International Trade Law News

OFAC Issues June 2009 Monthly Civil Penalties Report

2009-07-01T17:03:00.003-04:00

The Treasury Department's Office of Foreign Assets Control (OFAC) today issued its June 2009 (pdf) monthly report of civil penalties imposed for alleged violations of the sanctions regimes administered by OFAC.

OFAC announced the following four settlements with companies, none of which were resolved under OFAC's new enforcement guidelines implementing the enhanced maximum civil penalties of $250,000 for IEEPA-based violations:

Oxbow Carbon and Minerals LLC of West Palm Beach, Florida agreed to remit $276,250.00 to settle allegations that if violated te Iranian Transactions Regulations in 2006 and 2007. OFAC alleged that Oxbow engaged in transactions in or related to services of Iranian origin and facilitated trade-related transactions by non-U.S. persons which involved the use of vessels owned and/or managed by the Islamic Republic of Iran Shipping Lines in Tehran, Iran, without an OFAC license. While Oxbow did not voluntarily disclose the alleged violations, OFAC noted that the company demonstrated cooperation during OFAC’s review of the matter and as a remedial measure has made revisions to its compliance program.

National Marine Consultants, Inc. remitted $42,075.00 to settle allegations of violations of the Iranian Transactions Regulations that occurred between March 2005 and May 2007. OFAC alleged that NMCI outsourced to an Iranian entity inspection services it was contractually bound to perform for a third-party, without an OFAC license. NMCI did not voluntarily disclose the matter to OFAC but cooperated with OFAC’s investigation.

Philips Electronics of North America Corporation (PENAC) remitted $128,750.00 to settle allegations that it violated the Cuban Assets Control Regulations between 2004 and 2006. OFAC alleged that PENAC acted without an OFAC license through an employee’s travel to Cuba in connection with the sale of medical equipment by a foreign affiliate of PENAC. PENAC voluntarily disclosed this matter to OFAC.

Houston, Texas-based Willbros USA, Inc. paid $6,600 to settle an allegation of violation of the Sudanese Sanctions Regulations occurring in 2003 and 2004. OFAC alleged that Willbros, through a former Senior Vice President, willfully violated the Sudanese Sanctions Regulations (SSR) when it entered into a contract to bid on an oil development project in Sudan, despite its knowledge that such activities violated the Regulations, by facilitating the export of goods, technology or services to Sudan and evading the prohibitions set forth in the SSR. Willbros voluntarily disclosed this matter to OFAC.

OFAC did not settle any cases involving individuals last month.

Tennessee Professor Sentenced to 48 Months in Prison for Export Control Violations

2009-07-01T11:43:00.008-04:00

Today U.S. District Judge Thomas sentenced former University of Tennessee Professor John Reece Roth to 48 months in prison for violating the Arms Export Control Act. Following his release from prison, Roth, who is 72 years old, must serve two years of supervised release. Although he faced potential fines of more than $15 million, Judge Varlan did not impose any monetary penalties on Dr. Roth. The sentence was 15 months below the minimum suggested 63 month sentence contained in the Federal Sentencing Guidelines.

The press release issued by the Justice Department announcing Dr. Roth's sentence can be found here.

Following the sentencing hearing, there was a bond hearing at 2 p.m. today to determine whether Dr. Roth should remain free on bond pending an appeal. The U.S. Attorney's office opposes Dr. Roth's defense counsel's request that he remain free on bond. At the bond hearing Judge Varlan indicated that he would consider Dr. Roth's motion for bond pending appeal and will render a decision in the coming weeks.

There are still two more sentences to be handed out in this case. Daniel Daniel Max Sherman, a University of Tennessee-trained physicist who was an employee, director and one of the original founders of Atmospheric Glow Technologies, Inc. , pleaded guilty to conspiracy to violate the Arms Export Control Act. Sherman, who has been free on bond, will be sentenced in on July 17th. Sherman was a graduate student under Dr. Roth's supervision at the University of Tennessee and served as the lead scientist in the Air Force projects contracts at issue in this case.

One of Dr. Roth's alleged co-conspirators, Atmospheric Glow Technologies, Inc. (AGT) will be sentenced on August 27th. AGT, which filed last year for bankruptcy, was a plasma technology company located in Knoxville, Tennessee. AGT pleaded guilty in August 2008 to 10 counts of unlawfully exporting defense articles to a citizen of the People’s Republic of China in violation of the Arms Export Control Act.

More details to follow as soon as they are available.

Results of 2008 GSP Annual Review Announced

2009-06-30T23:59:00.002-04:00

U.S. Trade Representative Ron Kirk today announced the results of the 2008 Annual Review of the Generalized System of Preferences (GSP) program. The following is a summary of the results:

De minimis waivers were granted on 112 products from 16 beneficiary countries.

