Archive for April, 2012


Apr

30

Danger, Danger, Will Robinson! Deemed Exports Ahead!!


Posted by at 6:51 pm on April 30, 2012
Category: BISDDTCDeemed Exports

Medical LabA long article published today on the Bloomberg News website tells the story of a voluntary disclosure by Georgia Tech after one of its instructors inadvertently posted some export-controlled data on the Internet. The article follows this anecdote up with a ton of (virtual) ink about how universities are giving away all of our military secrets and how we shouldn’t be surprised when this results in the U.S. becoming a satellite province of China or Iran.

First, here’s what the story reveals about the Georgia Tech voluntary disclosure. According to the story, a research scientist at the university wanted to put course materials and videos of his lectures for his course “Infrared Technology and Applications” on a DVD because he was planning to retire and he wanted to use these materials to train his successor. When the university’s media staff encountered problems putting the video and materials on DVD, they suggested making the information available by a link. The research scientist approved this idea, thinking that it was an internal link, whereas it was an ordinary Internet link. The material was available online for about three weeks before the mistake was discovered and the materials were taken down. Although the video received hits only from the United States, some of the Powerpoint slides that were posted received hits from foreign countries, including 33 from China and one from Iran. The university disclosed this lapse to the Directorate of Defense Trade Controls which issued a warning letter but imposed no penalties, something which appears to have scandalized the Bloomberg reporter.

Above and beyond the description of the Georgia Tech voluntary disclosure, the article takes a Chicken Little approach to the dangers posed to national security by university research:

Eager to preserve their culture of openness and global collaboration, campuses are skirting — and even flouting — export-control laws that require foreigners to hold government licenses to work on sensitive projects.

To support this startlingly broad conclusion, the reporter humps the Roth case for all it is worth and cites some voluntary disclosures by several universities. That doesn’t much sound like “flouting” export rules to me, but perhaps Bloomberg has a different definition of that word.

For those familiar with the sorts of information which may be export-controlled (but not classified), it is hard to get too worked up about the national security implications of this. After all, business proprietary information about how to make handcuffs is controlled under the Commerce Department’s rules. Suffice it to say, things that are of real concern are classified. Accordingly, I am not scandalized when voluntary disclosures by universities relating to deemed exports result in warning letters rather than jail time for everyone involved as the reporter seems to think is appropriate. And because “fundamental research,” which is exempted from export controls, is an incredibly vague term that is difficult to apply in many contexts, overzealous enforcement of export rules to university research would have an unwarranted chilling effect on that research given the number of foreign students at almost every college and university. Well, I suppose colleges could adopt an American-only admissions policy, and I wouldn’t be surprised if there weren’t certain advocates of deemed export controls who secretly wish for such national homogeneity at our institutions of higher learning.

Permalink Comments (6)

Bookmark and Share


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

Apr

25

Lab Equipment Companies Added to Entity List


Posted by at 7:30 pm on April 25, 2012
Category: BISIran SanctionsSyria

Medical LabLast week the Bureau of Industry and Security (“BIS”) added three parties to the Entity List and imposed license requirements for exports, re-exports and in country transfers to these parties for all items subject to the Export Administration Regulations, i.e., items exported from the United States or with certain percentages of U.S. content. The order adding the parties to the Entity List indicated that there would be a presumption of denial for all license applications involving the three parties.

As is typically the case, BIS provides only scant detail about what got these three parties into hot water beyond saying that they had been involved in the transhipment of items to Iran and Syria. Looking at the identity of the parties allows one to make some more reasonable assumptions about what was going on. One of the designated entities was Canada Lab Instruments in Montréal, which describes itself in a business directory as “supplying a wide range of environmental, laboratory, measuring and analytical instruments for researching and educational purposes from the most famous manufacturers.” The second entity, Abou Elkhir Al Joundi, is an individual who owns Canada Lab Instruments and was educated in Damascus, Syria. The third entity was “Masound [sic] Est. for Medical and Scientific Supplies” in Amman, Jordan, which describes itself in a business directory as involved in the distribution of medical and scientific laboratory equipment.

It seems, therefore, reasonable to assume that the three entities were put on the Entity List in connection with shipment of medical and lab equipment from Canada and through Jordan to Syria and Iran. The quantity and value of the shipments, however, cannot be determined and the BIS order gives no indication. This also does not seem to involve items of particular concern to the interests of the United States in Iran and Syria, particular since the medical equipment probably would have been eligible for licenses. But I guess if we are chasing folks for selling nail polish to Iran, everything is fair game.

As a side issue, if BIS wants to put people in jail for future unlicensed exports to the Jordan company, it at least ought to spell the name of the company correctly on the list establishing this license requirement. It’s “Masoud,” not “Masound.”

Permalink Comments Off on Lab Equipment Companies Added to Entity List

Bookmark and Share


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

Apr

18

Updates on Bird Flu and Nail Polish


Posted by at 5:35 pm on April 18, 2012
Category: Deemed ExportsIran SanctionsOFAC

Gregory Schulte
ABOVE: H5N1 virus

Civil disobedience and export laws: those are two concepts not often linked together. But it appears that a Dutch researcher on the H5N1 avian virus is planning to tell Dutch authorities to take a hike and will submit his research to a U.S. journal even though the Dutch government has declared that the research is export-controlled.

