Archive for the ‘BIS’ Category


Apr

18

Oh, The Places You’ll Go!


Posted by Clif Burns at 3:25 pm on April 18, 2014
Category: BISIran SanctionsOFAC

By Alec Wilson [CC-BY-SA-2.0 (http://creativecommons.org/licenses/by-sa/2.0)], via Flickr https://www.flickr.com/photos/awilson154/12221595055/sizes/l
N604EP in Zurich last January (Alec Wilson via Flickr, CC-BY-SA-2.0)

According to an article in the New York Times, and a picture snapped by one of its reporters in Tehran, a U.S. registered corporate jet with a discreet U.S. flag painted on the tail and with the registration number N604EP was spotted three days ago on the runway of Mehrabad Airport in Tehran, Iran. At first, apparently not having seen the photographic evidence, Director General of Tehran’s Mehrabad Airport Nasrollah Mansouri Shirazi told the Tasnim News Agency, an IRGC-affiliated group, that no U.S. planes had landed at his airport. (Baghdad Bob is alive and well at the Mehrabad Airport!)

The appearance of the U.S. plane in Tehran has, of course, resulted in a whirlwind of speculation about what it is doing there. As the Times correctly points out, its unlikely to be a covert diplomatic mission what with the U.S. flag emblazoned on the tail and the jet sitting in full daylight in a spot where a reporter could snap a photograph. (Such trenchant observations are why the New York Times is, after all, the U.S. newspaper of record.)

The whole affair has the Bank of Utah, which owns the plane in trust for some shadowy and undisclosed investors, all flustered.

Brett King, one of its executives in Salt Lake City, said, “We have no idea why that plane was at that airport.

Mr. King, who helps run the bank’s trust services business, said the bank had no “operational control” or “financial exposure” to any of the planes.

For his part, Mr. King said Thursday in an interview that he was trying to get to the bottom of the aircraft’s presence in Tehran. “The Bank of Utah is very conservative, and located in the conservative state of Utah,” he said. “If there is any hint of illegal activity, we are going to find out and see whether we need to resign” as trustee.

If the jet was in Iran without authorization, the Bank, as the legal owner of the plane, is going to have a hard time trying to wash its hands of the matter simply by resigning as “trustee” and trying to walk away from the issue. It will certainly need to demonstrate to federal regulators that it took all necessary steps in its dealings with the mysterious owners to prevent them from flying the plane to embargoed destinations without authorization.

One final amusing note is that the New York Times cannot figure out which agency needed to authorize the plane to land in Iran:

Under United States law, any American aircraft would usually need prior approval from the [Treasury Department's Office of Foreign Assets Control] to go to Iran without violating a complicated patchwork of rules governing trade.

In the case of this particular aircraft, powered by engines made by General Electric, the Commerce Department typically would have to grant its own clearance for American-made parts to touch down on Iranian soil.”

Er, no, the license from OFAC would be enough. If the Times reporter spent a few moments with Google he would have easily found the Commerce Deparment saying this:

Although BIS maintains license requirements for Iran, OFAC is responsible for administering most Iran sanctions. You are not required to seek separate authorization from BIS to export or reexport an item subject to both BIS’s Export Administration Regulations (EAR) and OFAC’s Iranian Transactions and Sanctions Regulations (ITSR) (31 CFR Part 560). However, you will also violate the EAR if you do not obtain an OFAC authorization if one is required.

I guess the fact-checkers at the Gray Lady aren’t what they used to be. . . .

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Mar

27

BIS Halts Processing on All Export Licenses for Russia


Posted by Clif Burns at 12:28 pm on March 27, 2014
Category: BISDDTCRussia DesignationsRussia Sanctions

A notice that further processing of all export licenses for CCL items to Russia just appeared in the last several days in the slider on the home page of the website for the Bureau of Industry and Security (“BIS”):

(I’m posting a screenshot because there is no reliable permalink to the slider image).

Existing licenses are not affected; only license applications that were not granted as of March 1, 2014, are covered by this policy. Compare this to the U.K. action which suspended all existing licenses and applications for military and dual-use items destined for the Russian military “which could be or are being deployed against Ukraine.” The State Department has not yet taken action on licenses and applications for USML items to Russia, although possible action in that regard is rumored.

