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Feb

2

In Brightest Day, In Darkest Night


Posted by at 5:24 pm on February 2, 2007
Category: DDTC

What's in Your Laptop?Last week we were wondering about the origin of the name “Blue Lantern” for the pre-shipment and post-shipment verification program conducted by DDTC. Andrea Fekkes Dynes of General Dynamics, via “The Daily Bugle,” has an idea:

Last Friday’s Daily Bugle contained an article about State/DDTC’s Blue Lantern program [Daily Bugle, 26 Jan 2007, Item #10, Counsel Comment (R. Clifton Burns): “Beware My Power, Blue Lantern’s Light!”]. That article posed the question about the possible origin of the term “Blue Lantern.” One of our export compliance officials (who works in the UK) provides a possible answer: “It probably originates from the UK as, before about 1970, every police station in the UK had a blue lantern illuminated outside which signified to all the ‘strong arm of the law’.”

That seems a reasonable possibility, although I wonder whether anyone at DDTC had any familiarity with UK police stations during that period.

I’m beginning to suspect that it might actually be a reference to the comics. In an ODTC (yes, you remember the ODTC) presentation on the Blue Lantern program, there is a reference to three government wide end-use monitoring programs: Blue Lantern (ODTC), Golden Sentry (Department of Defense) and Green Lantern (Department of Commerce). The Sentry, in case you have forgotten, is a Marvel comics character whose clothing changes into the Golden Sentry suit when he undergoes the obligatory transformation from ordinary Robert Reynolds to a superhero.

The mystery thickens.

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Copyright © 2007 Clif Burns. All Rights Reserved.
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Feb

1

What’s In Your Laptop?


Posted by at 10:27 pm on February 1, 2007
Category: BISDeemed Exports

What's in Your Laptop?Next time you are in the airport, don’t be surprised if some ICE agents, dressed as Viking pillagers, come running after you in the jet-way screaming “What’s in your laptop?” At least that’s a possibility hinted at by BIS Assistant Secretary Darryl Jackson’s remarks to the ACI Conference on International Technology Transfer last Saturday.

In noting the means which are used by foreign governments to obtain controlled technology, Assistant Secretary Jackson cited “theft or other exploitation of laptops, PDAs and other data storage devices carried abroad by U.S. business persons, scientists and engineers.” Accordingly, he suggested that compliance programs should now determine whether “employees traveling overseas have controlled technology on their laptops or PDAs.”

Of course, the EAR, properly read, may currently prohibit employees from traveling outside the United States with laptops containing technical data relating to EAR-controlled dual use technology, depending on the technology and the country. License Exception TMP which allows temporary exports of “tools of the trade” such as laptops permits the temporary export of controlled software but not technical data. Proposals have been suggested to include technical data in License Exception TMP, but they so far have not been adopted by BIS. (Temporary export of laptops by U.S. citizens with technical data controlled by ITAR is permitted under most circumstances by ITAR § 125.4(b)(9) as long as the data is solely for the use of the departing U.S. citizen).

I am probably not stepping out on a limb by saying that dual-use technical data is probably routinely exported by U.S. employees traveling overseas with such data on their laptops, either because they are unaware of the problem or because of a mistaken belief that License Exception TMP applies. Nor has this been a particular enforcement priority by BIS in the past. But if BIS intends to start requiring licenses for temporary exports of laptops for personal use by traveling U.S. employees, this seems to be misguided, particularly where it seems premised mostly on the remote possibility that these laptops will be stolen or compromised. This concern is more properly addressed by enforcing the provision of License Exception TMP that requires the laptop to remain under the “effective control” of the exporter or the exporter’s employee.

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Copyright © 2007 Clif Burns. All Rights Reserved.
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Jan

31

Tucows, Two Terrorists and One Website


Posted by at 11:15 pm on January 31, 2007
Category: OFAC

Tucows LogoThe recent addition by OFAC of two South African individuals and one company to the SDN list illustrates the perils that may face companies engaged in Internet services and commerce. OFAC designated Farhad and Junaid Dockrat, both alleged to be Al-Qaeda financiers, as Specially Designated Global Terrorists. OFAC also designated the company Sniper Africa, in which Junaid Dockrat holds a seventy-percent interest. Sniper Africa, which sells camouflage gear to hunters in South Africa, has a website, and this website is specifically cited in the OFAC designation.

The problem occurs because the domain name for the site, www.africasniper.com, was registered by Tucows, Inc., a U.S.-based domain name registrar. This registration service provided by Tucows permits Sniper Africa to reserve its website address for its own use and also provides the routing service necessary for the domain name to point to web servers designated by Sniper Africa. Typically a name is registered to an individual or company by a completely automated process that takes place over the Internet without any human intervention by the registrar.

Once a company or individual has been designated by OFAC as a Specially Designated Global Terrorist, OFAC regulations §§ 594.406 and 594.407 forbid U.S. companies from providing services, in the United States or abroad, to the designated company. Specifically the U.S. company may not provide:

legal, accounting, financial, brokering, freight forwarding, transportation, public relations, educational, or other services

The provision of domain name registration services to a designated individual appears to possibly run afoul of these prohibitions, potentially subjecting Tucows to substantial civil and criminal penalties. Nevertheless, Tucows continues to provide the domain registration services to Sniper Africa, without which the website would disappear from the face of the Internet.

Tucows provides its domain name services through resellers, but this doesn’t seem to provide a valid defense here. The whois record clearly shows that, although Tucows may be selling the services through a reseller, it is providing the services to the name registrant and not the reseller. Perhaps Tucows might find some solace in this case because the named registrant here is HQ Clothing Enterprises, although the fact that the name of the designated company, the name of the website and the website address are all Sniper Africa suggest that this might not be such a strong defense.

