Jun

19

If You Speak Farsi, Well, You Can’t Have an iPhone


Posted by Clif Burns at 7:40 pm on June 19, 2012
Category: BISIran Sanctions

Apple StoreSometimes, believe it or not, export compliance efforts might be a bit overzealous and lead to other problems. Several readers brought to my attention this story at the Consumerist website suggesting that Apple Store employees in Georgia were refusing to sell iPads and other coveted Apple goodies to customers who spoke Farsi on the grounds that such sales would violate the U.S. embargo against Iran. Now, leaving aside the entire issue of how an Apple Store “genius” in Georgia is going to recognize that someone is speaking Farsi (as opposed to say, Pashto, or even, this being Georgia, French), this would seem to be a little problematic. In one case, the rebuffed customer was an American of Iranian descent who was speaking Farsi with her uncle.

A second case, however, was a bit more problematic. It involved an Iranian student properly in the United States on a student visa who wanted to buy an iPhone. The writer at the Consumerist, naturally being an expert on export law, quickly disposed of this issue.

In the second case, of the man here on a student visa, you might be able to make that argument, though it’s really just the exporting of goods to Iran — and not the sale of items to Iranians in the U.S. — that is embargoed.

Well, we must give the Consumerist guy some points for effort, but the issue is just a little more complicated than that. First, you can’t sell anything to an Iranian in the United States if you have any reason to believe that the item might be exported back to Iran by the purchaser. In the case of an iPhone, which is probably locked to a U.S. carrier, the export of that item seems unlikely.

Second, you can’t forget about the “deemed export” rules which could forbid transfer of certain technology to Iranian citizens in the United States, even on a legitimate visa. (Does the name Dr. Roth ring a bell?) And in some instances, given that the Export Administration Regulations, make clear that “visual inspection” can be a technology transfer, there might be certain items that you can’t sell to Iranian citizens in the United States. However, iPads, iPhones and Airbooks, aren’t among those items.

The nice folks at Apple have a listing of ECCNs on their website. (Would that more companies would do that!) The iPad, iPhone and even the Mac Book Air, are all classified as 5A992. (None of them has the horsepower, apparently to fit under 4A994, which covers certain personal computing devices.) Now here’s where the analysis gets slightly tricky. ECCN 5E992 controls technology for the “use” of items controlled by 5A992. Would the manual for these devices, or even the visual inspection of these devices, provide information about the “use” of the devices? If so, their sales to an Iranian citizen in the U.S. on a visa would require a license.

The reason it doesn’t is because of BIS’s rather odd definition of “use.” I’ll let BIS speak for itself on this point:

Keep in mind that the deemed export rule does not regulate the operation of controlled equipment. Rather, it is a release to a foreign national of export-controlled “use” technology that may have deemed export licensing implications, and “use” technology includes all of the attributes of “use” as defined in the EAR Part 772 (i.e., operation, installation, maintenance, repair, refurbishing and overhaul). If the foreign national has access only to the technology that is necessary to operate the export controlled equipment, a release of “use” technology has not occurred and no deemed export license requirement is triggered.

So since neither the manual or visual inspection of the Apple stuff will help the purchaser repair, refurbish or overhaul those items, Apple is free to sell them away to Iranians in the United States unless, of course, it has reason to believe that the Iranian is going to ship the goods back to Iran or take them back to Iran upon the visa-holders return.

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6 Comments:


Actually, Apple now sells carrier unlocked iPhones. These could easily be exported to and used in Iran. There are huge secondary markets in countries without an official Apple presence for Apple goods. I know, I live in one just north of Iran!

Comment by mpc on June 20th, 2012 @ 4:41 am

    If it’s an unlocked phone, I think Apple might well refuse to sell it given the likelihood — because it is unlocked — that the purchaser intends to take it back to Iran.

    Comment by Clif Burns on June 20th, 2012 @ 11:36 am

Thank you for the information. I enjoy reading the gems you find. I especially like the statement concerning the BIS definition of use.

However, there is one item I would like to clarify in regards to the ‘locked’ statement. I am not sure which version the individuals were attempting to purchase, but Apple sells unlocked versions of the iPhone. According to the apple store website:

‘The unlocked iPhone includes all the features of iPhone… if you prefer to use a local carrier when traveling abroad, the unlocked iPhone is the best choice…you’ll need an active micro-SIM card from any supported GSM carrier worldwide.’

Comment by Unlocked Iphones on June 20th, 2012 @ 9:11 am

I have no doubt that Iranians intending to export iPhones or other Apple products will henceforth refrain from speaking Farsi in the presence of Apple Store personnel. More likely, they will not speak to a sales person at all, but will simply make their purchases through the Apple Online Store. Shall we expect to hear in future that iPhones, etc., might be confiscated at Customs upon the departure of Iranians bound for home? If so, might Apple come under fire for export violations in connection with such confiscations? After all, Apple is aware of the situation, yet purchases of unlocked iPhones may be made online and without query as to final destination of said products. The law is either unenforceable or life for Apple Store employees, both online and regular, is about to become more stressful than it already is.

Comment by Dave on June 20th, 2012 @ 12:13 pm

Actually, iPhones and iPads do not come with user manuals–you have to download them to the device.

Comment by Arthur on June 20th, 2012 @ 5:46 pm

Most of the items in Apple’s store, such as iPads and computers, do not come with service contracts. It would be easier for Apple to have a blanket rule saying “don’t sell things to Iranian nationals” than for them to ask individual sales persons to make nuanced choices like “If they are Iranian, you can only sell them iPhones, and only if they are locked, and only if they don’t say anything about unlocking them while in the store…”

The entire notion of an Iranian on a Student Visa raises all kinds of potential conflicts. As a student, you need certain things, like computers, and access to libraries which contain books on technical subjects. If everyone who sells you something more substantial than a hamburger runs the risk of committing a crime by doing so, life is either going to be very difficult for you or very difficult from everyone you come into contact with. This problem suggests that the regs need to be simplified.

Comment by Tom Cross on June 25th, 2012 @ 9:07 am