UPDATE: DDTC has just posted this on the home page of its website:

The Department of State has placed a hold on the issuance of licenses that would authorize the export of defense articles and defense services to Russia. State will continue this practice until further notice.

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Mar

13

Daily News Attempts Export Humor; Bombs


Posted by Clif Burns at 4:25 pm on March 13, 2014
Category: BISCCLNorth Korea Sanctions

By Jared Kofsky (Own work) [CC-BY-SA-3.0 (http://creativecommons.org/licenses/by-sa/3.0)], via Wikimedia Commons http://commons.wikimedia.org/wiki/File%3ADaily_News_Building-_WPIX_CW_11.JPGIt must have been a slow news day on Tuesday for the New York Daily News, because the aging tabloid decided to try its hand at export humor. As you might imagine, things did not go well for the paper.

The attempt occurred in a feature called “Your Cheat Sheet,” which appears in a blog called “The Swamp” and looks at important events in DC. You know, so-and-so is testifying on the Hill, Prime Minister Muckety-Muck of Lower Lithovakia meets with USDA officials, etc.   With that in mind, we present the joke in full:

Breaking News, so let’s parachute Anderson Cooper into: the Commerce Department’s Bureau of Industry and Security holds a meeting of the Materials Processing Equipment Technical Advisory Committee to “discuss technical questions that affect the level of export controls applicable to materials processing equipment and related technology.”

[Insert sad trombone sound here.]

Okay, so see the Daily News writer thought it was just hilarious that somebody would meet about “materials processing equipment and related technology.” That’s like a meeting, you know, on polynomial equations or plasma actuators or other silly egghead stuff for nerdy bureaucrats. Losers!!!  Bring in that Anderson Cooper fellow to cover this really groundbreaking story, etc., etc.

One person who doesn’t think exports controls on “materials processing equipment and related technology” is a laughing matter is the Nork Dictator Kim-Jong Un. The UN Panel Report discussed in yesterday’s post noted that a key obstacle to Nork nuclear ambitions, and a key incentive for the country’s efforts to evade international sanctions, is that “it lacks sufficient domestic precision machine tool manufacturing capability” needed for building missiles and uranium enrichment facilities. That’s the equipment that’s in — yep, you got it — Category 2 of the Commerce Control List which covers “materials processing equipment and technology.”

The morale of this story is, of course, that export control humor should be left to the professionals.

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Feb

28

There’s a Nice Knock-Down Argument for You


Posted by Clif Burns at 5:16 pm on February 28, 2014
Category: BISDeemed Exports

Intevac HQ http://www.waymarking.com/gallery/image.aspx?f=1&guid=0efe8498-3735-4754-b1d9-e8e56cea9333 [Fair Use]It should come as little surprise that federal agencies, whether they sit on a wall or not, believe that a word means what they “choose it to mean — neither more nor less.” So when the Bureau of Industry and Security (“BIS”) says that “visual inspection” and “oral exchanges” mean “giving a system password,” well, you can wring your hands about the violence to the English language involved in such a semantic contortion and you can make obscure references to Humpty Dumpty. But that’s about it.

In a recently announced civil penalty imposed by BIS against Santa Clara based Intevac, the enforcement folks at BIS trampled over their own definitions in order to justify a $115,000 fine against the Company for giving a password to a foreign national employee that would allow him to access hard disk technology controlled by ECCN 3E001. Specifically at issue were drawings, blueprints and part numbers that resided on a company server. According to the charging documents

Intevac released the technology . . . by providing the Russian national employee with a login identification code and a password that enabled him to view, print and create attachments.

Now let’s take a moment to do something adventurous; let’s actually look at BIS’s definition in § 734.2(b)(3) of the EAR for “release of technology of software:”

Technology or software is “released” for export through:

(i) Visual inspection by foreign nationals of U.S.-origin equipment and facilities;

(ii) Oral exchanges of information in the United States or abroad; or

(iii) The application to situations abroad of personal knowledge or technical experience acquired in the United States.

