International Trade Law News

Published by Jacobson Burton Kelley PLLC

Labels: best practices, CEEC, Export Controls, Sanctions

On September 9, 2011, the Treasury Department's Office of Foreign Assets Control (OFAC) issued several general licenses relating to the U.S. sanctions programs on Syria and Libya. The following is an overview of these general licenses:

Libya General License

In the biggest change involving the current round of sanctions imposed by Executive Order 13566 on Libya on February 25, 2011, OFAC issued General License No. 7 which authorizes U.S. persons and companies to engage in transactions involving the following 16 subsidiaries of the Libyan National Oil Corporation located in Libya, Germany, Netherlands and other countries without having to obtain a specific license from OFAC:

• Arabian Gulf Oil Company
• Azzawiya Oil Refining Company
• Brega Petroleum Marketing Company
• Harouge Oil Operations
• Jamahiriya Oil Well Fluids and Equipment
• Libya Oil
• Mediterranean Oil Services Company
• Mediterranean Oil Services GmbH
• National Oil Fields and Terminals Catering Company
• North African Geophysical Exploration Company
• National Oil Wells Drilling and Workover Company
• Oilinvest Netherlands B.V.
• Ras Lanuf Oil and Gas Processing Company
• Sirte Oil Company for Production of Manufacturing of Oil and Gas
• Tamoil Group
• Waha Oil Company

It is important to note that General License No. 7 does not authorize transactions with the Libyan National Oil Corporation, Zueitina Oil Company or any other persons whose property and interests in property remain blocked pursuant to Executive Order 13566.

While OFAC has issued several other Libya general licenses, including General License No. 6 on August 19, 2011 that authorizes transactions with the Transitional National Council of Libya (formally known as the National Transitional Council), a large number of companies and entities in Libya remain blocked.

A summary of Executive Order 13566 and the current sanctions on Libya can be found here.

Because of the fast moving events in Libya U.S. persons and companies should proceed with caution before engaging in any business or financial transactions with Libya.

Syria General Licenses

OFAC issued the following four narrowly tailored general licenses with respect to the U.S. sanctions imposed on Syria on August 17, 2011 under Executive Order 13582:

General License 7​ - Authorizes transactions until November 25, 2011 that are incident and necessary to wind down contracts involving the Government of Syria. Also authorizes the divestiture to foreign persons of a U.S. person's investments in Syria.

General License 8 ​ - Authorizes U.S. persons to engage in transactions and activities in Syria associated with the United Nations and related programs and funds, including the World Health Organization, IMF, UNICEF, etc. Note 1 to the General License contains a reminder on the need to comply with other U.S. legal requirements, such as the Export Administration Regulations.
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General License 9 - Authorizes U.S. persons residing in Syria ​to pay to the Government of Syria personal expenses, such as housing, utilities, goods and services, taxes and fees.

General License 10​ - Authorizes U.S. financial institutions to operate accounts for non-blocked individuals in Syria as long as the transactions are for non-commercial purposes and do not involve transfers to Syria or for the benefit of persons residing in Syria.

A summary of Executive Order 13582 and the current sanctions on Syria can be found here.

Labels: Libya, Sanctions, Sanctions; Sanctions; Syria

For those readers that were not able to attend last month's Update 2011 Conference on Export Controls and Policy in Washington, DC, we are presenting a two part summary of the conference prepared by Benjamin Tarr, a law student at the American University's Washington College of Law who is focusing on international law.

Day 1 - Tuesday July 19, 2011

The Update 2011 conference presented by the Commerce Department's Bureau of Industry and Security (BIS) commenced with a short welcome address from Mr. Bernard Kritzer, who serves as the Director of the Office of Exporter Services. He applauded President Obama for his August 2009 pledge to reform the export system to create a classification system which allows government organizations to focus on examining sensitive items for classification while allocating less effort to classifying conventional, non-sensitive items for national security reasons.

After Mr. Kritzer’s speech, Deputy Under Secretary for Industry and Security Daniel O. Hill addressed conference attendees. He announced that President Obama’s export control policies have succeeded, despite widespread skepticism and opposition expressed during Update 2010. Mr. Hill placed special emphasis on the fact that President Obama has led the effort to place the Defense, State and Commerce departments all on the same export control IT system, thus enabling greater efficiency in the export control process. Mr. Hill commended the participants in Update for attending, as the sold-out nature of the conference indicates a surge in interest and attention given to this field.

The morning’s events culminated with a by Eric L. Hirschhorn, Under Secretary for Industry and Security. Under Secretary Hirschhorn opined that the current export control system is based on outdated Cold War technologies and “is not responsive to current threats.” He noted that export control policy and American global competitiveness is directly linked to national security. He applauded the current efforts to implement of a more simplified U.S. Munitions List that created a tiered structural system designed to control sensitive items. This is important, according to Mr. Hirschhorn, because the private sector now manufactures most of the goods used by the military. He believes that the government should focus its resources on the most sensitive items going to countries that pose great risks to U.S. national security. Less important military items should be subject to lesser scrutiny than should items of high sensitivity.

