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Aug

18

Yet More Sanctions on Syria

Posted by Clif Burns at 9:44 pm on August 18, 2011

Category: Syria

Syria The White House, hoping to speak loudly and to shake a big stick, issued today an executive order imposing yet another round of sanctions on Syria. Although exports of goods to Syria have been prohibited since the passage of the Syria Accountability and Lebanese Sovereignty Restoration Act of 2003, this new round prohibits, among other things, the exportation of services to Syria.

The new Executive Order does not define “exportation of services,” but this term has previously been defined by the Office of Foreign Assets Control (“OFAC”) in connection with other sanctions regulations. Section 560.410 of the Iranian Transaction Regulations defines the exportation of services as the provision of services in the United States or outside the United States by a United states person where the benefit is received in Iran. If any services are provided to the Government of Iran, the benefit of those services is presumed to be received in Iran.

Presumably this same definition will be adopted to apply to Syria. This will broadly prevent, for example, a U.S. person from being employed, with or without compensation, in Syria. A U.S. travel agency cannot book flights to, or hotel rooms in, Syria. A U.S. Law firm cannot provide legal advice to a French company doing business in Syria. Provision of a Twitter account or other social networking services by a U.S. Company to a Syrian will violate the new order. Whether typical exceptions that permit many of these activities in other sanctioned countries remains to be seen.

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Aug

17

White House Tries to Extend EAA … Again

Posted by Clif Burns at 8:55 pm on August 17, 2011

While Washington is as empty as a turkey coop on Thanksgiving, the White House sent up to the abandoned halls of Congress its annual proclamation, under the International Emergency Economic Powers Act (“IEEPA”), declaring a continuation of the national emergency that is claimed to authorize the executive to extend unilaterally all the provisions of the now lapsed Export Administration Act (“EAA”). Without this annual exercise, everyone at the Bureau of Industry and Security (“BIS”) would have to pack up their desks and go home. Also, without this declaration you could freely export uranium enrichment centrifuges to Iran.

Of course, the extent of the President’s authority to, in effect, resurrect an expired legislative scheme that Congress has itself declined to resurrect is open to some degree of question. In the Micei International case, the D.C. Circuit held that the President did not have the authority to extend the direct review provisions of the EAA.

The only way to eliminate the whole question as to what parts, if any, of the EAA can be resuscitated by executive fiat is for Congress to pass export reform legislation. I am not holding my breath.

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Aug

16

BIS Targets Greek Airline Involved in Leasing MD-83 to Iran

Posted by Clif Burns at 12:19 am on August 16, 2011

Category: BIS

Big News! The Bureau of Industry and Security (“BIS”) today added a number of entities to the Entity List, including Greek charter airline Sky Wings Airlines. When a company is added to the Entity List, all exports of items “subject to the EAR” — i.e. items with at least 25 percent U.S.-origin controlled content — will require export licenses before they can be exported to that company. Normally there is a general policy of denial for license applications for exports to companies on the Entity List, and that is the case for Sky Wings.

BIS stated the following reason for the designation:

Specifically, these persons were involved in the lease, transfer, and operation of commercial aircraft subject to the EAR, without the requisite licenses, for use in Syria and Iran.

The BIS designation does not provide any details to support this allegation, but they are not difficult to find. Sky Wings leased an MD-83 to Iran’s Zagros Airlines in January 2011.

As a result of being placed on the Entity List, Sky Wings will now find it difficult to obtain parts necessary to operate and service its aircraft, including those aircraft used to ferry European vacationers to Mediterranean beach resorts. Whatever one thinks of the damage that may or may not have occurred to the United States because an MD-83 was leased to an Iranian air carrier, that hardly seems a justification for taking actions that endanger passengers on all Sky Wing flights.

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Aug

11

Getting Your Money’s Worth Out of ITAR Registration

Posted by Clif Burns at 6:10 pm on August 11, 2011

Category: Part 122

Big News! As we slide into the slow news cycle that accompanies the dog days of August, our lives have been brightened, just a little bit, by DIVSYS International, which offers up for this blog and the entertainment of its readers an announcement of its ITAR registration. Another in a long series of exaggerated press releases on ITAR registration, DIVSYS wants everyone to know that it “earns” the registration, as if some test were required rather than merely filling out the form and sending the check to DDTC. DIVSYS was informed of the registration in an “approval letter” and now has been “entrusted” by DDTC with registration. Well, at least the company didn’t say it had been “certified” by DDTC as ITAR compliant.

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Aug

9

Are You Now, or Have You Ever Been, a Spy?

Posted by Clif Burns at 5:00 pm on August 9, 2011

Category: DDTC • Deemed Exports • Technical Data Export

With the August 15 implementation date for the new dual and third country national rule fast approaching, I wanted to comment briefly on the Sample Questionnaire that the Directorate of Defense Trade Controls (“DDTC”) has proposed as an example of something foreign companies should use to review whether a dual or third-country national has “substantive contacts” with other countries. Under the new rule, foreign companies covered by a technical assistance agreement (“TAA”) can share technical data with full-time employees who are also nationals of countries other than the company receiving the data under the TAA. One of the conditions, however, for using that rule is that the foreign licensee must examine the “substantive contacts” of that third-country or dual national with other countries to determine whether there is a risk of diversion of the technical data outside the home country of the foreign licensee.

The sample questionnaire proposed by DDTC represents the agency’s suggestion as to one way that such screening should take place. Some of the questions are poorly drafted, and many of the others are just plain silly and can be roughly paraphrased as simply asking the person involved whether or not he or she is a foreign spy — as if they would answer that question truthfully if they were.

In the poor drafting category, we have this question:

Do you have business contacts, business partners, business contracts, brokers, or any other relationship with a business in another country or other countries subject to U.S. or U.N. embargo?

Because the question as to whether there are contacts with “another country” would necessarily include countries subject to embargo, the final clause is unnecessary and potentially confusing.

Also in the poorly drafted category, we have this incredibly broad inquiry:

Have you ever served in or provided information to the government of another country (e.g., military, foreign ministry, intelligence agency or law enforcement)?

Anybody who has ever traveled to a foreign country would have to answer this affirmatively because of the requirement to provide information to customs and immigration officials upon entry in to the country. And, of course, a third country national will have provided tons of information to his home country government in terms of tax returns, driver’s license applications, and the like. And what about state-owned enterprises? Does information provided to them constitute information provided to the government?

Then we have the “are you a spy” questions:

Do you have contacts with any other individuals or groups involved in acquiring controlled defense articles, including technical data, illegally or otherwise circumventing export control laws? Please explain the nature of that contact.

Do you have contacts with agents from another country or another countryâ€™s government?

Do you have contacts with agents from another country or another countryâ€™s government?

It is a little known historical fact that Mata Hari, when asked questions of these sorts, broke down into tears, confessed to the French government that she was a spy and asked to be immediately taken to the firing squad for execution.

The questionnaire also has the dual or third country national attest that he or she has given the company complete and accurate “social networking addresses.” Apparently whoever wrote this had heard that all the kids these days do these Twitter and Facebook thingies but didn’t really understand how any of them worked. There really isn’t any such thing as a “social network address,” unless the DDTC expects that something like www.facebook.com be provided as a response to this question. Presumably the idea here would be that the employee has allowed the company to follow or “friend” the employee on Facebook, Twitter, Google Plus or the like. This would mean, I guess, that the foreign licensee will then inspect all the tweets or postings of the employee to make sure that he or she hasn’t said in one or more of them that they are passing controlled technical data to foreign government agents. It is probably easier just to not use the exemption.

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