This issue was discussed in an earlier post on this blog that discussed how decisions by U.S. researchers to restrict dissemination of some research on the bird flu virus might disqualify the research from the fundamental research exception and make it difficult to share the research with colleagues in other countries. Those restrictions were ultimately removed and the research is not considered export controlled in the United States. Dutch authorities have relied on those initial restrictions to declare the research controlled and have told the researcher that he could not submit the research to foreign journals for publication.

Now Fouchier [the Dutch researcher] says that he is prepared to defy the government and submit the work anyway, an action that could cost him up to 6 years in prison or a $102,000 fine. …

“We simply will never apply for an export permit on a scientific manuscript for publication in a journal. We do not want to create a precedent here,” he told Nature. “We might end up in court indeed if they insist on censorship.”

As an unrelated update, this blog yesterday posted on the $450,000 fine levied on Essie Cosmetics for exports of nail polish to Iran. Several readers have emailed me to suggest that the high fine was based not on the strategic implications of nail polish exports but on, shall we say, an uncooperative attitude by Essie in dealing with OFAC. That’s not hard to believe because, notwithstanding Essie’s expensive dust-up with OFAC, the cosmetic company’s website still has Iran in the drop-down list of countries in forms on its website.

Permalink Comments (2)

Bookmark and Share


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

Apr

17

OFAC Strikes Another Blow Against Iran’s Nuclear Ambitions


Posted by at 6:51 pm on April 17, 2012
Category: Iran SanctionsOFAC

Happy 25!In the last release of civil penalty information, the Office of Foreign Assets Control (“OFAC”) announced that it whacked Essie Cosmetics Ltd. with a whopping $450,000 fine for exports the company made to Iran in violation of the U.S. embargo on Iran. So what did Essie export to merit such an enormous fine? Uranium enrichment centrifuges? Missile guidance systems? No. Nail polish. Yes, you read that correctly: nail polish

The apparent violations relate to Essie and Individual’s knowing sale and export of nail care products on or about September 17, 2009, December 8, 2009 and February 23, 2010, to an Iranian distributor pursuant to an Exclusive Distributorship Agreement in apparent violation of § 560.204 of the ITR.

Well, it must have been boatloads of nail polish, right? No.

The total transaction value for the three transactions settled with OFAC was $33,299.

I guess the thinking was that it is pretty hard to enrich uranium, build nuclear weapons, threaten our allies, and engage in general terrorist activities if you aren’t wearing nail polish. I don’t know about you, but I’ll sleep better tonight knowing that a few people with unpolished nails are sitting at home rather than working on nuclear bombs.

Permalink Comments Off on OFAC Strikes Another Blow Against Iran’s Nuclear Ambitions

Bookmark and Share


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

Apr

16

MTCR Celebrates The Big Twenty-Five


Posted by at 5:28 pm on April 16, 2012
Category: General

Happy 25!The State Department’s Bureau of International Security and Non-Proliferation released today a fact sheet celebrating the twenty-fifth anniversary of the Missile Technology Control Regime, a multilateral initiative to control the export and dissemination of certain missile related technology. The MTCR was initially adopted by the G-7 countries in 1985 and now boasts 27 additional member countries.

Instead of breaking out the cake and the champagne to fête the MTCR, we have decided at Export Law Blog to use this opportunity instead to ask why the State Department, instead of sending a birthday card to the MTCR, does not spend the time more productively to fix section 121.16 of the International Traffic in Arms Regulations. That section bears the misleading header “Missile Technology Control Regime Annex,” even though it bears as much resemblance to the current MTCR Annex as Ron Howard does to Opie Taylor. Since that section was added to the USML in 1993 items have come and gone on the MTCR annex like rock singers in rehab clinics and yet nary an amendment has been made to that section.

This, of course, opens up plenty of possibilities for confusion and unintentional hilarity (if you think that sloppy regulations are humorous). Recently, I had a client notice that a rather ubiquitous item was listed in section 121.16 which the client (and many others) had been exporting freely and without even thinking of a license for quite some time. The item had been removed from the MTCR Annex when the Annex was a mere toddler and only taking its first steps. The client had a legitimate query: is this item on the USML or not?

The answer to that question is far from clear at least based on the actual language of the ITAR. The only part of the ITAR even bearing on the question is section 120.29(c) which I think says — your guess is as good as mine — that the items in section 121.16 are the list of all items on the MTCR which aren’t on the Bureau of Industry and Security’s Commodity Control List, although that statement is, now, patently untrue.

So more for amusement than anything else, I called the DDTC Response Team to ask the simple question: if an item listed in section 121.16 is no longer on the MTCR is it still export controlled? You would have thought that I posed Bishop Berkeley’s famous question: “If a tree falls in a forest and there is no one to hear it, does it make any sound?” After a stretch of silence, and some mutterings, the Response Team member finally solemnly informed me, somewhat tentatively, that it was. Oh dear. If that’s true, everybody now exporting that item is going to be in for some fun times, I thought.

I was fairly convinced that the best, and only, way to read 121.16 was that it was intended to state what things that were on the Annex in 1993 were controlled by BIS and what things were controlled by DDTC and that it was the Annex which determined what was controlled and what was not. So I escalated the question up through DDTC and I did receive that answer ultimately from the agency: if an item is no longer on the MTCR, it does not require a license from DDTC simply because it is still referenced in section 121.16.

So, Happy 25th Birthday, MTCR! Here’s to hoping that before you turn 30 somebody will finally fix section 121.16.

Permalink Comments (3)

Bookmark and Share


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