Archive for May, 2010


May

29

Leaked UN Report Reveals Nork Nuclear Exports


Posted by at 11:00 am on May 29, 2010
Category: North Korea Sanctions

PyongyangA UN report leaked to the Associated Press revealed that North Korea has been exporting nuclear and missile technology and items to Iran, Syria and Burma. According to that report, the Norks are using shell companies, intermediaries and criminal networks to evade sanctions imposed by the UN on the rogue state.

[The report] said the list of eight entities and five individuals currently subject to an asset freeze and travel ban seriously understates those known to be engaged in banned activities and called for additional names to be added. It noted that North Korea moved quickly to have other companies take over activities of the eight banned entities.

Given the revelations contained in this report and the recent torpedoing of the South Korean naval vessel by the Norks makes it likely that we will see new and broader sanctions against North Korea in the very near future. And given the ease with which the Norks have evaded targeted sanctions, any new sanctions might well include comprehensive import and export bans.

[Geek Note: This post was written on, and published with, my iPad. I had to add a photo editing and an FTP app, but with those in place the process was a breeze. And, yes, this can be seen as simply an effort to justify my acquisition of this fun little gadget.]

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May

27

No Relief In Pressure Relief Valve Export Settlement


Posted by at 8:26 pm on May 27, 2010
Category: BIS

Pressure Relief ValveWesco Industrial Products, Inc., a U.S.-based manufacturer of material handling equipment such as hand trucks and fork lifts recently agreed to pay the Bureau of Industry and Security (“BIS”) $50,000 to settle charges that it had illegally exported pressure relief valves without licenses. The pressure relief valves were allegedly classified as ECCN 2B350.g.

Wesco is the successor to Neptune Chemical Valve company due to a series of mergers that occurred in 2008, and the exports of the Neptune valves involved in this case occurred prior to these mergers. Neptune still has its own website and, helpfully, posts export classifications for its valves, including the valves at issue, on this page. Interestingly, that page says this:

Note that BIS has issued a CCATS determination of EAR99 for Neptune’s Back Pressure Valves, but due to the interchangeability of back pressure valves and pressure relief valves, Neptune has decided to treat the Back Pressure Valves as [ECCN] 2B350 for internal compliance purposes.

Indeed, as explained here, pressure relief valves and back pressure valves are the same device employed in different applications. A pressure relief valve opens up to vent fluids and gases externally when pressure is too high whereas a back pressure valve opens up to maintain pressure by allowing upstream excess pressure to flow downstream.

This raises the question as to why, if Neptune’s back pressure relief valves are EAR99, Neptune was being penalized for exporting interchangeable and equivalent devices. It shouldn’t be relevant that a formal classification for the pressure relief valves had not yet been obtained. That should have been obtained in the course of this investigation as a predicate to the charged violation.

Chances are extremely good that the back pressure valves were classified as EAR99 based on Note 1 to ECCN 2B350 which states:

This ECCN does not control equipment that is both: (1) specially designed for use in civil applications (e.g., food processing, pulp and paper processing, or water purification) and (2) inappropriate, by the nature of its design, for use in storing, processing,producing or conducting and controlling the flowof the chemical weapons precursors controlled by 1C350.

Interestingly, a pressure relief valve is more likely inappropriate by design for use in producing chemical weapons precursors than a back pressure valve because a pressure relief valve is designed to vent excess pressure outside the system, something that’s not really ideal when the substances to be vented are toxic. Back pressure valves, however, are designed to keep the pressure in the system and simply to move it downstream. If Neptune’s back pressure valves fit within Note 1, it would seem that there is an even stronger case that the pressure relief valves would fit within the Note.

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May

25

“Do What I Say” Etc., Etc.


Posted by at 5:45 pm on May 25, 2010
Category: Criminal PenaltiesDDTCDeemed ExportsTechnical Data Export

NASC RFP

In case you can’t read the text of the “WARNING” in this RFP from the Naval Air Systems Command sent to me by an alert reader, it says:

WARNING: THIS DOCUMENT CONTAINS TECHNICAL DATA WHOSE EXPORT IS RESTRICTED BY THE ARMS EXPORT CONTROL ACT (TITLE 22, U.S.C. SEC 2751 ET SEQ) OR THE EXPORT ADMINISTRATION ACT OF 1979, AS AMENDED, (TITLE 50, U.S.C. APP 2401, ET SEQ). VIOLATIONS OF THESE EXPORT

Which is why, of course, the document is posted on the web where any foreign person in any country could download the document and obtain export-restricted technical data. I was able to download without problem all of the documents attached to the RFP.

