Archive for the ‘USML’ Category

Nov

8

Skip to My Loo

Posted by Clif Burns at 6:43 pm on November 8, 2011
Category: DDTC • USML

ToiletMy inbox this morning had several, er, heads up alerting me to news that the Directorate of Defense Trade Controls (“DDTC”) has removed toilets from the United States Munitions List (“USML”). Needless to say, this was a blogging opportunity that I could not let go to waste.

More specifically, DDTC removed chemical toilets manufactured by MAG Aerospace Industries for use in military aircraft. The toilet in question was initially manufactured for the Lockheed C-130 and was subsequently modified for other military aircraft.

In explaining why these specially configured military aircraft components are being removed from the USML, DDTC said this:

The core functionality of the toilet remains the same as a model used for commercial aircraft.

That may be my favorite example of bureaucrat-ese ever. It translates, of course, into plain English as this: “The purpose of both models is to …” I bet you are relieved I didn’t finish that sentence, aren’t you?

For those that may not be privy to all aspects of export law, the DDTC adds at the end of the notice that the removal of the toilets from the USML does not mean that they can now be exported to Iran or other embargoed countries. Those poor mullahs will simply have to settle for ordinary flush toilets, I guess.

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Oct

3

Supreme Court Refuses to Hear Roth Appeal

Posted by Clif Burns at 5:41 pm on October 3, 2011
Category: Criminal Penalties • ITAR • USML
Professor John Roth
ABOVE: Professor Reece Roth

The Supreme Court term began today — today being the first Monday in October — and it got right to work by denying the certiorari petition of Professor of Professor J. Reece Roth, a professor emeritus at the University of Tennessee who had been convicted of violating the Arms Export Control Act (“AECA”). The conviction was based on, among other things, Professor Roth permitting access by a foreign graduate student to technical data relating to an Air Force military drone project. In January of this year, the Sixth Circuit dismissed Professor Roth’s appeal, which makes this pretty much the end of the road for Professor Roth.

Roth’s petition for certiorari argued that the Sixth Circuit was incorrect in its finding that the wilfulness element necessary for a conviction under the Arms Export Control Act did not require a finding that Professor Roth knew that the technology in question was on the United States Munitions List. The Sixth Circuit instead held that the standard was satisfied if Professor Roth knew that his conduct was unlawful without regard to any specific knowledge he might have relating to the USML.

Roth’s petition for certiorari relied on the Eighth Circuit’s decision in United States v. Gregg, 829 F.2d 1430, 1437 & n.14 (8th Cir. 1987) which appeared to hold that a conviction required a finding that the defendant knew the exported item was on the USML. The United States government, in its brief opposing Professor Roth’s petition for certiorari, argued that the decision in the Gregg case, although it cited a jury instruction requiring that the defendant knew the export item was on the USML, did not hold that the conviction would have been reversed if the jury instruction had not referenced the USML and had simply required knowledge by the defendant that the conduct was unlawful.

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Jul

15

New Rule Would Make It Harder to Export Spare Parts without Licenses

Posted by Clif Burns at 5:21 pm on July 15, 2011
Category: CCL • Export Reform • USML

Spare PartsAs noted in yesterday’s post dealing with the proposed rule by the Bureau and Industry and Security (“BIS”) on the transfer of United States Munitions List (“USML”) items to the Commerce Control List (“CCL”), parts and components of USML items may be transferred to the CCL while the item itself remains on the USML. In those cases, the parts, which will be covered under the new series 600 ECCNs, can be exported under BIS’s license exception RPL. However, that license exception requires that the exported spare parts be one-for-one replacements for parts of an item that had been previously exported pursuant to a license issued by the Directorate of Defense Trade Controls.

The problem here is that those parts now may only be exported without license using the overly restrictive conditions of RPL which require that the parts be a one-to-one replacement and cannot be shipped to be held in inventory for future repairs. This has been a much criticized aspect of BIS regulations which makes American goods less competitive by holding repairs hostage to the shipping delays that the one-to-one replacement rule inherently causes.

If the parts remained on the USML, they would be entitled to the license exemption in ITAR section 123.16(b)(2), which does not contain the burdensome one-to-one replacement requirement. That exemption permits the unlicensed export of repair parts if they are valued at less than $500, provided there are no more than 24 shipments per year to each approved end user. In those many instances where spare parts needed for repairs are relatively inexpensive, this rule provides much more flexibility to exporters; but it will now be lost for those parts that are transferred to the CCL.

Perhaps, the new license exception STA will be used to ameliorate this hardship somewhat. However, for each of the transferred USML parts, STA eligibility will depend on a one-time eligibility determination that may not have been made yet for the particular part at issue. And it won’t apply to exports of parts to countries not eligible for license exception STA. Those wishing to comment on the proposed rule might consider requesting that the provisions of 123.16(b)(2) be written into the revised RPL for the new series 600 ECCNs.

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Mar

30

eBay Drone Auction Leads to Sting, Arrest

Posted by Clif Burns at 9:29 pm on March 30, 2011
Category: Arms Export • Criminal Penalties • USMIL • USML

Robot Attack!Henderson Chua, a resident of the Philippines who was arrested when he traveled to Los Angeles in February, was indicted on March 10 on charges that he illegally engaged in a temporary import into the United States of parts for an AeroVironment RQ-11 Raven drone without the required State Department license. Mr. Chua had listed the Raven on eBay, which had attracted the attention of undercover federal agents in both California and in Florida. Agents in both states had entered into discussions with Mr. Chua to purchase the parts.