Mr. Hirschhorn elaborated on the Administration's three-tiered control list and mentioned the recent implementation of license exception Strategic Trade Authorization (STA) where exporters can export certain items license-free, absent any specific statutory requirements, to 36 countries including Canada, Australia and countries in the European Union. Specifically, these export reform efforts have focused on eliminating “easy cases” from governmental scrutiny vis-à-vis licensing to enable government resources to focus more of its energy on cases that require further examination as to whether or not to grant licenses. License exception STA will potentially eliminate 3,000 of the 22,000 licenses issued by BIS.

Under Secretary Hirschhorn also mentioned the Administration's role in continuing the sanctions regimes on North Korea, Iran, and Cuba. He also noted BIS's role in efforts to implement UN Security Council Resolution 1540, which directs U.N. members to establish an export control system and to collaborate to advance non-proliferation and counterterrorism goals. Additionally, he noted the Executive Order requiring the BIS, FBI, and military intelligence to share information in counterterrorism efforts.

With respect to enforcement of export control laws and regulations, Mr. Hirschhorn mentioned that BIS will continue to penalize individuals for deliberate violations of BIS regulations with punishment including, but not limited to, fines, imprisonment, and a denial of export privileges. However, the penalties can be mitigated if voluntary self-disclosed. (Editor's note: the full text of Under Secretary Hirschhorn's speech can be found here.)

The next speaker was Assistant Secretary for Export Administration Kevin Wolf who noted that his three goals since joining BIS were: first, to ensure aggressive compliance with the laws and regulations that we have now; second, trying to address the biggest problems that exporters face on a day-to-day basis, such as unnecessary impediments on trade with U.S. allies and dealing with the overlap between the U.S. USML and the CCL. His long-term goal is to address the compliance burden faced by those subject to the U.S. export control system.

Assistant Secretary Wolf then provided detailed information on the recently published proposed rule on how items removed from the USML will be eventually controlled on the CCL. He also mentioned that later this year BIS will be issuing a notice soliciting public comments on efforts that can be taken to streamline and clarify the EAR and are reviewing the public comments received on the notice seeking information on making the CCL a more positive list. He noted that it is BIS's goal by the end of 2012 to have a comprehensive proposal to simplify the EAR and start addressing the regulatory compliance burdens that drain corporate resources. (Editor's note: the full text of Assistant Secretary Wolf's speech can be found here.)

The lunch speaker was William Daley, President Obama’s Chief of Staff and a former Secretary Commerce. He noted that President Obama’s goals will allow the U.S. to double its exports in five years. He also criticized the U.S. control system because it still contains two control lists, each with its own control and IT policies and noted that “One branch doesn’t know what the other is doing.” (Editor's note: The White House's summary of Daley's remarks can be found here).

In one of the afternoon break out sessions, panelists from BIS, OFAC, the State Department and DTSA briefed attendees on sanctions policy issues. Among other things, they noted the recent sanctions imposed on certain companies under the amended Iran Sanctions Act and recently listed Iran Air and Tidewater Mid East Company as supporters of Iran’s WMD program and has imposed sanctions on these two companies. Regarding the situation in Libya, BIS has suspended all licenses to Libya. However, no changes have been implemented vis-à-vis exception eligibility for licenses to Libya.

South Sudanese independence has resulted in challenges to BIS since the U.S. must decide which sanctions, if any, apply to South Sudan. Currently, South Sudan is not subject to anti-terrorism controls that previously applied to all of Sudan. But, sanctions do apply to areas where Sudan and South Sudan cooperate, including much of the oil and gas industry.

Editor's note: The presentations from the Sanctions Panel and other panel presentations can be found here on the BIS website.

Labels: BIS, BIS Update Conference, Export Controls, Sanctions

ATTUS Technologies, a leading provider of restricted party screening solutions, will be hosting complimentary breakfast seminars in Chicago, Illinois and Milwaukee, Wisconsin on "Hot Topics in Export Controls and Sanctions Compliance."

The programs, which will be presented by Washington, DC-based export controls and trade attorney Douglas N. Jacobson, will be held in Chicago on September 7, 2011 and in Milwaukee on September 8, 2011. The programs will feature the following topics:

• Update on OFAC sanctions programs on Sudan, Libya, and other countries
• Export Controls and sanctions enforcement update
• Complying with I-129 Export Control Licensing Question and Deemed Export Compliance
• Antiboycott Compliance – What you need to know
• Merger and Acquisition Due Diligence: Importance of Reviewing Compliance With Export Controls and Sanctions Laws
• Plus, the latest news and status on U.S. export control reform efforts, including license exception STA 

Registration for these program is complimentary. For further information and to register see the following links: Chicago and Milwaukee.

Labels: Export Controls, Sanctions

President Obama today issued a notice (see below) renewing sanctions on Burma (Myanmar) for an additional year. The language contained in this year's renewal is nearly identical to that used in previous notices renewing sanctions on Burma.

