Libya

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)

On February 7, 2007, the Department of State amended the ITAR regarding its trade policy with Libya. In May of 2006, the US rescinded Libya’s designation as a state sponsor of terrorism. As a result of this, Libya has been removed from sections 126.1(a) and 126.1(d) of the ITAR and added to 126.1(k). This specifies the following:

“It is the policy of the United States to deny licenses, other approvals, exports or imports of defense articles and defense services destined for or originating in Libya except, on a case-by-case basis, for:

1. Non-lethal defense articles and defense services,
2. Non-lethal safety-of-use defense articles (e.g., cartridge actuated devices, propellant actuated devices and technical manuals for military aircraft for purposes of enhancing the safety of the aircrew) as spare parts for lethal end-items.”

As Libya is still proscribed in 126.1, exemptions other than 123.17 do not apply with respect to articles originating in or for export to Libya. Also, in terms of proposed sales, the requirements of 126.1 still apply.

Federal Register notice

At the December 5, 2006 meeting of the Regulations and Procedures Technical Advisory Committee, the following enforcement issues were discussed:

1. The increase in boycott requests from Iraq and Libya. Since power has transferred from the Coalition Provisional Authority to the new Iraqi government, boycott requests there have increased significantly since falling in 2004. Closing the Libyan boycott compliance office has resulted in increased requests from Libya as well. The biggest of the boycotting countries is U.A.E.
2. The Office of Export Enforcement reported that one of their highest priorities is the renewal of the Export Administration Act (EAA). Proposed changes for the act upon renewal include penalties increased from $11,000 to $50,000 as well as imposing criminal penalties for violations. They will continue to encourage Voluntary Self-disclosures (VSDs) with the policy that penalties will be reduced by 50% with the option to consider other factors which could reduce penalties even further. From 2004-2006 only 5% of VSDs resulted in any penalty at all. Half of the other 95% resulted in the conclusion that no violation had occurred.

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.)

What Happened & What You Need to Do

On August 31, 2006, the Commerce Department published regulations that move Libya off the small list of countries subject to severe US export and reexport controls. Generally speaking, the Export Administration Regulations (EAR) now treat Libya similar to countries such as the PRC, Russia, and Armenia. Read More

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.

On May 15, President Bush gave Congress a notice that that it wants Libya off its list of countries supporting terrorists. The Administration must wait 45 days before it may remove Libya from the list. Once we get to the end of that 45 day period, you should expect to see the Commerce Department revise the Export Administration Regulations (EAR) to relax US export and reexport controls on Libya by ending most of the AT-based (e.g., 9A991, 4A994, 5A991) licensing requirements.

What about exports and retransfers of defense articles and services? DDTC announced that Libya is still a proscribed country listed in 126.1 of the International Traffic in Arms Regulations (ITAR), which means there is a presumption of denial for license/agreement applications. DDTC said it will stick with this policy until it publishes a notice in the Federal Register.

OK, if you want my prediction of the future on this: I think the US Government will continue to move slowly to relax controls on Libya. It has moved slowly to relax the EAR controls and I think it will be a while before it significantly changes Libya’s status under the ITAR.

(Now, that is what I call a professional prediction. All I said is “it will be a while” and the US Government will move “slowly.” Not very informative, but certainly bound to be 100% accurate.)

Well, there was a lot of hoopla. And there still is, when people talk about the US Government relaxing its export controls on Libya . The problem is the US actually has not done much lately to relax its export controls on Libya .

Read More

When BIS first issued its interim rule covering newly-unembargoed Libya on April 29, 2004 the agency requested public comments.  The government response to those comments (pdf) and other perceived shortcomings of the Libya regulations are captured in the final rule promulgated March 22.  The new regulation makes a number of adjustments, but its overall impact is not major for most exporters.  Virtually everything listed on the Commerce Control List (CCL) will continue to require a license for export or reexport to Libya, but there are some significant changes.

Read More

Within a matter of weeks the Bush Administration made significant changes to the US export/reexport controls on Libya and Syria. The United States relaxed its controls on Libya and tightened its controls on Syria. The new controls on these countries are relatively straight-forward, despite the fact that these changes are based on a relatively large number of official document (two executive orders from the White House, a new law, several Treasury Department general licenses, and at least two Federal Register notices).

