Lebanon

On December 19, 2007, the Department of State issued an amendment to the International Traffic in Arms Regulations concerning exports and sales which were prohibited by United Nations Security Council embargoes. The amended list will add countries subject to such embargos. The current list includes: Cote d’Ivoire, Democratic Republic of Congo, Iraq, Iran, Lebanon, Liberia, North Korea, Rwanda, Sierra Leone, Somalia, and Sudan.

More information:

Federal Register 72FR71575.pdf (PDF)

In late March, 2007, the Department of Treasury released the most current list of countries which require, or may require, cooperation with an international boycott within the meaning of section 999(b)(3) of the Internal Revenue Code of 1986.

The list includes:

• Kuwait
• Lebanon
• Libya
• Qatar
• Saudi Arabia
• Syria
• United Arab Emirates
• Yemen

Republic of Iraq is not on this list but its status is currently under review by the Department of Treasury and it may be added in the future.

Source:

• Federal Register - April 3, 2007 (Volume 72, Number 63, Page 15934)

Canadian Citizens May Seek Relief via Canadian Legal System

According to media reports, the fallout continues from conflict between tight United States ITAR requirements and Canadian defense manufacturers. US regulations prohibit Canadian citizens who have dual citizenship in a country listed in ITAR 126.1 from working on US defense projects. There are currently 19 countries whose citizens are banned from this type of work including China, Cuba, Lebanon, Syria, North Korea, Belarus, Afghanistan and Rwanda. Recently Venezuela was added to this list, which may have contributed to the termination of an employee at Montreal’s Bell Helicopter facility.

Bell Helicopter is currently working on an $849 million contract for the US Military and has had to reassign 24 employees to stay in compliance with the US regulations on who can work on their defense projects.

Jaime Vargas, a Canadian citizen with dual citizenship in Venezuela, had only worked at Bell Helicopter for several weeks when he was unexpectedly terminated. There are conflicting stories from Mr. Vargas and Bell representatives on the quality of work performed by the employee. Though Bell claims that he had performed poorly, Mr. Vargas states that he had had nothing but positive reviews and had recently been congratulated by his supervisor on the high quality of his work.

The Canadian Centre for Research-Action on Race Relations says that it will be filing a civil suit on Mr. Vargas’ behalf stating that they believe he was terminated solely based on his connection with Venezuela. They will ask for $110,000 in compensation for Mr. Vargas. The suit will be based on allegations that the termination violated Canadian Human Rights laws.

John Black’s Note: I hope Mr. Vargas wins the suit. I seriously doubt that DDTC will want to revise the ITAR if that happens, but I love it when DDTC digs in its heels and refuses to bend its policies to take into account issues outside of its own control. I look forward to the eloquent statement of the DDTC position, “We don’t care if you win a law suit, we don’t care if the ITAR causes good Canadian companies to violation Canadian laws, we aren’t changing the ITAR.”

Source: “Canoe Network Money” February 6, 2007

Full story on Canoe Network

A few months ago we gave you the run down on the State Department’s announcement of its arms embargo on Lebanon. The scope of the arms embargo has not changed, but State did make it official by putting a notice in the Federal Register on December 15, 2006. There is a comprehensive embargo on ITAR exports, reexports and transfers to Lebanon, with the exception that there is no embargo for transfers specifically authorized by the Government of Lebanon or the United Nations Interim Force in Lebanon (UNIFIL).

So, you got limited export compliance resources and your probably use only a small part of that pool for compliance with the antiboycott regulations. We can’t get you more resources such as time and money, but we can tell you to focus your antiboycott compliance resources on your business activities that involve these countries:

• Kuwait
• Lebanon
• Libya
• Qatar
• Saudi Arabia
• Syria
• United Arab Emirates
• Republic of Yemen

( Iraq is not on the list at this time but remains under review by the Department of the Treasury.)

On September 26, 2006 , the U.S. Department of the Treasury published a notice in the Federal Register announcing that the above countries may require cooperation with an international boycott according to the Internal Revenue Code of 1986, the Arab League boycott of Israel , the same unsanctioned boycott covered by the Export Administration Regulations antiboycott rules. The Commerce Department has not recently put in writing an acknowledgement that its antiboycott regulations focus only on the Arab boycott of Israel , but informally Commerce Antiboycott officials may be willing to admit that is the case. (Quite a few years ago Commerce published an article in its newsletter “The OEL Insider” that stated that it interprets the EAR antiboycott rules to apply only to the Arab boycott of Israel.)

Venezuela:

In the August 17, 2006 Federal Register the State Department announced it has imposed comprehensive ban on transfers of defense articles and services to on Venezuela. The US took first step toward imposing this ban when it named Venezuela as a country supporting international terrorism on May 15, 2006 . Technically, however, the new State Department ban is not directly tied in a legal sense to Venezuela being identified as a “Country Supporting International Terrorism.”

(Contrary to popular belief, these actions are not based on the State Department identifying Venezuela as a “Country Insulting George Bush.”

Specifically, State:

• Revoked all licenses and approvals (agreements) for exports or transfers to Venezuela
• Revoked the use of ITAR exemptions for Venezuela , except for the use of ITAR 123.17 for personal use firearms
• Imposed a policy to deny all new applications for Venezuela

Lebanon:

To implement the United Nations arms embargo (UNSCR-1701) on Lebanon , the US State Department announced its new policy for transfers of defense articles and services to Lebanon. The US sanctions are intended to allow transfers of defense articles and services to the Government of Lebanon and the United Nations International Force in Lebanon (UNIFIL).

Specifically, the sanctions say:

• Any existing license or authorization for the export to Lebanon of ITAR-controlled defense articles or services is hereby suspended unless the end-user is the Government of Lebanon or UNIFIL.
• Holders of other existing licenses or authorizations, including exemptions, must submit documentation for review by the Directorate of Defense Trade Controls (DDTC) supporting the authorization of the transaction by the Government of Lebanon or UNIFIL.
• For future authorizations, exceptions to this policy of denial will be made, in accordance with the ITAR, on a case-by-case basis to determine whether they conform to UNSCR 1701.

You may not use any license, authorization or exemption for transfers to parties other than the Government of Lebanon and UNIFIL.

This notice has not yet appeared in the Federal Register. You may read it at the DDTC web site: www.pmddtc.state.gov/defense_trade_lebanon_arms_embargo.htm

Libya:

No news, is, in this case, no news. The Commerce Department has written up the new rules to revise the EAR to remove “Anti-Terrorism”(AT) controls on items such as 9A991 commercial aircraft parts for Libya. This rule is still being reviewed by the government and select industry representatives. Sooner or later, (I’m giving 2 to 1 odds on later), there will be a notice in the Federal Register removing the AT controls. I am staking my reputation on my prediction that this change will happen in 2006.

On the Libya ITAR front, the State Department has to remove Libya from the ITAR 126.1 proscribed country list. Seeing as how it is taking State 2–3 months before it even looks at normal agreement application, I think it is safe to say that it will be a while before the ITAR is revised.