Archive for the ‘Foreign Export Controls’ Category



When Pigs Fly

Posted by at 9:54 pm on February 3, 2015
Category: CanadaCriminal PenaltiesForeign Export Controls

When Pigs Fly by arvind grover [CC-BY-SA-2.0 (], via Flickr [cropped]According CTV’s investigative reporting arm W5, the Canadian Federal Government has agreed to pay a Canadian businessman, Steve de Jaray, more than $10 million to compensate him for damages caused to him by the government’s erroneous prosecution in which it charged de Jaray with illegal exports of items that were not in fact export controlled.

The case began in 2008 when de Jaray’s company, Apex Micro Electronics, shipped microchips used in flat screen televisions and video games to Hong Kong. Canadian customs flagged the items as suspicious. In February 2009, Canadian Mounties (probably not on horseback) and other officials raided de Jaray’s home and office causing, de Jaray alleged, him to lose his business and ultimately his house. Experts hired by de Jaray determined that the items were not export-controlled and Canada stayed, then ultimately dropped, the prosecution.

Interestingly, and not entirely surprisingly, it appears that there are some U.S. fingerprints on the prosecution. Lawyers for de Jaray allege, citing a cable released by WikiLeaks, that just months before de Jaray’s goods were seized, U.S. officials, including a high official from the State Department’s Bureau of Politico-Military Affairs, chided the Canadians for their poor export enforcement records and insisted that certain trade concessions might be withheld if the Canadians did not start following the U.S. example and throw more people in jail for export violations.

According to CTV, de Jaray has been living in self-imposed exile from Canada for the past 6 years. My guess is that he’s probably not in the United States. I also guess that the United States would pay similar damages in an export case when, as they say, pigs fly.

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Copyright © 2015 Clif Burns. All Rights Reserved.
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Wide World of (North Korean) Sports: Piste Off Edition

Posted by at 7:23 pm on January 21, 2014
Category: ChinaEconomic SanctionsEUForeign Export ControlsNorth Korea Sanctions

By Mark Scott Johnson from Sydney, Australia (IMG_7688) [CC-BY-2.0] (], via Wikimedia Commons Rodman and his coterie of NBA All-Stars recently returned to the United States from North Korea after Rodman’s birthday basketball bash for his “friend for life” Kim Jong Un.  While Rodman’s zealous zaniness has grabbed global media headlines, another sports-related development in North Korea, is more significant to sanctions and export control issues: the grand opening this month of the Masik Pass luxury ski and hotel resort.

Pictures taken of the resort show the 120-room hotel, indoor swimming pool and 11 ski runs.  Other pictures also show, however, Italian snow plows, Canadian snowmobiles and Swedish snow cannons.  Recent news reports began to shed light on the obvious sanctions issue: how did North Korea build a ski resort without someone violating sanctions.  U.N. Security Council Resolution 2094 and others prohibit members from selling “luxury goods” to North Korea and even though “luxury goods” are not defined and are not limited to the specific luxury items delineated in Annex IV of Resolution 2094, it seems hard to deny that snowmobiles, snow cannons and the other accoutrements of a “luxury” resort are not “luxury goods.”

According to SkyNews, the Italian snow plow manufacturer has predictably said, “Snow groomers are sold directly to ski resorts and distributors and it is possible that a used snow groomer is than sold to another final user by ski resorts or distributors themselves. On this kind of business we as a producer do not have any influence, no company can avoid that this happens.”

Western goods flowing into North Korea is not new.  In fact, we reported last year on the curious infiltration of an Apple iMac on Kim Jong Un’s desk and suggested it, like many Western goods in North Korea, came from China.  Plausible deniability about to whom a manufacturer’s customers sell its products becomes, of course, more attenuated when your business is selling “state-of-the-art snow cannons” that retail for 14,000 Euros each.

U.N., U.S., E.U. and Canadian sanctions policies fail if a repressive regime like North Korea’s so-called supreme leadership continues to violate human rights but opens a ski resort to sustain its control.  Like sanctions against Iran, Cuba and other countries, a principal goal is to curtail infrastructure projects that support the sanctioned governments.  While a ski resort is not the largest national infrastructure project, sanctions were designed to prohibit it being built and supported by Western goods and technology.

Even if the sales of the items found at Masik Pass were beyond detection of reasonable know-your-customer requirements, Italian, Canadian and Swedish enforcement authorities would at least have grounds to inquire further, especially company records and communications involving sales to Chinese resellers that may have been possible routes to North Korea.  While any manufacturer or retailer can’t know everything about its customers, knowing more gives a company greater support to conclude that its business does not involve impermissible activities or give law enforcement a reason to examine its business further.

Clif adds: Blame me, not George, for the terrible pun in the post title.

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Copyright © 2014 Clif Burns. All Rights Reserved.
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Brits Target Propofol Exports to U.S.

Posted by at 7:01 pm on September 26, 2012
Category: Foreign Export Controls

PropofolThe United Kingdom’s Department for Business Innovation and Skills (UK-BIS) recently released a notice to exporters with regard to exports of propofol from the U.K. to the United States. Propofol is probably best known these days as the sedative that cancelled Michael Jackson’s final tour. But the export ban is not the result of any special solicitude for The Gloved One or other substance-abusing American pop stars. (After Amy Winehouse, I think that Great Britain would be in no position to get on its high horse about chemically dependent pop stars in other countries.)

