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Jun

26

US-UK Treaty Details Begin to Leak Out

Posted by Clif Burns at 5:10 pm on June 26, 2007

Flags Although the text of the Defense Trade Cooperation Treaty signed last week by Bush and Blair has not yet been released to the public, the Society of British Aerospace Companies has published a summary of key points of the treaty. The summary answers some of the preliminary questions that were raised by conflicting press accounts of the treaty that we previously reported here.

Of key interest are what items will be subject to the treaty. Apparently the answer to that is almost everything on the USML. According to the SABC summary:

All USML items, with a small number of exceptions for highly-sensitive technologies that will be agreed between the UK and US, will be included in the coverage of the treaty. Subject to final agreement, the exceptions are likely to relate to low-observable technology and countermeasures, â€œanti-tamperâ€ technology and communication security technology.

Additionally, dual-use items on the U.S. Commerce Control List will not be subject to the treaty, whereas “dual use” items on the U.K. Strategic Export Control List would be subject to the treaty. The reason for the different treatment of U.S. and U.K. dual use items is not clear and is not explained in the summary.

The SBAC summary also provides some interesting details on the export of technical data. The treatment of technical data in the treaty will be the subject of a separate post.

Credit is due to Jim Bartlett at Northrop Grumman for finding the SBAC summary. When a text of the treaty is made available, we will post it here.

UPDATE: SBAC removed the key points summary of the treaty from its website. We have fixed the link above to point to our archive of the key points document. You can also see that document by clicking here.

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Jun

25

Statutes of Limitations Easily Circumvented by BIS

Posted by Clif Burns at 11:04 pm on June 25, 2007

Category: BIS

BIS recently released a Charging Letter, Settlement Agreement and Order pursuant to which pump maker Graco agreed to pay $97,000 to the Bureau of Industry and Security (“BIS”) to settle fifteen alleged violations of the Export Administration Regulations. The violations involved direct shipment of diaphragm pumps to locations requiring licenses as well as shipment of the pumps to distributors with knowledge that the distributor would reship the pumps without a license to destinations requiring a license.

The Settlement Agreement and the Order were dated June 22, 2007. The earliest violation occurred in 1999 and the latest violation in February 2002. All fifteen violations, accordingly, fell outside the relevant five-year statute of limitations set forth in 28 U.S.C. Â§ 2462.

So why, some of you might ask, would Graco agree to pay a $97,000 to BIS even though BIS would have no power to collect the fine in federal court? Simple. Graco agreed to pay the amount to avoid denial of export privileges which is not subject to the statute of limitations. The bottom line for exporters is that the threat of denial of export privileges can be used to obtain a fine from exporters that would otherwise be barred by the statute of limitations.

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Jun

22

Where the Flyin’-Fishes Play

Posted by Clif Burns at 4:26 pm on June 22, 2007

Category: OFAC

Bird Flu The Office of Foreign Assets Control (“OFAC”) published today in the Federal Register a Final Rule amending the Burmese Sanctions Regulations. The amendment adds to those regulations a new Â§ 537.527 which overrules the regulations’ prohibition of imports of Burmese-origin articles to permit the importation of “animals and specimens of Burmese origin, in sample quantities only, for bona fide scientific research and analysis purposes.” The importation will require a license, and licensing decisions will be made on a case-by-case basis.

The Federal Register notice provides no indication as to OFAC’s motivation for adopting the rule, but it seems to me that it is a speedy and laudable response to the recent outbreak of the H5N1 bird flu in Burma. The new rule will permit the importation, among other things, of birds and laboratory samples taken from birds in Burma in order to promote scientific research into the causes, prevention, treatment and eradication of bird flu.

It seems that OFAC can, from time to time at least, stop gnawing on the Cuba bone long enough to do something useful. Kudos to the agency officials who took this prompt action.

(The title is a reference to this guilty pleasure.)

