International Trade Law News

Export Control Reform 2010: Transforming the Legal Architecture of Dual-Use and Defense Trade Controls

2010-02-09T07:30:00.136-05:00

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

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

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

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

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

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

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

Sandler, Travis & Rosenberg Advisory: Finding a Willing Buyer Only One Part of the Export Process

2010-02-08T08:33:00.003-05:00

Finding a Willing Buyer Only One Part of the Export Process

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

U.K. Company Fined $17 Million for Exporting Boeing 747s to Iran

2010-02-05T15:10:00.004-05:00

Balli Aviation Ltd., a subsidiary of the United Kingdom-based Balli Group PLC (collectively "Balli"), pleaded guilty today in the U.S. District Court for the District of Columbia to a two-count criminal information in connection with its illegal export of commercial Boeing 747 aircraft from the United States to Iran.

In a related civil enforcement case, Balli entered into a joint settlement agreement with the Treasury Department's Office of Foreign Assets Control (OFAC) and the Commerce Department's Bureau of Industry and Security (BIS) to settle alleged violations of U.S. export controls and sanctions laws..

Under the criminal plea agreement, Balli agreed to pay a $2 million criminal fine and be placed on corporate probation for five years. In the civil settlement with BIS and OFAC, Balli agreed to pay a $15 million civil penalty (payable in five installments over two years) to settle alleged violations of the Iranian Transactions Regulations and Export Adminstration Regulations. The terms of the civil settlement agreement provide that $2 million of Balli's civil penalty will be suspended and waived if Balli remains in compliance with U.S. export control laws.

According to count one of the criminal information, from 2005 through 2008, Balli conspired to export three Boeing 747 aircraft from the United States to Iran via a subsidiary without first having obtained the required export license from BIS or authorization from OFAC, in violation of the EAR and Iranian Transactions Regulations. The criminal information also states that the Boeing 747 was purchased with financing obtained from Mahan Airlines, the first private airline in Iran. (Mahan Airlines prominently features the Boeing 747 on its home page).

Count two of the information states that Balli violated a Temporary Denial Order (TDO) issued by BIS in March 2008 that prohibited the company from conducting any transaction involving any item subject to the EAR. The Justice Department alleged Balli subsequently violated the TDO by carrying on negotiations with others concerning buying, receiving, using, selling and delivering U.S.-origin aircraft.

In the civil case, Balli was charged with conspiracy to violate the EAR by working with the Iranian airline to export the U.S.-origin aircraft to Iran. BIS also charged Balli with one count of acting contrary to the terms of a TDO by attempting to sell and export three additional 747s to Iran.

In addition to the civil monetary penalties, BIS suspended Balli's export privileges for five years (as noted, Balli was previously subject to a BIS TDO that was later lifted), although BIS agreed to suspend the denial order as long as the penalty is timely paid and the company remains compliant with the EAR. Mahan Airways remains on BIS's Denied Persons List.

In addition, the civil settlement agreement requires Balli to hire an unrelated third-party consultant with expertise in U.S. export control laws and sanctions regulations to conduct audits of Balli's U.S. export control and sanctions compliance on an annual basis during the next five years and to submit the audit results to BIS and OFAC.

The OFAC and BIS joint settlement agreement, which contain additional details on Balli's alleged activities, can be found here (pdf).

SIDEBAR: On a somewhat related note, last month marked the 40th anniversary of the first commercial flight of the Boeing 747 from New York to London by its launch customer Pan American World Airways. The Flightglobal website has put together a special section marking the 40th anniversary of the Boeing 747 here.

Next NCITD Meeting to Feature Speakers Discussing Export Control Reform and ITAR Issues

2010-02-05T10:46:00.001-05:00

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

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

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

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.

Two BIS Nominees Approved by Senate Banking Committee

2010-02-05T09:36:00.000-05:00

Yesterday the Senate Committee on Banking, Housing, and Urban Affairs approved the nominations of Kevin Wolf to serve as Assistant Secretary of Commerce for Export Administration and David Mills to be Assistant Secretary of Commerce for Export Enforcement.

The Senate Banking Committee held a hearing to consider these and other Obama Administration nominees on January 21, 2010. The webcast of the hearing can be viewed here.

On November 5, 2009, the Senate Banking Committee held a hearing on 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. However, the Senate has not yet held a vote on Mr. Hirschhorn's nomination or the nominations of several other nominees.