Added two agricultural products to the list of products eligible for GSP duty-free export into the United States from all beneficiary countries.

Determined that 12 products from six beneficiary countries should be excluded from the GSP program since they exceeded the competitive need limitation.

Unfortunately, the Obama Administration did not grant any of the numerous requests for redesignation of products that had been excluded from GSP since they exceeded the competitive need limitation in previous years.

In 2008, the United States extended duty-free treatment under the GSP program to imports worth $31.7 billion from eligible beneficiary countries.

The complete results of the 2008 GSP Annual Review are available here.

Tennessee Professor Convicted of Export Control Violations to be Sentenced Tomorrow

2009-06-30T22:13:00.003-04:00

After nearly ten months following his conviction of numerous export control violations, retired University of Tennessee professor John Reece Roth will be sentenced tomorrow, July 1, 2009, at 10 a.m. EDT by U.S. District Judge Thomas Varlan in Knoxville, Tennessee.

Information on Dr. Roth's sentence will be posted here as soon as it is available.

As we have previously reported, on September 3, 2008 Dr. Roth was convicted by a federal jury of one count of conspiring with Atmospheric Glow Technology, Inc. to unlawfully export in 2005 and 2006 "defense articles" to a citizen of the People’s Republic of China in violation of the Arms Export Control Act.

Dr. Roth was also convicted of 15 counts of violating the Arms Export Control Act and one count of wire fraud relating to defrauding the University of Tennessee of the honest services by illegally exporting controlled technical data relating to a U.S. Air Force contract.

Dr. Roth faces a maximum prison sentence of 175 years and more than $15,500,000 in fines. While the maximum prison sentence for each of the 15 Arms Export Control Act violations (22 USC § 2278) is 120 months in prison, the Federal Sentencing Guidelines provide for a prison sentence in the range of 63-78 months. The Federal Sentencing Guidelines note that in determining the sentence within the applicable guideline range, the judge may consider the "degree to which the violation threatened a security or foreign policy interest of the United States, the volume of commerce involved, the extent of planning or sophistication, and whether there were multiple occurrences." Where such factors are present in an extreme form, the judge may depart from the guidelines.

The sentencing date of Atmospheric Glow Technology, Inc. has not yet been set.

Guilty Plea in First FCPA Case Involving Vietnam

2009-06-30T21:34:00.003-04:00

In the first Foreign Corrupt Practices Act (FCPA) involving Vietnam, the Justice Department announced yesterday that Joseph T. Lukas, a former executive of Philadelphia-based Nexus Technologies Inc. pleaded guilty to one count of conspiracy to violate the FCPA and one count of violating the FCPA in connection with his role in a scheme to pay bribes to Government of Vietnam officials in exchange for contracts to supply equipment and technology to Vietnamese government agencies.

Mr. Lukas was arrested on September 5, 2008, after being indicted by a federal grand jury in Philadelphia. Also indicted in this case was Nexus Technologies and three alleged co-conspirators. Cases are still pending against the remaining defendants and the company.

Nexus Technologies Inc. is a Delaware company with offices in Philadelphia, New Jersey and Vietnam that allegedly purchased a wide variety of equipment and technology, including underwater mapping equipment, bomb containment equipment, helicopter parts, chemical detectors, satellite communication parts and air tracking systems, for export to agencies of the government of Vietnam. The indictment alleged that from approximately 1999 through 2008, the defendants engaged in a conspiracy to pay Vietnamese government officials bribes in order to secure lucrative contracts. Over the course of the scheme, the defendants are alleged to have paid at least $150,000 in bribes to foreign officials in Vietnam. The customers in Vietnam are alleged to have included the commercial branches of Vietnam's Ministries of Transport, Industry and Public Safety.

In connection with his guilty plea, Mr. Lukas admitted that from 1999 to 2005, he and other employees of Nexus Technologies Inc. agreed to pay, and knowingly paid, bribes to Vietnamese government officials in exchange for contracts with the agencies for which the officials worked. The bribes were falsely described as "commissions" in the company’s records.

Mr. Lukas faces a maximum prison sentence of 10 years in prison and a $350,000 fine when he is sentenced in April 2010.

Census Bureau Issues Important AES Export Compliance Notice

2009-06-30T21:27:00.005-04:00

U.S. exporters, freight forwarders and other authorized agents filing Electronic Export Information (EEI) using the Automated Export System should be aware that today the Census Bureau's Foreign Trade Division issued an important export compliance notice.

The notice, which is reprinted below, advises that on October 1, 2009, the Bureau of Industry and Security (BIS) will be adding new electronic edits on ECCNs, Special Comprehensive Licenses and certain license exceptions to ensure that EEI information reported is correct and accurate.

