Export Control Newsletter

Aerospace Export Control Newsletter
July 1999

Dear Reader:

This is a monthly email newsletter that focuses on developments in U.S. export and trade control regulations, laws, policies and procedures that effect the aerospace industry and related industries. Generally this newsletter will focus on developments over the past month and important near-term future possible developments.

We try to keep this newsletter brief, usually 5 - 7 pages. Sometimes we make exceptions such as last month when we included a comprehensive special report "Analysis of the Impact of US Export and Trade Controls on Foreign Subsidiaries of US Companies." I really liked that report because it boiled down US rules to a comprehensive 6-7 page summary. And we haven't even copyrighted anything so our readers can cut and paste from the email newsletter for their own purposes. And of course we try to insert a bit of humor occassionally.

We would be happy for you to sign up for a 100% free subscription. Have a good summer, and take a good vacation-if you're in this field, you need it.

Hope to see you on our subscriber list,

John Black, Publisher

1.1 Commerce Publishes Sweeping Changes to the Commerce Control List

In the July 23, 1999 Federal Register the Bureau of Export Administration (BXA) in the Commerce Department published revisions to a wide range of Export Control Classification Numbers (ECCNs) in the Commerce Control List (CCL). The changes focused on

Materials processing equipment, software and data in Category 2;
Electronic components and semiconductor manufacturing equipment in Category 3;
Telecommunications equipment, software and data in Category 5;
Cameras, image intensifier tubes, & semiconductor lasers in Category 6.

Fortunately for the readers of this newsletter, the changes likely will have little direct impact on exports of aerospace equipment, materials, and data. The changes in Category 7-Navigation and Avionics and Category 9-Propulsion Systems, Space Vehicles and Related Equipment, are merely cosmetic and organizational changes and do not effect the list of items that require a license. One area of perhaps some interest is that BXA made some adjustments to ECCN 2E003, which requires an export license for coating technology and technical data. This ECCN covers various coating techniques used in aerospace and other applications. For example, certain technologies used to coat aircraft engine parts are controlled under 2E003 and require an export license for virtually all countries even though the actual coated parts are classified as 9A991 and are eligible for export as No License Required to virtually all countries.

1.2 Proposed Chemical Weapons Convention Implementation Regulations

In the July 21, 1999 Federal Register the departments of Commerce and State each published their own respective proposed regulations that would implement the Convention on the Prohibition of the Development, Production, Stockpiling and Use of Chemical Weapons and on Their Destruction (also know as the Chemical Weapons Convention, and, fortunately, also known as the CWC). The Bureau of Arms Control in the State Department published proposed rules regarding inspections by international inspectors representing the CWC, and related recordkeeping requirements. The Bureau of Export Administration in the Commerce Department published its own rules for similar on-site inspections, initial declarations, reporting requirements, and recordkeeping requirements.

For the most part these proposed rules would primarily impact the chemical industry. Aerospace companies, however, should determine whether any of the chemicals they use or possess are on any of the CWC schedules which would subject them to the proposed rules. (See the May 1999 issue of this newsletter for a discussion of the schedules of chemicals.)

1.3 Prohibited Parties Lists Additions

1.3.1 Denied Persons

In the July 28, 1999 Federal Register the Commerce Department added these names to the Denied Persons List:

Export Materials, Inc., 3227 Greenbrier Drive, No. 108, Stafford, Texas 77477
Fawzi Mustapha Assi, 7706 Middlepoint Street, Dearborn, Michigan 48126
Dmitry N. Chernyshenko, Director, SFT Advertising Agency, 35 Altufievskoe Avenue, Moscow, 127410, Russia
SFT Advertising Agency, 35 Altufievskoe Avenue, Moscow, 127410, Russia
Nancy Ann Harvey, 4542 Indian Earth Court NE, Salem, Oregon 97305 (formerly known as Nancy Ann Mahler (nee Reamer))
Theresa Marie Squillacote, also known as Tina, Mary Teresa Miller, Schwan, The Swan, Margaret, Margit, Marget, Margrit, Lisa Martin, Resi, Anne; currently incarcerated at: Federal Correctional Institution, Register #422-90-083, 501 Capital Cricle, NE, Tallahassee, Florida 32301; and with an address at: 3809 13th Street, N.E., Washington, D.C. 2
James Michael Clark, also known as Brother Michael, Jack, Christopher Michael Glanz, Edward, and The Professor; currently incarcerated at: Federal Correctional Institution, Register #422-87-083, River Road, P.O. Box 1000, Petersburg, Virginia 23804; and with an address at: 904 prospect Avenue, Takoma, Maryland 20912.
Kurt Alan Stand, Also Known as Ken, Junior, and Alan David Jackson

1.3.2 Treasury Department Lists

In the July 1, 1999 Federal Register the Office of Foreign Assets Control (OFAC) in the Treasury Department published added a long list of new entities to its Specially Designated Terrorists and Specially Designated Nationals of Sudan Lists (See Appendix A).