Another possible defense might be that provided by § 594.508 which exempts the provision of “telecommunications” services. That exemption, however, seems to cover only traditional telecommunications services, such as the provision of telephone service, rather than the provision of domain name registration services.

Notwithstanding the possibility that Tucows may have run afoul of OFAC’s Global Terrorism Sanctions regime, it is clear that Tucows is in an awkward position. Companies that provide domain name registration services are not often well-positioned to determine whether the ultimate party to whom the service is provided is on the SDN list or not. The transaction takes place completely over the Internet which provides only limited ability for the registrar to verify the identity of its customer. As the joke goes, you can be anyone you want on the Internet.

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Copyright © 2007 Clif Burns. All Rights Reserved.
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Jan

30

Luxury — We Know It When We See It


Posted by at 2:37 pm on January 30, 2007
Category: BIS

The Kim Jong Il PodLast Friday BIS issued its new and final rule in the war of the iPods pursuant to which the U.S. has proposed to ban export of “luxury items” to North Korea. These sanctions were allegedly directed at the power elite of North Korea and sought to deny them access to Segway scooters, iPods, leather coats, plasma TVs and other luxury goods craved by the Pyongyang powerati.

A provisional list of such items had been developed, and BIS was widely expected to refine that list and ban the export of items on the list to North Korea, particularly since lip service had been paid — unique in the sanctions arena — to a supposed desire not to do anything that would harm the ordinary people of North Korea since, clearly, they had suffered enough under the rule of their Divine Leader and his minions.

So, of course, it was more than a little surprising to see that the final rule adopted by BIS went far beyond what was expected and required a license not just for the luxury items but for all items exported to North Korea other than food and medicine. Luxury goods would be subject to a general policy of denial and non-luxury goods would be subject to a general policy of approval. Of course, non-luxury goods would now require the expense and delay of a license application. So much for those crocodile tears about the people of North Korea.

And rather than define luxury items, the new rule adopts the Justice Stewart Rule on Pornography — “I can’t define it but I know it when I see it.” The notice explicitly states that the list is “illustrative” and that “whether an item is a luxury good will be made on a case-by-case basis.” The rule goes far out on the limb by offering three (yes, only three) examples of things that aren’t luxury goods: “blankets, basic footwear [and] heating oil.” Whether an umbrella is a luxury item will be determined deep in the bowels of BIS if anyone tries to export them to Pyongyang.

(On a side note, what BIS Federal Register notice would be complete without an obvious error? In this instance, no one at BIS read the notice to catch bad cross references. So, the new Supplement No. 1 to Part 746 set forth in the notice says:

The following further amplifies the illustrative of list luxury goods set forth in § 746.4(c):

In fact, the illustrative list is in § 746.4(b)(1), not 746.4(c). This shouldn’t have been hard to check since § 746.4(b)(1) is on the same page as, and only a few inches away from, the erroneous cross-reference.)

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Copyright © 2007 Clif Burns. All Rights Reserved.
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Jan

25

Beware My Power, Blue Lantern’s Light!


Posted by at 9:38 pm on January 25, 2007
Category: DDTC

Blue LanternThe Federation of American Scientists has received, pursuant to an FOIA request, a complete list of the unfavorable determinations from the “end-use” or “Blue Lantern” checks conducted by the State Department during FY 2002 through 2004. Under the Blue Lantern program, U.S. embassy personnel (and sometimes DDTC personnel) engage in investigations overseas to investigate suspicious export license requests and post-shipment reports of misuse or diversion.

Annual reports from DDTC have provided some information relating to unfavorable “Blue Lantern” determinations including an analysis of unfavorable determinations by region and commodity. These reports, however, did not single out individual countries. The FOIA disclosures provide data on specific countries for FY 2002 through 2004, and the results are interesting:

Country Unfavorable findings
Malaysia 15
Bolivia 10
Hong Kong 8
Singapore 8
Israel 7
Guatemala 6
Indonesia 5
Saudi Arabia 5
Canada 4
Dominican Republic 4
El Salvador 4
Germany 4
India 4
Pakistan 4
South Korea 4
Switzerland 4
UAE 4
UK 4
Argentina 3
Belize 3
Costa Rica 3
Ecuador 3
France 3
Italy 3
Oman 3
Peru 3
South Africa 3
Taiwan 3
Thailand 3
Thailand 3
Australia 2
Greece 2
Honduras 2
Jordan 2
Philippines 2
Portugal 2
Russia 2

Additionally, the report showed one unfavorable determination for each of the following countries: Bosnia, Botswana, Chile, Colombia, Cyprus, Czech Republic, Dominica. Grenada, Guyana, Haiti, Macau, Monaco, Morocco, Netherlands, Nicaragua, Panama, Slovenia, Spain, Suriname, Sweden, Turkey and Uruguay.

Obviously, Malaysia and Bolivia have won awards that no country would particularly want to win. In Malaysia’s case most of the unfavorable determinations related to aircraft parts. For Bolivia, the determinations involved firearms and riot control agents. Additionally, the appearance of Hong Kong as third on the list would appear to rebut the notion, frequently expressed by BIS at least, that Hong Kong has an exemplary export control program.

Now, here’s an inquiry for our readers. I am pretty sure that during a presentation on Blue Lantern by a DDTC official I heard the origin of the term “Blue Lantern” for the program. For the life of me, I can’t remember it, nor can I find it anywhere. A blue lantern is a signal, for railroad workers, that a car is being worked on and should not be moved, but that doesn’t seem a likely candidate. Nor does the use of a blue lantern by the Confederate submarine Hunley to signal that it sank the USS Housatonic seem an appropriate reference. So, does anyone know what “Blue Lantern” signifies?

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Copyright © 2007 Clif Burns. All Rights Reserved.
(No republication, syndication or use permitted without my consent.)