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Jan

6

DDTC Imposes Pseudo-Embargo on Niger

Posted by Clif Burns at 8:59 pm on January 6, 2010

ABOVE: Mamadou Tandja

The Directorate of Defense Trade Controls (“DDTC”) announced today that applications for exports of defense items and services to Niger might be delayed, possibly for a really, really long time:

In response to recent events in the Republic of Niger (Niger), DDTC wishes to inform exporters that although there is no current U.S. or UN arms embargo on Niger, the final decision of license applications for the export of U.S. Munitions List (USML) items to Niger received from this date or currently in the review process may be delayed. License applications will continue to be reviewed on a case-by-case basis, but approval should not be assumed. We encourage exporters to take the current situation into account and if applying for a new license to export or re-export USML items to Niger, that the license application provide detailed information on the end-use and end-user of the USML items.

The recent events referred to in the DDTC announcement were actions taken last August by Niger’s President Mamadou Tandja (or Tandja Mamadou, there seems to be some dispute as to the correct order) to amend his country’s constitution to give himself the right to run for a third term. The action was taken after a disputed referendum that was boycotted by the opposition and that Tandja pushed through by dissolving the parliament and the constitutional court.

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Jan

5

The Name Game Chinese Style

Posted by Clif Burns at 8:16 pm on January 5, 2010

Category: China • OFAC • Sanctions

Tiananmen Square An interesting story in today’s Wall Street Journal details instances in which a number of U.S. companies imported items from China Precision Machinery Import Export Corporation despite the fact that CPMIEC is on the Office of Foreign Assets Control’s Specially Designated Nationals List. The reason for this, asserts the story, is that Chinese companies on the SDN list “have proved adept at creating aliases or subsidiary shell companies to mask their ownership.”

Consider this example cited in the article:

John Iliff, general manager of American Forge & Foundry, says the single shipment of oil-drainage tanks it received in 2006 from the CPMIEC unit set off no alarms. “Trading in illegal goods certainly never crossed our minds,” he says.

The shipment came from China JMM Import & Export Shanghai Pudong Corp., which didn’t appear on any sanctions list until Thursday. Records indicate the company shares an address and phone number with a CPMIEC unit that was previously banned: CPMIEC Shanghai Pudong Corp. The Treasury determined that the two companies are affiliated.

That designation of JMM Import & Export occurred just a few days ago on December 31, 2009, almost three years after the cited shipment. But there were several red flags that American companies might have picked up on before OFAC’s belated designation of the CPMIEC affiliate. Not only is there a similarity in the names of the two companies, but they shared the same street address. Standard procedure should be not only to check names on the SDN list but addresses as well.

But the larger issue here is that the obvious ease with which Chinese companies can morph into new entities effectively renders company-based sanctions almost completely ineffective. It’s obviously as easy for Chinese companies to rename themselves as it is for underage Chinese gymnasts to acquire new, earlier and eligible birth dates on official documents. I’m not so sure what the solution is here but it doesn’t appear to be imposing penalties or additional compliance obligations on U.S. companies that deal with affiliates of companies on the SDN list.

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Dec

31

Top 10 Export Stories of 2009

Posted by Clif Burns at 12:40 pm on December 31, 2009

Category: General

Happy New Year! After seeing that CNN was doing a feature on the top ten YouTube videos of 2009, the staff at Export Law Blog decided that we no longer had an excuse not to recount the top 10 export stories of 2009. However, we can’t guarantee anything quite as awesome as the YouTube video of the toddler dancing to BeyoncÃ©’s Single Ladies (Put A Ring On It). But here goes anyway, in reverse order:

10. Nobody really knows what Part 129’s definition of arms broker includes but it certainly included a website from a Portland yacht broker trying to find customers for an armed hovercraft being sold by somebody in Eastern Europe for $60 million. Several days after the web page appeared, it was yanked.

9. BIS amended its rules to control the export of tonfas and sjamboks. And, no, these are not menu items found in Asian restaurants.

8. Canada actually prosecuted someone for an export violation.

7. Iran used eBay to buy military aircraft parts from eBay dealers who, apparently, thought that DDTC stands for Dauphin Dog Training Club.

6. OFAC and BIS amended the rules implementing the Cuba sanctions to allow more exports of cellphones, computers, peripherals and digital devices to Cuba. Three months later Cuba arrested a U.S. citizen distributing laptops and cellphones in Cuba to Cuban citizens.