Here are the new licensing requirements and restrictions in a nutshell.

LIBYA

• Items classified as EAR99 under the Export Administration Regulations (EAR) are eligible for export/reexport as No License Required (NLR) to Libya. Items under all specific ECCNs continue to require a license.
• Libya is eligible to receive items under license exceptions TMP, GOV, GFT, TSU, RPL and AVS in limited circumstances.
• There is a somewhat favorable license review policy for exports of low-level computers, civil aircraft and parts, and certain other items t o non-military/police end-users.
• Jurisdiction for exports to Libya is transferred from the Office of Foreign Assets Control to the Bureau of Industry and Security (BIS). (BIS already had jurisdiction over reexports to Libya.
• OFAC dropped its rules that prohibit US persons from being involved in transactions involving Libya. US persons may now enter into new transactions with Libya without OFAC restrictions. OFAC continues to prohibit:
  • US persons involvement in Libyan property and property blocked by US person prior to April 23, 2004; and
  • Certain travel-related activities including carriers of the United States and Libya flying to Libya and the United States, respectively.
• The 10% de minimis level for foreign-made items with US content remains unchanged.
• If you have an OFAC license for Libya, you may continue to use it through its expiration date (May 1, 2005 if the license has no expiration date).

SYRIA

• Everything except food and medicine require a license for Syria-that is, items classified as EAR99 now require a license for export or reexport to Syria. All items that formerly required a license for Syria still require a license.
• BIS revoked all licenses that BIS issued for Syria prior to May 14, 2004.
• The new restrictions (above) do not apply to any items en route to Syria on May 14, 2004 as long as the items are exported or reexported by May 28, 2004.
• You may not use license exceptions for Syria except as follows:
  • TMP only for news media
  • GOV only for US Government
  • TUS only for operation tech data/software, sales tech data, and software updates
  • BAG only in limited cases for personally owned baggage
  • AVS only for temporary sojourn of aircraft reexported to Syria
• BIS policy is to deny all license applications for Syria. Exceptions might be made for deemed exports/reexports, items to support US Government or United Nations activities; medicines and medical devices on the Commerce Control List; aircraft parts to ensure safety of civil aviation; telecomm equipment and associated computers, software and tech data.
• The 10% de minimis level for foreign-made items with US content remains unchanged.
• OFAC did not impose any restrictions on US persons dealing with Syria.

When Did These Changes Happen?

The primary Libya change was announced in a BIS Federal Register notice on April 29 and a general license OFAC announced on its web site on April 23. The Syria change was announced in a May 14, 2004 Federal Register notice.

Why Did the United States Change Its Policies?

Several factors led the United States to significantly relax its controls on Libya: 1) Libya exposed the widespread illicit international nuclear weapons proliferation network and thereby did as much to thwart the future spread of nuclear weapons as any export control regime could ever hope to accomplish; 2) Libya promised that it has ended its weapons of mass destruction program; and 3) Libya accepted a certain responsibility for the bombing of the commercial aircraft over Lockerbie, Scotland and agreed to pay $10 million to the families of the victims.

(Interestingly, a couple of weeks after the United States ended its trade embargo on Libya, Libyan President Gadhafi announced that Libya will halt its military trade with North Korea, Syria and Iran. The White House said that Libya’s actions “have made our country and the world safer.” We have calculated that if the current rate of increasing cooperation and trade policy coordination continues at this pace, by June 17, 2006 Libya will share the same status as Canada under US trade controls!)

As for Syria, the Bush Administration was pressured to impose more trade restrictions on Syria when Congress passed the Syria Accountability and Lebanese Sovereignty Act of 2003. Congress passed the law to punish Syria for its support of international terrorism.