Perhaps the contracting officer was unaware that the Internet was available outside the United States or that foreign nationals in the United States could actually access the Internet. Or did the contracting officer think that if, say, an Iranian saw this “WARNING” either a crise de conscience or fear of the long arm of U.S. law would cause him or her to heed the warning and not download the juicy details? (I have blurred the details of the RFP so as to not to assist any foreign person in locating this particular RFP, and I’m not providing a link for the same reason.)

The government regularly threatens defense contractors, universities (cf. Professor Roth), and others with huge fines and criminal penalties for disclosures of ITAR-controlled technical data, even data that is already available elsewhere on the Internet. So why haven’t I read about a raid on the Naval Air Command Systems office at the Pentagon and seen pictures of ICE carting off all their computers?

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May

24

Sanctions Traded for Sanctions


Posted by at 8:29 pm on May 24, 2010
Category: Economic SanctionsIran Sanctions

Mahmoud AhmadinejadOn Friday, the Department of State announced that it had terminated sanctions against various Russian entities. First, it lifted sanctions that it had imposed on Rosoboronexport in 2008. Second, it lifted sanctions on the D. Mendeleyev University of Chemical Technology of Russia and the Moscow Aviation Institute that it imposed on January 19, 1999 on the basis of a determination that the two entities had “engaged in proliferation activities related to Iran’s nuclear and/or missile programs.”

According to this article in the New York Times, the U.S. traded off these sanctions to secure Russia’s cooperation in the new U.N sanctions on Iran. The Times quoted one critic of this trade-off:

John R. Bolton, who was acting ambassador to the United Nations under Mr. Bush, said Russia’s foreign minister, Sergey V. Lavrov, got the upper hand on the Obama team. “He sensed desperation in the Obama administration on this Iran resolution, and probably extracted all that the traffic would bear,” he said. “The only remaining question is what else he got that we don’t yet know about.”

This makes the lifted sanctions seem a bigger deal for the Russian entities than they probably were. All three entities were subject to bans on U.S. government procurement and foreign assistance as well as prohbitions on any U.S. imports from these entities. Because neither company was likely to be a federal government contractor, likely to be recipient of federal aid or engaged in export of items to the United States in any significant quantity, these sanctions were more symbolic than anything else.

Rosoboronexport was also subjected to a ban on U.S. government arms sales and on issuance of any license to export defense articles from the United States to Rosoboronexport. These might have had a somewhat greater impact on Rosoboronexport but, again, it is doubtful that the company had been the recipient of many U.S. government arms sales nor of many U.S. exports of defense articles.

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May

19

First Reggie Award Goes to Prototron Circuits


Posted by at 5:18 pm on May 19, 2010
Category: DDTC

Reggie Award StatuetteRegular readers know that an on-going feature involves examining press releases issued by companies after they have registered their company with the Directorate of Defense Trade Controls (“DDTC”) as required under Part 122 of the International Traffic in Arms Regulations. All of these press releases seems to be punched out from the same template and routinely overstate the significance of DDTC registration. Many of these releases, like this one, go so far as to imply that registration constitutes a certification by DDTC that the company has adequate ITAR compliance provisions, as if the registrants had taken and passed a test rather than just sending in the registration fee.

So it is only fair that a company press release on its ITAR registration that, for once, tries to provide an accurate description of the significance of registration should be awarded. And for that very purpose Export Law Blog has created the Reggie Award.

And the first Reggie Award goes to . . .

. . .Envelope please. . .

Prototron Circuits for this press release

Now, with Redmond’s registration in place, we can participate in immediate demand from existing customers on ITAR designs that we previously could not service … . This now allows us to increase our value to our present customer base while increasing our value to prospective customers. …

The award committee noted that this statement in the press release showed a keen understanding that registration was required to manufacture defense articles and was not some optional certificate that the manufacturer obtained after its compliance procedures were reviewed and approved by DDTC. The committee expressed some discomfort with the company’s reference to having “achieved” registration, but felt that this was overcome by the clear acknowledgment of the purpose and benefit of the registration requirement.

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