5. French export control officer for Luxembourg-based Qioptiq SARL urged company employees not to consult U.S. export lawyers because they “play by the book” and will “push you to” disclose export violations. DDTC briefly abandoned its distaste for export lawyers and fined Qioptiq $25 million dollars.

4. DDTC finally released its amended brokering regulations. The entire world wished it hadn’t.

3. OFAC and the State Department finally discovered the Internet and realized that letting ordinary people in sanctioned countries use Twitter, Facebook and YouTube might actually be good for world democracy.

2. The United States Court of Appeals for the Seventh Circuit smacked down the DOJ’s outrageous (and routine) assertion that courts can’t review DDTC’s determination that a particular item fits in a particular USML category. The money quote:

A designation by an unnamed official, using unspecified criteria, that is put in a desk drawer, taken out only for use at a criminal trial, and immune from any evaluation by the judiciary, is the sort of tactic usually associated with totalitarian rÃ©gimes.

1. U.S. authorities liberated $536 million from Swiss bank vaults after Credit Suisse was caught lying to U.S. banks in order to clear U.S. dollar transactions for Iran. “Neutrality,” the Swiss learned yet again, isn’t free.

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Dec

24

How the OFAC Stole Christmas

Posted by Clif Burns at 8:18 am on December 24, 2009

Category: Cuba Sanctions • OFAC

A spokesman for the Treasury Department’s Office of Foreign Assets Control (“OFAC”) told Export Law Blog this morning that discussions between OFAC and the North Pole over Santa Claus’s Christmas Eve itinerary had broken down and were not expected to be resumed before Santa’s scheduled departure on December 24 at 10 pm EST.

The dispute arose from a dilemma that the U.S. sanctions against Cuba posed for Santa’s planned delivery of toys to children in Cuba. If Santa delivers toys for U.S. children first, there will be toys destined for Cuba in the sleigh in violation of 31 C.F.R. Â§ 515.207(b). That rule prohibits Santa’s sleigh from entering the United States with “goods in which Cuba or a Cuban national has an interest.” On the other hand, if Santa delivers the toys to Cuban children first, then 31 C.F.R. Â§ 515.207(a) prohibits the sleigh from entering the United States and “unloading freight for a period of 180 days from the date the vessel departed from a port or place in Cuba.”

A press release from the North Pole announced that the OFAC rules left Santa no choice but to bypass the children of the United States this Christmas. A spokesman from OFAC warned that if Santa attempted to overfly the United States, his sleigh would be forced to land and his cargo seized. He continued:

We know that the outcome is harsh, but we cannot allow Fidel Castro’s regime to continue to be propped up by Santa’s annual delivery of valuable Christmas toys to Cuban children.

Congressional leaders did not return our calls.

This post is an annual Christmas Eve tradition and appeared previously in 2007 and 2008 in slightly altered form. Export Law Blog would like to take the opportunity of this post to extend its best holiday wishes to all of its readers. Posting will be light between now and the end of the holidays due as much to the holidays as to a heartless clerk at the D.C. Circuit Court of Appeals who established a briefing schedule that requires me to file a brief on December 30.

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Dec

21

America’s First Arms Broker

Posted by Clif Burns at 7:29 pm on December 21, 2009

Category: Arms Export

With the federal government closed by snow, it’s a slow day for export news, which gives me the opportunity to plug “Unlikely Allies” by Joel Richard Paul. The book which reads like a novel of eighteenth-century intrigue recounts the true story of America’s first arms-broker, Silas Deane. Professor Paul, who teaches at UC-Hastings Law School, has written a book about arms-smuggling, intrigue in the Court of Versailles, duplicity, espionage and the most-unlikely cast of characters you might encounter outside of, say, a Mozart opera.

In fact, one of the key characters, Beaumarchais, is best known to history as the playwright of The Barber of Seville and The Marriage of Figaro. He also, it seems, dabbled in arms-smuggling, hatching a plot to smuggle French weapons to the Continental Army by transshipping them through a Caribbean island. Another unlikely character in the tale is the Chevalier d’Eon, a French military hero rumored to be a woman. And finally there is Silas Deane, a plain-spoken Connecticut merchant and delegate to the Continental Congress, who spoke not a single word of French but was sent to Versailles to solicit armaments and aid from the French.

So, if you’re looking for a good read over the holidays, pick-up Unlikely Allies, either in dead tree format or for your eBook reader of choice (Sony Reader, Nook, or Kindle).

(Note: the links in this post are not affiliate links and I don’t receive anything if you click through and buy the book at any of them. This is just another value-added service of Export Law Blog for its loyal readers.)

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