AES Broadcast 06/30/2009 Broadcast # 2009024

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BIS to Add New Edits on ECCNs, Special Comprehensive Licenses, and Certain License Exceptions

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United States Principal Parties in Interest (USPPIs) and their authorized filing agents (AES filers) are reminded that the AES record containing the Electronic Export Information (EEI) is an export control record under § 758.1(f) of the Export Administration Regulations (EAR). Furthermore, the AES record represents whether the export authorized under the terms and conditions of a license, license exception or no license required is true, accurate and complete.

Effective October 1, 2009, BIS is tightening up the edits on the EEI to improve statistics and to ensure that AES filers are correctly certifying the use of a license or license exception authorization or no license required designation. AES filers must prepare for these edits, as described below to prevent the return of fatal errors from AES.

- The export Control Classification Number (ECCN), when reported in AES must be [a] valid 5 - position ECCN as listed on the Commerce Control List. See Supplement 1 to § 774 of the EAR for a complete list of valid ECCNs and their descriptions. www.access.gpo.gov/bis/ear/ear_data.html

- The Special Comprehensive License (SCL) number reported in AES under license type C31 must be a BIS approved SCL.

- License exceptions LVS(C35), GBS(C36), CIV(C37), and TSR(C38) must designate an eligible ECCN and country. See Part 740 (License Exceptions) and Supplement 1 to § 774 (Commerce Control List) www.access.gpo.gov/bis/ear/pdf/740spir.pdf and
www.access.gpo.gov/bis/ear/ear_data.html

- In accordance with the EAR § 740.17, license exception ENC(C50) must only be used with ECCNs 5A002, 5B002, 5D002 and 5E002. www.access.gpo.gov/bis/ear/pdf/740.pdf

Please note that by using a License Exception, you are certifying that the terms, provisions and conditions for the use of the License Exception described in the EAR have been met. See Part 740 of the EAR.

If you are unable to resolve fatal errors related to the above and require regulatory guidance from BIS, please contact its Office of Exporter Services at one of the following locations.

Western Regional Office (949) 660-0144
San Jose, CA Branch (408) 291-4212
Headquarters, Washington, DC (202) 482-4811

Antidumping Petition Filed Today on Woven Electric Blankets From China

2009-06-30T20:59:00.004-04:00

An antidumping petition was filed today with the U.S. International Trade Commission and Department of Commerce against woven electric blankets from China.

The petitioner in this case is Jarden Consumer Solutions, a subsidiary of Jarden Corporation (NYSE: JAH) and the owner of Sunbeam Bedding and several other well known consumer brands, including Mr. Coffee.

The petition identifies the product allegedly sold at less than fair value as finished or unfinished woven electric blankets of all sizes including twin, full, queen and king sizes. The subject blankets consist of a shell of woven fabric, made of synthetic or natural fiber, or a blend of synthetic and natural fiber which contains heat-producing wire whose temperature is controlled by one or more thermostats or controllers. Imported woven electric blankets are classified under Harmonized Tariff Schedule of the United States (“HTSUS”) subheading 6301.10.0000 and are currently subject to an 11.4% duty rate.

CBP's 2009 Trade Symposium Set for December 2009

2009-06-29T18:38:00.004-04:00

U.S. Customs and Border Protection announced today that the 2009 Trade Symposium will take place from December 8 – 10, 2009. The program will be held for the first time at the Walter E. Washington Convention Center in Washington, DC, a much larger venue than the Ronald Reagan Building.

Further information on registration procedures and the agenda will be issued in the "early fall."

The materials from CBP's 2008 Trade Symposium can be found here.

BIS Update 2009 to be Held September 30 - October 2, 2009

2009-06-29T18:04:00.003-04:00

As a follow-up to our previous post, the Bureau of Industry and Security today announced that the 22nd annual Update Conference on Export Controls and Policy will be held September 30 through October 2, 2009 in Washington, DC.

Because the expected number of attendees will likely exceed the number of persons interested in attending, BIS will hold a registration lottery as they did in the past few years. Interested persons must first complete and submit the online “Interest Form” below between June 25 and July 17. If there are more potential participants than there is space available, BIS will grant registration through a random selection from the entire list of respondents, regardless of when received during the period. Those selected will be notified and given registration instructions in late July. They must register and submit payment by the designated date or their place will be forfeited and given to someone on the waiting list.

More information on the venue and program will be available in the coming weeks.

BIS Update 2009 Likely Set for Last Week of September

2009-06-25T14:45:00.005-04:00

While the specific dates and location have not been finalized, this year's Bureau of Industry and Security's annual update Update Conference on Export Controls and Policy should be held during the week of September 28, 2009 (end of September and beginning of October). Details on registration will follow once BIS has finalized the dates.

Two Good Export Controls Programs Scheduled for Next Week

2009-06-19T11:24:00.005-04:00

There are two good export controls-related programs scheduled for next week. It is not too late to sign up for these programs.