Clearly, simply giving out a password that enables access to a technology is neither a visual inspection or oral exchange of the technology. Unless the password is actually used by the foreign national to access the technology itself, something the charging documents rather coyly refuse to assert, there has been no release of technology. Granted the language here is ambiguous and perhaps the Russian national did see the technology at issue, but saying that the password “enabled him to view, print and create attachments” is an odd way of saying that.

The background here is that the Directorate of Defense Trade Controls (“DDTC”) has, at least since the Consent Agreement in the General Motors case, taken the position that with respect to ITAR-controlled technical data the “ability to access” such data is a deemed export whether actually accessed or not. This does equal violence to the definition of export in § 120.17 of the ITAR which refers to “disclosing (including oral or visual disclosure) or transferring technical data to a foreign person.” Again, to ordinary speakers of the English language permitting access and disclosing are two different things. Perhaps BIS in the Intevac case is just exhibiting a bad case of me-too-itis and does not want anyone to think that DDTC is rougher and tougher on deemed export issues than BIS.

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Feb

11

With All Eyes on Sochi, Russian Ears Are on Ukraine


Posted by George Murphy at 8:49 pm on February 11, 2014
Category: BISCCLExport ReformSurreptitious Listening Devices

Kremlin.ru [CC-BY-3.0 (http://creativecommons.org/licenses/by/3.0)], via Wikimedia Commonshttp://commons.wikimedia.org/wiki/File%3AVladimir_Putin_at_the_Millennium_Summit_6-8_September_2000-19.jpg

The continuing violence and political instability in Ukraine have raised concerns around the world, especially within the United States and the EU.  Whether some form of sanctions against current officials in the Ukrainian government should be imposed has been debated over the past several weeks, including reports that the Obama administration began preparing financial sanctions against current Ukrainian government officials last month.

Sanctions against Ukrainian officials are, of course, a delicate diplomatic endeavor for EU countries that not only trade extensively with Ukraine but also recognize the effects to EU-Russian relations with any rancor that develops by proxy in former Soviet states.  Such targeted EU or U.S. sanctions, moreover, amount to blocking funds that are unlikely to be found in large amounts in Western banks and a travel ban on individuals who were not likely to travel to the West in the near future in any event.

The telephone conversation posted to YouTube late last week between U.S. Assistant Secretary of State Victoria Nuland and Geoffrey Pyatt, U.S. ambassador to Ukraine, however, exposed just how heated a resolution in Ukraine is becoming between the United States and the EU.  In discussing how officials from the United Nations may assist in reaching a resolution between the current Ukrainian government and opposition leaders, Nuland has now infamously said, “f**k the EU,” presumably an expression of her view that EU involvement thus far to address the situation in Ukraine has been inadequate.  As if that were not enough for diplomatic missteps, it has also been reported that Nuland and Pyatt each used unencrypted cell phones during the conversation.

While the fallout of Nuland’s comments and the Obama Administration’s finger-pointing at Russia for its involvement in hacking the phone call will garner the headlines, the issue also presents an interesting juncture for a shadowy subject of U.S. export controls: surreptitious listening devices.

As we first reported over seven years ago, BIS has not always been sufficiently clear on its standards for classifying surreptitious listening devices that are subject to the EAR’s control under section 742.13.  In Export Control Reform materials presented by BIS last year, BIS articulated five questions to assist exporters in answering the ultimate question, “Is my item subject to the 742.13 Communications Interception policy?”  Those questions, however, don’t help advance the ball much in improving a U.S. exporter’s ability in classifiying surreptitious listening devices short of seeking clarification or a license from BIS.

The United States may never determine what devices were involved in intercepting the Nuland-Pyatt conversation.  Moreover, the “tradecraft,” as Nuland described the interception, may very well continue to develop in ways that outpace any technical specifications that BIS affixes to surreptitious listening devices.  Without further clarity, however, U.S. exporters will still be mostly in the dark about what items require a U.S. export license at the same time that BIS will likely crank up the breadth of its controls over exports of surreptitious listening devices.  But if clarity is a hallmark of Export Control Reform, a little more with respect to surreptitious listening devices would go a long way.

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