OFAC also revised existing entires to include additional details as follows:

PUBLIC ELECTRICITY AND WATER CORPORATION (a.k.a. CENTRAL ELECTRICITY AND WATER CORPORATION), P.O. Box 1380, Khartoum, Sudan [SUDAN]
INGASSANA HILLS MINES CORPORATION (a.k.a. INGESSANA HILLS MINES CORPORATION), P.O. Box 2241, Khartoum, Sudan; P.O. Box 1108, Khartoum, Sudan [SUDAN]
SACKS FACTORY (a.k.a. PLASTIC SACKS FACTORY), P.O. Box 2328, Khartoum, Sudan [SUDAN]

Finally, OFAC removed this name from its list: DE BOCCARD, Phillipe (a.k.a. DE BOCCARD, Philippe)

1.4 New Trade Embargo on Afghanistan

As predicted in the May issue of this newsletter, in the July 7, 1999 Federal Register the Clinton Administration announced its new embargo on Afghanistan. Because current US export total only slightly more than $20 million per year, the new controls are not expected to have a devastating effect on US industry in general, although their impact on foreign reexports of US products is less clear. The Clinton Administration imposed the embargo because the Taliban has allowed Afghanistan to be used as a safe haven and a base of operations for Usama bin Ladin and the Al-Qaida terrorist organization.

Currently, the embargo is imposed by Executive Order 13129. Sometime in the next several months the Office of Foreign Assets Control in the Treasury Department will publish detailed implementing regulations. The key elements of embargo on Afghanistan are:

1) Prohibits US persons from participating in any activities (e.g., exports, reexports, imports, sales of foreign products, contracts, and so on) involving the Taliban government of Afghanistan or any entity owned or controlled by, or acting on behalf of, the Taliban;

Analysis: This is a typical activity control applicable to US persons (i.e., US citizens and residents and US companies and their foreign branch offices, but not foreign subsidiaries of US companies). It overlaps with 2) through 5) below. In short, US persons may not doing anything that directly or indirectly involves the Taliban or related parties.

2) Prohibits the export, reexport, sale or directly or indirectly, from the United States, or by a US person to the Taliban controlled areas of Afghanistan;

Analysis: This clearly prohibits all exports from the United States to the Taliban controlled areas of Afghanistan. It is not clear exactly what this does for reexports-does it prohibit reexports only if made by US persons, or does it prohibit all reexports of US items (and items subject to US jurisdiction) regardless of whether the reexport is a US person or a non-US person? We will get clarification on this issue as soon as possible and pass it on next month.

3) Prohibits imports into the United States from the Taliban or from the Taliban controlled areas of Afghanistan;

4) Blocks all property of the Taliban government of Afghanistan or any entity owned or controlled by, or acting on behalf of, the Taliban that are in the United States or in the possession or control of a US person;

5) Prohibits US persons from participating in any activities involving the blocked property;

2.1 Commerce Hold Update 99 Conference in Washington

On July 12-14, 1999, the Commerce Department sponsored its annual Update conference on the current state of US export controls on dual use and commercial items. Several interesting items came up at the conference.

Release of Technical Data to Foreign Nationals: The Bureau of Export Administration (BXA) is receiving approximately 1000 license applications per year for "deemed exports," which are situations where technical data is released to a foreign national in the United States. BXA reported that nearly 70% of the deemed export license applications it receives come from approximately 30 - 35 companies. (Editor's Note: These figures almost conclusively prove that there is widespread non-compliance with the export licensing requirements for the release of technical data to foreign nationals.) BXA recently has been denying only approximately 1% of the applications it is receiving. The primary criteria the US Government takes into account when reviewing an application is the educational and employment background of the foreign national and the likelihood that the foreign will remain in the United States.
Antiboycott Regulations: Dexter Price, Director of the Office of Antiboycott Compliance, stated that it is no longer the position of the Commerce Department to interpret its antiboycott regulations as applying solely to the Arab Boycott of Israel. (Some years ago BXA published an article in its official newsletter The OEL Insider stating that it interpreted its regulations as applying only to the Arab boycott of Israel.)

