Terrorism

The Department of State has issued to Congress that Cuba, Eritrea, Iran, North Korea, Syria, and Venezuela are not fully cooperating with the United States antiterrorism efforts. John D. Negroponte, Deputy Secretary of State has issued the decision to retain the certification of North Korea pursuant to Section 40A of the Arms Export Control Act.

There will be an ongoing review of the designation of North Korea and the outcome of the review may warrant a new assessment and possible change in certification.

More information:

• Federal Register Notice

Secretary Mancuso delivered the keynote address on March 17, 2008 at the Export Control Forum in Newport Beach California. Mancuso emphasized the need to strengthen the US dual-use export control enforcement architecture and pushed for Congress to pass “a reauthorized Export Administration Act as quickly as possible.”

He also restated that his three highest policy priorities are still:

• Refining BIS’s enforcement efforts; focusing on terrorists, proliferators, and nations with transshipment concern;
• Reforming and updating dual-use export controls to enhance US national security and competitiveness;
• Accelerating and elevating international engagement with the most dynamic high technology markets in the world.

More information:

• BIS News Release

In 2006, the U.S. National Security Strategy stated that the United States was facing challenges from Iran and its efforts and involvement in international terrorism. The GAO has since reviewed U.S. sanctions against Iran and the impact it has had and reviewed numerous data relating to Iran’s economy and energy sector.

After conducting research, the GAO concluded that Congress should consider requiring the National Security Council and key agencies to:

1. Assess data on Iran sanctions and complete an overall baseline assessment of sanctions
2. Develop a framework for ongoing assessments
3. Periodically report the results to Congress

Officials did report that U.S. sanctions involving Iran has slowed foreign investment in the country’s petroleum sector, however other evidence indicates that the extent of the reported impact. Read More

The first-ever National Export Control Coordinator for the Department of Justice was appointed last June 20, 2007. Steven W. Pelak, a veteran prosecutor for 18 years, has been an Assistant U.S. Attorney and Senior Litigation Counsel in the National Security Section of the U.S. Attorney’s Office for the District of Columbia and, since September 2001, has served as the Anti- Terrorism Coordinator for the U.S. Attorney’s Office. Mr. Pelak is detailed to the Counter-espionage Section of the Justice Department’s National Security Division, wherein he will have some of the following responsibilities:

• development of comprehensive training materials on export control investigations and prosecutions for federal prosecutors nationwide
• solicit and receive regular progress reports from U.S. Attorneys’ offices on the development of export control cases
• coordinate between the Justice Department and the many other U.S. law enforcement, licensing and intelligence agencies that play a role in export enforcement.

Attorney General Alberto Gonzales mentioned in his June 11 speech on nuclear terrorism that the Justice Department’s National Security Division where federal prosecutors were provided instruction and guidance on export control cases, with trainers from the Justice Department and the relevant investigative agents on hand providing comprehensive prosecutorial instruction.

Read More

In the February 7, 2007’s Federal Register, the State Department amended section 126.1 of the ITAR to include Venezuela in the list of countries not cooperating fully with anti-terrorism efforts. This just makes the policy announced last year officially a part of ITAR 126.1.

The Secretary of State determined that Venezuela, along with Cuba, Iran, North Korea and Syria, would be placed on the list beginning October 1, 2006. The AECA prohibits the sale or licensing of defense articles and services to those countries on the list for the term of one fiscal year beginning October 1, 2006. Additionally, the State Department issued a policy of denial of the export or transfer of defense articles to and revocation of existing authorizations for Venezuela on August 17, 2006.

Federal Register notice

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.)

On May 15 the State Department notified Congress that Venezuela is now on the list of terrorist countries (“countries not fully cooperating with the antiterrorism efforts of the United States”). DDTC announced that beginning on October 1, 2006, it will implement a policy of denying all applications for the commercial export of defense articles and services to Venezuela. DDTC also stated that between now and October 1, 2006, it “will continue to carefully scrutinize all proposed arms transfers and sales to Venezuela on a case-by-case basis.” OK, that means you probably won’t get anything approved before October either.

Read More

On July 15, the Bureau of Industry and Security published a massive final rule implementing the decisions made at the December 2004 plenary meeting of the Wassenaar Arrangement. Other Wassenaar participants have already taken similar steps to codify the group’s changes at a national level or will do so in the near future. In addition to the Wassenaar-conforming revisions to Commerce Control List Categories 1-9, BIS also took this opportunity to add or expand some unilateral US controls.

