Illya Antonenko, one of our intrepid associate editors, attended a presentation today at the Washington International Trade Association by Chris Padilla, Assistant Secretary of Commerce for Export Administration. As expected, Mr. Padilla continued to tout BIS’s plans to expand the Validated End User (VEU) concept to China and beyond, with India being the next country on BIS’s radar screen. We have previously expressed our view here at ExportLawBlog that national sovereignty issues may complicate, if not prevent, the kind of in-country inspections by USG officials that the VEU process contemplates.

Of more interest, in our view at least, was the appearance by Mr. Padilla of stepping up the rhetoric about BIS’s concerns with the UAE. Avid readers of BIS consent orders — and there must be some of you out there other than me — have no doubt noticed that Dubai seems to be the current transshipment point of choice for exporters hoping to sneak things into Iran or other sanctioned destinations.

The Assistant Secretary repeated several times his concerns over the UAE’s “alarming lack of oversight” that has led to repeated diversions of shipments at the ports in Dubai and Abu Dhabi to Iran and Syria. He said that if the UAE does not adopt and implement an export control regime within months, then the US will take some steps, although he did not specify what steps might be taken. According to Mr. Padilla, the US has talked to the UAE for years about this issue and provided technical assistance to the Emirates to assist its export control program. Nevertheless, Mr. Padilla made it clear that “the time is running short” on this issue for the UAE.

Hong Kong was singled out by Mr. Padilla as a country having a good program of export controls to prevent diversion. This seems an odd time to be patting Hong Kong on the back in this regard since it was just last month that BIS issued an order denying export privileges to an exporter who had been transshipping items to the PRC through Hong Kong.

UPDATE: The prepared text of Assistant Secretary Padilla’s remarks to WITA can be found here.

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