Due to U.S. concerns over certain actions of the Government of Burma, the U.S. has imposed a wide range of sanctions on Burma, including an import ban on products from Burma, a prohibition on certain new investment activities in Burma, a freeze on the assets of certain entities and individuals in Burma, and restrictions on funds transfers between the U.S. and Burma. In addition, under the Export Administration Regulations, an export license is required to for most exports, reexports, and transfers of items subject to the EAR to persons whose property and interests in property are blocked pursuant to the various Executive Orders involving Burma.

On May 20, 1997, the President issued Executive Order 13047, certifying to the Congress under section 570(b) of the Foreign Operations, Export Financing, and Related Programs Appropriations Act, 1997 (Public Law 104-208), that the Government of Burma had committed large-scale repression of the democratic opposition in Burma after September 30, 1996, thereby invoking the prohibition on new investment in Burma by United States persons contained in that section. The President also declared a national emergency to deal with the threat posed to the national security and foreign policy of the United States by the actions and policies of the Government of Burma, invoking the authority, inter alia, of the International Emergency Economic Powers Act, 50 U.S.C. 1701-1706.

Because the actions and policies of the Government of Burma continue to pose an unusual and extraordinary threat to the national security and foreign policy of the United States, the national emergency declared on May 20, 1997, and the measures adopted to deal with that emergency in Executive Orders 13047 of May 20, 1997, 13310 of July 28, 2003, 13348 of October 18, 2007, and 13464 of April 30, 2008, must continue in effect beyond May 20, 2011.

Therefore, in accordance with section 202(d) of the National Emergencies Act (50 U.S.C. 1622(d)), I am continuing for 1 year the national emergency with respect to Burma. This notice shall be published in the Federal Register and transmitted to the Congress.

BARACK OBAMA

Labels: Burma/Myanmar, Sanctions

As a result of the recent events in Libya the United States and United Nations have announced various sanctions and other restrictions on transactions involving Libya. The following is a summary of these actions and their impact on U.S. companies:

Executive Order 13566 and OFAC

On Friday, February 25, 2011 President Obama signed an Executive Order (EO 13566) blocking the property and interests in property on the Gaddafi (Qadhafi) family, senior officials of the Libyan Government and others involved in the human rights abuses in Libya. The members of the immediate family of Colonel Muamar Gaddafi have been added to OFAC's SDN List. OFAC will soon be adding additional persons and entities to the SDN List.

The EO also blocks property and interests in the property of the Government of Libya, including the Government of Libya's "agencies, instrumentalities, and controlled entities." As a result, no transactions involving agencies of the Libyan Government can occur (such as the Ministries of Energy and Health, Civil Aviation Authority, etc.) or companies owned or controlled by the Libyan Government (such as the Libyan National Oil Company (NOC) can take place until further notice. OFAC considers any entity in Libya that is owned 50% or more by the Government of Libya to be owned or controlled by the Government of Libya.

While OFAC issued a General License (Libya General License No. 1) authorizing transactions with third-country financial institutions owned or controlled by the Government of Libya General License it remains to be seen how this General License can used for trade-related transactions.

While the U.S. has not yet reimposed the comprehensive ban on exports/reexports to or imports of commercial items from Libya (although see BIS and DDTC information below), given the large number of state-controlled companies in Libya, particularly in the oil and gas sector, U.S. companies should seek guidance before engaging in future transactions and payments involving companies that may be owned or controlled by the Government of Libya (this also applies to sales of medical products and medical devices to Libya's Ministry of Health and government operated hospitals in Libya). Most items subject to the Export Administration Regulations that are not classified as EAR99 currently require an export or reexport license to Libya.

BIS - Suspension of Export and Reexport Licenses

On March 3, 2011 the U.S. Department of Commerce's Bureau of Industry and Security (BIS) announced that it has suspended indefinitely all licenses that it has issued for exports or reexports to Libya. As a result, no further shipments may be made against BIS licenses for exports or reexports to Libya.

DDTC Suspension of ITAR Licenses and Exemptions

On February 26, 2011, the Directorate of Defense Trade Controls announced the immediate suspension of all export licenses for defense articles and technical data that have been issued under the ITAR. In addition, no ITAR exemptions may be utilized to export items subject to the ITAR to Libya.

The Census Bureau has advised that all such shipments to Libya reported to the Automated Export System will be fatally rejected with the following response message:

Response Code: 5C1 - DDTC License Suspended For Country

While the U.S. does not permit the export of weapons to Libya, section 126.1(k) of the ITAR currently authorizes the issuance of licenses and TAAs to Libya on a case by case basis to export to Libya non-lethal defense articles and services and non-lethal safety of use defense articles as spare parts.



FAA - Notice to Operators of Civil Aircraft

The U.S. Federal Aviation Administration has issued a notice to U.S. operators of civil aircraft to "exercise extreme caution" with respect to flight operations to or from Libya. The notice indicates that "that the ongoing unrest and reported Libyan military operations, to include aerial bombardments and unplanned military flights departing the [Tripoli airports], may a post a hazard to civil aviation.