Taiwan National Arrested on Charges of Exporting Dual-Use Products From United States to Iran

2010-02-04T17:18:00.001-05:00

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

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

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

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

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

2010 Quadrennial Defense Review Highlights Need to Reform U.S. Export Control System

2010-02-04T12:15:00.000-05:00

On February 1st, Secretary of Defense Robert Gates delivered the 2010 Quadrennial Defense Review (QDR) report to Congress. The QDR, which was mandated by Congress in the National Defense Authorization Act for Fiscal Year 1997 (10 USC 118(a)), is intended to be a "comprehensive examination of the national defense strategy, force structure, force modernization plans, infrastructure, budget plan, and other elements of the defense program and policies of the U.S."

In addition to discussing U.S. defense capabilities, strategy and objectives, the 2010 report focused on reforming the way that that the Pentagon does business and included an extensive discussion on the need to reform the U.S. export control system. While export control reform was mentioned in previous QDRs, the 2010 report contained an extensive discussion of the need to reform U.S. export control laws and called the current system "a relic of the Cold War" and noted "system itself poses a potential national security risk."

The export control section of the 2010 QDR is reprinted below:

Today’s export control system is a relic of the Cold War and must be adapted to address current threats. The current system impedes cooperation, technology sharing, and interoperability with allies and partners. It does not allow for adequate enforcement mechanisms to detect export violations, or penalties to deter such abuses. Moreover, our overly complicated system results in significant interagency delays that hinder U.S. industrial competitiveness and cooperation with allies.

The United States has made continuous incremental improvements to its export control system, particularly in adding controls against the proliferation of weapons of mass destruction and their means of delivery. The United States has also been a leader in international export controls, creating and improving the multilateral regimes made up of U.S. allies and trading partners that control what is exported to countries of concern to the United States. The regimes also have
become a global control standard via United Nations Security Council resolutions. They help ensure that key technologies and items available in numerous countries are controlled in order to prevent their acquisition by actors who would use them contrary to U.S. and allied interests.

However, the current system is largely out-dated. It was designed when the U.S. economy was largely self-sufficient in developing technologies and when we controlled the manufacture of items from these technologies for national security reasons. Much of the system protected an extensive list of unique technologies and items that, if used in the development or production of weapons by the former Soviet Union, would pose a national security threat to the United States.

The global economy has changed, with many countries now possessing advanced research, development, and manufacturing capabilities. Moreover, many advanced technologies are no longer predominantly developed for military applications with eventual transition to commercial uses, but follow the exact opposite course. Yet, in the name of controlling the technologies used in the production of advanced conventional weapons, our system continues to place checks on many that are widely available and remains designed to control such items as if Cold War economic and military-to-commercial models continued to apply.

The U.S. export system itself poses a potential national security risk. Its structure is overly complicated, contains too many redundancies, and tries to protect too much. Today’s export control system encourages foreign customers to seek foreign suppliers and U.S. companies to seek foreign partners not subject to U.S. export controls. Furthermore, the U.S. government is not adequately focused on protecting those key technologies and items that should be protected and ensuring that potential adversaries do not obtain technical data crucial for the production of sophisticated weapons systems.

These deficiencies can be solved only through fundamental reform. The President has therefore directed a comprehensive review tasked with identifying reforms to enhance U.S. national security, foreign policy, and economic security interests. Reform efforts must reflect an inherently interagency process as current export control authorities rest with other departments. Similarly, meaningful reforms will not be possible without congressional involvement throughout the process. The Department of Defense has a vital stake in fundamental reform of export controls, and will work with our interagency partners and Congress to ensure that a new system fully addresses the threats that the United States will face in the future.

OFAC Publishes Belarus Sanctions Regulations

2010-02-04T10:04:00.000-05:00

The Treasury Department's Office of Foreign Assets Control (OFAC) published in yesterday's Federal Register the Belarus Sanctions Regulations (31 C.F.R. Part 548) to implement Executive Order 13405 issued by President Bush in June 2006 that authorized the blocking of assets of individuals and entities determined to be responsible for undermining democratic processes or institutions in Belarus or engaging in political repression or public corruption.

The Belarus Sanctions Regulations are targeted only at certain persons and entities who have been specifically designated by the U.S. and do not prohibit trade or the provision of banking or other financial services involving Belarus, unless the transaction or service involves a person whose property and interests in property have been blocked.

