enrolled and pursuing either an undergraduate or graduate degree in International Trade studies, such as political science, international relations, economics, international business, international law, international finance, etc. (including study abroad programs affiliated with a U.S. university).

Application Process:

Applicants must complete and submit:

* The NCITD Scholarship application form;

* A copy of the most current transcript from the college or university;

* A letter of recommendation from a sponsoring NCITD member; or from a work colleague or professor;

* A brief (2500 words or less) narrative from the applicant explaining his/her interest in international trade and why the applicant should be awarded this scholarship, including merit and financial need.

Criteria for Selection, in Order of Importance:

* Proven interest or experience in international trade, e.g., education, work or volunteering;

* Current academic standing and performance, including honors and extracurricular activities;

* Strength of the narrative submission and recommendations by NCITD member, professor or work colleague;

* Preference will be given to candidates sponsored by employees of NCITD member firms.

Selection Process:

For consideration for the 2010-2011 academic terms, all applications must be submitted by April 15, 2010.

The Application, transcript, recommendation and narrative essay should be mailed in a single package OR emailed to:

ATTN: Scholarship Applications
c/o Christina Filipovic
NCITD
1707 L Street N.W.
Suite 570
Washington, DC 20036
Email: christina@ncitd.org

The NCITD Scholarship Committee will select the winner(s) and determine the award no later than April 15, 2010.

The winner(s) will be notified by e-mail and letter.

The scholarship(s) will be presented at the June 9, 2010 Compliance Meeting in Washington, DC.

The scholarship application form is available here.

For information contact Christina Filipovic at the NCITD Secretariat at 202-872-9280.

Three Persons Indicted in Los Angeles for Conspiring to Export Assault Rifle Parts and Gun Sights to Phillippines

2010-02-26T10:27:00.002-05:00

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.

Photos From BIS 2010 Export Control Forum

2010-02-25T11:08:00.003-05:00

Below are some photos from the Bureau of Industry and Security's 2010 Export Control Forum that was held earlier this week in Irvine, California. The event's Keynote Speaker was Kevin Wolf, who was recently sworn in as Assistant Secretary of Commerce for Export Administration. In addition to speakers from BIS, the program also featured speakers from OFAC, Census, DDTC and DTSA.

Photos courtesy of John Priecko, Chief Executive Officer and President of Trade Compliance Solutions (photos 1-4), and Melissa Miller Proctor, Sandler, Travis & Rosenberg, P.A.

Registration

Kevin Wolf, Keynote Speaker

Kevin Wolf and other BIS officials

Erin Clark, STTAS & Melissa Miller Proctor, STR

Next NCITD Meeting to Feature Speakers from OFAC, DDTC and FinCEN

2010-02-23T15:54:00.000-05:00

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

Adam Szubin, Director, Office of Foreign Assets Control, Department of the Treasury. Topic: OFAC News and Update;

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

Jamal El-Hindi, Associate Director, Regulatory Policy and Programs Division, Financial Crimes Enforcement Network, Department of the Treasury. Topic: FinCEN Enforcement Efforts and Updates.

For information on how to join NCITD or to attend the meeting, see www.ncitd.org or contact the NCITD Secretariat at 202-872-9280.

U.S. Customs Broker Sentenced to 24 Months in Prison for Defrauding Importer

2010-02-19T17:29:00.000-05:00

An unusual criminal case involving a customs broker illustrates the need for U.S. importers to be vigilant in exercising oversight over the activity of their customs brokers.

Earlier this week a New York-based customs broker was sentenced to 24 months in prison, three years of supervised release and ordered to pay nearly $1.2 million in restitution for defrauding an importer of medical equipment by submitting false customs documents that indicated that the importer owed customs duties on goods that were actually duty free.

According to the Justice Department, the customs broker, who had served as the importer's broker since 1980, continued to invoice the importer for customs duties over a seven year period even though the U.S. duty rate had decreased on imported medical equipment from 5.5% to duty free.