U.S. companies planning to use corporate aircraft to remove personnel working in Libya should check with their flight handling company and the FAA for further updates.

Financial Crimes Enforcement Network (FinCEN) Advisory to Financial Institutions

FinCEN has issued an advisory to U.S. financial institutions to take "reasonable risk-based steps" with respect to any movement of assets involving Libya and reminding them of their requirement to apply enhanced scrutiny for private banking accounts held by or on behalf of senior foreign political figures and to monitor transactions that could potentially represent misappropriated or diverted state assets, proceeds of bribery or other illegal payments, or other public corruption proceeds.

U.S. financial institutions that know, suspect, or have reason to suspect that a transaction relating to senior foreign political figures in Libya involves illegal or suspicious activity they are required to file a Suspicious Activity Report (SAR).

United Nations Security Resolution 1970

By a 15-0 vote, the U.N. Security Council last night adopted resolution 1970 imposing sanctions and other actions on Libya. Many of these sanctions have already been implemented by the U.S. The full text of S/RES/1970 (2011) can be found here. Among other things, Security Resolution 1970 requires U.N. members to take the following measures with respect to Libya:

1. Arms Embargo and Other Arms Restrictions:

• All U.N. member states are prohibited to provide any kind of arms to Libya and allowing the transit to Libya of mercenaries.
• Libya is prohibited from exporting any arms to any other state.
• U.N. members should inspect suspicious cargo that may contain arms. When such arms are found, states are required to seize and dispose of them.
• Should strongly discourage their nationals from traveling to Libya to contribute to human rights violations.

2. Targeted sanctions on key regime figures

• Seventeen Gaddafi loyalists are subject to an international travel ban.
• Six of these individuals, including Colonel Gaddafi and his immediate family members, are also subject to a freeze of their assets.
• The Security Council committed to ensure that any frozen assets will be made available to benefit the people of Libya.
• A Sanctions Committee is established to impose targeted sanctions on additional individuals and entities who commit serious human rights abuses, including ordering attacks and aerial bombardments on civilian populations or facilities.

Secretary of State Clinton has already directed the State Department to revoke U.S. visas held by certain Libyan officials, others responsible for human rights violations in Libya, and their immediate family members. As a matter of policy, new visa applications for Libyan Government officials will be denied.

3. Humanitarian assistance

• All U.N. members are called upon to work together to facilitate humanitarian assistance and support the return of humanitarian agencies.
• The Security Council expressed its readiness to consider additional measures to achieve the delivery of such assistance.

Other Countries

All U.N. members must implement the multilateral sanctions announced by the U.N. Security Council. The following are some links to these and other sanctions imposed by other countries on Libya:

• United Kingdom - On February 26, 2010 HM Treasury implemented the U.N. sanctions.
• Canada - In addition to the U.N. sanctions, on February 27, 2010 Canada announced that it will impose an asset freeze on, and a prohibition of financial transactions with the Government of Libya, its institutions and agencies, including the Libyan Central Bank. The Canadian implementing regulations can be found here.
• European Union - On February 28, 2011, the Council of the EU announced that it adopted a decision to implement the UN sanctions. In addition, the Council also stated that it would prohibit trade with Libya in equipment which might be used for internal repression.
• Switzerland - On February 24, 2011, Switzerland issued a regulation freezing the assets of 29 Libyans.
  
  

Labels: Libya, OFAC, Sanctions

Finding a Willing Buyer Only One Part of the Export Process

Exporters Looking to Boost Business Need to Mind Rules and Regulations Too

The Obama administration is launching a government-wide effort to double U.S. exports over the next five years as part of a plan to increase domestic employment and boost the U.S. economy. However, companies looking to take advantage of the new National Export Initiative to break into new markets should be aware that shipping goods overseas comes with potential perils as well as opportunities.

As part of the NEI, the federal government plans to increase its trade advocacy efforts, including educating U.S. companies about opportunities overseas, directly connecting them with new customers and advocating more forcefully for their interests. The NEI will also include a focus on improving access to export financing and helping to remove barriers that prevent U.S. companies from getting access to foreign markets. Only a very small percentage of U.S. companies currently export their products, and of those that do, 58% export to only one country. The Obama administration is looking to increase these figures in the expectation that doing so will also increase employment.

However, warns Doug Jacobson, head of Sandler, Travis & Rosenberg’s export controls practice group, while increasing the number of U.S. companies that export and increasing trade promotion assistance are laudable goals, U.S. exporters must be aware that finding a willing buyer is only the first step in the exporting process.

“In addition to taking the necessary steps to ensure they are paid for their goods, U.S. exporters must be aware of the wide range of U.S. regulatory and legal issues applicable to exports,” Jacobson said. “The benefits of exporting can be great for U.S. companies, but the penalties for violating export laws and regulations can be severe. ST&R often represents exporters in enforcement actions that learn of their export compliance obligations only after they receive an administrative subpoena from the Bureau of Industry and Security or the Office of Foreign Assets Control. Many of those violations could have been avoided if the exporters understood their export compliance obligations in advance.”

