Author Archive


Feb

17

UMass Bans Iranian Students


Posted by at 7:34 pm on February 17, 2015
Category: Deemed ExportsIran Sanctions

UMass Amherst Student Union by Trace Meek [CC-BY-SA-2.0 (http://creativecommons.org/licenses/by-sa/2.0)], via Flickr https://www.flickr.com/photos/tracemeek/8972271164 [cropped]

[UPDATES BELOW]

Why solve a problem with a scalpel when there is a sledgehammer nearby? That is the question that UMass Amherst administrators must have asked themselves when they decided to ban all Iranian students from their graduate-level science and engineering programs. The problem, of course, that had the administrators in a tizzy was the fear that the university might engage in deemed exports of export-controlled technology to those Iranian students.

It seems, however, that the UMass administrators perhaps need themselves a little education in export law. For starters, the Export Administration Regulations (“EAR”) make clear in section 734.9 that information “released by instruction in catalog courses and associated teaching laboratories of academic institutions” is not subject to the EAR and that, therefore, teaching this information to Iranians (or any other foreign student) is not a violation of the EAR.

Perhaps the administrators are afraid that school labs might have export-controlled equipment and that Iranians, if they have access to these machines, might be considered to have received export-controlled technology. That may be a legitimate concern, but it is not one that is restricted to Iranians. To solve this problem, UMass would have to boot all foreign students.

Nor is there any merit in the argument, apparently made by a “policy analyst” at a small DC firm cited in the linked article, that this result is mandated by section 501 of the Iran Threat Reduction and Syria Human Rights Act. That section prohibits the State Department from issuing visas to an Iranian to attend a U.S. university “to prepare … for a career in the energy sector of Iran or in nuclear science or nuclear engineering or a related field in Iran.” To begin with, this section imposes on obligation only on the State Department and not on any university in regard to its relation with a student once such a visa was granted. Nor does the prohibition extend to all fields in science and engineering, unless, somehow, a graduate degree in biology prepares one to work in the energy or nuclear field.

Beyond that, the University runs the risk of violating the anti-discrimination provisions of the Immigration and Nationality Act. Those provisions prohibit discrimination in employment against a legally-admitted foreign national based on his or her national origin. Since graduate students normally receive employment from their universities, a total ban on Iranian graduate students could very likely be seen as a violation of those prohibitions.

UPDATE: An email from the DC firm discussed in this post indicates that their policy analyst did not state in the interview cited in the linked article that section 501 of the Iran Threat Reduction and Syria Human Rights act mandated the position taken by UMass Amherst.  The email goes on to state that the law firm also believes, as I do, that the UMass Amherst policy is overbroad.

SECOND UPDATE:  Do you think maybe the folks at UMass Amherst read this post?  Probably not, but for whatever reason they’ve already reversed their policy banning Iranian graduate students in science and engineering.

 

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Feb

11

House of Castro: Francis Underwood Goes to Havana


Posted by at 11:15 pm on February 11, 2015
Category: Cuba SanctionsOFAC

Netflix HQ by Coolcaesar at the English language Wikipedia [GFDL (www.gnu.org/copyleft/fdl.html) or CC-BY-SA-3.0 (http://creativecommons.org/licenses/by-sa/3.0/)], via Wikimedia Commons http://commons.wikimedia.org/wiki/File%3ANetflix_headquarters.jpg [Cropped]Netflix just announced that it was going to offer its streaming service in Cuba, starting at $7.99 per month. Of course, under the information exception of the Berman Amendment, Netflix has always been able to stream its movies to Cuba without violating U.S. sanctions on Cuba.

Of course, as you might imagine, the reason that Netflix did not start streaming to Cuba earlier was the difficulty Netflix would have in getting paid. Now that the revisions to the Cuba sanctions have opened up the possibility for American credit card companies to do business in Cuba, payment becomes at least a theoretical possibility. Theoretical because $7.99 per month is out of reach of most Cubans given the average monthly wage of $17 and given the cost of Internet in Cuba where access to international sites, like Netflix, costs $4 per hour. Watching a two-hour movie on Netflix would leave about $1 to spend for rent, food and all other monthly expenses. (And you thought going to the movies at the local cineplex was expensive!)

The Netflix press release notes that “House of Cards” and “Orange is the New Black” will both be made available to Cuban subscribers. So, my question is this: which of these two will Fidel and Raúl binge watch first? The political machinations of Francis Underwood in “House of Cards” or the comic prison shenanigans of the women in “Orange is the New Black?”

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Feb

10

Because, Er, 9/11, That’s Why!


Posted by at 6:43 pm on February 10, 2015
Category: Criminal PenaltiesIran Sanctions

Fokker HQ via http://www.fokker.com/Contact_us [Fair Use]Did you know that Iran attacked us on September 11? No, neither did I, but Judge Richard Leon apparently thinks so, because 9-11 appears to be the central reason he rejected the Deferred Prosecution Agreement in the case against Fokker Services BV for exporting U.S. origin aircraft parts to Iran. Seriously.

Back in July of this year, I speculated that the DPA was headed for difficulty because there was, apparently, an argument that the Government learned about Fokker’s exports to Iran from Robert Kraaipoel, a Dutch businessman who was indicted for selling U.S. origin items to Iran. Judge Leon has apparently convinced himself now that the voluntary disclosure was indeed voluntary and not prompted by Kraaipoel’s cooperation with the Government. At least that’s how I read footnote 4 to the Order.

Instead, Leon now rejects the DPA as too lenient because of 9/11 and Iran’s heretofore unknown role in that terror attack:

Here, Fokker Services is charged with a five-year conspiracy to violate and evade United States export laws for the benefit, largely, of Iran and its military during the post-9/11 world when we were engaged in a two—front War against terror in the Middle East.