June 24, 2009 - Import/Export Classification Boot Camp: Cross-Training for International Trade Professionals, Philadelphia, Pennsylvania

This one-day seminar presented by Sandler, Travis & Rosenberg, P.A. breaks the traditional barriers between imports and exports. This seminar will give attendees a comprehensive understanding of the principles of both import and export classification, including:
• Overview of the U.S. export classification regimes
• Principles of import classification (Harmonized Tariff Schedule of the United States)
• Principles of export classification (Schedule B, Export Administration Regulations, International Traffic in Arms Regulations)
• Consequences of import and export misclassification
• Import/Export Classification "Best Practices"

The program will be held from 8:30 am to 4:30 pm at the Sofitel Philadelphia located at 120 South 17th Street Philadelphia, PA 19103. For more information and to register see the following link.

June 25-26, 2009 - Defense Export Controls, Alexandria, Virginia

This two-day seminar presented by Technology Training Corporation and sponsored by the American Institute of Engineers will feature a wide-range of speakers on defense and other export control topics. Included among the government speakers are current and former officials with DDTC, BIS, OFAC, DTSA, NASA, DOJ, GAO, DSCA, NRC as well as representatives from the private sector.

This two-day program will be held at the Holiday Inn Hotel & Suites in Alexandria, Virginia. For more information and to register see the following link.

House Postpones Hearing on Export Administration Act

2009-06-18T13:20:00.004-04:00

The hearing hearing on policy considerations associated with the Export Administration Act that was to be held at 2 p.m. today by House Foreign Affairs Committee's Subcommittee on Terrorism, Nonproliferation and Trade has been postponed. The new hearing date has not yet been set.

The witnesses scheduled to appear at the hearing were:

The Honorable John Engler, President and Chief Executive Officer of the National Association of Manufacturers

Arthur Shulman, Esq., Senior Research Associate at the Wisconsin Project on Nuclear Arms Control

Owen Herrnstadt, Esq., Director of Trade and Globalization Policy at the International Association of Machinists and Aerospace Workers

The Export Administration Act of 1979, which lapsed in August 2001, has not been renewed by Congress. The Export Administration Regulations have remained in effect pursuant to Executive Order 13222 issued on August 17, 2001 pursuant to the International Emergency Economic Powers Act and extended annually by the President.

Florida Man Sentenced to 35 Months in Prison for Role in Iranian Export Conspiracy

2009-06-12T15:01:00.003-04:00

The owner of a Florida company that pleaded guilty earlier this year to illegally exporting military and commercial aircraft parts to Iran was sentenced yesterday to 35 months in federal prison.

As part of his plea, Mr. Train Bujduveanu, a Romanian national and naturalized U.S. citizen, admitted that he used his company, Orion Aviation, to sell aircraft parts to Iran from Mr. Hassan Keshari, owner of Kesh Air International, a California-based company.

According to the indictment and statements and documents contained in court filings, Bujduveanu received orders by email from Keshari requesting specific aircraft parts for buyers in Iran. Bujduveanu then provided quotes, usually by e-mail, to Keshari. After the receipt of payment for the parts from Keshari, Bujduveanu then shipped the parts to a company in Dubai through the use of false or misleading shipping documents. From Dubai, the parts were then shipped on to the purchasers in Iran.

Among the aircraft parts illegally exported to Iran through the conspiracy were parts designed exclusively for the F-14 fighter jet, the Cobra AH-1 attack helicopter, and the CH-53A military helicopter.

Mr. Bujduveanu's co-conspirator, Hassan Keshari, pleaded guilty to one-count of conspiracy to violate export control laws and was sentenced in May 2009 to 17 months in federal prison.

U.N. Security Council Imposes Additional Sanctions on North Korea

2009-06-12T14:19:00.009-04:00

The United Nations Security Council today passed a resolution condemning North Korea's May 25th nuclear test and imposing additional multilateral sanctions on North Korea.

Security Council resolution 1874 requires U.N. member states to impose a series of additional measures on North Korea, including tougher inspections of cargo suspected of containing banned items related to the country’s nuclear and ballistic missile activities, a tighter arms embargo (with the exception of light weapons) and new financial restrictions.

Resolution 1874 also condemned North Korea's recent nuclear test on grounds that it was conducted in “violation and flagrant disregard” of relevant Council resolutions, particularly 1695 (2006) and 1718 (2006). The resolution also demands that North Korea “not conduct any further nuclear test or any launch using ballistic missile technology.”

Security Council Resolution 1695, issued in July 2006, required U.N. member states to implement measures to prevent the procurement of missiles or missile related-items, materials, goods and technology from North Korea and the transfer of any financial resources in relation to North Korea's missile or WMD programs.

