Archive for the ‘DDTC’ Category


Sep

22

Export Control Reform Arrives (Soon?) For Small Arms


Posted by at 4:00 pm on September 22, 2017
Category: BISDDTCExport Reform

Gun Show by M&R Glasgow [CC-BY-SA-2.0 (http://creativecommons.org/licenses/by-sa/2.0)], via Flickr https://flic.kr/p/EfXLa [cropped]Rumors have begun to circulate that export control reform is coming to USML Category I small arms despite thoughts that this might never happen. The reporters in this Reuters article, who clearly have little background in export policy and reform, have fallen on their fainting couches, clutched their pearls, and conjured up terrifying images of an out-of-control international arms bizarre that will result. This is, of course, silliness. Thousands of items have transitioned from the USML to the 600 series of the Commerce Control List without military items falling willy-nilly into the hands of foreigners.

There are two issues I think are worthy of comment without histrionics. The first relates to brokering issues. I have been a critic of DDTC’s brokering rules, not because of their concept, but mostly because of their implementation. The rules have been improved by restricting the registration and licensing requirements to brokers who are U.S. citizens or who are located in and acting from the United States. But I think that potentially removing small arms shipments from the restrictions of the brokering rules is not necessarily a good idea. Remember that the reason that these were passed in the first place was that U.S. persons were shipping small arms from foreign countries to regional disputes and rebellions outside the United States where those arms were used for genocide or otherwise against the foreign policy of the United States. The EAR has no controls on brokering and would not control export of foreign-manufactured arms (without U.S. content) to areas outside the United States by U.S. citizens or persons in the United States. The brokering issue is negligible when we talk about other transitioned items, like certain military aircraft parts. But the issue is front and center when it comes to small arms.

Another interesting effect of transitioning small arms to the CCL, and one that will be probably a beneficial one, relates to the issue of providing firearms training to foreign persons. As it stands, the definition of defense services in section 120.9 covers ” training … foreign persons … in the … maintenance, … operation, … or use of defense articles.” So a U.S. person could not show a foreign person how to clean a rifle but could provide a copy of the publicly available rifle manual with cleaning instructions to the foreign person. After transition of the rifle as a 600 series item to the EAR, since the information on how to clean the rifle is published, a U.S. person could show the foreign person how to clean the rifle rather than just provide a copy of the manual. This, of course, seems a much more sensible result.

Photo Credit: Gun Show by M&R Glasgow [CC-BY-SA-2.0 (http://creativecommons.org/licenses/by-sa/2.0)], via Flickr https://flic.kr/p/EfXLa [cropped]. Copyright 2007 M&R Glasgow/span>

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Sep

19

America’s Worst Spy Sentenced


Posted by at 11:52 pm on September 19, 2017
Category: Criminal PenaltiesDDTCITAR

DOJ Interview Video of Gregory Allen Justice [Public Domain - Work of U.S. Government]Yesterday, Gregory Allen Justice, a former Boeing engineer, who tried to sell satellite information to undercover agents he believed were Russian spies, was sentenced to five years in jail. I reported on the case previously here, noting that Justice was playing spy to get money for an online girlfriend (who had catfished him with sexy photos of another woman and to whom he was sending gifts, such as charcoal grills, from Amazon). Justice, who admitted he was under the spell of  the TV show “The Americans,” Jason Bourne and James Bond (and had even taken online spy courses), demonstrated his intimate knowledge of spy craft when he gave a receipt to the fake spies for the money they paid him after he made his first drop. Seriously. Worst spy ever. He might as well have posted pictures of the drop on Facebook — oh wait, that wouldn’t have been a problem because Russian spies apparently can post on Facebook without anyone noticing.

 

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Jul

19

Why One of the Swapped Prisoners Did Not Return to Iran.


Posted by at 9:55 pm on July 19, 2017
Category: Criminal PenaltiesDDTCITAR

Nima Golestaneh Mug Shot [Fair Use]
ABOVE: Nima Golestaneh

In January 2016 the United States and Iran engaged in a prisoner swap. None of the freed prisoners returned to Iran, instead they all chose to remain in the United States, including Nima Golestaneh, the only Iranian national in the group. (The remainder were dual U.S.-Iranian citizens). Golestaneh, who had been nabbed in, and extradited from, Turkey, had been convicted of a scheme to hack into Arrow Tech in Vermont and send its ITAR-controlled software back to Iran.