2.2 "New" Requirement for Off-Shore Procurement Licenses

When you apply for a State Department license to export drawings and other technical data for offshore procurement of defense articles from a foreign supplier, don't forget to put the "new" clause in block 20 of the DSP-5 application. In block 20 you must state, "Offshore procurement in accordance with the conditions established in the ITAR, including Sec. 124.13. No other use will be made of the technical data." This requirements was added to the International Traffic in Arms Regulations (ITAR) in the April 12, 1999 Federal Register notice that primarily effected exports of exports of firearms and exports to Canada. If you do not put the new language in block 20, you run the risk of having your application returned without action, forcing you to resubmit the application with the proper statement.

2.3 Relaxation of US Embargo on Kosovo Region of Serbia?

Clinton Administration officials are evaluating their options for relaxing the US trade embargo that is currently in force against The Federal Republic of Yugoslavia/Serbia. The idea is that the United States ought to find a way to remove the embargo for shipments into the region of Kosovo. As usual, such a change to existing US trade restrictions is easier said than done. For one thing, what exactly is Kosovo? Where exactly are the borders of Kosovo and exactly which precise areas should benefit from a relaxation in the US embargo. Serbian nationals, companies and agencies still retain control over a significant portion of the infrastructure and the United States does not want to relax US sanctions on the Serbians. Some difficult questions are how do you ensure that a shipment to Kosovo ends up with the intended end user and how do you write regulations to ensure that shipments benefit Kosovo specifically, not Serbia.

Facing the difficult task of crafting a regulatory solution to this problem, for now the Commerce Department may stick with implementing a new license approval policy. Under a more relaxed approval policy, Commerce may approve licenses for those transactions that will benefit Kosovo and not Serbia.

Appendix A

July 1, 1999 Federal Register Additions to Specially Designated Terrorists/Nationals of Sudan Lists

