Mar
31
Did He Really Say That?
Posted by Clif Burns at 8:10 pm on March 31, 2009
Category: Iran Sanctions
At the Bureau of Industry and Security’s (“BIS”) Export Control Forum in Newport Beach, California, on March 16, Tony Christino, a senior policy analyst for BIS, announced that a top priority for BIS as the new administration begins is to attempt to eliminate the jurisdictional overlap between BIS and the Office of Foreign Assets Control (“OFAC”) with respect to exports to Iran. It’s probably not overly cynical for me to suggest that the way that BIS staffers might want to eliminate that overlap is to take stuff from OFAC and give it to BIS. Even so, that’s all well and good and something to be commended, whether it involves centralizing authority for exports to Iran in BIS or in OFAC.
However, one thing that Christino said, at least as reported by the Washington Tariff and Trade Letter (subscription required) is not something that the export community is likely to welcome
Reexports to Iran have been the target of several BIS enforcement actions against both U.S. exporters and foreign reexporters. “Where the problem really seems to arise is that reexporters and distributors don’t seem to understand that they can’t replenish inventory knowing that they have a demand from Iran,†Christino said. When exporting to customers or distributors in the Middle East especially, even without knowledge of a reexport, U.S. firms could face “some kind of jeopardy,†he said.
Say what? Exporters face penalties for exporting goods to customers in the Middle East even without any knowledge of a possible reexport of those goods to Iran? If that’s what Christino meant, or even said, the effect is that U.S. companies should stop exporting completely to the Middle East. I’d like to think that Christino didn’t really say that.
Permalink
Copyright © 2009 Clif Burns. All Rights Reserved.
(No republication, syndication or use permitted without my consent.)
3 Comments:
By itself, the indirect quote you emphasize certainly goes too far (although it’s not clear whether the overreach really comes from Christino or the reporter). But I think the statement’s absolutism is tempered by the context set by the preceding direct quote: “Where the problem really seems to arise is that reexporters and distributors don’t seem to understand that they can’t replenish inventory knowing that they have a demand from Iran.” Taken together, my sense is that Christino’s comments mean that US exporters may be liable if they are aware that their foreign consignees are likely using the goods to meet some Iranian demands generally, even though the exporters might not have actual knowledge of specific illegal re-export transactions. In other words, Christino is probably restating the existing reasonably-should-have-known, no-blind-eye-turning standards of exporter scienter.
Pat, I think that’s a fair interpretation of Christino’s remarks. Even still, that’s a rough standard since it would be hard to find a Middle East company that didn’t deal with Iran in some fashion. From a compliance standpoint, however, it is probably reasonable for exporters to engage in a higher level of due diligence when dealing with distributors located in the Middle East (particularly UAE because of its geographic proximity to Iran).
I was there, and I can see both sides. First, that both sentences should be taken in context. Second, that it would seem to raise the bar, perhaps beyond what would be argued “the knowledge of a reasonable person’.
This reminds me of the allowance to ship food and medicals to Saddam’s Iraq, but little else. In his overall finances though, what he doesn’t need to spend on this he can spend on that. Different pocket, same pair of pants.
So, what’s a US exporter to do? How far is he to go to police his distributor customer? “Sure, I know my product is in Iran, and my that distributor is my only customer. But if A = B, and B = C, then you can’t tell me that A = C.”