The names of persons and entities in Belarus and elsewhere whose property and interests in property are blocked pursuant to EO 13405 are included on OFAC's Specially Designated Nationals and Blocked Persons List (‘‘SDN’’ list) with the identifier "[BELARUS]." Included on the SDN List is Belneftekhim, the largest enterprise in Belarus and was previously the largest exporter of Belarusian products to the United States.

President Obama Advises Congress That North Korea Will not be Redesignated as State Sponsor of Terrorism

2010-02-03T23:51:00.001-05:00

In a notification required by the National Defense Authorization Act for Fiscal Year 2010, President Obama today sent a letter to Congress stating that the Obama Administraition will not reinstate North Korea as a state sponsor of terrorism since it "does not meet the the statutory criteria to again be designated as a state sponsor of terrorism."

Former President George W. Bush announced in June 2008 that North Korea would be removed as a state sponsor of terrorism and in October 2008 Secretary of State Rice signed an order rescinding the designation of North Korea as a state sponsor of terrorism.

Currently, Cuba, Iran, Syria and Sudan are designated as state sponsors of terrorism by the U.S.

Although North Korea is no longer designated as a state sponsor of terrorism is rescinded, North Korea is still included in Country Group E:1 and an export license is required to export or reexport any item subject to the EAR to North Korea, except food and medicines classified as EAR99. While many products are subject to the policy of denial of export licenses, certain humanitarian and other products are subject to a licensing policy of approval.

North Korea also remains subject to a U.S. arms embargo and is subject to a variety of OFAC sanctions, including a prohibition on the import of North Korean products.

DDTC Imposes $1 Million Penalty on German Company and U.S. Affiliate for ITAR Violations

2010-02-03T15:12:00.002-05:00

The State Department's Directorate of Defense Trade Controls (DDTC) announced today that it entered into a consent agreement this week with Kaltenkirchen, Germany-based Interturbine Aviation Logistics GmbH, and its Grand Prairie Texas branch office, Interturbine Aviation Logistics GmbH, LLC, to resolve violations of the Arms Export Control Act (AECA) and International Traffic in Arms Regulations (ITAR) allegedly committed in 2004. The Interturbine companies are distributors of a wide range of products for the international commercial aviation sector.

This case marks the first penalty action taken by DDTC in 2010. It is widely expected that DDTC this year will conclude many more than the consent agreements that were finalized in 2009.

According to the Proposed Charging Letter, DDTC alleged that Interturbine committed seven violations of the ITAR associated with the unlicensed export to Germany of 400 kilograms of a heat resistant protective coating classified in USML Category IV(f) that can be used on missiles to protect high heat areas. The Proposed Charging Letter notes that even though the product was indicated in the company's inventory system as export controlled, some senior members of the company in Germany bypassed the company's normal procedures to order the product from its U.S. affiliate for shipment to a customer in Germany. After the product was shipped from Texas to Germany as NLR, the German customer later contacted Interturbine about the lack of an export license, suspended payment and quarantined the shipment. The material was subsequently returned to the U.S. and seized by U.S. Customs and Border Protection. A criminal investigation was then initiated by U.S. Immigration and Customs Enforcement.

Although the criminal case was later dropped as a result of the company's remedial measures, DDTC charged the company with one count of exporting the ITAR-controlled material to Germany without the proper license, one count of misrepresentation and omission of facts, two counts of willfully causing an unauthorized export, one count of exporting a defense article without being registered with DDTC, one count of failing to obtain a non-transfer and use certificate (DS-83) and one count of an unauthorized retransfer.

Under the consent agreement, Interturbine agreed to pay a civil penalty of $1,000,000, of which $900,000 will be suspended. DDTC agreed to suspend $500,000 of the penalty on the condition that Interturbine has already applied that amount to self-initiated, pre-consent agreement remedial compliance measures. In addition, $400,000 will be suspended on the condition that Interturbine maintains its self-initiated exclusion from all ITAR regulated activities.

If within the two-year term of this Consent Agreement Interturbine decides to become involved in ITAR regulated activities, Interturbine agreed to use this $400,000 for additional remedial compliance measures agreed to by the Department. Interturbine will also be subject to an independent audit to ensure that its company-wide Automated Export Control system prevents its involvement in all ITAR regulated activities and agreed to on-site reviews by DDTC.

According to DDTC, Interturbine acknowledged the seriousness of its conduct and cooperated with the investigation, expressed regret for these activities, and took appropriate steps to improve its export compliance program, which is now prominently featured on the company's website.

DDTC also determined that an administrative debarment of Interturbine is not appropriate at this time since the company has already begun implementing the remedial compliance actions specified in this consent agreement.