According to the criminal complaint filed in the case, the parts consisted of the nose cone, fuselage, and the horizontal surface of the tail assembly, but not the main wing, the entire tale assembly, the battery or the ground control equipment. (Almost all of the press stories, such as this one, this one, this one, and this one incorrectly reported that the illegal temporary import involved the entire drone.)

It’s important to understand that only parts were involved because a permanent import of these parts is not illegal. Aircraft and drone parts are not listed on the United States Munitions Import List. They are, however, listed in Category VIII(h) of the United States Munitions List, which means they require a State Department license for temporary (as opposed to permanent) imports, i.e., imports which will be followed by an export back out of the United States. As you will see, this distinction between legal permanent imports and illegal temporary imports opens up some major holes in the government’s case.

The narrative in the criminal complaint shows that Mr. Chua initially entered into negotiations with the federal agents to sell them the Raven parts, which apparently he was doing on behalf of a third party who claimed to have bought them in a Philippines government auction. During the negotiations, the agents frequently and incorrectly indicated that the import of these parts into the U.S. would be illegal. At one point, Mr. Chua responds that it should not be a problem because he is only shipping “as a part not a whole unit [and] can be declared as a spare.” (Paragraph 17.) At this point the agents might have realized that a permanent import of the parts would not be illegal, so they told Chua, for the first time and the very next day, that they were buying the parts for someone in Russia and the parts would be immediately exported after they received them. (Paragraph 18.)

After hearing this, Mr. Chua and the owner of the parts wisely consulted lawyers to see if the parts could still be shipped. Based on that consultation, Chua told the undercovers that they would need a State Department license (Paragraph 29.) After repeated statements by the agents that they would not obtain a license, Chua told the agents that he could only sell the parts to them if they would sign an agreement stating:

The Buyer shall not export, re-export, or transfer directly or indirectly either by laws applicalbe in the customer’s own courntry or by laws of the United States of America to countries/companies developing weapons of mass destruction (WMD) and to companies/persons listed under the U.S. Department of Commerce Denied List.”

(Paragraph 39.) The agents did sign such an agreement prior to the export of the parts by Chua to them. (Paragraph 42.)

As this blog has noted again and again, a criminal export violation requires knowledge by the defendant that he or she is violating the law. This is going to be tough in this case. The defendant correctly believed that he could ship the parts to the United States until the agents said that they were going to re-export the items to Russia. At that point, Chua and his seller consulted lawyers and told the undercovers they would need State Department licenses to ship the parts. When the agents declined to get licenses, Chua determined, apparently in consultation with legal counsel, that the items could only be shipped without a license if the agents agreed not to export them from the United States. Granted the advice was a bit flawed because the agreement no to re-export was limited to countries involved in developing WMD or to parties on the Department of Commerce’s Denied Parties List. But there is not a shred of evidence that Mr. Chua didn’t believe that this advice was a correct statement of U.S. law. Chua may be liable for civil penalties under the Arms Export Control Act but criminal penalties can’t be imposed without proving he knew he was relying on bad legal advice.

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Sep

7

Washington Times Lashes Out Against Export Reform

Posted by Clif Burns at 8:41 pm on September 7, 2010
Category: CCL • Export Reform • USML

Sun Myung MoonAs the troubled Washington Times enters into what may be its final days, unless it accepts the cold embrace and re-emergence of its founder, the Rev. Sun Myung Moon, the paper has turned its back on some of it former friends and given a forum to, of all people, Gary Milhollin of the Wisconsin Project on Nuclear Arms. Even though much of export reform is in areas that have nothing to do with Nuclear Arms, Mr. Milhollin — quelle surprise — is no fan of any export reform at all

Gary Milhollin, director of the Wisconsin Project on Nuclear Arms Control, called the new policy a “defense industry bailout.”

“The financial industry and the auto industry had their bailouts, now it is the defense industry’s turn,” he said.

Mr. Milhollin also said the United States steadily relaxed arms-export controls since the end of the Cold War. “We have already reduced controls to the bone,” he said.

I can only imagine that Mr. Milhollin hasn’t glanced at the Commerce Control List or the United States Munitions List recently or even at all if he can say we have already reduced controls to the bone with a completely straight face.

The number of items on the CCL that have no business being there is, as most readers of this blog will know, significant. My favorite example, of course, is “horses by sea” controlled by ECCN 0A980. But no survey of the oddities of the CCL would be complete without mentioning controls on items easily obtainable throughout the world such as triethanolamine (ECCN C350.c.9) used in cosmetics such as shaving cream. Other unique oddities of the list include thumbcuffs, whips, cattle prods, fingerprint inks, pumps and valves, muzzle-loading pistols and rifles, and optical sights for BB guns.

And the USML has its own share of unnecessary controls, starting with, of course, its legendary controls on military railway trains which have pretty much gone the way of muzzle-loading pistols, catapults, jousting lances, and military calvary brigades as items of warfare. Others include weapons silencers, flash suppressors, rifle parts, body armor, powder bags, and cartridge casings, all of which are readily available outside the United States.

None of this sounds to me like these two lists have been “cut to the bone.”

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