Among other things, Security Council Resolution 1718, issued in October 2006, required U.N. member states to prevent the transfer to North Korea of luxury goods, certain arms and related materiel, and items that could contribute to North Korea’s nuclear, ballistic missile, and other WMD programs. The resolution also called upon member states to prevent transfers to North Korea of technical training, advice, services or assistance related to the provision, manufacture, maintenance or use of the WMD programs.

Tennessee Professor Convicted of Export Control Violations Will be Sentenced on July 1st

2009-06-08T13:49:00.005-04:00

After numerous delays, the sentencing of convicted University of Tennessee professor Emeritus J. Reece Roth for violating the Arms Export Control Act (AECA) and the International Traffic in Arms Regulations (ITAR) has been rescheduled for Wednesday, July 1st at 10 a.m. before U.S. District Judge Tom Varlan in Knoxville, Tennessee.

In a sentencing hearing held on May 13, 2009, Judge Varlan heard testimony from the U.S. Government and defense counsel about the nature of the controlled technical data that was provided to foreign nationals by Professor Roth. During that hearing Judge Varlan said he would decide on a sentence after considering the evidence and hearing from Professor Roth in court.

U.S. Industry Files Three AD/CVD Cases on Chinese Steel Products in Past Two Weeks

2009-06-08T09:18:00.005-04:00

The number of antidumping and countervailing duty petitions being filed in the U.S. on steel products from China is on the rise.

On June 5, 2009, WP Industries, Inc., ITC Manufacturing, Inc., J&L Wire Cloth, Inc. and Nashville Wire Products Mfg. Co., Inc. filed antidumping and countervailing duty petitions with the U.S. Department of Commerce and U.S. International Trade Commission against imports of wire decking from China.

The proposed scope of the investigations on wire decking includes welded-wire rack decking for industrial and other commercial storage racks or pallet rack systems produced from carbon or alloy steel wire.

Wire decking is classified under Harmonized Tariff Schedule of the United States (HTSUS) subheadings 9403.90.8040, 9403.20.0020, 7217. 10, 7217.20, 7326.20, 7326.90.

These antidumping and countervailing duty petitions follow similar petitions filed on May 27 and 28 against prestressed concrete steel wire strand and steel grating, respectively, from China.

More antidumping and countervailing duty cases against other types of imported steel products from countries in addition to China are expected to be filed in the coming months.

Orbitz Launches Campaign to End U.S. Travel Ban to Cuba

2009-05-17T22:41:00.005-04:00

Online travel provider Orbitz recently launched the OpenCuba.org website to give travelers the opportunity to get directly involved in a grassroots effort to convince the Obama Administration and Congress to end the ban on travel to Cuba for those Americans who do not have immediate family members located on the island.

The site allows travelers to sign a petition calling for an end to the travel ban. Orbitz executives will formally present the petition to U.S. officials in Washington, DC later this year.

As an incentive to sign the online petition, every person who signs the petition will receive a $100 coupon redeemable on Orbitz against a vacation to Cuba valid if and when the U.S. Government removes the ban on travel to Cuba, and as soon as Orbitz is able to offer such travel on its website.

The Fort Myers News-Press today published a useful chronology of Cuba travel restrictions here.

Despite Embargo, Cuba Imports Daiquiri Mix from USA

2009-05-14T20:49:00.007-04:00

The AP published a story this evening entitled "Despite embargo, Cuba imports daiquiris from US" describing the types of products sold from the U.S. pursuant to the "agricultural waiver" of the U.S. embargo on Cuba. The story's lede states: "Jugs of daiquiri mix. Gourmet nuts. Rolls of newsprint. Not exactly humanitarian aid, but still among the items sold to Cuba under an agricultural waiver carved out of the decades-old U.S. trade embargo."

While the article notes that large quantities of grain, chicken and other food products are sold by U.S. companies to Cuba, the article also states that the "the waiver is so broad that it includes beer, soda and a host of inedible items such as beauty products, artwork, utility poles, kitchen cabinets and Alabama newsprint."

This article is not entirely correct when it implies that so-called "luxury" food or some of the inedible items are not eligible to be sold to Cuba under U.S. law. The article also contains some other inaccurate information regarding the types of products eligible for the so-called "agricultural waiver." In addition, as discussed below, any bartender would know that the article's headline is missing a key word.

First a little history. The so-called "agricultural waiver" of the Cuba embargo is not unique to the U.S. sanctions on Cuba and dates back to a January 5, 1999 announcement by President Clinton that the U.S. would initiate certain actions to enhance support of the Cuban people to promote transition to democracy. Under President Clinton's initiative, the Department of Commerce's Bureau of Export Administration (as it was then known) was authorized to approve, on a case-by-case basis, applications for exports of food and certain agricultural commodities for sale to independent non-governmental entities in Cuba.