The Consent Agreement, Proposed Charging Letter and Order in this case can be found here.

Senate Passes Comprehensive Iran Sanctions, Accountability and Divestment Act

2010-01-28T23:10:00.002-05:00

In a surprise move, the Senate this evening passed the Comprehensive Iran Sanctions, Accountability, and Divestment Act (S. 2799) on a voice vote after very little debate.

The vote occurred only a day after Senators John McCain (R-AZ), Evan Bayh (D-IN), Jon Kyl (R-AZ), Joe Lieberman (I-CT), Chuck Schumer (D-NY), Robert Casey (D-PA), Johnny Isakson (R-GA), Ben Cardin (D-MD), and David Vitter (R-LA) sent a letter to President Obama warning that his own year-end deadline for diplomacy with Iran expired and urging the President to make use of existing authorities under U.S. law to pursue "parallel and complementary" measures to increase pressure against Iran.

The Senate bill must now be reconciled with the Iran Refined Petroleum Sanctions Act of 2009 (H.R. 2194), which passed the House by a wide margin in December.

While the bills include many similar concepts, the Senate bill contains several additional provisions, including some export control-related provisions, that are not included in the House bill that will have to be reconciled in a conference committee. In addition, Senator McCain reportedly wants to amend the bill to impose sanctions targeted at Iranian Government officials who have committed human rights abuses or acts of violence against civilians that engage in peaceful political activity.

As we previously reported, both versions of the Iran sanctions bills have been criticized in a variety of circles, including the U.S. business community, groups that oppose the imposition of sanctions that would adversely impact average Iranians and would hamper the President's ability to conduct foreign affairs by requiring the imposition of mandatory additional sanctions. In addition, the bills have been criticized for their extraterritorial application of sanctions.

In addition to the gasoline and refinery equipment sales provisions in the House bill, S. 2799 would, among other things:

1. Restore the prohibitions on imports of carpets and certain food products from Iran that were lifted in 2000;

2. Would make U.S. parent companies liable for the acts of their non-U.S. subsidiaries that engage in transactions with Iran;

3. Would prohibit the U.S. Government from entering into contracting with firms that sell equipment to Iran which can be used to censor or monitor Internet usage in Iran;

4. Require the Director of National Intelligence to submit a report to the Secretary of Commerce, the Secretary of State, the Secretary of the Treasury and the appropriate congressional committees that identifies all countries determined to be of concern with respect to transshipment, reexportation, or diversion of items subject to the provisions of the Export Administration Regulations to Iran.

5. Authorizes the imposition of a new licensing requirement for exports of certain products to countries designated as “Destinations of Possible Diversion Concern.”

6. Authorizes state or local governments to divest from companies that engage in certain enery sector investments in Iran.

U.S. Business Groups Urge Obama Administration to Oppose Legislation to Broaden Scope of Iran Sanctions

2010-01-26T21:44:00.001-05:00

Several leading U.S. business organizations and associations sent a letter today to National Security Advisor James Jones and National Economic Council Director Lawrence Summers urging the Obama Administration to oppose the Iran sanctions bills currently pending in Congress.

The bills, the Iran Refined Petroleum Sanctions Act of 2009 (H.R. 2194), which passed the House in December by a wide margin, and the Comprehensive Iran Sanctions, Accountability, and Divestment Act of 2009 (S. 2799), which was approved by the Senate Banking Committee and placed on the Senate calendar, would expand the scope of current U.S. sanctions on Iran in a variety of ways, including making a number of changes to the Iran Sanctions Act, requiring certain sanctions to be imposed against non-U.S. companies that supply refined petroleum products to Iran and broadening the circumstances in which a U.S. company
could be penalized when one of its non-U.S. subsidiaries engages in business with Iran.

The letter states:

While we agree that preventing Iran from developing the capability to produce nuclear weapons is an urgent U.S. national security objective, the unilateral, extraterritorial, and overly broad approach of these bills would undercut rather than advance this critical objective.

The proposed sanctions would incite economic, diplomatic, and legal conflicts with U.S. allies and could frustrate joint action against Iran. They could prohibit any U.S. company from transacting routine business with critical partners from around the globe even if these transactions have no bearing on business with Iran. These provisions could encompass a very large portion of the global trade community with consequences that in our view have not been adequately assessed.

The proposals could have a large impact on the U.S. Export-Import Bank, precluding it from partnering with counterpart agencies abroad to co-finance U.S. exports that have no relation to Iran’s energy sector. A significant portion of the bank’s portfolio could be impacted, compromising its ability to boost U.S. exports.

