Archive for October, 2012


Oct

31

Tie Me Defense Cooperation Treaty Down, Sport


Posted by at 7:09 pm on October 31, 2012
Category: Arms Export

Sydney, AustraliaAccording to this story in Perth Now, the Australian Senate has finally approved the Defense Cooperation Treaty between the United States and Australia, which was approved by the U.S. Senate back in September 2010. The treaty was originally signed by both the United States back in 2007.

According to the above linked report, Australian opposition in its Senate to the treaty was based on the blinding speed with which it was being rushed through:

Senator Ludlum suggested the bill was being rushed through the Senate to provide a positive photo opportunity for Prime Minister Julia Gillard and Defence Minister Stephen Smith when they greet visiting senior US officials in Perth next month.

US Secretary of State Hillary Clinton and Defence Secretary Leon Panetta are scheduled to attend the annual Australia-United States Ministerial Consultations (AUSMIN) there on November 14.

Perhaps the Australians have, or at least Senator Ludlum has, a different idea about what it means to rush something.

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Copyright © 2012 Clif Burns. All Rights Reserved.
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Oct

30

ICE Nails Canadians for Exporting Cheese from United States


Posted by at 6:37 pm on October 30, 2012
Category: Agricultural ExportsCriminal PenaltiesICE

cheeseA reader sent me this press release from Immigration and Customs Enforcement:

One officer and a former officer with the Niagara Regional Police Service (NRP), and an associate are in custody in Canada Thursday following an investigation into a cheese smuggling scheme. …

The arrests were announced by James Spero, special agent in charge, U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI) Buffalo, the Canadian Border Services Agency (CBSA) and the NRP. …

Scott Heron, 39, Casey Langelaan, 48, and Bernie Pollino, 44, all of whom reside in Fort Erie, Ontario, have been charged for smuggling goods, evasion of duties and other related charges under Canadian laws. …

The network involved the purchasing of cases of cheese and other food items in the United States and transporting them into Canada without declaring the items or paying duty. Once the products arrived in the country, they were sorted and prepared for distribution to a variety of restaurants in southern Ontario.

Who knew that it was ICE’s job to help Canada put U.S. cheese makers out of business with punitive tariffs on American cheese?

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

Oct

25

If You Wish Upon ITAR


Posted by at 8:10 pm on October 25, 2012
Category: DDTCPart 122

Itar SealIt has been a while since we’ve highlighted the ever popular press releases of companies touting their ITAR registrations as the best thing since ShamWows and Chia Pets. Today’s companies that will do the Part 122 walk of shame are Professional Aviation Associates and American Industrial Systems.

Take it away, Professional Aviation Associates:

Professional Aviation Associates, a Greenwich AeroGroup company announced it recently became International Traffic in Arms Regulations (ITAR) certified.

According to the Directorate of Defense Trade Controls (DDTC), the U.S. Government requires all manufacturers, exporters, and brokers of defense articles, defense services or related technical data to be ITAR compliant.

The ITAR certification allows Professional Aviation Associates to supply rotables to military aviation operators of both fixed wing and rotorcraft models, as well as parts and tooling to foreign militaries

Of course, the only thing that DDTC has “certified” for PAA is that PAA could figure out the names of its officers and directors, put them on a piece of paper and send them to DDTC with a check that didn’t bounce. All certifications should be this easy. I do hope that during this intensive certification process, PAA learned that it needs more than just its certification to supply “parts and tooling to foreign militaries.”

But today’s winner is American Industrial Systems:

American Industrial Systems Inc. (AIS), an ISO 9001:2008 certified supplier and manufacturer of rugged computer and display has announced completion of the International Traffic in Arms Regulations (ITAR) registration with the Directorate of Defense Trade Controls (DDTC). ITAR is a set of United States government regulations that control [sic] the export and import of defense-related articles and services on the United States Munitions List (USML). This registration, and with [sic] our commitment to ISO 9001 standards, documents AIS’s dedication to adhering to the strict regulations that control the export and import of defense-related services. AIS has proven their knowledge, understanding, and compliance to [sic] the US Department of States [sic] regulations in addition to the inclusion of defined corporate procedures and controls.

Well, I can tell you at least one subject that isn’t on the ITAR certification exam.

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Oct

24

New Iran Regs: Boon for Lawyers; Bane for Exporters


Posted by at 4:47 pm on October 24, 2012
Category: GeneralIran Sanctions

Iranian RialsThe Office of Foreign Assets Control (“OFAC”) has taken the old Iran sanctions regulations, torn them up, thrown them away and issued a new set of regulations, now remonikered, for good measure, as the Iranian Transactions and Sanctions Regulations (“ITSR,” pronounced Its-er, as in “It’s Er Huge Mess.”) These regulations purport to reflect Executive Order 13599, issued February 5, 2012, which sanctioned all the remaining banks and financial institutions that had not been previously sanctioned under prior orders. Of course the 800-pound gorilla in the room, namely the recently issued Executive Order 13628, which expanded the Iran sanctions to foreign subsidiaries of U.S. companies, goes completely unmentioned. If you read the “new” regulations alone, you would get the incorrect impression that overseas subsidiaries of U.S. companies could still do business, under limited circumstances, with Iran. Why they didn’t hold up these regulations until they could make them, you know, current is a great mystery fathomed probably only by a select few in the subterranean bowels of the Treasury Department.