Read More

Bill Reinsch gave a very interesting speech to the ACI’s National Forum on Export Controls touching on many of the today’s major export control issues - deemed export, “higher fences, fewer items,” the post-9/11 effect, terrorism, China - and, more importantly, putting them in their proper historical and political context.  The National Foreign Trade Council is kindly hosting the full text.  Read the whole thing.  And while you’re at it, be sure to read the comments of Reinsch’s successor Peter Lichtenbaum at the same conference as well.

The Office of Foreign Assets Control (OFAC) unleashed the next salvo in the US Government’s barrage of sanctions directed against Syria when it published the entirely new Syrian Sanctions Regulations (SSR) in the Federal Register on April 5. The new regulations come nearly a year after President Bush issued his Executive Order 13338 (pdf) implementing sanctions against the Syrian regime under the Syria Accountability and Lebanese Sovereignty Restoration Act (SAA), the International Emergency Economic Powers Act (pdf) (IEEPA), and the National Emergencies Act (NEA). The new SSR draw their legal authority specifically from IEEPA, not from SAA (or, as some would more festively prefer to abbreviate it, SALSA.)

OFAC’s new regulations are in addition to last year’s rule from the Bureau of Industry and Security (BIS), which banned nearly all exports and reexports to Syria and revoked existing licenses for the country. The only exceptions to the export prohibition are for food and medicine, as well as shipments eligible under certain provisions of License Exceptions AVS, BAG, GOV, TMP, and TSU.

The new Syrian regs have more in common with those applicable to Slobodan Milosevic’s cronies, narcotics traffickers, and terrorists than the more well known Cuban or Iranian sanctions. They are intended to target specific Syrian individuals, firms or other entities that support terrorists, Syrian meddling in Iraq or Lebanon, or proliferation activity. In theory, these folks would have their property blocked. We say in theory because no one has actually been designated by OFAC under the SSR. Until Treasury takes this step, the new regulations have little practical effect.

1. ITAR Debarment

The State Department announced that it has imposed administrative debarment on

• Mart Haller Incorporated, September 10, 2003, U.S. District Court, District of Connecticut (New Haven), Case :3:03Cr170(EBB).
• Alan Haller, September 10, 2003, U.S. District Court, District of Connecticut (New Haven), Case :3:03Cr169(EBB).
• –Tariq Ahmed a/k/a “Tariq Amin”, “Tariq Ahmad Amin”, September 30, 2003, U.S. District Court, District of Connecticut (New Haven), Case :3:02CR247(DJS).
• Yasmin Ahmed a/k/a “Yasmin Tariq”, “Fatimah Mohammad”, September 4, 2003, U.S. District Court, District of Connecticut (New Haven), Case :3:02CR247(DJS).
• Jami Siraj Choudhury, November 10, 2003, U.S. District Court, Eastern District of Wisconsin, Case :02-Cr-261.

The debarment theoretically is for a minimum of three years, but, as we have discussed in the past, these debarments typically last forever. (Federal Register 17468)

2. Office of Foreign Assets Control Lists

OFAC announced changes to its prohibited parties lists related to Iraq and terrorists. To see these changes go to www.treas.gov/offices/eotffc/ofac/actions/index.html

3. Nonproliferation Sanctions

The State Department removed these entities from its nonproliferation sanctions list:

• Europalace 2000 (Federal Register 17262)
• Grafit (aka State Scientific Research Institute of Graphite or NIIGRAFIT) (Federal Register 17262)
• MOSO Company (Federal Register 17262)
• The Scientific Research and Design Institute of Power Technology (aka NIKIET, Research and Development Institute of Power Engineering (RDIPE), and ENTEK). (Federal Register 17262)
• Anatoliy Kuntsevich (Federal Register 17259)
• TZNII Central Scientific Research Institute of Precision Machine Building (aka Tzniitochmash) (Federal Register 17263)
• Volsk Mechanical Plant (Federal Register 17263)

4. Terrorist List

The State Department identified these terrorist organizations:

• Babbar Khalsa International (Federal Register 23555)
• Communist Party of Nepal (Maoist) Federal Register 23555)

DENIED PERSONS LIST:

Commerce Department added the following parties to the Denied Persons List:

1. ABO (USA) INC., 2563 NW 20th St, Miami, FL 33142 (12/22/03): Commerce took this action in response to charges that ABO committed two violations of the Export Administration Regulations by illegally export commercial night vision scopes to Japan without an export license.
2. Omega Engineering, Inc., One Omega Drive, Stamford, Connecticut 06907 (11/18/03): Commerce listed Omega for 17 violations related to illegal exports of laboratory equipment via Newport Electronics GmbH in Germany to Pakistan. Omega’s illegal exports came two to three months after Commerce denied Omega’s license application to export the items to Pakistan. Everybody knows that the government watches companies who get their licenses denied - I guess everybody but Omega knows that. Obviously, Omega is a good example of the law enforcement belief that if a company gets an export license denied, it will export anyway. Omega’s denied status is focused on transactions involving Pakistan. Commerce also fined Omega $187,000. In April of 2003 Omega pled guilty to criminal violations and received a $313,000 fine.
3. Ralph Michel, Vice President, Omega Engineering, Inc., One Omega Drive, Stamford, Connecticut 06907 (11/18/03): Commerce put Michel, the CFO of Omega, on the list for his involvement in the Omega violations. Michel’s denied status is focused on transactions involving Pakistan. In April of 2003 Michel pled guilty to criminal violations and received 10 months of confinement and a $50,000 fine.
   So, now you have an example that demonstrates that the government may go after senior company officials in addition to the company.
4. Ahwaz Steel Commercial & Technical Service Gmbh (ASOTEC), Tersteegenstr. 10, 40474 Dusseldorf, Germany AND Metal & Mineral Trade Sarl (MMT), Rue Pierre D’Aspelt, 1142 Luxembourg, Luxembourg. Commerce announced settlement agreement with these two parties in relation to charges that they caused illegal exports from the United States to Iran.

TERRORIST LIST:

In the December 23 Federal Register the State Department published notices adding aliases to the terrorist designation of various terrorist organizations. See www.access.gpo.gov/su_docs/fedreg/a031223c.html.

MISSILE PROLIFERATION SANCTIONS

In the December 24 Federal Register the State Department imposed missile proliferation sanctions against:

1. Blagoja Samakoski (Macedonian national)
2. Mikrosam (Macedonia)

These sanctions prohibit the approval of license for transfers to these parties of military and commercial items controlled by the Missile Technology Control Regime Annex. The sanctions also prohibit US Government contracts with these entities.

As a practical matter, exporters should read a bit more into these sanctions: First, if you ever deal with these entities, you must assume there are significant “red flags” indicating possible illegal missile activities and treat the transaction accordingly. Second, it is likely that the US Government will deny most, if not all, license applications for these parties.

1. Commerce Denied Persons List

The Commerce Department added the following to its DPL during October 2003:

• Reza Moghadam Pirasteh, 23087 Arroyo Court, Plano, Texas to the DPL for seven years based on a settlement agreement for Pirasteh’s alleged illegal exports to Iran. (October 7, 2003)
• Abdulamir Mahdi (aka Amir Mahdi and Jasin Khafaf), 20 Huntingwood Drive, Scarborough, Ontario, Canada and OTS Refining Equipment Corporation, 7030 Woodbine Avenue, NE, Suite 500, Markham, Ontario, Canada. See story in section 2.1 below.

2. Terrorists Lists

• Communist Party of Nepal (Maoist), aka the United Revolutionary Council, aka People’s Liberation Army of Nepal, aka CPN(M). (October 31, 2003 Federal Register)
• Dhamat Houmet Daawa Salafia [also known as Group Protectors of Salafist Preaching; aka Houmat Ed Daawa Es Salifiya; aka Katibat El Ahoual; aka Protectors of the Salafist Predication; aka El-Ahoual Battalion; aka Katibat El Ahouel; aka Houmate Ed-Daawa Es-Salafia; aka the Horror Squadron; aka Djamaat Houmat Eddawa Essalafia; aka Djamaatt Houmat Ed Daawa Es Salafiya; aka Salafist Call Protectors; aka Djamaat Houmat Ed Daawa Es Salafiya; aka Houmate el Da’awaa es-Salafiyya; aka Protectors of the Salafist Call; aka Houmat ed-Daaoua es-Salafia; aka Group of Supporters of the Salafiste Trend; aka Group of Supporters of the Salafist Trend] (October 20, 2003 Federal Register)

3. State Department Debarred Parties Clarification

Last month we reported that the State Department (finally) announced that it has imposed statutory debarment on a long list of parties who committed export/reexport violations. The State Department Federal Register notice said that each party was debarred for three years. In fact, one of our readers pointed out that under the ITAR, each party is debarred forever unless the State Department takes an action to lift the debarment. So, leave these parties on the denial list you use for export compliance screening.