Nov
2
Well That Didn’t Take Long, Did It?
Posted by Clif Burns at 10:58 pm on November 2, 2011
Category: BIS • Cuba Sanctions
ABOVE: Ileana Ros-Lehtinen
On October 19 this blog reported on a hearing held by the Senate Energy and Natural Resources Committee with respect to efforts that the U.S. government and U.S. companies are taking to respond to and mitigate potential ecological disasters that might stem from planned exploratory drilling by non-U.S. companies in Cuban territorial waters. The chairs in the hearing room had barely cooled off before Ileana Ros-Lehtinen, Chair of the House Foreign Relations Committee, fired off a letter to the Obama administration criticizing any efforts by the federal government to minimize the impact of the Cuban drilling on the ecology of nearby U.S. coastal waters. Because the drilling is going to occur in all events, complaining about damage containment on U.S. shores seems to be a classic case of cutting off our own nose to spite Cuba’s face.
Chairwoman Ros-Lehtinen’s tenure on the Foreign Relations Committee has, sadly, not caused her to learn much about U.S. export laws, as we’ve noted before, and this letter on Cuban drilling continues to demonstrate her confusion about applicable export and sanctions laws. For starters, the Chairwoman seems to believe that the lapsed Export Administration Act is still in force when she demands an investigation by the Bureau of Industry and Security (“BIS”) as to whether use of a Chinese-built rig in the drilling violates the “Export Administration Act.”
The de minimis rule also appears to have confused Ros-Lehtinen:
We are concerned by reports that the Scarabeo 9 may have been designed specifically to avoid U.S. economic sanctions against Cuba. While the EAA and the Export Administration Regulations (EAR) generally prohibit virtually all exports and reexports of U.S.-origin goods, software and technology to Cuba, we need clarity on how the Administration is applying the sanctions and EAR to foreign produced items incorporating 10 percent or less controlled U.S. content
That is not a difficult question to answer: the sanctions and the EAR do not apply to restrict export to Cuba of foreign-produced items incorporating 10 percent or less controlled U.S. content. There’s no need to write a letter to President Obama to get that answer; it’s clearly stated in the EAR.
But the Chairwoman saves the best for last:
The Export Administration Regulations clearly state that the only items allowed to be exported to Cuba are donations of medical equipment, agricultural exports, and telecommunications equipment. Thus, even if the de minimis rule does not [sic] apply, the broader prohibitions against exports to Cuba must still be enforced.
Where exactly to start with this? Section 746.2(a)(1) of the EAR permits many more exports other than the three mentioned by Ros-Lehtinen, including medicine, computers, disk drives, digital cameras, televisions, radio receivers, recording devices, baggage, gifts, humanitarian donations, aircraft on temporary sojourn, spare parts for foreign-made equipment and much more. More importantly, any listing of permissible exports in section 746.2(a)(1) does not overrule the explicit provisions of the de minimis rule found in section 734.4 of the EAR which specifically permits re-exports to Cuba of items with 10 percent or less U.S.-origin controlled content.
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7 Comments:
Great write up Clif, not so much so for the Chairwoman.
Perhaps Ms. Ros-Lehtinen would benefit from attending a BIS seminar. It is rather disturbing to think I (someone without a college degree) have a better understanding of export regulations then an elected official in Washington.
The policies advocated by the Congresswoman from Cuban Occupied Florida are a classic case of the tale wagging the dog. In her view, and the view of many of the other Batista expatriates now occupying parts of Florida, the only foreign policy that matters is policy toward Cuba, and all non-Cubans, i.e. Americans, should gladly suffer in order for the Cuba expatriates to continue their feud with the Castro boys. Now we know a thang or two about feuds up here in the hills, and one of the first principles of feuding is that you fight them yourself. I don’t support abolishing the import embargo on Castro – we don’t need to import more of anything – but the embargo on reexports of US goods and foreign-made goods kills US exports and jobs. We have given the Cuban expatriates far too much as it is. In an era with high annual trade deficits bleeding off GDP and jobs, we don’t need to lose more jobs to pander to those who ran away from Castro.
Clif, I believe that for Cuba, the EAR reexport rules count essentially all items of US origin as “controlled”, including most EAR99 items, because the EAR restricts the export of essentially all items of US origin to Cuba directly. Para (a)(1) of Supp. No. 2 to Part 734 of the EAR, which discusses the de minimis content calculations for reexport control purposes, states that when “identifying U.S.-origin controlled content, you should consult the Commerce Country Chart… and controls described in part 746 of the EAR.” The essentially blanket export embargo for Cuba is described in part 746.
You’re right, Avid. I’ve revised the post to reflect that. Thanks
I realize that most readers of this blog do not support U.S. sanctions on Cuba; and, through the years, those of us that do in this town have become accustomed to outlandish comments like those posted above by Hillbilly.
For the benefit of those of you who have not worked on the Hill, Congressional oversight is part of the policymaking process, not a legal exercise. The Chairman’s letter seems written in that vein, to elicit a response from the Obama Administration whose policy on enforcing sanctions generally, not just to Cuba, has been anything but good and consistent.
Cherry picking the Chairman’s letter may make for good blogging, but, in the end, Congress is there to conduct robust oversight to ensure U.S. laws are enforced as the Congress intended. And when it comes to U.S. laws toward Cuba, consistent enforcement is something that no administration, Republican or Democrat, has ever truly done (the only exception being the Reagan Administration).
It does not take a creative lawyer anytime to figure out that U.S. laws and regulations with regards to Cuba, under a TWEA umbrella, can dish out devastating and inconsistent results in the real world. There are just too many “may” or “will generally” clauses, peppered throughout all of the Cuba-realted regulations to reach the definitive conclusions outlined in this post.
Just ask any lawyer whose had to defend clients before OFAC – a very non-transparent process with a regulatory regime that is somewhat dated – makes you want to head for the hills. TWEA, IEEPA, EAA, Helms-Burton, Cuban Democracy Act, etc., and many more non-Cuba focused federal laws, makes for no easy analysis.
The true solution for this mess is for both the Obama Administration, and the U.S. Congress, to cease the partisan bickering on national security policy and start serious discussions to put in place an export controls reform process that will form the foundation for improving the licensing and compliance process for U.S. companies that are impacted by these rules; including the sanctions programs.
A good place to begin? Start with reauthorizing the EAA to remove the many IEEPA-related constraints in place today.
Of course, JP, you know that I believe the true solution is to end the counterproductive sanctions on Cuba and give US exporters equal footing with our Canadian and European allies in trading with Cuba. Then no “oversight” would be required.