Now we have a pretty good idea why he may have been selected for a pardon and why he decided that going back to Iran might not have been such a good idea. Yesterday, two Iranians, Mohammed Ajily and Mohammed Rezakhah were added by OFAC to the Specially Designated Nationals and Blocked Persons List (the “SDN List”) and the Department of Justice announced that an indictment against the two had been unsealed. The indictment reveals that Ajily and Rezakhah were Golestaneh’s co-conspirators in the hacking scheme, and it seems certain that Golestaneh made a deal and dropped the dime on Ajily and Rezakhah.

Both Ajily and Rezakhah are currently in Iran and probably have no current plans to visit Disneyland or anywhere else outside Iran. It’s also safe to assume that Golestaneh would not be welcomed with open arms should he turn up in Iran. In fact, that would be an instance of going from the frying pan (a U.S. jail) into the fire (an Iranian one).

The indictment details Golestaneh’s role in the hacking conspiracy. Apparently his job was to procure servers in Canada and the Netherlands. These enabled Rezakhah to download the Arrow Tech software without using an IP address from Iran, which likely would have been blocked by Arrow Tech. The software would not run without a hardware dongle from Arrow Tech, and Arrow Tech informed foreign customers that they would need an export license to obtain the dongle. That dongle not doubt contained the digital key needed to decrypt the program and allow it to run. It looks like Rezakhah hacked into Arrow Tech’s servers to obtain the digital key needed to decrypt the program.

Of course, it’s not just Rezakhah who has a problem in this scenario. If in fact, if Arrow Tech allowed foreign download of ITAR-controlled encrypted software without a license, that was arguably problematic. DDTC has taken the position that items are exported even if encrypted. And, if there is support for that position by DDTC, it can be found in this case, which demonstrates that there is always some possibility that the encryption will be broken. (It now appears that Arrow Tech distributes the software only by optical media and not by download). One has to wonder if the failure of DDTC to adopt rules like those adopted by BIS which exempt encrypted items from the definition of export is, at least in part, the result of what happened in this case.

One other thing bears noting here, namely, the most amusing irrelevant statement ever put in a criminal indictment. For some reason, the indictment notes that Ajily, Rezakhah’s co-conspirator “received certificates of appreciation for his work from several of the Iranian government and military entities.”   Seriously, he got certificates he could frame and hang on his office wall.  Awesome.  That was a clear violation of the law that forbids receiving certificates of appreciation from Iran.  I have to imagine that this factoid comes from Golestaneh who, when he was singing to the DOJ, said something on the order of  “Ajily got certificates and all I got was this lousy jumpsuit.”

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Jul

11

Don’t Believe Everything You Read in Blogs


Posted by at 5:54 pm on July 11, 2017
Category: BISDDTC

Road Warrior at LAX by Clif BurnsA lawyer, without any apparent background in export law, recently decided to write a post on export law for “In House,” which bills itself as the “FindLaw Corporate Counsel Blog.” The purpose of the post, it would seem, is to frighten people traveling internationally with their laptops with the suggestion that they may well be greeted on their return trip by an arrest warrant if they don’t have an export license for their laptop. No, really, he actually says that

Traveling abroad? Don’t forget your passport, your laptop, and your export license.

Wh-what export license? Oh, maybe your company attorney didn’t tell you that your laptop requires an export license.

That’s right, the United States requires a license for certain technology and software going abroad.

What the FindLaw post, in order to maximize clickbait value, never reveals is that while technically true that some laptop exports require an export license due to software or technology on that laptop, there are broad license exceptions which mean that, as a practical matter, such licenses are almost never required. That’s what License Exceptions TMP and BAG and the exemption in section 125.4(b)(9) of the ITAR are for. These are, oddly enough, never even mentioned in the FindLaw blog post.

I discussed these provisions permitting laptops to be exported without a license recently in a post about whether a requirement to check laptops in the cabin hold might mean that these provisions would no longer apply. As explained there, section 125.4(b)(9) and license exception BAG permit export of laptops (and any software or technology on them) accompanying passengers and for their personal use as long as the laptop is password protected. License exception TMP requires that the laptop remain in the effective control of the traveler. (The difference between BAG and TMP is that BAG applies to laptops owned by the traveler and TMP applies to company laptops taken on a business trip).