To show that the invoices were legitimate, the customs broker sent the importer falsified customs forms that indicated the amount of duty owed on the medical equipment. As a result, the importer reimbursed the customs broker for duties that the broker never paid, in amounts ranging from $1,000 to $9,000 per customs entry. By the time the importer discovered the problem seven years later the broker had defrauded the importer out of almost $1.2 million.

Under U.S. law, a conviction of a customs broker of a crime involving the importation of merchandise or arising out of the conduct of customs business is grounds for revocation of a customs broker license. As a result, assuming that this case is not overturned on appeal, the defendant's customs broker's license will be revoked by U.S. Customs and Border Protection.

While this type of activity by a customs broker is extremely rare (customs brokers must undergo an extensive background check before they receive their broker's license), this situation could have been easily avoided had the importer audited the customs entries to verify that the amount of duties and fees shown on the invoices and documents provided by the broker was consistent with the applicable duty rate shown on the Harmonized Tariff Schedule of the United States.

Two BIS Nominees Confirmed by Senate

2010-02-12T10:14:00.004-05:00

Yesterday the U.S. Senate confirmed Kevin Wolf to serve as Assistant Secretary of Commerce for Export Administration and David Mills to be Assistant Secretary of Commerce for Export Enforcement.

These two confirmations, along with 25 positions at other agencies, occurred after Senate Republicans earlier this week released a hold on a number of pending nominees following President Obama's threat to fill open positions by way of a recess appointment while the Senate is in recess next week.

However, the Senate confirmations did not include the nomination of Eric Hirschhorn to serve as Under Secretary of Commerce for Export Administration, the most senior position at the Bureau of Industry and Security. Mr. Hirschhorn's nomination was reported to the full Senate and has been included on the Senate calendar since December 17, 2009. Mr. Hirschhorn and 35 other nominees still await Senate confirmation. It is expected that the Senate will act on Mr. Hirschhorn's nominations in the coming weeks.

In a statement issued by President Obama after yesterdays' confirmations, he said that the Senate's action "is a good first step, there are still dozens of nominees on hold who deserve a similar vote, and I will be looking for action from the Senate when it returns from recess. If they do not act, I reserve the right to use my recess appointment authority in the future."

Virginia Resident Pleads Guilty in Connection With Role in Conspiracy to Pay Bribes to Obtain Business in Panama

2010-02-10T20:16:00.000-05:00

Despite the snow in the Washington, DC area, the blizzard of FCPA prosectutions continues.

Today, John W. Warwick pleaded guilty before U.S. District Court Judge Henry E. Hudson in Richmond, Virginia., to a one-count indictment charging him with conspiring to make corrupt payments to foreign government officials for the purpose of securing business for Ports Engineering Consultants Corporation (PECC) in violation of the Foreign Corrupt Practices Act

According to the indictment issued on December 15, 2009, PECC, a company incorporated under the laws of Panama, was affiliated with an engineering firm based in Virginia Beach. According to the indictment, PECC was created so that Warwick, co-conspirator Charles Jumet, an the engineering firm could obtain certain maritime contracts from the Panamanian government.

According to the Justice Department, Warwick and Jumet participated in a conspiracy to pay money secretly to Panamanian government officials for awarding contracts to PECC to maintain lighthouses and buoy in Panama. In December 1997, the Panamanian government awarded PECC a no-bid, 20-year concession to perform these duties. Upon receipt of the concession, Warwick, Jumet, and others authorized payments to be made to the Panamanian government officials.

In connection with his guilty plea, Warwick admitted that at least from 1997 through approximately July 2003, he, Jumet and others conspired to make corrupt payments totaling more than $200,000 to the former administrator and deputy administrator of the Panama Maritime Authority and to a former, high-ranking elected executive official of the Republic of Panama.

As part of his plea agreement, Warwick agreed to forfeit $331,000,the proceeds of the contract. At sentencing, scheduled for May 14, 2010, Warwick faces a maximum of five years in prison and a fine of the greater of $250,000 or twice the gain.

Jumet pleaded guilty on Nov. 13, 2009, to a two-count criminal information charging him with conspiring to make corrupt payments to foreign government officials for the purpose of securing business for PECC, in violation of the FCPA, and making a false statement. Jumet is scheduled to be sentenced on March 26, 2010.