The letter concludes by requesting the Obama Administration to "weigh in vigorously with Congress to eliminate these highly problematic proposals."

The letter was signed by the National Foreign Trade Council, the U.S. Chamber of Commerce, USA*Engage, the Business Roundtable, the Coalition for Employment through Exports, the Emergency Committee for American Trade, the National Association of Manufacturers, the Organization for International Investment and the U.S. Council for International Business.

The full text of the letter can be found here.

* * *

In other Iran sanctions-related news, German engineering firm Siemens announced at its annual shareholder meeting today that starting in mid-2010 the company would no longer accept any new orders from Iran.

In addition, Bloomberg today published a detailed story today entitled "Dubai Helps Iran Evade Sanctions as Smugglers Ignore U.S. Laws," describing how Dubai is used as a conduit to supply U.S. goods to Iran.

Senate Holds Confirmation Hearing on BIS Officials

2010-01-21T18:51:00.001-05:00

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

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

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

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

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

Senate to Hold Hearing on Nominations of Senior BIS Officials

2010-01-20T18:20:00.000-05:00

The Senate Committee on Banking, Housing, and Urban Affairs will hold a hearing tomorrow, January 21, 2009, on the confirmation of several persons nominated to serve in the Obama Administation, including two senior officials at the Commerce Department's Bureau of Industry and Security (BIS).

The Committee will consider the nominations of Kevin Wolf to serve as Assistant Secretary of Commerce for Export Administration and David Mills to serve as Assistant Secretary of Commerce for Export Enforcement, both of whom were nominated in December.

On November 5, 2009, the Committee held a hearing today on the nomination of Eric Hirschhorn to serve as Under Secretary of Commerce for Export Administration, the most senior position at BIS. While Mr. Hirschhorn's nomination was reported to the full Senate for inclusion on the Senate calendar on December 17, 2009, the Senate's vote was delayed due to the debate on health care and the Christmas recess.

Incoterms Update: Incoterms 2010 Likely to Take Effect in January 2011

2010-01-20T16:25:00.008-05:00

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

After receiving a large number of comments from the ICC National Committees, the Incoterms Drafting Group recently completed a third draft of the revised version of Incoterms. After comments on the third draft are submitted by the ICC National Committees, the Drafting Group will meet in March 2010 to prepare a fourth version of the draft revisions to Incoterms.

At this time, it remains the ICC’s goal to release the final version of Incoterms in the fall of 2010 with an effective date of January 1, 2011 (this date is subject to change).

In a change from previous reports, it appears that the new version of Incoterms will be entitled “Incoterms 2010”, reflecting the release date rather than the date they come into force (this is the third name change during this revision). In addition to the information provided in previous updates, Mr. Reynolds has provided the following information on items that may be contained in the final version of Incoterms 2010:

There will be clear differentiation between the omnimodal terms and those intended only for marine use.
Cargo security will be covered to the extent possible with differing regulatory systems.
The preambles to each Incoterm will be expanded to better inform users of its intended use.
A new term will be included to facilitate use in domestic transactions and those within Customs Unions where no export or import clearance obligations exist (as previously noted there are likely to be fewer than the 13 Incoterms in Incoterms 2000).

According to Mr. Reynolds, the "net result will be a more user-friendly set of terms reflecting up-to-date trade practice." “The changes are substantial, but the benefits are well worth the effort to learn,” he said.

In order to prepare for 2011 implementation of the revised Incoterms, the United States Council for International Business will be conducting training programs starting in the fall of 2010.

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 Incoterms for Americans, a useful publication for U.S. exporters and importers, which will be revised following the publication of Incoterms 2010.

Export Control Practitioners Group Issues U.S. Export Control Reform Recommendations

2010-01-19T18:40:00.002-05:00

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

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

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

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

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

Several members of the Group are a part of the business community’s Coalition for Security and Competitiveness, which released its recommendations for reform last week. While the recommendations issued by the two groups differ in terms of emphasis, the key message is the same: the U.S. business community is united in the effort to work with the Administration to effectuate reform of outdated U.S. export controls.

The associations that signed the Export Controls Practitioners Group letter included the following:

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

Twenty Two Executives and Employees of Military and Law Enforcement Products Companies Indicted in Alleged Foreign Bribery Scheme

2010-01-19T15:53:00.005-05:00

The Justice Department announced today that 22 executives and employees of companies in the military and law enforcement products industry have been indicted and arrested in the largest single investigation and prosecution against individuals in the history of the enforcement of the U.S. Foreign Corrupt Practices Act (FCPA).