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Jun

21

Licenses for Some Military Exports to the UK May Be Eliminated

Posted by Clif Burns at 6:28 pm on June 21, 2007

Category: Arms Export

George and Tony President Bush and Prime Minister Blair today signed the “Defense Trade Cooperation Treaty” which will ease export license requirements for defense articles exported between the United States and the United Kingdom. Details of the treaty are scarce at this point as the text of the treaty has not yet been released. The treaty will also require Senate approval, so even if the text were available, nothing is certain yet.

The official press release from 10 Downing Street, which first reported the signing of the treaty, was, to say the least, vague. No indication was made in the press release to the elimination of export license requirements.

The White House thereafter announced the treaty during Dana Perino’s Press Gaggle this afternoon on Air Force One:

The President and Prime Minister Blair signed a treaty this morning. It’s called the U.S.-U.K. Defense Trade Cooperation Treaty. It would improve transatlantic defense cooperation and counterterrorism efforts by alleviating barriers to trade in defense goods, services, and information between the two countries, including our defense industries. We are going to present this treaty to the Senate for their advice and consent.

The reasons we’ve undertaken this treaty with the U.K.: As you know, it’s our closest ally and our biggest defense trade partner, for several reasons. It’s in our national security interest to support joint U.S.-U.K. military and counterterrorism operations in a timely way, and to speed U.S.-U.K. research and development and production of the next generation of interoperable defense technologies. It’s also in our homeland security interests. We’re going to be collaborating with the United Kingdom to develop the most effective countermeasures possible to combat terrorist attacks at home and against our partners in the war on terror, and we also believe it is in our security and economic interests to save money by leveraging each other’s experience and by reducing duplication of efforts on some of the research and development that’s been going on.

To which a reporter immediately asked:

Q. Can you do any of that in English?

MS. PERINO: That wasn’t in English? I totally understood it.

Another press conference was held at State Department where spokesman Sean McCormack appears to have provided more details on the treaty. As of the time of this post, the transcript of that briefing was not yet on the State Department website.

Of course, the question in the forefront of everyone’s mind is what items will be exempted from export license requirements. The AP story on the treaty seems to suggest that the license requirement will be dropped on all military equipment. The Agence France Presse story is somewhat more circumspect and says that the license requirement will be eliminated for “certain U.S. military equipment.”

As soon as we can provide any answers to that question, we will try to do so.

UPDATE: The White House just released on its website a “Joint Statement Between the United States and the United Kingdom,” which also provides no detail on the elimination of export licenses between the two countries.

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Jun

20

OFAC Issues General License for Transactions with Palestinian Authority

Posted by Clif Burns at 9:20 pm on June 20, 2007

Category: OFAC • Sanctions

Palestine Stamp The Office of Foreign Asset Controls (“OFAC”) today issued General License No. 7 authorizing U.S. persons “to engage in all transactions otherwise prohibited by 31 C.F.R. parts 594, 595, and 597 with the Palestinian Authority.” Obviously this General License is the official action that implements the administrations promise to lift sanctions on the Palestinian Authority due to the expulsion of Hamas from the Palestinian Authority.

Of course, no official action needed to be taken at all. The Palestinian Authority itself had never been officially sanctioned. The PA isn’t listed on the SDN list, nor were “Palestinian Authority Transaction Regulations” or the like adopted by OFAC. Instead, the PA was constructively sanctioned because members of Hamas, which is on the SDN list, had been elected as part of the PA. So, no more Hamas, no more sanctions, no OFAC action or assembly required.

On a broader note, these “secret sanctions” such as those imposed on the PA, and more recently on Nepal, are a compliance headache of the first order. A compliance officer might look at the list of sanctioned countries and the SDN list and never conclude that the Palestinian Authority or the Nepalese Government were sanctioned unless they happened to know, as well, that SDNs had become part of the PA and the Nepalese Government. Granted the sanctions aren’t completely secret because in both cases there were General Licenses ultimately issued which indirectly attest to the difficulties of dealing with the PA and Nepal. Still, here’s a question for export compliance officers: have the Government of Nepal and the Palestinian Authority ever been mentioned in your OFAC compliance programs?

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