'ABD ALLAH, 'Issam 'Ali Muhammad (see MUSA, Rifa'i Ahmad Taha) [SDT]
'ABD-AL-'IZ (see MUSA, Rifa'i Ahmad Taha) [SDT]
ABD-AL-WAHAB, Abd-al-Hai Ahmad (see MUSA, Rifa'i Ahmad Taha) [SDT]
ABU HAFS (see ATEF, Muhammad) [SDT]
ABU YASIR (see MUSA, Rifa'i Ahmad Taha) [SDT]
ABDULLAH, Sheikh Taysir (see ATEF, Muhammad) [SDT]
ACCOUNTS AND ELECTRONICS EQUIPMENTS, c/o ENGINEERING EQUIPMENT CORPORATION, P.O. Box 97, Khartoum, Sudan [SUDAN]
AFRICAN OIL CORPORATION, P.O. Box 1, Khartoum North, Sudan [SUDAN]
AL-KAMEL, Salah 'Ali (see MUSA, Rifa'i Ahmad Taha) [SDT]
AL-MASRI, Abu Hafs (see ATEF, Muhammad) [SDT]
AL-QAIDA (see ISLAMIC ARMY) [SDT]
ALAKTAN COTTON TRADING COMPANY (see ALAKTAN TRADING COMPANY) [SUDAN]
ALAKTAN TRADING COMPANY (a.k.a. ALAKTAN COTTON TRADING COMPANY), P.O. Box 2067, Khartoum, Sudan [SUDAN]
ARAB CEMENT COMPANY, Durdeib, Sudan; P.O. Box 6180, Khartoum, Sudan [SUDAN]
ATBARA CEMENT COMPANY LIMITED, P.O. Box 36, Atbara, Sudan [SUDAN]
ATEF, Muhammad (a.k.a. ABU HAFS; a.k.a. ABDULLAH, Sheikh Taysir; a.k.a. AL-MASRI, Abu Hafs; a.k.a. EL KHABIR, Abu Hafs el Masry; a.k.a. TAYSIR) DOB 1956; POB Egypt (individual) [SDT]
BABANOUSA MILK PRODUCTS FACTORY, P.O. Box 16, Babanousa, Sudan [SUDAN]
BIN LADIN, Usama bin Muhammad bin Awad (a.k.a. BIN LADIN, Usama), DOB 30 July 1957; POB Jeddah, Saudi Arabia (individual) [SDT]
BLUE NILE BREWERY, P.O. Box 1408, Khartoum, Sudan [SUDAN]
BUILDING MATERIALS AND REFRACTORIES CORPORATION, P.O. Box 2241, Khartoum, Sudan [SUDAN]
CENTRAL ELECTRICITY AND WATER CORPORATION (see PUBLIC ELECTRICITY AND WATER CORPORATION) [SUDAN]
DUTY FREE SHOPS CORPORATION, P.O. Box 1789, Khartoum, Sudan [SUDAN]
EL KHABIR, Abu Hafs el Masry (see ATEF, Muhammad) [SDT]
ENGINEERING EQUIPMENT COMPANY, c/o ENGINEERING EQUIPMENT CORPORATION, P.O. Box 97, Khartoum, Sudan [SUDAN]
ENGINEERING EQUIPMENT CORPORATION, P.O. Box 97, Khartoum, Sudan [SUDAN]
EXPLORATION AND PRODUCTION AUTHORITY (SUDAN), Kuwait Building, Nile Avenue, Khartoum, Sudan; P.O. Box 2986, Khartoum, Sudan [SUDAN]
FOOD INDUSTRIES CORPORATION, P.O. Box 2341, Khartoum, Sudan [SUDAN]
FRIENDSHIP SPINNING FACTORY, Hassaheisa, Sudan [SUDAN]
GEZIRA TANNERY, Gezira, Sudan [SUDAN]
GINEID SUGAR FACTORY, P.O. Box 1, Gineid, Sudan [SUDAN]
GROUP FOR THE PRESERVATION OF THE HOLY SITES, THE (see ISLAMIC ARMY) [SDT]
HAGGAR ASSALAYA SUGAR FACTORY, Haggar Assalaya, Sudan [SUDAN]
INDUSTRIAL PRODUCTION CORPORATION, P.O. Box 1034, El Gamaa Street, Khartoum, Sudan [SUDAN]
INGESSANA HILLS MINES CORPORATION (see INGASSANA HILLS MINES CORPORATION) [SUDAN]
ISLAMIC ARMY (a.k.a. AL-QAIDA; a.k.a. ISLAMIC SALVATION FOUNDATION; a.k.a. THE ISLAMIC ARMY FOR THE LIBERATION OF THE HOLY PLACES; a.k.a. THE WORLD ISLAMIC FRONT FOR JIHAD AGAINST JEWS AND CRUSADERS; a.k.a. THE GROUP FOR THE PRESERVATION OF THE HOLY SITES) [SDT]
ISLAMIC ARMY FOR THE LIBERATION OF THE HOLY PLACES, THE (see ISLAMIC ARMY) [SDT]
ISLAMIC SALVATION FOUNDATION (see ISLAMIC ARMY) [SDT]
JUBA DUTY FREE SHOP, Juba, Sudan [SUDAN]
KARIMA DATE FACTORY, Karima, Sudan [SUDAN]
KARIMA FRUIT AND VEGETABLE CANNING FACTORY, P.O. Box 54, Karima, Sudan [SUDAN]
KASSALA ONION DEHYDRATION FACTORY, P.O. Box 22, Kassala, Sudan [SUDAN]
KENAF SOCKS FACTORY, Abu Naama, Sudan [SUDAN]
KRIKAH INDUSTRIES GROUP, P.O. Box 755, Khartoum North, Sudan [SUDAN]
LEATHER INDUSTRIES CORPORATION (a.k.a. LEATHER INDUSTRIES TANNERIES), P.O. Box 1639, Khartoum, Sudan [SUDAN]
LEATHER INDUSTRIES TANNERIES (see LEATHER INDUSTRIES CORPORATION) [SUDAN]