I will have more to say about the new regs over the coming days, but I want to start with an issue in the new regs that is endemic of the problems of interpretation that they impose, particularly with respect to actually paying for things in Iran that are otherwise permitted by ITSR.  The example I want to use involves the way personal, non-commercial remittances to Iran are now handled.

To understand what’s going on, let’s roll the clock back to February 2012 when E.O. 13599 was issued. As this blog noted then, the executive order blocking all financial institutions in Iran, if read alone, would make personal remittances to Iran somewhat difficult unless you stuffed all the money in a suitcase and hand-carried it to Iran. To address that issue, OFAC issued General License B that permitted non-commercial personal remittances as long as they are not made through Iranian banks or other entities, such as Bank Saderat or Bank Melli,  that were previously blocked prior to the issuance of E.O. 13599.

Now fast forward to the new regulations. General License B has been “disappeared” from the OFAC page on the Iran sanctions (although an unlinked zombie version of it can still, at least for the time being, be found on the OFAC website here and I have preserved a copy of the license for future anthropologists studying the strange habits of OFAC here). New section 560.550 deals with personal remittances and permits “personal, non-commercial remittances” that are “for or on behalf of an individual ordinarily resident in Iran.” Some portions of General License B, such as subsection (b) permitting the transferring U.S. financial institution to rely on the representations of the person originating the transfer, have made it into section 560.550. But, and this is the rub, the language in General License B authorizing the use in Iran (through third country banks, of course) of banks that were only blocked by virtue of E.O. 13599 is pointedly missing.

Without General License B, a number of other sections work to prohibit a personal remittance to Iran if any Iranian financial institution is involved. Section 560.211 says that all property of all Iranian financial institutions is blocked and may not be dealt in. Section 560.422(b) says that any funds transferred or attempted to be transferred through an Iranian financial institution are property of the Iranian financial institution and therefore blocked. (This clarifies that such transfers aren’t simply the property of the bank’s account holder that is the beneficiary of the transfer.) And section 560.502(c) says that a general license has the “effect of removing a prohibition contained in this part from the transaction, but only to the extent specifically stated by its terms.” But section 560.550 which permits personal remittances does not specifically authorize dealing with Iranian financial institutions blocked by section 560.211. The only specific mechanism for transfer mentioned by section 560.550 is in subsection (d) which specifically authorizes hand-carrying these funds.

Of course, I don’t believe that OFAC actually intended this result. Clearly the problem of dealing with Iranian financial institutions designated only by virtue of E.O. 13599 will make it virtually impossible for U.S. persons to engage in the many, if not all, of the other activities permitted by general licenses set forth in the new regulations. For example, it seems difficult to see how to compensate Iranian lawyers for trademark services permitted under section 560.509 without involving an Iranian financial institution.

Frankly, I don’t know whether this conundrum is the unintended result of sloppy drafting by OFAC or is an intentional ambiguity designed to discourage activities that OFAC doesn’t believe it could, as a political matter, prohibit outright.

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Oct

22

Global Trade Controls Conference Update


Posted by at 3:13 pm on October 22, 2012
Category: General

Will Watkins, one of the organizers of the Global Trade Controls Conference (see the ad in the right column), asked me to post the following:

The 25th annual Global Trade Controls conference is taking place in London on 13 and 14 November 2012, and is shaping up to be a great opportunity for export controls professionals to find out the latest information in one place, meet each other, make new contacts and renew old ones. The highlights of this year include new and extended sessions on sanctions and embargoes, global company compliance programmes, and understanding enforcement. With the rapid changes happening in sanctions, particularly against Iran, there is no better place to come to understand the latest developments: expert speakers include Barbara Hammerle, the Deputy Director of OFAC, Natalia Shehadeh of Weatherford International and Aaron Gothelf of Tyco International.

The conference has been designed to allow as much audience participation as possible, so please prepare your questions and bring them with you for discussion on the day.

In addition to the main conference, the annual pre-conference seminar ‘An Introduction to Export Licensing’ takes place on 12th November, and new for 2012, a half day workshop on ‘Defence Trade Controls’ takes place on 15th November covering the UK/USA and Australia/USA defence cooperation treaties , ITAR and EU export licensing for defence goods and technology.

Visit www.informamaritimeevents.com/FKT2435EXPBL and quote FKT2435 to save £100

We are promoting this conference because my colleague Anita Esslinger from our London office will be speaking. Also, the organizers kindly gave us one free admission to the conference which is being used by another one of our lawyers in Europe.

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