So, no, if you password protect that laptop and keep it with you on your travels, you’re not going to need a license just to take the laptop with you. (If you intend to transfer the laptop or give the technology or software to someone else in the foreign country, these exceptions won’t apply.)

This all goes to show that, with perhaps one exception, don’t believe everything you read on a blog!

Photo Credit: Road Warrior at LAX by Clif Burns. Copyright 2015 Clif Burns

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Jun

22

The Chewbacca Defense: Export Edition


Posted by at 5:26 pm on June 22, 2017
Category: Arms ExportCriminal PenaltiesDDTC

Human Cannonball by Laura LaRose [CC-BY-SA-2.0 (http://creativecommons.org/licenses/by-sa/2.0)], via Flickr https://flic.kr/p/6shAzP [cropped and processed]The decision in United States v. Burden, decided back in November of 2016, is not breaking news, but as I’ve seen several commentaries on it recently, I thought I might weigh in.  The defendants in that case argued that they had not violated the Arms Export Control Act because — get this — ammunition magazines and grenade launcher mounts, according to the defendants, are not defense articles. The defendants argued that these items are not defense articles because they can also be used with airsoft guns.  Accordingly they claimed the magazine and mount are not defense articles as defined in section 120.4 of the International Traffic in Arms Regulations and no license was required for their export.   This is pretty much like arguing that cannons are not defense articles because you could use them in circuses to shoot people into trampoline nets.

For reasons that are not clear, this led the District Court to actually consider whether these items were defense articles or not as defined in section 120.4.  That section deals with commodity jurisdiction determinations and had no relevance to the case under consideration.  The question properly before the court was whether the grenade mounts and ammunition magazines are on the United States Munitions List (“USML”), not whether they are defense articles.

If the items are on the USML, they are by definition defense articles.   The very first sentence of the USML makes this crystal clear:

U.S. Munitions List. In this part, articles, services, and related technical data are designated as defense articles or defense services pursuant to sections 38 and 47(7) of the Arms Export Control Act.

This means that the only real question the court had to answer was whether the grenade mount and ammunition magazine were described in Category I(h) of the USML which covers “[c]omponents, parts, accessories and attachments” of firearms described in Category I, subparts (a) through (h). It doesn’t matter that these items can be used on airsoft or paintball guns any more than it matters that a cannon can be used in a circus act or a performance of the 1812 Overture. Certainly the magazine meets the definition of a component and the mount meets the definition of an attachment and that, pretty much, should have been the end of it.

Even so, the court decided that the items were defense articles not because they were on the USML but because an expert witness from DDTC said that they were defense articles. The expert in question was Robert Warren, formerly Division Chief of the Plans, Personnel, Programs, and Procedures Division of DDTC, an odd choice in comparison to, say, the division chief for the division that handles licensing for firearms.  In any event, the court noted that Warren testified that “a defense article as we termed it is anything that has a military significance or military application.”  And that, according to the court, settled the question as to whether the mount and the magazine were defense articles.

Of course, the idea that something is a defense article if it has a military application is the equally stupid mirror argument to the defendants’ nonsensical claim that something is not a defense article if it has a non-military use.  Under the standard articulated by Warren, a water canteen purchased at a camping store or a pair of camo pants purchased from a clothing store would be defense articles.

As noted above, there was no need for anyone to dive down this rabbit hole and figure whether the mount and the magazine were defense articles.  If they were described by Category I(h) as attachments and components of firearms then they were defense articles.  End of story.  No further proof as to whether they were defense articles was necessary.   And, given that the defendants did not appear to dispute that these items were components and attachments of firearms but only that they were defense articles, it is not unfair to accuse them of raising the fabled Chewbacca defense.

Photo Credit: Human Cannonball by Laura LaRose [CC-BY-SA-2.0 (http://creativecommons.org/licenses/by-sa/2.0)], via Flickr https://flic.kr/p/6shAzP [cropped and processed]. Copyright 2009 Laura LaRose

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(No republication, syndication or use permitted without my consent.)