Twenty one of the defendants were arrested in Las Vegas yesterday and one defendant was arrested in Miami. In addition, approximately 150 FBI agents executed 14 search warrants in locations across the U.S. In addition, the United Kingdom’s City of London Police executed seven search warrants in connection with their own investigations into companies involved in the foreign bribery conduct that formed the basis for the indictments.

The defendants arrested in Las Vegas were there because they were attending the annual Shooting, Hunting, Outdoor Trade Show and Conference, known as the SHOT Show, the largest trade show of its kind.

According to the Justice Department, the indictments allege that the defendants engaged in a scheme to pay bribes to the minister of defense for a country in Africa. In fact, the scheme was part of the undercover operation, with no actual involvement from any minister of defense. As part of the undercover operation, the defendants allegedly agreed to pay a 20 percent "commission" to a sales agent who the defendants believed represented the minister of defense for a country in Africa in order to win a portion of a $15 million deal to outfit the country’s presidential guard. In reality, the "sales agent" was an undercover FBI agent.

The defendants were told that half of that "commission" would be paid directly to the minister of defense. The defendants allegedly agreed to create two price quotations in connection with the deals, with one quote representing the true cost of the goods and the second quote representing the true cost, plus the 20 percent "commission." The defendants also allegedly agreed to engage in a small "test" deal to show the minister of defense that he would personally receive the 10 percent bribe.

Each of the indictments allege that the defendants conspired to violate the FCPA, conspired to engage in money laundering, and engaged in substantive violations of the FCPA. The indictments also seek criminal forfeiture of the defendants’ ill gotten gains.

The maximum prison sentence for the conspiracy count and for each FCPA count is five years. The maximum sentence for the money laundering conspiracy charge is 20 years in prison.

A list of the persons named in the indictments are included in the press release.

International Trade Law News Twitter Updates for 1/8/10 to 1/16/10

2010-01-16T09:09:00.000-05:00

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Philadelphia Area Chemical Engineer Sentenced to Four Years in Prison for Violating Iran Sanctions

2010-01-12T14:20:00.001-05:00

Philly.com reports that Dr. Ali Amirnazmi, a Stanford trained chemical engineer and founder of Exton, Pennsylvania-based TranTech Consultants Inc, who was convicted in February 2009 of violating the U.S. embargo on Iran, was sentenced today to four years in prison and five years of supervised release. He was also ordered to pay restitution to a bank of $17,277, forfeit $81,277 and continue mental-health treatment.

Dr. Amirnazmi was convicted by a federal jury of one count of conspiracy to violate the International Emergency Economic Powers Act (IEEPA), three counts of violating IEEPA, three counts of making false statements to federal officials and three counts of bank fraud.

The Justice Department alleged that Amirnazmi, a citizen of the U.S. and Iran, participated in illegal business transactions with Iran between 1996 and 2008. Amirnazmi also allegedly engaged in investments with companies located in Iran, including a chemical company controlled in whole or in part by the government of Iran.

The jury convicted Amirnazmi of making false statements to the Treasury Department's Office of Foreign Assets Control (OFAC), the FBI and the Internal Revenue Service (IRS) about business deals with Iran in an attempt to cover up that illegal activity. Amirnazmi also allegedly submitted false tax returns to several banks in order to secure loans for which he would not have qualified.

Coalition for Security and Competitiveness Releases Detailed Export Control Recommendations

2010-01-12T12:12:00.002-05:00

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

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

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

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

In order to accomplish these reforms, the CSC indicated that these goals can best be accomplished in the near term by structuring export control reform around the following five themes:

1. Draw clear lines of agency responsibility.

2. Control lists should be revised and reduced.

3. Complete the transition to an end user-based system.

4. Enhance cooperation with allies.

5. Enhance cooperation with the business community.

The CSC also provided detailed recommendations in the following 11 areas applicable to the dual-use (EAR) and munitions control (ITAR/USML) control systems that can be taken within the existing legislative authorizations and would not require further Congressional action:

1. Establish Clear Lines of Responsibility in the Commodity Jurisdiction Process

2. Promote Effective Compliance and Enforcement

3. Improve Outreach to and Resources for U.S. industry, particularly for Small and Medium-sized Enterprises

4. Promote Greater Multilateral Cooperation with Allies and Partners

5. Improve the Licensing System and Increase Transparency

6. Systematic Review of the Commerce Control List (CCL) with a Greater Focus on Foreign Availability

7. Encryption

8. Focus and Improve the U.S. Munitions List

9. Improve Export Licensing Caseload Management

10. Provide for DoD Acquisition, technology and Logistics Role in Export Controls

11. Developing Transparent and Disciplined Processes for the Department of Defense’s Disclosure Decisions

The CSC's letter to the President noted that, “our principles and recommendations would create a 21st century export control regime that protects critical technologies, safeguards our national security, spurs innovation and promotes economic growth.”