Just in case you think Judge Leon was joshing when he linked Iran and 9/11, he makes the point a second time:

[A]fter looking at the DPA in its totality, I cannot help but conclude that the DPA presented here is grossly disproportionate to the gravity of Fokker Services’ conduct in a post-9/11 world. In my judgment, it would undermine the public’s confidence in the administration of justice and promote disrespect for the law for it to see a defendant prosecuted so ancmically for engaging in such egregious conduct for such a sustained period of time and for the benefit of one of our country’s worst enemies.

So, in the end, Fokker’s voluntary disclosure, its cooperation with the government, its remedial actions mean nothing because, you know, Iran was somehow or other involved in September 11.

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Feb

4

Crimea River: BIS Muddies the Water


Posted by at 9:04 pm on February 4, 2015
Category: BISCrimea SanctionsOFAC

The Swallows Nest by Vyacheslav Argenberg [CC-BY-SA-2.0 (http://creativecommons.org/licenses/by-sa/2.0)], via Flickr https://www.flickr.com/photos/argenberg/199746052 [cropped]The Bureau of Industry and Security (“BIS”) has issued rules governing exports to Crimea and there’s good news and bad news. The bad news (for exporters): the BIS rule is incomprehensibly written and, arguably, may require you to have a license both from OFAC and BIS for the same export.  The good news (for lawyers):  the BIS rule is incomprehensibly written and, arguably, may require you to have a license both from OFAC and BIS for the same export.

Let’s start with the easy part: BIS amended part 746 of the Export Administration Regulations to add a new section 746.6 to establish a license requirement for exports to the Crimea region of all goods subject to the EAR other than food and medicine.  Note: basic medical supplies, because they are not either food or medicine, are not exempt, apparently on the grounds that the best way to get Putin where it hurts is to make sure that U.S.-origin bandages, hearing aids and hospital beds are kept out of Crimea.  That’ll show him.

But wait a minute.  Didn’t OFAC issue General License 4 permitting the unlicensed export of all items on its list of medical supplies without a license to Crimea?  OFAC, SCHMOFAC — here’s what BIS has to say about that:

The rule establishes a presumption of denial for all such exports or reexports to the Crimea region of Ukraine and transfers within the Crimea region of Ukraine, except with respect to items not exempt from the license requirement but authorized under the Department of the Treasury’s Office of Foreign Assets Control (OFAC) General License No. 4 (discussed in greater detail in the next paragraph) which BIS will review on a case-by-case basis.

And unlike, as is the case with, say, the Iran rules, where BIS says in section 746.7(a)(2) that if an item is authorized by OFAC no license from BIS will be necessary, the new Crimea rules say no such thing. So, what BIS appears to be saying is that OFAC General License No. 4 is nothing more than guidance that BIS will use when it decides whether to grant a license to export medical supplies to Crimea.

There is one contorted interpretation of General License No. 4 and the BIS statements that would avoid this result. General License No. 4 covers exports by U.S. persons or from the United States. Arguably, this may not cover re-exports of medical supplies with more than a de minimis (25%) U.S. controlled content. Such exports would then be licensed by BIS and these license applications would be considered on a case by case basis (rather than under a presumption of denial) for foreign manufactured medical supplies on the list. The problem with this reading is that the foreign manufactured items would not be “authorized under . . . General License No. 4” and thus would fall back under the presumption of denial.

The bottom line: even if you have an item on the list of medical supplies and eligible for General License No. 4 that you want to export from the United States, you probably should also file a license application with BIS rather than relying on the general license. Better safe than sorry.

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Copyright © 2015 Clif Burns. All Rights Reserved.
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Feb

3

When Pigs Fly


Posted by at 9:54 pm on February 3, 2015
Category: CanadaCriminal PenaltiesForeign Export Controls

When Pigs Fly by arvind grover [CC-BY-SA-2.0 (http://creativecommons.org/licenses/by-sa/2.0)], via Flickr http://www.flickr.com/photos/arvindgrover/3194476705 [cropped]According CTV’s investigative reporting arm W5, the Canadian Federal Government has agreed to pay a Canadian businessman, Steve de Jaray, more than $10 million to compensate him for damages caused to him by the government’s erroneous prosecution in which it charged de Jaray with illegal exports of items that were not in fact export controlled.

The case began in 2008 when de Jaray’s company, Apex Micro Electronics, shipped microchips used in flat screen televisions and video games to Hong Kong. Canadian customs flagged the items as suspicious. In February 2009, Canadian Mounties (probably not on horseback) and other officials raided de Jaray’s home and office causing, de Jaray alleged, him to lose his business and ultimately his house. Experts hired by de Jaray determined that the items were not export-controlled and Canada stayed, then ultimately dropped, the prosecution.

Interestingly, and not entirely surprisingly, it appears that there are some U.S. fingerprints on the prosecution. Lawyers for de Jaray allege, citing a cable released by WikiLeaks, that just months before de Jaray’s goods were seized, U.S. officials, including a high official from the State Department’s Bureau of Politico-Military Affairs, chided the Canadians for their poor export enforcement records and insisted that certain trade concessions might be withheld if the Canadians did not start following the U.S. example and throw more people in jail for export violations.

According to CTV, de Jaray has been living in self-imposed exile from Canada for the past 6 years. My guess is that he’s probably not in the United States. I also guess that the United States would pay similar damages in an export case when, as they say, pigs fly.

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Copyright © 2015 Clif Burns. All Rights Reserved.
(No republication, syndication or use permitted without my consent.)