Examples of the important compliance-related issues that U.S. exporters should be aware of when selling goods overseas include the following.

Ultimate Destination. U.S. export restrictions and licensing requirements vary by the country of destination. Some countries are subject to comprehensive embargoes, while others are subject to targeted sanctions directed at certain individuals and companies.

Jurisdiction and Classification of Goods. Proper jurisdiction and classification of goods under the Export Administration Regulations or the International Traffic in Arms Regulations is required to determine export licensing requirements and end-use and end-user restrictions for all products being exported from the U.S. In addition, the proper export classification is required to be declared in the Electronic Export Information filing that must be transmitted via the Automated Export System.

Know Your Customer. To avoid engaging in transactions with parties that have been denied export privileges or are subject to U.S. sanctions, exporters should screen all customers and parties involved in the export against the government’s various restricted party lists.

Anti-boycott Compliance. Boycott requests, which often contain the words “boycott” or “blacklist” or provisions prohibiting the importation of goods from certain countries, are often found in documents involving sales to the Middle East, including purchase orders, tenders, contracts, shipping requests and letters of credit. Certain boycott requests must be reported to the Bureau of Industry and Security.

Foreign Corrupt Practices Act. The FCPA prohibits U.S. persons and their agents from making prohibited payments to foreign government officials to obtain and keep business.

For more information on these issues please contact Doug Jacobson at (202) 431-2407.

Labels: Export Controls, Exports, Sanctions

In order to implement yesterday's changes in certain aspects of the U.S. embargo on Cuba, the Census Bureau's Foreign Trade Division has issued Foreign Trade Letter No. 5 explaining the requirements for filing electronic export information (EEI) through the Automated Export System (AES) for shipments under new License Exception Consumer Communication Devices (CCD).

License Exception CCD authorizes exports and re-exports to Cuba of certain donated consumer communications devices, computers, and software to individuals in Cuba and to independent non-governmental organizations in Cuba. Exports or re-exports under the License Exception CCD may not be made to organizations administered or controlled by the Cuban Government or the Communist Party or to designated officials of the Cuban Government or Communist Party.

FTR Letter No. 5 also states that Census has modified the AES by adding the new License Type Code “C58” for the License Exception CCD. The AES filers who report “C58” are required to report CCD, regardless of value, in the license number field and the Export Control Classification Numbers 4A994, 4D994, 5A991, 5D991, 5A992, 5D992, or EAR99 corresponding to the License Exception. The country of destination and ultimate consignee reported in the AES must be CU.

Labels: BIS; EAR, Census, Cuba, Sanctions

Japan's Yomiuri Shimbun newspaper reports how North Korea acquired the controlled technology and products from Japan that was likely used in developing the missile launched on Sunday.

The article notes that at "a U.S. Senate hearing in May 2003, an engineer who had defected from North Korea testified that about 90 percent of the parts used for one type of North Korean missile originated in Japan, adding the components were brought into the country by a ferry every two to three weeks."

Labels: Export Controls, North Korea, Sanctions

The U.S. Government quickly reacted to North Korea's launch of a long-range Taep'o-dong 2 missile.

The U.S. Northern Command said that the stage one of the missile fell into the Sea of Japan and the remaining stages, along with the payload, landed in the Pacific Ocean. Despite North Korea's claims of launching a communications satellite into orbit, the Northern Command said no object entered orbit.

While in Prague, President Obama said that "North Korea broke the rules, once again, by testing a rocket that could be used for long-range missiles." He also said that such "provocation underscores the need for action - not just this afternoon at the UN Security Council, but in our determination to prevent the spread of these weapons. Rules must be binding" and "violations must be punished."

Representative Howard Berman (D-CA), Chairman of the House Foreign Affairs Committee issued the following statement:

It is alarming that North Korea carried out this missile launch in direct defiance of the international community. The test is an unnecessary provocation that raises tensions in the region, and I urge the North Koreans to stop using their missile and WMD programs to threaten their neighbors and the rest of the world. Since the launch violates UN Security Council resolution 1718, I urge the Security Council to take strong and concerted action to demonstrate that Pyongyang’s actions are unacceptable. I especially call on both China and Russia to work constructively with other members of the Security Council to show that the world is united in condemning North Korea’s disturbing behavior.

Representative Ileana Ros-Lehtinen (R-FL), the Ranking Republican on the House Foreign Affairs Committee, said North Korea's "launch and its growing partnership with Iran, as well as its reported assistance to Syria's nuclear program, clearly show that Pyongyang's behavior threatens our interests, our forces in northeast Asia, our allies, and global peace and security." As a result, she announced she will soon introduce legislation that requires U.S. economic sanctions and diplomatic isolation to remain in place "until North Korea abandons its illegal nuclear, missile and weapons programs, and resolves the glaring human rights abuses which it has been causing and perpetuating."