The CSC is comprised of the following member associations: the Aerospace Industries Association, the Association of American Exporters and Importers, the AMT - Association for Manufacturing Technology, The Business Roundtable, the Coalition for Employment Through Exports, the General Aviation Manufacturers Association, the Industrial Fastener Institute, the Information Technology Industry Council, the National Association of Manufacturers, the National Defense Industrial Association, the National Foreign Trade Council, the Satellite Industry Association, the Space Enterprise Council, The Space Foundation, TechAmerica and the U.S. Chamber of Commerce.

The CSC's letter to President Obama can be found here.

The CSC's specific export control reform recommendations can be found here.

Management Consultant Arrested and Charged With Violating Iran Embargo

2010-01-08T12:03:00.001-05:00

Mahmoud Reza Banki, a management consultant formerly employed by McKinsey and Co., was arrested yesterday by Immigration and Customs Enforcement agents following an indictment charging him with violating the U.S. sanctions on Iran and operating an unlicensed money transfer business between the U.S. and Iran.

According to the indictment, from January 2006 to September 2009, Banki, who is 33 years old and a U.S. citizen, allegedly provided money transmitting services to residents of Iran by operating a "hawala," which is a type of informal value-transfer system in which money does not physically cross international boundaries through the banking system. In the hawala system, funds are transferred by customers to a hawala operator, or "hawaladar," in one country, and corresponding funds, less any fees, are disbursed to recipients in another country by hawaladar associates on that end.

Banki allegedly received wire transfers in a personal bank account he maintained at Bank of America in Manhattan totaling about $4.7 million from companies and individuals located in Saudi Arabia, Kuwait, Latvia, Slovenia, Russia, Sweden, the Philippines, the United States, and other countries. Banki apparently did not know the wire originators personally. He allegedly received the funds with the understanding that an equivalent amount of Iranian currency would, in turn, be disbursed to intended recipients residing in Iran. Banki informed an Iran-based co-conspirator when funds had been received, and the co-conspirator then disbursed the funds in Iran, less any fees.

Banki allegedly used specific funds transferred into his Bank of America account to make joint investments in the United States with the Iran-based co-conspirator. Among other things, Banki used the funds to purchase a $2.4 million Manhattan condominium; to invest in securities for his own benefit and that of the co-conspirator; and to make payments on his credit card accounts, including about $55,000 in one month alone in the summer of 2007.

Banki is charged with violating the International Emergency Economic Powers Act (IEEPA), together with Executive Orders and U.S. Department of Treasury regulations; conducting an unlicensed money transmitting business; and conspiracy to commit those crimes. If convicted, Banki faces a maximum sentence of five years in prison on each of the conspiracy and unlicensed money transmitting counts and 20 years in prison on the IEEPA violation count.

This case is being prosecuted by the Complex Frauds and Asset Forfeiture Units of the U.S. Attorney's Office, Southern District of New York.

DDTC Appoints Lisa Studtmann as Director of Office of Defense Trade Controls Compliance

2010-01-08T11:28:00.000-05:00

The State Department's Directorate of Defense Trade Controls (DDTC) has confirmed that Lisa Studtmann, Esq. is now the Director of the Office of Defense Trade Controls Compliance, succeeding former Director David Trimble and Acting Director Daniel Buzby.

Ms. Studtmann began work as a compliance specialist at DDTC in July 2007 and has served as a senior compliance specialist at DDTC's Enforcement Division since August 2008. Prior to joining DDTC, Ms. Studtmann worked as an attorney for approximately ten years, both in private practice and in the General Counsel’s office of the Central Intelligence Agency. She has a J.D. and an M.A. in Clinical Psychology from the University of Tulsa.