MALUT SUGAR FACTORY, Malut, Sudan [SUDAN]
MANGALA SUGAR FACTORY, Mangala, Sudan [SUDAN]
MASPIO CEMENT CORPORATION, P.O. Box 96, Atbara, Sudan [SUDAN]
MAY ENGINEERING COMPANY, c/o ENGINEERING EQUIPMENT CORPORATION, P.O. Box 97, Khartoum, Sudan [SUDAN]
MUSA, Rifa'i Ahmad Taha (a.k.a. 'ABD ALLAH, 'Issam 'Ali Muhammad; a.k.a. 'ABD-AL-'IZ; a.k.a. ABD-AL-WAHAB, Abd-al-Hai Ahmad; a.k.a. ABU YASIR; a.k.a. AL-KAMEL, Salah 'Ali; a.k.a. TAHA, Rifa'i Ahmad; a.k.a. TAHA MUSA, Rifa'i Ahmad; a.k.a. THABIT 'IZ), DOB 24 June 1954; POB Egypt; Passport No. 83860 (Sudan), 30455 (Egypt), 1046403 (Egypt) (individual) [SDT]
NATIONAL COTTON AND TRADE COMPANY, P.O. Box 1552, Khartoum, Sudan [SUDAN]
NEW HAIFA SUGAR FACTORY, Kashm el Girba, Sudan [SUDAN]
NEW KHARTOUM TANNERY, P.O. Box 17, Khartoum, Sudan [SUDAN]
NORTHWEST SENNAR SUGAR FACTORY, Northwest Sennar, Sudan [SUDAN]
OIL CORPORATION, P.O. Box 64, Khartoum, Sudan [SUDAN]
OMDURMAN SHOE FACTORY, Omdurman, Sudan [SUDAN]
PETROLEUM GENERAL ADMINISTRATION, P.O. Box 2649, Khartoum, Sudan [SUDAN]
PLASTIC SACKS FACTORY (see SACKS FACTORY) [SUDAN]
PORT SUDAN COTTON AND TRADE COMPANY (a.k.a. PORT SUDAN COTTON COMPANY), P.O. Box 590, Khartoum, Sudan; P.O. Box 261, Port Sudan, Sudan [SUDAN]
PORT SUDAN COTTON COMPANY (see PORT SUDAN COTTON AND TRADE COMPANY) [SUDAN]
PORT SUDAN DUTY FREE SHOP, Port Sudan, Sudan [SUDAN]
PORT SUDAN EDIBLE OILS STORAGE CORPORATION, P.O. Box 429, Port Sudan, Sudan [SUDAN]
PORT SUDAN SPINNING FACTORY, Port Sudan, Sudan [SUDAN]
PUBLIC CORPORATION FOR OIL PRODUCTS AND PIPELINES, Khartoum, Sudan [SUDAN]
RABAK OIL MILL, P.O. Box 2105, Khartoum, Sudan [SUDAN]
RAINBOW FACTORIES, P.O. Box 1768, Khartoum, Sudan [SUDAN]
REA SWEET FACTORY, P.O. Box 1027, Khartoum, Sudan [SUDAN]
RED SEA HILLS MINERALS COMPANY, c/o SUDANESE MINING CORPORATION, P.O. Box 1034, Khartoum, Sudan [SUDAN]
REFRIGERATION AND ENGINEERING IMPORT COMPANY, P.O. Box 1092, Khartoum, Sudan [SUDAN]
SHEREIK MICA MINES COMPANY (a.k.a. SHEREIK MICA PROJECT), c/o SUDANESE MINING CORPORATION, P.O. Box 1034, Khartoum, Sudan [SUDAN]
SHEREIK MICA PROJECT (see SHEREIK MICA MINES COMPANY) [SUDAN]
SPINNING AND WEAVING CORPORATION, P.O. Box 795, Khartoum, Sudan [SUDAN]
SUDAN COTTON COMPANY, Khartoum, Sudan [SUDAN]
SUDAN COTTON COMPANY LIMITED, P.O. Box 1672, Khartoum, Sudan [SUDAN]
SUDAN OIL CORPORATION, P.O. Box 2, Khartoum North, Sudan [SUDAN]
SUDAN SOAP CORPORATION, P.O. Box 23, Khartoum North, Sudan [SUDAN]
SUDANESE INTERNATIONAL TOURISM COMPANY, c/o TOURISM AND HOTELS CORPORATION, P.O. Box 7104, Khartoum, Sudan [SUDAN]
SUDANESE MINING CORPORATION, P.O. Box 1034, Khartoum, Sudan [SUDAN]
SUGAR AND DISTILLING CORPORATION, New Mustafa el Amin Building, Barlaman Avenue, P.O. Box 511, Khartoum, Sudan [SUDAN]
TAHA, Rifa'i Ahmad (see MUSA, Rifa'i Ahmad Taha) [SDT]
TAHA MUSA, Rifa'i Ahmad (see MUSA, Rifa'i Ahmad Taha) [SDT]
TAYSIR (see ATEF, Muhammad) [SDT]
THABIT 'IZ (see MUSA, Rifa'i Ahmad Taha) [SDT]
TOURISM AND HOTELS CORPORATION, P.O. Box 7104, Khartoum, Sudan; Ed Damer, Sudan; El Fasher, Sudan; Khartoum Airport, Sudan; Port Sudan, Sudan [SUDAN]
WAD MADANI DUTY FREE SHOP, Wad Madani, Sudan [SUDAN]
WAU FRUIT AND VEGETABLE CANNING FACTORY, P.O. Box 110, Wau, Sudan [SUDAN]
WHITE NILE BREWERY, P.O. Box 1378, Khartoum, Sudan [SUDAN]
WHITE NILE TANNERY, P.O. Box 4078, Khartoum, Sudan [SUDAN]
WORLD ISLAMIC FRONT FOR JIHAD AGAINST JEWS AND CRUSADERS, THE (see ISLAMIC ARMY) [SDT]

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