What caused the U.K. to overlook its special relationship with the United States and instead treat us as a naughty child unworthy of one of its pharmaceutical exports were news reports that the state of Missouri planned to use propofol as part of its lethal injection cocktail when executing prisoners. There are no indications that that this action by the United Kingdom has caused the State of Missouri to reconsider its position on capital punishment. Propofol is available generically and is produced worldwide.

My favorite part of the notice is this:

This control reflects the Government’s opposition to the use of the death penalty in all circumstances. Following consultation with applicable industry and other bodies, we assessed that the trade between the UK and the USA in propofol appears to be negligible, and therefore we expect the impact on UK businesses to be low.

These moral reservations, of course, came to late to save Admiral Bing whom the British unceremoniously shot, as Voltaire said, “pour encourager les autres.”  Best of all, these moral reservations come at no cost to British industry because, apparently, propofol isn’t actually being exported in any measurable amounts from the U.K. to the U.S. Millionaires are also similarly admirable when they state their profound opposition to stealing pennies from toddlers.

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Copyright © 2012 Clif Burns. All Rights Reserved.
(No republication, syndication or use permitted without my consent.)



Time Machine Used to Export Ammo to Libya

Posted by at 3:26 pm on September 19, 2012
Category: Arms ExportForeign Export Controls

Exports of defense articles to repressive Arab regimes by the United Kingdom have re-ignited a debate as to whether Parliament should have the right to approve certain defense — or should I say “defence”? — exports utilizing a process similar to the Congressional notification procedure required by the U.S. Arms Export Control Act. To illustrate a story on this debate, The Guardian used the photo below, allegedly showing ammunition that was found in Benghazi and had supposedly been exported from the U.K. to Gaddafi in Libya prior to Gaddafi’s final stand.

Guardian Photo

A reader points out the ammo box bears the markings of the Imperial Chemical Industry Metals Division. But before you get out your pitchforks and torches and storm the gates of that company, you should understand that the Imperial Chemical Industry Metals Division ceased to exist in 1962, when it was renamed Imperial Metal Industries Ltd., as you can read here on IMI’s website.

So one of three things happened here. IMI was sending stuff out in 60-year-old wooden crates with the wrong name on it. Or, perhaps, someone at Imperial Chemical Industries had a flux-capacitor equipped DeLorean in 1960 and drove the ammo through time and space to Benghazi, Libya, in 2010. Or, finally, the editors at the Guardian were knocking down pints at the local pub when they should have been on Google.

We report, you decide.

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Copyright © 2012 Clif Burns. All Rights Reserved.
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UK Uses Encryption Controls To Prevent Export of FinSpy Trojan

Posted by at 6:33 pm on September 12, 2012
Category: EncryptionForeign Export Controls

Gamma International HQ
ABOVE: Gamma International
headquarters in Andover, UK

Bloomberg News reported yesterday that the U.K. has imposed export controls on Gamma International’s FinFisher software. FinFisher is commercial trojan software that can take over computers and mobile phones and which the company has marketed to foreign governments anxious to keep really, really close tabs on political dissidents. Reporters and privacy groups have uncovered evidence recently that the nice folks in Bahrain were using this software against political dissidents in that country.

Of particular interest is the rational used by the U.K. to assert export controls over the software. According to a letter sent by the U.K. government, the software required an export license because it uses cryptographic functionality covered by Category 5, Part 2 of the E.U.’s Dual Use Control List:

The Secretary of State, having carried out an assessment of the FinSpy system to which your letter specifically refers, has advised Gamma International that the system does require a licence to export to all destinations outside the EU under Category 5, Part 2 (‘Information Security’) of Annex I to the Dual-Use Regulation. This is because it is designed to use controlled cryptography and therefore falls within the scope of Annex I to the Dual-Use Regulation. The Secretary of State also understands that other products in the Finfisher [sic] portfolio could be controlled for export in the same way.

Of course, the interesting question here is whether the similar controls placed on encryption in Category 5, Part 2 of the Commerce Control List would require an export license if a U.S. company wanted to export similar trojan software for surveillance purposes. More particularly, the issue is whether under License Exception ENC a U.S. company could self-classify the item and export it without license if it had previously registered and received an Encryption Registration Number. It seems to me that it could not because the software at issue falls within 740.17(b)(2)(i)(C)(3) which excludes from self-classification items that have been designed for government end users. It is abundantly clear that Gamma International only sells this trojan software to government end users. Nevertheless, items in this category can be exported immediately upon filing a classification request to countries outside those listed in Supplement 3 to Part 740, e.g., most NATO countries as well as Japan, Switzerland, Malta, Australia and New Zealand. Licenses would be required, however, for exporting the software to countries outside those listed in Supplement 3. The U.K. will apparently require licenses to all destinations.

An additional control on such software in the United States could be found in ECCN 5D980 which controls software “primarily useful for the surreptitious interception of wire, oral, and electronic communications.” However, at least under current policy licenses to export such software to government agencies in countries other than Cuba, Iran, North Korea, Sudan, and Syria are generally approved. Whether that policy will hold given the current publicity over the use of FinFisher by oppressive regimes is another matter.

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Copyright © 2012 Clif Burns. All Rights Reserved.
(No republication, syndication or use permitted without my consent.)