President Clinton subsequently announced in April 1999 that the U.S. would lift sanctions on commercial sales of most agricultural commodities and food products to Iran, Libya and Sudan since such products should not be used as a foreign policy tool and that medical and agricultural products would not be included in future sanctions programs imposed by President.

During the next two years, there were efforts underway in Congress to codify the Clinton Administration's policy and to extend the policy to Cuba. For example, in June 1999, Representative George Nethercutt (R-WA) offered an amendment to the FY 2000 agriculture appropriations bill to “prohibit unilateral economic sanctions against a foreign government, lift current sanctions as they relate to agriculture and medical supplies, and provide for a national security waiver.” In August 1999, the ‘‘Food and Medicine for the World Act” was introduced in Senate as an amendment to the FY2000 agriculture appropriations bill. In March 2000, the Senate Foreign Relations Committee held a mark up of S. 1771, the ‘‘Food and Medicine for the World Act.’’ During the mark up, the name was changed to ‘‘Trade Sanctions Reform and Export Enhancement Act.’’

In October 28, 2008, the Trade Sanctions Reform and Export Enhancement Act language was included in the FY 2001 appropriations bill for Agriculture, Rural Development, Food and Drug Administration, and Related Programs (Title IX of H.R. 5426) and ultimately became known as the Trade Sanctions Reform and Export Enhancement Act of 2000, commonly known as TSRA (Pub. Law 106-387). TSRA codified the lifting of U.S. sanctions on commercial sales of food, agricultural commodities, medicines and medical devices to Iran, Libya, North Korea and Sudan, and extended this policy to Cuba (sales of medicines and medical devices to Cuba were previously authorized by the Cuban Democracy Act of 1992). TSRA did not permit such exports to go unregulated, however, and required that such exports be made to licenses or license exceptions.

TSRA defined “agricultural commodities” using the meaning given to that term in section 102 of the Agricultural Trade Act of 1978 (7 U.S.C. 5602). This definition includes a wide range of food commodities, feed, fish, shellfish and fish products, beer, wine and spirits, soft drinks, livestock, fiber, including cotton, wool, and other fibers, tobacco and tobacco products, wood and wood products (including lumber and utility poles), seeds, and reproductive materials such as fertilized eggs, embryos, and semen. It also includes certain fertilizers and organic fertilizers that are not otherwise controlled. A complete list of eligible items can be found in a list (pdf) published and maintained by the Department of Agriculture.

On July 12, 2001, BIS and OFAC published regulations implementing TSRA. The implementing regulations expanded the definition of "agricultural commodities" to include vitamins and minerals, food additives or supplements, and bottled drinking water. The regulations also clarified that the term "agricultural commodities" does not include furniture made from wood, clothing manufactured from plant or animal materials, agricultural equipment pesticides, insecticides, herbicides or cosmetics.

BIS implemented TSRA for exports and reexports of agricultural commodities to Cuba by creating License Exception Agricultural Commodities (AGR) to permit exports and reexports to Cuba. Under License Exception AGR, exporters must submit a notification to the Commerce Department regarding the proposed export. That notification is referred for vetting and review to the Departments of State and Defense. If the three agencies approve the notification, the exporter receives an authorization to ship the products to Cuba using license exception AGR.

According to the U.S. Department of Agriculture, the U.S. now supplies about 30 percent of Cuba’s food and agricultural import requirements.

Now, back to the article. First, the so-called "waiver" of the Cuban sanctions is not a true waiver. Rather, it is an exemption from U.S. sanctions that still requires advance notification and review by the U.S. Government to ensure that the products qualify under TSRA. Second, a similar exemption to the sanctions programs on Iran and Sudan (and previously Libya) has been in place since 1999 and has been codified since 2000. Third, the definition of the term "agricultural commodities" that Congress included in TSRA is broad and legally permits the commercial sales of daiquiri mix, nuts, newsprint, beer, utility poles and similar articles.

However, some of the items mentioned in the article may not be legally sold to Cuba. For example, cosmetics and other beauty products are not eligible to be sold to Cuba under TSRA, unless they are derived from plant material. Similarly, kitchen cabinets, even if made from wood, are ineligible to be exported to Cuba.

In addition, artwork is excluded from the scope of the U.S. embargo on Cuba and other sanctioned countries by the 1994 "Berman Amendment", which restrict the President's authority to regulate the importation or exportation of information or informational materials.

Finally, the article's headline of the article is not entirely accurate since an important word is omitted. The headline should read "Despite embargo, Cuba imports daiquiri mix from US", since the company mentioned in the article only exports the fruit mix for the drink and not the rum, the essential ingredient in a daiquiri.