Syria and Libya export controls are under active review at the senior levels of the Bush Administration. As usual, OFAC representatives would not comment on any potential Libya sanctions development other than to say that they are waiting for a White House decision. Based on past experience, the Libya sanctions are likely to be lifted in measured steps over a significant period of time. The first step taken was a lifting of the Libya travel ban on February 25 (for more information see: www.treas.gov/offices/eotffc/ofac/sanctions/libya_gl1.pdf), and an announcement by President Bush encouraging US companies to travel to Libya and prepare themselves for doing business. But the statement seemed more window dressing than sustentative. At least for now, no deals can be closed, as the myriad of sanctions remain, including a total export and reexport ban as well as financial and other transaction restrictions. These sanctions are likely to be rolled back in steps in the coming months, with ECCN: EAR99 license free exports likely to be a first decontrol step.

Read More

Press reports around the globe have been publishing articles about potential sanctions or lifting of sanctions on various countries. Though there has been a lot of sanctions talk these days, as of today there have been few actual changes. As of January 1, 2004, the following is the status of sanctions of key countries listed in reports.

Syria

President Bush recently signed into law legislation that allows the imposition of sanctions (embargo) against Syria. The legislation essentially allows the President to impose an embargo at his discretion should Syria fail to meet certain benchmarks relating to Syrian troops in Lebanon and the Middle East peace process. The President has not imposed these sanctions, so as of this moment, Syrian controls remain as they have been, with non-EAR99 items require export and reexport licenses.

Libya

The US Libya embargo remains in full effect. After the Lockerbie settlement, in which Libya agreed to compensate families of the victims of the aircraft bombings, the UN lifted multilateral sanctions on Libya. However, the US maintained their unilateral sanctions on Libya, with all export from the US requiring licensing from Treasury and all reexports requiring licenses under the Export Administration Regulations. The US maintained unilateral sanctions out of concern for ongoing weapons proliferation programs.

Libya strong man Muammar Qadaffi recently has taken dramatic steps to end these weapons programs and to open the country up to inspectors in an attempt to have the US sanctions lifted. The US is likely to remain cautious in lifting sanctions. Though continued progress may result in an eventual lifting of the embargo, there does not appear to be any immediate movement on the US side to lift sanctions.

Iran

In a Treasury Press release issued on December 31, 2003 (see http://www.treas.gov/press/releases/js1076.htm), the Office of Foreign Assets Controls eased sanctions on Iran for transactions related to humanitarian relief for the earthquake victims in Bam. Contrary to some press reports which indicate a broader easing of sanctions, the changes are actually very limited in scope. They authorize cash donations to NGO’s for the earthquake victims, authorize humanitarian relief activities, and fast track licensing of NGO’s authorizing relief activity in Iran. There is no other movement to lift the embargo on Iran.

In the October 15, 2003 Federal Register the Treasury Department published a notice identifying 10 countries that may require cooperation with an international trade boycott not sanctioned by the United States. The ten countries are:

Bahrain, Kuwait, Lebanon, Libya, Oman, Qatar, Saudi Arabia, Syria, United Arab Emirates, Republic of Yemen.

Companies in these countries may require that you comply with the Arab League boycott of Israel. If you are a US company, a US citizen/resident, or a subsidiary of a US company, compliance with the secondary and tertiary levels of the Arab boycott of Israel may be a violation of US antiboycott rules found in the Export Administration Regulations and section 999(b)(3) of the Internal Revenue Code of 1986.

Generally speaking, the key provisions of the US antiboycott rules prohibit US persons from complying with the Arab boycott of Israel. Prohibited cooperation could include 1) refusing to do business with a company or country; and 2) supplying information about your business relationship with other companies or countries.

This list is useful in that it highlights the countries from which you are most likely to receive prohibited boycott requests or inquiries. You should focus your antiboycott compliance procedures on these countries. Please note, however, that EAR antiboycott issues may also arise when dealing with any country, but you also pay close attention to Indonesia, Bangladesh, Pakistan, Iran, India, Ethiopia, and Eritrea.

In the January 4, 2002 Federal Register, President George W. Bush extended national emergency status in respect to nation and government of Libya for 1 year. This action is a continuation of Executive Order 12543, which was enacted by former President Ronald Reagan on January 7, 1986. This does not change the scope of the US trade embargo on Libya.