Apr

16

Export Control Final Transition Plan Announced


Posted by at 11:25 pm on April 16, 2013
Category: DDTCExport Reform

CH-53Ds landingToday DDTC released its final transition plan for the first wave of export control reform under which certain items in Category VIII of the USML are transitioned to a new “600 series” of controls in Category 9 of the CCL. Of course, a major concern of exporters has been where to file licenses for the transitioned items between the date of the publication of the rule and its effective date.

This concern was exacerbated by some confusing language in the proposed transition plan released last summer. That was this language:

License applications [for transitioned items] received by DDTC within the 45 days following the final rule’s publication, but before the rule becomes effective, will be adjudicated only when the applicant provides a written statement certifying that the export or temporary import will be completed within 45 days after the effective date of the final rule.

The concern here, of course, was what would happen to licenses for these items that were filed after the 45 days from publication but before the effective date of the rule when, presumably, BIS would be able to issue licenses for the transitioned items. When informal information subsequently suggested that the period between publication and effective date would be 180 days, the concern was magnified: this would create a licensing limbo of 135 days when DDTC would not accept or grant applications and BIS would not grant them.

Under the final version of the transition plan, this problem goes away:

License applications will be accepted by both DDTC and BIS for items moving from the USML to the CCL, but BIS will not issue approved licenses for such items until on or after the applicable effective date.

Licenses for transitioned items granted by DDTC during the 180-day transition period will be valid for two-years unless an earlier expiration date is specified in the license.

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Copyright © 2013 Clif Burns. All Rights Reserved.
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Apr

9

Australian Court Sentences Export Defendant to Good Behavior


Posted by at 6:54 pm on April 9, 2013
Category: Arms ExportCriminal Penalties

Ian Chow https://www.facebook.com/photo.php?fbid=410491802970&set=p.410491802970&type=1&theater (Fair Use)
ABOVE: Ian Chow


Ian Chow, an Australian expatriate living in New Guinea and who is the managing director of the Lae Biscuit Company in Lae, New Guinea,* pleaded guilty to charges in Australia that he illegally exported ammunition components to New Guinea. His sentence may surprise those here in the U.S. used to seeing export defendants walloped with 5 year sentences for export violations. Mr. Chow was ordered to pay $10,000 to a charity and sentenced to a 12-month good behavior bond. (A good behavior bond is an Australian form of probation where the defendant is fined rather than jailed if he misbehaves.)

Apparently the sentence was based on testimony the court heard of the motive for the shipment of the ammunition components to New Guinea:

Chow took a short cut by shipping the items to PNG without permission from authorities, as the shooting club and police officers in Lae were short of ammunition when Chow’s house burnt down in February last year. Chow kept ammunition for the club at his house and it was destroyed in the fire.

You’d think that the Lae police might keep their ammunition somewhere other than the house of the guy who runs the local cookie company, but I have to imagine that many other things are done in an unconventional manner in New Guinea.

*An interesting bit of trivia: the Lae airport was the last place Amelia Earhart was seen alive.

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Copyright © 2013 Clif Burns. All Rights Reserved.
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Apr

3

U.N. Approves Arms Trade Treaty


Posted by at 4:58 pm on April 3, 2013
Category: Arms ExportDDTC

By Stefano Corso http://commons.wikimedia.org/wiki/File:UN_building.jpg (Attribution)Yesterday the United Nations, by a lopsided 154-3 vote, approved the Arms Trade Treaty. The three “no” votes came from Iran, Syria and North Korea. Joining with those three countries in opposing the treaty will likely be the U.S. Congress, seemingly oblivious to the irony of casting its lot with these three rogue nations.

Much of the opposition centers on fears that the treaty will allow a transnational body to impose restrictions on domestic sales of guns in the United States. However, the preamble dismisses this concern at the outset, noting that the treaty acknowledges

the sovereign right of any State to regulate and control conventional arms exclusively within its territory, pursuant to its own legal or constitutional system. …

Moreover, the treaty only impacts exports and imports of arms and has no application to any member state’s purely domestic or internal regulation (or non-regulation) of weapons and firearms.

Of primary significance here, however, is that the treaty does not require the United States to do anything other than what it is required to do, and already does, under its own Arms Export Control Act (“AECA”), namely to establish a control list, to regulate exports of items on that control list, and to assure that export licenses are not granted to permit exports of arms to be used in violation of international agreements or to commit genocide or crimes against humanity. These are arguably not any different from the factors set forth in section 38(a)(2) of the AECA to be considered by DDTC in granting export licenses.

What this means is that the real impact of the treaty will be to require countries that do not now regulate their arms exports to start doing so. This would create a more level playing field for U.S. exporters who must get licenses for all weapons exports but who compete against suppliers in other countries which do not regulate weapons export.  It seems hard to argue against that result.

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Copyright © 2013 Clif Burns. All Rights Reserved.
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Mar

29

Apple’s Newest Fanboi?


Posted by at 2:39 pm on March 29, 2013
Category: BISNorth Korea Sanctions

Photo By Korean Central News Agency (derivative work; fair use)

Well, well, well.   It seems that North Korea’s well-fed Dear Leader is planning his attack on the United States mainland using a 21.5 inch aluminum unibody iMac.  Or perhaps he just uses it to play Call of Duty Mac Edition in between snacks and drawing pictures.  It’s hard to tell.

But, you may ask, what’s he doing with an iMac?  Don’t we have laws against that? Yes, we do. Currently, exports to North Korea of all items other than food and medicine classified as EAR99 require a license from the Bureau of Industry and Security (“BIS”). An iMac is classified as ECCN 5A992. Under EAR § 742.19(b)(vii), licenses to export 5A992 items to North Korea are subject to a general policy of denial, so I think we can reasonably assume that no license was issued by BIS to export the iMac to our Dear Leader.

So where did he get it? Um, where do you think? China, probably..

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Copyright © 2013 Clif Burns. All Rights Reserved.
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Mar

26

OFAC Threatens To Fine Bank Employees in Sanctions Cases


Posted by at 3:58 pm on March 26, 2013
Category: OFAC

Department of Treasury Seal by woodleywonderworks http://www.flickr.com/photos/wwworks/2895964373/in/photostream/ (CC BY-SA 3.0)Banks may be too big to fail but their employees, apparently, aren’t too small to nail.

After taking a boatload of abuse during Senate Banking Committee hearings in December that no individuals were held civilly or criminally liable for the HSBC violations, OFAC has started waving a big stick at bank employees who might play some role in sanctions violations

As reported by Brett Wolf at Reuters, Treasury spokesman John Sullivan had this to say last week:

Although sanctions enforcement cases involving financial institutions have typically concluded with civil penalties at the corporate level, individuals can and do face liability … when they are personally responsible for sanctions violations, and Treasury’s Office of Foreign Assets Control will take appropriate enforcement action in these circumstances.

Of course the issue here will be which employees will be “personally responsible” if illegal transactions for Iran are cleared by a bank. Are we talking about the people in the wire room who process the transactions or are we talking about the folks with keys to the executive washrooms? I am probably not being overly cynical to suggest that it will be the wire clerks and not the VPs who will pay here.

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Copyright © 2013 Clif Burns. All Rights Reserved.
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