All ITAR License Submissions Must be Made Using DTrade 2 Starting May 16, 2009

2009-05-14T20:07:00.004-04:00

U.S. exporters and importers of defense articles subject to the jurisdiction of the International Traffic in Arms Regulations (ITAR) are reminded that starting on May 16, 2009, all new license submissions must be made using the DTrade 2 system. The Directorate of Defense Trade Controls (DDTC) has stated that it has "identified and addressed" the issues encountered in the unintended live “beta test” that began last month.

While DTrade 1 will be used to process any cases submitted via that system, all new license submissions to the DTrade1 system will be Returned Without Action.

DDTC has issued a document containing information and tips on using the DTrade2 system to "ensure optimal performance and a better end-user experience."

No Sentence Yet for Convicted Professor Convicted of Export Control Violations

2009-05-13T21:08:00.007-04:00

The Knoxville News Sentinel reports that no decision was made today during the sentencing hearing of University of Tennessee professor Emeritus J. Reece Roth who was convicted in September of various export control violations.

The article states that U.S. District Judge Tom Varlan spent the afternoon hearing testimony from the prosecutors and defense about the nature of the controlled technical data that was provided to foreign nationals. The article notes that Judge Varlan "said he'll decide on a sentence after considering the evidence and letting Roth speak for himself if he wants to." The date of the next sentencing hearing is likely to be set tomorrow.

Today's sentencing of Atmospheric Glow Technologies Inc., who was alleged to be Dr. Roth's coconspirator and which plead guilty to violating U.S. export control laws, has been rescheduled to a future date.

10 Reasons Trade Compliance Programs Are Unnecessary

2009-05-12T19:13:00.005-04:00

Today's guest post is by Rick Miller, director of trade compliance recruitment at Tyler Search Consultants. Rick is a licensed customs broker and served as director of trade compliance for several large companies before joining Tyler Search. Rick can be reached at rmiller@tylersearch.com.

10 Reasons Trade Compliance Programs Are Unnecessary

Companies of all sizes in all industries struggle with trade compliance programs and the trade compliance role. There are many reasons why a compliance program is controversial. Here are the top 10 reasons why a trade compliance program is truly an unnecessary waste of resources:

1. Trade compliance is a cost center with no financial benefit to the company.
Except for avoiding audits, penalties and border delays. Except for avoiding duty under special programs such as the North American Free Trade Agreement, the Central America Free Trade Agreement, the Generalized System of Preferences. Except for tariff engineering, broker management, supplier management.

2. Classification is easy.
Anyone can do it - just pick the lowest duty rate and let Customs tell us if we're wrong. Until Customs catches you and sends you a bill for the duty (plus interest) for all entries made over the last five years. And don't forget the penalty that's sure to follow.

3. Shipments to and from Canada and Mexico are not really imports/exports.
Tell that to U.S. Customs. Canada and Mexico may be our biggest trading partners, but they have their own customs services to deal with. And, oh yeah, those folks at Commerce may require an export license.

4. Any product purchased in the U.S. is U.S.-origin.
The trade deficit must come from somewhere ... make sure you ask before you assume. Get it in writing and then ask again.

5. Any U.S.-origin product is NAFTA-eligible.
Unless you are audited, of course. The NAFTA rules of origin are complex and vary tremendously depending on the item. The value of U.S. components may or may not have anything to do with eligibility - even with 99 percent U.S. components. When importing under NAFTA, every compliance professional needs to verify the supplier's certificate of origin. Ask and ask again.

6. We have been doing business for years without worrying about Customs.
Ever notice that all the big penalty cases in the news are for companies that have been around for a while?

7. Our customs brokers and freight forwarders are responsible for compliance.
Importers of record for imports and U.S. principal parties of interest for exports are on the hook not the broker or forwarder - period! Ever look at the liability limitations on your broker and/or forwarder agreements?

8. We need to make exceptions for big customers or we'll lose the business.
So if I walk past the bank every day on my way to work and only rob it once, the judge will let me off the hook because I was good most of the time? Where is my duffle bag?

9. C-TPAT is not mandatory, so we aren't spending any money or dedicating any resources to it.
Sure it is not mandatory, but don't come crying to trade compliance when the borders tighten up and your non-C-TPAT shipments are delayed while all C-TPAT importers are given a priority.

10. Compliance slows deliveries.
Noncompliant importers will face many more inspections and delays, especially after Customs finds the first problem. Due to limited resources, Customs targets the bad guys. Even compliant importers face delays, but if Customs already knows your company has a trade compliance program, they are more likely to work with you.

While failure to maintain a viable trade compliance program may sound funny, border delays, inspections, audits and penalties are not. Trade compliance and supply chain security is more then a fact of business life today. Our world has changed. It's here to stay. Work closely with your trade compliance team. Top down support is the critical component for a successful trade compliance program.

