BIS Considers Adding Country Group C for “Destinations of Diversion” Concern
February 2007
In an effort to scare the governments of countries that are major transshipment points to US embargoed countries (or as Commerce would say, ‘in order to strengthen the trade and export compliance systems of countries that are hubs for transshipments), the Commerce Department’s Bureau of Industry and Security (“BIS”) published a notice of proposed rule making in which it stated it is considering adding a “Country Group C” for countries of particular diversion concern.
Inclusion in this new group would be based on several criteria including, but not limited to the following:
- transit and transshipment volume,
- inadequate export/reexport controls,
- demonstrated inability to control diversion activities in this destination,
- having a government not directly involved in diversion activities, and
- having a government unwilling or unable to cooperate with the US in interdiction efforts.
The export controls on Country Group C would be more stringent than they are currently. The result could be the requirement of more license applications, more stringent review policies, fewer approvals and delayed authorizations. All of these would be necessary to decrease the diversion risks.
The Commerce Department says the goal of this addition would be to further the national security interests of the United States and to address the threat to national security caused by the illicit transshipment, reexport and diversion in international trade of EAR-regulated items. Diversion of such regulated items could significantly undermine US counter-proliferation efforts as well as increase the capabilities of state sponsors of terrorism.
Editorial comments begin here:
BIS no doubt hopes that the actual listing of a country in this Group C, or the threat of doing so, would force that country to take effective measures to prevent unauthorized diversion of US items to countries such as Iran, the PRC, and Cuba.
US officials have repeatedly identified the United Arab Emirates as a transshipment point for illegal diversions to Iran. Interesting, Office of Export Enforcement officials have more than once also identified the United Kingdom as a significant transshipment point for Iran. Obviously, while there is a chance a country like the UAE could end up in Country Group C, there is no way the United States would ever add a close ally such as the United Kingdom to the Group C.
Even more entertaining, for me, is that I remember one OEE presentation in which the enforcement officer had a slide that identified key transshipment countries, and on the slide the transshipment countries for Cuba were Mexico, Panama, and Miami. Yes, we can chuckle at the thought of Miami being added to Country Group C, but, the real policy question is: If the President can’t get his brother, the Governor of Florida, to crack down on illegal diversion to embargoed countries, how can we hope for the President to make any headway with the UAE and UK?