Despite the Bush Administration's decision last year to remove North Korea's designation as a State Sponsor of Terrorism, the U.S. still imposes comprehensive restrictions on trade with North Korea under the International Emergency Economics Power Act (IEEPA). For example, an export license must be obtained from the Bureau of Industry and Security (BIS) to export or reexport any item subject to the Export Administration Regulations to North Korea except food and medicine classified as EAR99.

In addition, the Treasury Department's Office of Foreign Assets Control (OFAC) maintains controls on certain transactions involving persons subject to U.S. jurisdiction and North Korean entities or any specially designated North Korean national and prohibits the importation of North Korean goods without prior notification to and approval from OFAC.

The U.N. Security Council will meet at 3 p.m. EDT today to discuss its options, including the possible imposition of additional sanctions.

Labels: North Korea, Sanctions

A federal judge in the U.S. District Court for the Southern District of Florida recently struck down Florida’s "Act to Travel to Terrorist States" (the "Travel Act") -- the state legislature’s effort to prohibit academic -related travel to countries labeled as terrorist states by the U.S. State Department, including Cuba.

The American Civil Liberties Union of Florida filed the lawsuit in June 2006 on behalf of Florida International University’s Faculty Senate and six professors at several Florida universities challenging the law enacted by the legislature in 2006.

In Faculty Senate FIU et al., v. Winn et al., Judge Patricia A. Seitz ruled that the portion of the Florida law prohibiting the use of private and non-state funds for such trips was unconstitutional, citing precedent set in a 2000 U.S. Supreme Court decision declaring a Massachusetts law that prohibited firms doing business with Myanmar (Burma) from obtaining state contracts. The Burma Law was challenged by the National Foreign Trade Council, and unanimously overturned by the Supreme Court as a violation of Supremacy Clause of the Constitution.

“The Courts have been clear, states and local governments should not be in the business of setting foreign policy,” said Jake Colvin, NFTC Vice President for Global Trade Issues. “Florida’s attempt to undermine the ability of academic institutions to pursue their mission through international travel was not only unconstitutional but misguided. The United States should encourage international travel at every turn, particularly to places like Cuba where ordinary Americans would be superb ambassadors of freedom and democracy.”

The PDF version of the decision can be found here.

Labels: Cuba, Sanctions

In a story about U.S.-U.K. relations, the current edition of The Economist contains a list of "imbalances" in the areas of trade, justice and defense. Not surprisingly, issues relating to the extraterritorial application of U.S. economic sanctions and U.S. defense export controls were included in the list of five things that need to be fixed. Here is the complete list in the order presented in the article:

"Extradition treaty—A new extradition treaty signed between America and Britain in 2003 is seen as unfair because it has made it easier for America to extradite criminal suspects from Britain (with low requirements for evidence) than it is the other way round.

Internet gambling—America has closed its domestic gambling market to foreign (mainly British) internet betting companies despite clear rulings by the World Trade Organisation that the move is discriminatory.

Extraterritorial laws—Legislation such as the Helms-Burton Act and Patriot Act extends the reach of American law to other parts of the world, impeding trade and raising the risk that foreign firms and citizens may face prosecution in America for doing things that are legal in their home countries.

Investment barriers—America’s domestic air travel market is closed to foreign airlines, whereas American firms have full access to Europe’s.

Defence—British defence firms and its military worry that American efforts to close its markets and to limit exports of sensitive military technology do not take account of historical ties and will undermine further co-operation."

Labels: Export Controls, Sanctions, United Kingdom

Zimbabwe's Sunday Mail newspaper has reported that the Zimbabwe government "has begun auditing the ownership of Western firms in the country as part of a black empowerment drive' and to counter the possible withdrawal of investment under sanctions imposed and proposed by Britain and the U.S.'"

The preliminary results of the audit indicated that 499 companies in Zimbabwe had British ownership while 353 companies companies were owned by shareholders from other European countries.

Meanwhile, this week Zimbabwe will introduce a 100 billion Zimbabwe dollar bank note, as the country's inflation rate reached 2.2 million percent.

Labels: Sanctions, Zimbabwe

USA*Engage, a coalition that works to seek alternatives to unilateral U.S. foreign policy sanctions and to promote the benefits of U.S. engagement abroad, today held its annual luncheon on Capitol Hill in Washington, DC to honor Senator Chuck Hagel (R-NE) and Representative Earl Blumenauer (D-OR) for their leadership on issues relating to U.S. diplomacy and global engagement. Senator Hagel and Representative Blumenauer each delivered remarks on the importance of the United States maintaining an open dialogue with the rest of the world.

Senator Hagel was honored by USA*Engage for his strong support of U.S. global engagement, free trade and his efforts to reform the way in which U.S. sanctions are administered. Senator Hagel was one of the original sponsors of the Trade Sanctions Reform and Export Enhancement Act of 2000 (codified at 22 USC § 7201 et seq.) that authorized the licensed export and reexport of medicines, medical devices and agricultural products to countries subject to U.S. unilateral sanctions.