Port of Chicago Updates Procedures for Imports and Exports of Defense Articles

2009-05-11T22:13:00.005-04:00

U.S. Customs and Border Protection at the Port of Chicago today issued an updated Pipeline (09-12) containing detailed and information on the port's procedures for processing imports and exports of defense articles subject to the jurisdiction of the International Traffic in Arms Regulations (ITAR), including hand-carried and cargo shipments.

The pipeline contains useful information on lodging permanent licenses, license decrementation, handling license amendments and the proper procedures for the use of various license exemptions set forth in the ITAR.

While exporters and importers should check with their local ports to verify the local procedures applicable to the import and export of ITAR shipments, the Port of Chicago's Pipeline contains a good summary of the relevant requirements.

Global Antidumping Database Confirms Increased Number of Trade Remedy Cases

2009-05-11T21:49:00.004-04:00

According to data compiled by the Global Antidumping Database, the first quarter of 2009 saw an 18.8% year increase in the number of antidumping, countervailing duty, global safeguard, and China-specific safeguards brought by WTO members compared to the same period in 2008. Not surprisingly, China's exporters were the dominant target of these investigations, accounting for more than 2/3 of the new cases.

The Global Antidumping Database is a project of Chad P. Bown, an Associate Professor in the Department of Economics and International Business School at Brandeis University and a Fellow in the Global Economy and Development Program at the Brookings Institution.

An analysis of the data prepared by Professor Bown shows that:

Compared to the same time period in 2008, the first quarter of 2009 also saw a 15.4% increase in the imposition of new import-restricting tariffs and quotas upon completion of earlier investigations initiated under these trade remedy laws, a trend that will almost certainly continue to increase throughout the remainder of 2009 and into 2010. While India imposed the most new import barriers under these laws during this time period, other G-20 members that did so include Argentina, Australia, Brazil, Canada, the EU and its member states, South Korea, Turkey and the United States. China's exporters are the dominant target for these newly imposed import restrictions facing new barriers in over 70% of the cases.

The complete and detailed data on antidumping investigations will be made available in early summer 2009 as version 5.0 of the Global Antidumping Database.

Tennessee Professor Convicted of Export Control Violations Will be Sentenced This Wednesday

2009-05-11T09:37:00.004-04:00

After numerous delays, the sentencing of University of Tennessee professor Emeritus J. Reece Roth for violating U.S. export control laws has been set for 10 a.m. on Wednesday, May 13, 2009 in federal court in Knoxville, Tennessee.

Atmospheric Glow Technologies Inc., who was alleged to be Dr. Roth's coconspirator and which plead guilty to violating U.S. export control laws, will be sentenced immediately before Dr. Roth.

By way of background, on September 3, 2008, professor Roth was convicted by a federal jury of one count of conspiring with Atmospheric Glow Technology to violate the Arms Export Control Act (AECA) and 15 counts of violating the AECA for exporting controlled technical data associated with an Air Force Research Laboratory contract to a Chinese national. Dr. Roth was also convicted of one count of wire fraud relating to defrauding the University of Tennessee of honest services by illegally exporting controlled technology associated with the Air Force contract.

Atmospheric Glow Technologies, a privately held plasma technology company located in Knoxville, Tennessee, plead guilty in August 2008 to 10 counts of a federal indictment charging the company with unlawfully exporting controlled technology to a Chinese citizen.

Dr. Roth faces a maximum penalty of five years in prison and a $250,000 fine for the conspiracy and fraud convictions. The 15 convictions for violating the AECA each carry a maximum penalty of 10 years in prison and a $1 million fine.

Atmospheric Glow Technologies faces a maximum criminal fine of $1,000,000 and a maximum term of five years of probation for each of the 10 counts.

This case has generated a great deal of interest and concern in the academic and research communities.

Census Bureau's Foreign Trade Division Names New Trade Ombudsman

2009-05-06T17:50:00.004-04:00

The U.S. Census Bureau's Foreign Trade Division has announced that Mr. Omari Wooden has been named as the Foreign Trade Division's Trade Ombudsman. Mr. Wooden replaces Jerry Greenwell, who retired in January 2009 after more than 36 years with Census.

Mr. Wooden joined the U.S. Census Bureau's Foreign Trade Division in October 1997. He had been the project manager for postdeparture reporting program in the Automated Export System (AES) Branch.

Mr. Wooden has been recognized numerous times for his outstanding work with the export trade community, including special recognition for his effort with AES Team for marketing and customer service. Most recently, Mr. Wooden received a team Silver Medal Award for Leadership from the Department of Commerce for his work on the revision and implementation of the new Foreign Trade Regulations.

Mr. Wooden received his BS degree in Mathematics from the University of Maryland at College Park. He also received a Master of Science in Management from the University of Maryland and a Master's Certificate in Project Management from the George Washington University School of Business.