Feb
17
Don’t Believe Everything You Read in Newsweek
Posted by Clif Burns at 8:31 pm on February 17, 2010
Category: Syria
Andrew Tabler, who works for a Washington-based think tank on the Middle East wrote a column in today’s web-edition of Newsweek on the appointment by the Obama administration of a new Ambassador to Syria — the first since 2005 — and what that might mean for U.S. sanctions on Syria. According to Tabler the sanctions have economically crippled Syria, and Syria is now “fanatical about ending U.S. sanctions (which, Damascus has only just admitted for the first time, are truly damaging).”
In trying to explain how U.S. sanctions have economically damaged Syria, Tabler gets into the weeds of export law and the Export Administration Regulations (the “EAR”) and, frankly, doesn’t come out smelling like roses:
[T]he regime had to ground most of its civilian air fleet—as well as President Assad’s personal jets—because the sanctions forbid the sale of spare parts without an export license. (Sanctions classified anything with more than 10 percent American content as an American product, and since U.S. companies dominate the aerospace industry, even third-party retailers from other parts of the world couldn’t sell the parts to Syria.)
This is clearly a reference to the de minimis rule in section 734.4 of the EAR which, for sanctioned countries, only exempts exports to sanctioned countries with less than 10% controlled U.S. content, not exports with less than 10% of all U.S. content. According to the Guidelines for De Minimis Rules set forth in Supplement 2 to Part 734, controlled content consists of content in the item that has an Export Control Classification Number (ECCN) requiring a license to the sanctioned country in question. There are plenty of items that might be parts of exported items that aren’t controlled content to Syria, so Mr. Tabler’s misstatement of the applicable regulations is a significant error in this regard and suggests that more items are subject to the Syria sanctions than is in fact the case.
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7 Comments:
I’m an avid reader of the blog and think the quality, relevance and timeliness of the posts are absolutely top-notch.
On this specific point, I think that, although the EAR is not completely clear, the BIS takes the view that essentially all US-origin items subject to the EAR count towards the 10% de minimis calculation for non-US origin items to be exported to Syria. They take the view that it is not just items on the Commerce Control List (CCL) that count towards the 10% de minimis level. I went back and found a presentation made by a BIS presenter at Update 2008 that specifically makes this point.
I suppose that in applying this interpretation, BIS looks to the language in Supp. No. 2 to Part 734 that defines the scope of what is “controlled” for purposes of the de minimis calculation by reference to the embargoes described in Part 746 (as well as to the Commerce Country Chart, which largely ties to the CCL). Part 746 in turn references General Order No. 2 in Supp. No. 1 to Part 736 which provides that most items subject to the EAR (and not just CCL items) require a license for export to Syria.
Aircraft parts generally fall under ECCN 9A991. These are controlled to Syria (anti-terrorism). Parts and Components related to Safety of Civil Aviation and Safe operation of Commercial Aircraft will be considered for a license to Syria on a case by case basis.
Don’t understand why “most of the civil fleet” is grounded, when mandatory grounding is usually a safety of flight issue, and there is a possible license available.
@Malcolm: The parts are ECCN 9A991 but are still subject to the 10% de minimis rule. If less than 10% of the content of the components of the part are U.S. origin goods controlled for export to Syria, the de minimis rule applies.
Your point about safety of flight issues is an extremely good point because I am aware that a number of license have been granted for export of aircraft parts to Syria for precisely that reason.
@avid reader: I think you’re right that what is “controlled” for these purposes does look to the country embargoes in Part 746 as well. But not all items are controlled to Syria even under part 746 — food, medicine and non-CCL technology among them. So the value of U.S.-origin non-CCL technology wouldn’t be included in the 10% calculation. But upon reflection it may well be that as a practical matter most items would be controlled and that a blanket 10% rule for all U.S. content, although not a correct statement of the rule, practically reaches the same result.
Smarter folks than me have weighed in with perceptive obsevations, but I have just one admittedly gratuitous comment: Why would you believe *anything* you read in Newsweek? OK, back to my foxhole….
Clif,
Your response to Avid is helpful, but I think your readers might beneift from a further clarification of the rule at hand.
Simply stated: If an item requires an export license if exported directly from the US to a given desetination, it is “controlled content” for purposes of the de minimis calculation when reexporting items to that destination. This potentially includes EAR 99 content.
Note, then, that EAR99 content is always “controlled” when the destination at issue in the reexport transaction is a sanctioned country under the EAR and that sanctioned country is subject to an export license requirement for all items subject to the EAR when shipped from the US (e.g. Iran, Cuba, Syria). I think this is now clear from the revised de minimis rule and was also implicit in the previous version of that rule. Also, BIS has adhered to this interpretation for quite some time (e.g. see p. 28 of this BIS presentation from 2007: http://www.buyusa.gov/france/fr/dualuseprogram.pdf ).
Lastly, I note that the only items subject to the EAR that do not require an export license to Syria are food and medicines not on the Commerce Control List (i.e. EAR99 food and medicines). Thus, the only US origin content that could be ignored when doing a de minimis calculation for Syria would be EAR 99 food/drugs. No aircraft parts (or other technology) could be excluded, even if EAR99.
It appears Mr. Tabler had it right!
Technology, which needs to be included in de minimis calculations, would not be controlled to Syria unless listed in an ECCN and so could be excluded from the content calculations where otherwise required, as I read it.