In his remarks, Senator Hagel said that "trade is not just an exchange of goods and merchandise. Trade is the only bridge into other nation’s culture and society. It is the one bridge that gets across the great chasm of differences; it is the one relevant and realistic option for countries to continue to grow and improve." He added that "we can fall prey to the narrowness of politics, but trade will overcome it. I believe free trade will be sustained."

USA*Engage honored Congressman Blumenauer for his commitment to a U.S. diplomacy, including his votes against new unilateral U.S. sanctions efforts against Cuba and Iran. Represenative Blumenauer has sought to promote humanitarian engagement abroad, and as a new member of the House Ways and Means Committee, has been a strong supporter of a bipartisan trade policy. Representative Blumenauer focused his remarks on the need for multilateral cooperation on a range of issues – from environmental protection and global poverty to international trade.

Jake Colvin, Director of USA*Engage, said "Senator Hagel and Congressman Blumenauer each take a thoughtful and nuanced approach to U.S. foreign policy and are champions of international engagement." He added that “their commitment to ensuring that the United States remains a respected diplomatic leader in the world is one reason we honor their public service today."

Editor's Note: Senator Hagel will be speaking tomorrow, June 26, on U.S. foreign and trade policy at the Brookings Institution in Washington, DC. During his speech, Senator Hagel will examine the inventory of global challenges that the next president will inherit and the responsibilities of the presidential candidates to address these challenges.

6/26 Update: The text of Senator Hagel's speech, entitled “Memo to the Candidates" delivered today at the Brookings Institution can be found here. The speech contained the following discussion of trade issues:

Trade is a driving force for sustained economic prosperity and job creation both in the United States and throughout the world. Trade, however, is not a guarantee. The ongoing credit crisis and skyrocketing world food and energy prices are among the recent temptations for countries to restrict markets and veer toward protectionism that leads to dangerous insular thinking. These temptations must be resisted and the hard-earned lessons of history not forgotten. The United States must continue to press for a successful conclusion to the Doha Round of global trade negotiations. America’s leaders should stand behind our trade agreements and support the pending Free Trade Agreements with Colombia, South Korea and Panama as well as renewing Trade Promotion Authority for the next President.

Labels: Congress, Sanctions, TSRA

The Treasury Department's Office of Foreign Assets Control (OFAC) today issued its monthly report of civil penalties imposed on companies and individuals for allegedly violating the sanctions regimes administered by OFAC.

OFAC's monthly penalty report indicates that the agency settled three cases involving corporations and three cases against individuals. The following is a summary of the settlements:

Entities:

• Fleet National Bank, which was acquired by Bank of America in 2005, remitted $1,337.50 to settle allegations of a violation of the former Libyan Sanctions Regulations by the Montevideo, Uruguay branch office of Fleet. The alleged violation by the Fleet branch occurred in April 2003 and prior to the June 2005 merger of Fleet into Bank of America. This matter was voluntarily disclosed to OFAC.
  

• Citigroup, N.A. remitted $16,250 to settle allegations of violations of the Cuban Assets Control Regulations. OFAC alleged that in October 2004 Citigroup acted without an OFAC license or outside the scope of its license by creating a banker’s acceptance for goods shipped by a Cuban carrier. Citigroup voluntarily disclosed this matter to OFAC.

• America Servi Express, Inc. (“ASE”), a Fort Lauderdale, Florida provider of financial and other services, was assessed a $2,465.00 civil monetary for allegedly violating the Narcotics Trafficking Sanctions Regulations by initiating a wire transfer to a U.S. life insurance company in payment of a premium on a policy issued on the life of a Specially Designated Narcotics Trafficker. ASE did not voluntarily disclose this matter to OFAC.
  

Individuals (OFAC does not release the names of individuals involved in civil penalty cases):

• OFAC imposed a $6,000 penalty on an individual for allegedly dealing in property in which Cuba has an interest. Specifically, the person allegedly engaged in financial transaction with Cuba, including the receipt of an payment for goods and services. This penalty amount is one of the largest recent penalties imposed by OFAC on an individual associated with the Cuban Assets Control Regulations.

• OFAC settled one case involving the purchase of Cuban-cigars offered for sale on the internet for $282.50.

• OFAC also settled a case for $1,063 against an individual that dealt in services with Cubans that were incident to the making of a commercial.
  

Labels: Cuba, OFAC, Sanctions

The National Council on International Trade Development's (NCITD) February 14, 2008 meeting in Washington, DC will feature the following speakers:

Labels: ITAR, OFAC, Sanctions

The Council on Foreign Relations recently hosted an online debate on sanctions policy between Simon Cox, an economics correspondent for The Economist, and Jake Colvin of USA*Engage. To read the debate, start at the bottom of the site and work your way up.

Labels: Cuba, Sanctions, Sanctions; Iran, Sanctions; Sudan

On July 11, 2007, the Treasury Department's Office of Foreign Assets Control (OFAC) issued its monthly report of civil penalties imposed on companies and individuals for allegedly violating the sanctions regimes administered by OFAC.