BIS Suspends Authorization VEU Eligibility for Certain Companies in China and India

2009-12-23T07:38:00.000-05:00

The Bureau of Industry and Security (BIS) published a notice in today's Federal Register amending the Export Administration Regulations (EAR) to suspend the Authorization Validated End-User (VEU) status of Aviza Technology China and GE Fanuc Systems PVT Ltd. in India.

BIS is suspending the availability of Authorization VEU for exports, reexports, and in-country transfers to these two facilities due to material changes at the companies and not due to any prohibited activities by the two companies.

Senate Passes Bill Extending GSP and ATPA Programs; Bill to be Sent to President for Signature

2009-12-22T23:47:00.000-05:00

This evening the U.S. Senate approved by unanimous consent H.R. 4284, legislation that will extend the Generalized System of Preferences (GSP) and Andean Trade Preference Act (ATPA) duty preference programs until December 31, 2010.

H.R. 4284 will now be sent to President Obama for his signature and the GSP/ATPA extensions will be enacted into law.

This is good news for U.S. importers of products eligible for GSP and ATPA benefits since the products will continue to enter duty free without interruption.

Tthe U.S. Congress is expected to consider changes to the GSP and other trade preferences programs in 2010.

Seasons Greetings From International Trade Law News

2009-12-22T12:08:00.000-05:00

Season's Greetings and Happy New Year to all of our loyal readers from around the world. See you in 2010.

And in the spirit of the holiday season we have reprinted below Tyler Brown's A Harmonized (Tariff) Christmas.

—Doug Jacobson

A Harmonized (Tariff) Christmas

By Tyler Brown, Sr. Export Technical Representative, Office of Export Compliance, Jet Propulsion Laboratory (reprinted with permission)

For this analysis, we assumed that the Lords, Ladies, maids, and entertainers are not performing defense services. Articles and material would appear to all be EAR99. Dealing only with the associated hardware, I propose the following HTS designations:

Twelve drummers drumming: 9206.00.20 00 - Percussion musical instruments (for example, drums, xylophones, cymbals, castanets, maracas): Drums
Eleven pipers piping: 9205.90.20.60 - Woodwind instruments: Flutes and piccolos (except bamboo)
Ten lords a-leaping: Since there are no hereditary Lords in the U.S., the Country of Origin of the Lords would need to be specified, and the leaping activity subjected to an analysis as to whether it constitutes a defense service.
Nine ladies dancing: See above.
Eight maids a-milking: Given a modern interpretation: 8434.10.00.00 - Milking machines and dairy machinery, and parts thereof: Milking machines
Seven swans a-swimming: 0106.39.00.00 - Birds: Other
Six geese a-laying: (Assume the geese weigh over 185 gms.) 0105.99.00.00 - Live poultry of the following kinds: Chickens, ducks, geese, turkeys and guineas: Other, Other
Five golden rings: Note: 9. For the purposes of heading 7113, the expression "articles of jewelry" means: (a) Any small objects of personal adornment (for example, rings, bracelets, necklaces, broaches, earnings, watch chains, fobs, pendants, tie pins, cuff links, dress studs, religious or other medals and insignia); 7113.19.50.00 - Of other precious metal, whether or not plated or clad with precious metal: Other, other.
Four calling birds: Today when people sing that song they usually sing about calling birds. But actually many years ago they sang the song's old English words. They sang about colly, or collie, birds. Colly or collie means black, according to the British Broadcasting Corporation. It comes from an old word for coal. Wikipedia pins down colly bird even more: to the European blackbird. Common in parks and cities in Europe, it looks like a dusky version of its cousin, the American robin. Both belong to the thrush family. Like all thrushes, they sing (or call) beautifully. 0106.39.00.00 - Birds: Other
Three French hens: Live poultry of the following kinds: Chickens, ducks, geese, turkeys and guineas: Chickens, Weighing not more than 185 g: 0105.11.00; Breeding stock, whether or not purebred: 10 Layer-type (egg-type), 20 Broiler-type (meat-type), 40 Other; Chickens, Weighing more than 185 g: 0105.94.00.00 (We actually spent some time worrying about whether the "French Hens" might be a re-export...)
Two turtle doves: 0106.39.00.00 - Birds: Other
A partridge in a pear tree: 0106.39.00.00 - Birds: Other; 0602.20.00.00 - Trees, shrubs and bushes, grafted or not, of kinds which bear edible fruit or nuts.

And remember, any Christmas ornamentation falls under 9505.10: Festive, carnival, or other entertainment articles, including magic tricks and practical joke articles; parts and accessories thereof: Articles for Christmas festivities and parts and accessories thereof.