OFAC's monthly report indicates that the agency settled three cases involving corporations and three cases against persons. The following is a summary of the settlements:

Entities:

• LogicaCMG Inc. paid $220,000.00 to settle allegations of violations of the Cuban Assets Control Regulations by a predecessor corporation, CMG Telecommunications, Inc. (CMG), occurring during 2001. OFAC alleged that CMG procured, assembled, and exported a computer system, as well as provided technical support for the system after export, with knowledge that the goods and services were ultimately destined for Cuba and that such exports to Cuba were prohibited. CMG did not have an OFAC license to engage in these transactions and CMG did not voluntarily disclose this matter to OFAC.

This is the third penalty imposed on CMG as a result of prohibited transactions with Cuba. As we previously reported, in May 2007 LogicaCMG, Inc. paid $99,000 to the Bureau of Industry and Security to settle allegations that CMG violated the Export Administration Regulations by making an unlicensed export of telecommunications equipment to Cuba via Panama.

In addition, in April 2007, LogicaCMG pled guilty in federal court for violating the International Emergency Economic Powers Act for the unlicensed reexport from Panama to Cuba and was ordered to pay a $50,000 criminal fine.

• Gibson Overseas, Inc. paid $1,357 to settle allegations of violations of the Iranian Transactions Regulations occurring during January 2006. OFAC alleged that Gibson used an Iranian vessel to ship goods from China to Dubai in violation of 31 C.F.R. § 560.206, which prohibits transactions or dealings in goods or services of Iranian origin. Gibson did not voluntarily disclose this matter to OFAC.

• American Bankers Life Assurance Company of Florida remitted $1,271.50 to settle allegations of violations of the Narcotics Trafficking Sanctions Regulations occurring between October – December 2003. OFAC alleged that the insurance company processed premium payments on insurance policies on the lives of two persons who are named as Specially Designated Narcotics Traffickers. ABLAC did not voluntarily disclose this matter to OFAC.
  

Persons (OFAC does not release the names of individuals involved in civil penalty cases):

• One individual agreed to a settlement totaling $10,000 for alleged travel-related transactions incident to travel to Cuba. Specifically, OFAC alleged that from May through December 2002 the individual engaged in prohibited travel-related transactions, including the purchase of food and lodging in Cuba. The individual traveled to and from Cuba through a third country. (This is one the largest penalties imposed by OFAC on an individual for travel-related violations of the Cuban Assets Control Regulations.)
  

• Another individual agreed to pay $2,892.75 to settle charges of allegedly dealing in property in which Cuba or a Cuban national had an interest. OFAC alleged that in 2004, 2005 and 2006 the individual purchased Cuban-origin cigars on six separate occasions that were offered for sale on the Internet. The individual did not voluntarily disclose this matter to OFAC.

• An individual was assessed a penalty totaling $200.00 for making four payments in 2003 to purchase of Cuban-origin cigars offered for sale on the Internet. The individual did not voluntarily disclose this matter to OFAC.

Labels: Cuba, OFAC, Sanctions, Sanctions; Iran

Today the Treasury Department's Office of Foreign Assets Control (OFAC) posted on its website a one-page PDF document entitled "Guidelines on Transactions With the Palestinian Authority." The Guidelines are intended to assist U.S. persons in understanding the scope of OFAC's General License No. 7 that was issued on June 20, 2007.

The guidelines, which do not provide a great deal of new information, state that despite the issuance of General License No. 7 that "dealings with designated terrorist entities such as Hamas or other designated persons remain prohibited."

The Guidelines can be found at the following link: www.treas.gov/offices/enforcement/ofac/programs/terror/ns/pal_guide.pdf.

Labels: OFAC, Palestinian Authority, Sanctions

The Securities and Exchange Commission (SEC) today announced that it has added to its Web site a new software tool that permits investors to obtain information directly from company disclosure documents about their business interests in countries that have been designated as "State Sponsors of Terrorism" (currently Cuba, Iran, North Korea, Sudan and Syria).

The SEC's software tool, which can be found at www.sec.gov/edgar/edgartlistfilings.htm, contains a menu listing the countries on the State Sponsors of Terrorism list. Clicking on the country name brings up a list of the companies whose 2006 annual reports disclosed business activities in that country. Clicking on the name of a company will then bring up the pertinent portions of that company’s annual report.

A quick review of this new software reveals that this new tool is a work in progress and needs to be refined. For example, included on the list are companies that that have already wound up their operations in the countries in question or are legally doing business with such countries pursuant to licenses issued by OFAC. Thus, anyone using this information to base their investment decisions should carefully review the information contained in the SEC filings.

In addition, although the SEC's press release announcing the new software tool stated that the "existence of a disclosure by a company concerning activities in one of the listed countries does not, in itself, mean that the company directly or indirectly supports terrorism or is otherwise engaged in any improper activity", this disclaimer does not appear anywhere on the new software tool.

Labels: Sanctions, SEC, Treasury Department